Exhibit 10.41


	
   

  



 


 


LIMITED LIABILITY COMPANY AGREEMENT




OF




BEHRINGER HARVARD BAILEYS VENTURE, LLC




(a Delaware Limited Liability Company)


	
   

  



 


 


Dated as of June 26, 2007


 


THE
INTERESTS (THE “INTERESTS”) OF BEHRINGER HARVARD BAILEYS VENTURE, LLC HAVE NOT
BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED (THE “SECURITIES
ACT”), THE SECURITIES LAWS OF ANY STATE OR ANY OTHER APPLICABLE U.S. OR
NON-U.S. SECURITIES LAWS, IN EACH CASE IN RELIANCE UPON EXEMPTIONS FROM THE
REGISTRATION REQUIREMENTS OF THE SECURITIES ACT AND SUCH LAWS. THE INTERESTS
MAY BE ACQUIRED FOR INVESTMENT ONLY, AND NEITHER THE INTERESTS NOR ANY
PART THEREOF MAY BE OFFERED FOR SALE, PLEDGED, HYPOTHECATED, SOLD,
ASSIGNED OR TRANSFERRED AT ANY TIME EXCEPT IN COMPLIANCE WITH (I) THE
SECURITIES ACT, ANY APPLICABLE STATE SECURITIES LAWS AND ANY OTHER APPLICABLE
SECURITIES LAWS, AND (II) THE TERMS AND CONDITIONS OF THIS LIMITED
LIABILITY COMPANY AGREEMENT. THE INTERESTS WILL NOT BE TRANSFERRED OF RECORD
EXCEPT IN COMPLIANCE WITH SUCH LAWS AND THIS LIMITED LIABILITY COMPANY
AGREEMENT. THEREFORE, PURCHASERS OF THE INTERESTS WILL BE REQUIRED TO BEAR THE
RISK OF THEIR INVESTMENT FOR AN INDEFINITE PERIOD OF TIME.


 

















 


TABLE OF
CONTENTS


 


	
   

  	
   

  	
  Page

  
	
   

  	
   

  	
   

  
	
  ARTICLE
  1          DEFINITIONS

  	
  1

  
	
   

  	
   

  	
   

  
	
  ARTICLE
  2          THE VENTURE

  	
  8

  
	
   

  	
   

  	
   

  
	
  2.1

  	
  Formation
  of Venture

  	
  8

  
	
   

  	
   

  	
   

  
	
  2.2

  	
  Venture
  Name and Principal Office

  	
  8

  
	
   

  	
   

  	
   

  
	
  2.3

  	
  Office
  of and Agent for Service of Process

  	
  8

  
	
   

  	
   

  	
   

  
	
  2.4

  	
  Term
  of the Venture

  	
  8

  
	
   

  	
   

  	
   

  
	
  2.5

  	
  Title
  to Assets

  	
  8

  
	
   

  	
   

  	
   

  
	
  2.6

  	
  Purpose
  and Powers

  	
  8

  
	
   

  	
   

  	
   

  
	
  ARTICLE
  3          MEMBERS AND
  CAPITAL CONTRIBUTIONS

  	
  11

  
	
   

  	
   

  	
   

  
	
  3.1

  	
  Members;
  Capital Contributions

  	
  11

  
	
   

  	
   

  	
   

  
	
  3.2

  	
  Capital
  Calls

  	
  12

  
	
   

  	
   

  	
   

  
	
  3.3

  	
  Additional
  Capital Contributions

  	
  12

  
	
   

  	
   

  	
   

  
	
  3.4

  	
  Failure
  to Make Capital Contributions

  	
  13

  
	
   

  	
   

  	
   

  
	
  3.5

  	
  Return
  of Capital Contributions

  	
  15

  
	
   

  	
   

  	
   

  
	
  3.6

  	
  Capital
  Account

  	
  15

  
	
   

  	
   

  	
   

  
	
  3.7

  	
  Transfer
  of Capital Account

  	
  15

  
	
   

  	
   

  	
   

  
	
  3.8

  	
  Tax
  Matters Partner

  	
  15

  
	
   

  	
   

  	
   

  
	
  3.9

  	
  Liability
  for Venture’s Obligations

  	
  15

  
	
   

  	
   

  	
   

  
	
  ARTICLE
  4          ALLOCATIONS

  	
  16

  
	
   

  	
   

  	
   

  
	
  4.1

  	
  Allocation
  of Profits and Losses

  	
  16

  
	
   

  	
   

  	
   

  
	
  4.2

  	
  Tax
  Allocations

  	
  16

  
	
   

  	
   

  	
   

  
	
  ARTICLE
  5          DISTRIBUTIONS
  AND EXPENSES

  	
  17

  
	
   

  	
   

  	
   

  
	
  5.1

  	
  Distributions
  of Net Cash Flow

  	
  17

  
	
   

  	
   

  	
   

  
	
  5.2

  	
  Tax
  Provisions

  	
  17

  
	
   

  	
   

  	
   

  
	
  5.3

  	
  Priority

  	
  17

  
	
   

  	
   

  	
   

  
	
  5.4

  	
  Expenses

  	
  17

  
	
   

  	
   

  	
   

  
	
  ARTICLE 6          MANAGEMENT
  RIGHTS, DUTIES, AND POWERS OF THE  MANAGER; TRANSACTIONS INVOLVING THE MANAGER OR ITS AFFILIATES; ADDITIONAL OR SUCCESSOR
  MANAGER

  	
  18

  
	
   

  	
   

  	
   

  
	
  6.1

  	
  Management
  of the Venture

  	
  18

  
	
   

  	
   

  	
   

  
	
  6.2

  	
  Operating
  Plans

  	
  19

  



 


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TABLE OF
CONTENTS


 


	
   

  	
   

  	
  Page

  
	
   

  	
   

  	
   

  
	
  6.3

  	
  Major
  Decisions

  	
  20

  
	
   

  	
   

  	
   

  
	
  6.4

  	
  Business
  with Affiliates; Other Activities

  	
  22

  
	
   

  	
   

  	
   

  
	
  6.5

  	
  Maintenance
  of Domestic Status

  	
  23

  
	
   

  	
   

  	
   

  
	
  6.6

  	
  Tax
  Status

  	
  23

  
	
   

  	
   

  	
   

  
	
  6.7

  	
  Liability
  for Venture’s Obligations

  	
  23

  
	
   

  	
   

  	
   

  
	
  6.8

  	
  Additional
  or Successor Manager

  	
  23

  
	
   

  	
   

  	
   

  
	
  6.9

  	
  Removal
  of Manager for Cause

  	
  24

  
	
   

  	
   

  	
   

  
	
  ARTICLE
  7          LIMITATIONS ON LIABILITY AND
  INDEMNIFICATION

  	
  24

  
	
   

  	
   

  	
   

  
	
  7.1

  	
  Limitation
  of Liability

  	
  24

  
	
   

  	
   

  	
   

  
	
  7.2

  	
  Indemnification

  	
  24

  
	
   

  	
   

  	
   

  
	
  ARTICLE
  8          TRANSFER OF MEMBERS’ INTERESTS IN THE
  VENTURE; BUY/SELL 

  	
  26 

  
	
   

  	
   

  	
   

  
	
  8.1

  	
  Transfers
  of a Member’s Interest

  	
  26

  
	
   

  	
   

  	
   

  
	
  8.2

  	
  Buy/Sell
  Arrangement

  	
  27

  
	
   

  	
   

  	
   

  
	
  8.3

  	
  Basis
  Election

  	
  34

  
	
   

  	
   

  	
   

  
	
  8.4

  	
  Void
  Transfer

  	
  34

  
	
   

  	
   

  	
   

  
	
  ARTICLE
  9          EXCESS INTEREST PROVISIONS

  	
  34

  
	
   

  	
   

  	
   

  
	
  9.1

  	
  Definitions

  	
  34

  
	
   

  	
   

  	
   

  
	
  9.2

  	
  Ownership
  Limitation

  	
  35

  
	
   

  	
   

  	
   

  
	
  9.3

  	
  Excess
  Interests

  	
  37

  
	
   

  	
   

  	
   

  
	
  9.4

  	
  Prevention
  of Transfer

  	
  37

  
	
   

  	
   

  	
   

  
	
  9.5

  	
  Notice

  	
  38

  
	
   

  	
   

  	
   

  
	
  9.6

  	
  Information
  for the Venture

  	
  38

  
	
   

  	
   

  	
   

  
	
  9.7

  	
  Other
  Action by Venture

  	
  38

  
	
   

  	
   

  	
   

  
	
  9.8

  	
  Ambiguities

  	
  38

  
	
   

  	
   

  	
   

  
	
  9.9

  	
  Modification
  of Existing Holder Limits

  	
  38

  
	
   

  	
   

  	
   

  
	
  9.10

  	
  Increase
  or Decrease in Ownership Limit

  	
  39

  
	
   

  	
   

  	
   

  
	
  9.11

  	
  Limitations
  on Changes in Existing Holder and Ownership Limits

  	
  39

  
	
   

  	
   

  	
   

  
	
  9.12

  	
  Waivers
  by Venture

  	
  39

  
	
   

  	
   

  	
   

  
	
  9.13

  	
  Severability

  	
  39

  
	
   

  	
   

  	
   

  
	
  9.14

  	
  Trust
  for Excess Interests

  	
  39

  



 


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  Page

  
	
   

  	
   

  	
   

  
	
  9.15 

  	
  Distributions
  on Excess Interests

  	
  40

  
	
   

  	
   

  	
   

  
	
  9.16 

  	
  Voting
  of Excess Interests

  	
  40

  
	
   

  	
   

  	
   

  
	
  9.17 

  	
  Non-Transferability
  of Excess Interests

  	
  40

  
	
   

  	
   

  	
   

  
	
  9.18 

  	
  Call
  by the Venture on Excess Interests

  	
  41

  
	
   

  	
   

  	
   

  
	
  ARTICLE
  10          DISSOLUTION OF
  VENTURE

  	
  41

  
	
   

  	
   

  	
   

  
	
  10.1 

  	
  Bankruptcy
  of Member

  	
  41

  
	
   

  	
   

  	
   

  
	
  10.2 

  	
  Other
  Events of Dissolution

  	
  42

  
	
   

  	
   

  	
   

  
	
  10.3

  	
  Distribution
  Upon Liquidation

  	
  42

  
	
   

  	
   

  	
   

  
	
  10.4 

  	
  Procedural
  and Other Matters

  	
  43

  
	
   

  	
   

  	
   

  
	
  ARTICLE
  11          REPRESENTATIONS
  AND WARRANTIES

  	
  43

  
	
   

  	
   

  	
   

  
	
  11.1 

  	
  Representations
  and Warranties of the Members

  	
  43

  
	
   

  	
   

  	
   

  
	
  ARTICLE
  12          BOOKS AND
  RECORDS; REPORTS TO MEMBERS

  	
  44

  
	
   

  	
   

  	
   

  
	
  12.1 

  	
  Books

  	
  44

  
	
   

  	
   

  	
   

  
	
  12.2 

  	
  Quarterly
  Reports

  	
  44

  
	
   

  	
   

  	
   

  
	
  12.3 

  	
  Annual
  Reports

  	
  45

  
	
   

  	
   

  	
   

  
	
  12.4 

  	
  Accountants;
  Tax Returns

  	
  45

  
	
   

  	
   

  	
   

  
	
  12.5 

  	
  Accounting
  and Fiscal Year

  	
  45

  
	
   

  	
   

  	
   

  
	
  12.6 

  	
  Project
  Valuations

  	
  45

  
	
   

  	
   

  	
   

  
	
  ARTICLE
  13          MISCELLANEOUS

  	
  45

  
	
   

  	
   

  	
   

  
	
  13.1 

  	
  Notices

  	
  45

  
	
   

  	
   

  	
   

  
	
  13.2 

  	
  Execution
  in Counterparts

  	
  47

  
	
   

  	
   

  	
   

  
	
  13.3 

  	
  Amendments

  	
  47

  
	
   

  	
   

  	
   

  
	
  13.4 

  	
  Additional
  Documents

  	
  47

  
	
   

  	
   

  	
   

  
	
  13.5 

  	
  Validity

  	
  47

  
	
   

  	
   

  	
   

  
	
  13.6 

  	
  Governing
  Law

  	
  47

  
	
   

  	
   

  	
   

  
	
  13.7 

  	
  Waiver

  	
  47

  
	
   

  	
   

  	
   

  
	
  13.8 

  	
  Consent
  and Approval

  	
  47

  
	
   

  	
   

  	
   

  
	
  13.9 

  	
  Waiver
  of Partition

  	
  48

  
	
   

  	
   

  	
   

  
	
  13.10 

  	
  Binding
  Effect

  	
  48

  
	
   

  	
   

  	
   

  
	
  13.11 

  	
  Entire
  Agreement

  	
  48

  
	
   

  	
   

  	
   

  
	
  13.12 

  	
  Captions

  	
  48

  



 


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TABLE OF
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  Page

  
	
   

  	
   

  	
   

  
	
  13.13 

  	
  No
  Strict Construction

  	
  48

  
	
   

  	
   

  	
   

  
	
  13.14 

  	
  Identification

  	
  48

  
	
   

  	
   

  	
   

  
	
  13.15 

  	
  Recourse
  to the Manager

  	
  48

  
	
   

  	
   

  	
   

  
	
  13.16 

  	
  Recourse
  to the Members

  	
  48

  
	
   

  	
   

  	
   

  
	
  13.17 

  	
  Remedies
  Not Exclusive

  	
  49

  
	
   

  	
   

  	
   

  
	
  13.18 

  	
  Use
  of Behringer Harvard Trade Name

  	
  49

  
	
   

  	
   

  	
   

  
	
  13.19 

  	
  Venture
  Counsel

  	
  49

  
	
   

  	
   

  	
   

  
	
  13.20

  	
  Waiver
  of Jury Trial

  	
  49

  
	
   

  	
   

  	
   

  
	
  EXHIBITS

  	
   

  	
   

  
	
  A

  	
  Members;
  Addresses; Capital Commitments; Percentage Interests

  	
   

  
	
  B

  	
  Legal
  Description of Project

  	
   

  
	
  C

  	
  Investment
  Guidelines

  	
   

  
	
  D

  	
  Master
  Partnership Agreement

  	
   

  
	
  E

  	
  Form of
  Limited Liability Company Agreement for the Subsidiary REIT

  	
   

  



 


iv
















 


LIMITED LIABILITY COMPANY AGREEMENT

OF

BEHRINGER HARVARD BAILEYS VENTURE, LLC


 


THIS
LIMITED LIABILITY COMPANY AGREEMENT of BEHRINGER HARVARD BAILEYS VENTURE, LLC
is made and entered into as of June 21, 2007, by and between Behringer
Harvard Baileys, LLC (“BH REIT”), a limited liability company that is an
indirect wholly owned subsidiary of Behringer Harvard Multifamily REIT I, Inc., with its principal office at 15601 Dallas
Parkway, Suite 600, Addison, Texas 75001, and BEHRINGER HARVARD MASTER
PARTNERSHIP I LP (“BH MP”), a Delaware limited partnership with its principal
office at 15601 Dallas Parkway, Suite 600, Addison, Texas 75001.


 


W I T N E S S E T H


 


WHEREAS, BH REIT as the Manager and a Member and BH MP
as a Member desire to form a limited liability company for the purpose of
owning, operating and managing the real property at Parcel 1, Fairfield Baileys
LLC, Mason District, located in Fairfax County, Virginia and Arlington County,
Virginia, the legal description for which is set forth in Exhibit B hereof and known as Baileys (the “Project”);


 


WHEREAS, BH REIT and BH MP desire to establish their
respective rights and duties relating to the Venture on the terms provided in
this Agreement;


 


NOW, THEREFORE, in consideration of the premises and the
mutual covenants of the parties hereto, and for other good and valuable
consideration, the receipt and sufficiency of which are hereby acknowledged,
the parties hereby agree as follows:


 


ARTICLE 1


 


DEFINITIONS


 


Capitalized
terms used in this Agreement (including, without limitation, Exhibits,
Schedules and amendments) have the meanings set forth below or in the
Section of this Agreement referred to below, except as otherwise expressly
indicated or limited by the context in which they appear in this Agreement. All
terms defined in this Agreement in the singular have the same meanings when
used in the plural and vice versa. Accounting terms used but not otherwise
defined shall have the meanings given to them under U.S. GAAP. References to
Sections, Articles and Exhibits and Schedules refer to the sections and
articles of, and the exhibits and schedules to, this Agreement, unless the
context requires otherwise.


 


“Acquisition
Date” has the meaning ascribed thereto in Section 3.1.


 


“Act”
means the Limited Liability Company Act of the State of Delaware, Del. Code
Ann. tit. 6, §§ 18-101 et seq., as it may be amended from time to time, and any
successor to such statute.


 


“Advisory
Committee” means the Advisory Committee established pursuant to the terms of
the Master Partnership Agreement.


 


1

















 


“Affiliate”
means, when used with respect to a specified Person, (i) any Person that,
directly or indirectly through one or more intermediaries, controls, is
controlled by or is under common control with the specified Person or
(ii) any Person that is an officer, general partner or trustee of, or
serves in a similar capacity with respect to, the specified Person or of which
the specified Person serves in a similar capacity. For this purpose, the term
“control” (including, without limitation, the terms “controlling,” “controlled
by” and “under common control with”) means the possession, direct or indirect,
of the power to direct or cause the direction of the management and policies of
a Person, whether through the ownership of voting securities, by contract or
otherwise, which shall conclusively be deemed to exist where one Person
directly or indirectly is the beneficial owner of 50.1% or more of any class of
voting equity securities or other voting ownership interests of another Person.


 


“Affiliated
Entity” means, with respect to the Manager, an Entity that is an Affiliate of
the Manager. For the avoidance of doubt, an Affiliated Entity does not include
any individual that is an Affiliate of the Manager.


 


“Agreement”
means this Limited Liability Company Agreement, as amended, modified,
supplemented or restated from time to time.


 


“Alternative
Offer Price” has the meaning ascribed thereto in Section 8.2(b)(ii).


 


“Applicable
Law” has the meaning ascribed thereto in Section 3.4(d).


 


“Arbitration
Notice” has the meaning ascribed thereto in Section 8.2(e)(ii)(A).


 


“Bankruptcy”
has the meaning ascribed thereto in Section 10.1(b).


 


“Bankruptcy
Event” has the meaning ascribed thereto in Section 10.1(a).


 


“Behringer”
means Behringer Harvard Holdings, LLC, a Delaware limited liability company.


 


“Behringer
Party” has the meaning ascribed thereto in Section 8.2(e)(ii).


 


“Beneficial
Owner” means a Person who or which is or is treated as a direct or indirect
owner of the Subsidiary REIT for purposes of determining the status of the
Subsidiary REIT as a domestically-controlled qualified investment entity under
Section 897(h)(4)(B) of the Code.


 


“BH
MP” has the meaning ascribed thereto in the preamble to this Agreement.


 


“BH
MP Venture” has the meaning ascribed thereto in Section 8.2(e)(i).


