Document:

Form of Advisory Agreement

 

EXHIBIT
10.2

FORM
OF ADVISORY AGREEMENT

This
ADVISORY AGREEMENT (this “Agreement”) is
entered into on this the ____ day of _____________, 2005, by and between
BEHRINGER HARVARD OPPORTUNITY REIT I, INC., a Maryland corporation (the
“Company”), and
BEHRINGER HARVARD OPPORTUNITY ADVISORS I LP, a Texas limited partnership (the
“Advisor”).

W
I T N E S S E T H

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

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

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

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

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

ARTICLE
ONE

DEFINITIONS

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

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

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 Person (including
any fees or commissions paid by or to any Affiliate of the Company or the
Advisor) in connection with making or investing in Mortgages or the purchase,
development or construction of an Asset, including, without limitation, real
estate commissions, selection fees, 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. 

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

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

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

Aggregate
Assets Value. The
aggregate book value of the Assets at the time of measurement before deducting
depreciation, bad debts or other similar non-cash reserves and without reduction
for any debt secured by or relating to such assets; provided, however, that
during such periods in which the Company is obtaining regular independent
valuations of the current value of its net assets for purposes of enabling
fiduciaries of employee benefit plan stockholders to comply with applicable
Department of Labor reporting requirements, “Aggregate Assets Value” will equal
the greater of (i) the amount determined pursuant to the foregoing or (ii) the
Assets’ aggregate valuation established by the most recent such valuation report
without reduction for depreciation, bad debts or other non-cash reserves and
without reduction for any debt secured by or relating to such assets.

Appraised
Value. Value
according to an appraisal made by an Independent Appraiser. 

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 from time to time.

Assets.
Properties, Mortgages and other direct or indirect investments in equity
interests in or loans secured by or otherwise relating to Real Property (other
than investments in bank accounts, money market funds or other current assets,
whether of the proceeds from an Offering or the sale of an Asset or otherwise)
owned by the Company, directly or indirectly through one or more of its
Affiliates or Joint Ventures. 

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 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 such values at the end of each month during
such period; provided, however, that during such periods in which the Company is
obtaining regular independent valuations of the current value of its net assets
for purposes of enabling fiduciaries of employee benefit plan stockholders to
comply with applicable Department of Labor reporting requirements, “Average
Invested Assets” will equal the greater of (i) the amount determined pursuant to
the foregoing or (ii) the Assets’ aggregate valuation established by the most
recent such valuation report(s) without reduction for depreciation, bad debts or
other non-cash reserves. 

Board. The
Board of Directors of the Company. 

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Bylaws. The
bylaws of the Company, as the same are in effect from time to time.

Change
of Control. Any
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
Securities Exchange Act of 1934, as amended) is or becomes the “beneficial
owner” (as defined in Rule 13d-j of the Securities Exchange Act of 1934, as
amended), directly or indirectly, of securities of the Company or the
Partnership representing greater than 50% or more of the combined voting power
of the Company’s or the Partnership’s then outstanding securities, respectively;
provided, that, a Change of Control shall not be deemed to occur as a result of
any widely distributed public offering of the Shares.

Closing
Price. On any
date, the last sale price for any class or series of the Company’s Shares,
regular way, or, in case no such sale takes place on such day, the average of
the closing bid and asked prices, regular way, for such Shares, in either case
as reported in the principal consolidated transaction reporting system with
respect to Shares listed or admitted to trading on the NYSE or, if such Shares
are not listed or admitted to trading on the NYSE, as reported on the principal
consolidated transaction reporting system with respect to Shares listed on the
principal national securities exchange on which such Shares are listed or
admitted to trading or, if such Shares are not listed or admitted to trading on
any national securities exchange, the last quoted price on the Nasdaq National
Market System, or, if not so quoted, the average of the high bid and low asked
prices in the over-the-counter market, as reported by the principal automated
quotation system or other quotation service that may then be in use or, if such
Shares are not quoted by any such organization, the average of the closing bid
and asked prices as furnished by a professional market maker making a market in
such Shares selected by the Board.

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 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. 

Company.
Behringer Harvard Opportunity REIT I, Inc., a corporation organized under the
laws of the State of Maryland. 

Company
Value. The
actual value of the Company as a going concern based on the difference between
(a) the actual value of all of its assets as determined in good faith by the
Board, including a majority of the Independent Directors, and (b) all of its
liabilities as set forth on its then current balance sheet, provided that (i) if
such Company Value is being determined in connection with a Change of Control
that establishes the Company’s net worth (e.g., a tender offer for the Shares,
sale of all of the Shares or a merger) then the Company Value shall be the net
worth established thereby and (ii) if such Company Value is being determined in
connection with a Listing, then the Company Value shall be equal to the number
of outstanding Shares multiplied by the Closing Price of a single Common Share
averaged over a period of 30 trading days during which the Shares are listed or
quoted for trading after the date of Listing. For purposes hereof, a “trading
day” shall be any day on which the NYSE is open for trading whether or not the
Shares are then Listed on the NYSE and whether or not there is an actual trade
of such Shares on any such day. If the holder of Convertible Shares disagree as
to the Company Value as determined by the Board, then each of the holder of
Convertible Shares and the Company (determined by a majority of the Independent
Directors) shall name one appraiser and the two named appraisers shall promptly
agree in good faith to the appointment of one other appraiser whose
determination of the Company Value shall be final and binding on the parties as
to the Company Value. The cost of such appraisal shall be split evenly between
the Company and the Advisor.

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

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

Contract
Purchase Price. The
amount actually paid or allocated in respect of the purchase, development,
construction or improvement of a Property, the amount of funds advanced with
respect to a Mortgage or the amount actually paid or allocated in respect to the
purchase of other Assets, in each case exclusive of Acquisition Fees and
Acquisition Expenses. 

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

Convertible
Shares. The
1,000 shares of the Company’s non-participating, non-voting, convertible stock,
par value $.0001 per share.

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

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

Director. A
member of the Board. 

Distributions. Any
dividends or other distributions of money or other property by the Company to
owners of Shares, including distributions that may constitute a return of
capital for federal income tax purposes. 

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 such Offering without reduction.

Independent
Appraiser. A
Person with no material current or prior business or personal relationship with
the Advisor or the Directors and who is a qualified appraiser of Real Property
of the type held by the Company or of other Assets as determined by the Board.
Membership in a nationally recognized appraisal society such as the Appraisal
Institute shall be conclusive evidence of such qualification as to Real
Property. 

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, the Company, the Advisor or any of their Affiliates 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

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Advisor
or any of their Affiliates, other than as a Director of the Company, (iv)
performance of services, 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. A business or professional relationship is considered material
if the aggregate gross revenue derived by the Director from the Sponsor, the
Advisor and their 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. 

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

Invested
Capital. The
amount calculated by multiplying the total number of Shares purchased by
Stockholders by the issue price, reduced by the portion of any Distribution
(other than any Stock Dividends) that is attributable to Net Sales Proceeds and
by any amounts paid by the Company to repurchase Shares pursuant to the
Company’s plan for repurchase of Shares. 

Joint
Ventures. The
joint venture or partnership arrangements in which the Company or the
Partnership is a co-venturer or general partner, which are established to
acquire or hold Assets. 

