**Exhibit10.1**

 

**AMENDEDAND RESTATED**

 

**ADVISORYMANAGEMENT AGREEMENT**

 

This AMENDED AND RESTATED ADVISORY MANAGEMENTAGREEMENT (this “**Agreement**”) isentered into on this the 2nd day of October, 2009, by and between BEHRINGERHARVARD OPPORTUNITY REIT II, INC., a Maryland corporation (the “**Company**”), and BEHRINGER HARVARDOPPORTUNITY ADVISORS II LP, a Texas limited partnership (the “**Advisor**”).

 

**W I T N E SS E T H**

 

**WHEREAS**, the Company and the Advisor previously entered into that certainAdvisory Management Agreement dated January 4, 2008, amended by thatcertain First Amendment to the Advisory Management Agreement dated August 13,2008 (collectively, the “Original Agreement”); and

 

**WHEREAS**, the Company and the Advisor desire to amend the Original Agreement to,among other things, (i) change the timing in determining the reimbursementof organization and offering expenses by the Company during the Offering (asdefined below) and to amend certain other terms regarding the reimbursement oforganization and offering expenses, including the waiver of certainorganization and offering expenses, (ii) provide that acquisition expensesreimbursable to the Advisor include expenses related to the Advisor directlyproviding certain accounting and environmental services in connection with anacquisition, which services are customarily provided by third parties andreimbursed as third-party expenses in connection with completed acquisitions,and (iii) permit the parties to audit the records, books and accounts ofthe other party, as related to any fees and reimbursements paid to the Advisor;

 

**WHEREAS**, the Companydesires to avail itself of the experience, sources of information, advice,assistance and certain facilities available to the Advisor and to have theAdvisor undertake the duties and responsibilities hereinafter set forth, onbehalf of, and subject to the supervision of, the Board, all as providedherein; and

 

**WHEREAS**, the Advisoris willing to undertake to provide these services, subject to the supervisionof the Board, on the terms and conditions hereinafter set forth.

 

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

 

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**ARTICLE ONE**

 

**DEFINITIONS**

 

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

 

**Acquisition Expenses**. Anon-accountable acquisition expense reimbursement in the amount of: (i) 0.25%of the funds paid for purchasing an Asset, including any debt attributable tothe Asset, plus 0.25% of the funds budgeted for development, construction orimprovement 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 aloan or other investment.  In addition,to the extent the Advisor directly provides services formerly provided orusually provided by third parties, including without limitation accountingservices related to the preparation of audits required by the Securities andExchange Commission, property condition reports, title services, titleinsurance, insurance brokerage or environmental services related to the preparationof environmental assessments in connection with a prospective or completedinvestment (the “Additional Services”), the direct employee costs and burden tothe Advisor of providing the Additional Services shall be Acquisition Expenses.  Acquisition Expenses also include anyinvestment-related expenses due to third parties in the case of a completedinvestment, including, but not limited to legal fees and expenses, travel andcommunications expenses, costs of appraisals, accounting fees and expenses, third-partybrokerage or finder’s fees, title insurance, premium expenses and other closingcosts.  Acquisition Expenses also includeany payments made to (i) a prospective seller of an asset, (ii) anagent of a prospective seller of an asset, or (iii) a party that has theright to control the sale of an asset intended for investment by the Companythat are not refundable and that are not ultimately applied against thepurchase price for such asset (“Non-Refundable Payments”).

 

**Acquisition Fees**. Any and all fees andcommissions, exclusive of Acquisition Expenses but including the Acquisitionand Advisory Fees, paid by any Person to any other duly qualified and licensedPerson (including any fees or commissions paid by or to any duly qualified andlicensed Affiliate of the Company or the Advisor) in connection with making orinvesting in Mortgages or other loans or the purchase, development orconstruction of an Asset, including, without limitation, real estatecommissions, selection fees, investment banking fees, third party seller’s fees(to the extent the Company agrees to pay any such fees as part of anacquisition), Development Fees, Construction Fees, non-recurring managementfees, loan fees, points or any other fees of a similar nature. Excluded shallbe Development Fees and Construction Fees paid to any Person not affiliatedwith the Sponsor in connection with the actual development and construction ofany Property.

 

**Acquisition and Advisory Fees****.**  The feespayable to the Advisor pursuant to Section 3.01(b).

 

**Advisor**. Behringer HarvardOpportunity Advisors II LP, a Texas limited partnership, any successor advisorto the Company, or any Person to which Behringer Harvard Opportunity AdvisorsII LP or any successor advisor subcontracts all or substantially all of itsfunctions.

 

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

 

**Articles of Incorporation**. The Articlesof Incorporation of the Company filed with the Maryland State Department ofAssessments and Taxation in accordance with the Maryland General CorporationLaw, as amended or restated from time to time.

 

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

 

**Asset Management Fee**. The feepayable to the Advisor for day-to-day professional management services inconnection with the Company and its investments in Assets pursuant to Section 3.01(a) ofthis Agreement.

 

**Average Invested Assets**. For aspecified period, the average of the aggregate book value of the Assets beforededuction for depreciation, bad debts or other non-cash reserves, computed bytaking the average of the values at the end of each month during the period.

 

**Board**. The Board of Directors ofthe Company.

 

**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 Sharesof capital stock of the Company or equity interests in the Partnership, merger,share exchange or consolidation) after which any “person” (as that term is usedin Sections 13(d) and 14(d) of the Exchange Act) is or becomesthe “beneficial owner” (as defined in Rule 13d-3 of the Exchange Act),directly or indirectly, of securities of the Company or the Partnershiprepresenting greater than 50% of the combined voting power of the Company’s orthe Partnership’s then outstanding securities, respectively; provided, that, aChange of Control shall not be deemed to occur as a result of any widelydistributed 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 theproperties or assets of the Company or the Partnership, taken as a whole, toany “person” (as that term is used in Sections 13(d) and 14(d) ofthe Exchange Act).

 

**Code**. Internal Revenue Code of1986, as amended from time to time, or any successor statute thereto. Referenceto any provision of the Code shall mean the provision as in effect from time totime, as the same may be amended, and any successor provision thereto, asinterpreted by any applicable regulations as in effect from time to time.

