Document:

Exhibit 4.5

 

STATEMENT REGARDING RESTRICTIONS ON

TRANSFERABILITY OF SHARES OF COMMON STOCK

 

(To Appear on Stock Certificate or to Be Sent
upon Request

and without Charge to Stockholders Issued
Shares without Certificates)

 

The securities
of Behringer Harvard Opportunity REIT II, Inc. are subject to restrictions on
Beneficial and Constructive Ownership and Transfer for the purpose of the
Company’s maintenance of its status as a real estate investment trust under the
Internal Revenue Code of 1986, as amended. 
Subject to certain further restrictions and except as expressly provided
in this Charter, (i) no Person may Beneficially or Constructively Own
Common Shares of the Company in excess of 9.8% (in value or number of Shares)
of the outstanding Common Shares of the Company unless the Person is an
Excepted Holder (in which case the Excepted Holder Limit shall be applicable);
(ii) no Person may Beneficially or Constructively Own Preferred Shares of the
Company in excess of 9.8% (in value or number of Shares) of the outstanding
Preferred Shares of the Company unless the Person is an Excepted Holder (in
which case the Excepted Holder Limit shall be applicable); (iii) no Person may
Beneficially or Constructively Own Shares that would result in the Company
being “closely held” under Section 856(h) of the Code or otherwise cause
the Company to fail to qualify as a REIT; and (iv) no Person may Transfer
Shares if the Transfer would result in the Shares of the Company being owned by
fewer than 100 Persons.  Any Person who
Beneficially or Constructively Owns or attempts to Beneficially or
Constructively Own Shares that cause or will cause a Person to Beneficially or
Constructively Own Shares in excess or in violation of the above limitations
must immediately notify the Company.  If
any of the restrictions on transfer or ownership are or would be violated, the
Shares will be deemed to have automatically transferred to a Trustee of a Trust
for the benefit of one or more Charitable Beneficiaries upon such
transfer.  In addition, the Company may
redeem Shares upon the terms and conditions specified by the Board in its sole
discretion if the Board determines that ownership or a Transfer or other event
may violate the restrictions described above. 
Furthermore, upon the occurrence of certain events, attempted Transfers
in violation of the restrictions described above may be void ab initio.

 

Until the
Common Shares are Listed, to purchase Common Shares, the purchaser must
represent to the Company:  (i) that
the purchaser (or, in the case of sales to fiduciary accounts, that the
beneficiary, fiduciary account or grantor or donor who directly or indirectly
supplies the funds to purchase the shares if the grantor or donor is the
fiduciary) has a minimum annual gross income of $70,000 and a net worth
(excluding home, furnishings and automobiles) of not less than $70,000; or
(ii) that the purchaser (or, in the case of sales to fiduciary accounts,
that the beneficiary, fiduciary account or grantor or donor who directly or
indirectly supplies the funds to purchase the shares if the grantor or donor is
the fiduciary) has a net worth (excluding home, furnishings and automobiles) of
not less than $250,000.  Until the Common
Shares are Listed, each transfer of Common Shares shall comply with the requirements
regarding minimum initial and subsequent cash investment amounts set forth in
Company’s registration statement filed under the Securities Act for the Initial
Public Offering as such registration statement has been amended or supplemented
as of the date of such issuance or transfer.

 

 

All
capitalized terms in this notice have the meanings defined in the Charter of
the Company, as the same may be amended from time to time, a copy of which,
including the restrictions on transfer and ownership, will be furnished to each
holder of Shares of the Company on request and without charge.

 

Note:
Instead of the foregoing legend, the certificate may state that state that the
Company will furnish information about the restrictions on transfer to the
Stockholder on request and without charge.

 

2EXHIBIT 10.1

 

FORM OF ADVISORY MANAGEMENT
AGREEMENT

 

This ADVISORY MANAGEMENT AGREEMENT (this “Agreement”) is entered into on this the      
day of                   ,
2007, by and between BEHRINGER HARVARD OPPORTUNITY REIT II, INC., a
Maryland corporation (the “Company”),
and BEHRINGER HARVARD OPPORTUNITY ADVISORS II LP, a Texas limited partnership
(the “Advisor”).