Listing
or Listed. The
listing of the Shares of the Company on a national securities exchange or the
quotation of shares on the Nasdaq National Market System. Upon such Listing, the
Shares shall be deemed Listed. 

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 evidences
of indebtedness or obligations, which are secured or collateralized by Real
Property owned by the borrowers under such notes, deeds of trust, security
interests or other evidences of indebtedness or obligations. 

NASAA
Guidelines. The
Statement of Policy Regarding Real Estate Investment Trusts of the North
American Securities Administrators Association, Inc. effective September 29,
1993.

Net
Income. For any
period, the Company’s total revenues applicable to such period, less the total
expenses applicable to such 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. 

Net
Sales Proceeds. In the
case of a transaction described in clause (i)(A) of the definition of Sale, the
proceeds of any such transaction less the amount of selling expenses incurred by
or on behalf of the Company, including all real estate commissions, closing
costs and legal fees and expenses. In the case of a transaction described in
clause (i)(B) of such definition, Net Sales Proceeds means the proceeds of any
such transaction less the amount of selling expenses incurred by or on behalf of
the Company, including any legal fees and expenses and other selling expenses
incurred in connection with such transaction. In the case of a transaction
described in clause (i)(C) of such definition, Net Sales Proceeds means the
proceeds of any such transaction actually distributed to the Company from the
Joint Venture less the amount of any selling expenses, including legal fees and
expenses incurred by or on behalf of the

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Company
(other than those paid by the Joint Venture). In the case of a transaction or
series of transactions described in clause (i)(D) of the definition of Sale, Net
Sales Proceeds means the proceeds of any such transaction (including the
aggregate of all payments under a Mortgage or in satisfaction thereof other than
regularly scheduled interest payments to the extent such interest accrues at a
rate of less than ten percent (10%) per annum) less the amount of selling
expenses incurred by or on behalf of the Company, including all commissions
closing costs and legal fees and expenses. In the case of a transaction
described in clause (i)(E) of such definition, Net Sales Proceeds means the
proceeds of any such transaction less the amount of selling expenses incurred by
or on behalf of the Company, including any legal fees and expenses and other
selling expenses incurred in connection with such transaction. In the case of a
transaction described in clause (ii) of the definition of Sale, Net Sales
Proceeds means the proceeds of such transaction or series of transactions less
all amounts generated thereby which are reinvested in one or more Assets within
180 days thereafter and less the amount of any real estate commissions, closing
costs, and legal fees and expenses and other selling expenses incurred by or
allocated to the Company in connection with such transaction or series of
transactions. Net Sales Proceeds shall also include any consideration (including
non-cash consideration such as stock, notes, or other property or securities)
that the Company determines, in its discretion, to be economically equivalent to
proceeds of a Sale, valued in the reasonable determination of the Company. Net
Sales Proceeds shall not include any reserves established by the Company in its
sole discretion. 

NYSE. The New
York Stock Exchange, Inc.

Offering. Any
private or public offering of Shares pursuant to an effective registration
statement filed under the Securities Act or exempt from such filing during
periods from and after the date hereof. 

Organization
and Offering Expenses. Any and
all costs and expenses, other than Selling Commissions and the dealer manager
fee (as in effect from time to time), incurred by and to be paid by the Company,
the Advisor or any Affiliate in connection with the formation, qualification and
registration of the Company and the marketing and distribution of its Shares,
including, without limitation, the following: legal, accounting and escrow fees;
printing, amending, supplementing, mailing and distributing costs; filing,
registration and qualification fees and taxes; telecopier and telephone costs;
and all advertising and marketing expenses, including the costs related to
investor and broker-dealer sales meetings. 

Partnership.
Behringer Harvard Opportunity OP I, LP, a Texas limited partnership, through
which the Company may own Assets. 

Performance
Fee. The fee
payable to the Advisor upon termination of this Agreement under certain
circumstances if certain performance standards have been met pursuant to Section
4.03(b). 

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

Property
or Properties. As the
context requires, any, or all, respectively, of the Real Property acquired by
the Company, either directly or indirectly (whether through joint venture
arrangements or other partnership or investment interests). 

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 investment advice regarding
current and potential Assets, and all modifications, enhancements and derivative
works of the foregoing.

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Prospectus.
Prospectus has the meaning set forth in Section 2(10) of the Securities Act,
including a preliminary prospectus, an offering circular as described in Rule
256 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 to the public.

Real
Property. 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 equity 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 portion thereof
(including with respect to any Mortgage, all repayments thereunder or in
satisfaction thereof other than regularly scheduled interest payments) and any
event with respect to a Mortgage which gives rise to a significant amount of
insurance proceeds or similar awards; or (E) the Company or the Partnership
directly or indirectly (except as described in other subsections of this
definition) sells, grants, transfers, conveys, or relinquishes its ownership of
any other Asset not previously described in this definition or any portion
thereof, but (ii) not including any transaction or series of transactions
specified in clause (i) (A) through (E) above in which the proceeds of such
transaction or series of transactions are reinvested in one or more Assets
within 180 days thereafter. 

Securities
Act. The
Securities Act of 1933, as amended from time to time, or any successor statute
thereto. Reference to any provision of the Securities Act shall mean 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. 

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 $.0001 per share. 

Soliciting
Dealers.
Broker-dealers who are members of the National Association of Securities
Dealers, 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. 

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Sponsor. Robert
M. Behringer.

Stock
Dividend. Any
dividend or other distribution paid to stockholders of the Company in the form
of additional Shares.

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

Stockholders’
10% Return. As of
any date, an aggregate amount equal to a 10% cumulative, noncompounded, annual
return on Invested Capital (calculated like simple interest); provided, however,
that for purposes of calculating the Stockholders’ 10% Return, any Stock
Dividend shall not be included as a Distribution; and provided further that for
purposes of determining the Stockholders’ 10% Return, the return for each
portion of the Invested Capital shall commence for purposes of the calculation
upon the issuance of the shares issued in connection with such capital.

Subordinated
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). 

Subordinated
Incentive Listing Fee. The fee
payable to the Advisor under certain circumstances if the Shares are Listed
pursuant to Section 3.01(e). 

Subordinated
Share of Net Sales Proceeds. The fee
payable to the Advisor under certain circumstances following receipt of Net
Sales Proceeds pursuant to Section 3.01(d). 

Termination
Date. The
date of termination of this Agreement. 

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 such 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) the
Subordinated Share of Net Sales Proceeds, (vi) the Performance Fee, (vii) the
Subordinated Incentive Listing Fee, (viii) Acquisition Fees and Acquisition
Expenses, (ix) real estate commissions on the Sale of Property, and (x) 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). 

2%/25%
Guidelines. The
requirement pursuant to the NASAA Guidelines that, in any 12 month period, Total
Operating Expenses not exceed the greater of 2% of Average Invested Assets
during such 12 month period or 25% of Net Income over the same 12 month period.

