Document:

who8k072208ex10-1.htm

    
      

      

    

    
 

    
      FORM
OF NOTE

       

       

      THE
SECURITIES REPRESENTED BY THIS CERTIFICATE HAVE NOT BEEN REGISTERED UNDER THE
SECURITIES ACT OF 1933, AS AMENDED (THE "ACT"), OR THE SECURITIES LAWS OF ANY
STATE, AND MAY NOT BE OFFERED, SOLD TRANSFERRED, PLEDGED, HYPOTHECATED OR
OTHERWISE DISPOSED OF EXCEPT PURSUANT TO (i) AN EFFECTIVE REGISTRATION STATEMENT
UNDER THE ACT AND ANY APPLICABLE STATE LAWS, (ii) TO THE EXTENT APPLICABLE, RULE
144 UNDER THE ACT (OR ANY SIMILAR RULE UNDER THE ACT RELATING TO THE DISPOSITION
OF SECURITIES), OR (iii) AN OPINION OF COUNSEL, IF SUCH OPINION SHALL BE
REASONABLY SATISFACTORY TO COUNSEL TO THE ISSUER, THAT AN EXEMPTION FROM
REGISTRATION UNDER THE ACT AND APPLICABLE STATE LAW IS AVAILABLE.

       

       

      WHO’S
YOUR DADDY, INC., A NEVADA CORPORATION

       

       

      10%
CONVERTIBLE PROMISSORY NOTE

       

       

      

       

       

      $100,000                                                                                                ____________
__, 2008

       

       

                 FOR
VALUE RECEIVED, the
undersigned, Who’s Your Daddy, Inc., a Nevada corporation (the “Company”),
hereby promises to pay to the order of __________________________________
________________________________________________________________________

       

       

      (the
“Investor”), in lawful money of the United States of America, and in immediately
payable funds, the principal sum of $100,000. The principal and any unpaid
accrued interest thereon shall be due and payable on January 15, 2010 (the
“Maturity Date”). Payment of all amounts due hereunder shall be made at the
address of the Investor provided for in the Subscription Agreement. The Company
further promises to pay interest at the rate of 10% per annum on the outstanding
principal balance hereof, such interest to be payable upon the Maturity Date
(prorated for any partial month).

       

      This Note
has been issued pursuant to a Subscription Agreement of even date herewith
between the Company and the Investor (the “Subscription Agreement”), which
contains representations and warranties and additional covenants of the Company
with respect to the Note. Capitalized terms not otherwise defined herein shall
have the meaning set forth in the Subscription Agreement. THE PROVISIONS OF THE
SUBSCRIPTION AGREEMENT ARE INCORPORATED HEREIN BY REFERENCE.

       

                 1.           PAYMENTS. The Company
hereby promises to pay to the Investor, in lawful money of the United States of
America, and in immediately payable funds, the principal sum of $100,000. The
principal hereof and any unpaid accrued interest thereon shall be due and
payable on the Maturity Date (unless such payment date is accelerated as
provided in Section 1(a) or 5 hereof) (the “Maturity Date”). The Company further
promises to pay interest at the rate of 10% per annum on the outstanding
principal balance hereof, such interest to be payable upon the Maturity Date
(prorated for any partial month). Payment of all amounts due hereunder shall be
made at the address of the Investor provided for in the Subscription Agreement.
Payments shall be made according to the following schedule:

       

      
        
           

        

        
           

          
            

          

        

        
           

        

      

       

       

      (a)           The
Company currently intends to conduct a best efforts private offering of its
common stock or convertible securities for a proposed minimum of $3.5 million
(the “Proposed Private Placement”). Fifty percent (50%) of the net proceeds
raised by the Company in the Proposed Private Placement or any other debt or
equity offering conducted prior to the Maturity Date by the Company will be used
to repay any amounts due under this Note pari passu with all other
notes issued pursuant to this Offering (as defined in the Subscription
Agreement).

