EXHIBIT
10.2


FOURTH AMENDED AND RESTATED

ADVISORY AGREEMENT


This FOURTH AMENDED AND RESTATED ADVISORY AGREEMENT (this “Agreement”) is entered into on this 20th day of October,
2006, by and between BEHRINGER HARVARD REIT I, INC., a Maryland corporation (the
“Company”), and BEHRINGER ADVISORS LP, a
Texas limited partnership (the “Advisor”).


W I T N E S S E T H


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


WHEREAS, the Company
and the Advisor previously entered into that certain Advisory Agreement, dated
February 14, 2003 (as amended, supplemented or restated from time to time, the “Original
Advisory Agreement”), and it is intended that this Agreement amend and restate
the Original Advisory Agreement effective as of and for all periods after the
date hereof;


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


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


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


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


ARTICLE I

DEFINITIONS


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


Acquisition Expenses.  Any and all expenses incurred by the Company,
the Advisor, or any Affiliate of either in connection with the selection,
acquisition or development of any Asset, whether or not acquired, including,
without limitation, legal fees and expenses, travel and communications
expenses, costs of appraisals, nonrefundable option payments on property not
acquired, accounting fees and expenses, and title insurance premiums.


Acquisition Fees.  Any and all fees and commissions, exclusive
of Acquisition Expenses but including the Acquisition and Advisory Fees, paid
by any Person to any other Person (including any fees or commissions paid by or
to any Affiliate of the Company or the Advisor) in connection with making or
investing in Mortgages or the purchase, development or construction of an
Asset, including, without limitation, real estate commissions, selection fees,
Development Fees, Construction Fees, non-recurring 









 



management fees, loan fees, points or any other fees of a similar
nature.  Excluded shall be Development
Fees and Construction Fees paid to any Person not affiliated with the Sponsor
in connection with the actual development and construction of any Property.


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


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


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


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


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


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


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


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


Average Invested Assets.  For a specified period, the average of the
aggregate book value of the Assets before deduction for depreciation, bad debts
or other non-cash reserves, computed by taking the average of such values at
the end of each month during such period;
provided, however, that during such periods in which the Company is obtaining
regular independent valuations of the current value of its net assets for
purposes of enabling fiduciaries of employee benefit plan stockholders to
comply with applicable Department of Labor reporting requirements, “Average
Invested Assets” will equal the greater of (i) the amount determined pursuant
to the foregoing or (ii) the Assets’ aggregate valuation established by the 



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most
recent such valuation report(s) without reduction for depreciation, bad debts
or other non-cash reserves.


Board.  The Board of Directors of the Company.


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


Change of Control.  Any event (including, without limitation,
issue, transfer or other disposition of Shares of capital stock of the Company
or equity interests in the Partnership, merger, share exchange or
consolidation) after which any “person” (as that term is used in
Sections 13(d) and 14(d) of the Securities Exchange Act of 1934, as
amended) is or becomes the “beneficial owner” (as defined in Rule 13d-3 of the
Securities Exchange Act of 1934, as amended), 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.


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


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


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


Company Value.  The actual value of the Company as a going
concern based on the difference between (a) the actual value of all of its
assets as determined in good faith by the Board, including a majority of the
Independent Directors, and (b) all of its liabilities as set forth on its then
current balance sheet; provided that (i) if such Company Value is being
determined in connection with a Change of Control that establishes the Company’s
net worth (e.g., a tender offer for the Shares, sale of all of the Shares or a
merger) then the Company Value shall be the net worth established thereby, and
(ii) if such Company Value is being determined in connection with a Listing,
then the Company Value shall be equal to the number of outstanding Shares
multiplied by the Closing Price of a single Share averaged over a period of 30
trading days during which the Shares are listed or quoted for trading after the
date of Listing.  For purposes hereof, a “trading
day” shall be any day on which the NYSE is open for trading whether or not the
Shares are then Listed on the NYSE and whether or not there is an actual trade
of such Shares on any such day.  If the
holder of Convertible Shares disagrees as to the Company Value as determined by
the Board, then each of the holder of Convertible Shares and the Company
(determined by a majority of the Independent Directors) shall name one
appraiser and the two named appraisers shall promptly agree in 



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good faith to the appointment of one other appraiser whose
determination of the actual value of the Company as a going concern shall be
final and binding on the parties as to Company Value.  The cost of any such appraisal shall be split
evenly between the Company and the Advisor.