 


“BH
REIT” has the meaning ascribed thereto in the preamble to this Agreement.


 


“BH
REIT Advisor” means Behringer Harvard Multifamily Advisors I LP, a Texas
limited partnership.


 


2

















 


“BH-Sponsored
Investment Program” means an entity formed or advised by Behringer Harvard
Holdings, LLC, a Delaware limited liability company, or one of its Affiliates.


 


“Business
Day” means a day other than a Saturday, Sunday or other day on which commercial
banks in New York City are authorized or required by applicable law to close.


 


“Buy/Sell
Interest” has the meaning ascribed thereto in Section 8.2(a)(ii). 


 


“Capital
Account” has the meaning ascribed thereto in Section 3.6.


 


“Capital
Call” means a call for capital to be contributed to the Venture in accordance
with Section 3.2.


 


“Capital
Commitment” means, with respect to any Member, the amount set forth opposite
such Partner’s name on Exhibit A,
as amended from time to time.


 


“Capital
Contribution” means a capital contribution made by a Member to the Venture in
accordance with Section 3.1 or Section 3.3
hereof.


 


“Cause”
means (i) a material breach of this Agreement by the Manager involving
fraud or a violation of a fiduciary duty owed to the Venture or BH MP as a
Member; (ii) the termination of the Advisory Agreement by BH REIT as a
result of, or within six months of the occurrence of, fraud or willful
misconduct on the part of BH REIT Advisor in respect of any Project or Venture;
or (iii) the conviction of, or the entry of a guilty plea or plea of no
contest with respect to, a felony involving fraud, embezzlement or dishonesty
by BH REIT Advisor or any Affiliated Entity of BH REIT Advisor.


 


“Certificate”
means the Certificate of Formation of the Venture, as originally filed with the
office of the Secretary of State of the State of Delaware on June 21,
2007, as amended, supplemented or otherwise modified from time to time as
herein provided.


 


“Closing
Date” has the meaning ascribed thereto in Section 8.2(d)(ii).


 


“Code”
means the Internal Revenue Code of 1986, as amended from time to time (or any
corresponding provisions of succeeding law); any reference to any section of
the Code shall include any corresponding provision of succeeding laws.
Notwithstanding the foregoing, any change in the Code which materially
increases the requirements for qualification of the Subsidiary REIT as a
domestically-controlled qualified investment entity for purposes of Section 897(h)(4)(B) of
the Code, or otherwise causes the Subsidiary REIT not to be a
domestically-controlled qualified investment entity for purposes of
Section 897(h)(4)(B) of the Code, shall not be included in the
definition of “Code” hereunder, it being understood that PGGM will bear the
risk of such change; provided that the Manager will use commercially
reasonable efforts to minimize the financial impact to PGGM (indirectly through
BH MP) of any such change at PGGM’s expense; provided further
that the same does not adversely affect BH REIT’s tax status.


 


3

















 


“Consent”
means the vote, approval or consent, as the case may be, of a Person to do the
act or thing for which the vote, approval or consent is solicited, or the act
of voting or granting such approval or consent, as the context may require.


 


“Default”
has the meaning ascribed thereto in Section 3.4(a).


 


“Default
Loan” has the meaning ascribed thereto in Section 3.4(b). 


 


“Defaulting
Member” has the meaning ascribed thereto in Section 3.4(a).


 


“Defaulting
Purchaser” has the meaning ascribed thereto in Section 8.2(d)(i).


 


“Domestic
Status Loss” means a change in the Tax Sensitive Beneficial Owner Group, if the
effect thereof would be a disqualification of the Subsidiary REIT as a
“domestically-controlled qualified investment entity” within the meaning of
Section 897(h)(4)(B) of the Code.


 


“Domestically-Controlled
REIT” means a REIT that is a “domestically-controlled qualified investment
entity” for purposes of Section 897(h)(4)(B) of the Code.


 


“Earnest
Money” has the meaning ascribed thereto in Section 8.2(d)(i).


 


“Entity”
means a partnership, corporation, business trust, limited liability company,
proprietorship, joint stock company, trust, estate, unincorporated association,
joint venture, pension fund, governmental entity, cooperative association or
other foreign or domestic entity or enterprise.


 


“Escrow
Agent” has the meaning described thereto in Section 8.2(d)(i).


 


“Indemnified
Person” and “Indemnified Persons” have the meanings ascribed thereto in Section 7.2(a).


 


“Initial
Operating Plan” has the meaning described thereto in Section 6.2(a).


 


“Interest”
means, as to a Member, the entire ownership interest of such Member in the
Venture at any particular time, including the right of such Member to any and
all benefits to which such Member may be entitled as provided in this
Agreement, together with the obligations of such Member to comply with all the
terms and provisions of this Agreement.


 


“Investment
Guidelines” means the investment guidelines for the Project described in Exhibit C.


 


“Liquidation”
means (i) when used with reference to the Venture, the date upon which the
Venture ceases to be a going concern, and (ii) when used with reference to
any Member, the earlier of (a) the date upon which there is a Liquidation
of the Venture or (b) the date upon which such Member’s entire Interest in
the Venture is terminated other than by Transfer to a Person other than the
Venture.


 


“Liquidator”
has the meaning ascribed thereto in Section 10.3(a).


 


4

















 


“Major
Decision” has the meaning ascribed thereto in Section 6.3(a).


 


“Major
Dispute” means any disagreement of the Members in respect of (i) the
establishment of sale objectives and parameters for the Project; (ii) the
sale or other disposition of the Project or any other property owned, directly
or indirectly, by the Venture in excess of $100,000; (iii) incurring,
materially restructuring or materially modifying any indebtedness of the
Venture or the Subsidiary REIT in excess of $100,000 or causing or the Venture
or Subsidiary REIT to become liable as an endorser, guarantor, surety or
otherwise, except as otherwise contemplated under Section 6.3(a)(iii);
(iv) a mortgage, pledge or hypothecation of the Project to secure
indebtedness of the Subsidiary REIT, except as otherwise contemplated under Section 6.3(a)(v);
or (v) selling any additional interests in the Venture (other than to the
developer of the Project).


 


“Management
Company” means Fairfield Baileys LLC, a Delaware limited liability company or
an Affiliate thereof.


 


“Manager”
means BH REIT, or any permitted successor or delegee of Behringer in accordance with this Agreement, in such
Person’s capacity as the manager of the Venture.


 


“Mark
to Market Price” has the meaning ascribed thereto in Section 8.2(e)(ii)(A).


 


“Master
Partnership” means the limited partnership formed under the Master Partnership
Agreement.


 


“Master
Partnership Agreement” means that certain limited partnership agreement, dated
as of May 7, 2007, by and between BH Institutional GP LP and PGGM, the
form of which is attached as Exhibit D, as amended, modified, supplemented or
restated from time to time.


 


“Maximum
Rate” has the meaning ascribed thereto in Section 3.4(d).


 


“Member”
means BH MP or BH REIT, or any permitted successor or assign of either of them
in accordance with this Agreement, in such Person’s capacity as a member of the
Venture.


 


“Negotiation
Deadline” has the meaning ascribed thereto in Section 8.2(e)(ii)(A).


 


“Net
Cash Flow,” for any period, means all cash receipts to the Venture from any
source during such period (other than from Capital Contributions), plus releases from reserves, minus all cash expenditures by the Venture during
such period (but only to the extent not made from Capital Contributions),
including costs, expenses, fees and additions to reserves determined by the
Manager in its sole discretion.


 


“Non-defaulting
Member” has the meaning ascribed thereto in Section 3.4(a).


 


“Offer
Price” has the meaning ascribed thereto in Section 8.2(a)(ii).


 


“Offering
Notice” has the meaning ascribed thereto in Section 8.2(a).


 


“Offeror”
has the meaning ascribed thereto in Section 8.2 (a).


 


5

















 


“Operating
Expenses” has the meaning ascribed thereto in Section 5.4(b).


 


“Option
Period” has the meaning ascribed thereto in Section 8.2 (b).


 


“Organizational
Expenses” has the meaning ascribed thereto in Section 5.4(a).


 


“Percentage
Interest” means, as to any Member, its percentage ownership interest in the
Venture as set forth in Exhibit A,
as the same may be amended from time to time.


 


“Permitted
Temporary Investments” means investments in (i) U.S. government and agency
obligations with maturities of not more than one year and one day from the date
of acquisition, (ii) commercial paper with maturities of not more than six
months and one day from the date of acquisition and having a rating assigned to
such commercial paper by Standard & Poor’s Ratings Services or Moody’s
Investors Service, Inc. (or, if neither such organization shall rate such
commercial paper at such time, by any nationally recognized rating organization
in the United States of America) equal to one of the two highest commercial paper
ratings assigned by such organization, it being understood that as of the date
hereof such ratings by Standard and Poor’s Rating Services are “P1” and “P2”
and such ratings by Moody’s Investors Service, Inc. are “Al” and “A2,”
(iii) interest bearing deposits in U.S. banks with an unrestricted surplus
of at least $250 million, maturing within one year and (iv) money market
mutual funds with assets of not less than $500 million, substantially all of
which assets are believed by the Manager to consist of items described in the
foregoing clause (i), (ii) or (iii).


 


“Person”
means an individual or Entity.


 


“PGGM”
means Stichting Pensioenfonds voor de Gezondheid, Geestelijke en
Maatschappelijke Belangen, a Dutch foundation.


 


“Prior
Operating Plan” has the meaning ascribed thereto in Section 6.2(b).


 


“Profits” or “Losses” means,
for each period taken into account under Article 4, an amount equal to the Venture’s taxable
income or taxable loss for such period, determined in accordance with federal
income tax principles, adjusted to the extent the Manager determines that such
adjustment is necessary to comply with the requirements of
Section 704(b) of the Code.


 


“Project”
has the meaning described thereto in the recitals to this Agreement.


 


“Purchase
Price” has the meaning ascribed thereto in Section 8.2 (d)(i).


 


“Purchaser”
has the meaning ascribed thereto in Section 8.2 (d)(i).


 


“Qualifying
Opinion” means a written opinion of outside, reputable tax counsel licensed to
practice law in the United States and acting reasonably.


 


“Real
Estate Proceeds” means proceeds from the direct sale of the Project (as opposed
to proceeds from the sale of interests in the Subsidiary REIT).


 


“REIT”
means a real estate investment trust under the Code.


 


6

















 


“REIT
Member” means a direct or indirect (through another partnership or limited
liability company) Member of the Venture that is not a U.S. Person and for whom
the direct or indirect receipt of Real Estate Proceeds would have a material
adverse tax consequence on such Member. For the avoidance of doubt PGGM is a
REIT Member.


 


“Seller”
has the meaning ascribed thereto in Section 8.2 (d).


 


“Shares”
means the shares of beneficial interests (including, for the avoidance of
doubt, membership interests) in the Subsidiary REIT.


 


“Subsequent
Operating Plan” has the meaning ascribed thereto in Section 6.2(b).


 


“Subsidiary
REIT” means the subsidiary to be formed by the Venture for the purpose of
investing in the Project and that has qualified or intends to qualify as a
REIT. The form of limited liability company agreement for the Subsidiary REIT
is attached hereto as Exhibit E.


 


“Substitute
Capital” has the meaning ascribed thereto in Section 3.3(b).


 


“Substituted
Purchase Price” has the meaning ascribed thereto in Section 8.2 (d).


 


“Substituted
Purchaser” has the meaning ascribed thereto in Section 8.2 (d).


 


“Taxes”
shall mean all taxes, charges, fees, duties, levies or other assessments,
including without limitation, income, gross receipts, net proceeds, ad valorem,
turnover, real and personal property (tangible and intangible), sales, use,
franchise, excise, value added, stamp, leasing, lease, user, transfer, fuel,
excess profits, occupational and interest equalization, windfall profits,
severance and employees’ income withholding and Social Security taxes, which
are imposed by the United States, or any state, local or foreign government or
subdivision or agency thereof, and such term shall include any interest,
penalties or additions to tax attributable to such Taxes.


 


“Tax
Return” shall mean any report, return or other information required to be
supplied to a taxing authority in connection with Taxes.


 


“Tax
Sensitive Beneficial Owner Group” means all Beneficial Owners of Shares other
than (i) PGGM, (ii) PGGM’s direct or remote transferees with respect
to such Shares, and (iii) the direct or indirect owners of PGGM or its
transferees.


 


“Transfer”
means to give, sell, assign, pledge, hypothecate, devise, bequeath or otherwise
dispose of, transfer or permit to be transferred, during life or at death. The
term “Transfer” when used as a noun, means any Transfer transaction.


 


“U.S.
GAAP” means U.S. generally accepted accounting principles at the time in
effect.


 


“U.S.
Person” means a “U.S. Person” as such term is defined in
Section 7701(a)(30) of the Code.


 


“Venture”
means the limited liability company formed hereby.


 


7

















 


“Venture
Counsel” has the meaning ascribed thereto in Section 13.19.


 


ARTICLE 2


 


THE VENTURE


 


2.1                                 Formation of Venture. The Manager and the Members hereby form a
limited liability company pursuant to the provisions of the Act, and the rights
and liabilities of the Members shall be as provided in the Act except as herein
otherwise expressly provided.


 


2.2                                 Venture Name and Principal Office. The name of the Venture shall be Behringer Harvard
Baileys Venture, LLC or such other name as the Manager may determine. The
principal place of business and the principal administrative office of the
Venture shall be 15601 Dallas Parkway, Suite 600, Addison, Texas 75001.
The Venture may change such office and may have such additional offices as the
Manager may determine.


 


2.3                                 Office of and Agent for Service of Process. The registered office of the Venture in the
State of Delaware shall initially be 1209 Orange Street, Wilmington, Delaware
19801 and the Venture’s agent for service of process on the Venture in the
State of Delaware shall be The Corporation Trust Company. The Venture may
change, at any time and from time to time, the location of such registered
office and/or such registered agent upon written notice of the change to the
Members.


 


2.4                                 Term of the Venture. The term of the Venture commenced on the
date the Certificate was first filed with the Secretary of State of the State
of Delaware. Unless sooner terminated as hereinafter provided or by operation
of law, the term of the Venture shall continue until December 31, 2057.


 


2.5                                 Title to Assets. Record title to all assets acquired by the
Venture shall be held in the name of the Venture, and no Member shall have any
property interest in such assets.


 


2.6                                 Purpose and Powers.


 


(a)                                  The Venture is organized for the object and
purpose of investing in the Project through the Subsidiary REIT, owning,
managing, supervising and disposing of such investment as provided in this
Agreement, sharing the profits and losses therefrom and engaging in such
activities necessary, incidental or ancillary thereto and in any other lawful
act or activity in furtherance of the foregoing for which limited liability
companies may be organized under the Act. Notwithstanding any other provision
of this Agreement, the Venture, and the Manager on behalf of the Venture, may
execute, deliver and perform such agreements and documents as the Manager determines
are necessary or desirable for the formation, organization and continuation of
the Venture. Any provision herein regarding the purpose and powers of the
Venture and the authorization of actions hereunder may be done through the
Subsidiary REIT (and any subsidiary thereof). In furtherance of this purpose,
subject to the limitations and restrictions set forth elsewhere in this
Agreement, including, without limitation, Section 6.3 hereof, the
Venture shall have all powers necessary, suitable or convenient for the
accomplishment of the aforesaid purpose, as principal or agent, including,
without limitation, all of the powers that may be exercised by the Manager on
behalf of and, except as specifically provided herein, at the expense


 


8

















 


of,
the Venture pursuant to this Agreement or the Act, and further including,
without limitation, the following:


 


(i)                              to organize or cause to be organized the
Subsidiary REIT and any subsidiary thereof and to act as manager of the
Subsidiary REIT, and to exercise all of the powers, duties, rights and
responsibilities associated therewith;


 


(ii)                           to borrow money, encumber assets (other than
the Capital Commitments of the Members) and otherwise incur recourse and
non-recourse indebtedness (including, without limitation, the issuance of
guarantees of the payment or performance of obligations by any Person) in
connection with or in furtherance of the acquisition or development or the
financing or refinancing of the Project;


 


(iii)                        to improve, develop, redevelop, construct,
reconstruct, maintain, renovate, rehabilitate, reposition, manage, lease,
mortgage and otherwise deal with the assets and/or businesses of the Venture;


 


(iv)                       to lend money on a secured or unsecured basis
and, if applicable, in connection therewith take as collateral a mortgage or
pledge of any real or personal property and to extend or modify the terms of
any such financing;


 


(v)                          to alter or restructure the Venture’s
investment in the Project at any time during the term of the Venture without
any precondition that the Manager make any distributions to the Members in
connection therewith;


 


(vi)                       to make additional investments in the Project
subsequent to the Venture’s initial investment in the Project (including, without
limitation, additional investments made to finance an acquisition by the
Subsidiary REIT or any capital improvements, tenant improvements or other
improvements or alterations to any property constituting the Project or
otherwise to protect the Venture’s investment in the Project or to provide
working capital for the Project);


 


(vii)                      to invest the Venture’s funds in Permitted
Temporary Investments;


 


(viii)                   to pay commissions, fees or other charges to
Persons that may be applicable in connection with any transactions entered into
by or on behalf of the Venture;


 


(ix)                           to open, maintain and close bank accounts and
draw checks and other orders for the payment of moneys;


 


(x)                            to engage outside accountants, custodians,
appraisers, attorneys, property managers, leasing brokers and any and all other
third-party agents and assistants, both professional and nonprofessional, and
to compensate them in such reasonable degree and manner as the Manager may deem
necessary or advisable;


 


(xi)                         subject to Sections 2.6(b) and (c), to enter into,
make and perform all contracts, agreements and other undertakings as may be
necessary or advisable or incidental to carrying out its purpose, including,
without limitation, such agreements as the Manager deems


 


9

















 


necessary
or appropriate for the acquisition, development, operation, management,
financing, sale or other disposition of the Project or as otherwise
contemplated by this Agreement;


 


(xii)                             to sue and be sued, to prosecute, arbitrate,
settle or compromise all claims of or against third parties, to compromise,
arbitrate, settle or accept judgment with respect to claims of or against the
Venture and to execute all documents and make all representations, admissions
and waivers in connection therewith;


 


(xiii)                          to make any and all elections and filings for
federal, state, local and foreign tax purposes, including, without limitation,
any consent dividend IRS Form 972;


 


(xiv)                         to purchase, and otherwise enter into
contracts of, insurance (including, without limitation, property and casualty
insurance, terrorism insurance, and liability insurance in respect of any
liabilities for which the Venture, the Manager or any other Indemnified Party
would otherwise be entitled to indemnification under this Agreement);


 


(xv)                            to enter into and perform the terms of any
credit facility as borrower or guarantor and cause the Subsidiary REIT to enter
into and perform the terms of any credit facility as borrower, including,
without limitation, repaying borrowings under any credit facility on behalf of
the Venture;


 


(xvi)                         to do such other things and engage in such
other activities as the Manager may deem necessary, convenient or advisable
with respect to the conduct of the business of the Venture, and have and
exercise all of the powers and rights conferred upon limited liability
companies formed pursuant to the Act.


