Document:

EXHIBIT 10.2

 

FORM OF
PROPERTY MANAGEMENT AND LEASING AGREEMENT

 

This
PROPERTY MANAGEMENT AND LEASING AGREEMENT (this “Management  Agreement”)
is made and entered into as of the [      ] day
of [                    ],
2008, by and among BEHRINGER HARVARD REIT II, INC., a Maryland corporation
(“BH REIT”), BEHRINGER HARVARD OPERATING PARTNERSHIP II LP, a Texas
limited partnership (“BH OP”), and BEHRINGER HARVARD REIT II
MANAGEMENT SERVICES, LLC, Texas limited liability company (the “Manager”).

 

WHEREAS, BH OP was organized to acquire, own,
operate, lease and manage real estate properties on behalf of BH REIT;

 

WHEREAS,
BH REIT intends to raise money from the sale of its common stock to be used,
net of payment of certain offering costs and expenses, for investment in the
acquisition or construction of income-producing real estate and other real
estate-related investments (including the making or purchase of mortgage,
bridge or mezzanine loans), some or all of which are to be acquired and held by
Owner (as hereinafter defined) on behalf of BH REIT; and

 

WHEREAS,
Owner intends to retain Manager to manage and coordinate the leasing of certain
of the real estate properties acquired by Owner under the terms and conditions
set forth in this Management Agreement.

 

NOW, THEREFORE,
in consideration of the premises and other good and valuable consideration, the
receipt and sufficiency of which are hereby acknowledged, the parties hereto,
intending to be legally bound hereby, do hereby agree, as follows:

 

ARTICLE
I

 

DEFINITIONS

 

Except
as otherwise specified or as the context may otherwise require, the following
terms have the respective meanings set forth below for all purposes of this
Management Agreement, and the definitions of the terms are equally applicable
both to the singular and plural forms thereof:

 

1.1                                 “Advisor” means Behringer Advisors
II LP, a Texas limited partnership, or its successor as advisor of BH REIT.

 

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

 

1.3           “Economic Interest Percentage”
means the percentage of capital contributed directly or indirectly to the Joint
Venture as compared with the total capital contributed to the Joint Venture by
all of the owners of the Joint Venture as the percentage shall be calculated in
good faith by the Owner.  Any in-kind
contribution shall be considered in the calculation of the Economic Interest
Percentage and valued at the fair market value of the contribution on the date
of contribution as determined by the Owner.

 

1.4                                 “Gross
Revenues” means all amounts actually collected as rents or other charges
for the use and occupancy of the Properties, but shall exclude interest and
other investment income of Owner and 

 

 

proceeds received by Owner for a sale, exchange, condemnation, eminent
domain taking, casualty or other disposition of assets of Owner.

 

1.5                                 “Improvements”
means buildings, structures, equipment from time to time located on the Properties
and all parking and common areas located on the Properties.

 

1.6                                 “Intellectual
Property Rights” means 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 these
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.

 

1.7           “Joint Venture” means an
investment in 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 Properties.

 

1.8                                 “Lease”
means, unless the context otherwise requires, any lease or sublease made by
Owner as landlord or by its predecessor.

 

1.9                                 “Management
Fees” has the meaning set forth in Section 5.1 hereof.

 

1.10         “Oversight Fee” has the meaning
set forth in Section 5.1 hereof.

 

1.11                           “Owner”
means BH REIT, BH OP and any joint venture, limited liability company or
other Affiliate of BH REIT or BH OP that owns, in whole or in part, on
behalf of BH REIT, any Properties.

 

1.12                           “Person”
means an individual, corporation, association, business trust, estate, trust,
partnership, limited liability company or other legal entity.

 

1.13                           “Properties”
means all real estate properties owned by Owner and all tracts as yet
unspecified but to be acquired `by Owner containing income-producing
improvements or on which Owner will construct income-producing improvements.

 

1.14                           “Property
Amendment” means an amendment to this Management Agreement describing a
Property and the Owner thereof and any variations to the basic terms and
conditions of this Management Agreement with respect to the Property related
thereto.

 

1.15                           “Proprietary
Properties” means 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 Article II that relate to management advice,
services and techniques regarding current and potential Properties, and all
modifications, enhancements and derivative works of the foregoing.

 

1.16                           “Texas Tax Code” means the Texas
Tax Code as amended by Texas H.B. 3, 79th Leg., 3rd C.S. (2006), and reference
to any provision of the Texas Tax Code Act shall mean that 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.

 

ARTICLE
II

 

APPOINTMENT
AND STATUS OF MANAGER; SERVICES TO BE PERFORMED

 

2.1                                 Appointment of Manager. 
Owner hereby engages and retains Manager as the manager and as tenant
coordinating agent of the Properties, and Manager hereby accepts the
appointment on the 

 

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terms and conditions hereinafter set forth; it
being understood that this Management Agreement shall cause Manager to be, at
law, Owner’s agent upon the terms contained herein.  Owner and Manager shall execute a Property
Amendment for each Property setting forth a description of the Property, the
individual legal Owner with respect to the Property, and any variations from
the terms and conditions set forth in this Management Agreement with respect to
the management and leasing of the Property.

 

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

 

2.3                                 General Duties.  Manager shall devote its best efforts to
performing its duties hereunder to manage, operate, maintain and lease the
Properties in a diligent, careful and vigilant manner.  The services of Manager are to be of scope
and quality not less than those generally performed by professional property
managers of other similar properties in the same geographic area.  Manager shall make available to Owner the
full benefit of the judgment, experience and advice of the members of Manager’s
organization and staff with respect to the policies to be pursued by Owner
relating to the operation and leasing of the Properties.

 

2.4                                 Specific Duties.  Manager’s duties include the following:

 

(a)                                  Lease Obligations. 
Manager shall perform all duties of the landlord under all Leases insofar
as the duties relate to operation, maintenance, and day-to-day management.  Manager shall also provide or cause to be
provided, at Owner’s expense, all services normally provided to tenants of like
premises, including where applicable and without limitation, gas, electricity
or other utilities
required to be furnished to commercial tenants, repairs and maintenance
necessary to preserve the Properties in its present condition and for the
operating efficiency thereof and cleaning and janitorial service.  Manager shall arrange for and supervise the
performance of all installations and improvements in space leased to any tenant
that are either expressly required under the terms of the Lease of the space or
that are customarily provided to commercial tenants.

 

(b)                                 Maintenance. 
Manager shall cause the Properties to be maintained in the same manner
as similar properties in the same geographic area.  Manager’s duties and supervision in this
respect shall include, without limitation, cleaning of the interior and the
exterior of the Improvements and the public common areas on the Properties and
the making and supervision of repair, alterations, and decoration of the
Improvements, subject to and in strict compliance with this Management
Agreement and the Leases.  Construction
activities undertaken by Manager, if 

 

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any, will be limited to activities related to the
management, operation, maintenance, and leasing of each Property (e.g.,
repairs, renovations, and leasehold improvements).

 

(c)                                  Leasing Functions. 
Manager shall coordinate the leasing of the Properties and shall
negotiate and use its best efforts to secure executed Leases from qualified
tenants, and to execute same on behalf of Owner, if requested, for available
space in the Properties, the Leases to be in form and on terms approved by
Owner and Manager, and to bring about complete leasing of the Properties.  Manager shall be responsible for the hiring
of all duly qualified and licensed leasing agents, as necessary for the leasing
of the Properties, and to otherwise oversee and manage the leasing process on
behalf of Owner.