 

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**Company**. Behringer HarvardOpportunity REIT II, Inc., a corporation organized under the laws of theState of Maryland.  Unless the contextclearly indicates otherwise, references to the Company shall include its directand indirect subsidiaries, including the Partnership.

 

**Competitive Real Estate Commission**. A real estateor brokerage commission paid or, if no commission is paid, the amount thatcustomarily would be paid for the purchase or sale of a Property that isreasonable, customary, and competitive in light of the size, type and locationof the Property (as determined by the Board, including a majority of theIndependent Directors).

 

**Construction Fee**. A fee or other remunerationfor acting as general contractor and/or construction manager to constructimprovements, supervise and coordinate projects or to provide major repairs orrehabilitations on a Property.

 

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

 

**Contract Sales Price**. The totalconsideration provided for in the sales contract for the Sale of a Property.

 

**Cost of Investment**. For each Asset, (i) withrespect to an Asset wholly owned by the Company or any wholly owned subsidiary,the Fully Loaded Cost, and (ii) inthe case of an Asset owned by any Joint Venture or in some other manner inwhich the Company is a co-venturer or partner or otherwise a co-owner, (A) the Fully Loaded Cost if the Company (or anysubsidiary) controls the Asset; owns a majority interest, directly orindirectly, in the Asset; or provides a substantial amount of services in theacquisition, development, or management of the Asset (as determined by amajority of the Independent Directors) or (B) the portion of the FullyLoaded Cost that is attributable to the Company’s investment in theJoint 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 thedealer manager for an Offering.

 

**Development Fee**. A fee for the packaging ofan Asset, including the negotiation and approval of plans, and any assistancein obtaining zoning and necessary variances and financing for a specificdevelopment Property, either initially or at a later date.

 

**Director**. A member of the Board.

 

**Disposition Fee**. The fee payable to theAdvisor for services provided in connection with the Sale of one or moreProperties pursuant to Section 3.01(c).

 

**Distributions**. Any dividends or otherdistributions of money or other property by the Company to Stockholders,including distributions that may constitute a return of capital for federalincome 

 

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tax purposes but excluding distributions that constitute the redemptionof any Shares and excluding distributions on any Shares before theirredemption.

 

**Exchange Act**.  TheSecurities Exchange Act of 1934, as amended from time to time, or any successorstatute thereto.  Reference to anyprovision of the Exchange Act shall mean such provision as in effect from timeto time, as the same may be amended, and any successor provision thereto, asinterpreted by any applicable regulations as in effect from time to time.

 

**Fully Loaded Cost**.  TheContract Purchase Price of an Asset at the time of acquisition (exclusive ofclosing costs), plus the amount actually paid and/or budgeted for thedevelopment, construction or improvement of the Asset, inclusive of expensesrelated thereto, plus the amount of any subsequent debt attributable to suchAsset.

 

**Gross Proceeds**. The aggregate purchaseprice of all Shares sold for the account of the Company through an Offering,without deduction for Selling Commissions, volume discounts, any marketingsupport and due diligence expense reimbursement or Organization and OfferingExpenses. For the purpose of computing Gross Proceeds, the purchase price ofany Share for which reduced Selling Commissions are paid to the Dealer Manageror 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 pursuantto the Prospectus for the Offering without reduction.

 

**Independent Director**. A Directorwho is not on the date of determination, and within the last two years from thedate of determination has not been, directly or indirectly associated with theSponsor or the Advisor by virtue of (i) ownership of an interest in theSponsor, the Advisor or any of their Affiliates, other than the Company, (ii) employmentby the Sponsor, the Company, the Advisor or any of their Affiliates, (iii) serviceas an officer or director of the Sponsor, the Advisor or any of theirAffiliates, other than as a Director of the Company, (iv) performance ofservices for the Company, other than as a Director of the Company, (v) serviceas a director or trustee of more than three real estate investment trustsorganized by the Sponsor or advised by the Advisor, or (vi) maintenance ofa material business or professional relationship with the Sponsor, the Advisoror 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 interestin a REIT or other real estate program organized by the Sponsor or advised ormanaged by the Advisor or its Affiliates shall not, by itself, cause a Directorto be deemed associated with the Sponsor or the Advisor.  A business or professional relationship isconsidered material if the aggregate annual gross revenue derived by theDirector from the Sponsor, the Advisor and their Affiliates (excluding fees forserving as a director of the Company or other REIT or real estate programorganized or advised or managed by the Advisor or its Affiliates) exceeds fivepercent of either the Director’s annual gross income during either of the lasttwo years or the Director’s net worth on a fair market value basis. An indirectassociation with the Sponsor or the Advisor shall include circumstances inwhich 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 associatedwith 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 tradesecrets, confidential information rights, patents, invention rights,copyrights, service marks, trademarks, know-how, or similar intellectualproperty rights and all applications 

 

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and rights to apply for such rights, as well as any and all moralrights, rights of privacy, publicity and similar rights and license rights ofany type under the laws or regulations of any governmental, regulatory, orjudicial authority, foreign or domestic and all renewals and extensionsthereof.

 

**Joint Ventures**. A legal organizationformed to provide for the sharing of the risks and rewards in an enterpriseco-owned and operated for mutual benefit by two or more business partners andestablished to acquire or hold Assets.

 

**Listing or Listed**.  The filing of a Form 8-A to register anyclass of the Company’s securities on a national securities exchange and anoriginal listing application related thereto; provided, that the Shares shallnot be deemed to be Listed until trading in the Shares shall have commenced onthe relevant national securities exchange.

 

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

 

**NASAA Guidelines**. The Statement of PolicyRegarding Real Estate Investment Trusts adopted by the North AmericanSecurities Administrators Association, Inc. on May 7, 2007, and ineffect on the date hereof.

 

**Net Income**. For any period, theCompany’s total revenues applicable to that period, less the total expensesapplicable to the period other than additions to reserves for depreciation, baddebts or other similar non-cash reserves and excluding any gain from the saleof the Assets.

 

**Offering**. Any public offering ofShares pursuant to an effective registration statement filed under theSecurities Act, other than a public offering of Shares under a distributionreinvestment plan.