 


(b)                                 (i)                                     Subject to Section 6.3(a)(i), the
interest in the Project owned by the Venture may only be sold, exchanged or
otherwise disposed of (A) by selling, exchanging or otherwise disposing of
for cash the Venture’s Shares in the Subsidiary REIT or, subject to any other
requirements of this Agreement, including, without limitation, Section 2.6(b)(ii),
by selling, exchanging or otherwise disposing of for cash a Member’s interest
in the Venture, or (B) in connection with a like-kind exchange of the
Project pursuant to Section 1031 of the Code that does not result in the
recognition of any taxable gain to the Subsidiary REIT, an involuntary
conversion of the Project pursuant to Section 1033 of the Code that does
not result in the recognition of any taxable gain to the Subsidiary REIT, or
any other disposition or transfer that pursuant to a nonrecognition provision
in the Code does not result in the recognition of any taxable gain to the
Subsidiary REIT; provided that, in a transaction within the description of the
foregoing clause (B) the Members agree on the asset or assets to be
acquired as a result of such transaction.


 


(ii)                                  The Manager shall use “Best Efforts” (as
defined below) to cause the Subsidiary REIT to satisfy the requirements for
taxation as a Domestically-Controlled REIT; provided,  however,
that the Manager and its Affiliates shall not be required to engage in any
transaction with, or on behalf of, the Venture or contribute additional capital
to the Venture in connection with such obligation. For purposes of the
foregoing sentence, the Manager’s “Best Efforts” means that (A) no Capital
Contribution shall be accepted and no redemption of interests in the Venture
shall be allowed if as a result thereof more than 49% of the interests in the


 


10

















 


Subsidiary
REIT would be held, directly or indirectly (including, without limitation,
through the Venture) by Persons that are not U.S. Persons, and (B) no
Transfer of less than all of the Venture’s interest in the Subsidiary REIT
shall be permitted if such Transfer would result in the Subsidiary REIT no
longer qualifying as a Domestically-Controlled REIT. In satisfying the
requirements of this Section 2.6(b)(ii),
in the absence of actual knowledge to the contrary, the Manager shall be
entitled to rely upon the most recent written representations of the direct or
indirect partners or members and prospective partners or members of the Venture
regarding the extent to which they are, or are owned by, U.S. Persons.


 


(iii)                               The Manager shall cause the limited liability
company agreement, charter or other governing document of the Subsidiary REIT
to provide that any Transfer that, if effective, would result in the interests
in the Subsidiary REIT being beneficially owned (as provided in
Section 856(a) of the Code) by fewer than 100 Persons (determined
without reference to any rules of attribution) shall be void ab initio as to the Transfer of any interest in the
Subsidiary REIT which would be otherwise beneficially owned (as provided in
Section 856(a) of the Code) by the transferee and that the intended
transferee shall acquire no rights in such interest.


 


(iv)                              The provisions of Sections 2.6(b)(i) and (ii) shall not apply if either (A) there is not at least one REIT
Member or (B) the Venture has received a Qualifying Opinion (from counsel
reasonably acceptable to PGGM) that there has been a change in applicable U.S.
law that eliminates the material adverse tax consequence relating to the
receipt by a REIT Member of Real Estate Proceeds.


 


ARTICLE 3


 


MEMBERS AND CAPITAL CONTRIBUTIONS


 


3.1                                 Members; Capital Contributions.
The name, address and Capital Commitment of each Member shall be as set forth
on Exhibit A.
Unless otherwise agreed by each Member, the Members shall have no obligation to
fund Capital Contributions to the Venture in excess of their respective Capital
Commitments set forth on Exhibit A.
The Members shall be required to make Capital Contributions under this Section 3.1 in connection with the Project, including
the acquisition, development, improvement, financing (including any mezzanine
financing), operation or maintenance by the Venture through the Subsidiary REIT
of the Project or to pay any Organizational Expenses or Operating Expenses. The
obligation of each Member to make any Capital Contribution with respect to the
Project (including additional funding subsequent to the acquisition,
development or financing of the Project) contemplated by this Section 3.1 is subject to the conditions concurrent that
(i) (A) the Venture has acquired an interest in the Project or a
binding commitment has been executed for the acquisition of an interest in the
Project; (B) the Project has been substantially developed by the Manager,
an Affiliate or a BH-Sponsored Investment Program; or (C) the Venture,
directly or indirectly, has provided mezzanine or other financing for the
Project or a binding commitment for the provision of such financing has been
executed and, in any case, the applicable event under clause (A), (B) or
(C) occurs no later than 120 days after the date of this Agreement (the
“Acquisition Date”) and (ii) each other Member has made, or is concurrently
making, its proportionate Capital Contribution. If the conditions in clauses
(i) and (ii) have not been satisfied or waived on or


 


11
















 


before
the Acquisition Date, then subject to the payment of any Organizational
Expenses or Operating Expenses pursuant to Section 5.4, the Capital
Contributions, if any, made by the Members pursuant to this Section 3.1
shall be returned to the Members, and this Agreement will terminate and be of
no further force and effect.


 


3.2           Capital Calls. The Manager from time to time may call for
payment on at least ten (10) Business Days’ prior notice of (i) each
Member’s Capital Commitment, or any portion thereof, to the extent the
conditions concurrent to the contribution obligations in Section 3.1
are met or (ii) additional Capital Contributions in accordance with Section 3.3.
Each call for contributions of capital from the Members shall be made in
accordance with their respective Percentage Interests. Except as otherwise
provided in Section 3.3 or unless otherwise agreed by a Member, the
amount of such Capital Call for a Member shall not exceed the amount of its
Capital Commitment as set forth on Exhibit A. Except as otherwise
provided in Section 3.3 or unless otherwise agreed by a Member,
such Member shall not be required to fund a Capital Call other than as provided
in Section 3.1.


 


3.3          Additional
Capital Contributions.


 


(a)           If at any time, and from time to time, after
the date on which each of the Members has made its Capital Contributions up to
the amount of such Member’s Capital Commitment in accordance with Section 3.1
hereof, additional cash in excess of Net Cash Flow and other funds available to
the Venture is required by the Venture (i) in order to pay any
Organizational Expenses or Operating Expenses, or (ii) in respect of the
Project, including in order to pay the costs of maintenance, repairs, capital
improvements, replacements or other expenses necessary to comply with lease or
other contractual obligations of the Subsidiary REIT (or any subsidiary thereof
that owns the Project) and to keep the Project in good condition and repair,
then the Manager may make a Capital Call for additional capital from the Members
in proportion to their respective Percentage Interests in an amount believed in
good faith by the Manager to be the amount needed to fund the cash needs of the
Venture and in such event shall provide the Members with not less than ten
(10) Business Days’ advance notice of the date on which such contributions
are required to be made. Subject to Section 3.3(b), the Members
shall make their respective additional Capital Contributions as and when
requested in such notice.


 


(b)           In the event that BH MP declines to make its
additional Capital Contribution in accordance with Section 3.3(a),
the Manager shall be obligated to contribute, or to cause one or more of its
Affiliates, or Behringer or its Affiliates, to contribute, an amount (the
“Substitute Capital”) equal to the BH MP’s Capital Contribution specified in
such Capital Call. Unless otherwise agreed by PGGM, such Persons shall
contribute the Substitute Capital to the Subsidiary REIT. In consideration of
the contribution of the Substitute Capital, the Subsidiary REIT shall issue
Shares to the Person(s) contributing the Substitute Capital based on the
value of the outstanding Shares of the Subsidiary REIT determined in accordance
with this Section 3.3(b). The number of Shares to be issued by the
Subsidiary REIT in consideration of the contribution of Substitute Capital
shall equal the amount of such Substitute Capital divided by the value of a
Share, which value shall be determined by the net asset value of the Subsidiary
REIT, based upon the valuation of the Project specified in this Section 3.3(b) and
the Subsidiary REIT’s interest in the Project and taking into account the fair
value of any other assets and the liabilities of the Subsidiary REIT and the
number of Shares outstanding immediately prior to the


 


12

















 


contribution
of the Substitute Capital. The value of the Project shall be determined based
on a valuation (or an update of the most recent valuation) that has been
prepared within the three months preceding the contribution of the Substitute
Capital to the Subsidiary REIT and made by the real estate valuation firm that
prepared the most recent valuation of the Project for the Venture or another
real estate valuation firm approved by Advisory Committee, or, if there is no
previous valuation, upon a valuation that has been prepared by a real estate
valuation firm approved by the Advisory Committee; provided that, if there has
been any event that in the reasonable judgment of the Manager has had a material
effect (whether beneficial or adverse) on the Project since the date of such
valuation, a new valuation or an update of the most recent valuation shall be
obtained for the valuation of the Project.


 


3.4             Failure to Make Capital Contributions.


 


(a)           If, for any reason, a Member (the “Defaulting
Member”) fails to make a Capital Contribution under Section 3.1 (a
“Default”), which Default continues for fifteen (15) days after notice from the
Manager, the Member who has made, or is prepared to make, its contribution of
such capital (the “Non-defaulting Member”) may, but shall not be obligated to,
make a Default Loan to the Defaulting Member in accordance with Sections
3.4(b) through (e).


 


(b)           The Non-defaulting Member may, at its
election, make a loan (a “Default Loan”) to the Defaulting Member of all of the
amount that the Defaulting Member was obligated to contribute to the Venture.
The Defaulting Member hereby irrevocably authorizes and directs the
Non-defaulting Member to advance the proceeds of each Default Loan to the
Venture. Receipt by the Venture of such proceeds shall constitute a Capital
Contribution of, and a loan made by the Non-defaulting Member to, the
Defaulting Member, and such Default Loan shall be legally enforceable to the
same extent and in the same manner, subject to the terms of this Agreement, as
if such proceeds were loaned directly to the Defaulting Member and contributed
by the Defaulting Member to the Venture. The making of a Default Loan to the
Defaulting Member shall not cure the default by the Defaulting Member.


 


(c)           Each Default Loan shall bear interest on the
unpaid principal amount thereof from time to time outstanding from the date
advanced until repaid, at the lesser of (i) six percent (6%) per annum
plus the prime commercial lending rate that Citibank, N.A., New York announces
from time to time to be in effect and (ii) the Maximum Rate permitted by
Applicable Law, and all payments made thereon shall be applied first toward
payment of unpaid accrued interest and then (if anything remains) toward
payment of principal. Each Default Loan, both principal and interest, shall be
due and payable from the Defaulting Member to the Non-defaulting Member who has
made such loan upon demand by such Non-defaulting Member, and the
Non-defaulting Member shall have and is hereby granted a first and prior lien
and security interest upon the Interest of the Defaulting Member and all
amounts, payments and proceeds becoming distributable or payable by the Venture
to such Defaulting Member to secure repayment of the Default Loan.


 


(d)           In no event shall the aggregate of the
interest on a Default Loan, plus any other amounts paid in connection with the
Default Loan that under Applicable Law would be deemed “interest,” ever exceed
the maximum amount of interest which, under Applicable Law, could be lawfully
charged on such Default Loan. The Defaulting Member and Non-defaulting


 


13

















 


Member
making the Default Loan specifically intend and agree to limit contractually
the interest payable on each Default Loan to not more than an amount determined
as being at the Maximum Rate. Therefore, none of the terms of a Default Loan or
any other instruments pertaining to or securing a Default Loan shall ever be
construed to create a contract to pay interest at a rate in excess of the
Maximum Rate, and neither the Defaulting Member nor any other party liable
therefor shall ever be liable for interest in excess of that determined as
being at the Maximum Rate. The provisions of this Section 3.4(d) shall
control over all provisions of or respecting a Default Loan and of any other
instruments pertaining to or securing a Default Loan. If any amount of interest
taken or received by the Non-defaulting Member shall be in excess of the maximum
amount of interest that, under Applicable Law, could lawfully have been
collected on a Default Loan, then the excess shall be deemed to have been the
result of a mathematical error by the parties hereto and shall be refunded
promptly to the Defaulting Member. All amounts paid or agreed to be paid in
connection with the indebtedness evidenced by a Default Loan that would under
Applicable Law be deemed “interest” shall, to the extent permitted by
Applicable Law, be amortized, prorated, allocated, and spread throughout the
full term of such Default Loan. “Applicable Law” means the law in effect from
time to time and applicable to a Default Loan that permits the charging and
collection of the highest permissible lawful nonusurious rate of interest on a
Default Loan, including laws of the United States of America and, to the extent
applicable to a given Default Loan, laws of the State of Virginia. “Maximum
Rate” means the maximum lawful nonusurious rate of interest (if any) that under
Applicable Law the Non-defaulting Member is permitted to charge the Defaulting
Member on a Default Loan from time to time.


 


(e)           If a suit or other proceeding in any court
shall be instituted for collection of a Default Loan or enforcement of the lien
and security interest securing payment of same, the Defaulting Member, in
addition to all other remedies available at law or in equity in connection with
such Default, shall be liable for all court costs and reasonable attorneys’
fees and other collection costs thereby incurred, payment of which shall
likewise be secured by said security interest and lien. A Member who becomes a
Defaulting Member shall continue to be a Defaulting Member until all Default
Loans made to such Member have been fully repaid, both as to principal and
interest and costs, and all amounts due from the Defaulting Member to the
Venture and the Non-Defaulting Member in connection with such Default Loans
shall have been paid in full. Notwithstanding anything to the contrary in Article 5,
all amounts of Net Cash Flow and any other payments and proceeds which become
distributable or payable to a Defaulting Member shall be paid, first, to
discharge all accrued and unpaid interest and the outstanding principal (in
that order) of the Default Loans made to the Defaulting Member, and second (if
anything remains), to pay all remaining amounts due to the Venture from the
Defaulting Member (with any amounts applied to discharge a Default Loan and any
costs or expenses in connection therewith being treated as having been distributed
to the Defaulting Member).


 


(f)            Notwithstanding anything to the contrary
contained in this Agreement, during the period that any Member is a Defaulting
Member with respect to a Capital Call, such Member’s Consent, whether otherwise
required directly or indirectly, shall not be required in order for the Venture
to make or to implement any Major Decision, and any action, decision or other
matter set forth in Section 6.3(a) as a “Major Decision” shall
cease to be a Major Decision during such period.


 


14

















 


3.5           Return of Capital Contributions.
Except as otherwise expressly provided herein, (i) the Capital Contributions of
a Member will be returned to that Member only in the manner and to the extent
provided in this Article 3 and in Articles 5 and 9,
(ii) except to the extent provided in this Article 3 and in Articles 5 and 9,
no Member shall have any right to demand or receive the return of any Capital
Contribution to the Venture, and (iii) subject to Section 8.2,
no Member shall have the right or, subject to Sections 8.2 and 10.3(a)(ii), the obligation to
receive a distribution of property other than cash. No Member shall be entitled
to interest on any Capital Contribution or Capital Account notwithstanding any
disproportion therein as between the Members. No Member shall be liable for the
return of any portion of the Capital Contributions of the Members, and the
return of such Capital Contributions shall be made solely from, and to the
extent of, available Venture assets. No Member shall be entitled to withdraw
from the Venture.


 


3.6           Capital Account.
The Venture shall establish and maintain throughout the life of the Venture for
each Member a separate capital account (“Capital Account”) in accordance with Section 704(b) of
the Code. Such Capital Account shall be increased by (i) the amount of the
Capital Contributions made by such Member to the Venture pursuant to this
Agreement, and (ii) all items of income and gain allocated to such Member
pursuant to Section 4.1;
and such Capital Account shall be decreased by (A) the amount of cash and
property distributed to such Member pursuant to this Agreement and (B) all
items of loss and deduction allocated to such Member pursuant to Section 4.1.
Any other Venture item which is required or authorized under
Section 704(b) of the Code to be reflected in the Capital Accounts
shall be so reflected.


 


3.7           Transfer of Capital Account.
The original Capital Account established for each transferee shall be in the
same amount as the Capital Account or portion thereof of the Member which such
transferee succeeds, at the time such transferee is admitted to the Venture.
The Capital Account of any Member whose Percentage Interest shall be increased
by means of the Transfer to it of all or part of the Interest of another Member
shall be appropriately adjusted to reflect such Transfer. Any reference in this
Agreement to a Capital Contribution of, or distribution to, a then-Member shall
include a Capital Contribution or distribution, as the case may be, previously
made by or to any prior Member on account of the Interest of such then-Member.


 


3.8           Tax Matters Partner.
BH REIT shall be the Venture’s “Tax Matters Partner” (as such term is defined
in Section 6231(a)(7) of the Code), with all of the powers that
accompany such status (except as otherwise provided in this Agreement).
Promptly following the written request of the Tax Matters Partner, the Venture
shall, to the fullest extent permitted by law, reimburse and indemnify the Tax
Matters Partner for all reasonable expenses, including, without limitation,
reasonable legal and accounting fees, claims, liabilities, losses and damages
incurred by the Tax Matters Partner in connection with any administrative or
judicial proceeding with respect to the tax liability of the Members. The
provisions of this Section 3.8 shall survive the termination of the Venture
and shall remain binding on the Members for as long a period of time as is
necessary to resolve with the Internal Revenue Service any and all matters
regarding the U.S. federal income taxation of the Venture or the Members.


 


3.9           Liability for Venture’s Obligations.
Except as otherwise provided by the Act, the debts, obligations and liabilities
of the Venture, whether arising in contract, tort or otherwise,


 


15

















 


shall be solely the debts, obligations and liabilities of the Venture,
and the Members shall not be obligated personally for any such debt, obligation
or liability solely by reason of being a Member of the Venture. Each Member
shall be obligated to make payment of its contributions of capital as and when
due hereunder and other payments as provided in this Agreement.


 


ARTICLE 4


 


ALLOCATIONS


4.1           Allocation of Profits and Losses.


 


(a)           Except as otherwise provided in this Section 4.1,
Profits and Losses shall be allocated among the Members in accordance with
their respective Percentage Interests.


 


(b)           Notwithstanding anything to the contrary in
this Agreement, Profits and Losses shall be allocated as though this Agreement
contained (and there is hereby incorporated herein by reference) a qualified
income offset provision which complies with Treas. Reg. § 1.704-1(b)(2)(ii)(d) and
minimum gain chargeback and partner minimum gain chargeback provisions which
comply with the requirements of Treas. Reg. § 1.704-2.


 


(c)           In the event that any amounts paid or payable
to any Member or any Affiliate which the Venture deducted or intended to deduct
are disallowed as deductions for federal income tax purposes (or it is
determined that such amounts are no longer allowable as deductions), (i) the
amounts thus disallowed or no longer allowable will be allocated to the Member
which received them (or whose Affiliate received them) as income, and (ii) notwithstanding
any provision herein to the contrary, the balance of the redetermined income or
loss of the Venture for the taxable year in question shall, to the extent
permitted by law, be allocated among the Members to obtain the same allocation
of Venture income or loss (after giving effect to the income allocated pursuant
to clause (i) hereof) as would have been obtained for such taxable year if
the amounts thus disallowed or no longer allowable had been proper deductions
by the Venture.