ARTICLE
II

THE
ADVISOR

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

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2.02       
Duties
of the Advisor. The
Advisor shall be deemed to be in a fiduciary relationship to the Company and its
Stockholders. The Advisor undertakes to use its best efforts to present to the
Company potential investment opportunities and to provide a continuing and
suitable investment program consistent with the investment objectives and
policies of the Company as determined and adopted from time to time by the
Board. In performance of this undertaking, 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 an Affiliate of the Advisor or other Person:

(a)       
serve as
the Company’s investment and financial advisor and provide research and economic
and statistical data in connection with the Assets and investment policies;

(b)       
provide
the daily management of the Company 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 uncertificated Shares, if any, and acting as transfer agent for the
Company’s Shares;

(d)       
investigate,
select, and, on behalf of the Company, engage and conduct business with such
Persons as the Advisor deems necessary to the proper performance of its
obligations hereunder, including but not limited to 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 Affiliates of the Advisor, and
Persons acting in any other capacity deemed by the Advisor necessary or
desirable for the performance of any of the foregoing services, including but
not limited to entering into contracts in the name of the Company with any of
the foregoing; 

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

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

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

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

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(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)       
provide
the Company with 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 others to act, as
attorney-in-fact or agent of the Company in making, requiring and disposing of
Assets, disbursing, and collecting the funds, paying the debts and fulfilling
the obligations of the Company and 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 in connection with investor relations; 

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

(q)       
prepare
on behalf of the Company all reports and returns required by the Securities and
Exchange Commission, Internal Revenue Service and other state or federal
governmental agencies; and

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

2.03       
Authority
of Advisor.

(a)       
Pursuant
to the terms of this Agreement (including the restrictions included in this
Section 2.03 and in Section 2.06), and subject to the continuing and exclusive
authority of the Board over the management of the Company, the Board hereby
delegates to the Advisor the authority to (i) locate, analyze and select
investment opportunities, (ii) structure the terms and conditions of
transactions pursuant to which investments will be made or acquired for the
Company or the Partnership, (iii) acquire Properties, make and acquire Mortgages
and invest in other Assets in compliance with the investment objectives and
policies of the Company, (iv) arrange for financing or refinancing of Assets,
(v) enter into leases for the Properties and service contracts for the Assets,
including oversight of Affiliated companies that perform property

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management
or other services for the Company, (vi) oversee non-affiliated and Affiliated
property managers and other non-affiliated and Affiliated Persons who perform
services for the Company, and (vii) undertake accounting and other
record-keeping functions at the Asset level. 

(b)       
Notwithstanding
the foregoing, any investment in Assets by the Company or the Partnership (as
well as any financing acquired by the Company or the Partnership in connection
with such 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 such proposed transactions involving
investments in Assets as thereafter require prior approval, provided however,
that such 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
such 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 such account or accounts, and disburse from any such account or
accounts, any money on behalf of the Company, under such terms and conditions as
the Board may approve, provided that no funds shall be commingled with the funds
of the Advisor; and the Advisor shall from time to time render appropriate
accountings of such collections and payments to the Board, its Audit Committee
and the auditors of the Company. 

2.05       
Records;
Access. The
Advisor shall maintain appropriate records of all its activities hereunder and
make such 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 such 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 such action and shall refrain from taking
such action until it receives further clarification or instructions from the
Board. In such event the Advisor shall have no liability for acting in
accordance with the specific instructions of the Board so given. The Advisor,
its directors, officers, employees and stockholders, and the directors,
officers, employees and stockholders of the Advisor’s Affiliates shall not be
liable to the Company or to the Board or Stockholders for any act or omission by
the Advisor, its directors, officers, employees or stockholders, or for any act
or omission of any Affiliate of the Advisor, its directors, officers or
employees or stockholders except as provided in Section 5.02 of this Agreement.

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

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

ARTICLE
III

COMPENSATION

3.01       
Fees.

(a)       
Asset
Management Fee. The
Company shall pay the Advisor a monthly Asset Management Fee on the
15th day of
each month in an amount equal to 1/12th of 0.75%
of Aggregate Assets Value as of the last day of the preceding month.

(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 payable at the
time and in respect of funds expended for (i) the acquisition of an Asset, (ii)
to the extent that such funds are capitalized, for the development, construction
or improvement of an Asset, or (iii) the making of a Mortgage. The total of all
Acquisition Fees and any Acquisition Expenses shall be limited in accordance
with the Articles of Incorporation. 

(c)       
Subordinated
Disposition Fee. If the
Advisor or an Affiliate provides a substantial amount of the services (as
determined by a majority of the Independent Directors) in connection with the
Sale of one or more Assets, the Advisor or such Affiliate shall receive, subject
to the satisfaction of the condition outlined below, a Subordinated Disposition
Fee in an amount (the “Contingent
Subordinated 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 such Property and (ii) in the case of
the sale of

-12-

any Asset
other than Property, 3% of the sales price of such Asset or Assets. The
Contingent Subordinated Disposition Fee will not be earned or paid unless and
until the Stockholders have received total Distributions in an amount equal to
or in excess of the sum of their aggregate Invested Capital plus the
Stockholders’ 10% Return. To the extent that, in any instance, the Contingent
Subordinated Disposition Fees is not earned and paid due to the foregoing
limitation, the Contingent Subordinated Disposition Fees that would have been
earned and paid had the foregoing limitation not been in place at the time of a
Sale shall be a contingent liability of the Company, which shall be paid if and
only if the conditions set forth in this subparagraph 3.01(c) have been
satisfied and, upon the satisfaction of such condition, the Company shall pay
all such Contingent Subordination Disposition Fees as if such condition had been
satisfied with respect to each such prior Sale. 

The
Subordinated Disposition Fee may be payable in addition to real estate
commissions paid to non-Affiliates, provided, however, that the total real
estate commissions paid to all Persons by the Company (together with the
Subordinated 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. 

In the
event this Agreement is terminated prior to such time as the Stockholders have
received total Distributions in an amount equal to or in excess of the sum of
their aggregate Invested Capital plus the Stockholders’ 10% Return through the
Termination Date, the Company Value shall be determined and any contingent
liabilities for the payment of Contingent Subordinated Disposition Fees on
Assets previously sold will be paid if the Company Value plus total
Distributions received prior to the Termination Date equals or exceeds the sum
of the aggregate Invested Capital plus the Stockholders’ 10% Return through the
Termination Date and then only to the extent of such excess. 

Following
Listing, and as soon as practicable after determination of Market Value (defined
below), any contingent liabilities for the payment of the Contingent
Subordinated Disposition Fees on Assets previously sold will be earned and paid
if and only if the Stockholders have received or been deemed to have received
total Distributions in an amount equal to or in excess of the sum of the
aggregate Invested Capital plus the Stockholders’ 10% Return through the date of
Listing. For purposes of the preceding sentence, in addition to actual
Distributions received, Stockholders will be deemed to have received
Distributions in the amount equal to the product of the total number of Shares
outstanding and the average closing price of the Shares over the 30-trading-day
period beginning the date of Listing (the “Market
Value”). Once
any Contingent Subordinated Disposition Fees are actually paid, such amounts
shall thereafter be referred to as “Subordinated Disposition Fees.”