Competitive Real Estate Commission.  A real estate or brokerage commission paid
or, if no such commission is paid, the amount that customarily would be paid
for the purchase or sale of a Property that is reasonable, customary, and
competitive in light of the size, type and location of the Property.


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


Contract Purchase Price.  The amount actually paid or allocated in
respect of the purchase, development, construction or improvement of a
Property, the amount of funds advanced with respect to a Mortgage or the amount
actually paid or allocated in respect to the purchase of other Assets, in each
case exclusive of Acquisition Fees and Acquisition Expenses.


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


Convertible Shares.  The 1,000 shares of the Company’s
non-participating, non-voting, convertible stock, par value $0.0001 per share.


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


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


Director.  A member of the Board.


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


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


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


Independent Director.  A Director who is not on the date of
determination, and within the last two years from the date of determination has
not been, directly or indirectly associated with the Sponsor, the 



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Company, the Advisor or any of their Affiliates by virtue of (i)
ownership of an interest in the Sponsor, the Advisor or any of their
Affiliates, other than the Company, (ii) employment by the Sponsor, the
Company, the Advisor or any of their Affiliates, (iii) service as an officer or
director of the Sponsor, the Advisor or any of their Affiliates, other than as
a Director of the Company, (iv) performance of services, other than as a
Director of the Company, (v) service as a director or trustee of more than
three real estate investment trusts organized by the Sponsor or advised by the
Advisor, or (vi) maintenance of a material business or professional relationship
with the Sponsor, the Advisor or any of their Affiliates.  A business or professional relationship is
considered material if the aggregate gross revenue derived by the Director from
the Sponsor, the Advisor and their Affiliates exceeds 5% of either the Director’s
annual gross income during either of the last two years or the Director’s net
worth on a fair market value basis.  An
indirect association with the Sponsor or the Advisor shall include
circumstances in which a Director’s spouse, parent, child, sibling, mother- or
father-in-law, son- or daughter-in-law, or brother- or sister-in-law is or has
been associated with the Sponsor, the Advisor, any of their Affiliates, or the
Company.


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


Invested Capital.  The amount calculated by multiplying the
total number of Shares outstanding by $10.00, reduced by the portion of any
Distribution (other than any Stock Dividends) that is attributable to Net Sales
Proceeds and by any amounts paid by the Company to repurchase Shares pursuant
to the Company’s plan for repurchase of Shares.


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


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


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


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


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


Net Sales Proceeds.  In the case of a transaction described in
clause (i)(A) of the definition of Sale, the proceeds of any such transaction
less the amount of selling expenses incurred by or on behalf of the Company,
including all real estate commissions, closing costs and legal fees and
expenses. In the case of a transaction described in clause (i)(B) of such
definition, Net Sales Proceeds means the proceeds of any such transaction less
the amount of selling expenses incurred by or on behalf of the Company,
including any legal fees and expenses and other selling expenses incurred in
connection with such transaction. In 



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


NYSE.  The New York Stock Exchange, Inc.


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


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


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


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


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


Property or Properties.  As the context requires, any, or all,
respectively, of the Real Property acquired by the Company, either directly or
indirectly (whether through joint venture arrangements or other partnership or
investment interests).


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



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


Prospectus.  Prospectus has the meaning set forth in
Section 2(10) of the Securities Act, including a preliminary prospectus, an
offering circular as described in Rule 256 of the General Rules and Regulations
under the Securities Act or, in the case of an intrastate offering, any
document by whatever name known, utilized for the purpose of offering and
selling securities of the Company to the public.


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


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


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


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


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


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



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


Sponsor.  Robert M. Behringer.


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


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


Stockholders’ 9% Return.  As of any date, an aggregate amount equal to
a 9% cumulative, noncompounded, annual return on Invested Capital (calculated
like simple interest); provided, however, that for purposes of calculating the
Stockholders’ 9% Return, any Stock Dividend shall not be included as a
Distribution; and provided further that for purposes of determining the
Stockholders’ 9% Return, the return for each portion of the Invested Capital
shall commence for purposes of the calculation upon the issuance of the shares
issued in connection with such capital.


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


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


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


Termination Date.  The date of termination of this Agreement.