 

(d)                                 Notice of Violations. 
Manager shall forward to Owner promptly upon receipt all notices of
violation or other notices from any governmental authority, and board of fire
underwriters or any insurance company, and shall make recommendations regarding
compliance with the notice as shall be appropriate.

 

(e)                                  Personnel.  Any personnel
hired by Manager to maintain, operate and lease each Property shall be the
employees or independent contractors of Manager and not of Owner of the
Property, BH OP or BH REIT. 
Manager shall use due care in the selection and supervision of employees
or independent contractors, who shall be duly qualified and licensed, as
necessary.  Manager shall be responsible
for the preparation of and shall timely file all payroll tax reports and timely
make payments of all withholding and other payroll taxes with respect to each
employee.

 

(f)                                    Utilities and Supplies. 
Manager shall enter into or renew contracts for electricity, gas, steam,
landscaping, fuel, oil, maintenance and other services as are customarily
furnished or rendered in connection with the operation of similar rental
property in the same geographic area.

 

(g)                                 Expenses.  Manager shall
analyze all bills received for services, work and supplies in connection with
maintaining and operating the Properties, pay all bills when due, and, if
requested by Owner, pay, when due, utility and water charges, sewer rent and
assessments, and any other amount payable in respect to the Properties.  All bills shall be paid by Manager within the
time required to obtain discounts, if any. Owner may from time to time request
that Manager forward certain bills to Owner promptly after receipt, and Manager
shall comply with any request.  Manager
shall pay all bills, assessments, real property taxes, insurance premiums and
any other amount payable in respect to the Properties out of the Account (as
hereinafter defined).  All expenses shall
be billed at net cost (i.e., less all rebates, commissions, discounts and
allowances, however designed).

 

(h)                                 Monies Collected. 
Manager shall timely collect all rent and other monies, in the form of a
check or money order, from tenants and any sums otherwise due Owner with
respect to the Properties in the ordinary course of business.  Owner authorizes Manager to request, demand,
collect and provide receipt for all the rent and other monies and to institute
legal proceedings in the name of Owner for the collection thereof and for the
dispossession of any tenant in default under its Lease.

 

(i)                                     Banking Accommodations. 
Manager shall establish and maintain a separate checking account (the “Account”)
for funds relating to the Properties. 
All monies deposited from time to time in the Account shall be deemed to
be trust funds and shall be and remain the property of Owner and shall be
withdrawn and disbursed by Manager for the account of Owner only as expressly
permitted by this Management Agreement for the purposes of performing the
obligations of Manager hereunder.  No
monies collected by Manager on Owner’s behalf shall be 

 

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commingled with funds of Manager.  The Account shall be maintained, and monies
shall be deposited therein and withdrawn therefrom, in accordance with the
following:

 

(i)                                     All sums received from rents
and other income from the Properties shall be promptly deposited by Manager in
the Account.  Manager shall have the
right to designate two or more persons who shall be authorized to draw against
the Account, but only for purposes authorized by this Management Agreement.

 

(ii)                                  All sums due to Manager
hereunder, whether for compensation, reimbursement for expenditures, or
otherwise, as herein provided, shall be a charge against the operating revenues
of the Properties and shall be paid and withdrawn by Manager from the Account
prior to the making of any other disbursements therefrom.

 

(iii)                               By the 15th day
after the end of each month, Manager shall forward to Owner all monies
contained in the Account other than a reserve of $5,000 and any other amounts
otherwise provided in the budget, which shall remain in the Account.

 

(j)                                     Controlling Agreements. 
Manager has received copies of (and will be provided with copies of
future) articles of incorporation, agreements of limited partnership, joint
venture agreements, operating agreements, loan agreements, deeds of trust or
mortgages, each as may be amended from time to time, of Owner, as applicable
(the “Controlling Agreements”) and is and will be familiar with the
terms thereof.  Manager shall use
reasonable care to avoid any act or omission that, in the performance of its
duties hereunder, shall in any way conflict with the terms of Controlling
Agreements.

 

(k)                                  Signs.  Manager shall
place and remove, or cause to be placed and removed, any signs upon the
Properties as Manager deems appropriate, subject, however, to the terms and
conditions of the Leases and to any applicable ordinances and regulations.

 

2.5                                 Approval of
Leases, Contracts, Etc.  In
fulfilling its duties to Owner, Manager may and hereby is authorized to enter
into any leases, contracts or agreements on behalf of Owner in the ordinary
course of the management, operation, maintenance and leasing of each Property.

 

2.6                                 Accounting,
Records and Reports.

 

(a)                                  Records.  Manager shall
maintain all office records and books of account and shall record therein, and
keep copies of, each invoice received from services, work and supplies ordered
in connection with the maintenance and operation of the Properties.  The records shall be maintained on a double
entry basis.  Owner and persons
designated by Owner shall at all reasonable time have access to and the right
to audit and make independent examinations of the records, books and accounts
and all vouchers, files and all other material pertaining to the Properties and
this Management Agreement, all of which Manager agrees to keep safe, available
and separate from any records not pertaining to the Properties, at a place
recommended by Manager and approved by Owner.

 

(b)                                 Monthly Reports. 
On or before the 15th day after the end of each month during
the term of this Management Agreement, Manager shall prepare and submit to
Owner the following reports and statements:

 

(i)                                     rental collection record;

 

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(ii)                                  monthly operating statement;

 

(iii)                               copy of cash disbursements
ledger entries for the period, if requested;

 

(iv)                              copy of cash receipts ledger
entries for the period, if requested;

 

(v)                                 the original copies of all
contracts entered into by Manager on behalf of Owner during the period, if
requested; and

 

(vi)                              copy of ledger entries for the
period relating to security deposits maintained by Manager, if requested.

 

(c)                                  Budgets and Leasing Plans. 
Not later than November 15 of each calendar year, Manager shall
prepare and submit to Owner for its approval an operating budget and a
marketing and leasing plan on each Property for the calendar year immediately
following the submission.  In connection
with any acquisition of a Property by Owner, Manager shall prepare a budget and
marketing and leasing plan for the remainder of the calendar year.  The budget and marketing and leasing plan
shall be in the form of the budget and plan approved by Owner prior to the date
thereof.  As often as reasonably
necessary during the period covered by any budget, Manager may submit to Owner
for its approval an updated budget or plan incorporating any changes as shall
be necessary to reflect cost over-runs and the like during the period.  If Owner does not disapprove any budget
within 30 days after receipt thereof by Owner, the budget shall be deemed
approved.  If Owner shall disapprove any
budget or plan, it shall so notify Manager within said 30-day period and
explain the reasons therefor.  If Owner
disapproves of any budget or plan, Manager shall submit a revised budget or
plan, as applicable, within 10 days of receipt of the notice of disapproval,
and Owner shall have 10 days to provide notice to Manager if it disapproves of
any revised budget or plan.  Manager will
not incur any costs other than those included in, and only to the extent
provided for (subject to reasonable deviation for changes in market costs), in
any budget except for:

 

(i)                                     tenant improvements and real
estate commissions required under a Lease;

 

(ii)                                  maintenance or repair costs
under $5,000 per Property;

 

(iii)                               costs incurred in emergency
situations in which action is immediately necessary for the preservation or
safety of a Property, or for the safety of occupants or other persons (or to
avoid the suspension of any necessary service at a Property);

 

(iv)                              expenditures for real estate
taxes and assessment; and

 

(v)                                 maintenance supplies calling
for an aggregate purchase price less than $25,000 per annum for all Properties.