 


4.2           Tax Allocations.


 


(a)           Items of taxable income, gain, loss and
deduction shall be determined in accordance with Section 703 of the Code,
and except as otherwise provided in this Section 4.2, the Members’ distributive shares of such
items for purposes of Section 702 of the Code shall be determined
according to their respective shares of Profits or Losses (or items thereof) to
which such items relate.


 


(b)           In accordance with Section 704(c) of
the Code and the regulations thereunder, income, gain, loss, and deduction with
respect to any property contributed to the capital of the Venture shall, solely
for tax purposes, be allocated among the Members so as to take account of any
variation between the adjusted basis of such property to the Venture for
federal income tax purposes and its fair market value as of the date of
contribution. In the event the book value of any Venture property is adjusted
pursuant to the Venture’s maintenance of Capital Accounts, subsequent
allocations of income, gain, loss, and deduction with respect to such asset shall
take account of any variation between the adjusted basis of such asset for
federal


 


16

















 


income
tax purposes and its book value for Capital Account purposes in the same manner
as under Section 704(c) of the Code and the regulations thereunder.
Any elections or other decisions relating to such allocations shall be made by
the Manager in any manner that reasonably reflects the purpose and intention of
this Agreement.


 


(c)           Allocations pursuant to this Section 4.2
are solely for purposes of federal, state, and local taxes and shall not
affect, or in any way be taken into account in computing, any Member’s Capital
Account or share of Profits, Losses or distributions pursuant to any provision
of this Agreement.


 


ARTICLE 5


 


DISTRIBUTIONS AND EXPENSES


 


5.1           Distributions of Net Cash Flow. The Net Cash Flow of the Venture, as determined
by the Manager, shall be distributed no less frequently than quarterly to the
Members in accordance with their respective Percentage Interests.


 


5.2           Tax Provisions. In the event the Venture is subject to any
tax or other obligation that is attributable to the Interest of one Member, but
not all the Members, such tax or other obligation shall be specially allocated
to, and charged against the Capital Account of, such Member, and the amounts
otherwise distributable to such Member pursuant to this Agreement shall be
reduced by such amount but shall nevertheless be deemed to be a distribution of
such amount to such Member for all purposes of this Agreement.


 


5.3           Priority. Notwithstanding any other provision of this Agreement, it is
specifically acknowledged and agreed by each Member that the Venture’s failure
to pay any distribution pursuant to Section 5.1 to such Member
shall not give such Member creditor status with regard to such unpaid amount;
but rather, such Member shall be treated only as a Member of whatever class
such Person is a Member, and not as a creditor, of the Venture. This Section 5.3
is, as permitted by Section 18-606 of the Act, intended to override the
provisions of Section 18-606 of the Act relating to a member’s status and
remedies as a creditor, to the extent that such provisions would be applicable
in the absence of this Section 5.3.


 


5.4           Expenses.


 


(a)           Organizational Expenses. The Members shall bear, either directly or
indirectly through the Venture, all out-of-pocket costs (including, without
limitation, legal and accounting fees and expenses) incurred in connection with
the formation and organization of the Venture, the Subsidiary REIT and any subsidiary thereof (“Organizational
Expenses”) in accordance with their respective Percentage Interests. The
Manager may make one or more Capital Calls in accordance with Article 3
in order to enable the Venture to pay (or, if applicable, to reimburse to the
Manager or its Affiliates) any Organizational Expenses.


 


(b)           Operating Expenses. The Venture shall bear all other costs and
expenses of the Venture’s activities and operations, including without
limitation, the following: (i) Taxes of the Venture, fees and expenses of
professional advisors to the Venture, premiums for insurance (including,
without limitation, error and omissions, directors and officers and other


 


17

















 


forms
of liability insurance (other than the cost of liability insurance for the
Manager, its Affiliates and any of their respective officers, directors,
partners, members, shareholders and employees)) protecting the Venture, the
Manager and other Indemnified Persons and litigation costs of the Venture; (ii) administrative
expenses related to the Venture, including without limitation, fees and
expenses of accountants, lawyers and other professionals incurred in connection
with the Venture’s annual audit, financial reporting, legal opinions and
preparation of Tax Returns; (iii) the Venture’s proportionate share of all
fees, costs and expenses incurred in evaluating, developing, negotiating,
structuring, acquiring, holding, appraising, financing, selling or otherwise
disposing of or otherwise dealing with the Subsidiary REIT and the Project (or
the Venture’s interest therein) pursued for the Venture in accordance with the
terms of this Agreement, whether or not the Venture actually invests therein
(including, without limitation, any “dead deal” costs, travel, legal,
accounting, due diligence, projections, valuations and other fees and
out-of-pocket expenses related thereto); (iv) all fees and expenses
incurred in connection with obtaining independent, third-party valuations of
the Venture pursuant to Section 12.6; (v) indemnification expenses incurred pursuant to Section 7.2; and (vi) all other customary fees,
costs and expenses of the Venture (collectively, “Operating Expenses”). The
Manager may make one or more Capital Calls in accordance with Article 3 in order to enable the Venture to pay any
Operating Expenses.


 


ARTICLE 6


 


MANAGEMENT RIGHTS, DUTIES, AND POWERS OF THE

MANAGER; TRANSACTIONS INVOLVING

THE MANAGER OR ITS AFFILIATES;

ADDITIONAL OR SUCCESSOR MANAGER


 


6.1           Management of the Venture.


 


(a)           Right, Power and Authority of Manager.
Except as provided in this Agreement, the Manager shall have the right, power
and authority to manage and control the day-to-day affairs of the Venture.
Subject to Sections 6.2 and 6.3 and except for any other
provision of this Agreement that requires the Consent of the Members, any
action taken by the Manager on behalf of the Venture shall constitute the act
of, and serve to bind, the Venture. Without limiting the generality of the
foregoing, it is understood and agreed that the Manager may enter into letters
of intent, purchase agreements or other commitments relating to the acquisition
or development of the Project on behalf of the Venture and in anticipation of
the purchase or development of the Project by the Subsidiary REIT (or a
subsidiary thereof), it being acknowledged that any liability thereby incurred
by the Manager in connection therewith shall be subject to indemnification
under Section 7.2.
In no event shall any Person dealing with the Manager with respect to the
conduct of the affairs of the Venture be obligated to ascertain that the terms
of this Agreement have been complied with or be obligated to inquire into the
necessity or expediency of any action of the Manager. The Manager shall be
required to devote only such time to the business of the Venture as is
reasonably necessary to perform its obligations under this Agreement.


 


(b)           Reliance on Officers of the Manager.
It is understood and agreed that each officer of the Manager may act for and in
the name of the Manager under this Agreement.


 


18

















 


In
dealing with any officer of the Manager acting for or on behalf of the Venture,
no Person shall be required to inquire into, and Persons dealing with the
Venture are entitled to rely conclusively on, the right, power and authority of
any officer of the Manager to bind the Venture.


 


(c)           No Obligation Other Than As Set Forth Herein.
The Manager and its Affiliates shall not be obligated to do or perform any act
or thing in connection with the business of the Venture not expressly set forth
in this Agreement.


 


6.2           Operating Plans.


 


(a)           Initial Operating Plan.
The Manager shall prepare, or have prepared, an initial operating plan (the
“Initial Operating Plan”) for the Project and submit the Initial Operating Plan
to BH MP for its review and approval prior to the date of the Venture’s
acquisition of an ownership interest in the Project. The Initial Operating Plan
shall cover the period from the Venture’s acquisition of an ownership interest
in the Project through the end of the first full fiscal year of the Venture
following such acquisition and shall contain all material pertinent leasing,
financing, operational and disposition information together with a detailed
budget of projected operating and capital expenses and revenues and any other
information deemed appropriate by the Manager for the Project, to the extent
applicable. BH MP may make comments on and suggestions for the Initial
Operating Plan, and if accepted by the Manager in its reasonable discretion,
such comments and suggestions shall be incorporated into a revised Initial
Operating Plan. Upon approval by BH MP of the Initial Operating Plan (as
revised, if applicable), the Manager shall have the operations of the Project
conducted in all material respects in accordance with the Initial Operating
Plan (as revised, if applicable) through the end of such first full year,
except for any action or expenditure the Manager deems reasonably necessary or
appropriate in the event of any emergency situation affecting the Project, as
determined by the Manager in its reasonable discretion. After the receipt of
the Consent of BH MP for the Initial Operating Plan (as revised, if
applicable), any material deviation from or amendment to the Initial Operating
Plan shall be submitted to BH MP for its Consent, except for any action or
expenditure the Manager deems reasonably necessary or appropriate in the event
of an emergency situation affecting the Project, as determined by the Manager
in its reasonable discretion. Except as otherwise provided herein in the event
of an emergency situation affecting the Project, the Initial Operating Plan and
each amendment thereto or deviation therefrom in any material respect shall
require the approval of BH MP, and the operations of the Project after the
acquisition of the Venture’s ownership interest in the Project shall not
commence until BH MP has approved the Initial Operating Plan.


 


(b)           Subsequent Operating Plans.
Thirty days before the end of the Venture’s first full fiscal year after the
acquisition of its ownership interest in the Project and each subsequent fiscal
year of the Venture, the Manager shall prepare, or cause to be prepared, and
submit to BR MP for its review and approval an operating plan (a “Subsequent
Operating Plan”) for the Project for the next succeeding fiscal year of the
Venture. Each Subsequent Operating Plan for the Project shall contain all
material pertinent leasing, financing, operational and disposition information
together with a detailed budget of projected operating and capital expenses and
revenues and any other information deemed appropriate by the Manager for the
applicable fiscal year. BH MP may make comments on and suggestions for the
Subsequent Operating Plan, and if accepted by the Manager in its reasonable
discretion, such comments and


 


19

















 


suggestions
shall be incorporated into a revised Subsequent Operating Plan for such
Project. Upon receiving the Consent of BH MP for the Subsequent Operating Plan
(as revised, if applicable), the Manager shall cause the operations of the
Project for the applicable fiscal year to be conducted in all material respects
in accordance with such Subsequent Operating Plan. If BH MP has not granted its
Consent to a Subsequent Operating Plan for the Project prior to the beginning
of the fiscal year for which the Subsequent Operating Plan is intended to be
used, the Manager shall cause the operations of the Project to be conducted in
all material respects in accordance with the operating plan for the immediately
preceding fiscal year (the “Prior Operating Plan”); provided that, (i) the
Manager may make such adjustments to the Prior Operating Plan as the Manager reasonably
deems necessary or appropriate under the circumstances, except that, other than
as permitted by clause (iii) of this Section 6.2, the Manager
may not increase any items of operating or capital expenses in excess of the
amounts permitted by clause (ii) of this Section 6.2 without
the Consent of BH MP, (ii) the Manager may increase each item of operating
and capital expenses in the Prior Operating Plan by up to 5%, and (iii) in
the event of an emergency situation affecting the Project, as determined by the
Manager in its reasonable discretion, the Manager may take, or cause to be
taken, such action in respect of such emergency situation as the Manager deems
reasonably necessary or appropriate; provided that, the Manager promptly
advises BH MP of such emergency situation and such action taken or caused to be
taken. After its approval by BH MP, any material deviation from or amendment to
an approved Subsequent Operating Plan shall require the Consent of the Members
pursuant to Section 6.3, except for any action or expenditure the
Manager deems reasonably necessary or appropriate in the event of an emergency
situation affecting the Project, as determined by the Manager in its reasonable
discretion.


 


6.3           Major Decisions.


 


(a)           Notwithstanding anything to the contrary
contained in this Agreement (except as otherwise provided in Section 3.4(f) or
permitted in accordance with Section 6.2), the Manager shall have
no authority on behalf of the Venture to take any action, make any decision,
expend any sum or undertake or suffer any obligation if to do so would
constitute a Major Decision, unless such Major Decision is approved in advance
in writing by all of the Members (or, in the case of clause (vii) below,
by the affected Member(s)) As used herein, “Major Decision” means any decision
of the Venture to do or take any of the following actions:


 


(i)            selling or otherwise disposing of the Project
(including without limitation, the sale of the Venture’s interest therein), or
causing the Subsidiary REIT to sell or otherwise dispose of the Project, or any
other property having a value in excess of $100,000, or Transferring any
material interest therein;


 


(ii)           selling any additional interests in the
Venture or the Subsidiary REIT (other than, in the case of the Subsidiary REIT,
such number of Shares as the Manager may reasonably determine to be necessary
or appropriate to permit the Subsidiary REIT to qualify or maintain its status
as a REIT or as provided in Section 3.3(b)); provided that, the
sale of an interest in the Venture to the developer of the Project and the
admission of such developer as a member of the Venture shall not require the
Consent of the Members.


 


20

















 


(iii)          incurring, materially restructuring or
materially modifying any indebtedness of the Venture or the Subsidiary REIT in
excess of $100,000 or causing the Venture or the Subsidiary REIT to become
liable as an endorser, guarantor, surety or otherwise for any debt, obligation
or undertaking of any other Person in excess of $100,000 other than in
accordance with the Initial Operating Plan or the applicable Subsequent
Operating Plan, as the case may be, except for (A) indebtedness of the
Venture or the Subsidiary REIT arising in the ordinary course of business for
trade payables, wages, taxes or otherwise for goods or services rendered or
provided to the Venture or the Subsidiary REIT, and (B) endorsements of the Venture or the Subsidiary
REIT for deposit or collection of checks, drafts and similar instruments received
by the Venture or the Subsidiary REIT in the ordinary course of business;


 


(iv)          establishing sale objectives and parameters
in respect of the Project or the Venture’s interest therein that are contrary
to the Investment Guidelines or making any material deviation from, waiver of
or amendment to the Investment Guidelines;


 


(v)           causing or permitting the Venture or the
Subsidiary REIT to mortgage, pledge or hypothecate the Project (except pursuant
to leases entered into in the ordinary course of business) to secure any
indebtedness for borrowed money of the Venture other than in accordance with
the Initial Operating Plan or the applicable Subsequent Operating Plan, as the
case may be;


 


(vi)          calling for or requiring any Capital
Contribution from a Member such that the aggregate Capital Contributions of
such Member would be in excess of its Capital Commitment, except as otherwise
agreed by the Members or as otherwise provided in Section 3.3 hereof;


 


(vii)         making any Tax election or decision affecting
the Tax treatment of any or all of the Members in connection with its or their
participation in the Venture other than as contemplated by Section 3.8;


 


(viii)        determining that the Subsidiary REIT shall no
longer qualify and operate as a REIT;


 


(ix)           adopting and implementing a Subsequent
Operating Plan or making any material deviation from or amendment to the
Initial Operating Plan or a previously approved Subsequent Operating Plan other
than as contemplated by Section 6.2;
or


 


(x)            Transferring any interest in the Venture to
any Person or admitting any Person as a Member of the Venture except in
accordance with the proviso of Section 6.3(a)(ii) or Article 8.


 


(b)           In connection with any proposed Consent to a
Major Decision, the Manager shall provide the Members with such information as
they may reasonably request and as shall be reasonably available to the General
Partner for the Members (or, in the case of clause (vii) of  Section 6.3(a), the affected Member(s)) to make a prudent
judgment whether to approve or disapprove the proposed action. The Manager
shall give the Members not less than 10 Business Days’ advance written notice
of, and request their Consent to, each proposed Major Decision. Should a Member
fail to respond to a Consent request with respect to a Major


 


21
















 


Decision
within 10 Business Days from when such notice is given, such Member shall
conclusively be deemed to have granted its Consent to such Major Decision
(other than a Major Decision identified in Section 6.3(a)(i), (ii) or
(vii), which shall require the affirmative Consent of each Member or, in
the case of Section 6.3(a)(vii), the affected Member(s)) and shall
waive any right to withdraw such Consent or otherwise object to such Major
Decision, provided that the notice must indicate that it will become effective
at the expiration of the 10 Business Day period in order to become effective in
such manner.


 


6.4           Business with Affiliates; Other Activities.


 


(a)           The Venture, directly or through the
Subsidiary REIT, may invest in the Project, notwithstanding that Behringer, any
of its Affiliates or any BH-Sponsored Investment Program holds a material (or
lesser) interest in the Project or that the Project has been recently developed
by, or is to be developed by, Behringer, any of its Affiliates or any BH-Sponsored
Investment Program, and, subject to Sections 2.6(b) and 6.3(a)(i),
may sell, assign or otherwise Transfer interests in the Project or other assets
of the Venture or the Subsidiary REIT to, and otherwise enter into a joint
venture or other partnership or co-ownership arrangement with, Behringer, any
of its Affiliates or any BH-Sponsored Investment Program.


 


(b)           The Venture, directly or through the
Subsidiary REIT (and any other Person to which any of the foregoing are related
or in which any of the foregoing are interested), may, as necessary or
appropriate, engage in any transaction with or employ or retain Behringer or
any of its Affiliates to provide services (including, without limitation,
administration, accounting, construction management, data processing,
development, engineering, environmental, financing, insurance brokerage,
management and servicing, leasing, legal, market research, mortgage financing,
property management or other similar services) that would otherwise be
performed for the Venture or the Subsidiary REIT by third parties on terms
(including, without limitation, the consideration to be paid) that are
determined by the Manager to be fair and reasonable to the Venture or the
Subsidiary REIT, as the case may be, and such Persons may receive from the
Venture (and any such other Person) compensation (including, without
limitation, salary, salary related employment costs and expenses of the
employees who provide such services and other overhead expenses allocable
thereto, as reasonably determined by the Manager based on the time expended by
the employees who render such services or on a project-by-project basis) in
addition to that expressly provided for in this Agreement. It is expressly
acknowledged and agreed that the Manager may cause the Subsidiary REIT (or any
subsidiary thereof that owns the Project) to engage the Management Company (or
another Affiliate of Behringer), to perform property management, leasing and
related services for the Project for a fee equal to the lesser of (i) 3.75%
of the gross revenues from the Project and (ii) the amount that an
Affiliate of Behringer or BH REIT otherwise pays to the Management Company (or
such other Affiliate) for property management, leasing and related services.


 


(c)           Nothing herein contained shall prevent or
prohibit Behringer, any of its Affiliates, or any of their respective trustees,
officers, directors, members, partners, employees or shareholders from
acquiring, developing, investing in, managing, leasing or otherwise dealing in
real property of any kind or nature for its own account or that of any of its
Affiliates or third parties or from entering into, engaging in or conducting
any other activity or performing for a fee any service (including, without
limitation, engaging in any business dealing with real property of


 


22

















 


any
type or location, acting as a director, officer or employee of any corporation,
as a trustee of any trust, as a general partner of any partnership, as a member
or manager of any limited liability company or as an official of any other
Entity, or receiving compensation for services to, or participating in profits
derived from, the investments of any such corporation, trust, partnership,
limited liability company or other Entity, regardless of whether such
activities are competitive with the Venture or the Project). The fact that
Behringer or its Affiliates may encounter opportunities to purchase, otherwise
acquire, lease, sell or otherwise dispose of real or personal property and may
take advantage of such opportunities themselves or introduce such opportunities
to other Persons in which it has or has not any interest, shall not subject
Behringer or its Affiliates to liability to the Venture or any of the Members
(or any of the direct or indirect partners or members of the Members) on
account of the lost opportunity.