 

**Organization and Offering Expenses**. Any and allcosts and expenses incurred by and to be paid by the Company in connection withan Offering, the formation of the Company, and including the qualification andregistration of the Offering and the marketing and distribution of its Shares,including, without limitation:  totalunderwriting and brokerage discounts and commissions (including fees of theunderwriters’ attorneys); expenses for printing, engraving, amendingregistration statements and supplementing prospectuses; mailing anddistribution costs; salaries of employees while engaged in sales activity, suchas preparing supplemental sales literature; telephone and othertelecommunication costs; all advertising and marketing expenses, including thecosts related to investor and broker-dealer meetings; charges of transferagents, registrars, trustees, escrow holders, depositories and experts; filing,registration and qualification fees and taxes relating to the Offering underfederal and state laws; and accountants’ and attorneys’ fees.

 

**Partnership**. Behringer HarvardOpportunity OP II, LP, a Delaware limited partnership, through which theCompany may own Assets or otherwise conduct its operations.

 

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

 

**Property****or Properties**. As thecontext requires, any, or all, respectively, of the Real Property acquired bythe Company, either directly or indirectly (whether through Joint Ventures orother investment interests, regardless of whether the Company consolidates thefinancial results of these entities).

 

**Proprietary Property**. All modelingalgorithms, tools, computer programs, know-how, methodologies, processes,technologies, ideas, concepts, skills, routines, subroutines, operatinginstructions and other materials and aides used in performing the duties setforth in Section 2.02 that relate to advice regarding current andpotential Assets, and all modifications, enhancements and derivative works ofthe foregoing.

 

**Prospectus**. Prospectus has the meaningset forth in Section 2(a)(10) of the Securities Act, including apreliminary prospectus, an offering circular as described in Rule 253 ofthe General Rules and Regulations under the Securities Act or, in the caseof an intrastate offering, any document by whatever name known, utilized forthe purpose of offering and selling securities of the Company.

 

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

 

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

 

**Sale or Sales**. (i) Any transactionor series of transactions whereby: (A) the Company or the Partnershipdirectly or indirectly (except as described in other subsections of thisdefinition) sells, grants, transfers, conveys, or relinquishes its ownership ofany Property or portion thereof, including the lease of any Property consistingof a building only, and including any event with respect to any Property whichgives rise to a significant amount of insurance proceeds or condemnationawards; (B) the Company or the Partnership directly or indirectly (exceptas described in other subsections of this definition) sells, grants, transfers,conveys, or relinquishes its ownership of all or substantially all of theinterest of the Company or the Partnership in any Joint Venture in which it isa co-venturer or partner; (C) any Joint Venture directly or indirectly(except as described in other subsections of this definition) in which theCompany or the Partnership as a co-venturer or partner sells, grants,transfers, conveys, or relinquishes its ownership of any Property or portionthereof, including any event with respect to any Property which gives rise toinsurance claims or condemnation awards; (D) the Company or thePartnership directly or indirectly (except as described in other subsections ofthis definition) sells, grants, conveys or relinquishes its interest in anyMortgage or other loan or portion thereof (including with respect to anyMortgage or other loan, all payments thereunder or in satisfaction thereofother than regularly scheduled interest payments of amounts owed pursuant tothe Mortgage or other loan) and any event with respect to a Mortgage or otherloan which gives rise 

 

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to a significant amount of insurance proceeds or similar awards; or (E) theCompany or the Partnership directly or indirectly (except as described in othersubsections of this definition) sells, grants, transfers, conveys, orrelinquishes its ownership of any other Asset not previously described in thisdefinition or any portion thereof, but (ii) not including any transactionor series of transactions specified in clause (i) (A) through (E) abovein which the proceeds of such transaction or series of transactions arereinvested in one or more Assets within 180 days thereafter.

 

**Securities Act**. The Securities Act of1933, as amended from time to time, or any successor statute thereto. Referenceto any provision of the Securities Act shall mean the provision as in effectfrom time to time, as the same may be amended, and any successor provisionthereto, as interpreted by any applicable regulations as in effect from time totime.

 

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

 

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

 

**Soliciting Dealers**. Broker-dealers who aremembers of the Financial Industry Regulatory Authority, or that are exempt frombroker-dealer registration, and who, in either case, have executedparticipating broker or other agreements with the Dealer Manager to sellShares.

 

**Sponsor**. Sponsor has the meaningascribed to such term in the Articles of Incorporation.

 

**Stockholders**. The record holders of theCompany’s Shares as maintained in the books and records of the Company or itstransfer agent.

 

**Termination Date**. The date of termination ofthis Agreement.

 

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

 

**Total Operating Expenses**. All costs andexpenses paid or incurred by the Company, as determined under generallyaccepted accounting principles, which are in any way related to the operationof the Company or to Company business, including the Asset Management Fee, butexcluding (i) the expenses of raising capital such as Organization andOffering Expenses, legal, audit, accounting, underwriting, brokerage, listing,registration, and other fees, printing and other expenses and tax incurred in connectionwith the issuance, distribution, transfer, registration and Listing of theShares, (ii) interest payments, (iii) taxes, (iv) non-cashexpenditures such as depreciation, amortization and bad debt reserves, (v) AcquisitionFees and Acquisition Expenses, (vi) real estate commissions on the Sale ofAssets (including the Disposition Fee), and (vii) other fees and expensesconnected with the acquisition, disposition, management and ownership of realestate interests, mortgage loans or other property (including the costs offoreclosure, insurance premiums, legal services, maintenance, repair andimprovement of property).

 

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**Value of Investment**.  For each Asset, if available, (i) withrespect to an Asset wholly owned by the Company or any wholly owned subsidiary,the Asset’s value establishedby the most recent independent valuation report (without reduction fordepreciation, bad debts or other non-cash reserves), and (ii) in the case of an Asset owned by any JointVenture or in some other manner in which the Company is a co-venturer orpartner or otherwise a co-owner, (A) the Asset’s value established by the most recent independentvaluation report (without reduction for depreciation, bad debts or other non-cashreserves) if the Company (or anysubsidiary) controls the Asset; owns a majority interest, directly orindirectly, in the Asset; or provides a substantial amount of services in theacquisition, development, or management of the Asset (as determined by amajority of the Independent Directors) or (B) the portion of theAsset’s value established by the most recent independent valuation report(without reduction for depreciation, bad debts or other non-cash reserves) thatis attributable to the Company’s investment in the Joint Venture or otherinterest in such Asset if the Company does not control, own a majority of, orprovide substantial services in the acquisition, development, or management of,the Asset.  Nothing in this definition isintended to obligate the Advisor to obtain independent valuations at any pointin time beyond those specified in the Company’s Prospectus.