       

       

      (b)           The
Investor shall have the right to convert principal and interest into common
stock of the of the Company’s unregistered common stock (the “Conversion
Shares”) at a price (the “Conversion Price”) equal to 80% of the volume weighted
average price (“VWAP”) for the last 30 trading days preceding the earlier of (i)
closing of at least $3 million in gross proceeds of the Proposed Private
Placement, or (ii) twelve months from the initial closing date of this Offering,
but in no event shall the Conversion Price be less than $0.50 per share or
greater than $0.75 per share.  The Investor shall maintain this right
of conversion, for any outstanding principal and/or interest, until the note is
paid in full.

       

       

      (c)           Provided
the Investor does not elect to exercise his right to convert and if the payments
set forth in section 1(a) are insufficient to satisfy all principal and interest
due hereunder, beginning thirty days after the final closing of the Proposed
Private Placement, Company will make monthly principal and interest payments to
the Investor amortized over a period of 60 months, until all principal and
interest is paid in full.

       

       

      (d)           If
the Company does not conduct the Proposed Private Placement, then beginning 18
months from the date of this Note or January 15, 2010, whichever is later, the
Company will make monthly payments of principal and interest amortized over a
period of 60 months, until all principal and interest is paid in
full.

       

       

       

      2.           PREPAYMENT. This Note
may be prepaid, in whole or in part, without the prior written consent of the
Investor and without penalty or premium.

       

       

       

      3.           DEFAULT. The
occurrence of any one of the following events shall constitute an Event of
Default:

       

       

      (a)           The
non-payment, when due, of any principal or interest pursuant to this
Note;

       

       

      
        
           

        

        
           

          
            

          

        

        
           

        

      

       

      (b)           The
material breach of any representation or warranty in this Note or in the
Subscription Agreement or in any Exhibit to the Note or the Subscription
Agreement, all of which are incorporated by reference, or in any other agreement
that may be entered into by and between the Investor and the Company regarding
this Note. In the event the Investor becomes aware of a breach of this Section
3(b), the Investor shall notify the Company in writing of such breach and if the
breach is curable by the Company within 60 days and the Company is taking all
reasonable steps to cure the breach, the Company shall have 60 days notice to
effect a cure of such breach;

       

       

      (c)           The
material breach of any covenant or undertaking in this Note or in
the

       

      Subscription
Agreement or in any Exhibit to the Note or the Subscription Agreement or in any
other agreement that may be entered into by and between the Investor and the
Company regarding this Note not otherwise provided for in this Section 3. In the
event the Investor becomes aware of a breach of this Section 3(c), the Investor
shall notify the Company in writing of such breach and if the breach is curable
by the Company within 60 days and the Company is taking all reasonable steps to
cure the breach, the Company shall have 60 days notice to effect a cure of such
breach;

       

       

      (d)           A
default shall occur in the payment when due (subject to any applicable grace
period), whether by acceleration or otherwise, of any indebtedness of the
Company or an event of default or similar event shall occur with respect to such
indebtedness, if the effect of such default or event (subject to any required
notice and any applicable grace period) would be to accelerate the maturity of
any such indebtedness or to permit the holder or holders of such indebtedness to
cause such indebtedness to become due and payable prior to its express
maturity;

       

       

      (e)           The
commencement by the Company of any voluntary proceeding under any
bankruptcy, reorganization, arrangement, insolvency, readjustment or debt,
receivership, dissolution, or liquidation law or statute or any jurisdiction,
whether now or hereafter in effect; or the adjudication of the Company as
insolvent or bankrupt by a decree of a court of competent jurisdiction; or the
petition or application by the Company for, acquiescence in, or consent by the
Company to, the appointment of any receiver or trustee for the Company or for
all or a substantial part of the property of the Company; or the assignment by
the Company for the benefit of creditors; or the written admission of the
Company of its inability to pay its debts as they mature; or

       

       