 


6.5           Maintenance of Domestic Status. The Manager hereby agrees that, notwithstanding anything herein to the
contrary, unless caused, consented to or induced by PGGM or any Affiliate
thereof, either directly or through BH MP, neither the Manager nor any of its
Affiliates will (a) voluntarily take any action that, to the knowledge of
the Manager, would result in a Domestic Status Loss, or (b) permit to
occur any action that is within its reasonable control to prevent and that, to
the knowledge of the Manager, would result in a Domestic Status Loss. The
provisions of this Section 6.5 shall not apply if there is not at least one
REIT Member.


 


6.6           Tax Status. Each Member agrees to
take commercially reasonable actions to assist the other Member in achieving
the most favorable tax treatment for such other Member (and the owners of such
Member); provided that, no Member shall be required to take or permit any
action which (a) creates any risk of material adverse economic or tax
consequences for such Member (or the owners of such Member), unless the
requesting Member agrees to reimburse each such Person that may be subject to
such consequences for all adverse economic and tax consequences, or (b) is
contrary to law.


 


6.7           Liability for Venture’s Obligations.
The debts, obligations and liabilities of the Venture, whether arising in
contract, tort or otherwise, shall be solely the debts, obligations and
liabilities of the Venture, and neither the Members nor the Manager shall be
obligated personally for any such debt, obligation or liability of the Venture
by reason of being the Members or the Manager of the Venture.


 


6.8           Additional or Successor Manager.
The Manager may delegate its rights and powers as a manager under this
Agreement and the Act, and may admit to the Venture as an additional or
successor Manager, any of its Affiliates, Behringer or any of its Affiliates
without the Consent of any Member, provided that, the Manager arranges for such
Person(s) to be bound by the provisions of this Agreement by having such
Person(s) execute such documents as may be reasonably required to make
such Person(s) party to this Agreement as an additional or successor
Manager(s). In the event that any such Person is admitted as an additional
Manager, the Manager and such additional Manager shall share in the rights and
powers, as well as any duties and obligations, under this Agreement and the Act
in such manner and to such extent as the Manager and such additional Manager
may agree. In the event that any such Person is admitted as a successor
Manager, the Manager shall thereupon cease to have any rights, powers, duties
or obligations under this Agreement and the Act, and such Person, as the
successor Manager, shall assume all such rights, powers, duties and obligations
previously held by the Manager. Except


 


23

















 


as
provided in this Section 6.8, the Manager may not admit any Person as an
additional or successor Manager without the Consent of the Members.


 


6.9           Removal of Manager for Cause.
Notwithstanding anything herein to the contrary, BH MP shall have the sole
right to elect to remove the Manager for Cause. Upon the occurrence of any
event constituting Cause for its removal, the Manager shall deliver written
notice of such event to BH MP within five (5) Business Days of the
occurrence of such event. BH MP shall exercise its right to remove the Manager,
if at all, by delivering to the Manager written notice of such election within
twenty (20) Business Days of the delivery of the notice of Cause from the
Manager. In the event BH MP shall exercise the right to remove the Manager, BH
MP shall promptly (but in no event later than ten (10) Business Days after
its exercise of the right of removal) appoint a successor Manager of the
Venture. Upon the removal of the Manager the Venture shall file an amendment to
its Certificate evidencing the removal of the Manager as manager of the
Venture.


 


ARTICLE 7


 


LIMITATIONS ON LIABILITY AND
INDEMNIFICATION


 


7.1           Limitation of Liability.
To the maximum extent permitted under the Act in effect from time to time,
neither the Manager nor any other Indemnified Person shall be liable to the
Venture or to any Member for (a) any act or omission performed or failed
to be performed by it, or for any losses, claims, costs, damages or liabilities
arising from any such act or omission, except to the extent such loss, claim,
cost, damage or liability results from such Indemnified Person’s gross
negligence, willful misconduct, fraud or a material breach of this Agreement, (b) any
tax liability imposed on the Venture or (c) any losses due to the
negligence (gross or ordinary), dishonesty or bad faith of any agents of the
Venture, as long as such persons are selected with reasonable care. Without
limiting the generality of the foregoing, each Indemnified Person shall, in the
performance of his, her or its duties, be fully protected in relying in good
faith upon the records of the Venture and upon information, opinions, reports
or statements presented to such Indemnified Person by the Manager or by any
other Person as to matters such Indemnified Person reasonably believes are
within such other Person’s professional or expert competence and who has been
selected with reasonable care by or on behalf of the Venture. Any repeal or
modification of this Section 7.1 shall not adversely affect any right or
protection of a Person existing at the time of such repeal or modification.


 


7.2           Indemnification.  


 


(a)           Advancement of Expenses.
In the event that the Manager, any of its Affiliates or any directors,
officers, shareholders, partners, members, employees, trustees, representatives
or agents of any of them (each, an “Indemnified Person” and collectively, the
“Indemnified Persons”) becomes involved in any capacity in any threatened,
pending or completed action, proceeding or suit, whether civil, criminal,
administrative or investigative, by reason of the fact that it, he or she was a
manager, officer, employee, representative or agent of the Venture, the Manager
or otherwise authorized to act hereunder or in connection herewith or otherwise
failed to act in connection with the business or affairs of the Venture or one
of its direct or indirect subsidiaries or otherwise is or was serving at the
Venture’s or one of the


 


24

















 


Venture’s direct or indirect subsidiary’s request as a director,
trustee, officer, partner, employee or agent of another Entity, the Venture
will periodically reimburse such Indemnified Person for its reasonable legal
and other expenses (including, without limitation, the costs of any
investigation and preparation) incurred in connection with such involvement,
provided that such Indemnified Person shall promptly repay to the Venture the
amount of any such reimbursed expenses paid to it if it is ultimately
determined by a court having appropriate jurisdiction in a decision that is not
subject to appeal, that such Indemnified Person is not entitled to be
indemnified by the Venture under this Section 7.2.


 


(b)           Indemnification.
To the maximum extent permitted under the Act in effect from time to time, the
Venture shall indemnify, defend and hold harmless any Indemnified Person
against any losses, claims, costs, damages or liabilities to which such
Indemnified Person may become subject in connection with the business or
affairs of the Venture or one of its direct or indirect subsidiaries or serving
at the Venture’s or one of the Venture’s direct or indirect subsidiary’s
request as a director, trustee, officer, partner, employee or agent of another
Entity, except to the extent that any such loss, claim, cost, damage or
liability results from the gross negligence, willful misconduct, fraud or a material
breach of this Agreement of such Indemnified Person. If for any reason (other
than the gross negligence, willful misconduct, fraud or material breach of this
Agreement of such Indemnified Person) the foregoing indemnification is
unavailable to such Indemnified Person, or is insufficient to hold it harmless,
then the Venture shall contribute to the amount paid or payable to the
Indemnified Person as a result of such loss, claim, cost, damage or liability
in such proportion as is appropriate to reflect not only the relative benefits
received by the Venture on the one hand and such Indemnified Person on the
other hand but also the relative fault of the Venture and such Indemnified
Person, as well as any relevant equitable considerations.


 


(c)           Successors. The reimbursement,
indemnity and contribution obligations of the Venture under this Section 7.2 shall be in addition to any liability which
the Venture may otherwise have and shall be binding upon and inure to the
benefit of any successors, assigns, heirs and personal representatives of the
Venture, the Manager and any other Indemnified Person. The foregoing provisions
shall survive any termination of this Agreement and any amendment to such
provisions shall not reduce the Venture’s indemnity obligation with respect to
any act or omission occurring prior to the date of such amendment.


 


(d)           Exclusivity. The indemnification
provided by this Section 7.2 shall not be deemed to be exclusive of any
other rights to which the Indemnified Person may be entitled under any
agreement or as a matter of law, or otherwise, both as to action in an
Indemnified Person’s official capacity and to action in another capacity, and
shall continue as to an Indemnified Person who has ceased to have an official
capacity for acts or omissions during such official capacity or otherwise when
acting at the request of the Manager and shall inure to the benefit of the
heirs, successors and administrators of such Indemnified Person.


 


(e)           Limitation. Notwithstanding any of
the foregoing to the contrary, the provisions of this Section 7.2 shall not be construed as to provide for the
indemnification of any Indemnified Person for any liability (including, without
limitation, liability under U.S. federal securities laws which, under certain
circumstances, impose liability on Persons that act in good faith), to the
extent (but only to the extent) that such indemnification would be in violation
of


 


25

















 


applicable
law, but shall be construed so as to effectuate the provisions of this Section 7.2 to the fullest extent permitted by law.


 


(f)            Reliance. An Indemnified Person
may rely upon and shall be protected in acting or refraining from action upon
any resolution, certificate, statement, instrument, opinion, report, notice,
request, consent, order or other document believed by it to be genuine and to
have been signed or presented by the proper party or parties.


 


(g)           Consultation.
An Indemnified Person may consult with counsel, accountants and other experts
reasonably selected by it, and any opinion of an independent counsel,
accountant or expert retained with reasonable care shall be full and complete
protection in respect of any action taken or suffered or omitted by the
Indemnified Person hereunder in good faith and in accordance with such opinion.


 


ARTICLE 8


 


TRANSFER OF MEMBERS’ INTERESTS IN THE VENTURE;


BUY/SELL


 


8.1           Transfers of a Member’s Interest.


 


(a)           No Member may Transfer all or any portion of
its Interest or have any transferee admitted as a substituted Member in respect
of such Interest or any portion thereof without the prior written Consent of
the Manager, which Consent may be withheld in the sole discretion of the
Manager. In the event a Member desires to secure permission to Transfer its
Interest or any portion thereof, it shall notify the Manager in the manner
described in Section 13.1
hereof and shall deliver such information to the Manager as it may request,
including, if requested, evidence reasonably satisfactory to the Manager with
respect to (i) compliance with applicable federal and state securities
laws and (ii) any other appropriate laws or regulations. No Transfer may
be made if it would violate applicable federal or state securities laws or
other laws or regulations.


 


(b)           In the event any Member desires to Transfer
all or any portion of its Interest in the Venture (and the Manager Consents
thereto) the Transferring Member shall arrange for its transferee to be bound
by the provisions of this Agreement by having such transferee execute such
documents as shall be reasonably required by the Manager to make the transferee
a party to this Agreement and by delivering the same to the Manager together
with such other information that may be reasonably requested by counsel to the
Manager. The transferee of all or any portion of the Interest of a Member shall
become a substituted Member as to the Interest (or portion thereof) thus
Transferred upon the written Consent of the Manager, which Consent may be
granted or withheld in the sole discretion of the Manager. Any such substituted
Member shall succeed to all of the rights and assume all of the obligations of
the Member to the extent of the portion of the Interest in the Venture which
has been Transferred to such substituted Member. A transferee of all of any
portion of the Interest of a Member who is not a substituted Member shall have
the right to receive allocations of income, gain, loss and deduction and
distributions of Net Cash Flow and other distributions pursuant to this
Agreement, but shall have no other rights hereunder, and neither the transferor
nor the transferee shall have


 


26

















 


the
right to vote with respect to any Interest so Transferred. The effective date
of any Transfer under Section 8.1 (a) or (b)
shall be the date on which the transferee executes and delivers to the Manager
the documents required by the Manager, and the Manager grants its Consent in
accordance with Section 8.1(a) or (b),
as the case may be.


 


(c)           Anything contained in Sections 8.1(a) or (b) to the contrary notwithstanding, no Transfer of an
Interest or any portion shall be effective if it would result in the Venture
being classified as an association (or publicly traded partnership) taxable as
a corporation for federal or state income tax purposes, and any such Transfer
shall be effected in such manner as may be necessary to maintain the
classification of the Venture as a partnership for federal and state income tax
purposes.


 


(d)           Notwithstanding anything to the contrary in
this Agreement, no Interest in the Venture, or any portion thereof, shall be
issued in a transaction that is (or transactions that are) registered or
required to be registered under the Securities Act of 1933, as amended, and any
Transfer of an Interest or any portion thereof must be made in a transaction
that is exempt from registration or qualification under the Securities Act of
1933, as amended, and applicable state securities law.


 


(e)           No admission (or purported admission) of a
Member and no Transfer (or purported Transfer) of all or part of a Member’s
Interest (or any interest or right or attribute therein) in the Venture shall
be effective, and no Person shall otherwise become a Member, if the Venture
would or may have more than 100 members, treating as a member for this purpose
each Person indirectly owning an Interest (or any interest therein) in the
Venture through a partnership, a grantor trust or an S corporation.


 


8.2           Buy/Sell Arrangement.
Any time after the occurrence and during the continuation of (i) a Major
Dispute for a period of not less than fifteen (15) days (such 15-day period to
commence upon written notice by a Member to the other Member), or (ii) an
event triggering the Subsidiary REIT’s “Excess Share” provisions pursuant to
its limited liability company agreement (or other governing instrument), then
either Member shall be entitled to initiate the buy/sell rights set forth in
this Section 8.2.


 


(a)           Either Member (an “Offeror”) may serve upon
the other Member (an “Offeree”) a notice (an “Offering Notice”) which shall
contain the following:


 


(i)            statement of intent to rely on this Section 8.2;
and


 


(ii)           a statement of the aggregate dollar amount
that the Offeror would be willing to pay in cash (the “Offer Price”) for all of
the Offeree’s interest (the “Buy/Sell Interest”) in the Shares (assuming that
the Venture were liquidated and the Shares owned by the Venture were
distributed in-kind to the Members), as specified in the Offering Notice.


 


(b)           Within thirty (30) days after receipt of the
Offering Notice by the Offeree (the “Option Period”), the Offeree shall notify
the Offeror whether the Offeree elects:


 


(i)            to sell its Buy/Sell Interest to the Offeror
for a price equal to the Offer Price; or


 


27

















 


(ii)           to purchase the Buy/Sell Interest of the
Offeror for a price (the “Alternative Offer Price”) that is in proportion to
the Offer Price (based upon the relative Percentage Interests of the Members),
together with a statement of whether the Offeree elects to purchase the
Offeror’s Buy/Sell Interest in respect of the Venture or the Shares.


 


(c)           If the Offeree does not notify the Offeror of
its election prior to expiration of the Option Period, the Offeree shall for
all purposes be conclusively deemed to have elected to sell its Buy/Sell
Interest to the Offeror for the Offer Price indicated in Section 8.2 (a)(ii).


 


(d)           (i) If BH REIT is the Member obligated
to purchase the Buy/Sell Interest under Section 8.2(b) or (c) (the “Purchaser”), then within five (5) Business
Days after the date of the exercise of the election by the Offeree or five (5) Business
Days after the expiration of the Option Period, whichever is earlier, the
Purchaser shall deposit in cash an amount in escrow, which amount while in escrow
shall be invested in Permitted Temporary Investments as directed by the
Purchaser (such amount, together with any interest earned thereon being the
“Earnest Money”), equal to 10% of the Offer Price or Alternative Offer Price,
as the case may be (such Offer Price or Alternative Offer Price, as applicable,
being the “Purchase Price”), with an independent third party (the “Escrow
Agent”) reasonably satisfactory to BH MP as the Member obligated to sell its
Interest under this Section 8.2(d) (the “Seller”). The Earnest Money shall be applied against the Purchase
Price at the closing referenced below, or shall be paid to the Seller as
liquidated damages in the event of a default by the Purchaser in accordance
with this Section 8.2(d)(i).
In the event the Purchaser fails to deposit timely such Earnest Money as
provided above or fails or refuses to close on the purchase and sale of its
Buy/Sell Interest on the Closing Date (such Purchaser being then referred to as
the “Defaulting Purchaser”), then within fifteen (15) days thereafter, unless
the Defaulting Purchaser has earlier cured such default by depositing the
required Earnest Money as provided above or has proven to the reasonable
satisfaction of the Seller that the Defaulting Purchaser is ready, willing and
able to close such purchase and sale, the Seller shall have the option of
substituting itself as Purchaser of the Buy/Sell Interest of the Defaulting
Purchaser (such Seller being then referred to as the “Substituted Purchaser”)
under this Section 8.2(d) at a purchase price (the “Substituted Purchase Price”) equal to 90% of
the Purchase Price multiplied by the ratio of BH REIT’s Percentage Interest to
BH MP’s Percentage Interest if the Defaulting Purchaser is BH REIT (or if,
after becoming the Purchaser in accordance with Section 8.2(e),
BH MP or the BH MP Venture is the Defaulting Purchaser, 90% of the Purchase
Price multiplied by the ratio of BH MP’s Percentage Interest to BH REIT’s
Percentage Interest). In the event that the Seller elects to become the Substituted
Purchaser in accordance with the preceding sentence, the Seller shall, within
10 Business Days after the Seller obtains the right to become the Substituted
Purchaser, give written notice to the Defaulting Purchaser of its intention to
do so, which notice shall specify the Substituted Purchase Price. Within five (5) Business
Days after such notice the Substituted Purchaser shall deposit Earnest Money
equal to 10% of the Substituted Purchase Price in escrow with an Escrow Agent
selected by the Substituted Purchaser, whereupon, for purposes of Sections 8.2(d)(ii) and (iii) below, the Substituted Purchaser shall become the Purchaser, the
Defaulting Purchaser shall become the Seller and the Substituted Purchase Price
shall become the Purchase Price. Alternatively, after the default by the
Defaulting Purchaser and its failure to cure such default prior to the earlier
of (A) fifteen (15) days after such default and (B) the Seller’s
election to become the Substituted Purchaser, the Seller may elect to obtain,
and retain as liquidated damages for the Defaulting Purchaser’s default under
this Section 8.2(d),
the amount of Earnest Money deposited by the


 


28

















 


Defaulting
Purchaser (or the amount that should have been deposited by the Defaulting
Purchaser as Earnest Money but was not).


 


(ii)           On or before the date on which the Purchaser
is required to make the Earnest Money deposit referenced in Section 8.2(d)(i) (or, if the Substituted Purchaser has become the Purchaser, within five
(5) Business Days after such Purchaser has made its Earnest Money
deposit), the Purchaser shall fix a closing date (the “Closing Date”) not later
than 30 days (or as soon thereafter as practicable) following (i) the date
of the election by the Offeree, or (ii) if no election was made, the date
of the expiration of the Option Period, provided that such Option Period shall
be subject to extension by up to 150 days if BH MP has become the Substituted
Purchaser. If the Purchaser’s election has been to purchase the Seller’s
interest in the Shares, immediately prior to the Closing Date, the Venture
shall make a distribution in-kind of the Shares owned by the Venture to the
Members in accordance with their respective Percentage Interests. For purposes
of the distribution in-kind, the distributed Shares shall have a value per
Share equal to the Purchase Price divided by the number of Shares to be
distributed to the Seller. The closing shall take place on the Closing Date at
a location reasonably designated by the Purchaser. The Purchaser may assign its
rights to purchase the Seller’s Buy/Sell Interest hereunder to any third party,
including one or more of its Affiliates; provided that, the Purchaser shall
remain liable for any such obligation to purchase.