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 such expenses and tax incurred in connection with the issuance,
distribution, transfer, registration and Listing of the Shares, (ii) interest
payments, (iii) taxes, (iv) non-cash expenditures such as depreciation,
amortization and bad debt reserves, (v) the Subordinated Share of Net Sales
Proceeds, (vi) the Performance Fee, (vii) the Subordinated Incentive Listing Fee,
(viii) Acquisition Fees and Acquisition Expenses, (ix) real estate
commissions on the Sale of Property, and (x) other fees and expenses connected
with the acquisition, disposition, management and ownership of real estate
interests, mortgage loans or other property (including the costs of
foreclosure, insurance premiums, legal services, maintenance, repair and
improvement of property).


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



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ARTICLE II

THE ADVISOR


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


2.02         Duties
of the Advisor.  The
Advisor undertakes to use its best efforts to present to the Company potential
investment opportunities and to provide a continuing and suitable investment
program consistent with the investment objectives and policies of the Company
as determined and adopted from time to time by the Board.  In performance of this undertaking, subject
to the supervision of the Board and consistent with the provisions of the
Company’s most recent Prospectus for Shares, the Articles of Incorporation and
Bylaws, the Advisor shall, either directly or by engaging an Affiliate of the
Advisor or other Person:


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


(b)           provide
the daily management of the Company and perform and supervise the various
administrative functions reasonably necessary for the management and operations
of the Company;


(c)           maintain
and preserve the books and records of the Company, including stock books and records
reflecting a record of the Stockholders and their ownership of the Company’s
uncertificated Shares, if any, and acting as transfer agent for the Company’s
Shares;


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


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


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



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


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


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


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


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


(l)            provide
the Company with all necessary cash management services;


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


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


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


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


(q)           prepare
on behalf of the Company all reports and returns required by the Securities and
Exchange Commission, Internal Revenue Service and other state or federal
governmental agencies; and


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


2.03         Authority of Advisor.


(a)           Pursuant
to the terms of this Agreement (including the restrictions included in this
Section 2.03 and in Section 2.06), and subject to the continuing and exclusive
authority of the Board over the management of the Company, the Board hereby
delegates to the Advisor the authority to (i) locate, analyze and select
investment opportunities, (ii) structure the terms and 



 10
 






 



conditions of transactions pursuant to which
investments will be made or acquired for the Company or the Partnership, (iii)
acquire Properties, make and acquire Mortgages and invest in other Assets in
compliance with the investment objectives and policies of the Company, (iv)
arrange for financing or refinancing of Assets, (v) enter into leases for the
Properties and service contracts for the Assets, including oversight of
Affiliated companies that perform property management or other services for the
Company, (vi) oversee non-affiliated and Affiliated property managers and other
non-affiliated and Affiliated Persons who perform services for the Company, and
(vii) undertake accounting and other record-keeping functions at the Asset
level.


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


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


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


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


2.04         Bank
Accounts.  The Advisor may
establish and maintain one or more bank accounts in its own name for the
account of the Company or in the name of the Company and may collect and
deposit into any such account or accounts, and disburse from any such account
or accounts, any money on behalf of the Company, under such terms and
conditions as the Board may approve, provided that no funds shall be commingled
with the funds of the Advisor; and the Advisor shall from time to time render
appropriate accountings of such collections and payments to the Board, its
Audit Committee and the auditors of the Company.


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


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



 11
 






 



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


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


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


ARTICLE III

COMPENSATION


3.01         Fees.


(a)           Asset
Management Fee.  The Company shall
pay the Advisor a monthly Asset Management Fee of (i) with respect to operating
Assets, 0.6% of the Aggregate Assets Value for such operating Assets (including
any debt attributable to the Assets), payable on the 15th day of each month in
an amount equal to 1/12th of 0.6% of the Aggregate Assets Value for such
operating Assets as of the last day of the immediately preceding month, and
(ii) with respect to development or redevelopment Assets, 0.6% of the Contract
Purchase Price (including any debt attributable to the Assets and any budgeted
improvement costs therefor) for such development or redevelopment Assets,
payable on the 15th day of each month in an amount equal to 1/12th of 0.6% of
the total Contract Purchase Price for such development or redevelopment Assets
as of the date such amount is determinable. 
In any given month, in no event shall the Advisor be paid Asset
Management Fees pursuant to both clause (i) and clause (ii) of this Section
3.01(a) with respect to the same Asset.