 

W I T N E S S E T H

 

WHEREAS, the Company will be issuing shares of its common stock, par value
$.0001, to the public, such shares to be registered with the Securities and
Exchange Commission and may subsequently issue additional securities;

 

WHEREAS, the
Company has been formed to acquire and operate a diverse portfolio of real
estate assets with a focus on acquisitions with significant possibilities for
short-term capital appreciation, such as properties requiring development,
redevelopment or repositioning or those located in markets and submarkets with
high growth potential, where such acquisitions may include office, industrial,
retail, hospitality, recreation and leisure, multifamily and other properties;

 

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

 

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

 

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

 

ARTICLE ONE

 

DEFINITIONS

 

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

 

Acquisition Expenses. Any and all expenses incurred by the
Company, the Advisor, or any Affiliate of either in connection with the
selection and acquisition 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, title insurance premiums
and other closing costs.

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

2

 

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

 

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

 

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

 

Competitive Real Estate Commission. A real estate or brokerage commission paid
or, if no commission is paid, the amount that customarily would be paid for the
purchase or sale of a Property that is reasonable, customary, and competitive
in light of the size, type and location of the Property (as determined by the
Board, including a majority of the Independent Directors).

 

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

 

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

 

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

 

Cost of
Investment. For
each Asset, (i) with respect to an Asset wholly owned by the Company or any
wholly owned subsidiary, the Fully
Loaded Cost, and (ii) in the case of an Asset owned by any Joint Venture
or in some other manner in which the Company is a co-venturer or partner or
otherwise a co-owner, (A) the Fully
Loaded Cost if the Company (or any subsidiary) controls 

 

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the Asset; owns a majority interest, directly or
indirectly, in the Asset; or provides a substantial amount of services in the
acquisition, development, or management of the Asset (as determined by a
majority of the Independent Directors) or (B) the portion of the Fully Loaded
Cost that is attributable
to the Company’s investment in the Joint Venture or other interest in such
Asset if the Company does not control, own a majority of, or provide
substantial services in the acquisition, development, or management of, the
Asset.

 

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

 

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

 

Director. A member of the Board.

 

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).

 

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

 

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

 

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

 

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

 

Independent Director. A Director who is not on the date of
determination, and within the last two years from the date of determination has
not been, directly or indirectly associated with the Sponsor or the Advisor by
virtue of (i) ownership of an interest in the Sponsor, the Advisor or any of
their Affiliates, other than the Company, (ii) employment by the Sponsor, the
Company, the Advisor or any of their Affiliates, (iii) service as an officer or
director of the Sponsor, the Advisor or any of their Affiliates, other than as
a Director of the Company, (iv) performance of 

 

4

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

5

 

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

 

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

 

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

 

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

 

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

 

Proprietary Property. All modeling algorithms, tools, computer
programs, know-how, methodologies, processes, technologies, ideas, concepts,
skills, routines, subroutines, operating instructions and other materials and
aides used in performing the duties set forth in Section 2.02 that relate to
advice regarding current and potential Assets, and all modifications,
enhancements and derivative works of the foregoing.

 

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

 

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

 

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

 

6

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

7

 

Termination Date. The date of termination of this Agreement.