 

Budgets prepared by Manager shall be for planning and informational
purposes only, and Manager shall have no liability to Owner for any failure to
meet any budget.  However, Manager will
use its best efforts to operate within the approved budget.

 

(d)                                 Legal Requirements. 
Manager shall execute and file when due all forms, reports, and returns
required by law relating to the employment of its personnel.  Manager shall be responsible for notifying
Owner in the event it receives notice that any Improvement on a 

 

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Property or any equipment therein does not comply with
the requirements of any statute, ordinance, law or regulation of any
governmental body or of any public authority or official thereof having or
claiming to have jurisdiction thereover. 
Manager shall promptly forward to Owner any complaints, warnings,
notices or summonses received by it relating to these matters.  Owner represents that to the best of its knowledge
each of its Properties and any equipment thereon will upon acquisition by Owner
comply with all requirements.  Owner
authorizes Manager to disclose the ownership of each Property by Owner to any
officials.  Owner agrees to indemnify,
protect, defend, save and hold Manager and its stockholders, officers,
directors, employees, managers, successors and assigns (collectively, the “Manager
Indemnified Parties”) harmless of and from any and all Losses (as defined
in Section 6.5(a) hereof) that may be imposed on them or any
or all of them by reason of the failure of Owner to correct any present or
future violation or alleged violation of any and all present or future laws,
ordinances, statutes, or regulations of any public authority or official
thereof, having or claiming to have jurisdiction thereover, of which it has
actual notice.

 

2.7                                 Dealings with Advisor. Unless Owner specifically informs
Manager to the contrary, Advisor may perform any of the obligations or exercise
any of the rights of Owner under this Management Agreement.

 

ARTICLE
III

 

AUTHORITY
GRANTED TO MANAGER AND CERTAIN OWNER OBLIGATIONS

 

3.1                                 Authority As To
Tenants, Etc.  Owner agrees
and does hereby give Manager the following exclusive authority and powers (all
of which shall be exercised either in the name of Manager, as manager for
Owner, or in the name or Owner entered into by Manager as Owner’s authorized
agent, and Owner shall assume all expenses in connection with these matters):

 

(a)                                  to advertise each Property or any part
thereof and to display signs thereon, as permitted by law;

 

(b)                                 to lease the Properties to tenants;

 

(c)                                  to pay all expenses of leasing the
Property, including but not limited to, newspaper and other advertising,
signage, banners, brochures, referral commissions, leasing commissions, finder’s
fees and salaries, bonuses and other compensation of duly qualified and
licensed leasing personnel responsible for the leasing of each Property;

 

(d)                                 to cause references of prospective
tenants to be investigated, it being understood and agreed by the parties
hereto that Manager does not guarantee the creditworthiness or collectibility
of accounts receivable from tenants, users or lessees; and to negotiate new
Leases and renewals and cancellations of existing Leases that shall be subject
to Manager obtaining Owner’s approval;

 

(e)                                  to collect from tenants all or any of the
following: a late rent administrative charge, a non-negotiable check charge,
credit report fee, a subleasing administrative charge or broker’s commission;
and Manager need not account for charges or commission to Owner;

 

(f)                                    to terminate tenancies and to sign and
serve in the name of Owner of each Property any notices as are deemed necessary
by Manager;

 

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(g)                                 to institute and prosecute actions to
evict tenants and to recover possession of each Property or portions thereof; and

 

(h)                                 with Owner’s authorization, to sue for
and in the name of Owner and recover rent and other sums due; and to settle,
compromise, and release the actions or suits, or reinstate the tenancies.  All expenses of litigation including, but not
limited to, attorneys’ fees, filing fees, and court costs that Manager shall
incur in connection with the collecting of rent and other sums, or to recover
possession of any Property or any portion thereof, shall be deemed to be an
operational expense of the Property. 
Manager and Owner shall concur on the selection of the attorneys to
handle the litigation.

 

3.2                                 Operational Authority. 
Owner agrees and does hereby give Manager the following exclusive
authority and powers (all of which shall be exercised either in the name of
Manager, as manager for Owner, or in the name of Owner entered into by Manager
as Owner’s authorized agent, and Owner shall assume all expenses in connection
with these matters):

 

(a)                                  to hire, supervise, discharge, and pay
all labor required for the operation and maintenance of each Property including
but not limited to on-site personnel, managers, assistant managers, leasing
consultants, engineers, janitors, maintenance supervisors and other employees
required for the operation and maintenance of each Property, including
personnel spending a portion of their working hours (to be charged on a pro
rata basis) at each Property.  All
expenses of this employment shall be deemed operational expenses of the
Property (notwithstanding any possible implication to the contrary in Section 2.4(e)).;

 

(b)                                 to make or cause to be made all ordinary
repairs and replacements necessary to preserve each Property in its present
condition and for the operating efficiency thereof and all alterations required
to comply with lease requirements, and to decorate each Property;

 

(c)                                  to negotiate and enter into, as Manager
of each Property, contracts for all items on budgets that have been approved by
Owner, any repairs for items not exceeding $5,000, any emergency services, appropriate
service agreements and labor agreements for normal operation of each Property
with duly qualified and licensed Persons, which have terms not to exceed three
years, and agreements for all budgeted maintenance, minor alterations, and
utility services, including, but not limited to, electricity, gas, fuel, water,
telephone, window washing, scavenger service, landscaping, snow removal, pest
exterminating, decorating and legal services in connection with the Leases and
service agreements relating to each Property, and other services or any of them
as Manager may consider appropriate; and

 

(d)                                 to purchase supplies and pay all bills.

 

Manager shall use its best efforts to obtain the
foregoing services and utilities for each Property under terms that are as
cost-effective and otherwise favorable to Manager as possible for the quality
of services and utilities required. 
Owner hereby appoints Manager as Owner’s authorized Manager for the
purpose of executing, as manager for said Owner, all contracts for the
foregoing services and utilities.  In
addition, Owner agrees to specifically assume in writing all obligations under
all these contracts so entered into by Manager, on behalf of Owner of the
Property, upon the termination of this Management Agreement, and Owner shall
indemnify, protect, save, defend and hold harmless Manager and the other
Indemnified Parties from and against any and all Losses resulting from, arising
out of or in any way related to these contracts and that relate to or concern
matters occurring after termination of this Management Agreement, but excluding
matters arising out of Manager’s willful misconduct, gross negligence or
unlawful acts.  Manager shall secure the
approval of, and execution of appropriate contracts 

 

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by,
Owner for any non-budgeted and non-emergency/contingency capital items,
alterations or other expenditures in excess of $5,000 for any one item,
securing for each item at least three written bids, if practicable, or
providing evidence satisfactory to Owner that the contract amount is lower than
industry standard pricing, from responsible contractors.  Manager shall have the right from time to
time during the term hereof, to contract with and make purchases from duly
qualified and licensed Affiliates of Manager, provided that contract rates and
prices are competitive with other available sources.  Manager may at any time and from time to time
request and receive the prior written authorization of Owner of the specific Property
of any one or more purchases or other expenditures, notwithstanding that
Manager may otherwise be authorized hereunder to make these purchases or expenditures.