      (f)           The
commencement against the Company of any proceeding relating to the Company under
any bankruptcy, reorganization, arrangement, insolvency, adjustment of debt,
receivership, dissolution or liquidation law or statute or any jurisdiction,
whether now or hereafter in effect, provided, however, that the commencement of
such a proceeding shall not constitute an Event of Default unless the Company
consents to the same or admits in writing the material allegations of same, or
said proceeding shall remain undismissed for 30 days; or the issuance of any
order, judgment or decree for the appointment of a receiver or trustee for the
Company or for all or a substantial part of the property of the Company, which
order, judgment or decree remains undismissed for 30 days; or a warrant of
attachment, execution, or similar process shall be issued against any
substantial part of the property of the Company.

       

      
        
           

        

        
           

          
            

          

        

        
           

        

      

       

      Upon the
occurrence of any Event of Default, the Investor may, by written notice to the
Company, declare all or any portion of the unpaid principal amount due to
Investor, together with all accrued interest thereon, immediately due and
payable.

       

       

       

      4.           NOTICES. Notices to
be given hereunder shall be in writing and shall be deemed

       

      to have
been sufficiently given if delivered personally or sent by overnight delivery
service or by facsimile transmission. Notice shall be deemed to have been
received on the date of personal delivery or facsimile transmission, or if sent
by overnight delivery service, shall be deemed to have been received on the next
delivery day after deposit with the courier or messenger. The address of the
Company is set forth in the Subscription Agreement and the Company shall give
written notice of any change of address to the Investor. The address of the
Investor is as set forth in Subscription Agreement, and the Investor shall give
written notice of any change of address to the Company.

       

       

      5.           CONSENT TO JURISDICTION AND
SERVICE OF PROCESS. The Parties consent to the jurisdiction of any court
of the State of California and of any federal court located in
California.  San Diego County, California shall be proper
venue.

       

       

      6.           GOVERNING LAW. THIS
NOTE SHALL BE GOVERNED BY AND

       

      CONSTRUED
AND INTERPRETED IN ACCORDANCE WITH THE LAWS OF THE STATE OF CALIFORNIA
APPLICABLE TO CONTRACTS MADE AND TO BE PERFORMED ENTIRELY THEREIN, WITHOUT
GIVING EFFECT TO THE RULES AND CONFLICTS OF LAW.

       

       

      7.           ATTORNEYS FEES. If
any legal action or any other proceeding, including arbitration or action for
declaratory relief is brought for the interpretation or enforcement of this
Agreement, the Prevailing Party shall be entitled to recover reasonable
attorneys’ fees and other costs incurred in that action or proceeding, in
addition to any other relief to which it may be entitled. “Prevailing Party”
shall include without limitation (a) a party who dismisses an action in exchange
for sums allegedly due; (b) the party who receives performance from the other
party of an alleged breach or a desired remedy that is substantially equivalent
to the relief sought in an action or proceeding; or (c) the party determined to
be the prevailing party by an arbitrator or a court of law.

       

      
        
           

        

        
           

          
            

          

        

        
           

        

      

       

      8.           CONFORMITY WITH LAW.
It is the intention of the Company and of the Investor to conform strictly to
applicable usury and similar laws.  Accordingly, notwithstanding
anything to the contrary in this Note, it is agreed that the aggregate of all
charges which constitute interest under applicable usury and similar laws that
are contract for, chargeable or receivable under or in respect of this Note,
shall under no circumstances exceed the maximum amount of interest permitted by
such laws, and any excess, whether occasioned by acceleration or maturity of
this Note or otherwise, shall be canceled automatically, and if theretofore
paid, shall be either refunded to the Company or credited on the principal
amount of this Note.

       

       

      9.           NOTICE OF RIGHT TO
COUNSEL. Each of the parties has had the opportunity to
have  this Agreement reviewed by their respective attorney. Each of
the parties affirms to the other that they have apprized themselves of all
relevant information giving rise to this Agreement and has consulted and
discussed with their independent advisors the provisions of this Agreement and
fully understands the legal consequences of each provision. Each party further
affirms to the other that they have not, and do not, rely upon any
representation of advice from the other or from the other parties'
counsel.