 

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

 

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

 

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

 

ARTICLE II

 

THE ADVISOR

 

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

 

2.02         Duties
of the Advisor. The Advisor shall be deemed to be in a fiduciary
relationship to the Company and its Stockholders. Subject to Section 2.08, the
Advisor undertakes to use its 

 

8

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

9

 

functions for the maintenance and administration of the Assets,
including the servicing of Mortgages;

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

10

 

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

 

2.03         Authority of Advisor.

 

(a)           Pursuant to the
terms of this Agreement (including the restrictions included in this Section
2.03 and in Section 2.06), and subject to the continuing and exclusive
authority of the Board over the management of the Company, the Board hereby
delegates to the Advisor the authority to (i) locate, analyze and select
investment opportunities, (ii) structure the terms and conditions of
transactions pursuant to which investments will be made or acquired for the
Company or the Partnership, (iii) acquire Properties, make and acquire
Mortgages and other loans and invest in other Assets in compliance with the
investment objectives and policies of the Company, (iv) arrange for financing
or refinancing of Assets, (v) enter into leases for the Properties and service
contracts for the Assets with duly qualified and licensed non-affiliated and
Affiliated Persons, including oversight of non-affiliated and Affiliated
Persons that perform property management, acquisition, advisory, disposition or
other services for the Company, (vi) oversee duly qualified and licensed
property managers and other Persons who perform services for the Company, and
(vii) arrange for, or provide, accounting and other record-keeping functions at
the Asset level.

 

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

 

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

 

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

 

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

 

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

 

11

 

accountings
of the collections and payments to the Board, its Audit Committee and the
auditors of the Company.

 

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

 

2.06         Limitations
on Activities. Anything else in this Agreement to the contrary
notwithstanding, the Advisor shall refrain from taking any action which, in its
sole judgment made in good faith, would (a) adversely affect the status of the
Company as a REIT, (b) subject the Company to regulation under the Investment
Company Act of 1940, as amended, or (c) violate any law, rule, regulation or
statement of policy of any governmental body or agency having jurisdiction over
the Company, the Shares or any of the Company’s securities, or otherwise not be
permitted by the Articles of Incorporation or Bylaws, except if the action
shall be ordered by the Board, in which case the Advisor shall notify promptly
the Board of the Advisor’s judgment of the potential impact of the action and
shall refrain from taking the action until it receives further clarification or
instructions from the Board. In such event the Advisor shall have no liability
for acting in accordance with the specific instructions of the Board so given.
The Advisor, its directors, officers, employees and stockholders, and the
directors, officers, employees and stockholders of the Advisor’s Affiliates
shall not be liable to the Company or to the Board or Stockholders for any act
or omission by the Advisor, its directors, officers, employees or stockholders,
or for any act or omission of any Affiliate of the Advisor, its directors,
officers or employees or stockholders except as provided in Section 5.02 of
this Agreement.

 

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

 

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

 

12

 

investment
programs with similar investment objectives which have investment funds
available at the same time as the Company, it shall be the duty of the Board
(including the Independent Directors) to adopt the method set forth in the
Company’s most recent Prospectus for its Shares or another reasonable method by
which investments are to be allocated to the competing investment entities and
to use their best efforts to apply such method fairly to the Company.

 

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

 

ARTICLE III

 

COMPENSATION AND REIMBURSEMENT OF SPECIFIED COSTS

 

3.01         Fees.

 

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

 

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

 

(c)           Disposition Fee.
If the Advisor or an Affiliate provides a substantial amount of services (as
determined by a majority of the Independent Directors) in connection with the
Sale of one or more Assets, the Advisor or the Affiliate shall receive, subject
to the 

 

13

 

satisfaction 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
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 the Property and (ii) in the
case of the sale of any Asset other than Property, 3% of the sales price of the
Asset or Assets.

 

The Disposition Fee may be payable in addition to real estate
commissions paid to persons not affiliated with the Company or the Advisor and
their respective Affiliates; provided, however, that the total real estate
commissions paid to all Persons by the Company (together with the 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.  The Advisor,
in its sole discretion, may waive, reduce or defer all or any portion of the
Disposition Fee to which it would otherwise be entitled.