 


(iii)          At the closing on the Closing Date, the
Purchaser shall pay the Seller, in cash, the amount determined under Section 8.2(d)(i),
as the Purchase Price (with the Purchaser’s Earnest Money being credited
against such amount at the closing) and the Seller shall execute and deliver to
the Purchaser or its designee stock powers, bills of sale, instruments of
assignment, and other instruments as the Purchaser may reasonably require, to
give it or its designee good and indefeasible title to all of the Seller’s
right, title and interest in and to all of its Buy/Sell Interest. The Venture
shall pay all closing costs; provided, however, that the Purchaser and the
Seller shall pay their own respective legal costs and expenses in connection
with the preparation of the closing documentation. In addition, on the Closing
Date, the Purchaser shall cause the Seller to be released from any liability
accruing from and after the Closing Date in respect of the Venture (including
any financing arrangements entered into by the Venture or with respect to the
Project) or shall indemnify the Seller with respect to such liability.


 


(iv)          The Purchase Price to be paid pursuant to
this Section 8.2(d) in respect of the applicable Buy/Sell Interest being sold shall be
reduced proportionately on a per Share basis for any distributions made by the
Venture after the determination of the Offer Price and prior to the Transfer of
the applicable Buy/Sell Interest.


 


(v)           A sale of its Buy/Sell Interest shall not
relieve the Seller from any obligations or liabilities arising under or in
connection with this Agreement prior to the closing of the sale of the Buy/Sell
Interest, including, without limitation, any obligation to repay a Default Loan
in accordance with Section 3.4, and the Purchaser shall be entitled to
withhold from the Purchase Price an amount equal to the then outstanding
principal and accrued and unpaid interest of any such Default Loan in payment
thereof. Similarly, after the closing of the sale of a Buy/Sell Interest the
Purchaser shall remain liable to the Seller for the amount of any Default Loan
incurred by the Purchaser and outstanding on and after the closing of such sale


 


29

















 


until
the outstanding principal and any accrued and unpaid interest of such Default
Loan has been paid in full.


 


(e)           (i)            If
BH MP is the Offeree pursuant to Section 8.2(a) and elects to purchase BH REIT’s Buy/Sell
Interest, or has become the Substituted Purchaser, then BH MP shall have 150
days after the earlier of the election by BH MP to purchase BH REIT’s Buy/Sell
Interest under this Section 8.2 and the expiration of the Option Period
either to purchase BH REIT’s Buy/Sell Interest or to find a third party to form
a joint venture or other joint ownership arrangement (the “BH MP Venture”) with
BH MP for the acquisition and ownership of BH REIT’s Buy/Sell Interest. In the
event that BH MP either decides to purchase BH REIT’s Buy/Sell Interest or
finds a third party for such joint venture or other joint ownership arrangement
for the purchase of BH REIT’S Buy/Sell Interest, BH MP shall so notify BH REIT
in writing within such 150-day period. In such event, BH MP or the BH MP
Venture, as the case may be, shall become the “Purchaser,” BH REIT shall become
the “Seller” and the provisions in Section 8.2(d),
to the extent not inconsistent with this Section 8.2(e)(i),
shall apply; provided that, BH MP or BH MP Venture, as the case may be, shall
have five (5) Business Days after its election to proceed with the purchase
to deposit its Earnest Money in escrow. If BH MP is the Offeror pursuant to Section 8.2(a) and BH REIT, as the Offeree, elects to sell its Buy/Sell Interest to BH
MP, then the provisions of this Section 8.2(e)(i) shall apply and, if BH MP does not find a third party with whom to form
a joint venture or other joint ownership arrangement and otherwise elects not
to proceed with the purchase of BH REIT’s Buy/Sell Interest, the provisions of Section 8.2(e)(ii) shall apply.


 


(ii)           If BH MP does not find a third party with
whom to form a joint venture or other joint arrangement and otherwise elects
not to proceed with the purchase, or if BH MP does not notify BH REIT in
writing within the applicable 150-day period that BH MP or the BH MP Venture
will proceed with the purchase, then, subject to Section 2.6(b),
BH REIT shall have the opportunity to elect to purchase, or to have Behringer,
its Affiliate or another designee (collectively, the “Behringer Party”)
purchase, or to seek to cause the sale of, the Project in accordance with the
following procedures.


 


(A)        The Behringer Party and BH MP shall attempt to mutually agree on a fair
market value of the Project through negotiation for a period of ten (10) days
(the “Negotiation Deadline”) commencing upon BH MP’s election not to proceed
with the purchase or the expiration of the 150-day period, whichever is
earlier. If the Behringer Party and BH MP do not agree upon the fair market
value of the Project prior to the expiration of the Negotiation Deadline, then
either the Behringer Party or BH MP may deliver to the other a written notice
of arbitration (the “Arbitration Notice”), pursuant to which the fair market
value (the “Mark to Market Price”) of the Project shall be determined by
“baseball style” arbitration in accordance with the provisions in paragraphs (B) through
(H) of this Section 8.2(e)(ii).


 


(B)         The Behringer Party and BH MP shall each use reasonable efforts to
agree, within ten (10) days after the delivery of an Arbitration Notice,
upon the appointment of one arbitrator to agree on a Mark to


 


30

















 


Market
Price of the Project. If an agreement on a single arbitrator is not reached
within such 10-day period, then the Behringer Party and BH MP shall each
appoint one arbitrator within ten (10) days after the expiration of such
previous 10-day period and shall specify the name and address of their
respective arbitrators to the other party prior to the expiration of such
10-day period; provided that, if one party fails to specify the name and
address of its selected arbitrator within such 10-day period, then the other
party shall give such failing party written notice, and if within three (3) days
after such written notice the failing party still has not specified an arbitrator,
then the arbitrator selected by the other party shall act as the sole
arbitrator as if both parties had agreed to the appointment of such arbitrator
as provided above.


 


(C)         If two arbitrators have been selected, then such arbitrators shall then
appoint a third arbitrator within ten (10) days after their appointment.
If the first two arbitrators are unable to agree upon a third arbitrator within
such 10-day period, then the third arbitrator shall be appointed as soon as
reasonably practicable thereafter by a court of competent jurisdiction residing
in the county in which the Project is situated, subject to the qualification
requirements set forth in paragraph (G) of this Section 8.2(e)(ii).
In the event of the failure, refusal or inability of any arbitrator to act, a
new arbitrator shall be appointed as a replacement, which appointment shall be
made in the same manner as set forth above for the appointment of such
resigning arbitrator. Immediately after the selection of the final arbitrator,
the three arbitrators shall meet and, within fifteen (15) days after the
completion of the selection of the arbitrators shall, or, if there is only one
arbitrator, within fifteen (15) days after his selection, such arbitrator
shall, endeavor to determine the Mark to Market Price.


 


(D)         Within ten (10) days after the selection of the sole arbitrator or
all arbitrators, as the case may be, the Behringer Party and BH MP shall submit
to the arbitrator(s) such party’s proposed Mark to Market Price as well as
all other economic terms relevant to the determination of the Mark to Market
Price, together with reasonable evidence supporting such proposed Mark to
Market Price. The arbitrator(s) shall select either the proposed Mark to
Market Price submitted by the Behringer Party or the proposed Mark to Market
Price submitted by BH MP, whichever proposal the arbitrator(s) deem to be
the most nearly correct according to the definitions, terms and requirements
set forth in this Agreement and the information submitted to the arbitrator(s) by
the parties, with no compromise. The power of the arbitrator(s) shall be
exercised by the concurrence of at least two arbitrators, except that if only
one arbitrator is selected, the decision of such arbitrator shall govern. The
proposed Mark to Market Price selected by the arbitrator(s) shall be the
“Mark to Market Price.” The determination of the arbitrator(s) shall be
final and non-


 


31
















 


appealable,
shall be binding on both BH MP and the Behringer Party, and may be enforced in
any court of competent jurisdiction.


 


(E)         The price (the “Buy/Sell Market Price”) to be paid for BH MP’s
Buy/Sell Interest shall be equal to the amount that BH MP would receive
assuming that the Project were sold at its Mark to Market Price, the Subsidiary
REIT and, if applicable, any subsidiary thereof owning an interest in the
Project were liquidated, all of their other assets sold, their debts and other
liabilities discharged, and any net proceeds remaining were distributed to the
Members in proportion to their respective interests in the Venture. Within ten (10) days
after the decision of the arbitrator(s) determining the Mark to Market
Price, the Behringer Party shall deliver written notice to BH MP stating
whether the Behringer Party elects (x) to purchase BH MP’s Buy/Sell
Interest at the Buy/Sell Market Price or (y) seek to obtain a third-party
purchaser for the Project. In the event that the Behringer Party elects to
purchase BH MP’s Buy/Sell Interest, the Behringer Party and BH MP shall close
on such purchase at the Buy/Sell Market Price payable in cash within thirty
(30) days of such election by the Behringer Party. The provisions of Section 8.2(d) shall, to the extent not inconsistent with Section 8.2(e)(ii), shall apply to such purchase. In the event
that the Behringer Party elects to seek to obtain a third-party purchaser, the
Behringer Party shall have 150 days from such election to obtain such
third-party purchaser either to purchase (1) the Members’ entire Interests
in the Venture, or (2) all of the Venture’s Shares in the Subsidiary REIT,
in either case for a price equal to what Members would have received assuming
the Project were sold at the Mark to Market Price, the Subsidiary REIT and, if
applicable, any subsidiary thereof owning an interest in the Project were
liquidated, all of their other assets sold, their debts and liabilities
discharged, and any net proceeds remaining were distributed to the Members in
proportion to their respective interests in the Venture. The Behringer Party
shall provide prompt written notice advising BH MP of the identity of such
third-party purchaser, if any. In the event that a third party is to purchase
either the Interests of the Members or the Shares owned by the Venture, the
third-party purchaser shall purchase such Interests or Shares for cash at the
closing of such purchase, which shall occur within thirty (30) days of the
Behringer Party’s written notification of the third-party purchaser’s identity.
In such event, the Mark to Market Price shall be reduced for any distributions
made by the Venture to its Members after the determination of the Mark to
Market Price and the closing of such sale. Such sale shall not relieve either
Member from any obligations or liabilities arising under or in connection with
this Agreement prior to such sale including, without limitation any obligation
to repay a Default Loan in accordance with Section 3.4.
If, at the end of such 150-day period, the Behringer Party has not
obtained a third-party purchaser, the Behringer Party shall advise BM MP of
such fact, and the Behringer Party may, within such 150-day period, elect to
purchase BM MP’s Buy/Sale Interest at the Buy/Sell


 


32

















 


Market
Price, in which event such purchase price shall be payable in cash at a closing
to be held thirty (30) days after the end of such 150-day period, and the
provisions of Section 8.2(d) shall, to the extent not inconsistent with Section 8.2(e)(ii),
apply to the purchase of BH MP’s Buy/Sell Interest under this Section 8.2(e).
In the event that the Behringer Party does not elect to purchase BH MP’s
Buy/Sell Interest and does not find a third-party purchaser for the Project,
either BH REIT or BH MP may, at its election, re-initiate the Buy/Sell
procedure in accordance with this Section 8.2 but
otherwise shall not be obligated to purchase the other party’s Buy/Sell
Interest.


 


(F)         The arbitrator(s) shall have the authority to request
additional facts or evidence from each of the parties and, if such arbitrator(s) so
require, a hearing to present the same. In the event of such a hearing, rules of
evidence applicable to state court judicial proceedings in civil district courts
in Dallas, Texas shall govern; provided that, evidence will be admitted or
excluded in the sole discretion of the arbitrator(s). The arbitrator(s) shall
resolve the controversy and shall execute and acknowledge his or their
decision, together with a brief statement describing the rationale for such
decision, in writing and simultaneously deliver a copy thereof to each of the
parties personally or by registered or certified mail, return receipt
requested. If the arbitrators fail to reach an agreement during such 15-day
period (as may be extended in accordance with the next sentence), then they
shall be discharged, and new arbitration proceedings shall commence, with new
arbitrators being appointed in the same manner as set forth above. By agreement
in writing, the Behringer Party and BH MP may extend the time to reach
agreement either before or after the expiration thereof up to a maximum of
thirty (30) additional days. The period within which the arbitrator(s) must
act are not jurisdictional.


 


(G)         Each arbitrator shall (x) be an independent appraiser
licensed under the laws of the state in which the Project is situated, and (y) have
been actively and continuously engaged in appraising multifamily rental
communities as Member of the Appraisal Institute in the county in which the
Project is situated, for not less than the previous five years. The arbitrator(s) selected
by the Behringer Party and BH MP shall be instructed that they are neutral
arbitrators and shall not have any ex parte communication with the appointing party and
may not be appraisers that consulted with the Behringer Party or BH MP in
negotiations regarding the Mark to Market Price prior to the submission of the
Mark to Market Price proposals to arbitration. In addition, the sole arbitrator
or third arbitrator, as the case may be, shall be an independent appraiser
having no relationship representing the Behringer Party, BH MP, PGGM or their
respective Affiliates during the immediately preceding 365-day period prior to
selection.


 


33

















 


(H)         Each party to the arbitration proceeding shall bear its own costs
and the costs of the arbitrator it appoints. The cost of the third arbitrator
(or the single arbitrator if only one arbitrator is required) shall be split
equally between the Behringer Party and BH MP.


 


8.3           Basis Election.
In the event that a distribution of any of the Venture’s property is made in
the manner provided in Section 734 of the Code, or where a Transfer of an
Interest in the Venture permitted by this Agreement is made in the manner
provided in Section 743 of the Code, then, upon the request of any Member,
the Venture shall file an election under Section 754 of the Code, in
accordance with procedures set forth in the applicable Treasury regulations.
Each Member shall provide the Venture with all information necessary to give
effect to any election under Section 754 of the Code.


 


8.4           Void Transfer.
In no event shall any Interest, or any portion, thereof, be Transferred to a
minor or an incompetent or in violation of any state or Federal law or in
violation of this Article 8.
Any such attempted Transfer shall be void and ineffectual and shall not bind
the Venture or any Member.


 


ARTICLE 9


 


EXCESS INTEREST PROVISIONS


 


9.1           Definitions. For purposes of this Article 9,
the following terms shall have the following meanings:


 


“Beneficial
Ownership” shall mean
ownership of Interests by a Person who would be treated as an owner of such
Interests either directly or constructively through the application of Section 544
of the Code, as modified by Section 856(h)(1)(B) of the Code. The
terms “Beneficial Owner,” “Beneficially Owns,” “Beneficially Own” and
“Beneficially Owned” shall have correlative meanings.


 


“Charitable
Beneficiary” shall
mean an organization or organizations described in Sections 170(b)(1)(A) and
170(c) of the Code and identified by the Venture as the beneficiary or
beneficiaries of the Excess Interest Trust.


 


“Excess
Interest Trust” shall
mean the trust created pursuant to Section 9.14.


 


“Excess
Interest Trustee”
shall mean a Person, who shall be unaffiliated with the Venture, any Purported
Beneficial Transferee and any Purported Record Transferee, identified by the
Venture as the trustee of the Excess Interest Trust.


 


“Excess
Interests” shall have
the meaning given to it in Section 9.3(a).


 


“Existing
Holder” shall mean (a) each
of BH MP and BH REIT and (b) any Person to whom an Existing Holder
Transfers, subject to the limitations provided in this Agreement, Beneficial
Ownership of Interests causing such transferee to Beneficially Own Interests in
excess of the Ownership Limit.


 


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“Existing
Holder Limit” (a) for
the Members shall mean, initially, 45% in the case of BH MP and 55% in the case
of BH REIT of the Interests, and, after any adjustment pursuant to Section 9.9,
shall mean such percentage of the outstanding Interests, as the case may be, as
so adjusted, and (b) for any Existing Holder who becomes an Existing
Holder by virtue of clause (b) of the definition thereof, shall mean,
initially, the percentage of the outstanding Interests Beneficially Owned by
such Existing Holder at the time that such Existing Holder becomes an Existing
Holder, but in no event shall such percentage be greater than the Existing
Holder Limit for the Existing Holder who Transferred Beneficial Ownership of
such Interests or, in the case of more than one transferor, in no event shall
such percentage be greater than the smallest Existing Holder Limit of any
transferring Existing Holder, and, after any adjustment pursuant to Section 9.9, shall mean such percentage of the outstanding Interests as so
adjusted.


 


“Market
Price” shall mean the
market price of such class of Interests on the relevant date as determined in
good faith by the Manager.


 


“Ownership
Limit” shall
initially mean 9.8% in number of the Interests or value of the outstanding
Interests, and after any adjustment as set forth in Section 9.10,
shall mean such greater percentage of the outstanding Interests as so adjusted.
The number and value of the outstanding Interests of the Venture shall be
determined by the Manager in good faith, which determination shall be
conclusive for all purposes hereof.


 


“Person” shall mean an individual, corporation,
partnership, estate, trust (including, without limitation, a trust qualified
under Section 401(a) or 501(c)(17) of the Code), portion of a trust
permanently set aside for or to be used exclusively for the purposes described
in Section 642(c) of the Code, association, private foundation within
the meaning of Section 509(a) of the Code, joint stock company or
other Entity.


 


“Prohibited
Owner Event” has the
meaning provided in Section 9.3(c).


 


“Purported
Beneficial Transferee”
shall mean, with respect to any purported Transfer which results in Excess
Interests, the beneficial holder of the Interests, if such Transfer had been
valid under Section 9.2.


 


“Purported
Record Transferee”
shall mean, with respect to any purported Transfer which results in Excess
Interests, the record holder of the Interests, if such Transfer had been valid
under Section 9.2.


 


“Redemption
Price” has the
meaning provided in Section 9.18.


 


“Restriction
Termination Date”
shall mean the first day on which the Venture determines that it is no longer
in the best interests of the Subsidiary REIT to attempt to, or continue to,
qualify as a REIT.


 


9.2           Ownership Limitation.


 


(a)           Except as provided
in Section 9.12,
until the Restriction Termination Date, no Person (other than an Existing
Holder) shall Beneficially Own Interests in excess of the


 


35

















 


Ownership
Limit and no Existing Holder shall Beneficially Own Interests in excess of the
Existing Holder Limit for such Existing Holder.


 


(b)           Except as provided in Section 9.12, until the Restriction Termination Date, any
Transfer that, if effective, would result in any Person (other than an Existing
Holder) Beneficially Owning Interests in excess of the Ownership Limit shall be
void ab
initio as to the Transfer of
the Interests which would otherwise be Beneficially Owned by such Person in
excess of the Ownership Limit; and the intended transferee shall acquire no
rights in such Interests.


 


(c)           Except as provided in Sections 9.9 and 9.12, until the Restriction
Termination Date, any Transfer that, if effective, would result in any Existing
Holder Beneficially Owning Interests in excess of the applicable Existing
Holder Limit shall be void ab initio as
to the Transfer of the Interests which would be otherwise Beneficially Owned by
such Existing Holder in excess of the applicable Existing Holder Limit; and
such Existing Holder shall acquire no rights in such Interests.