(d)       
Subordinated
Share of Net Sales Proceeds. Prior
to Listing, upon the consummation of any Sale, the Advisor shall receive a
Subordinated Share of Net Sales Proceeds in an amount equal to 15% of Net Sales
Proceeds less the amount by which the Company’s debt for borrowed money exceeds
the aggregate book value of the Company’s assets after the sale of the Asset(s)
in respect of which the Net Sales Proceeds is being determined.
**Notwithstanding the foregoing, the Subordinated Share of Net Sales Proceeds
will not be earned or paid unless and until the Stockholders have received total
Distributions in an amount equal to or in excess of the sum of their aggregate
Invested Capital plus the Stockholders’ 10% Return. To the extent that, in any
instance, the Subordinated Share of Net Sales Proceeds is not earned and paid
due to the foregoing limitation, the Subordinated Share of Net Sales Proceeds
that would have been earned and paid had the foregoing limitation not been in
place at the time of a Sale shall be a contingent liability of the Company,
which shall be paid if and only if the conditions set forth in the 

-13-

preceding
sentence of this subparagraph 3.01(d) have been satisfied and, upon the
satisfaction of such condition, the Company shall pay all such Subordinated
Share of Net Sales Proceeds as if such condition had been satisfied with respect
to each such prior Sale. 

Following
Listing, and as soon as practicable after determination of Market Value, if the
Stockholders have received or been deemed to have received total Distributions
in an amount equal to the sum of their aggregate Invested Capital and
Stockholders’ 10% Return through the date of Listing, the Advisor shall receive
a Subordinated Share of Net Sales Proceeds in an amount equal to 15% of Net
Sales Proceeds less the amount by which the Company’s debt for borrowed money
exceeds the aggregate book value of the Company’s assets after the sale of the
Asset(s) in respect of which the Net Sales Proceeds is being determined. For
purposes of this subparagraph (d), in determining whether the Subordinated Share
of Net Sales Proceeds is payable following Listing, in addition to actual
Distributions received, Stockholders will be deemed to have received
Distributions in the amount equal to the Market Value. 

(e)       
Subordinated
Incentive Listing Fee.
Following Listing, and as soon as practicable after determination of Market
Value, the Advisor shall be entitled to receive a Subordinated Incentive Listing
Fee payable in the form of an interest bearing promissory note (the
“SILF
Note”) in a
principal amount equal to 15% of the amount by which (i) the market value of the
outstanding Shares, measured by taking the Market Value, plus the total of all
Distributions paid to Stockholders from the Company’s inception until the date
of Listing, exceeds (ii) the sum of (A) 100% of Invested Capital and (B) the
total Distributions required to be paid to the Stockholders in order to pay the
Stockholders’ 10% Return from inception through the date of Listing. Interest on
the SILF Note will accrue beginning on the date of Listing at a rate deemed fair
and reasonable by the Independent Directors on the date of Listing. The Company
shall repay the SILF Note using the entire Net Sales Proceeds of each Sale after
Listing until the SILF Note is paid in full, with interest. If the SILF Note has
not been paid in full within five years from the date of Listing, then the
Advisor, its successors or assigns, may elect to convert the balance of the SILF
NOTE, including accrued but unpaid interest, into Shares at a price per Share
equal to the average Closing Price of the Shares over the ten trading days
immediately preceding the date of such election. If the Shares are no longer
listed at such time as the SILF Note becomes convertible into Shares as provided
by this paragraph, then the price per Share, for purposes of conversion, shall
equal the fair market value for the Shares as determined by the Board based upon
the Appraised Value of the Assets as of the date of election. The principal
amount of the SILF Note shall be referred to as “Subordinated Disposition
Fees.”

(f)       
Debt
Financing Fee. In the
event of the origination 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 one percent (1%) of the amount available under such
financing.

(g)       
Limitations
on Payments.
Notwithstanding the foregoing, no payments shall be made under Sections 3.01(d),
3.01(e) or 4.03(b) if, at or prior to the time the payment is due, the
Convertible Shares have been converted into Shares in the case of Sections
3.01(d) and 3.01(e), or, in the case of Section 4.03(b), the determination of
the number of Shares issuable upon conversion of the Convertible Shares has been
made in accordance with Section 5.3(iii)(c) of Article V of the Articles of
Incorporation, in each case, without any
reduction in the number of Convertible Shares converted or in the value or
number of Shares to be issued upon such conversion that may be triggered under
the terms of the Convertible Shares to avoid jeopardizing the Company’s REIT
status. If, however, the Convertible Shares have been converted into Shares in
the case of Sections 3.01(d) and 3.01(e), or, in the case of Section 4.03(b),
the determination of the number of Shares issuable upon conversion of the
Convertible Shares has been made in 

-14-

accordance
with Section 5.3(iii)(c) of Article V of the Articles of Incorporation, in each
case, with a
reduction in the number of Convertible Shares converted or in the value or
number of Shares issued upon such conversion triggered under the terms of the
Convertible Shares to avoid jeopardizing the Company’s REIT status, (i) no
payments otherwise due and payable under Section 3.01(d) (“Offset
Payments”) shall
be paid until the aggregate amount of such Offset Payments equals the aggregate
value of the Shares (as determined at the time of such conversion as being the
Company Value divided by the number of Shares outstanding at such time) issued
or issuable upon conversion of the Convertible Shares, and (ii) any payments
otherwise due and payable under Sections 3.01(e) or 4.03(b) shall be reduced,
dollar-for-dollar, by an amount equal to the aggregate value of the Shares (as
determined at the time of such conversion as being the Company Value divided by
the number of Shares outstanding at such time) issued or issuable upon
conversion of the Convertible Shares. 

3.02       
Expenses.

(a)       
In
addition to the compensation paid to the Advisor pursuant to Section 3.01
hereof, the Company shall pay directly or reimburse the Advisor for all of the
expenses paid or incurred by the Advisor in connection with the services it
provides to the Company pursuant to this Agreement, including, but not limited
to: 

(i)       
Organization
and Offering Expenses; provided, however, that 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 reimbursement received by the
Advisor pursuant to this Section 3.02, to the extent that such reimbursement
exceeds 2% of the Gross Proceeds exclusive of Gross Proceeds from shares sold
under the Company’s Distribution Reinvestment Plan. The Advisor shall be
responsible for the payment of all Organization and Offering Expenses in excess
of 2% of the Gross Proceeds exclusive of Gross Proceeds from shares sold under
the Company’s Distribution Reinvestment Plan; 

(ii)      
Acquisition
Expenses incurred in connection with the selection and acquisition of Assets in
an amount equal to up to 0.5% of the Contract Purchase Price of each
Asset;

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

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

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

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

(vii)     expenses
of managing and operating Assets owned by the Company, whether payable to an
Affiliate of the Company or a non-affiliated Person; 

-15-

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

(ix)      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, Listing and registration
fees, and other 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, revising, amending, converting, modifying, or terminating the
Company or 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)    administrative
service expenses (including personnel costs; provided, however, that no
reimbursement shall be made for costs of personnel to the extent that such
personnel perform services in transactions for which the Advisor receives a
separate fee); and 

(xiv)   
audit,
accounting and legal fees. 

(b)       
Expenses
incurred by the Advisor on behalf of the Company and payable pursuant to this
Section 3.02 shall be reimbursed no less than quarterly to the Advisor within 60
days after the end of each quarter. The Advisor shall prepare a statement
documenting the expenses of the Company during each quarter, and shall deliver
such 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, such
services shall be separately compensated at such rates and in such amounts as
are agreed by the Advisor and the Independent Directors, subject to the
limitations contained in the Articles of Incorporation, and shall not be deemed
to be services pursuant to the terms of this Agreement. 

