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           “Construction Work” has the
meaning set forth in Section 5.2 hereof.

 

 

1.4           “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.

 

1.5           “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.

 

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

 

1.7           “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.

 

1.8           “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.

 

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

 

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

 

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

 

1.12         “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.

 

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

 

1.14         “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.

 

1.15         “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.

 

1.16         “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  

 

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that relate to management advice, services and
techniques regarding current and potential Properties, and all modifications,
enhancements and derivative works of the foregoing.

 

1.17         “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 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 

 

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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 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 commercially reasonable 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).

 

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(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
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 

 

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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;

 

(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);

 

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(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 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;

 

7

 

(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;

 

(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

 

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(d)           to
purchase supplies and pay all bills.

 

Manager shall use its commercially reasonable 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 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 

 

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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 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 

 

10

 

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 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.

 

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           Construction Supervision Fees. Manager shall supervise construction
performed by or on behalf of Owner with respect to the Properties, including,
but not limited to, capital repairs and improvements, major building
reconstruction and tenant improvements (collectively, Construction Work”). In
the event that Manager supervises the Construction Work with respect to a
Property, Owner shall pay Manager a construction supervision fee equal to an
amount not greater than five percent (5%) of all hard construction costs
incurred in connection with the Construction Work. Owner shall pay construction
supervision fees at the same time it makes payments to any third party
contractors in respect of any Construction Work at that Property.

 

5.3           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.

 

11

 

5.4           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 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, 

 

12

 

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 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 

 

13

 

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 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 

 

14

 

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.

 

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 

 

15

 

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.

 

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 

 

16

 

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.

 

8.16         Non-Solicitation. During the period commencing on the date on
which this Agreement is entered into and ending one year following the
termination of this Agreement, the Company and BH OP shall not, without the
Manager’s prior written consent, directly or indirectly, (i) solicit or
encourage any person to leave the employment or other service of the Manager or
any of its affiliates, or (ii) hire, on behalf of the Company or BH OP or
any other person or entity, any person who has left the employment of the
Manager or any of its affiliates within the one-year period following the
termination of that person’s employment with the Manager or any of its
affiliates. During the period commencing on the date hereof through and ending
one year following the termination of this Agreement, the Company and BH OP
will not, whether for its or their own account or for the account of any other
person, firm, corporation or other business organization, intentionally
interfere with the relationship of the Manager or any of its affiliates with,
or endeavor to entice away from the Manager or any of its affiliates, any
person who during the term of this Agreement is, or during the preceding
one-year period was, a tenant, co-investor, co-developer, joint venturer or
other customer of the Manager or any of its affiliates.

 

17

 

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

  
					

 

18

 

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 4.8

 

THIS
WARRANT HAS NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED
(THE “1933 ACT”), OR ANY
APPLICABLE STATE SECURITIES LAWS, AND MAY NOT BE SOLD OR TRANSFERRED
UNLESS SUCH SALE OR TRANSFER IS IN ACCORDANCE WITH THE REGISTRATION
REQUIREMENTS OF SUCH ACT AND APPLICABLE LAWS OR SOME OTHER EXEMPTION FROM THE
REGISTRATION REQUIREMENTS OF SUCH ACT AND APPLICABLE LAWS IS AVAILABLE WITH
RESPECT THERETO.

 

COMMON
STOCK PURCHASE WARRANT

 

	
  Warrant No.

  	
  Number of Shares: 158,770

  
	
   

  	
  Common Stock

  

 

ARYX THERAPEUTICS, INC.

 

Effective
as of October 17, 2008

 

Void
after October 17, 2013

 

1.             Issuance. 
This Common Stock Purchase Warrant (the “Warrant”) is issued to LIGHTHOUSE
CAPITAL PARTNERS V, L.P. (the “Holder”)
by ARYX THERAPEUTICS, INC., a
Delaware corporation (hereinafter with its successors called the “Company”).