 

**ARTICLE II**

 

**THE ADVISOR**

 

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

 

2.02         **Duties of the Advisor**. The Advisor shall bedeemed to be in a fiduciary relationship to the Company and its Stockholders.Subject to Section 2.08, the Advisor undertakes to use its commerciallyreasonable best efforts to present to the Company potential investmentopportunities consistent with the investment objectives and policies of theCompany as determined and adopted from time to time by the Board. In performingits duties, subject to the supervision of the Board and consistent with theprovisions of the Company’s most recent Prospectus for Shares, the Articles ofIncorporation and Bylaws, the Advisor shall, either directly or by engaging aduly qualified and licensed Affiliate of the Advisor or other duly qualifiedand licensed Person:

 

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

 

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

 

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

 

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(d)           investigate, select, and, on behalf of the Company,engage and conduct business with the duly qualified and licensed Persons as theAdvisor 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 andany and all agents for any of the foregoing, including duly qualified andlicensed Affiliates of the Advisor, and duly qualified and licensed Personsacting in any other capacity deemed by the Advisor necessary or desirable forthe performance of any of the foregoing services, including but not limited toentering into contracts in the name of the Company with any of the foregoing;

 

(e)           consult with the officers and the Board and assistthe Board in the formulation and implementation of the Company’s financialpolicies, and, as necessary, furnish the Board with advice and recommendationswith respect to the making of investments consistent with the investmentobjectives and policies of the Company and in connection with any borrowingsproposed to be undertaken by the Company;

 

(f)            subject to the provisions of Sections 2.02(h) and2.03 hereof, (i) locate, analyze and select potential investments inAssets, (ii) structure and negotiate the terms and conditions oftransactions pursuant to which investment in Assets will be made; (iii) makeinvestments in Assets on behalf of the Company or the Partnership in compliancewith the investment objectives and policies of the Company; (iv) arrangefor financing and refinancing and make other changes in the asset or capitalstructure of, and dispose of, reinvest the proceeds from the sale of, orotherwise deal with the investments in, Assets; and (v) enter into leasesof Property and service contracts for Assets with duly qualified and licensedPersons and, to the extent necessary, perform all other operational functionsfor the maintenance and administration of the Assets, including the servicingof Mortgages;

 

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

 

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

 

(i)            negotiate on behalf of the Company with banks orlenders for loans to be made to the Company, negotiate on behalf of the Companywith investment banking firms and broker-dealers, and negotiate private salesof 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 Advisorshall be acting as broker-dealer or underwriter; and provided, further, thatany fees and costs payable to third parties incurred by the Advisor inconnection with the foregoing shall be the responsibility of the Company;

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

2.03         **Authorityof Advisor**.

 

(a)           Pursuant to the terms of this Agreement (includingthe restrictions included in this Section 2.03 and in Section 2.06),and subject to the continuing and exclusive authority of the Board over themanagement of the Company, the Board hereby delegates to the Advisor theauthority to (i) locate, analyze and select investment opportunities, (ii) structurethe terms and conditions of transactions pursuant to which investments will bemade or acquired for the Company or the Partnership, (iii) acquireProperties, make and acquire Mortgages and other loans and invest in otherAssets in compliance with the investment objectives and policies of theCompany, (iv) arrange for financing or refinancing of Assets, (v) enterinto leases for the Properties and service contracts for the Assets with dulyqualified and licensed non-affiliated and Affiliated Persons, includingoversight of non-affiliated and Affiliated Persons that perform propertymanagement, acquisition, advisory, disposition or other services for theCompany, (vi) oversee duly 

 

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qualified and licensed property managers andother 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 inAssets by the Company or the Partnership (as well as any financing acquired bythe Company or the Partnership in connection with the investment), will requirethe prior approval of the Board (including a majority of the IndependentDirectors).

 

(c)           The prior approval of a majority of the IndependentDirectors and a majority of the Board not otherwise interested in thetransaction will be required for each transaction with the Advisor or itsAffiliates.

 

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

 

The Board may, at any time upon the giving ofnotice 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 containedherein, the Advisor shall henceforth submit to the Board for prior approval theproposed transactions involving investments in Assets as thereafter requireprior approval; provided, however, that the modification or revocation shall beeffective upon receipt by the Advisor and shall not be applicable to investmenttransactions to which the Advisor has committed the Company prior to the dateof receipt by the Advisor of the notification.

 

2.04         **Bank Accounts**. The Advisor may establish and maintain oneor more bank accounts in its own name for the account of the Company or in thename 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 fundsof the Company or the Partnership shall be commingled nor shall any of suchfunds be commingled with the funds of the Advisor; and the Advisor shall fromtime 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 allits activities hereunder and make the records available for inspection by theBoard and by counsel, auditors and authorized agents of the Company, at anytime or from time to time during normal business hours. The Advisor shall atall reasonable times have access to the books and records of the Company.

 

2.06         **Limitations on Activities**. Anything else in thisAgreement to the contrary notwithstanding, the Advisor shall refrain fromtaking any action which, in its sole judgment made in good faith, would (a) adverselyaffect the status of the Company as a REIT, (b) subject the Company toregulation under the Investment Company Act of 1940, as amended, or (c) violateany law, rule, regulation or statement of policy of any governmental body oragency having jurisdiction over the Company, the Shares or any of the Company’ssecurities, or otherwise not be permitted by the Articles of Incorporation orBylaws, except if the action shall be ordered by the Board, in which case theAdvisor shall notify promptly the Board of the Advisor’s judgment of thepotential impact of the action and shall refrain from taking the action 

 

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

 

2.07         **Relationship with Directors**. Directors, officers andemployees of the Advisor or an Affiliate of the Advisor may serve as Directors,officers or employees of the Company, except that no director, officer oremployee of the Advisor or its Affiliates who also is a Director shall receiveany compensation from the Company for serving as a Director other thanreasonable reimbursement for travel and related expenses incurred in attendingmeetings of the Board.