3.04       
Reimbursement
to the Advisor. The
Company shall not reimburse the Advisor for Total Operating Expenses to the
extent that Total Operating Expenses (including the Asset Management Fee), in
the four consecutive fiscal quarters then ended (the “Expense
Year”) exceed
(the “Excess
Amount”) the
greater of 2% of Average Invested Assets or 25% of Net Income for such year. Any
Excess Amount paid to the Advisor during a fiscal quarter shall be repaid to the
Company. Reimbursement of all or any portion of the Total Operating Expenses
that exceed the limitation set forth in the preceding sentence may, at the
option of the Advisor, be deferred without interest and may be reimbursed in any
subsequent Expense Year where such limitation would permit such reimbursement if
the Total Operating Expense were incurred during such period. Notwithstanding
the foregoing, if there is an Excess Amount in any Expense Year and the
Independent Directors determine that such excess was justified, based on unusual
and nonrecurring factors which they deem sufficient, the Excess Amount may be
reimbursed to the Advisor. Within 60 days after the end of any fiscal quarter of
the Company for which there is an Excess Amount which the Independent Directors
conclude was justified and reimbursable to the Advisor, there 

-16-

shall be
sent to the Stockholders a written disclosure of such fact, together with an
explanation of the factors the Independent Directors considered in determining
that such Excess Amount was justified. Such determination shall be reflected in
the minutes of the meetings of the Board. The Company will not reimburse the
Advisor or its Affiliates for services for which the Advisor or its Affiliates
are entitled to compensation in the form of a separate fee. All figures used in
any computation pursuant to this Section 3.04 shall be determined in accordance
with generally accepted accounting principles applied on a consistent basis.

ARTICLE
IV

TERM
AND TERMINATION

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

4.02       
Termination. This
Agreement will automatically terminate upon Listing. This agreement also may be
terminated at the option of either party (i) immediately upon a Change of
Control or (ii) upon 60 days written notice without cause or penalty (in either
case, if termination is by the Company, then such 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 (i.e.,
Sections 3.01(e) and 4.03) shall continue in full force and effect until all
amounts payable thereunder to the Advisor are paid in full.

4.03       
Payments
to and Duties of Advisor upon Termination.

(a)       
After the
Termination Date, the Advisor shall not be entitled to compensation for further
services hereunder except it shall be entitled to and receive from the Company
within 30 days after the effective date of such 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, provided that the Subordinated Incentive Listing
Fee, if any, shall be paid in accordance with the provisions of Section 3.01(e).
In the event the Subordinated Incentive Listing Fee is paid to the Advisor
following Listing, no Performance Fee will be paid to the Advisor pursuant to
Sections 4.03(b) below.

(b)       
Upon
termination, unless such termination is by the Company because of a material
breach of this Agreement by the Advisor, or upon Listing (in which case the
Subordinated Incentive Listing Fee will be paid in accordance with the
provisions of Section 3.01(e)), the Advisor shall be entitled to receive a
Performance Fee payable in the form of an interest bearing promissory note (the
“Performance
Fee Note”) in a
principal amount equal to the product of 0.15 times the amount, if any, by which
(i) the Company Value plus the total Distributions paid to holders of Shares
through the Termination Date, exceeds (ii) the sum of the aggregate Invested
Capital plus the Stockholders’ 10% Return through the Termination Date. Interest
on the Performance Fee Note will accrue beginning on the Termination Date at a
rate deemed fair and reasonable by the Independent Directors. The Company shall
repay the Performance Fee Note using the entire Net Sales Proceeds of each Sale
after the Termination Date until the Performance Fee Note is paid in full, with
interest. If the Performance Fee Note has not been paid in full within five
years from the Termination Date, then the Advisor, its successors or assigns,
may elect to convert the balance of the Performance Fee Note, including accrued
but unpaid interest, 

-17-

into
Shares at a price per Share equal to the average Closing Price of the Shares
over the ten trading days immediately preceding the date of such election if the
Shares are Listed at such time. If the Shares are not Listed at such time, the
Advisor, its successors or assigns, may elect to convert the balance of the
Performance Fee Note, including accrued but unpaid interest, into Shares at a
price per Share equal to the fair market value for the Shares as determined by
the Board based upon the Appraised Value of the Assets on the date of election.
In no event will the amount paid to the Advisor under the Performance Fee Note,
including interest, exceed the amount considered presumptively reasonable under
Section IV.F. of the NASAA REIT Guidelines in effect on the date hereof (the
“NASAA
Limit”). In
such event, the aggregate amount payable under the Performance Fee Note,
including interest, shall be reduced to an amount equal to the NASAA
Limit.

(c)       
In the
event that the Advisor disagrees with the valuation of Shares pursuant to
Section 4.03(b) where the Shares are not Listed, for purposes of determining the
number of shares to be issued to the Advisor following the Advisor’s election to
convert the balance of the Performance Fee Note owed to the Advisor, then the
fair market value of such shares shall be determined by an independent appraiser
of equity value selected by the Advisor and the Company. If the Advisor and the
Company are unable to agree upon an expert independent appraiser, then each of
the Company and the Advisor shall name one appraiser and the two named
appraisers shall promptly agree in good faith to the appointment of one such
appraiser whose determination shall be final and binding on the parties. The
cost of such appraisal shall be shared evenly between the Company and the
Advisor.

(d)       
The
Advisor shall promptly upon termination: 

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

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

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

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

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
      

 

 

-18-

 

 

 

	 	 	Incorporation and the NASAA Guidelines.
      Notwithstanding the foregoing, under the Articles of Incorporation, 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 Affliates,
      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) such 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) such indemnification
      or agreement to hold harmless is recoverable only out of the Company's net
      assets and not from stockholders. Notwithstanding the foregoing, the
      Advisor and its Affiliates, including their respective officers,
      directors, partners and employees, shall not be indemnified by the Company
      for any losses, liability or expenses arising from or out of an alleged
      violation of federal or state securities laws by such party unless one or
      more of the following conditions are met: (i) there has been a successful
      adjudication on the merits of each count involving alleged securities law
      violations as to the particular indemnitee; (ii) such claims have been
      dismissed with prejudice on the merits by a court of competent
      jurisdiction as to the particular indemnitee; and (iii) a court of
      competent jurisdiction approves a settlement of the claims against a
      particular indemnitee and finds that indemnification of the settlement and
      the related costs should be made, and the court considering the request
      for indemnification has been advised of the position of the Securities and
      Exchange Commission and of the published position of any state securities
      regulatory authority in which securities of the Company were offered or
      sold as to indemnification for violations of securities
laws.

	 	 	 

	 	(b)	The Articles of Incorporation provide that the
      advancement of Company 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
      jurisdiciton 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 such Advisor or its Affiliates, including their respective officers,
      directors, partners and employees, are found not to be entitled to
      indemnification.

	 	 	 

	 	(c)	The indemnity provided for pursuant to this
      Section 5.01 shall extend, without limitation, to any claims to the extent
      relating to any of the events or outcomes set forth in the Prospectus as
      possible results, outcomes or risks associated with the business and
      investment objectives of the Company. 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.

-19-

 

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 such 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,
negligence or reckless disregard of its duties, but the Advisor shall not be
held responsible for any action of the Board in following or declining to follow
any advice or recommendation given by the Advisor. 