(b)           Acquisition
and Advisory Fees.  The Company shall
pay the Advisor an Acquisition and Advisory Fee in an amount equal to (i) with
respect to each Asset acquired directly by the 



 12
 






 



Company, 2.5% of the Contract Purchase Price
of such Asset and (ii) with respect to each Asset acquired indirectly by the
Company through one or more of its Affiliates or Joint Ventures, 2.5% of the
Contract Purchase Price of such Asset multiplied by the Company’s
percentage equity interest in such Affiliates or Joint Ventures, in each case
payable at the time and in respect of the funds expended for (A) the
acquisition of such Asset (including any debt attributable to the Asset), (B)
to the extent that such funds are capitalized, for the development,
construction or improvement of such Asset (including any debt attributable to
the Asset) or (C) the making of a Mortgage; provided, however,
that in no event shall the Company pay the Advisor Acquisition and Advisory
Fees with respect to any temporary investment in Assets.  The total of all Acquisition Fees and any
Acquisition Expenses shall be limited in accordance with the Articles of
Incorporation.


(c)           Subordinated
Disposition Fee.  If the Advisor or
an Affiliate provides a substantial amount of the services (as determined by a
majority of the Independent Directors) in connection with the Sale of one or
more Assets, the Advisor or such Affiliate shall receive, subject to the
satisfaction of the condition outlined below, a Subordinated Disposition Fee in
an amount (the “Contingent Subordinated
Disposition Fee”) equal to (subject to the limitation in the
following paragraph) (i) in the case of the sale of Property, the lesser of (A)
one-half of a Competitive Real Estate Commission or (B) 3% of the sales price
of such Property and (ii) in the case of the sale of any Asset other than
Property, 3% of the sales price of such Asset or Assets.  The Contingent Subordinated Disposition Fee
will not be earned or paid unless and until the Stockholders have received
total Distributions in an amount equal to or in excess of the sum of their
aggregate Invested Capital plus the Stockholders’ 9% Return.  To the extent that, in any instance, the
Contingent Subordinated Disposition Fees is not earned and paid due to the
foregoing limitation, the Contingent Subordinated Disposition Fees that would
have been earned and paid had the foregoing limitation not been in place at the
time of a Sale shall be a contingent liability of the Company, which shall be
paid if and only if the conditions set forth in this subparagraph 3.01(c) have
been satisfied and, upon the satisfaction of such condition, the Company shall
pay all such Contingent Subordination Disposition Fees as if such condition had
been satisfied with respect to each such prior Sale.


The Subordinated Disposition Fee may be payable in
addition to real estate commissions paid to non-Affiliates, provided, however,
that the total real estate commissions paid to all Persons by the Company
(together with the Subordinated Disposition Fee) shall in no case exceed an
amount equal to the lesser of (i) 6% of the Contract Sales Price of an Asset or
(ii) the Competitive Real Estate Commission in respect of any Property.


In the event this Agreement is terminated prior to
such time as the Stockholders have received total Distributions in an amount
equal to or in excess of the sum of their aggregate Invested Capital plus the
Stockholders’ 9% Return through the Termination Date, the Company Value shall
be determined and any contingent liabilities for the payment of Contingent
Subordinated Disposition Fees on Assets previously sold will be paid if the
Company Value plus total Distributions received prior to the Termination Date
equals or exceeds the sum of the aggregate Invested Capital plus the
Stockholders’ 9% Return through the Termination Date and then only to the
extent of such excess.


Following Listing, and as soon as practicable after
determination of Market Value (defined below), any contingent liabilities for
the payment of the Contingent Subordinated Disposition Fees on Assets
previously sold will be earned and paid if and only if the Stockholders have
received or been deemed to have received total Distributions in an amount equal
to or in excess of the sum of the aggregate Invested Capital plus the
Stockholders’ 9% Return through the date of 



 13
 






 



Listing.  For
purposes of the preceding sentence, in addition to actual Distributions
received, Stockholders will be deemed to have received Distributions in the
amount equal to the product of the total number of Shares outstanding and the
average closing price of the Shares over the 30-trading-day period beginning
the date of Listing (the “Market Value”).  Once any Contingent Subordinated Disposition
Fees are actually paid, such amounts shall thereafter be referred to as “Subordinated
Disposition Fees.”