 

3.3                                 Rent and Other Collections. 
Owner agrees and does hereby give Manager the exclusive authority and
powers (all of which shall be exercised either in the name of Manager, as manager
for Owner, or in the name or Owner entered into by Manager as Owner’s
authorized agent, and Owner shall assume all expenses in connection with these
matters) to collect rents and assessments and other items, including but not
limited to tenant payments for real estate taxes, property liability and other
insurance, damages and repairs, common area maintenance, tax reduction fees and
all other tenant reimbursements, administrative charges, proceeds of rental
interruption insurance, parking fees, income from coin operated machines and
other miscellaneous income, due or to become due and give receipts therefor and
to deposit all Gross Revenue collected hereunder in the Account.  Manager may endorse any and all checks
received in connection with the operation of any Property and drawn to the
order of Owner, and Owner shall, upon request, furnish Manager’s depository
with an appropriate authorization for Manager to make the endorsement.  Manager shall also have the exclusive
authority to collect and handle tenants’ security deposits, including the right
to apply the security deposits to unpaid rent, and to comply, on behalf of
Owner of each Property, with applicable state or local laws concerning security
deposits and interest thereon, if any. 
Manager shall not be required to advance any monies for the care or
management of any Property.  Owner agrees
to advance all monies necessary therefor. 
If Manager shall elect to advance any money in connection with a
Property, Owner agrees to reimburse Manager forthwith and hereby authorizes
Manager to deduct the advances from any monies due Owner.  In connection with any insured losses or
damages relating to any Property, Manager shall have the exclusive authority to
handle all steps necessary regarding any claim; provided that Manager
will not make any adjustments or settlements in excess of $10,000 without Owner’s
prior written consent.

 

3.4                                 Payment of
Expenses.  Owner
agrees and does hereby give Manager the exclusive authority and power (all of
which shall be exercised either in the name of Manager, as manager for Owner,
or in the name or Owner entered into by Manager as Owner’s authorized agent,
and Owner shall assume all expenses in connection with these matters) to pay
all expenses of each Property from the Gross Revenue collected in accordance
with Section 3.3 above, from the Account.  It is understood that the Gross Revenue will
be used first to pay the compensation to Manager as contained in Article V
below, then operational expenses and then any mortgage indebtedness, including
real estate tax and insurance impounds, but only as directed by Owner in
writing and only if sufficient Gross Revenue is available for the
payments.  Nothing in this Management Agreement shall be
interpreted in a manner as to obligate Manager to pay from Gross Revenue, any
expenses incurred by Owner prior to the commencement of this Management Agreement, except to the
extent Owner advances additional funds to pay the expenses.

 

3.5                                 Environmental
Matters.  Owner hereby warrants and
represents to Manager that to the best of Owner’s knowledge, no Property, upon
acquisition by Owner, nor any part thereof, will be used to treat, deposit,
store, dispose of or place any hazardous substance that may subject Manager to
liability or claims under the Comprehensive Environmental Response,
Compensation and Liability Act of 1980 (42 U.S.C.A. Section 9607) or any
constitutional provision, statute, ordinance, law, or regulation of any
governmental body or of any order or ruling of any public authority or official
thereof, having or claiming to have jurisdiction thereover.  Furthermore, Owner agrees to indemnify,
protect, defend, save and hold 

 

9

 

harmless Manager and all of the other Manager
Indemnified Parties from any and all Losses involving, concerning or in any way
related to any past, current or future allegations regarding treatment,
depositing, storage, disposal or placement by any party other than Manager of
hazardous substances on any Property.

 

3.7                                 Legal Status of
Properties.  Owner
represents that to the best of its knowledge each Property and any equipment
thereon, when acquired by Owner, will comply with all legal requirements and
authorizes Manager to disclose the identity of the owner of each Property to
any officials and agrees to indemnify, protect, defend, save and hold harmless Manager
and the other Manager Indemnified Parties of and from any and all Losses that
may be imposed on them or any of them by reason of the failure of Owner to
correct any present or future violation or alleged violation of any and all
present or future laws, ordinances, statutes, or regulations of any public
authority or official thereof, having or claiming to have jurisdiction
thereover, of which it has actual notice. 
In the event it is alleged or charged that any Improvement or any
equipment on a Property or any act or failure to act by Owner with respect to
the Property or the sale, rental, or other disposition thereof fails to comply
with, or is in violation of, any of the requirements of any constitutional
provision, statute, ordinance, law, or regulation of any governmental body or
any order or ruling of any public authority or official thereof having or
claiming to have jurisdiction thereover, and Manager, in its sole and absolute
discretion, considers that the action or position of Owner, with respect
thereto may result in damage or liability to Manager, Manager shall have the
right to cancel this Management Agreement at
any time by written notice to Owner of its election so to do, which
cancellation shall be effective upon the service of the notice.  Cancellation shall not release the
indemnities of Owner set forth in this Management Agreement and shall not
terminate any liability or obligation of Owner to Manager for any payment,
reimbursement, or other sum of money then due and payable to Manager hereunder.

 

3.8                                 Extraordinary
Payments.  Owner
agrees to give adequate advance written notice to Manager if Owner desires that
Manager make any extraordinary payment, out of Gross Revenue, to the extent
funds are available after the payment of Manager’s compensation as provided for
herein and all operational expenses, of mortgage indebtedness, general taxes,
special assessments, or fire, boiler or any other insurance premiums.

 

ARTICLE
IV

 

EXPENSES

 

4.1                                 Owner’s
Expenses.  Except as
otherwise specifically provided, all costs and expenses incurred hereunder by
Manager in fulfilling its duties to Owner shall be for the account of and on
behalf of Owner.  Such costs and expenses
shall include the wages and salaries and other employee-related expenses of all
on-site and off-site employees of Manager who are engaged in the operation,
management, maintenance and leasing or access control of the Properties,
including taxes, insurance and benefits relating to such employees, costs of
technology related to the Properties, including computers, telephone systems
and property management and accounting software and any upgrades or conversions
thereof, and legal, travel and other out-of-pocket expenses that are directly
related to the management of specific Properties.  All costs and expenses for which Owner is
responsible under this Management Agreement shall be paid by Manager out of the
Account.  In the event the Account does
not contain sufficient funds to pay all said expenses, Owner shall fund all
sums necessary to meet the such additional costs and expenses.

 

4.2                                 Manager’s
Expenses.  Manager
shall, out of its own funds, pay all of its general overhead and administrative
expenses.

 

10

 

ARTICLE V

 

MANAGER’S COMPENSATION

 

5.1                                 Management Fees.  Owner shall pay Manager property
management fees in an amount equal to three percent (3%) of Gross Revenues (the
“Management Fee”) on a monthly basis from the income received from the
Properties over the term of this Management Agreement.  Certain of these Properties may be owned by
Joint Ventures.  When the Manager is not
paid by the Joint Venture directly in respect of its services, the applicable
Management Fee or Oversight Fee (as defined below) to be paid by the Owner will
be calculated by multiplying the Management Fee by the Economic Interest
Percentage owned directly or indirectly by the Owner in that Property. In the
event that Owner contracts directly with a third-party property manager not
affiliated with the Manager in respect of a Property for which the Owner, in
its sole discretion, has the ability to appoint or hire the Manager, Owner
shall pay Manager an oversight fee (“Oversight Fee”) equal to one-half of one
percent (0.50%) of Gross Revenues.  In no
event will Owner pay both a Management Fee and an Oversight Fee to Manager with
respect to any Property.  If Manager
subcontracts its responsibilities hereunder to another person or entity,
Manager shall be solely responsible for the payment to the third party.  The Management Fee includes the reimbursement
of the specified cost incurred by the Manger of engaging another person or
entity to perform Manager’s responsibilities hereunder; provided, however, that
Manager shall be responsible for payment of all amounts to these third
parties.  Nothing herein shall prevent
Manager from entering fee-splitting arrangements with third parties with
respect to the Management Fee.