 

2.                                      Purchase Price; Number
of Shares.

 

(a)           The registered holder of this Warrant, commencing on
the date hereof, is entitled upon surrender of this Warrant with the
subscription form annexed hereto duly executed, at the principal office of the
Company, to purchase from the Company, at a price per share equal to $3.97516
(the “Purchase Price”), 158,770
fully paid and nonassessable shares of the Company’s Common Stock, par value
$0.001 per share  (the “Common Stock”).

 

Any term not defined herein shall have the meaning as
set forth in the Loan Agreement.

 

Until such time as this Warrant is exercised in full
or expires, the Purchase Price and the securities issuable upon exercise of
this Warrant are subject to adjustment as hereinafter provided.  The person or persons in whose name or names
any certificate representing shares of Common Stock is issued hereunder shall
be deemed to have become the holder of record of the shares represented thereby
as at the close of business on the date this Warrant is exercised with respect
to such shares, whether or not the transfer books of the Company shall be
closed.

 

3.             Payment of Purchase Price. 
The Purchase Price may be paid (i) in cash or by check, (ii) by
the surrender by the Holder to the Company of any promissory notes or other
obligations issued by the Company, with all such notes and obligations so
surrendered being credited against the Purchase Price in an amount equal to the
principal amount thereof plus accrued interest to the date of surrender, or (iii) by
any combination of the foregoing.

 

4.             Net Issue Election. 
The Holder may elect to receive, without the payment by the Holder of
any additional consideration, shares of Common Stock equal to the value of this
Warrant or any portion hereof by the surrender of this Warrant or such portion
to the Company, with the net issue election notice annexed hereto duly
executed, at the principal office of the Company.  Thereupon, the Company shall issue to the
Holder such number of fully paid and nonassessable shares of Common Stock as is
computed using the following formula:

 

 

	
   

  	
  X=  

  	
  Y(A-B)

  	
   

  	
   

  
	
   

  	
   

  	
  A

  	
   

  	
   

  

 

	
  where:

  	
   

  	
  X =

  	
   

  	
  the number of shares of Common Stock to be issued
  to the Holder pursuant to this Section 4.

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
  Y =

  	
   

  	
  the number of shares of Common Stock covered by this Warrant in respect
  of which the net issue election is made pursuant to this Section 4.

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
  A =

  	
   

  	
  the Fair Market Value (defined below) of one share of Common Stock, as
  determined at the time the net issue election is made pursuant to this Section 4.

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
  B =

  	
   

  	
  the Purchase Price in effect under this Warrant at the time the net
  issue election is made pursuant to this Section 4.

  

 

For purposes of this
Warrant, the “Fair Market Value”
of a share of Common Stock as of the date that the net issue election is made
(the “Determination Date”) shall
mean: (i) if traded on a securities exchange or the NASDAQ Global Market,
the fair market value of the Common Stock shall be deemed to be the average of
the closing or last reported sale prices of the Common Stock on such exchange
or market for the five (5) consecutive trading days immediately prior to
the Determination Date, or (ii) if otherwise traded in an over-the-counter
market, the fair market value of the Common Stock shall be deemed to be the
average of the closing ask prices of the Common Stock for the five (5) consecutive
trading days immediately prior to the Determination Date, or (iii) if
there is no public market for the Common Stock or if the fair market value
cannot be calculated as of the Determination Date on any of the foregoing
bases, then the fair market value shall be determined in good faith by the
Company’s Board of Directors.

 

5.             Partial Exercise. 
This Warrant may be exercised in part, and the Holder shall be entitled
to receive a new warrant, which shall be dated as of the date of this Warrant,
covering the number of shares in respect of which this Warrant shall not have
been exercised.