 

2.08         **Other Activities of the Advisor**. Nothing herein containedshall 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, sponsoredor organized by the Advisor or its Affiliates; nor shall this Agreement limitor restrict the right of any director, officer, employee, or stockholder of theAdvisor or its Affiliates to engage in any other business or to render servicesof any kind to any other Person. The Advisor may, with respect to anyinvestment in which the Company is a participant, also render advice andservice to each and every other participant therein. The Advisor shall reportto the Board the existence of any condition or circumstance, existing oranticipated, of which it has knowledge, which creates or could create aconflict of interest between the Advisor’s obligations to the Company and itsobligations to or its interest in any other Person. The Advisor or itsAffiliates shall promptly disclose to the Board knowledge of such condition orcircumstance.  The Advisor shall informthe Board at least quarterly of the investment opportunities that have beenoffered to other programs with similar investment objectives sponsored by theSponsor, Advisor, Director or their Affiliates. If the Sponsor, Advisor, Director or Affiliates thereof have sponsoredother investment programs with similar investment objectives which haveinvestment funds available at the same time as the Company, it shall be theduty of the Board (including the Independent Directors) to adopt the method setforth in the Company’s most recent Prospectus for its Shares or anotherreasonable method by which investments are to be allocated to the competinginvestment entities and to use their best efforts to apply such method fairlyto the Company.

 

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

 

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**ARTICLE III**

 

**COMPENSATION AND REIMBURSEMENT OF SPECIFIED COSTS**

 

3.01         **Fees**.

 

(a)           Asset Management Fee. The Company shall pay theAdvisor a monthly Asset Management Fee on the 15th day of eachmonth in an amount equal to 1/12 th of 1.0% ofthe sum of, for each and every Asset, the higher of the Cost of Investment orthe Value of Investment.  The Advisor, inits sole discretion, may waive, reduce or defer all or any portion of the AssetManagement Fee to which it would otherwise be entitled.

 

(b)           Acquisition and Advisory Fees. The Companyshall pay the Advisor a fee in the amount of 2.5% of the Contract PurchasePrice of each Asset as Acquisition and Advisory Fees.  The total of all Acquisition Fees and anyAcquisition Expenses shall be limited in accordance with the Articles ofIncorporation.  Acquisition and AdvisoryFees shall be paid as follows: (1) for real property (including propertieswhere development/redevelopment is expected), at the time of acquisition, (2) fordevelopment/redevelopment projects (other than the initial acquisition of thereal property), at the time a final budget is approved, and (3) for loansand similar assets (including without limitation mezzanine loans), quarterlybased 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 shalldetermine the actual amounts paid.  Tothe extent the amounts actually paid vary from the budgeted amounts on which theAcquisition and Advisory Fee was initially based, the Advisor will pay orinvoice the Company for 2.5% of the budget variance such that the Acquisitionand Advisory Fee is ultimately 2.5% of amounts expended on suchdevelopment/redevelopment project.  TheAdvisor, in its sole discretion, may waive, reduce or defer all or any portionof the Acquisition and Advisory Fees to which it would otherwise be entitled.

 

(c)           Disposition Fee. If the Advisor or anAffiliate provides a substantial amount of services (as determined by amajority of the Independent Directors) in connection with the Sale of one ormore Assets, the Advisor or the Affiliate shall receive, subject to thesatisfaction of the condition outlined below, a Disposition Fee in an amount(the “**Disposition Fee**”) equal to(subject to the limitation in the following paragraph) (i) in the case ofthe sale of Property, the lesser of (A) one-half of a Competitive RealEstate Commission or (B) 3% of the sales price of the Property and (ii) inthe case of the sale of any Asset other than Property, 3% of the sales price ofthe Asset or Assets.

 

The Disposition Fee may be payable inaddition to real estate commissions paid to persons not affiliated with theCompany or the Advisor and their respective Affiliates; provided, however, thatthe total real estate commissions paid to all Persons by the Company (togetherwith the Disposition Fee) shall in no case exceed an amount equal to the lesserof (i) 6% of the Contract Sales Price of an Asset or (ii) theCompetitive Real Estate Commission in respect of any Property.  The Advisor, in its sole discretion, may 

 

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waive, reduce or defer all or any portion ofthe Disposition Fee to which it would otherwise be entitled.

 

(d)           Debt Financing Fee. In the event of any debtfinancing 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 theamount available under the financing. The Debt Financing Fee includes the reimbursement of the specified costincurred by the Advisor of engaging third parties to source debt financing, andnothing herein shall prevent the Advisor from entering fee-splittingarrangements with third parties with respect to the Debt Financing Fee.  The Advisor, in its sole discretion, maywaive, reduce or defer all or any portion of the Debt Financing Fee to which itwould otherwise be entitled.

 

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

 

3.02         **Expenses**.

 

(a)           In addition to the compensation paid to the Advisorpursuant to Section 3.01 hereof and except as noted in Section 2.09above, the Company shall pay directly or reimburse the Advisor for all of thecosts and expenses paid or incurred by the Advisor that are in any way relatedto the operations of the Company or the business of the Company or the servicesthe Advisor provides to the Company pursuant to this Agreement, including, butnot limited to:

 

(i)            Organization and Offering Expenses;

 

(ii)           Acquisition Fees and Acquisition Expenses;

 

(iii)          the actual cost of goods, services and materialsused by the Company and obtained from Persons not affiliated with the Advisor,other than Acquisition Expenses, including brokerage fees paid in connectionwith 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 andtaxes as an expense of doing business;

 

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

 

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

 

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

 

(ix)           except as otherwise limited by the Articles ofIncorporation, expenses associated with Listing or with the issuance anddistribution of Shares and other securities of the Company, such as sellingcommissions and fees, advertising expenses, taxes, legal and accounting feesand Listing and registration fees, but excluding Organization and OfferingExpenses;

 

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

 

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

 

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

 

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

 

(xiv)        audit, accounting and legal fees.