(d)           Subordinated
Share of Net Sales Proceeds.  Prior
to Listing but after the Stockholders have received total Distributions in an
amount equal to the sum of their aggregate Invested Capital and Stockholders’
9% Return, upon the consummation of any Sale, the Advisor shall receive a
Subordinated Share of Net Sales Proceeds in an amount equal to 15% of Net Sales
Proceeds less the amount by which the Company’s debt for borrowed money exceeds
the aggregate book value of the Company’s assets after the sale of the Asset(s)
in respect of which the Net Sales Proceeds is being determined.


Following Listing, and as soon as practicable after
determination of Market Value, if the Stockholders have received or been deemed
to have received total Distributions in an amount equal to the sum of their
aggregate Invested Capital and Stockholders’ 9% Return through the date of
Listing, the Advisor shall receive a Subordinated Share of Net Sales Proceeds
in an amount equal to 15% of Net Sales Proceeds less the amount by which the
Company’s debt for borrowed money exceeds the aggregate book value of the
Company’s assets after the sale of the Asset(s) in respect of which the Net
Sales Proceeds is being determined.  For
purposes of this subparagraph (d), in determining whether the Subordinated
Share of Net Sales Proceeds is payable following Listing, in addition to actual
Distributions received, Stockholders will be deemed to have received
Distributions in the amount equal to the Market Value.


(e)           Subordinated
Incentive Listing Fee.  Following
Listing, and as soon as practicable after determination of Market Value, the
Advisor shall be entitled to receive a Subordinated Incentive Listing Fee
payable in the form of an interest bearing promissory note (the “SILF Note”) in a principal amount equal to
15% of the amount by which (i) the market value of the outstanding Shares,
measured by taking the Market Value, plus the total of all Distributions paid
to Stockholders from the Company’s inception until the date of Listing, exceeds
(ii) the sum of (A) 100% of Invested Capital and (B) the total Distributions
required to be paid to the Stockholders in order to pay the Stockholders’ 9%
Return from inception through the date of Listing.  Interest on the SILF Note will accrue beginning on the date of Listing
at a rate deemed fair and reasonable by the Independent Directors on the date
of Listing.  The Company shall
repay the SILF Note using the entire Net Sales Proceeds of each Sale after
Listing until the SILF Note is paid in full, with interest.  If the SILF Note has not been paid in full
within five years from the date of Listing, then the Advisor, its successors or
assigns, may elect to convert the balance of the SILF Note, including accrued
but unpaid interest, into Shares at a price per Share equal to the average
Closing Price of the Shares over the ten trading days immediately preceding the
date of such election.  If the Shares are
no longer listed at such time as the SILF Note becomes convertible into Shares
as provided by this paragraph, then the price per Share, for purposes of conversion,
shall equal the fair market value for the Shares as determined by the Board
based upon the Appraised Value of the Assets as of the date of election.  The principal amount of the SILF Note shall
be referred to as “Subordinated Disposition Fees.”


(f)            Debt
Financing Fee.  In the event of the
origination of any debt financing obtained by or for the Company (including any
refinancing or assumption of debt), the Company will pay to the Advisor a debt
financing fee equal to one percent (1%) of the amount available under such
financing.



 14
 






 



(g)           Limitations
on Payments.  Notwithstanding the
foregoing, no payments shall be made under Sections 3.01(d), 3.01(e), 4.03(b)
or 4.03(c) if, at or prior to the time the payment is due, the Convertible
Shares have been converted into Shares in the case of Sections 3.01(d) and
3.01(e), or, in the case of Sections 4.03(b) and 4.03(c), the determination of
the number of Shares issuable upon conversion of the Convertible Shares has
been made in accordance with Article First, Section (iii)(c) of the Articles
Supplementary, dated as of March 22, 2006, to the Articles of Incorporation, in
each case, without any reduction in the number of Convertible Shares converted
or in the value or number of Shares to be issued upon such conversion that may
be triggered under the terms of the Convertible Shares to avoid jeopardizing
the Company’s REIT status.  If, however,
the Convertible Shares have been converted into Shares in the case of Sections
3.01(d) and 3.01(e), or, in the case of Sections 4.03(b) and 4.03(c), the
determination of the number of Shares issuable upon conversion of the
Convertible Shares has been made in accordance with Article First, Section
(iii)(c) of the Articles Supplementary, dated as of March 22, 2006, to the
Articles of Incorporation, in each case, with a reduction in the number of
Convertible Shares converted or in the value or number of Shares issued upon
such conversion triggered under the terms of the Convertible Shares to avoid
jeopardizing the Company’s REIT status, (i) no payments otherwise due and
payable under Section 3.01(d) (“Offset Payments”) shall be paid until the
aggregate amount of such Offset Payments equals the aggregate value of the
Shares (as determined at the time of such conversion as being the Company Value
divided by the number of Shares outstanding at such time) issued or issuable
upon conversion of the Convertible Shares, and (ii) any payments otherwise due
and payable under Section 3.01(e), 4.03(b) or 4.03(c) shall be reduced,
dollar-for-dollar, by an amount equal to the aggregate value of the Shares (as
determined at the time of such conversion as being the Company Value divided by
the number of Shares outstanding at such time) issued or issuable upon
conversion of the Convertible Shares.