 

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

 

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

 

3.02         Expenses.

 

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

 

14

 

(i)            Organization and
Offering Expenses; provided, however, that (i)  the Company shall not
reimburse the Advisor to the extent such reimbursement would cause the total
amount spent by the Company on Organization and Offering Expenses (other than
Selling Commissions and the dealer manager fee) to exceed 1.5% of the Gross
Proceeds as of the date of the reimbursement and (ii) 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 (other than
Selling Commissions and the dealer manager fee) to the extent that such
Organization and Offering Expenses incurred by the Company exceed 1.5% of the
Gross Proceeds raised in the completed Offering;

 

(ii)           Acquisition Fees
and Acquisition Expenses incurred in connection with the selection and
acquisition of Assets, including such expenses incurred related to assets
pursued or considered but not ultimately acquired by the Company;

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

15

 

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

 

(xiii)         personnel and
related employment costs incurred by the Advisor or its Affiliates in
performing the services described herein, including but not limited to
reasonable salaries and wages, benefits and overhead of all employees directly
involved in the performance of such services; provided, that no reimbursement
shall be made for costs of such employees of the Advisor or its Affiliates to
the extent that such employees perform services for which the Advisor receives
a separate fee; 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 the 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, the services shall be separately compensated at
the rates and in the amounts as are agreed by the Advisor and the Independent
Directors, subject to the limitations contained in the Articles of
Incorporation, and shall not be deemed to be services pursuant to the terms of
this Agreement.

 

3.04         Reimbursement
to the Advisor. The Company shall not reimburse the Advisor for
Total Operating Expenses to the extent that Total Operating Expenses (including
the Asset Management Fee), in the four consecutive fiscal quarters then ended
(the “Expense Year”) exceed (the “Excess Amount”) the greater of 2% of
Average Invested Assets or 25% of Net Income for that period of four
consecutive fiscal quarters. Any Excess Amount paid to the Advisor during a
fiscal quarter shall be repaid to the Company. Reimbursement of all or any
portion of the Total Operating Expenses that exceed the limitation set forth in
the preceding sentence may, at the option of the Advisor, be deferred without
interest and may be reimbursed in any subsequent Expense Year where such
limitation would permit such reimbursement if the Total Operating Expense were
incurred during such period. Notwithstanding the foregoing, if there is an
Excess Amount in any Expense Year and the Independent Directors determine that
all or a portion of such excess was justified, based on unusual and
nonrecurring factors which they deem sufficient, the Excess Amount may be
reimbursed to the Advisor.  If the
Independent Directors determine such excess was justified, then, after the end
of any fiscal quarter of the Company for which there is an Excess Amount for
the 12 months then ended paid to the Advisor, the Advisor, at the direction of
the Independent Directors, shall cause such fact to be disclosed in the next
quarterly report of the Company or in a separate writing and sent to the
Stockholders within 60 days of such quarter end, together with an explanation
of the factors the Independent Directors considered in determining that such
Excess Amount was justified. Such determination shall be reflected in the
minutes of the meetings of the Board. The Company will 

 

16

 

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 upon 60 days written notice
without cause or penalty (if termination is by the Company, then the
termination shall be upon the approval of a majority of the Independent
Directors). Notwithstanding the foregoing, the provisions of this Agreement
which provide for payment to the Advisor of expenses, fees or other
compensation following the date of termination 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 the termination all unpaid
reimbursements of expenses, subject to the provisions of Section 3.04 hereof,
and all contingent liabilities related to fees payable to the Advisor prior to
termination of this Agreement.

 

(b)           The Advisor shall
promptly upon termination:

 

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

 

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

 

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

 

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

 

17

 

ARTICLE V

 

INDEMNIFICATION

 

5.01         Indemnification
by the Company.

 

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

 

                (b)           The Company may advance funds to the
Advisor or its Affiliates, including their respective officers, directors,
partners and employees, for legal expenses and other costs incurred as a result
of any legal action for which indemnification is being sought is permissible
only if all of the following conditions are satisfied: (i) the legal action
relates to acts or omissions with respect to the performance of duties or
services on behalf of the 

 

18

 

Company; (ii) the legal action is initiated by a third-party who is not
a stockholder or the legal action is initiated by a stockholder acting in his
or her capacity as such and a court of competent jurisdiction specifically
approves such advancement; (iii) the Advisor or its Affiliates, including their
respective officers, directors, partners and employees, undertake to repay the
advanced funds to the Company together with the applicable legal rate of
interest thereon, in cases in which the Advisor or its Affiliates, including
their respective officers, directors, partners and employees, are found not to
be entitled to indemnification.