 

6.             Fractional Shares. 
In no event shall any fractional share of Common Stock be issued upon
any exercise of this Warrant.  If, upon
exercise of this Warrant in its entirety, the Holder would, except as provided
in this Section 6, be
entitled to receive a fractional share of Common Stock, then the Company shall,
in lieu of issuance of any fractional share, pay the Holder otherwise entitled
to such fraction a sum in cash equal to the product resulting from multiplying
the then current Fair Market Value of one share of Common Stock by such
fraction.

 

7.             Expiration Date; Automatic
Exercise.  This Warrant shall expire at the earliest
to occur of (i) the close of business on October 17, 2013; or (ii) the
effective date of a Merger as defined below, unless otherwise assumed per the
language below (the “Expiration Date”)
and shall be void thereafter.

 

“Merger” means: (i) a sale, license or
other disposition of all or substantially all of the Company’s assets to an
Unaffiliated Entity (as defined below), or (ii) the merger, consolidation
or acquisition of the Company with, into or by an Unaffiliated Entity (other
than a merger or consolidation for the principle purpose of changing the
domicile of the Company or a bona fide stock equity financing), the result of
which is that stockholders of the Company immediately prior to the merger,
consolidation or acquisition do not own or control more than fifty percent (50%)
of the voting power of the surviving entity immediately following such merger,
consolidation or acquisition.  “Unaffiliated Entity” means any entity that
is owned or controlled by parties who own less than twenty percent (20%) of the
combined voting power of the voting securities of the Company immediately prior
to such merger, consolidation or acquisition. 
Notwithstanding the foregoing, in the event that any outstanding
warrants to purchase equity securities of the Company are assumed by the
successor entity of a Merger (or parent thereof), this Warrant will be
similarly assumed.    Notwithstanding
anything to the contrary in this Warrant, if Holder exercises this Warrant
after receiving a notice from the Company of a proposed merger or if the
exercise was otherwise precipitated by such proposed Merger, the Company will
hold the exercise notice, without processing such notice, until immediately prior
to the consummation of the Merger, at which time the exercise notice shall be
processed. If the Merger is terminated, the Holder will have ten (10) business
days from the date the Company gives Holder notice indicating such termination
to rescind its exercise notice, otherwise the exercise notice shall be
processed by 

 

2

 

the Company as set forth
herein.  In the event of such rescission,
this Warrant will continue to be exercisable on the same terms and conditions.

 

Notwithstanding the foregoing, this Warrant shall
automatically be deemed to be exercised in full pursuant to the provisions of Section 4 hereof, without any further
action on behalf of the Holder, immediately prior to the time this Warrant would
otherwise expire pursuant to this Section 7,
unless otherwise assumed per above.

 

8.             Reserved Shares; Valid Issuance. 
The Company covenants that it will at all times from and after the date
hereof reserve and keep available such number of its authorized shares of
Common Stock issuable upon exercise of this Warrant free from all preemptive or
similar rights therein.  The Company
further covenants that such shares as may be issued pursuant to such exercise
will, upon issuance, be duly and validly issued, fully paid and nonassessable
and free from all taxes, liens and charges with respect to the issuance
thereof.

 

9.             Stock Splits and Dividends. 
If after the date hereof the Company shall subdivide the Common Stock,
by split-up or otherwise, or combine the Common Stock, or issue additional
shares of Common Stock in payment of a stock dividend on the Common Stock, the
number of shares of Common Stock issuable on the exercise of this Warrant shall
forthwith be proportionately increased in the case of a subdivision or stock
dividend, or proportionately decreased in the case of a combination, and the
Purchase Price shall forthwith be proportionately decreased in the case of a
subdivision or stock dividend, or proportionately increased in the case of a
combination.