 

(b)           Expenses, other than Organization and OfferingExpenses (which shall be reimbursed in accordance with subsection (c) herein),incurred by the Advisor on behalf of the Company and payable pursuant to this Section 3.02shall be reimbursed no less than quarterly to the Advisor within 60 days afterthe end of each quarter.  The Advisorshall prepare a statement documenting the expenses of the Company during eachquarter, including Organization and Offering Expenses, and shall deliver thestatement 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 andthe dealer manager agreement or similar 

 

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agreement or agreements that the Companyenters into in connection with any Offering. Organization and Offering Expenses other than Selling Commissions andthe dealer manager fee incurred by the Advisor on behalf of the Company on orafter January 1, 2009 and payable pursuant to this Section 3.02 shallbe reimbursed no less than quarterly to the Advisor within 60 days after theend of each quarter until an aggregate of $7,500,000 of such Organization andOffering Expenses have been reimbursed to the Advisor.  Thereafter, no such Organization and OfferingExpenses shall be reimbursed to the Advisor until the Advisor has prepared anddelivered to the Company within 90 days after the end of the year in which thecurrent Offering ends a reconciliation of amounts of Organization and OfferingExpenses incurred in connection with such Offering and the reimbursementobligations of the Company therefor under this Agreement, unless the terms ofthis Agreement are amended upon renewal to provide otherwise in connection withany subsequent Offering.  The Advisor, onbehalf of itself and its Affiliates, and its and their respective successorsand assigns, hereby waives the Company’s obligation to pay $3,500,000 ofOrganization and Offering Expenses (other than Selling Commissions and thedealer manager fee) incurred by the Advisor on behalf of the Company through December 31,2008.  Notwithstanding the foregoing, theCompany shall not reimburse the Advisor, and the Advisor shall reimburse theCompany, to the extent that the total amount spent by the Company onOrganization and Offering Expenses (other than Selling Commissions and thedealer manager fee and excluding the $3,500,000 of Organization and OfferingExpenses reimbursement waived by the Advisor as set forth above) would exceed1.5% 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 theinvestment-related expenses that the Company or the Advisor incurs that are dueto third parties or in connection with providing the Additional Services withrespect to investments the Company does not make other than Non-RefundablePayments and (ii) the Company shall be responsible for paying directly orreimbursing the Advisor for all Non-Refundable Payments.

 

3.03         **Other Services**. Should the Board request that the Advisoror any director, officer or employee thereof render services for the Companyother than set forth in Section 2.02, the services shall be separatelycompensated at the rates and in the amounts as are agreed by the Advisor andthe Independent Directors, subject to the limitations contained in the Articlesof Incorporation, and shall not be deemed to be services pursuant to the termsof this Agreement.

 

3.04         **Reimbursement to the Advisor**. The Company shall notreimburse the Advisor for Total Operating Expenses to the extent that TotalOperating Expenses (including the Asset Management Fee), in the fourconsecutive fiscal quarters then ended (the “**ExpenseYear**”) exceed (the “**Excess Amount**”)the greater of 2% of Average Invested Assets or 25% of Net Income for thatperiod of four consecutive fiscal quarters. Any Excess Amount paid to theAdvisor during a fiscal quarter shall be repaid to the Company. Reimbursementof all or any portion of the Total Operating Expenses that exceed thelimitation set forth in the preceding sentence may, at the option of theAdvisor, be deferred without interest and may be reimbursed in any subsequentExpense Year where such limitation would permit such reimbursement if the TotalOperating Expense were incurred during such period. Notwithstanding theforegoing, if there is an Excess Amount in any Expense Year and the IndependentDirectors determine that all 

 

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or a portion of such excess was justified, based on unusual andnonrecurring factors which they deem sufficient, the Excess Amount may bereimbursed to the Advisor.  If theIndependent Directors determine such excess was justified, then, after the endof any fiscal quarter of the Company for which there is an Excess Amount forthe 12 months then ended paid to the Advisor, the Advisor, at the direction ofthe Independent Directors, shall cause such fact to be disclosed in the nextquarterly report of the Company or in a separate writing and sent to theStockholders within 60 days of such quarter end, together with an explanationof the factors the Independent Directors considered in determining that suchExcess Amount was justified. Such determination shall be reflected in theminutes of the meetings of the Board. The Company will not reimburse theAdvisor or its Affiliates for services for which the Advisor or its Affiliatesare entitled to compensation in the form of a separate fee. All figures used inany computation pursuant to this Section 3.04 shall be determined inaccordance with generally accepted accounting principles applied on aconsistent basis.

 

3.05         **Auditof Advisor Payments**.  Itis the intention of the parties hereto to conform strictly to the applicableprovisions 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 havethe right, upon reasonable written notice, to engage a separate audit, on aconfidential basis, of its own and the other party’s records, books andaccounts in respect of Advisor Payments to ascertain whether the AdvisorPayments were properly determined and paid. An audit may be engaged only once in any 12-month period regardless ofwhich party engages the audit.  Any suchaudit shall be conducted by an independent certified public accounting firm ofrecognized national standing designated by the party requesting the audit (the“**Requesting Party**”), other than the thencurrent auditor of its or any of its Affiliates’ financial statements, andshall be conducted during regular business hours and in such a manner so as notto interfere with the Company’s or the Advisor’s regular businessactivities.  The Requesting Party shallbear the costs of the audit unless the audit conclusively reveals anunderpayment or overpayment of Advisor Payments adverse to the Requesting Partyin an amount greater than 10% of the total amount of Advisor Payments owed forthe period being inspected, in which case the other party shall bear the costsof the audit.  Any auditor who is engagedto perform an audit shall not be compensated on a contingent basis or any otherbasis 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 inwriting as such.  If the auditconclusively reveals an overpayment or underpayment of Advisor Payments, theCompany or the Advisor shall promptly pay to the other party the amount of theoverpayment or underpayment, as the case may be, without interest; provided,however, that in the event that the audit conclusively reveals an overpaymentof Advisor Payments and the Advisor has at any time previously waived orforgiven in writing any Advisor Payments that it would otherwise have beenentitled to hereunder (including the $3,500,000 waiver of Organization andOffering Expense reimbursement set forth in Section 3.02(c) above),the Company shall credit against the overpayment any amounts previously waivedor forgiven, without interest, and the Advisor shall not be obligated to repaythe Company to the extent that the overpayments do not exceed the aggregate ofthe waived or forgiven amounts not already so credited.  Any underpayment or overpayment under thisAgreement shall not be a breach of this Agreement unless and until an auditperformed in accordance with this Section 3.05 is completed and the partywho may be obligated to make a payment hereunder as a result of such auditshall have failed to promptly make any required payment.