 


(d)           Until the Restriction Termination Date, any
Transfer that, if effective, would result in the Venture (treating the Venture
as if it otherwise qualified as a REIT solely for this purpose) being “closely
held” within the meaning of Section 856(h) of the Code shall be void ab initio as to the Transfer of the Interests which
would cause the Venture (treating the Venture as if it otherwise qualified as a
REIT solely for this purpose) to be “closely held” within the meaning of Section 856(h) of
the Code; and the intended transferee shall acquire no rights in such
Interests.


 


(e)           Until the Restriction Termination Date, any
Transfer that, if effective, would result in the Venture (treating the Venture
as if it otherwise qualified as a REIT solely for this purpose) otherwise
failing to qualify as a REIT shall be void ab initio as to the Transfer of Interests that would result in the Venture
(treating the Venture as if it otherwise qualified as a REIT solely for this
purpose) failing to qualify as a REIT; and the intended transferee shall
acquire no rights in such Interests.


 


(f)            Until the Restriction Termination Date, any Transfer
that, if effective, would result in the Venture (treating the Venture as if it
otherwise qualified as a REIT solely for this purpose) becoming a “pension-held
REIT” as defined in Section 856(h) of the Code shall be void ab initio as to the Transfer of Interests which would
result in the Venture (treating the Venture as if it otherwise qualified as a
REIT solely for this purpose) becoming a “pension-held REIT;” and the intended
transferee shall acquire no rights in such Interests.


 


(g)           Until the Restriction Termination Date, any
Transfer that would result in the Venture (treating the Venture as if it
otherwise qualified as a REIT solely for this purpose) not maintaining its
status as a Domestically-Controlled REIT shall be void ab initio as to the Transfer of Interests which would
result in the Venture (treating the Venture as if it otherwise qualified as a
REIT solely for this purpose) failing to maintain its status as a
Domestically-Controlled REIT; and the intended transferee shall acquire no rights
in such Interests.


 


36

















 


9.3           Excess Interests.


 


(a)           If, notwithstanding the other provisions
contained in this Article 9, at any time, until the Restriction
Termination Date, there is a purported Transfer or other change in the capital
structure of the Venture such that any Person would Beneficially Own Interests
in excess of the applicable Ownership Limit or Existing Holder Limit (as
applicable), then, except as otherwise provided in Sections 9.9 and 9.12,
the Interests Beneficially Owned in excess of such Ownership Limit or Existing
Holder Limit (rounded up to the nearest whole Interest) shall constitute “Excess
Interests” and shall be treated as provided in this Article 9.
Such designation and treatment shall be effective as of the close of business
on the business day prior to the date of the purported Transfer or change in
capital structure.


 


(b)           If, notwithstanding the other provisions
contained in this Article 9, at any time, until the Restriction
Termination Date, there is a purported Transfer or other change in the capital
structure of the Venture (as a result of a direct or indirect Transfer or
otherwise) which, if effective, would cause the Venture (treating the Venture
as if it otherwise qualified as a REIT solely for this purpose) to (i) become
“closely held” within the meaning of Section 856(h) of the Code, (ii) become
a “pension-held REIT” within the meaning of Section 856(h) of the
Code, (iii) fail to qualify as a Domestically-Controlled REIT or (iv) otherwise
fail to qualify as a REIT, then the Interests that are the subject of such
Transfer or other event which would cause the Venture to fail such requirement
shall constitute “Excess Interests” and shall be treated as provided in this Article 9.
Such designation and treatment shall be effective as of the close of business
on the business day prior to the date of the purported Transfer or change in
capital structure.


 


(c)           If, at any time prior to the Restriction
Termination Date, notwithstanding the other provisions contained in this Article 9,
there is an event (a “Prohibited Owner Event”) which would result in the
disqualification of the Venture as a REIT under the Code (treating the Venture
as if it otherwise qualified as a REIT solely for this purpose) by virtue of
actual, Beneficial or constructive ownership of Interests, then Interests which
result in such disqualification shall be automatically exchanged for an equal
number of Excess Interests to the extent necessary to avoid such disqualification.
Such exchange shall be effective as of the close of business on the business
day prior to the date of the Prohibited Owner Event. In determining which
Interests are exchanged, Interests owned directly or indirectly by any Person
who caused the Prohibited Owner Event to occur shall be exchanged before any
Interests not so held are exchanged. If similarly situated Persons exist, such
exchange shall be pro rata. If the Venture is still so disqualified as a REIT (treating the Venture
as if it otherwise qualified as a REIT solely for this purpose), Interests
owned directly or indirectly by Persons who did not cause the Prohibited Owner
Event to occur shall be chosen by random lot and exchanged for Excess Interests
until the Venture is no longer so disqualified as a REIT (treating the Venture
as if it otherwise qualified as a REIT solely for this purpose).


 


9.4           Prevention of Transfer. If the Venture or its designee shall at any
time determine in good faith that a Transfer has taken place in violation of Section 9.2
or that a Person intends to acquire or has attempted to acquire beneficial
ownership (determined without reference to any rules of attribution) or
Beneficial Ownership of any Interests in violation of Section 9.2,
the Venture or its designee shall take such action as it deems advisable to
refuse to give effect to or to prevent such Transfer, including, without
limitation, refusing to give effect to such Transfer on the books of the
Venture or instituting proceedings to enjoin such Transfer; provided, however,
that any Transfers or attempted Transfers in violation of paragraph (b), (c),
(d), (e), (f)


 


37

















 


or
(g) Section 9.2 shall automatically result in the
designation and treatment described in Section 9.3, irrespective of any action (or non-action)
by the Venture.


 


9.5           Notice. Any Person who
acquires or attempts to acquire Interests in violation of Section 9.2,
or any Person who is a transferee such that Excess Interests result under Section 9.3, shall immediately give written notice or, in the event of a proposed or
attempted Transfer, shall give at least fifteen (15) days prior written notice
to the Venture of such event and shall provide to the Venture such other
information as the Venture may request in order to determine the effect, if
any, of such Transfer or attempted Transfer on the Subsidiary REIT’s status as
a REIT.


 


9.6           Information for the Venture.
Until the Restriction Termination Date:


 


(a)           Every Beneficial Owner of more than 1/2 of 1%
of the number or value of outstanding Interests shall, within thirty (30) days
after January 1 of each year, give written notice to the Venture stating
the name and address of such Beneficial Owner, the number of Interests
Beneficially Owned, and a description of how such Interests are held. Each such
Beneficial Owner shall provide to the Venture such additional information as
the Venture may reasonably request in order to determine the effect, if any, of
such Beneficial Ownership on the Subsidiary REIT’s status as a REIT.


 


(b)           Each Person who is a Beneficial Owner of
Interests and each Person who is holding Interests for a Beneficial Owner shall
provide to the Venture in writing such information with respect to direct,
indirect and constructive ownership of Interests as the Venture deems
reasonably necessary to comply with the provisions of the Code applicable to a
real estate investment trust, to determine the Subsidiary REIT’s status as a
REIT, to comply with the requirements of any taxing authority or governmental
agency or to determine any such compliance.


 


9.7           Other Action by Venture.
Nothing contained in this Article 9 shall limit the authority of the Venture to
take such other action as it deems necessary or advisable to protect the
Venture, the Subsidiary REIT and the interests of their respective members by
preservation of the Subsidiary REIT’s status as a REIT.


 


9.8           Ambiguities. In the case of an
ambiguity in the application of any of the provisions of this Article 9,
including, without limitation, any definition contained in Section 9.1, the Venture shall have the power to interpret and determine the
application of the provisions of this Article 9 with
respect to any situation based on the facts known to the Venture.


 


9.9           Modification of Existing Holder Limits.
The Existing Holder Limits may be modified as follows:


 


(a)           Subject to the limitations provided in Section 9.11,
the Venture may grant options which result in Beneficial Ownership of Interests
by an Existing Holder pursuant to an option plan approved by the Venture. Any
such grant shall increase the Existing Holder Limit for the affected Existing
Holder to the maximum extent possible under Section 9.11 to
permit the Beneficial Ownership of the Interests issuable upon the exercise of
such option.


 


38

















 


(b)           The Venture shall reduce the Existing Holder
Limit for any Existing Holder after any Transfer permitted in this Article 9 by such Existing Holder by the percentage of
the outstanding Interests so Transferred or after the lapse (without exercise)
of an option described in paragraph (a) of this Section 9.9 by the percentage of the Interests that the
option, if exercised, would have represented, but in either case no Existing
Holder Limit shall be reduced to a percentage which is less than the Ownership
Limit.


 


9.10           Increase or Decrease in Ownership Limit.
Subject to the limitations provided in Section 9.11, the Venture may from time to time increase
or decrease the Ownership Limit; provided, however, that any decrease may only be made
prospectively as to subsequent holders (other than a decrease as a result of a
retroactive change in existing law that would require a decrease to retain the
Subsidiary REIT’s status as a REIT, in which case such decrease shall be effective
immediately).


 


9.11           Limitations on Changes in Existing Holder and
Ownership Limits.


 


(a)           Neither the Ownership Limit nor any Existing
Holder Limit may be increased (nor may any additional Existing Holder Limit be
created) if, after giving effect to such increase (or creation), five (5) Beneficial
Owners of Interests (including, without limitation, all of the then Existing
Holders) could Beneficially Own, in the aggregate, more than 49.9% in number or
value of the outstanding Interests.


 


(b)           Prior to the modification of any Existing
Holder Limit or Ownership Limit pursuant to Sections 9.9 or 9.10,
the Venture may require such opinions of counsel, affidavits, undertakings or
agreements as it may deem necessary or advisable in order to determine or ensure
the Subsidiary REIT’s status as a REIT.


 


(c)           No Existing Holder Limit shall be reduced to
a percentage which is less than the Ownership Limit.


 


9.12         Waivers by Venture.
The Venture, upon receipt of a ruling from the Internal Revenue Service or an
opinion of counsel or other evidence satisfactory to the Manager and upon at
least fifteen (15) days written notice from a transferee prior to the proposed
Transfer which, if consummated, would result in the intended transferee owning
Interests in excess of the Ownership Limit or the Existing Holder Limit, as the
case may be, and upon such other conditions as the Venture may direct, may
waive the Ownership Limit or the Existing Holder Limit, as the case may be,
with respect to such transferee.


 


9.13           Severability.
If any provision of this Article 9 or any application of any such provision is
determined to be void, invalid or unenforceable by any court having
jurisdiction over the issue, the validity and enforceability of the remaining
provisions shall be affected only to the extent necessary to comply with the
determination of such court.


 


9.14           Trust for Excess Interests.
Upon any purported Transfer that results in Excess Interests pursuant to Section 9.3,
such Excess Interests shall be deemed to have been transferred to the Excess
Interest Trustee, as trustee of the Excess Interest Trust for the exclusive
benefit of the Charitable Beneficiary. Excess Interests so held in trust shall
be issued and outstanding


 


39

















 


Interests
of the Venture. The Purported Beneficial Transferee shall have no rights in
such Excess Interests except as provided in Section 9.17.


 


9.15         Distributions on Excess Interests. Any distributions (whether as dividends,
distributions upon liquidation, dissolution or winding up or otherwise) on
Excess Interests shall be paid to the Excess Interest Trust for the benefit of
the Charitable Beneficiary. Upon liquidation, dissolution or winding up, the
Purported Record Transferee shall receive the lesser of (a) the amount of
any distribution made upon liquidation, dissolution or winding up or (b) the
price paid by the Purported Record Transferee for the Interests, or if the
Purported Record Transferee did not give value for the Interests, the Market
Price of the Interests on the day of the event causing the Interests to be held
in trust. Any such dividend paid or distribution paid to the Purported Record
Transferee in excess of the amount provided in the preceding sentence prior to
the discovery by the Venture that the Interests with respect to which the
dividend or distribution was made had been exchanged for Excess Interests shall
be repaid by the Purported Record Transferee to the Excess Interest Trust for
the benefit of the Charitable Beneficiary.


 


9.16         Voting of Excess Interests. The Excess Interest Trustee shall be
entitled to vote the Excess Interests for the benefit of the Charitable
Beneficiary on any matter. Subject to Delaware law, any vote taken by a
Purported Record Transferee prior to the discovery by the Venture that the
Excess Interests were held in trust shall be rescinded ab initio. The owner of the Excess Interests shall be deemed to have given an
irrevocable proxy to the Excess Interest Trustee to vote the Excess Interests
for the benefit of the Charitable Beneficiary.


 


9.17         Non-Transferability of Excess Interests. Excess Interests shall be transferable only
as provided in this Section 9.17. At the direction of the Venture,
the Excess Interest Trustee shall Transfer the Interests held in the Excess
Interest Trust to a person whose ownership of the Interests will not violate
the Ownership Limit or Existing Holder Limit and for whom such Transfer would
not be wholly or partially void pursuant to Section 9.2. Such
Transfer shall be made within sixty (60) days after the latest of (x) the
date of the Transfer which resulted in such Excess Interests and (y) the
date the Venture determines in good faith that a Transfer resulting in Excess
Interests has occurred, if the Venture does not receive a notice of such
Transfer pursuant to Section 9.5. If such a Transfer is made, the
interest of the Charitable Beneficiary shall terminate and proceeds of the sale
shall be payable to the Purported Record Transferee and to the Charitable
Beneficiary. The Purported Record Transferee shall receive the lesser of the
price paid by the Purported Record Transferee for the Interests or, if the
Purported Record Transferee did not give value for the Interests, the Market
Price of the Interests on the day of the event causing the Interests to be held
in trust, and the price received by the Excess Interest Trust from the sale or
other disposition of the Interests. Any proceeds in excess of the amount
payable to the Purported Record Transferee shall be paid to the Charitable Beneficiary.
Prior to any Transfer of any Excess Interests by the Excess Interest Trustee,
the Venture must have waived in writing its purchase rights under Section 9.18.
It is expressly understood that the Purported Record Transferee may enforce the
provisions of this Section 9.17 against the Charitable Beneficiary.


 


If
any of the foregoing restrictions on Transfer of Excess Interests is determined
to be void, invalid or unenforceable by any court of competent jurisdiction,
then the Purported Record


 


40

















 


Transferee
may be deemed, at the option of the Venture, to have acted as an agent of the
Venture in acquiring such Excess Interests and to hold such Excess Interests on
behalf of the Venture.


 


9.18         Call by the Venture on Excess Interests. Excess Interests shall be deemed to have
been offered for sale to the Venture, or its designee, at a price per Interest
equal to the lesser of the price per Interest in the transaction that created
such Excess Interests (or, in the case of a devise, gift or other transaction
in which no value was given for such Excess Interests, the Market Price at the
time of such devise, gift or other transaction) and the Market Price of the
Interests to which such Excess Interests relates on the date the Venture, or
its designee, accepts such offer (the “Redemption Price”). The Venture
shall have the right to accept such offer for a period of ninety (90) days
after the later of (x) the date of the Transfer which resulted in such
Excess Interests and (y) the date the Manager determines in good faith
that a Transfer resulting in Excess Interests has occurred, if the Venture does
not receive a notice of such Transfer pursuant to Section 9.5 but
in no event later than a permitted Transfer pursuant to and in compliance with
the terms of Section 9.17. Unless the Manager determines that it is
in the interests of the Venture to make earlier payments of all of the amount
determined as the Redemption Price per Interest in accordance with the
preceding sentence, the Redemption Price may be payable at the option of the
Venture at any time up to but not later than one year after the date the
Venture accepts the offer to purchase the Excess Interests. In no event shall
the Venture have an obligation to pay interest to the Purported Record
Transferee.


 


ARTICLE 10


 


DISSOLUTION OF VENTURE


 


10.1         Bankruptcy of Member.


 


(a)           The Bankruptcy, insolvency, termination,
dissolution, liquidation or other cessation or assignment for the benefit of
creditors by, any Member (each a “Bankruptcy Event”), or, except as otherwise
permitted in accordance with Article 8, the withdrawal of any
Member, shall dissolve the Venture, unless within 90 days after notice is given
to the other Member of the occurrence of such event, the remaining Member
elects to continue the business of the Venture. The Member suffering a
Bankruptcy Event (or its legal representative) or withdrawing from the Venture,
except as otherwise permitted in accordance with Article 8, is
hereby deemed to Consent to the continuation of the business of the Venture. In
the event of a Bankruptcy Event with respect to BH REIT or a withdrawal of BH
REIT as the Manager of the Venture, the Venture shall file an amendment to the
Venture’s Certificate removing BH REIT as the Manager of the Venture.


 


(b)           For purposes of this Agreement, the
“Bankruptcy” a Member shall be deemed to have occurred upon the happening of
any of the following: (i) the filing of an application by the Member for,
or a consent to, the appointment of a trustee of its assets, (ii) the
filing by the Member of a voluntary petition for relief as a debtor under the
United States Bankruptcy Code or the filing of a pleading in any court of
record admitting in writing its inability to pay its debts as they come due, (iii) the
making by the Member of a general assignment for the benefit of creditors or (iv) the
expiration of 60 days following the entry of an


 


41
















 


order,
judgment or decree by any court of competent jurisdiction adjudicating the
Member a bankrupt or appointing a trustee of its assets.


 


10.2         Other Events of
Dissolution. The happening of any one
of the following events shall work a dissolution of the Venture:


 


(i)          The reduction to cash or cash equivalents of
all Venture assets;


 


(ii)         The agreement in writing to dissolution by
the Members; or


 


(iii)        The termination of the term of the Venture
pursuant to Section 2.4 of this Agreement.


 


Each
Member waives the right to cause a dissolution of the Venture in any other way.
Dissolution of the Venture shall be effective on the day on which the event
occurs which gives rise to the dissolution, but the Venture shall not terminate
until the assets of the Venture shall have been distributed as provided herein
and a certificate of cancellation of the Certificate has been filed with the
Secretary of State of the State of Delaware.


 


10.3         Distribution Upon
Liquidation.


 


(a)           Upon dissolution of the Venture, unless the
business of the Venture is continued as provided above, the Manager (or, in the
event that the dissolution is caused by a Bankruptcy Event with respect to the
Manager, such Person, other than the Manager, as the Members shall designate as
liquidator of the Venture) shall act as (“Liquidator”). The Liquidator shall
wind up the affairs of the Venture, shall sell such of the assets of the
Venture as it deems necessary or appropriate in accordance with Section 2.6(b)), and (i) any resulting gain or loss from each sale plus (ii) the
fair market value of such property which has not been sold shall be determined
and income, gain, loss or deduction inherent in such property (which has not
been reflected in the Capital Accounts previously) shall be allocated among the
Members as provided in Section 4.1
and, after paying all debts and liabilities of the Venture, including all costs
of dissolution, shall distribute any remaining Venture property along with any
cash received from the sale of the property as follows:


 


(i)          The Liquidator may set up any reserve it
deems reasonably necessary for any contingent liabilities or obligations of the
Venture arising out of or in connection with the Venture. Such reserve may be
paid over by the Liquidator to a bank or trust company to act as escrow agent.
Any such escrow agent shall hold such reserves for payment of any of the
aforementioned contingencies, and, at the expiration of such period as the
Liquidator shall designate, distribute the balance thereafter remaining in the
manner hereinafter provided.