ARTICLE
VI

MISCELLANEOUS

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

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

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

	
      To
      the Directors and to the Company:
	
      Behringer
      Harvard Opportunity REIT I, Inc.

	 	
      15601
      Dallas Parkway

	 	
      Suite
      600

	 	
      Addison,
      Texas 75001

	 	 
	
      To
      the Advisor:
	
      Behringer
      Harvard Opportunity Advisors I LP

	 	
      15601
      Dallas Parkway

	 	
      Suite
      600

	 	
      Addison,
      Texas 75001

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

 

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

-20-

 

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

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

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

6.08       
Waiver. Neither
the failure nor any delay on the part of a party to exercise any right, remedy,
power or privilege under this Agreement shall operate as a waiver thereof, nor
shall any single or partial exercise of any right, remedy, power or privilege
preclude any other or further exercise of the same or of any other right,
remedy, power or privilege, nor shall any waiver of any right, remedy, power or
privilege with respect to any occurrence be construed as a waiver of such 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 such waiver. 

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

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

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

6.12      
Name.
Behringer
Harvard Opportunity Advisors I LP and/or one or more of its Affiliates has a
proprietary interest in the names “Harvard” (for the businesses engaged in by
the Company and its Affiliates) and “Behringer” (for all purposes). Accordingly,
and in recognition of this right, if at any time the Company ceases to retain
Behringer Harvard Opportunity Advisors I LP or an Affiliate thereof to perform
the services of Advisor, the Company will, promptly after receipt of written
request from Behringer Harvard Opportunity Advisors I LP, cease to conduct
business under or use the name “Harvard” or “Behringer” or any diminutive
thereof and the Company shall use its best efforts to change the name of the
Company to a name that does not contain the name “Harvard” or “Behringer” or
any

-21-

other
word or words that might, in the sole discretion of Behringer Harvard
Opportunity Advisors I LP LP, be susceptible of indication of some form of
relationship between the Company and Behringer Harvard Opportunity Advisors I LP
or any Affiliate thereof. Consistent with the foregoing, it is specifically
recognized that Behringer Harvard Opportunity Advisors I LP or one or more of
its Affiliates has in the past and may in the future organize, sponsor or
otherwise permit to exist other investment vehicles (including vehicles for
investment in real estate) and financial and service organizations having
“Harvard” or “Behringer” as a part of their name, all without the need for any
consent (and without the right to object thereto) by the Company or its Board.

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.

-22-

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

 

 

 

	 	
      BEHRINGER
      HARVARD OPPORTUNITY REIT I, INC. 

      

      

      By:                                                                               
      

      Gerald
      J. Reihsen, III
Executive
      Vice President - Corporate Development and Legal

	 	 
	 	
      BEHRINGER
      HARVARD OPPORTUNITY ADVISORS I LP

      

      By:
      Harvard Property Trust, LLC,

            
      its General Partner

      

      

            
      By:                                             
                                
      

      Gerald
      J. Reihsen, III
Executive
      Vice President - Corporate Development and
Legal

 

 

 

 

-23-Form of Property Management and Leasing Agreement

EXHIBIT
10.3

 

 

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 _________, 2005, by and among BEHRINGER
HARVARD OPPORTUNITY REIT I, INC., a Maryland corporation (“BH OPPORTUNITY
REIT”), BEHRINGER HARVARD OPPORTUNITY OP I, LP, a Texas limited partnership (“BH
OPPORTUNITY LP”), and HPT MANAGEMENT SERVICES LP, Texas limited partnership (the
“Manager”). 

 

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

 

WHEREAS,
BH OPPORTUNITY 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
loans), some or all of which are to be acquired and held by Owner (as
hereinafter defined) on behalf of BH OPPORTUNITY REIT; and

 

WHEREAS,
Owner intends to continue 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 such terms are equally applicable both to the
singular and plural forms thereof: 

 

1.1       
“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 such 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 such other Person; (iii) any Person directly or
indirectly controlling, controlled by or under common control with such other
Person; (iv) any executive officer, director, trustee or general partner of such
other Person; and (v) any legal entity for which such Person acts as an
executive officer, director, trustee or general partner.

 

1.2       
“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-

 

1.3       
“Improvements”
means buildings, structures, equipment from time to time located on the
Properties and all parking and common areas located on the Properties.

 

1.4       
“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 such rights, as well as any and all moral rights, rights of privacy,
publicity and similar rights and license rights of any type under the laws or
regulations of any governmental, regulatory, or judicial authority, foreign or
domestic and all renewals and extensions thereof.

 

1.5       
“Lease”
means, unless the context otherwise requires, any lease or sublease made by
Owner as landlord or by its predecessor. 

 

1.6       
“Management
Fees” has the meaning set forth in Section 5.1 hereof. 

 

1.7       
“Owner”
means BH OPPORTUNITY REIT, BH OPPORTUNITY LP and any joint venture, limited
liability company or other Affiliate of BH OPPORTUNITY REIT or BH OPPORTUNITY LP
that owns, in whole or in part, on behalf of BH OPPORTUNITY REIT, any
Properties. 

 

1.8       
“Person”
means an individual, corporation, association, business trust, estate, trust,
partnership, limited liability company or other legal entity.

 

1.9       
“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. 

 

1.10       
“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 2 that relate to management advice,
services and techniques regarding current and potential Properties, and all
modifications, enhancements and derivative works of the foregoing.

 

ARTICLE
II

 

APPOINTMENT
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 such 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. 

 

2.2       
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 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. 

 

2.3       
Specific
Duties.
Manager’s duties include the following: 

 

(a)       
Lease
Obligations. Manager
shall perform all duties of the landlord under all Leases insofar as such duties
relate to operation, maintenance, and day-to-day management. Manager shall also
provide or cause to be provided, at Owner’s expense, all services normally
provided to tenants of like premises, including where applicable and without
limitation, gas, 

-2-

 

electricity
or other utilities required to be furnished to tenants under Leases, normal
repairs and maintenance, 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 such space or that are customarily provided to tenants.

 

(b)       
Maintenance. Manager
shall cause the Properties to be maintained in the same manner as similar
properties in the 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 the
Property (e.g., repairs, renovations, and leasehold improvements). 

 

(c)       
Leasing
Functions. Manager
shall coordinate the leasing of the Properties and shall negotiate and use its
best efforts to secure executed Leases from qualified tenants, and to execute
same on behalf of Owner, if requested, for available space in the Properties,
such 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 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 such recommendations regarding compliance with
such notice as shall be appropriate. 

 

(e)       
Personnel. Any
personnel hired by Manager to maintain, operate and lease the Property shall be
the employees or independent contractors of Manager and not of Owner of such
Property, BH OPPORTUNITY LP or BH OPPORTUNITY REIT. Manager shall use due care
in the selection and supervision of such employees or independent contractors.
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
area. 

 

(g)       
Expenses. Manager
shall analyze all bills received for services, work and supplies in connection
with maintaining and operating the Properties, pay all such 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 such request.
Manager shall pay all bills, assessments, real property taxes, insurance
premiums and any other amount payable in respect to the Properties out of the
Account (as hereinafter defined). All expenses shall be billed at net cost
(i.e., less
all rebates, commissions, discounts and allowances, however designed).

