Exhibit
10.1


 


SECOND
AMENDED AND RESTATED


 


ADVISORY
MANAGEMENT AGREEMENT


 


This SECOND AMENDED AND RESTATED ADVISORY
MANAGEMENT AGREEMENT (this “Agreement”)
is entered into on this the 15th day of February, 2010, by and between
BEHRINGER HARVARD OPPORTUNITY REIT II, INC., a Maryland corporation (the “Company”), and BEHRINGER HARVARD
OPPORTUNITY ADVISORS II LP, a Texas limited partnership (the “Advisor”).


 


W I T N E S
S E T H


 


WHEREAS, the Company and the Advisor previously entered into that certain
Advisory Management Agreement dated January 4, 2008, amended by that
certain First Amendment to the Advisory Management Agreement dated August 13,
2008 and amended and restated by that certain Amended and Restated Advisory
Management Agreement dated October 2, 2009 (collectively, the “Original
Agreement”); and


 


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


 


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


 


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


 


ARTICLE ONE


 


DEFINITIONS


 


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


 


Acquisition
Expenses.  A
non-accountable acquisition expense reimbursement in the amount of: (i) 0.25%
of the funds paid for purchasing an Asset, including any debt attributable to
the Asset, plus 0.25% of the funds budgeted for development, construction or
improvement in the case of Assets that we acquire and intend to develop,
construct or improve or (ii) 0.25% of the funds advanced in respect of a
loan or other investment.  In addition,
to the extent the Advisor directly provides services formerly provided or
usually provided by third parties, including without limitation accounting
services related to the preparation of audits required by the Securities and
Exchange Commission, property condition reports, title services, title
insurance, insurance brokerage or environmental services related to the
preparation of environmental assessments in connection with a prospective or
completed investment (the “Additional Services”), the direct employee costs and
burden to the Advisor of providing the Additional Services shall be Acquisition
Expenses.  Acquisition Expenses also
include any investment-related expenses due to third parties in the case of a
completed investment, including, but not limited to legal fees


 

















 


and expenses, travel and communications expenses, costs of appraisals,
accounting fees and expenses, third-party brokerage or finder’s fees, title
insurance, premium expenses and other closing costs.  Acquisition Expenses also include any
payments made to (i) a prospective seller of an asset, (ii) an agent of a
prospective seller of an asset, or (iii) a party that has the right to
control the sale of an asset intended for investment by the Company that are
not refundable and that are not ultimately applied against the purchase price
for such asset (“Non-Refundable Payments”).


 


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


 


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


 


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


 


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


 


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


 


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


 


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


 


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


 


Board.  The Board of Directors of the Company.


 


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


 


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


 


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


 


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


 


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


 


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


 


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


 


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


 


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


 


Director.  A member of the Board.


 


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Distributions.  Any dividends or other distributions of money
or other property by the Company to Stockholders, including distributions that
may constitute a return of capital for federal income tax purposes but
excluding distributions that constitute the redemption of any Shares and
excluding distributions on any Shares before their redemption.


 


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


 


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


 


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


 


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


 


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


 


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


 


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


 


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


 


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


 


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


 


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


 


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


 


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


 


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


 


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


 


Proprietary
Property.  All
modeling algorithms, tools, computer programs, know-how, methodologies,
processes, technologies, ideas, concepts, skills, routines, subroutines,
operating instructions and other materials and aides used in performing the
duties set forth in Section 2.02 that


 


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relate to advice regarding current and potential Assets, and all
modifications, enhancements and derivative works of the foregoing.


 


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


 


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


 


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


 


Sale or
Sales.  (i) Any
transaction or series of transactions whereby: (A) the Company or the
Partnership directly or indirectly (except as described in other subsections of
this definition) sells, grants, transfers, conveys, or relinquishes its
ownership of any Property or portion thereof, including the lease of any
Property consisting of a building only, and including any event with respect to
any Property which gives rise to a significant amount of insurance proceeds or
condemnation awards; (B) the Company or the Partnership directly or
indirectly (except as described in other subsections of this definition) sells,
grants, transfers, conveys, or relinquishes its ownership of all or
substantially all of the interest of the Company or the Partnership in any
Joint Venture in which it is a co-venturer or partner; (C) any Joint
Venture directly or indirectly (except as described in other subsections of
this definition) in which the Company or the Partnership as a co-venturer or
partner sells, grants, transfers, conveys, or relinquishes its ownership of any
Property or portion thereof, including any event with respect to any Property
which gives rise to insurance claims or condemnation awards; (D) the
Company or the Partnership directly or indirectly (except as described in other
subsections of this definition) sells, grants, conveys or relinquishes its
interest in any Mortgage or other loan or portion thereof (including with
respect to any Mortgage or other loan, all payments thereunder or in
satisfaction thereof other than regularly scheduled interest payments of
amounts owed pursuant to the Mortgage or other loan) and any event with respect
to a Mortgage or other loan which gives rise to a significant amount of
insurance proceeds or similar awards; or (E) the Company or the
Partnership directly or indirectly (except as described in other subsections of
this definition) sells, grants, transfers, conveys, or relinquishes its
ownership of any other Asset not previously described in this definition or any
portion thereof, but (ii) not including any transaction or series of
transactions specified in clause (i) (A) through (E) above in which the
proceeds of such transaction or series of transactions are reinvested in one or
more Assets within 180 days thereafter.