 


(ii)         Cash and all other assets of the Venture not sold pursuant to this Section 10.3 will be distributed
among the Members in the same manner as Net Cash Flow in accordance with Section 5.1.


 


(b)           The Members shall continue to share income,
loss and other tax items during the period of such Liquidation in the same
proportions as before dissolution. Subject to Sections 2.6(b) the
Liquidator shall determine whether to sell any Venture property, and, if so,


 


42

















 


whether
at a public or private sale, for what price, and on what terms. If the
Liquidator determines to sell or otherwise dispose of any Venture property or
any interest therein, the Liquidator shall not be required to do so promptly
but shall do so in an orderly and commercially reasonable manner so as to avoid
a distress sale.


 


(c)           The obligation of any Member to the Venture
or any other Member that shall have accrued and be unsatisfied as of the date
of dissolution or termination of the Venture shall survive such dissolution or
termination.


 


(d)           Each Member shall look solely to the assets
of the Venture for all distributions with respect to the Venture, its Capital
Account and its share of income, loss and other tax items, and shall have no
recourse therefor (upon dissolution or otherwise) against the Manager, any
other Member, the Liquidator or any of their Affiliates.


 


10.4         Procedural and Other Matters.


 


(a)           Upon dissolution of the Venture and until the
filing of a certificate of cancellation, the Liquidator may, in the name of,
and for and on behalf of, the Venture, prosecute and defend suits, whether
civil, criminal or administrative, gradually settle and close the business of
the Venture, dispose of and convey the property of the Venture, discharge or
make reasonable provision for the liabilities of the Venture and distribute to
the Members any remaining assets of the Venture, in accordance with this Article 10 and all without affecting the liability of
the Members or the Manager and without imposing liability on the Liquidator.


 


(b)           The Certificate may be canceled upon the
dissolution and the completion of winding-up of the Venture by any Person
authorized to cause such cancellation in connection with such dissolution and
winding-up.


 


ARTICLE 11


 


REPRESENTATIONS AND WARRANTIES


 


11.1         Representations and Warranties of the Members.
Each of the Members hereby represents and warrants to the other Member as
follows:


 


(a)           Such Member is a corporation or other Entity
duly formed and validly existing under the laws of the jurisdiction of its
organization with all requisite power and authority to own its assets and to
carry on its business as now being conducted. Such Member has all requisite
power and authority to enter into this Agreement and the other agreements
contemplated to be entered into by it in connection herewith and to carry out
the transactions contemplated hereby and thereby.


 


(b)           The execution and delivery of this Agreement
and the consummation of the transactions contemplated hereby have been duly
authorized by all necessary action on the part of such Member. This Agreement
has been executed and delivered by a duly authorized officer of such Member and
constitutes the valid and binding obligation of such Member, enforceable against
such Member in accordance with the terms hereof, subject, as to


 


43

















 


enforcement,
to bankruptcy, insolvency, reorganization and other laws of general
applicability relating to or affecting creditor’s rights and to general
principles of equity.


 


(c)           The execution, delivery and performance by
such Member of this Agreement and all other agreements contemplated hereby to
which it is to be a party do not and will not (i) violate any decree or
judgment of any court of governmental authority that may be applicable to such
Member; (ii) violate any law (or regulation promulgated under any law); (iii) violate
or conflict with, or result in a breach of, or constitute a default (or an
event with or without notice or lapse of time or both would constitute a
default) under any contract or agreement to which such Member is a party; or (iv) violate
or conflict with any provision of the organizational documents of such Member.


 


(d)           No broker, finder, agent or other third party
has been employed by or on behalf of such Member (or any partner, member,
shareholder or advisor thereof) in connection with the negotiation or
consummation of this Agreement or any of the transactions contemplated hereby,
and no such party has any claim for any commission, finder’s fee or similar
amount payable as a result of any engagement of such party by or on behalf of
such Member.


 


(e)           Such Member has acquired its Interest in the
Venture for investment purposes and has not acquired its Interest in the
Venture for the purpose of selling its Interest in the Venture, or causing the
Venture to sell its assets, to customers in the ordinary course of a trade or
business.


 


ARTICLE 12


 


BOOKS AND RECORDS; REPORTS TO MEMBERS


 


12.1         Books. The Manager shall maintain or cause to be maintained separate, full
and accurate books and records of the Venture, and each Member or any
authorized representative of any Member shall have the right to freely inspect,
examine and copy the same and to meet with employees of the Manager responsible
for preparing the same at reasonable times during business hours and upon
reasonable notice. In addition, the Manager agrees to provide each Member, its
representatives and an independent accounting firm (if any) designated by such Member
reasonable access to all such books and records, during which such Member or
such accounting firm may conduct an audit of the Venture. The cost of any such
audit shall be borne by the requesting Member unless an error is discovered
which has had the effect of reducing or increasing such Member’s distributions
from the Venture by an amount equal to or greater than five percent (5%), in
which case the Venture shall bear the cost of the audit.


 


12.2         Quarterly Reports. The Manager shall prepare and distribute to
the Members a quarterly report with respect to the Venture within 75 days of
the last day of each of the first three fiscal quarters of a fiscal year
prepared in accordance with U.S. GAAP, consistently applied, including (i) a
balance sheet, (ii) a profit and loss statement, (iii) a statement
showing cash distributions for such fiscal quarter and for the year to date, (iv) a
statement showing computation of related party fees and Member distributions
for such fiscal quarter and for the year to date, and (v) a report briefly
describing any significant variances from the applicable budget line item in
the Venture’s Initial Operating Plan or Subsequent Operating Plan.


 


44

















 


12.3         Annual Reports.
The Manager shall engage Deloitte & Touche LLP or such other
nationally recognized independent registered public accounting firm selected by
the Manager with the Consent of the Members to examine and audit the Venture’s
books and records. Within 120 days after the end of each fiscal year, or as
soon as practicable thereafter, the Manager shall distribute to the Members
financial statements with respect to the Venture, which shall include the items
set forth in clauses (i)-(v) of Section 12.2 with respect to such fiscal year and which
shall be prepared in accordance with U.S. GAAP, consistently applied, and shall
be audited by the Venture’s independent registered public accounting firm.


 


12.4         Accountants; Tax Returns.
The Manager shall engage Deloitte & Touche LLP or such other
nationally recognized independent registered public accounting firm selected by
the Manager and approved by the Members to review, or to sign as preparer, all
federal, state and local Tax Returns that the Venture is required to file. The
Manager will furnish to each Member within 120 days after the end of each
fiscal year, or as soon thereafter as is practicable, a Schedule K-1 or such
other statement as is required by the Internal Revenue Service that sets forth
such Member’s share of the income, gain, loss, deduction and other relevant
fiscal items of the Venture for such fiscal year. Each Member shall be entitled
to receive, upon request, copies of all federal, state and local income Tax
Returns and information returns, if any, that the Venture is required to file.


 


12.5         Accounting and Fiscal Year.
The Venture books and records shall be kept on the accrual basis. The fiscal
year of the Venture shall end on December 31.


 


12.6         Project Valuations.
Unless the Venture is to receive a report of a real estate valuation firm set
forth in the next sentence, the Manager shall cause the Venture, within 30 days
after the end of each semi-annual fiscal period, to have prepared and to
provide to the Members, with a copy to PGGM, an estimate of the market value of
the Venture, based on traditional real estate principles. In addition,
commencing at the end of the fiscal year that is four years after the later of (x) the
receipt of a certificate of occupancy for the Project and (y) the
acquisition of the Project, the Manager, on behalf of the Venture, shall engage
the services of a reputable real estate valuation firm to prepare and deliver
an annual report to the Members, with a copy to PGGM, estimating the market
value of the Project, based on traditional real estate principles. All costs
and expenses associated with the engagement by the Venture for the valuation by
such real estate valuation firm shall be borne by the Venture.


 


ARTICLE 13


 


MISCELLANEOUS


 


13.1         Notices. All notices and
demands under this Agreement shall be in writing and may be either delivered
personally (which shall include deliveries by courier), by telefax, telex or
other wire transmission or by email (with request for assurance of receipt in a
manner appropriate with respect to communications of that type, provided that a
confirmation copy is concurrently sent by an internationally recognized express
courier for overnight delivery, if possible) or mailed, postage prepaid, by
registered air mail, return receipt requested:


 


45

















 


If
to BH MP, addressed as follows:


 


Behringer
Harvard


Master
Partnership I LP


15601
Dallas Parkway, Suite 600


Addison,
Texas 75001


Attention:
 Gerald J. Reihsen, Esq.

Facsimile:  (469) 341-0540


Email:
 greihsen@behringerharvard.com


 


with
a copy to:


 


Stichting Pensioenfonds voor de Gezondheid,

Geestelijke en Maatschappelijke Belangen


Kroostweg-Noord 149


P.O. Box
117


3700
AC Zeist


The
Netherlands


Attention:
 Werner Sohier


Facsimile:
 011.31.30.277 4724


Email:
 werner.sohier@pggm.nl


 


with
a copy to:


 


Stichting Pensioenfonds voor de Gezondheid,

Geestelijke en Maatschappelijke Belangen


Kroostweg-Noord 149


P.O. Box
117


3700
AC Zeist


The
Netherlands


Attention:
 Gert-Jaap Das


Facsimile:
 011.31.30.277 9191


Email:
 gert.jaap.das@pggm.nl


 


If
to BH REIT (whether as Manager or a Member), addressed as follows:


 


Behringer
Harvard Baileys, LLC


15601
Dallas Parkway, Suite 600


Addison,
Texas 75001


Attention:
Gerald J. Reihsen, Esq.


Facsimile:
(469) 341-0540


Email:
greihsen@behringerharvard.com


 


Unless
delivered personally or by telefax, telex or other wire transmission or by
email as above (which shall be deemed delivered on the next Business Day
following the date of such personal delivery or transmission or email, provided
that such day is a Business Day in the recipient’s jurisdiction, or otherwise
on the following Business Day in such jurisdiction), any notice shall be


 


46

















 


deemed
to have been given when received by its addressee. Any party hereto may
designate a different address to which notices and demands shall thereafter be
directed by written notice given in the same manner and directed to the other
parties at their offices hereinabove set forth.


 


13.2         Execution in Counterparts. This Agreement may be executed in several
counterparts, each of which shall be deemed an original but all of which shall
constitute one and the some instrument. In addition, this Agreement may contain
more than one counterpart of the signature page, and this Agreement may be
executed by the affixing of the signature (or one of the several signatures) of
the Manager and each of the Members to any of such counterpart signature pages;
all of such counterpart signature pages shall be read as though one, and
they shall have the same force and effect as though all of the signers had
signed a single signature page.


 


13.3         Amendments. This Agreement may be amended only with the unanimous written Consent
of the Manager and the Members. Any waiver of any provision of this Agreement shall
require the Consent of the Party from whom such waiver is sought.


 


13.4         Additional Documents. The Manager may cause to be filed with any
governmental agency any Applications for Authority and, where applicable,
certificates of cancellation or certificates or statements of dissolution as
may be required or permitted by the laws of the State of Delaware and any other
jurisdiction where the Venture is organized or doing business. Each party
hereto agrees to execute, with acknowledgment or affidavit, if required by the
Manager, any and all documents and writings that may be necessary or expedient
in connection with the creation of the Venture and the achievement of its
purposes, provided that no such document may modify this Agreement.


 


13.5         Validity. If any provision of this Agreement or the application of such
provision to any Person or circumstance shall be held invalid, the remainder of
this Agreement or the application of such provision to Persons or circumstances
other than those with respect to which it is held invalid, shall not be
affected thereby and shall continue to be binding and in force.


 


13.6         Governing Law. This Agreement and the rights of the
parties hereunder shall be governed by and interpreted in accordance with the
internal laws of the State of Delaware. Except as otherwise provided herein,
the rights and obligations of the Manager and the Members and the
administration and termination of the Venture shall be governed by the Act.


 


13.7         Waiver. The waiver by any party hereto of the breach of any term, covenant,
agreement or condition herein contained shall not be deemed a waiver of any
subsequent breach of the same or any other term, covenant, agreement or
condition herein, nor shall any custom, practice or course of dealings arising
among the parties hereto in the administration hereof be construed as a waiver
or diminution of the right of any party hereto to insist upon the strict
performance by any other party hereto of the terms, covenants, agreements and
conditions herein contained.


 


13.8         Consent and Approval. Whenever under this Agreement the Consent
of any Member is required or permitted, such Consent may be evidenced by a
written consent signed by an authorized representative of such Member.


 


47

















 


13.9         Waiver
of Partition. The Members hereby agree
that the assets of the Venture are not and will not be suitable for partition.
Accordingly, each of the Members hereby irrevocably waives any and all rights
(if any) that it may have to maintain any action for partition of any of the
assets of the Venture.


 


13.10       Binding
Effect. Except as herein
otherwise provided, this Agreement shall be binding upon and inure to the
benefit of the parties, their legal representatives, heirs, administrators,
executors, successors and permitted assigns.


 


13.11       Entire
Agreement. This Agreement
constitutes the entire agreement among the parties with respect to the
formation and operation of the Venture; it supersedes any prior agreements or
understandings among them and it may not be modified or amended in any manner
other than pursuant to Section 13.3.


 


13.12       Captions. Captions and headings contained in this Agreement are
inserted only as a matter of convenience and in no way define, limit or extend
the scope of this Agreement or any provision hereof.


 


13.13       No
Strict Construction. The language used in
this Agreement is that chosen by the parties hereto to express their mutual
understanding and agreement, and no rule of strict construction shall be
applied against any Person in interpreting this Agreement.


 


13.14       Identification. Wherever from the context it appears appropriate, each
term stated in either the singular or plural shall include the singular and the
plural, and pronouns stated in either the masculine or the neuter gender shall
include the masculine, feminine and neuter.


 


13.15       Recourse
to the Manager. ANYTHING CONTAINED
HEREIN TO THE CONTRARY NOTWITHSTANDING, NO PERSONAL LIABILITY OR PERSONAL
DEFICIENCY JUDGMENT SHALL BE ASSERTED OR ENFORCED AGAINST ANY MEMBERS OF THE
MANAGER, AGAINST THE DIRECTORS, TRUSTEES, OFFICERS, EMPLOYEES, AGENTS, MEMBERS,
SHAREHOLDERS OR PRINCIPALS OF THE MANAGER OR ITS MEMBERS, OR AGAINST THE ASSETS
OF ANY SUCH PARTIES, FOR PAYMENT OF ANY AMOUNT HEREUNDER OR FOR OBSERVANCE OR
PERFORMANCE OF ANY OF THE OBLIGATIONS OF THE MANAGER OR THE VENTURE.


 


13.16       Recourse
to the Members. ANYTHING CONTAINED
HEREIN TO THE CONTRARY NOTWITHSTANDING, NO PERSONAL LIABILITY OR PERSONAL
DEFICIENCY JUDGMENT SHALL BE ASSERTED OR ENFORCED AGAINST ANY MEMBERS, PARTNERS
OR SHAREHOLDERS OF EITHER MEMBER, AGAINST THE DIRECTORS, TRUSTEES, OFFICERS,
EMPLOYEES, AGENTS, MEMBERS, SHAREHOLDERS OR PRINCIPALS OF EITHER MEMBER OR ANY
SUCH MEMBERS, PARTNERS OR SHAREHOLDERS OF A MEMBER, OR AGAINST THE ASSETS OF
ANY SUCH PARTIES, FOR PAYMENT OF ANY AMOUNT HEREUNDER OR FOR OBSERVANCE OR
PERFORMANCE OF ANY OF THE OBLIGATIONS OF SUCH MEMBER OR THE VENTURE.


 


48

















 


13.17       Remedies Not Exclusive.
Any remedies herein contained for breaches of obligations hereunder shall not
be deemed to be exclusive and shall not impair the right of any party to
exercise any other right or remedy, whether for damages, injunction or
otherwise.


 


13.18       Use of Behringer Harvard Trade Name. If any third parties other than Behringer, any of its Affiliates or
any BH-Sponsored Investment Program acquires the Interest of any Member, or if
the property management agreement between the Subsidiary REIT (or any
subsidiary thereof) and the Management Company (or any other Affiliate of
Behringer) is terminated for any reason, then the remaining Member shall cause
the Venture (and the Subsidiary REIT (and any subsidiary thereof)) to cease to
use the name “Behringer Harvard” within 30 days of such event, unless Behringer
agrees in writing to allow the continued use of such name beyond such 30-day
period.


 


13.19       Venture Counsel. The
Manager has retained Mayer, Brown, Rowe &  Maw (“Venture Counsel”) in connection with
the formation of the Venture and the Subsidiary REIT and may retain Venture
Counsel in connection with the operation of the Venture and the Subsidiary
REIT, including, without limitation, acquiring, developing, holding and
disposing of the Project. Each Member acknowledges that Venture Counsel does
not represent any Member (in its capacity as such) in the absence of a clear
and explicit written agreement to such effect between such Member and Venture
Counsel (and then only to the extent specifically set forth in such agreement),
and that in the absence of any such agreement, Venture Counsel shall owe no
duties to any Member (in such capacity) or to the Members as a group, whether
or not Venture Counsel has in the past represented or is currently representing
such Member or Members with respect to other matters.


 


13.20       Waiver of Jury Trial.
TO THE EXTENT PERMITTED BY APPLICABLE LAW, THE PARTIES HEREBY IRREVOCABLY WAIVE
ANY AND ALL RIGHT TO TRIAL BY JURY IN ANY LEGAL PROCEEDING ARISING OUT OF OR
RELATING TO THIS AGREEMENT OR THE TRANSACTIONS CONTEMPLATED HEREBY.


 


[INTENTIONALLY LEFT BLANK]


 


* * * * *


 


49

















 


IN
WITNESS WHEREOF, this Agreement has been executed by each of the parties hereto
as of the date of this Agreement set forth above.


 


 


	
  Manager:

  	
  BEHRINGER
  HARVARD BAILEYS, LLC, a

  
	
   

  	
  Delaware
  limited liability company

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  By:

  	
  /s/
  M. Jason Mattox

  
	
   

  	
   

  	
  M.
  Jason Mattox

  
	
   

  	
   

  	
  President

  
	
   

  	
   

  	
   

  
	
  Members:

  	
  BEHRINGER
  HARVARD MASTER

  PARTNERSHIP I LP, a
  Delaware limited

  partnership

  
	
   

  	
   

  	
   

  
	
   

  	
  By:

  	
  Behringer
  Harvard Institutional GP LP, a

  Texas limited partnership, its general partner

  
	
   

  	
   

  	
   

  
	
   

  	
  By:

  	
  Harvard
  Property Trust, LLC, a Delaware

  limited liability company, its general partner

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
  By:

  	
  /s/
  M. Jason Mattox

  
	
   

  	
   

  	
  M.
  Jason Mattox

  
	
   

  	
   

  	
  President

  
	
   

  	
   

  	
   

  
	
   

  	
  BEHRINGER
  HARVARD BAILEYS, LLC,

  a Delaware limited liability company

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
  By:

  	
  /s/
  M. Jason Mattox

  
	
   

  	
   

  	
  M.
  Jason Mattox

  
	
   

  	
   

  	
  President

  



 


50