 

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**ARTICLE IV**

 

**TERM AND TERMINATION**

 

4.01         **Term; Renewal**. Subject to Section 4.02 hereof, thisAgreement shall continue in force until January 4, 2010. Thereafter, thisAgreement may be renewed for an unlimited number of successive one-year termsupon mutual consent of the parties. It is the duty of the Board to evaluate theperformance of the Advisor annually before renewing the Agreement, and eachsuch renewal shall be for a term of no more than one year.

 

4.02         **Termination**.  This Agreement will automatically terminateupon Listing.  This agreement also may beterminated at the option of either party upon 60 days written notice withoutcause or penalty (if termination is by the Company, then the termination shallbe upon the approval of a majority of the Independent Directors).  Notwithstanding the foregoing, the provisionsof Section 4.03, Article V and Article VI shall continue in fullforce and effect and shall survive the termination or expiration of thisAgreement.

 

4.03         **Payments to and Duties of Advisor upon Termination**.

 

(a)           After the Termination Date, the Advisor shall not beentitled to compensation for further services hereunder except it shall beentitled to and receive from the Company within 30 days after the effectivedate of the termination all unpaid reimbursements of expenses, subject to theprovisions of Section 3.04 hereof, and all contingent liabilities relatedto 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 heldfor the account of the Company pursuant to this Agreement, after deducting anyaccrued compensation and reimbursement for its expenses to which it is thenentitled;

 

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

 

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

 

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

 

(c)                                  (i)            In the event that thisAgreement is terminated or allowed to expire without renewal due to a materialbreach by the Advisor of this Agreement, which termination or expiration occursprior to the Company’s or the Advisor’s reimbursement of Organization andOffering Expenses pursuant to the provisions of Section 3.02(c), theappropriate party, within 90 days after the end of the year in which theOffering terminates shall make the necessary reimbursement.

 

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(ii)           In the event that an Advisory Management AgreementTermination (as such term is defined in the Articles of Incorporation) occursafter the commencement of an Offering and prior to the Company’s or theAdvisor’s reimbursement of Organization and Offering Expenses pursuant to theprovisions of Section 3.02(c), the appropriate party, within 90 days afterthe end of the year in which such Offering terminates shall make the necessaryreimbursement.

 

**ARTICLE V**

 

**INDEMNIFICATION**

 

5.01         **Indemnificationby the Company**.

 

(a)           The Company shall indemnify and hold harmless theAdvisor and its Affiliates, including their respective officers, directors,partners and employees, from all liability, claims, damages or losses arisingin the performance of their duties hereunder, and related expenses, includingreasonable attorneys’ fees, to the extent such liability, claims, damages orlosses and related expenses are not fully reimbursed by insurance, subject toany limitations imposed by the laws of the State of Maryland, the Articles ofIncorporation and the NASAA Guidelines. Notwithstanding the foregoing, theCompany shall not indemnify or hold harmless the Advisor or its Affiliates,including their respective officers, directors, partners and employees, for anyliability or loss suffered by the Advisor or its Affiliates, including theirrespective officers, directors, partners and employees, nor shall it providethat the Advisor or its Affiliates, including their respective officers,directors, partners and employees, be held harmless for any loss or liabilitysuffered by the Company, unless all of the following conditions are met: (i) theAdvisor or its Affiliates, including their respective officers, directors,partners and employees, have determined, in good faith, that the course ofconduct which caused the loss or liability was in the best interests of theCompany; (ii) the Advisor or its Affiliates, including their respectiveofficers, directors, partners and employees, were acting on behalf of or performingservices of the Company; (iii) the liability or loss was not the result ofnegligence or misconduct by the Advisor or its Affiliates, including theirrespective officers, directors, partners and employees; and (iv) theindemnification or agreement to hold harmless is recoverable only out of theCompany’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 orstate securities laws by such party unless one or more of the followingconditions are met: (i) there has been a successful adjudication on themerits of each count involving alleged securities law violations as to theparticular indemnitee; (ii) such claims have been dismissed with prejudiceon the merits by a court of competent jurisdiction as to the particularindemnitee; and (iii) a court of competent jurisdiction approves asettlement of the claims against a particular indemnitee and finds thatindemnification of the settlement and the related costs should be made, and thecourt considering the request for indemnification has been advised of the positionof the Securities and Exchange Commission and of the published position of anystate securities

 

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regulatory authority in which securities ofthe Company were offered or sold as to indemnification for violations ofsecurities laws.

 

(b)           The Company may advance funds to the Advisor or itsAffiliates, including their respective officers, directors, partners andemployees, for legal expenses and other costs incurred as a result of any legalaction for which indemnification is being sought is permissible only if all ofthe following conditions are satisfied: (i) the legal action relates toacts or omissions with respect to the performance of duties or services onbehalf of the Company; (ii) the legal action is initiated by a third-partywho is not a stockholder or the legal action is initiated by a stockholderacting in his or her capacity as such and a court of competent jurisdictionspecifically approves such advancement; (iii) the Advisor or its Affiliates,including their respective officers, directors, partners and employees,undertake to repay the advanced funds to the Company together with theapplicable legal rate of interest thereon, in cases in which the Advisor or itsAffiliates, including their respective officers, directors, partners andemployees, 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 harmlesspursuant to this Section 5.01 for any activity which the Advisor shall berequired to indemnify or hold harmless the Company pursuant to Section 5.02.

 

5.02         **Indemnification by Advisor**. The Advisor shallindemnify 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 andrelated expenses are not fully reimbursed by insurance and are incurred byreason of the Advisor’s bad faith, fraud, misfeasance, misconduct, grossnegligence or reckless disregard of its duties, but the Advisor shall not beheld responsible for any action of the Board in following or declining tofollow any advice or recommendation given by the Advisor.