 

11.          Mergers and Reclassifications. 
Subject to Section 7,
if after the date hereof the Company shall enter into any Reorganization (as
hereinafter defined), then, as a condition of such Reorganization, lawful
provisions shall be made, and duly executed documents evidencing the same from
the Company or its successor shall be delivered to the Holder, so that the
Holder shall thereafter have the right to purchase, at a total price not to
exceed that payable upon the exercise of this Warrant in full, the kind and
amount of shares of stock and other securities and property receivable upon
such Reorganization by a holder of the number of shares of Common Stock which
might have been purchased by the Holder immediately prior to such
Reorganization, and in any such case appropriate provisions shall be made with
respect to the rights and interest of the Holder to the end that the provisions
hereof (including without limitation, provisions for the adjustment of the
Purchase Price and the number of shares issuable hereunder and the provisions
relating to the net issue election) shall thereafter be applicable in relation
to any shares of stock or other securities and property thereafter deliverable
upon exercise hereof.  For the purposes
of this Section 11, the term “Reorganization” shall include without
limitation any reclassification, capital reorganization or change of the Common
Stock (other than as a result of a subdivision, combination or stock dividend
provided for in Section 9
hereof), or any consolidation of the Company with, or merger of the Company
into, another corporation or other business organization (other than a merger
in which the Company is the surviving corporation and which does not result in
any reclassification or change of the outstanding Common Stock), or any sale or
conveyance to another corporation or other business organization of all or
substantially all of the assets of the Company.

 

12.          Certificate of Adjustment. 
Whenever the Purchase Price is adjusted, as herein provided, the Company
shall promptly deliver to the Holder a certificate of the Company’s chief
financial officer setting forth the Purchase Price after such adjustment and
setting forth a brief statement of the facts requiring such adjustment.

 

13.          Notices of Record Date, Etc. 
In the event of:

 

(a)           any
taking by the Company of a record of the holders of any class of securities for
the purpose of determining the holders thereof who are entitled to receive any
dividend or other distribution, or any right to subscribe for, purchase, sell
or otherwise acquire or dispose of any shares of stock of any class or any
other securities or property, or to receive any other right;

 

(b)           any
reclassification of the capital stock of the Company, capital reorganization of
the Company, consolidation or merger involving the Company, or sale or
conveyance of all or substantially all of its assets; or

 

(c)           any
voluntary or involuntary dissolution, liquidation or winding-up of the Company;

 

3

 

then
in each such event the Company will provide or cause to be provided to the
Holder a written notice thereof.  Such
notice shall be provided at least ten (10) business days prior to the date
specified in such notice on which any such action is to be taken.

 

14.          Representations, Warranties and
Covenants.  This Warrant is issued and delivered by the
Company and accepted by each Holder on the basis of the following
representations, warranties and covenants made by the Company:

 

(a)           The
Company has all necessary authority to issue, execute and deliver this Warrant
and to perform its obligations hereunder. 
This Warrant has been duly authorized issued, executed and delivered by
the Company and is the valid and binding obligation of the Company, enforceable
in accordance with its terms.

 

(b)           The
shares of Common Stock issuable upon the exercise of this Warrant have been
duly authorized and reserved for issuance by the Company and, when issued in
accordance with the terms hereof, will be validly issued, fully paid and
nonassessable.

 

(c)           The
issuance, execution and delivery of this Warrant do not, and the issuance of
the shares of Common Stock upon the exercise of this Warrant in accordance with
the terms hereof will not, (i) violate or contravene the Company’s
Certificate of Incorporation or by-laws, or any law, statute, regulation, rule,
judgment or order applicable to the Company, (ii) violate, contravene or
result in a material breach or default under any material contract, material
agreement or material instrument to which the Company is a party or by which
the Company or any of its assets are bound or (iii) require the consent or
approval of or the filing of any notice or registration with any person or
entity.

 

16.          Amendment. 
The terms of this Warrant may be amended, modified or waived only with
the written consent of the Holder and the Company.

 

17.          Representations and Covenants of the
Holder.  This Warrant has been entered into by the
Company in reliance upon the following representations and covenants of the
Holder, which by its execution hereof the Holder hereby confirms:

 

(a)           Investment Purpose. 
The right to acquire Common Stock issuable upon exercise of the Holder’s
rights contained herein will be acquired for investment and not with a view to
the sale or distribution of any part thereof, and the Holder has no present
intention of selling or engaging in any public distribution of the same except
pursuant to a registration or exemption.