 


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


 


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


 


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


 


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


 


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


 


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


 


Termination Date.  The date of termination of this Agreement.


 


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


 


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


 


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


 


ARTICLE II


 


THE ADVISOR


 


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


 


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


 


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


 


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


 


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


 


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


 


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


 


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


 


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


 


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


 


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


 


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


 


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


 


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


 


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


 


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


 


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


 


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


 


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


 


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


 


2.03                        Authority of Advisor.


 


(a)                                  Pursuant to the
terms of this Agreement (including the restrictions included in this Section 2.03
and in Section 2.06), and subject to the continuing and exclusive
authority of the Board over the management of the Company, the Board hereby
delegates to the Advisor the authority to (i) locate, analyze and select
investment opportunities, (ii) structure the terms and conditions of
transactions pursuant to which investments will be made or acquired for the


 


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Company or the Partnership, (iii) acquire
Properties, make and acquire Mortgages and other loans and invest in other
Assets in compliance with the investment objectives and policies of the
Company, (iv) arrange for financing or refinancing of Assets, (v) enter
into leases for the Properties and service contracts for the Assets with duly
qualified and licensed non-affiliated and Affiliated Persons, including
oversight of non-affiliated and Affiliated Persons that perform property
management, acquisition, advisory, disposition or other services for the
Company, (vi) oversee duly qualified and licensed property managers and
other Persons who perform services for the Company, and (vii) arrange for,
or provide, accounting and other record-keeping functions at the Asset level.


 


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


 


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


 


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


 


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


 


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


 


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


 


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


 


10

















 


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


 


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


 


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


 


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


 


ARTICLE III


 


COMPENSATION AND REIMBURSEMENT OF SPECIFIED COSTS


 


3.01                        Fees.


 


(a)                                  Asset
Management Fee.  The Company
shall pay the Advisor a monthly Asset Management Fee on the 15th day of each month in an amount equal to 1/12 th of 1.0% of the sum of, for each and every
Asset, the higher of the Cost of Investment or the Value of Investment.


 


11














 


The Advisor, in its sole discretion, may
waive, reduce or defer all or any portion of the Asset Management Fee to which
it would otherwise be entitled.


 


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


 


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


 


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


 


3.02                        Expenses.


 


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


 


(i)                                     Organization
and Offering Expenses;


 


12

















 


(ii)                                  Acquisition
Fees and Acquisition Expenses;


 


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


 


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


 


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


 


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


 


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


 


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


 


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


 


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


 


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


 


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


 


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


 


(xiv)                         audit,
accounting and legal fees.


 


(b)                                 Expenses, other
than Organization and Offering Expenses (which shall be reimbursed in
accordance with subsection (c) herein), incurred by the Advisor on behalf
of the


 


13

















 


Company and payable pursuant to this Section 3.02
shall be reimbursed no less than quarterly to the Advisor within 60 days after
the end of each quarter.  The Advisor
shall prepare a statement documenting the expenses of the Company during each
quarter, including Organization and Offering Expenses, and shall deliver the
statement to the Company within 45 days after the end of each quarter.


 


(c)                                  Selling
Commissions and the dealer manager fee, which are included in the definition of
Organization and Offering Expenses, shall be paid by the Company in accordance
with Section 2.09 herein and the dealer manager agreement or similar
agreement or agreements that the Company enters into in connection with any
Offering.  Organization and Offering
Expenses other than Selling Commissions and the dealer manager fee incurred by
the Advisor on behalf of the Company on or after January 1, 2009 and
payable pursuant to this Section 3.02 shall be reimbursed no less than
quarterly to the Advisor within 60 days after the end of each quarter until an
aggregate of $7,500,000 of such Organization and Offering Expenses have been
reimbursed to the Advisor.  Thereafter,
no such Organization and Offering Expenses shall be reimbursed to the Advisor
until the Advisor has prepared and delivered to the Company within 90 days
after the end of the year in which the current Offering ends a reconciliation
of amounts of Organization and Offering Expenses incurred in connection with
such Offering and the reimbursement obligations of the Company therefor under
this Agreement, unless the terms of this Agreement are amended upon renewal to
provide otherwise in connection with any subsequent Offering.  The Advisor, on behalf of itself and its
Affiliates, and its and their respective successors and assigns, hereby waives
the Company’s obligation to pay $3,500,000 of Organization and Offering
Expenses (other than Selling Commissions and the dealer manager fee) incurred
by the Advisor on behalf of the Company through December 31, 2008.  Notwithstanding the foregoing, the Company
shall not reimburse the Advisor, and the Advisor shall reimburse the Company,
to the extent that the total amount spent by the Company on Organization and
Offering Expenses (other than Selling Commissions and the dealer manager fee
and excluding the $3,500,000 of Organization and Offering Expenses
reimbursement waived by the Advisor as set forth above) would exceed 1.5% of
the Gross Proceeds raised in the completed Offering.