 

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

 

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

 

ARTICLE VI

 

MISCELLANEOUS

 

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

 

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

 

6.03         Notices.
Any notice, report or other communication required or permitted to be given
hereunder shall be in writing unless some other method of giving such notice,
report or other 

 

19

 

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

 

	
  To
  the Directors and to the Company:

  	
   

  	
  Behringer
  Harvard Opportunity REIT II, Inc.

  
	
   

  	
   

  	
  15601
  Dallas Parkway

  
	
   

  	
   

  	
  Suite
  600

  
	
   

  	
   

  	
  Addison,
  Texas 75001

  
	
   

  	
   

  	
   

  
	
  To
  the Advisor:

  	
   

  	
  Behringer
  Harvard Opportunity Advisors II LP

  
	
   

  	
   

  	
  15601
  Dallas Parkway

  
	
   

  	
   

  	
  Suite
  600

  
	
   

  	
   

  	
  Addison,
  Texas 75001

  

 

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

 

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

 

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

 

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

 

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

 

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

 

20

 

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

 

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

 

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

 

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

 

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

 

6.14         
Treatment Under Texas Margin Tax. For purposes of the Texas
margin tax, the Advisor’s performance of the services specified in this
Agreement will cause the Advisor to conduct part of the active trade or business
of the Company, and the compensation specified in Article III includes both the
payment of management fees and the reimbursement of specified costs incurred in
the Advisor’s conduct of the active trade or business of the Company.  Therefore, the Advisor and Company intend
Advisor to be, and shall treat Advisor as, a “management company” within the
meaning of Section 171.0001(11) of the Texas Tax Code.  The Company and the Advisor will apply
Sections 171.1011(m-1) and 171.1013(f)-(g) of the Texas Tax Code to the Company’s
reimbursements paid to the Advisor pursuant to this Agreement of specified
costs and wages and compensation.  The
Advisor and the Company 

 

21

 

further
recognize and intend that (i) as a result of the fiduciary relationship created
by this Agreement and acknowledged in Section 2.02, reimbursements paid to the
Advisor pursuant to this Agreement are “flow-though funds” that the Advisor is
mandated by law or fiduciary duty to distribute, within the meaning of Section
171.1011(f) of the Texas Tax Code, and (ii) as a result of Advisor’s
contractual duties under this Agreement, certain reimbursements under this
Agreement are “flow-through funds” mandated by contract to be distributed
within the meaning of Section 171.1011(g) of the Texas Tax Code.  The terms of this Agreement shall be
interpreted in a manner consistent with the characterization of the Advisor as
a “management company” as defined in Section 171.0001(11), and with the
characterization of the reimbursements as “flow-though funds” within the
meaning of Section 171.1011(f)-(g) of the Texas Tax Code.

 

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22

 

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

 

	
   

  	
  BEHRINGER HARVARD OPPORTUNITY 

  REIT II, INC.

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
  By:

  	
   

  
	
   

  	
   

  	
  Gerald
  J. Reihsen, III

  
	
   

  	
   

  	
  Executive
  Vice President — Corporate 

  Development & Legal and Secretary

  
	
   

  	
   

  	
   

  
	
   

  	
  BEHRINGER HARVARD OPPORTUNITY 

  ADVISORS II LP

  
	
   

  	
   

  	
   

  
	
   

  	
  By:

  	
  Harvard
  Property Trust, LLC, its General 

  Partner

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
  By:

  	
   

  
	
   

  	
   

  	
  Gerald
  J. Reihsen, III

  
	
   

  	
   

  	
  Executive
  Vice President — Corporate 

  Development & Legal and Secretary

  

 

23

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