 

(b)           Accredited Investor. 
Holder is an “accredited investor” within the meaning of Rule 501
of Regulation D promulgated under the 1933 Act.

 

(c)           Private Issue. 
The Holder understands (i) that the Common Stock issuable upon
exercise of the Holder’s rights contained herein is not registered under the
1933 Act or qualified under applicable state securities laws on the ground that
the issuance contemplated by this Warrant will be exempt from the registration
and qualifications requirements thereof, and (ii) that the Company’s
reliance on such exemption is predicated on the representations set forth in
this Section 17.

 

(d)           Financial Risk.  Holder
understands that the purchase of this Warrant and its underlying securities
involves substantial risk.  Holder has
experience as an investor in securities of companies in the development stage
and acknowledges that Holder can bear the economic risk of such Holder’s
investment in this Warrant and its underlying securities and has such knowledge
and experience in financial or business matters that Holder is capable of
evaluating the merits and risks of its investment in this Warrant and its
underlying securities and/or has a preexisting personal or business
relationship with the Company and certain of its officers, directors or
controlling persons of a nature and duration that enables Holder to be aware of
the character, business acumen and financial circumstances of such persons.

 

4

 

(e)           Rule 144. The Holder is aware that
neither the Warrant, nor the Common Stock issuable upon conversion thereof may
be sold pursuant to Rule 144 adopted under the 1933 Act unless certain
conditions are met, including, among other things, the existence of a public
market for the shares, the availability of certain current public information
about the Company, the resale following the required holding period under Rule 144
and the number of shares being sold during any three month period not exceeding
specified limitations. Holder is aware that the Company has no obligation
hereunder to satisfy the conditions for resale set forth in Rule 144.

 

18.          Notices, Transfers, Etc.

 

(a)           Any notice or written communication required
or permitted hereunder shall be in writing and shall be deemed effectively
given: (a) upon personal delivery to the party to be notified, (b) when
sent by confirmed facsimile to the facsimile number specified in writing by the
recipient if sent during normal business hours of the recipient on a business
day, if not, then on the next business day, or (c) the next business day
after deposit with a nationally recognized overnight courier, specifying next
day delivery, with written verification of receipt.  All communications shall be sent to the
Company or the Holder at the address listed on the signature page hereto
or at such other address as the Company or Holder may designate by ten (10) days
advance written notice to the other party hereto.

 

(b)           Subject
to compliance with applicable federal and state securities laws and the terms
hereof, this Warrant may be transferred by the Holder with respect to any or
all of the shares purchasable hereunder. 
Upon surrender of this Warrant to the Company, together with the
assignment notice annexed hereto duly executed, for transfer of this Warrant as
an entirety by the Holder, the Company shall issue a new warrant of the same denomination
to the assignee.  Upon surrender of this
Warrant to the Company, together with the assignment hereof properly endorsed,
by the Holder for transfer with respect to a portion of the shares of Common
Stock purchasable hereunder, the Company shall issue a new warrant to the
assignee, in such denomination as shall be requested by the Holder hereof, and
shall issue to such Holder a new warrant covering the number of shares in
respect of which this Warrant shall not have been transferred.

 

(c)           In
case this Warrant shall be mutilated, lost, stolen or destroyed, the Company
shall, on such terms as to indemnity or otherwise as it may reasonably impose
(which shall, in the case of a mutilated Warrant, include the surrender
thereof), issue a new warrant of like tenor and denomination and deliver the
same (i) in exchange and substitution for and upon surrender and
cancellation of any mutilated Warrant, or (ii) in lieu of any Warrant
lost, stolen or destroyed, upon receipt of an affidavit of the Holder or other evidence
reasonably satisfactory to the Company of the loss, theft or destruction of
such Warrant

 

19.          Governing Law. 
The provisions and terms of this Warrant shall be governed by and
construed in accordance with the internal laws of the State of California
without giving effect to its principles regarding conflicts of laws.