 

5.2                                 Leasing Fees.  In addition to the compensation paid to
Manager under Section 5.1 above, Manager shall be entitled to
receive a separate fee for the Leases of new tenants and renewals of Leases
with existing tenants in an amount not to exceed the fee customarily charged in
arm’s-length transactions by others rendering similar services in the same
geographic area for similar properties as determined by a survey of brokers and
agents in the area.

 

 5.3                              Audit
Adjustment.  If any
audit of the records, books or accounts relating to the Properties discloses an
overpayment or underpayment of Management Fees, Owner or Manager shall promptly
pay to the other party the amount of the overpayment or underpayment, as the
case may be.  If the audit discloses an
overpayment of Management Fees for any fiscal year of more than the correct
Management Fees for the fiscal year, Manager shall bear the cost of the audit.

 

ARTICLE
VI

 

INSURANCE
AND INDEMNIFICATION

 

6.1                                 Insurance to be
Carried.

 

(a)                                  Manager shall obtain and keep in full
force and effect insurance on the Properties against any hazards as Owner and
Manager shall deem appropriate, but in any event insurance sufficient to comply
with the Leases and Controlling Agreements shall be maintained. All liability
policies shall provide sufficient insurance satisfactory to both Owner and
Manager and shall contain waivers of subrogation for the benefit of Manager.

 

(b)                                 Manager shall obtain and keep in full
force and effect, in accordance with the laws of the state in which each
Property is located, workers’ compensation and employer’s liability insurance
applicable to and covering all employees of Manager at the Properties, and Manager
shall furnish Owner certificates of insurers evidencing that the insurance is
in effect.  If any work under this
Management Agreement is subcontracted as permitted herein, Manager shall 

 

11

 

include in each subcontract a provision that the
subcontractor shall also furnish Owner with the certificate.

 

6.2                                 Insurance
Expenses.  Premiums
and other expenses of insurance, as well as any applicable payments in respect
of deductibles, shall be borne by Owner.

 

6.3                                 Cooperation
with Insurers.  Manager
shall cooperate with and provide reasonable access to the Properties to
representatives of insurance companies and insurance brokers or agents with
respect to insurance that is in effect or for which application has been
made.  Manager shall use its best efforts
to comply with all requirements of insurers.

 

6.4                                 Accidents and
Claims.  Manager shall promptly
investigate and shall report in detail to Owner all accidents, claims for
damage relating to ownership, operation or maintenance of the Properties, and
any damage or destruction to the Properties and the estimated costs of repair
thereof, and shall prepare for approval by Owner all reports required by an
insurance company in connection with any accident, claim, damage, or
destruction.  These reports shall be
given to Owner promptly, and any report not so given within 10 days after the
occurrence of any accident, claim, damage or destruction shall be noted in the
monthly operating statement delivered to Owner pursuant to Section 2.5(b) hereof.  Manager is authorized to settle any claim
against an insurance company arising out of any policy and, in connection with the
claim, to execute proofs of loss and adjustments of loss and to collect and
receipt for loss proceeds.

 

6.5                                 Indemnification.

 

(a)                                  On Termination. In the event
this Management Agreement is terminated for any reason prior to the expiration
of its original term or any renewal term, Owner shall indemnify, protect,
defend, save and hold harmless Manager and all of the other Manager Indemnified
Parties from and against any and all claims, causes of action, demands, suits,
proceedings, loss, judgments, damage, awards, liens, fines, costs, attorney’s
fees and expenses, of every kind and nature whatsoever (collectively, “Losses”),
that may be imposed on or incurred by Manager by reason of the willful misconduct,
gross negligence or unlawful acts (such unlawfulness having been adjudicated by
a court of proper jurisdiction) of Owner.

 

(b)                                 Property
Damage, Etc. Owner agrees to indemnify, defend, protect, save
and hold harmless Manager and all of the other Manager Indemnified Parties from
any and all Losses in connection with or in any way related to each Property
and from liability for damage to each Property and injuries to or death of any
person whomsoever, and damage to property; provided, however,
that the indemnification and exculpation shall not extend to any such Losses
arising out of the willful misconduct, gross negligence or unlawful acts (the
unlawfulness having been adjudicated by a court of proper jurisdiction) of
Manager, its agents, servants, or employees; provided, further,
that the indemnification and exculpation shall be limited to the extent that
Manager recovers insurance proceeds with respect to that matter. Manager shall
not be liable for any error of judgment or for any mistake of fact or law, or
for any thing that it may do or refrain from doing, except in cases of willful
misconduct, gross negligence or unlawful acts (the unlawfulness having been
adjudicated by a court of proper jurisdiction). Manager agrees to indemnify,
defend, protect, save and hold harmless Owner and its stockholders, officers,
directors, employees, managers, successors and assigns from any and all claims
or liability for any injury or damage to any person or property whatsoever for
which Manager is responsible occurring in, on, or about the Properties,
including, without limitation, the Improvements, when the injury or damage
shall be caused by the willful misconduct, gross negligence or unlawful acts (the
unlawfulness having been adjudicated by a court of proper jurisdiction) of
Manager, its 

 

12

 

agents, servants, or employees, except to the
extent that Owner recovers insurance proceeds with respect to such matter.

 

(c)                                  Limitations.
Notwithstanding anything to the contrary in this Management Agreement, any
indemnification and exculpation by the Owner under this Management Agreement is
subject to any limitations imposed under the Company’s Articles of
Incorporation or any amendments thereto.

 

ARTICLE
VII

 

TERM
AND TERMINATION

 

7.1                                 Term.  This Management Agreement shall commence on
the date first above written and shall continue until the fifth anniversary of that
date and thereafter for successive five year renewal periods, unless on or
before one year prior to the date last above mentioned or on or before one year
prior to the expiration of any renewal period, Manager shall notify Owner in
writing that it elects to terminate this Management Agreement, in which case
this Management Agreement shall be thereby terminated on said last mentioned
date.  In addition, and notwithstanding
the foregoing, Owner may terminate this Management Agreement at any time upon
delivery of written notice to Manager not less than 30 days prior to the
effective date of termination, in the event of (and only in the event of) a
showing by Owner of misconduct, negligence, or malfeasance by Manager in the
performance of Manager’s duties hereunder. In addition, either party may
terminate this Management Agreement immediately upon the occurrence of any of
the following:

 

(a)                                  A decree or order is rendered by a court
having jurisdiction (i) adjudging Manager as bankrupt or insolvent, (ii) approving
as properly filed a petition seeking reorganization, readjustment, arrangement,
composition or similar relief for Manager under the federal bankruptcy laws or
any similar applicable law or practice or (iii) appointing a receiver or
liquidator or trustee or assignee in bankruptcy or insolvency of Manager or a
substantial part of the property of Manager, or for the winding up or
liquidation of its affairs; or

 

(b)                                 Manager (i) institutes proceedings
to be adjudicated a voluntary bankrupt or an insolvent, (ii) consents to
the filing of a bankruptcy proceeding against it, (iii) files a petition
or answer or consent seeking reorganization, readjustment, arrangement,
composition or relief under any similar applicable law or practice, (iv) consents
to the filing of any petition, or to the appointment of a receiver or
liquidator or trustee or assignee in bankruptcy or insolvency for it or for a
substantial part of its property, (v) makes an assignment for the benefit
of creditors, (vi) is unable to or admits in writing its inability to pay
its debts generally as they become due unless inability shall be the fault of
the other party, or (iv) takes corporate or other action in furtherance of
any of the aforesaid purposes.