3.02         Expenses.


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


(i)            Organization
and Offering Expenses; provided, however, that within 60 days after the end of
the month in which an Offering terminates, the Advisor shall reimburse the
Company for any Organization and Offering Expenses reimbursement received by
the Advisor pursuant to this Section 3.02, to the extent that such
reimbursement exceeds 1.5% of the Gross Proceeds (2.0% for Offerings conducted
prior to the date hereof but after February 19, 2005, and 2.5% for Offerings
conducted prior to February 19, 2005) exclusive of Gross Proceeds from shares
sold under the Company’s Distribution Reinvestment Plan.  The Advisor shall be responsible for the
payment of all Organization and Offering Expenses in excess of 1.5% of the
Gross Proceeds (2.0% for Offerings conducted prior to the date hereof but after
February 19, 2005, and 2.5% for Offerings conducted prior to February 19, 2005)
exclusive of Gross Proceeds from shares sold under the Company’s Distribution
Reinvestment Plan;


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


(iii)          the
actual cost of goods, services and materials used by the Company and obtained
from Persons not affiliated with the Advisor, other than Acquisition Expenses, 



 15
 






 



including brokerage fees paid in connection
with the purchase and sale of Shares or other securities;


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


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


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


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


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


(ix)           expenses
associated with Listing or with the issuance and distribution of Shares and
other securities of the Company, such as Selling Commissions and fees,
advertising expenses, taxes, legal and accounting fees, Listing and registration
fees, and other Organization and Offering Expenses;


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


(xi)           expenses
of organizing, revising, amending, converting, modifying, or terminating the
Company or the Articles of Incorporation;


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


(xiii)         administrative
service expenses (including personnel costs; provided, however, that no
reimbursement shall be made for costs of personnel to the extent that such
personnel perform services in transactions for which the Advisor receives a
separate fee); and


(xiv)        audit,
accounting and legal fees.


(b)           Expenses
incurred by the Advisor on behalf of the Company and payable pursuant to this
Section 3.02 shall be reimbursed no less than quarterly to the Advisor within
60 days after the end of each quarter. 
The Advisor shall prepare a statement documenting the expenses of the
Company during each quarter, and shall deliver such statement to the Company
within 45 days after the end of each quarter.


3.03         Other
Services.  Should the
Board request that the Advisor or any director, officer or employee thereof
render services for the Company other than set forth in Section 2.02, such
services shall be separately compensated at such rates and in such amounts as
are agreed by the Advisor and the 



 16
 






 



Independent
Directors, subject to the limitations contained in the Articles of
Incorporation, and shall not be deemed to be services pursuant to the terms of
this Agreement.