       

       

       

      IN WITNESS WHEREOF, the
Company has signed and sealed this Note and delivered it in the State of
California as of _____________ ___, 2008.

       

       

      

       

       

      

       

      
        	 
      	
                COMPANY:

              
	 
      	 
      
	 
      	
                WHO’S
      YOUR DADDY, INC.,

              
	 
      	
                a
      Nevada corporation

              
	 
      	 
      
	 
      	 
      
	 
      	
                _____________________________________________

              
	 
      	
                By:  Michael
      R. Dunn

              
	 
      	
                Its:  Chief
      Executive Officer

              

      

       

      

       

      
        
           

        

        
           

          
            

          

        

        
           

        

      

       

      

       

       

      

       

      
        	 
      	
                INVESTOR:

              
	 
      	 
      
	 
      	
                _____________________________________________

              
	 
      	 
      
	 
      	
                By:  _________________________________________

              
	 
      	 
      
	 
      	
                Its:   _________________________________________

              
	 
      	 
      
	 
      	 
      
	 
      	
                JOINTLY
      WITH (if applicable):

              
	 
      	 
      
	 
      	
                _____________________________________________

              
	 
      	 
      
	 
      	
                By:  _________________________________________

              
	 
      	 
      
	 
      	
                Its:   _________________________________________EXHIBIT 10.1

 

FORM OF ADVISORY MANAGEMENT AGREEMENT

 

This ADVISORY
MANAGEMENT AGREEMENT (this “Agreement”) is
entered into on this [        ] day of [                    ], 2008, by and between BEHRINGER HARVARD REIT II, INC., a
Maryland corporation (the “Company”), and
BEHRINGER 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 $0.0001, to the public, such shares to be
registered with the Securities and Exchange Commission and may subsequently
issue additional securities;

 

WHEREAS, the Company has been formed to
acquire and operate a diverse portfolio of real estate assets such as office,
industrial, retail, hospitality, recreation and leisure, single-tenant and
multifamily, public infrastructure assets (such as roads, correctional
facilities and water utilities) and other real properties ;

 

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

 

WHEREAS, the Company desires to 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 I

DEFINITIONS

 

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

 

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

 

Acquisition Expenses.  Any and all expenses incurred by the Advisor
or any Affiliate thereof 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 Advisors II LP, a Texas limited
partnership, any successor advisor to the Company, or any Person to which
Behringer 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 the 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 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.

 

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

 

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

 

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

 

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

 

Board.  The Board of Directors of the Company.

 

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 

 

2

 

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.

 

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 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.

 

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

 

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 or construction manager to construct improvements, supervise
and coordinate projects or to provide major repairs or rehabilitations on a
Property.

 

Contract Purchase Price.  The amount actually paid in respect of the
purchase of a Property, and the amount budgeted in respect of the development,
construction or improvement of a Property, the amount of funds advanced with
respect to a Mortgage or other loan or the amount actually paid in respect to
the purchase of other Assets, in each case exclusive of Acquisition Fees,
Acquisition Expenses and Company Acquisition Expenses, but including any debt
attributable to the 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) owns a 100% interest, directly or indirectly, in the Asset
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 own a 100% interest in the Asset.

 

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

 

3

 

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
plus (i) the amount of any costs payable to third parties for the
development, construction or improvement of the Asset and (ii) the amount
of any subsequent debt attributable to the Asset.