 

7.2                                 Manager’s
Obligations Upon Termination.  Upon the termination of this Management
Agreement, Manager shall have the following duties:

 

(a)                                  Manager shall deliver to Owner or its
designee, all books and records with respect to the Properties.

 

(b)                                 Manager shall transfer and assign to
Owner, or its designee, all service contracts and personal property relating to
or used in the operation and maintenance of the Properties, except personal
property paid for and owned by Manager. 
Manager shall also, for a period of 60 

 

13

 

days immediately following the date of termination,
make itself available to consult with and advise Owner, or its designee,
regarding the operation, maintenance and leasing of the Properties.

 

(c)                                  Manager shall render to Owner an
accounting of all funds of Owner in its possession and shall deliver to Owner a
statement of all Management Fees claimed to be due to Manager and shall cause
funds of Owner held by Manager relating to the Properties to be paid to Owner
or its designee.

 

7.3                                 Owner’s
Obligations Upon Termination.  Owner shall pay or reimburse Manager for any
sums of money due it under this Management Agreement for services and expenses
prior to termination of this Management Agreement.  All provisions of this Management Agreement
that require Owner to have insured, or to protect, defend, save, hold and
indemnify or to reimburse Manager shall survive any expiration or termination
of this Management Agreement and, if Manager is or becomes involved in any
claim, proceeding or litigation by reason of having been Manager of Owner, such
provisions shall apply as if this Management Agreement were still in effect.

 

The parties understand and
agree that Manager may withhold funds for 60 days after the end of the month in
which this Management Agreement is terminated to pay bills previously incurred
but not yet invoiced and to close accounts. Should the funds withheld be
insufficient to meet the obligation of Manager to pay bills previously
incurred, Owner will, upon demand, advance sufficient funds to Manager to ensure
fulfillment of Manager’s obligation to do so, within 10 days of receipt of
notice and an itemization of any unpaid bills.

 

ARTICLE
VIII

 

MISCELLANEOUS

 

8.1                                 Notices.  All notices, approvals, consents and other
communications hereunder shall be in writing, and, except when receipt is
required to start the running of a period of time, shall be deemed given when
delivered in person or on the fifth day after its mailing by either party by
registered or certified United States mail, postage prepaid and return receipt
requested, to the other party, at the addresses set forth after their respect
name below or at any different addresses as either party shall have theretofore
advised the other party in writing in accordance with this Section 8.1.

 

	
   

  	
  Owner:

  	
   

  	
  BEHRINGER HARVARD OPERATING PARTNERSHIP II
  LP

  
	
   

  	
   

  	
  c/o Behringer Harvard
  REIT II, Inc.

  
	
   

  	
   

  	
  15601 Dallas Parkway

  
	
   

  	
   

  	
  Suite 600

  
	
   

  	
   

  	
  Addison, Texas 75001

  
	
   

  	
   

  	
  Attention: Chief Legal Officer

  
	
   

  	
   

  	
   

  
	
   

  	
  Manager:

  	
   

  	
  BEHRINGER HARVARD REIT II MANAGEMENT
  SERVICES, LLC

  
	
   

  	
   

  	
  15601 Dallas Parkway

  
	
   

  	
   

  	
  Suite 600

  
	
   

  	
   

  	
  Addison, Texas 75001

  
	
   

  	
   

  	
  Attention: Chief Legal Officer

  
					

 

8.2                                 Governing Law;
Venue.  This Management Agreement
shall be governed by and construed in accordance with the laws of the State of
Texas, and any action brought to enforce the agreements made hereunder or any
action which arises out of the relationship created hereunder shall be brought
exclusively in Dallas County, Texas.

 

14

 

8.3                                 Assignment.  Manager may assign or delegate partially or
in full its duties and rights under this Management Agreement and the fees and
compensation related thereto to a duly qualified and licensed Affiliate of
Manager without the approval of Owner. Any other assignment or delegation by
Manager of its duties and rights under this Management Agreement may be made
only with the prior written consent of Owner. 
Owner acknowledges and agrees that any or all of the duties of Manager
as contained herein may be assigned or delegated by Manager and performed by a duly
qualified and licensed Person (“Submanager”) with whom Manager contracts
for the purpose of performing these duties. 
Owner specifically grants Manager the authority to enter into a contract
with a Submanager; provided that, unless Owner otherwise agrees in
writing with the Submanager, Owner shall have no liability or responsibility to
any Submanager for the payment of the Submanager’s fee or for reimbursement to
the Submanager of its expenses or to indemnify the Submanager in any manner for
any matter; and provided, further, that Manager shall require
Submanager to agree, in the written agreement setting forth the duties and
obligations of the Submanager, to indemnify Owner for all Losses incurred by
Owner as a result of the willful misconduct or gross negligence of the
Submanager, except that indemnity shall not be required to the extent that
Owner recovers issuance proceeds with respect to that matter.  Any contract entered into between Manager and
a Submanager pursuant to this Section 8.3 shall be consistent with
the provisions of this Management Agreement, except to the extent Owner
otherwise specifically agrees in writing. 
This Management Agreement shall be binding upon and shall inure to the
benefit of the parties hereto and their respective successors and permitted assigns.

 

8.4                                 Third Party
Leasing Services.  Manager
acknowledges that from time to time Owner may determine that it is in the best
interests of Owner to retain a third party to provide certain leasing services
with respect to certain Properties and to compensate the third party for
leasing services.  Upon the prior written
consent of Manager, Owner shall have the authority to enter into a contract for
leasing services with a duly qualified and licensed third party (a “Third
Party Leasing Agreement”); provided, that Manager shall have no
liability or responsibility to Owner for any of the duties and obligations
undertaken by the third party, and Owner agrees to indemnify Manager for all
Losses incurred by Manager as a result of acts of the third party pursuant to
the Third Party Leasing Agreement.  To
the extent that leasing services are specifically required to be performed by a
third party pursuant to the Third Party Leasing Agreement, Manager shall have
no obligation to perform the leasing services and Owner shall have no
obligation to Manager for leasing fees pursuant to Section 5.2
hereof.

 

8.5                                 Third Party
Management Services.  Manager
acknowledges that from time to time Owner may acquire interests in Properties
in which Owner does not control the determination of the party that is engaged
to provide property management and other services to be provided by Manager
with respect to all Properties acquired by Owner hereunder.  Upon the prior written consent of Manager,
Owner shall have the authority to acquire non-controlling interests in
Properties for which a duly qualified and licensed third party provides some or
all of the services otherwise required to be performed by Manager hereunder (a “Third
Party Management Agreement”); provided that Manager shall have no liability
or responsibility to Owner for any of the duties and obligations undertaken by the
third party, and Owner agrees to indemnify Manager for all Losses incurred by
Manager as a result of the acts of the third party pursuant to the Third Party
Management Agreement.  To the extent that
property management and other services are specifically required to be
performed by a third party pursuant to the Third Party Management Agreement,
Manager shall have no obligation to perform the services and Owner shall have
no obligation to Manager for compensation for the services pursuant to Article V
hereof.

 

8.6                                 No Waiver.  The failure of Owner to seek redress for
violation or to insist upon the strict performance of any covenant or condition
of this Management Agreement shall not constitute a waiver thereof for the
future.

 

15

 

8.7                                 Amendments.  This Management Agreement may be amended only
by an instrument in writing signed by the party against whom enforcement of the
amendment is sought.

 

8.8                                 Headings.  The headings of the various subdivisions of
this Management Agreement are for reference only and shall not define or limit
any of the terms or provisions hereof.