 

**ARTICLE VI**

 

**MISCELLANEOUS**

 

6.01         **Assignment to an Affiliate**. This Agreement and anyrights, duties, liabilities and obligations hereunder and the fees andcompensation related thereto may be assigned by the Advisor, in whole or inpart, to a duly qualified and licensed Affiliate of the Advisor withoutobtaining the approval of the Board.  Anyother assignment shall be made only with the approval of a majority of theBoard (including a majority of the Independent Directors). The Advisor mayassign any rights to receive fees or other payments under this Agreementwithout obtaining the approval of the Board. This Agreement shall not beassigned by the Company without the consent of the Advisor, except in the caseof an assignment by the Company to a corporation or other organization which isa successor to all of the assets, rights and obligations of the Company, inwhich case the successor organization shall be bound hereunder and by the termsof said assignment in the same manner as the Company is bound by thisAgreement. This Agreement shall be binding on successors to the Companyresulting from a Change of Control or 

 

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sale of all or substantially all the assets of the Company or thePartnership, and shall likewise be binding upon any successor to the Advisor.

 

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

 

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

 
| 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 inwriting 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 writingsigned by both parties hereto, or their respective successors or permittedassignees.

 

6.05         **Severability**. The provisions of this Agreement areindependent of and severable from each other, and no provision shall beaffected or rendered invalid or unenforceable by virtue of the fact that forany reason any other or others of them may be invalid or unenforceable in wholeor in part.

 

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

 

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

 

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

 

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

 

6.10         **Headings**. The titles and headings of sections andsubsections contained in this Agreement are for convenience only, and theyneither form a part of this Agreement nor are they to be used in theconstruction or interpretation hereof.

 

6.11         **Execution in Counterparts**. This Agreement may beexecuted in multiple counterparts, each of which shall be deemed to be anoriginal as against any party whose signature appears thereon, and all of whichshall together constitute one and the same instrument. This Agreement shallbecome binding when one or more counterparts hereof, individually or takentogether, shall bear the signatures of all of the parties reflected hereon asthe signatories.

 

6.12         **Initial Investment**. The Advisor or one of itsAffiliates has contributed $200,000 (the “**InitialInvestment**”) in exchange for the initial issuance of Shares of theCompany. The Advisor or its Affiliates may not sell any of the Shares purchasedwith the Initial Investment while the Advisor acts in an advisory capacity tothe Company. The restrictions included above shall not apply to any Sharesacquired by the Advisor or its Affiliates other than the Shares acquiredthrough the Initial Investment. Neither the Advisor nor its Affiliates shall voteany Shares they now own, or hereafter acquires, in any vote for the election ofDirectors or any vote regarding the approval or termination of any contractwith the Advisor or any of its Affiliates.

 

6.13         **Ownership of Proprietary Property**. The Advisor retainsownership of and reserves all Intellectual Property Rights in the ProprietaryProperty. To the extent that the Company has or obtains any claim to any right,title or interest in the Proprietary Property, including without limitation inany suggestions, enhancements or contributions that Company may provideregarding the Proprietary Property, the Company hereby assigns and transfersexclusively to the Advisor all right, title and interest, including withoutlimitation all Intellectual Property Rights, free and clear of any liens,encumbrances or licenses in favor of the Company or any other party, in and tothe Proprietary Property. In addition, at the Advisor’s expense, the Companywill perform any acts that may be deemed desirable by the Advisor to evidencemore fully the transfer of ownership of right, title and interest in theProprietary Property to the Advisor, including but not limited to the executionof any instruments or documents now or hereafter requested by the Advisor toperfect, defend or confirm the assignment described herein, in a formdetermined by the Advisor.

 

6.14         **Treatment Under Texas Margin Tax**. For purposes of the Texasmargin tax, the Advisor’s performance of the services specified in thisAgreement will cause the Advisor to 

 

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conduct part of the active trade or business of the Company, and thecompensation specified in Article III includes both the payment ofmanagement fees and the reimbursement of specified costs incurred in theAdvisor’s conduct of the active trade or business of the Company.  Therefore, the Advisor and Company intendAdvisor to be, and shall treat Advisor as, a “management company” within themeaning of Section 171.0001(11) of the Texas Tax Code.  The Company and the Advisor will applySections 171.1011(m-1) and 171.1013(f)-(g) of the Texas Tax Code to theCompany’s reimbursements paid to the Advisor pursuant to this Agreement ofspecified costs and wages and compensation. The Advisor and the Company further recognize and intend that (i) asa result of the fiduciary relationship created by this Agreement andacknowledged in Section 2.02, reimbursements paid to the Advisor pursuantto this Agreement are “flow-though funds” that the Advisor is mandated by law orfiduciary duty to distribute, within the meaning of Section 171.1011(f) ofthe Texas Tax Code, and (ii) as a result of Advisor’s contractual dutiesunder this Agreement, certain reimbursements under this Agreement are“flow-through funds” mandated by contract to be distributed within the meaningof Section 171.1011(g) of the Texas Tax Code.  The terms of this Agreement shall beinterpreted in a manner consistent with the characterization of the Advisor asa “management company” as defined in Section 171.0001(11), and with thecharacterization of the reimbursements as “flow-though funds” within themeaning 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 enteredinto and ending one year following the termination of this Agreement, theCompany shall not, without the Advisor’s prior written consent, directly orindirectly, (i) solicit or encourage any person to leave the employment orother service of the Advisor or its affiliates or (ii) hire, on behalf ofthe Company or any other person or entity, any person who has left theemployment within the one year period following the termination of thatperson’s employment the Advisor or its affiliates.  During the periodcommencing on the date of the Original Agreement through and ending one yearfollowing the termination of this Agreement, the Company shall not, whether forits own account or for the account of any other person, firm, corporation orother business organization, intentionally interfere with the relationship ofthe Advisor or it affiliates with, or endeavor to entice away from the Advisoror its affiliates, any person who during the term of the Agreement is, orduring the preceding one-year period was, a customer of the Advisor or itsaffiliates.

 

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**IN WITNESSWHEREOF**, the parties hereto have executed this Amended and Restated AdvisoryManagement Agreement as of the date first above written.

 
|   | **BEHRINGER HARVARD OPPORTUNITY REIT II, INC.**      |
|--------|------------------------------------------------------|
|   |                                                 |
|   |                                                 |
|   | By:                                                  | /s/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:                                                  | /s/Gerald J. Reihsen, III |
|   |                                                 | Gerald J. Reihsen, III |
|   |                                                 | Executive Vice President — Corporate Development & Legal and  Secretary |

 

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