 

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

 

Independent Director.  A Director who is not on the date of
determination, and within the last two years from the date of determination has
not been, directly or indirectly associated with the Sponsor or the Advisor by
virtue of (i) ownership of an interest in the Sponsor, the Advisor or any
of their Affiliates, other than the Company, (ii) employment by the Sponsor,
the Company, the Advisor or any of their Affiliates, (iii) service as an
officer or director of the Sponsor, the Advisor or any of their Affiliates,
other than as a Director of the Company, (iv) performance of services for
the Company, other than as a Director of the Company, (v) service as a
director or trustee of more than three real estate investment trusts organized
by the Sponsor or advised by the Advisor, or (vi) maintenance of a
material business or professional relationship with the Sponsor, the Advisor or
any of their Affiliates.  Notwithstanding
the foregoing, and consistent with (v) above, serving as a director of or
receiving director fees from or owning an interest in a REIT or other real
estate program organized by the Sponsor or advised or managed by the Advisor or
its Affiliates shall not, by itself, cause a Director to be deemed associated
with the Sponsor or the Advisor.  A
business or professional relationship is considered material if the aggregate
annual gross revenue derived by the Director from the Sponsor, the Advisor and
their Affiliates (excluding fees for serving as a director of the Company or
other REIT or real estate program organized or advised or managed by the
Advisor or its Affiliates) exceeds 5% of either the Director’s annual gross
income during either of the last two years or the Director’s net worth on a
fair market value basis.  An indirect
association with the Sponsor or the Advisor shall include circumstances in
which a Director’s spouse, parent, child, sibling, mother- or father-in-law,
son- or daughter-in-law, or brother- or sister-in-law is or has been associated
with the Sponsor, the Advisor, any of their Affiliates, or the Company.

 

4

 

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 the 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 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 the
approval of an original listing application related thereto by the applicable
exchange; 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 the notes, deeds of trust, security interests or other evidence of
indebtedness or obligations.

 

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

 

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

 

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

 

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

 

Partnership.  Behringer Harvard Operating Partnership II
LP, a Texas 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.

 

5

 

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.

 

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 the 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 

 

6

 

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, Inc., or that are exempt from
broker-dealer registration, and who, in either case, have executed
participating broker or other agreements with the Dealer Manager to sell
Shares.

 

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

 

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

 

Termination Date.  The date of termination of this Agreement.

 

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

 

Total Operating Expenses.  All costs and expenses paid or incurred by
the Company, as determined under generally accepted accounting principles,
which are in any way related to the operation of the Company or to Company
business, including the Asset Management Fee, but excluding (i) the
expenses of raising capital such as Organization and Offering Expenses, legal,
audit, accounting, underwriting, brokerage, listing, registration, and other
fees, printing and other expenses and tax incurred in connection with the
issuance, distribution, transfer, registration and Listing of the Shares, (ii) interest
payments, (iii) taxes, (iv) non-cash expenditures such as
depreciation, amortization and bad debt reserves, (v) Acquisition Fees and
Acquisition Expenses, (vi) real estate commissions on the Sale of Assets
(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) owns a 100% interest,
directly or indirectly, in the Asset 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 own a 100% interest in 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.

 

7

 

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 the 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 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
performance of 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 or acquired for the Company or the Partnership; (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; (v) 

 

8

 

enter into leases of Property and service
contracts for Assets with duly qualified and licensed non-affiliated and
Affiliated Persons and, to the extent necessary, perform all other operational
functions for the maintenance and administration of the Assets, including the
servicing of Mortgages; and (vi) arrange for, or provide, accounting and
other record-keeping functions at the Asset level;

 

(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

 

9

 

(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 take those actions set forth in Section 2.02.

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

10

 

refrain from taking the action until it
receives further clarification or instructions from the Board.  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, rendering 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 the
condition or circumstance.  The Advisor
shall inform the Board at least quarterly of the investment opportunities that
have been offered to other programs sponsored by the Sponsor, Advisor, Director
or their Affiliates that have similar investment objectives. If the Sponsor,
Advisor, Director or Affiliates thereof have sponsored other investment
programs with similar investment objectives which have investment funds
available at the same time as the Company, it shall be the duty of the Board
(including the Independent Directors) to adopt the method set forth in the
Company’s most recent Prospectus for its Shares or another reasonable method by
which investments are to be allocated to the competing investment entities and
to use their best efforts to apply the method fairly to the Company.