3.04         Reimbursement
to the Advisor.  The
Company shall not reimburse the Advisor for Total Operating Expenses to the
extent that Total Operating Expenses (including the Asset Management Fee), in
the four consecutive fiscal quarters then ended (the “Expense Year”) exceed (the “Excess Amount”) the greater of 2% of
Average Invested Assets or 25% of Net Income for such year.  Any Excess Amount paid to the Advisor during
a fiscal quarter shall be repaid to the Company.  Reimbursement of all or any portion of the Total
Operating Expenses that exceed the limitation set forth in the preceding
sentence may, at the option of the Advisor, be deferred without interest and
may be reimbursed in any subsequent Expense Year where such limitation would
permit such reimbursement if the Total Operating Expense were incurred during
such period. Notwithstanding the foregoing, if there is an Excess Amount in any
Expense Year and the Independent Directors determine that such excess was
justified, based on unusual and nonrecurring factors which they deem
sufficient, the Excess Amount may be reimbursed to the Advisor.  Within 60 days after the end of any fiscal
quarter of the Company for which there is an Excess Amount which the
Independent Directors conclude was justified and reimbursable to the Advisor,
there shall be sent to the Stockholders a written disclosure of such fact,
together with an explanation of the factors the Independent Directors
considered in determining that such Excess Amount was justified. Such
determination shall be reflected in the minutes of the meetings of the
Board.  The Company will not reimburse
the Advisor or its Affiliates for services for which the Advisor or its
Affiliates are entitled to compensation in the form of a separate fee.  All figures used in any computation pursuant
to this Section 3.04 shall be determined in accordance with generally accepted
accounting principles applied on a consistent basis.


ARTICLE
IV

TERM AND TERMINATION


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


4.02         Termination.  This Agreement will automatically terminate
upon Listing.  This agreement also may be
terminated at the option of either party (i) immediately upon a Change of
Control or (ii) upon 60 days written notice without cause or penalty (in either
case, if termination is by the Company, then such termination shall be upon the
approval of a majority of the Independent Directors).  Notwithstanding the foregoing, the provisions
of this Agreement which provide for payment to the Advisor of expenses, fees or
other compensation following the date of termination (i.e., Sections 3.01(e) and 4.03) shall continue in full
force and effect until all amounts payable thereunder to the Advisor are paid
in full.


4.03         Payments
to and Duties of Advisor upon Termination.


(a)           After
the Termination Date, the Advisor shall not be entitled to compensation for
further services hereunder except it shall be entitled to and receive from the
Company within 30 days after the effective date of such termination all unpaid
reimbursements of expenses, subject to the provisions of Section 3.04 hereof,
and all contingent liabilities related to fees payable to the Advisor prior to
termination of this Agreement, provided that the Subordinated Incentive Listing
Fee, if any, shall be paid in accordance with the provisions of Section
3.01(e).  Upon termination, the SILF Note
shall become immediately due and payable and shall be promptly paid by the 



 17
 






 



Company. 
In the event the Subordinated Incentive Listing Fee is paid to the
Advisor following Listing, no Performance Fee will be paid to the Advisor
pursuant to Sections 4.03(b) or (c) below.


(b)           Upon
termination, unless such termination is by the Company because of a material
breach of this Agreement by the Advisor or occurs upon a Change of Control, the
Advisor shall be entitled to receive a Performance Fee payable in the form of
an interest bearing promissory note (the “Performance
Fee Note”) in a principal amount equal to the product of 0.15 times the amount, if any,
by which (i) the Company Value plus the total Distributions paid to
holders of Shares through the Termination Date, exceeds (ii) the sum of the
aggregate Invested Capital plus the Stockholders’ 9% Return through the
Termination Date.  Interest on the Performance Fee Note will
accrue beginning on the Termination Date at a rate deemed fair and reasonable
by the Independent Directors.  The
Company shall repay the Performance Fee Note
using the entire Net Sales Proceeds of each Sale after the Termination Date
until the Performance Fee Note is
paid in full, with interest.  If the Performance Fee Note has not been paid
in full within five years from the Termination Date, then the Advisor, its
successors or assigns, may elect to convert the balance of the Performance Fee Note, including accrued
but unpaid interest, into Shares at a price per Share equal to the average
Closing Price of the Shares over the ten trading days immediately preceding the
date of such election if the Shares are Listed at such time.  If the Shares are not Listed at such time,
the Advisor, its successors or assigns, may elect to convert the balance of the
Performance Fee Note, including
accrued but unpaid interest, into Shares at a price per Share equal to the fair
market value for the Shares as determined by the Board based upon the Appraised
Value of the Assets on the date of election.


(c)           Notwithstanding
the foregoing, if termination occurs upon a Change of Control, the Advisor
shall be entitled to payment of a Performance Fee equal to the product of 0.15 times the amount, if any,
by which (i) the Company Value plus the total Distributions paid to
holders of Shares through the Termination Date, exceeds (ii) the sum of the
aggregate Invested Capital plus the Stockholders’ 9% Return.  No deferral of payment of the Performance Fee
may be made under this Section 4.03(c).