 

8.9                                 Counterparts.  This Management Agreement may be executed in
two or more counterparts, each of which shall be deemed an original, and it
shall not be necessary in making proof of this Management Agreement to produce
or account for more than one counterpart.

 

8.10                           Entire
Agreement.  This
Management Agreement (including the Property Amendments) contains the entire
understanding and all agreements between Owner and Manager respecting the
management of the Properties.  There are
no representations, agreements, arrangements or understandings, oral or
written, between Owner and Manager relating to the management of the Properties
that are not fully expressed herein.

 

8.11                           Disputes.  If there shall be a dispute between Owner and
Manager relating to this Management Agreement resulting in litigation, the
prevailing party in the litigation shall be entitled to recover from the other
party to the litigation the amount as the court shall fix as reasonable
attorneys’ fees.

 

8.12                           Activities of
Manager.  The obligations of Manager
pursuant to the terms and provisions of this Management Agreement shall not be
construed to preclude Manager from engaging in other activities or business
ventures, whether or not the other activities or ventures are in competition
with Owner or the business of Owner.

 

8.13                           Independent
Contractor.  Manager and
Owner shall not be construed as joint venturers or partners of each other
pursuant to this Management Agreement, and neither shall have the power to bind
or obligate the other except as set forth herein.  In all respects, the status of Manager to
Owner under this Management Agreement is that of an independent contractor.

 

8.14                           No Third-Party Rights. 
Nothing expressed or referred to in this Management Agreement will be
construed to give any Person other than the parties to this Management
Agreement any legal or equitable right, remedy or claim under or with respect
to this Management Agreement or any provision of this Management Agreement,
except the rights as shall inure to a successor or permitted assignee pursuant
to Section 8.3.

 

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

 

 

16

 

IN WITNESS WHEREOF, the parties
have executed this Property Management and Leasing Agreement as of the date
first above written.

 

 

	
   

  	
  BEHRINGER HARVARD REIT II, INC.

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  By:

  	
   

  
	
   

  	
   

  	
  Gerald J. Reihsen, III

  
	
   

  	
   

  	
  Executive Vice President – Corporate

  
	
   

  	
   

  	
  Development & Legal

  
	
   

  	
   

  
	
   

  	
  BEHRINGER HARVARD OPERATING

  
	
   

  	
     PARTNERSHIP
  II LP

  
	
   

  	
   

  
	
   

  	
  By:

  	
  Behringer Harvard REIT II, Inc.

  
	
   

  	
   

  	
  General Partner

  
	
   

  	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  By:

  	
   

  
	
   

  	
   

  	
   

  	
  Gerald J. Reihsen, III

  
	
   

  	
   

  	
   

  	
  Executive Vice President – Corporate

  
	
   

  	
   

  	
   

  	
  Development & Legal

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  BEHRINGER HARVARD REIT II

  MANAGEMENT SERVICES, LLC

  
	
   

  	
   

  
	
   

  	
  By:

  	
   

  
	
   

  	
   

  	
  Gerald J. Reihsen, III

  
	
   

  	
   

  	
  Executive Vice President – Corporate

  
	
   

  	
   

  	
  Development & Legal

  
						

 

17

 

Form of Property Amendment

 

	
  Property
  Description:

  	
   

  
	
   

  	
   

  
	
   

  	
   

  
	
  Legal
  Name of Owner:

  	
   

  
	
   

  	
   

  
	
  Jurisdiction
  of Organization/Incorporation:

  	
   

  
	
   

  	
   

  
	
  Services
  to be Provided (if other than in Management Agreement):

  	
   

  
	
   

  	
   

  
	
   

  	
   

  
	
  Alterations
  to basic terms and conditions of Management Agreement (if any):

  	
   

  
	
   

  	
   

  

 

 

	
   

  	
   

  	
  MANAGER:

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
  BEHRINGER HARVARD REIT II

  MANAGEMENT SERVICES, LLC

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
  By:

  	
   

  
	
   

  	
   

  	
   

  	
  Gerald J. Reihsen, III

  
	
   

  	
   

  	
   

  	
  Executive Vice President – Corporate

  
	
   

  	
   

  	
   

  	
  Development & Legal

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
  OWNER:

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
  By:

  	
   

  
	
   

  	
   

  	
  Name:

  	
   

  
	
   

  	
   

  	
  Title:EXHIBIT 10.8

 

CONTRIBUTION AGREEMENT

 

THIS CONTRIBUTION AGREEMENT
(the “Agreement”) is made as of this 11th day of April, 2008 (the “Effective
Date”), between CALIFORNIA MORTGAGE AND REALTY, INC.,
a Delaware corporation (“CMR”), and DAVID CHOO, an
individual (“Choo”), for the benefit of CMR MORTGAGE FUND, LLC,
a California limited liability company, CMR MORTGAGE FUND II, LLC,
a California limited liability company and CMR MORTGAGE FUND III, LLC,
a California limited liability company (collectively, the “Funds”).

 

RECITALS

 

A.                                    CMR
and Choo acknowledge that CMR is indebted to the Funds for various sums as more
particularly set forth in the respective audited financial statements for each
of the Funds.

 

B.                                    Choo,
indirectly through various family trusts and other affiliated entities, is the
controlling principal of CMR and has an economic interest in the financial
stability and solvency of CMR.

 

C.                                    CMR
is the sole manager of the Funds and, as such, has a fiduciary duty to manage
the Funds in a prudent manner and also will receive indirect benefits from the
solvency and profitability of the Funds.

 

D.                                    Due
to current extraordinary conditions in the real estate credit and capital
markets, the Funds are experiencing cash flow shortages.  Choo wishes to contribute or otherwise
advance to CMR funds to enable CMR to pay debts and obligations owed to the
Funds by CMR, which will provide the Funds with cash for use in protecting and
preserving assets and paying their expenses during a period of reduced cash
flow from their mortgage investments. 
Choo also wishes to provide CMR with operating capital to conduct its
business operations and satisfy other debts and obligations.

 

E.                                      Through
various limited liability companies that Choo directly or indirectly owns
and/or controls, Choo indirectly owns various real property assets with
substantial equity that can be liquidated to provide cash to meet the needs
described above.

 

AGREEMENT

 

NOW, THEREFORE, for
good and valuable consideration, the parties agree as follows:

 

1.                                      Sale
or Refinance of Real Estate Assets.  Commencing on the date of this Agreement, Choo
covenants and agrees to use his diligent, good faith and best efforts to sell
or cause to be sold,  some or all of the
real property assets listed in Exhibit A attached hereto (each
individually, a “Property,” and collectively, the “Properties”) to the extent
necessary to 

 

1

 

satisfy the
requirements of Section 3 below. 
Choo shall promptly cause the ownership entity for each Property Choo
decides to sell to enter into a listing agreement with a reputable real estate
brokerage firm appropriate for the marketing and sale of each such
Property.  Choo further covenants and
agrees to accept the best reasonable offer obtained for each Property selected
to be sold within a time period that is reasonably adequate to enable all such
sales to close within ninety (90) to one hundred eighty (180) days after the
date hereof.  Each Property is encumbered
by various mortgages and liens and agreements with various lenders.  Choo may elect to refinance or
cross-collateralize one or more of the Properties to raise cash proceeds to
contribute or advance to CMR and/or to obtain forbearances or extensions from
existing lenders.  Prior to the sale of
any of the Properties, Choo retains the right to encumber any of the Properties
with further liens, pay off liens or replace collateral for existing secured or
unsecured debts of Choo and/or his affiliates. 
Choo is currently in discussions with various lenders regarding existing
secured and unsecured debts.