 

2.09        Third Party Alliances.
To the extent that the Advisor deems necessary, it may enter into strategic
relationships with third parties having specialized or particularized knowledge
or experience regarding certain Assets. 
The Advisor may reallow to these third parties a portion of the fees to
be paid to it by the Company, as described in Section 3.01.

 

2.10        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 toward the limit on Organization and
Offering Expenses reimbursable by the Company to the Advisor pursuant to Section 3.02(a)(1) below.

 

11

 

ARTICLE III

COMPENSATION AND REIMBURSEMENT OF SPECIFIED COSTS.

 

3.01        Fees.

 

(a)           Asset Management
Fee.  For each and every Asset, the
Company shall pay the Advisor a monthly Asset Management Fee on the 15th day of
each month in an amount equal to one-twelfth of 1% of the sum of, for each and
every Asset, the higher of the Cost of Investment or the Value of Investment; provided,
however, in the case of an Asset owned by any Joint Venture in which the
Company is a co-venturer or partner or otherwise a co-owner, the Asset
Management Fee may be paid to the Advisor directly by the Joint Venture rather
than the Company; provided, further, that any Asset Management
Fee paid by a Joint Venture in accordance with the terms of this Section 3.01(a) shall
be credited to the Company in an amount equal to (i) the Asset Management
Fee paid by the Joint Venture multiplied by (ii) the percentage of the
Company’s ownership interest in that Joint Venture.  In the event that the Asset Management Fee is
based on the Cost of Investment in respect of an Asset being developed,
constructed or improved, upon completion of the development, construction or
improvement project, the Advisor shall determine the actual amounts paid.  To the extent the amounts actually paid vary
from the budgeted amounts on which the Asset Management Fee was initially
based, the Advisor will pay or invoice the Company for one-twelfth of 1% of the
budget variance, multiplied by the number of months for which an Asset
Management Fee was paid. 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 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.

 

12

 

(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 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,
the Company shall not pay Development Fees to the Advisor or any of its
Affiliates if the Advisor or any of its Affiliates elects to receive
Acquisition and Advisory Fees based on the cost of the construction of that
development project; provided, further, 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.

 

3.02        Expenses.

 

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

 

(i)            Organization and Offering Expenses; 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, provided, however, that
the Advisor and its Affiliates shall not be reimbursed for any personnel costs;

 

(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;

 

13

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

(xiii)         personnel and related employment costs incurred by the
Advisor or its Affiliates in performing the services described herein,
including but not limited to reasonable salaries and wages, benefits and
overhead of all employees directly involved in the performance of the services;
provided, that no reimbursement shall be made for costs of the employees
of the Advisor or its Affiliates to the extent that the 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 sixty 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.

 

14

 

3.04        Reimbursement to the Advisor.  The Company shall not reimburse the Advisor
for Total Operating Expenses paid by the Advisor 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 the
limitation would permit the reimbursement if the Total Operating Expense were
incurred during that 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
the 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 the
excess was justified, then after the end of any fiscal quarter of the Company
for which there is an Excess Amount for the twelve months then ended paid to
the Advisor, the Advisor, at the direction of the Independent Directors, shall
cause the fact to be disclosed in the next quarterly report of the Company in a
separate writing and sent to the Stockholders within sixty days of the quarter
end, together with an explanation of the factors the Independent Directors
considered in determining that the Excess Amount was justified. The
determination shall be reflected in the minutes of the meetings of the Board.  The Company will not reimburse the Advisor or
its Affiliates for services for which the Advisor or its Affiliates are
entitled to compensation in the form of a separate fee.  All figures used in any computation pursuant
to this Section 3.04 shall be determined in accordance with
generally accepted accounting principles applied on a consistent basis.

 

ARTICLE IV

TERM AND TERMINATION

 

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

 

4.02        Termination.  This agreement may be terminated at the
option of either party upon sixty 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 thirty 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:

 

15

 

(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.