 

(h)       
Monies
Collected. Manager
shall timely collect all rent and other monies, in the form of a check or money
order, from tenants and any sums otherwise due Owner with respect to the
Properties in the ordinary course of business. Owner authorizes Manager to
request, demand, 

-3-

 

collect
and provide receipt for all such 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/or
      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)       
Ownership
Agreements. Manager
has received copies of (and will be provided with copies of future) Articles of
Incorporation, Agreements of Limited Partnership, Joint Venture Partnership
Agreements and Operating Agreements, each as may be amended from time to time,
of Owner, as applicable (the “Ownership Agreements”) and is 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 Ownership Agreements. 

 

(k)       
Signs. Manager
shall place and remove, or cause to be placed and removed, such 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.

 

2.4       
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 the Property.

 

2.5       
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. Such
records shall be maintained on a double entry basis. Owner and persons
designated by Owner shall at all reasonable time have access to and the right to
audit and make independent examinations of such 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

-4-

 

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 such period, if requested;
      

 

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

 

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

 

	 	
      (vi)
	
      copy
      of ledger entries for such 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 such 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 such budget, Manager may submit to
Owner for its approval an updated budget or plan incorporating such changes as
shall be necessary to reflect cost over-runs and the like during such period. If
Owner does not disapprove any such budget within 30 days after receipt thereof
by Owner, such budget shall be deemed approved. If Owner shall disapprove any
such 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 (ten)
days of receipt of the notice of disapproval, and Owner shall have 10 (ten) days
to provide notice to Manager if it disapproves of any such revised budget or
plan. Manager will not incur any costs other than those estimated 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 the Property, or for the safety of
      occupants or other persons (or to avoid the suspension of any necessary
      service of the Property); 

 

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

 

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

-5-

 

 

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 such
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 such 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 such requirements. Owner authorizes Manager
to disclose the ownership of the Property by Owner to any such officials. Owner
agrees to indemnify, protect, defend, save and hold Manager and its
stockholders, officers, directors, employees, managers, successors and assigns
(collectively, the “Indemnified Parties”) harmless of and from any and all
Losses (as defined in Section 3.5(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. 

 

2.6    Guaranty
of Deposits. Should
Owner acquire real property from Behringer Development Company LP, a Texas
limited partnership (“Behringer Development”), Manager hereby guarantees the
full, prompt and unconditional refund of any earnest money deposit paid by Owner
to Behringer Development should Owner be entitled to such refund as a result of
(i) the failure of Behringer Development to develop the property, (ii) the
failure of all or a specified portion of the pre-leased tenants to take
possession under their leases for any reason, or (iii) the inability of Owner to
pay the full purchase price at closing.

 

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 such
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 such 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 leasing personnel responsible for the leasing of the Property; 

 

(d)       
to cause
references of prospective tenants to be investigated, it being understood and
agreed by the parties hereto that Manager does not guarantee the
creditworthiness or collectibility of accounts receivable from tenants, users or
lessees; and to negotiate new Leases 

-6-

 

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 and/or broker’s commission; and Manager need not account
for such charges and/or commission to Owner; 

 

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

 

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

 

	 	
      (ii)
	
      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 such
      actions or suits, or reinstate such 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
      such 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 or Owner entered into by Manager as Owner’s authorized
agent, and Owner shall assume all expenses in connection with such
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 the Property, including personnel spending a portion of their
working hours (to be charged on a pro rata basis) at the Property. All expenses
of such employment shall be deemed operational expenses of the
Property.

 

(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
the Property; 

 

(c)       
to
negotiate and enter into, as Manager of the Property, contracts for all items on
budgets that have been approved by Owner, any emergency services or repairs for
items not exceeding $5,000, appropriate service agreements and labor agreements
for normal operation of the Property, 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 the Property, and other services or such of them
as Manager may consider appropriate; and 

 

(d)       
to
purchase supplies and pay all bills. 

 

Manager
shall use its best efforts to obtain the foregoing services and utilities for
the 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

-7-

 

of
executing, as Manager for said Owner, all such contracts. In addition, Owner
agrees to specifically assume in writing all obligations under all such
contracts so entered into by Manager, on behalf of Owner of the Property, upon
the termination of this Agreement, and Owner shall indemnify, protect, save,
defend and hold Manager and the other Indemnified Parties harmless from and
against any and all Losses resulting from, arising out of or in any way related
to such contracts and that relate to or concern matters occurring after
termination of this Agreement, but excluding matters arising out of Manager’s
willful misconduct, gross negligence and/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 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 Property of any one or more
purchases or other expenditures, notwithstanding that Manager may otherwise be
authorized hereunder to make such 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 such matters) to collect
rents and/or 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 such 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 such
endorsement. Manager shall also have the exclusive authority to collect and
handle tenants’ security deposits, including the right to apply such security
deposits to unpaid rent, and to comply, on behalf of Owner of the 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 such 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 such 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 such matters) to pay all
expenses of the Property from the Gross Revenue collected in accordance with
Section 3.3 above, from the Account. It is understood that the Gross Revenue
will be used first to pay the compensation to Manager as contained in Article 5
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 such payments. Nothing in
this Agreement shall be interpreted in such a manner as to obligate Manager to
pay from Gross Revenue, any expenses incurred by Owner prior to the commencement
of this Agreement, except to the extent Owner advances additional funds to pay
such expenses.

-8-

 

 

3.5       
Certain
Owner Indemnification Obligations.

 

(a)       
On
Termination. In the
event this 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 Manager and all of the other Indemnified Parties harmless from and
against any and all claims, causes of action, demands, suits, proceedings, loss,
judgments, damage, awards, liens, fines, costs, attorney’s fees and expenses, of
every kind and nature whatsoever (collectively, “Losses”), that may be imposed
on or incurred by Manager by reason of the willful misconduct, gross negligence
and/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 Manager and all of the other
Indemnified Parties harmless from any and all Losses in connection with or in
any way related to the Property and from liability for damage to the Property
and injuries to or death of any person whomsoever, and damage to property;
provided, however, that such indemnification shall not extend to any such Losses
arising out of the willful misconduct, gross negligence and/or unlawful acts
(such unlawfulness having been adjudicated by a court of proper jurisdiction) of
Manager or any of the other Indemnified Parties. 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 and/or unlawful acts (such unlawfulness having been adjudicated by a
court of proper jurisdiction).

 

3.6       
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 Manager and all of the other
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 the 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 the Property to any
such officials and agrees to indemnify, protect, defend, save and hold Manager
and the other Indemnified Parties harmless 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 Agreement at any time by written notice to Owner
of its election so to do, which cancellation shall be effective upon the service
of such notice. Such cancellation shall not release the indemnities of Owner set
forth in this 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. 