 

2.                                      Use
of Proceeds by Choo; Contribution to CMR.  Choo covenants and agrees that he will use and
apply a substantial portion of the net cash sales proceeds or refinance
proceeds from the Property sales described above for the sole and exclusive
purposes of (a) contributing or advancing (or causing to be contributed or
advanced) all such proceeds to CMR within two (2) business days after the
close of escrow for the sale of each Property until the requirements of Section 3
below have been satisfied; (b) paying operating expenses, debt service and
other expenditures reasonably necessary to protect and preserve other
Properties and/or to maximize the sales proceeds obtainable from any sales
thereof; and (c) paying or adequately providing for Choo’s state and
federal income tax liabilities.

 

3.                                      Use
of Proceeds by CMR.  CMR covenants
and agrees to use funds that it receives pursuant to Section 2 above
solely for the following purposes:

 

(a)           To pay and satisfy
in full all of its debts and obligations to the Funds (including both the
current and long-term portions of any such debts and obligations) up to an
aggregate maximum of $5,000,000 and all of its debts to third parties; and

 

(b)           To fund an operating
reserve of at least One Million Five Hundred Thousand Dollars ($1,500,000.00),
of which $400,000 has already been advanced in April of 2008, by
depositing such funds into a deposit account in CMR’s name at CMR’s primary
bank.  The funds in said operating
reserve shall be used solely for the overhead and operating costs of CMR.

 

4.                                      Term.  This Agreement shall continue until the
earlier of (a) the date that the independent registered public accounting
firm(s) employed by each of the Funds and CMR confirms that it/they would
issue an opinion regarding the financial statements of CMR and each Fund
without a qualification as to the ability of CMR or that Fund to continue in
business as a going concern, or (b) the termination of this Agreement by
written agreement of all parties hereto.

 

5.                                      General.

 

2

 

(a)           Governing Law.  This Agreement and performance under it will
be governed by and construed in accordance with the laws of the State of
California.

 

(b)           Attorneys’ Fees.  If any legal or arbitration action or
proceeding is commenced by any party to enforce or interpret any provision of
this Agreement, the prevailing party shall be entitled to recover its
reasonable attorneys’ fees and other costs incurred by such prevailing party in
such action or proceeding.

 

(c)           Further
Assurances.  The parties covenant and
agree that, subsequent to the execution and delivery of this Agreement and
without any additional consideration, each of the parties will execute and
deliver any further legal instruments and perform any acts which are or may
become reasonably necessary to effectuate this Agreement.

 

(d)           Assignment.  This Agreement will be binding on the parties
hereto and their respective successors and assigns.

 

(e)           Entire Agreement;
Amendment.  This Agreement, including
any Exhibits referred to herein and attached hereto constitute the entire
agreement between the parties with respect to the subject matter contained in
this Agreement and supersede all prior agreements, whether written or oral,
with respect to such subject matter.  No
modification, waiver, or discharge hereof will be valid unless in writing and
signed by the parties hereto.

 

(f)            Counterparts.  This Agreement may be executed in several
counterparts, all of which taken together will constitute one single agreement
between the parties.

 

(g)           Headings.  Headings contained in this Agreement are for
convenience only and are not -part of this Agreement and do not in any way
interpret, limit, or amplify the scope, extent, or intent of this Agreement or
any of the provisions hereof.

 

(h)           Severability.  The invalidity of any provision of this
Agreement will not affect the validity and binding effect of any other
provision, and any invalid provision will be severed from this Agreement and
the remainder of the Agreement will be enforced to the maximum extent permitted
by applicable law and in keeping with the original intention of the parties.

 

(i)            Authority.  Each person executing this Agreement hereby
covenants and warrants that he or she is duly and validly authorized to do so.

 

(j)            No Third Party
Beneficiaries.  This Agreement is
entered into solely for the benefit of the parties hereto and is not intended
to benefit, nor shall it be enforceable by, any third party not a party
thereto.

 

 

(Signature page follows.)

 

3

 

IN WITNESS
WHEREOF, the parties have each caused this Agreement
to be signed and delivered as of the date first set forth above.

 

	
  “CMR”

  	
   

  	
  “FUNDS”

  
	
   

  	
   

  	
   

  
	
  CALIFORNIA MORTGAGE AND REALTY, 

  	
   

  	
  CMR MORTGAGE FUND, LLC, 

  
	
  INC., a Delaware corporation 

  	
   

  	
  a California limited liability company 

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
  By: 

  	
  California Mortgage and Realty, Inc., 

  
	
  By: 

  	
   /s/ James Gala 

  	
   

  	
   

  	
  its Manager 

  
	
   

  	
  James Gala, Chief Executive Officer

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
  By:  

  	
   /s/ James Gala 

  
	
   

  	
   

  	
   

  	
   

  	
  James Gala, Chief Executive Officer

  
	
   

  	
   

  	
   

  	
   

  
	
  “CHOO”

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
  CMR MORTGAGE FUND, II LLC, 

  
	
   

  	
   

  	
  a California limited liability company 

  
	
   /s/ David Choo 

  	
   

  	
   

  	
   

  
	
  DAVID CHOO

  	
   

  	
  By: 

  	
  California Mortgage and Realty, Inc., 

  
	
   

  	
   

  	
   

  	
   

  	
  its Manager 

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
  By:  

  	
   /s/ James Gala 

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
  James Gala, Chief Executive Officer

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
  CMR MORTGAGE FUND III, LLC, 

  
	
   

  	
   

  	
  a California limited liability company 

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
  By: 

  	
  California Mortgage and Realty, Inc., 

  
	
   

  	
   

  	
   

  	
   

  	
  its Manager 

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
  By:  

  	
   /s/ James Gala 

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
  James Gala, Chief Executive Officer

  
							

 

4

 

EXHIBIT A

 

PROPERTIES TO BE SOLD

 

CMR Capital, David Choo and Related Entities - Assets Listed for Sale
4/11/2008

 

	
  Asset

  	
   

  	
  Listing
  Agent

  	
   

  	
   

  
	
  First
  and Mission - SF, CA

  	
   

  	
  CBRE
  and Eastdil Secured

  	
   

  	
   

  
	
  524
  Howard Street - SF, CA

  	
   

  	
  Colliers

  	
   

  	
   

  
	
  25
  Seaview - Piedmont, CA

  	
   

  	
  Grubb
  Co.

  	
   

  	
   

  
	
  2836
  Washington Street - SF, CA

  	
   

  	
  TRI
  Coldwell Banker

  	
   

  	
   

  
	
  Scotts
  Valley - CA

  	
   

  	
  In
  Contract

  	
   

  	
   

  
	
  St.
  Regis Condo - SF, CA

  	
   

  	
  Pacific
  Union

  	
   

  	
   

  
	
  NYC
  Condo

  	
   

  	
  Prudential
  Douglas Elliman

  	
   

  	
   

  
	
  St.
  Helena, CA

  	
   

  	
  Morgan
  Lane

  	
   

  	
   

  
	
  Washington
  Street - Las Vegas, NV

  	
   

  	
  In
  Contract

  	
   

  	
   

  

 

A-1

Source: [{"source": "alea-institute/alea-institute/kl3m-data-edgar-agreements/train-00145-of-00352.parquet"}, [{"source": "alea-institute/alea-institute/kl3m-data-edgar-agreements/train-00145-of-00352.parquet"}]]