 

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 the individual assets of the 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 

 

16

 

of any state securities regulatory authority in which securities of the
Company were offered or sold as to indemnification for violations of securities
laws.

 

(b)           The Company may advance funds to the Advisor or its
Affiliates, including their respective officers, directors, partners and
employees, for legal expenses and other costs incurred as a result of any legal
action for which indemnification is being sought is permissible only if all of
the following conditions are satisfied: (i) the legal action relates to
acts or omissions with respect to the performance of duties or services on
behalf of the Company; (ii) the legal action is initiated by a third-party
who is not a stockholder or the legal action is initiated by a stockholder
acting in his or her capacity as such and a court of competent jurisdiction
specifically approves 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        Non-Solicitation.  During the period commencing on the date on
which this Agreement is entered into and ending one year following the
termination of the this Agreement, the Company shall not, without the Advisor’s
prior written consent, directly or indirectly, (i) solicit or encourage
any person to leave the employment or other service of the Advisor, or (ii) hire,
on behalf of the Company or any other person or entity, any person who has left
the employment within the one year period following the termination of that
person’s employment the Advisor.  During
the period commencing on the date hereof through and ending one year following
the termination of this Agreement, the Company will not, whether for his own
account or for the account of any other person, firm, corporation or other
business organization, intentionally interfere with the relationship of the
Advisor with, or endeavor to entice away from the Advisor, any person who
during the term of the Agreement is, or during the preceding one-year period,
was a tenant, co-investor, co-developer, joint venturer or other customer of
the Advisor.

 

6.02        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 

 

17

 

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, and
shall likewise be binding upon any successor to the Advisor.

 

6.03        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 the partners or joint venturers or impose any liability
as such on either of them.

 

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

 

	
  To the Directors and to the Company:

  	
  Behringer Harvard REIT II, Inc.

  
	
   

  	
  15601 Dallas Parkway

  
	
   

  	
  Suite 600

  
	
   

  	
  Addison, Texas 75001

  
	
   

  	
   

  
	
  To the Advisor:

  	
  Behringer 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 6.04.

 

6.05        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.

 

6.06        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.

 

6.07        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.

 

6.08        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.

 

18

 

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

 

6.10        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.

 

6.11        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.

 

6.12        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.

 

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

 

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

 

6.15        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) 

 

19

 

and 171.1013(f)-(g) of the
Texas Tax Code to the Company’s reimbursements paid to the Advisor pursuant to
this Agreement of specified costs and wages and compensation.  The Advisor and the Company further recognize
and intend that (i) as a result of the fiduciary relationship created by
this Agreement and acknowledged in Section 2.02, reimbursements
paid to the Advisor pursuant to this Agreement are “flow-though funds” that the
Advisor is mandated by law or fiduciary duty to distribute, within the meaning
of Section 171.1011(f) of the Texas Tax Code, and (ii) as a
result of Advisor’s contractual duties under this Agreement, certain
reimbursements under this Agreement are “flow-through funds” mandated by
contract to be distributed within the meaning of Section 171.1011(g) of
the Texas Tax Code.  The terms of this
Agreement shall be interpreted in a manner consistent with the characterization
of the Advisor as a “management company” as defined in Section 171.0001(11),
and with the characterization of the reimbursements as “flow-though funds”
within the meaning of Section 171.1011(f)-(g) of the Texas Tax Code.

 

20

 

IN WITNESS WHEREOF, the parties hereto have
executed this 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
  ADVISORS II LP

  
	
   

  	
   

  
	
   

  	
  By:

  	
  Harvard Property Trust II, LLC,

  
	
   

  	
   

  	
  its General Partner

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
  By:

  	
   

  
	
   

  	
   

  	
   

  	
  Gerald J. Reihsen, III

  
	
   

  	
   

  	
   

  	
  Executive Vice President – Corporate

  
	
   

  	
   

  	
   

  	
  Development & Legal

  
					

 

21

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"}]]