-9-

 

 

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

 

ARTICLE
IV

 

EXPENSES

 

4.1       
Owner’s
Expenses. Except
as otherwise specifically provided, all costs and expenses incurred hereunder by
Manager in fulfilling its duties to Owner shall be for the account of and on
behalf of Owner. Such costs and expenses shall include the wages and salaries
and other employee-related expenses of all on-site and off-site employees of
Manager who are engaged in the operation, management, maintenance and leasing or
access control of the Properties, including taxes, insurance and benefits
relating to such employees, 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.
Commencing on the date hereof, Owner shall pay Manager property management and
leasing fees in an amount equal to four and one-half percent (4.5%) of Gross
Revenues (the “Management Fees”) on a monthly basis from the rental income
received from the Properties over the term of this Management Agreement.
Manager’s compensation under this Section 5.1 shall apply to all renewals,
extensions or expansions of Leases that Manager has originally negotiated. In
the event Manager assists with planning and coordinating the construction of any
tenant-paid finish-out or improvements, Manager shall be entitled to receive
from any such tenant an amount equal to not greater than five percent (5.0%) of
the cost of such tenant improvements. 

 

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

 

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

-10-

 

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 such hazards as Owner and Manager shall deem appropriate, but in any
event insurance sufficient to comply with the Leases and Ownership 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, employer’s liability insurance
applicable to and covering all employees of Manager at the Properties and all
persons engaged in the performance of any work required hereunder, and Manager
shall furnish Owner certificates of insurers naming Owner as a co-insured and
evidencing that such 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
such a certificate. 

 

6.2       
Insurance
Expenses.
Premiums and other expenses of such 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 such accident, claim,
damage, or destruction. Such reports shall be given to Owner promptly, and any
report not so given within 10 (ten) days after the occurrence of any such
accident, claim, damage or destruction shall be noted in the monthly operating
statement delivered to Owner pursuant to Section 2.5(b). Manager is authorized
to settle any claim against an insurance company arising out of any policy and,
in connection with such claim, to execute proofs of loss and adjustments of loss
and to collect and receipt for loss proceeds. 

 

6.5       
Indemnification. Manager
shall hold Owner harmless from and indemnify and defend Owner against 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 such injury or
damage shall be caused by the negligence of Manager, its agents, servants, or
employees, except to the extent that Owner recovers insurance proceeds with
respect to such matter. Owner will indemnify and hold Manager harmless against
all liability for injury to persons and damage to property caused by Owner’s
negligence and which did not result from the negligence of misconduct of
Manager, except to the extent Manager recovers insurance proceeds with respect
to such matter. Notwithstanding the foregoing, if the person seeking
indemnification under this Section 6.5 is an Affiliate, such person’s right to
indemnification is subject to any limitations imposed under the Company’s
Articles of Incorporation or any amendments thereto.

-11-

 

 

ARTICLE
VII

 

TERM
AND TERMINATION

 

7.1       
Term. This
Agreement shall commence on the date first above written and shall continue
until the seventh (7th)
anniversary of such date and thereafter for successive seven (7) year renewal
periods, unless on or before 30 days prior to the date last above mentioned or
on or before 30 days prior to the expiration of any such renewal period, Manager
shall notify Owner in writing that it elects to terminate this Agreement, in
which case this Agreement shall be thereby terminated on said last mentioned
date. In addition, and notwithstanding the foregoing, Owner may terminate this
Agreement at any time upon delivery of written notice to Manager not less than
thirty (30) days prior to the effective date of termination, in the event of
(and only in the event of) a showing by Owner of willful misconduct, gross
negligence, or deliberate malfeasance by Manager in the performance of Manager’s
duties hereunder. In addition, either party may terminate this 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, or (ii) approving as properly filed a petition seeking
reorganization, readjustment, arrangement, composition or similar relief for
Manager under the federal bankruptcy laws or any similar applicable law or
practice, or (iii) appointing a receiver or liquidator or trustee or assignee in
bankruptcy or insolvency of Manager or a substantial part of the property of
Manager, or for the winding up or liquidation of its affairs, or 

 

(b)       
Manager
(i) institutes proceedings to be adjudicated a voluntary bankrupt or an
insolvent, (ii) consents to the filing of a bankruptcy proceeding against it,
(iii) files a petition or answer or consent seeking reorganization,
readjustment, arrangement, composition or relief under any similar applicable
law or practice, (iv) consents to the filing of any such 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 such
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 sixty (60) days immediately following the date of
such 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 Agreement
for services and expenses prior to termination of this Agreement. All

-12-

 

provisions
of this 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 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 Agreement were still in effect. 

 

The
parties understand and agree that Manager may withhold funds for sixty (60) days
after the end of the month in which this 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 ten (10)
days of receipt of notice and an itemization of such unpaid bills.

 

ARTICLE
VIII

 

MISCELLANEOUS

 

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

 

	 	Owner:	
      BEHRINGER
      HARVARD OPPORTUNITY OP I, LP

      c/o
      Behringer Harvard Opportunity REIT I, Inc.

      15601
      Dallas Parkway

      Suite
      600

      Addison,
      Texas 75001

      Attention:
      Chief Legal Officer

	 	 	 
	 	Manager:	
      HPT
      MANAGEMENT SERVICES LP

      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 delegate partially or in full its duties and rights under this Management
Agreement but 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
delegated by Manager and performed by a person or entity (“Submanager”) with
whom Manager contracts for the purpose of performing such duties. Owner
specifically grants Manager the authority to enter into such a contract with a
Submanager; provided that, unless Owner otherwise agrees in writing with such
Submanager, Owner shall have no liability or responsibility to any such
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 such Submanager to
agree, in the written agreement setting forth the duties and obligations of such
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 such
indemnity shall not be required to the extent that 

-13-

 

Owner
recovers issuance proceeds with respect to such matter. Any contract entered
into between Manager and a Submanager pursuant to this Section 8.3 shall be
consistent with the provisions of this 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 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 such third party for such
leasing services. Upon the prior written consent of Manager, Owner shall have
the authority to enter into such a contract for leasing services with a 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 such party, and Owner agrees to indemnify Manager for all Losses
incurred by Manager as a result of acts of such third party pursuant to the
Third Party Leasing Agreement. To the extent that leasing services are
specifically required to be performed by a third party pursuant to such Third
Party Leasing Agreement, Manager shall have no obligation to perform such
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 such
non-controlling interests in Properties for which a 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 such third party, and Owner agrees to indemnify Manager for all
Losses incurred by Manager as a result of the acts of such 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 such Third Party Management Agreement, Manager shall have no
obligation to perform such services and Owner shall have no obligation to
Manager for compensation for such 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 such
counterpart. 

 

8.10      Entire
Agreement. This
Management Agreement 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. 

-14-

 

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 such litigation shall
be entitled to recover from the other party to such litigation such 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 such other activities or
ventures are in competition with Owner or the business of Owner. 

 

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

 

 

 

[THE
REMAINDER OF THIS PAGE HAS BEEN INTENTIONALLY LEFT
BLANK]

-15-

 

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

 

 

 

	 	
      BEHRINGER
      HARVARD OPPORTUNITY REIT I, INC.

      
 

      By:                                            
                                             
      

            
        Gerald J. Reihsen, III

          
          Executive Vice President

      

      BEHRINGER
      HARVARD OPPORTUNITY OP I, LP

      

      By: 
      Behringer Harvard Opportunity REIT I, Inc.

      General
      Partner

      

      

      By:                                    
                                             
      

      Gerald
      J. Reihsen, III

      Executive
      Vice President

      HPT
      MANAGEMENT SERVICES LP 

      
 

      By:                                              
                                             
      

            
      Gerald J. Reihsen, III

            
      Executive Vice President

 

 

 

-16-

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