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


(e)           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;



 18














 


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


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


ARTICLE V

INDEMNIFICATION


5.01         Indemnification
by the Company.  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.  The foregoing indemnity
shall extend, without limitation, to any claims to the extent relating to any
of the events or outcomes set forth in the Prospectus as possible results,
outcomes or risks associated with the business and investment objectives of the
Company.  Notwithstanding the foregoing,
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.
Any indemnification of the Advisor may be made only out of the net assets of
the Company and not from Stockholders.


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


ARTICLE VI

MISCELLANEOUS


6.01         Assignment
to an Affiliate.  This
Agreement may be assigned by the Advisor to an Affiliate of the Advisor with
the approval of a majority of the Board (including a majority of the
Independent Directors).  The Advisor may
assign any rights to receive fees or other payments under this Agreement
without obtaining the approval of the Board. 
This Agreement shall not be assigned by the Company without the consent
of the Advisor, except in the case of an assignment by the Company to a
corporation or other organization which is a successor to all of the assets,
rights and obligations of the Company, in which case such successor organization
shall be bound hereunder and by the terms of said assignment in the same manner
as the Company is bound by this Agreement. 
This Agreement shall be 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 



 19
 






 



required by
the Articles of Incorporation, the Bylaws, or accepted by the party to whom it
is given, and shall be given by being delivered by hand or by overnight mail or
other overnight delivery service to the addresses set forth herein:


	
  To the Directors and to the
  Company:

  	
  Behringer Harvard REIT I, Inc.

  
	
   

  	
  15601 Dallas
  Parkway

  
	
   

  	
  Suite 600

  
	
   

  	
  Addison, Texas
  75001

  
	
   

  	
   

  
	
  To the Advisor:

  	
  Behringer Advisors 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 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 such right, remedy, power or privilege
with respect to any other occurrence.  No
waiver shall be effective unless it is in writing and is signed by the party
asserted to have granted such waiver.


6.09         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.



 20
 






 



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


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


6.12         Name.  Behringer Advisors LP and/or one or more
of its Affiliates has a proprietary interest in the names “Harvard” (for the
businesses engaged in by the Company and its Affiliates) and “Behringer” (for
all purposes).  Accordingly, and in
recognition of this right, if at any time the Company ceases to retain
Behringer Advisors LP or an Affiliate thereof to perform the services of
Advisor, the Company will, promptly after receipt of written request from
Behringer Advisors LP, cease to conduct business under or use the name “Harvard”
or “Behringer” or any diminutive thereof and the Company shall use its best
efforts to change the name of the Company to a name that does not contain the
name “Harvard” or “Behringer” or any other word or words that might, in the
sole discretion of Behringer Advisors LP, be susceptible of indication of some
form of relationship between the Company and Behringer Advisors LP or any
Affiliate thereof. Consistent with the foregoing, it is specifically recognized
that Behringer Advisors LP or one or more of its Affiliates has in the past and
may in the future organize, sponsor or otherwise permit to exist other
investment vehicles (including vehicles for investment in real estate) and
financial and service organizations having “Harvard” or “Behringer” as a part
of their name, all without the need for any consent (and without the right to
object thereto) by the Company or its Board.


6.13         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.


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


[The remainder of this page
intentionally blank]



 21














 


IN WITNESS
WHEREOF, the parties hereto have executed this
Agreement as of the date first above written.


	
  

  	
  BEHRINGER HARVARD REIT I, INC.

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  By: 

  	
  /s/ Gerald J.
  Reihsen, III

  
	
   

  	
   

  	
  Gerald J.
  Reihsen, III

  
	
   

  	
   

  	
  Executive Vice
  President — Corporate

  
	
   

  	
   

  	
  Development
  & Legal

  
	
   

  	
   

  	
   

  
	
   

  	
  BEHRINGER ADVISORS LP

  
	
   

  	
   

  	
   

  
	
   

  	
  By:

  	
  Harvard Property Trust, LLC,

  
	
   

  	
   

  	
  its General Partner

  
	
   

  	
   

  	
   

  
	
   

  	
  By:

  	
  /s/ Gerald J. Reihsen, III

  
	
   

  	
   

  	
  Gerald J. Reihsen, III

  
	
   

  	
   

  	
  Executive Vice
  President — Corporate

  
	
   

  	
   

  	
  Development
  & Legal