 

20.          Successors and Assigns. 
This Warrant shall be binding upon the Company’s successors and assigns
and shall inure to the benefit of the Holder’s successors, legal
representatives and permitted assigns.

 

21.          Business Days. 
If the last or appointed day for the taking of any action required or
the expiration of any rights granted herein shall be a Saturday or Sunday or a
legal holiday in California, then such action may be taken or right may be
exercised on the next succeeding day which is not a Saturday or Sunday or such
a legal holiday.

 

5

 

22.          No
Stockholder Rights. This
Warrant in and of itself shall not entitle the Holder to any voting rights or
other rights as a stockholder of the Company.

 

 

	
   

  	
  ARYX THERAPEUTICS, INC.

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  By:

  	
  /s/ John Varian

  
	
   

  	
   

  
	
   

  	
  Name:

  	
  John Varian

  
	
   

  	
   

  
	
   

  	
  Title:

  	
     COO

  
	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
  Address: 

  	
  6300 Dumbarton Circle

  
	
   

  	
   

  	
  Fremont, CA 94555

  
						

 

Accepted
and Agreed:

 

LIGHTHOUSE CAPITAL PARTNERS V, L.P.

 

	
  By:

  	
  Lighthouse Management Partners V, L.L.C.

  	
   

  
	
   

  	
  its general partner

  	
   

  
	
   

  	
   

  
	
   

  	
   

  
	
  By:

  	
  /s/Thomas Conneely

  	
   

  
	
   

  	
   

  
	
  Name:

  	
  Thomas Conneely

  	
   

  
	
   

  	
   

  
	
  Title:

  	
     Vice President

  	
   

  
	
   

  	
   

  
	
   

  	
   

  	
   

  
	
  Address: 

  	
  500 Drake’s Landing Road

  	
   

  
	
   

  	
  Greenbrae, CA 94904

  	
   

  
							

 

6

 

Subscription

 

	
  To:

  	
   

  	
   

  
	
  Date:

  	
   

  	
   

  
				

 

The
undersigned hereby subscribes for                                   
shares of Common Stock covered by this Warrant. 
The certificate(s) for such shares shall be issued in the name of
the undersigned or as otherwise indicated below:

 

	
   

  	
   

  
	
  Signature

  	
   

  
	
   

  	
   

  
	
   

  	
   

  
	
  Name for Registration

  	
   

  
	
   

  	
   

  
	
   

  	
   

  
	
  Mailing Address

  	
   

  

 

 

Net Issue Election Notice

 

	
  To:

  	
   

  	
   

  	
  Date:

  	
   

  

 

The
undersigned hereby elects under Section 4
to surrender the right to purchase shares of Common Stock pursuant to this
Warrant.  The certificate(s) for
such shares issuable upon such net issue election shall be issued in the name
of the undersigned or as otherwise indicated below:

 

	
   

  	
   

  
	
  Signature

  	
   

  
	
   

  	
   

  
	
   

  	
   

  
	
  Name for Registration

  	
   

  
	
   

  	
   

  
	
   

  	
   

  
	
  Mailing Address

  	
   

  

 

 

Assignment

 

For
value received                                                                               
hereby sells, assigns and transfers unto

 

 

[Please
print or typewrite name and address of Assignee]

 

 

the
within Warrant, and does hereby irrevocably constitute and appoint                                                                     
its attorney to transfer the within Warrant on the books of the within named
Company with full power of substitution on the premises.

 

	
  Dated:

  	
   

  	
   

  
	
   

  	
   

  
	
   

  	
   

  
	
  Signature

  	
   

  
	
   

  	
   

  
	
   

  	
   

  
	
  Name for Registration

  	
   

  
	
   

  	
   

  
	
  In the Presence of:

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