 


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


 


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


 


3.04                        Reimbursement to the Advisor.  The Company shall not reimburse the Advisor
for Total Operating Expenses to the extent that Total Operating Expenses
(including the Asset Management Fee), in the four consecutive fiscal quarters
then ended (the “Expense Year”)
exceed (the “Excess Amount”) the
greater of 2% of Average Invested Assets or 25% of Net Income for that period
of four consecutive fiscal quarters.  Any
Excess Amount paid to the Advisor during a fiscal quarter shall be repaid to
the Company.  Reimbursement of all or any
portion of the Total Operating Expenses that exceed the limitation set forth in
the preceding sentence may, at the option of the Advisor, be deferred without


 


14

















 


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


 


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


 


15

















 


ARTICLE IV


 


TERM AND TERMINATION


 


4.01                        Term; Renewal. 
Subject to Section 4.02 hereof, this Agreement shall continue in
force until January 4, 2011. 
Thereafter, this Agreement may be renewed for an unlimited number of
successive one-year terms upon mutual consent of the parties.  It is the duty of the Board to evaluate the
performance of the Advisor annually before renewing the Agreement, and each
such renewal shall be for a term of no more than one year.


 


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


 


4.03                        Payments to and Duties of Advisor upon Termination.


 


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


 


(b)                                 The Advisor
shall promptly upon termination:


 


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


 


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


 


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


 


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


 


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


 


(ii)                                  In the event
that an Advisory Management Agreement Termination (as such term is defined in
the Articles of Incorporation) occurs after the commencement of an Offering and
prior to the Company’s or the Advisor’s reimbursement of Organization


 


16

















 


and Offering Expenses pursuant to the
provisions of Section 3.02(c), the appropriate party, within 90 days after
the end of the year in which such Offering terminates shall make the necessary
reimbursement.


 


ARTICLE V


 


INDEMNIFICATION


 


5.01                        Indemnification by the Company.


 


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


 


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


 


17

















 


such advancement; (iii) the Advisor or
its Affiliates, including their respective officers, directors, partners and
employees, undertake to repay the advanced funds to the Company together with
the applicable legal rate of interest thereon, in cases in which the Advisor or
its Affiliates, including their respective officers, directors, partners and
employees, are found not to be entitled to indemnification.


 


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


 


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


 


ARTICLE VI


 


MISCELLANEOUS


 


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


 


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


 


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


 


18

















 


	
  To the Directors and to
  the Company:

  	
  Behringer Harvard
  Opportunity REIT II, Inc.

  
	
   

  	
  15601 Dallas Parkway

  
	
   

  	
  Suite 600

  
	
   

  	
  Addison, Texas 75001

  
	
   

  	
   

  
	
  To the Advisor:

  	
  Behringer Harvard
  Opportunity Advisors II LP

  
	
   

  	
  15601 Dallas Parkway

  
	
   

  	
  Suite 600

  
	
   

  	
  Addison, Texas 75001

  



 


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


 


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


 


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


 


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


 


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


 


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


 


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


 


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


 


6.11                        Execution in Counterparts.  This Agreement may be executed in multiple
counterparts, each of which shall be deemed to be an original as against any
party whose signature appears thereon, and


 


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all of which shall together constitute one and the same
instrument.  This Agreement shall become
binding when one or more counterparts hereof, individually or taken together,
shall bear the signatures of all of the parties reflected hereon as the
signatories.


 


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


 


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


 


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


 


6.15                        Non-Solicitation.  During the period commencing on the date on
which the Original Agreement was entered into and ending one year following the
termination of this Agreement, the Company shall not, without the Advisor’s
prior written consent, directly or indirectly, (i) solicit or encourage
any person to leave the employment or other service of the Advisor or its
affiliates or (ii) hire, on behalf of the Company or any other person or
entity, any person who has left the employment within


 


20

















 


the one year period following the termination of that person’s
employment the Advisor or its affiliates.  During the period commencing on
the date of the Original Agreement through and ending one year following the
termination of this Agreement, the Company shall not, whether for its own
account or for the account of any other person, firm, corporation or other
business organization, intentionally interfere with the relationship of the
Advisor or it affiliates with, or endeavor to entice away from the Advisor or
its affiliates, any person who during the term of the Agreement is, or during
the preceding one-year period was, a customer of the Advisor or its affiliates.


 


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


 


	
   

  	
  BEHRINGER HARVARD OPPORTUNITY REIT II, INC.

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  By:

  	
  Gerald J. Reihsen, III

  
	
   

  	
   

  	
  Gerald J. Reihsen, III

  
	
   

  	
   

  	
  Executive Vice President — Corporate Development & Legal

  
	
   

  	
   

  
	
   

  	
  BEHRINGER HARVARD OPPORTUNITY ADVISORS II LP

  
	
   

  	
   

  
	
   

  	
  By: Harvard Property Trust, LLC, its General Partner

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  By:

  	
  Gerald J. Reihsen, III

  
	
   

  	
   

  	
  Gerald J. Reihsen, III

  
	
   

  	
   

  	
  Executive Vice President — Corporate Development & Legal and
  Secretary

  



 


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