Document:

Exhibit 10.1

 

GAS PURCHASE AND SALE AGREEMENT

 

BETWEEN

 

COPANO FIELD SERVICES/UPPER GV LF COAST, LP. (“BUYER”)

 

AND

 

EVOLUTION OPERATING CO., INC. (“SELLER”)

 

 

February 1, 2009

Grimes County, Texas

Copano Meter #SH2-1 0122

 

 

TABLE OF CONTENTS

 

	
   

  	
  PAGE

  
	
  ARTICLE  DESCRIPTION

  	
   

  
	
   

  	
   

  
	
  I.

  	
   

  	
  Dedication

  	
  2

  
	
  II.

  	
   

  	
  Point(s) of
  Delivery and Title

  	
  2

  
	
  III.

  	
   

  	
  Facilities

  	
  3

  
	
  IV.

  	
   

  	
  Price

  	
  3

  
	
  V.

  	
   

  	
  Fees

  	
  4

  
	
  VI.

  	
   

  	
  Term

  	
  5

  
	
  VII.

  	
   

  	
  Notices

  	
  5

  
	
  VIII.

  	
   

  	
  General
  Terms and Conditions

  	
  6

  
	
  IX.

  	
   

  	
  Signatures

  	
  6

  
	
   

  	
   

  	
   

  	
   

  
	
  SECTION

  	
   

  	
  EXHIBIT
  “A”

  	
   

  
	
  1.

  	
   

  	
  Definitions

  	
  7

  
	
  2.

  	
   

  	
  Gas
  Quality

  	
  8

  
	
  3.

  	
   

  	
  Pressures

  	
  9

  
	
  4.

  	
   

  	
  Gas
  Measurement

  	
  9

  
	
  5.

  	
   

  	
  Operating
  Provisions

  	
  11

  
	
  6.

  	
   

  	
  Billing
  and Payment

  	
  12

  
	
  7.

  	
   

  	
  Information
  and Audit

  	
  12

  
	
  8.

  	
   

  	
  Liability
  and Warranties

  	
  13

  
	
  9.

  	
   

  	
  Force
  Majeure

  	
  14

  
	
  10.

  	
   

  	
  Confidentiality

  	
  15

  
	
  11.

  	
   

  	
  Taxes

  	
  15

  
	
  12.

  	
   

  	
  Laws
  and Regulations

  	
  15

  
	
  13.

  	
   

  	
  Miscellaneous

  	
  15

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
  EXHIBIT
  “B” — Dedication and Point(s) of Delivery

  	
  17

  

 

 

GAS PURCHASE AND SALE AGREEMENT

 

THIS GAS PURCHASE AND SALE AGREEMENT (the “Agreement”)
is made and entered into effective as of the 1st day of February 2009 by
and between COPANO FIELD SERVICES/UPPER GULF
COAST, L.P., a Texas limited partnership (“Buyer”), and EVOLUTION OPERATING CO. INC., (“Seller”).
Buyer and Seller are sometimes referred to collectively as “Parties” or
singularly as a “Party.”

 

WITNESSETH:

 

WHEREAS, Seller owns and/or controls Gas to be
produced from well(s) and acreage located in Grimes County, Texas, and
desires to deliver and sell to Buyer quantities of such Gas as provided herein;
and

 

WHEREAS, Buyer desires to purchase and receive
Seller’s Gas subject to the terms and conditions contained herein.

 

NOW, THEREFORE,  in consideration of the premises and of the mutual covenants
and agreements herein contained, the Parties hereto covenant and agree as
follows:

 

I.                                        Dedication

 

(a)                                  Subject to the
terms and conditions of this Agreement, Seller dedicates and commits to the
performance of this Agreement (i) 100 percent of its owned and/or
controlled Gas produced from the well(s) described on the attached Exhibit “B,”
and (ii) the acreage assigned to such well(s).

 

(b)                                 Buyer shall
purchase 100% of the gas delivered from the well(s) described on Exhibit “B”
up to the MDQ. The maximum daily quantity of Gas that Buyer agrees to purchase
under this Agreement (the “MDQ”) shall be 3,000 MMBtu per Day.

 

(c)                                  Subject to the
terms and conditions hereof, Buyer agrees to purchase Seller’s Gas as provided
under this Agreement except in those cases where failure to do so is due to (i) causes
within the control of the Seller, (ii) Force Majeure as defined in the
General Terms and Conditions attached hereto as Exhibit “A” (the “GT&C”),
(iii) any quantity of Gas not meeting the quality specifications set forth
in the GT&C, or (iv) Buyer’s compliance with applicable laws of the
State of Texas or rules and regulations of the Railroad Commission of
Texas.

 

II.                                    Point(s) of Delivery and Title

 

(a)                                  The point(s) of
delivery for all Gas purchased hereunder shall be at the point(s) described
on Exhibit “B” (the “Point(s) of Delivery”). Seller shall be
responsible for all necessary arrangements to deliver Gas into Buyer’s
pipeline. Buyer shall operate metering and tap facilities necessary to receive
and measure Seller’s Gas at the Point(s) of Delivery.

 

2

 

(b)                                 Nothing in this
Agreement shall obligate Buyer or Seller to install any facilities to receive
or deliver Seller’s Gas other than those facilities specifically provided for
hereunder.

 

(c)                                  Title to Seller’s
Gas delivered hereunder shall pass to Buyer at the Point(s) of Delivery.

 

Ill.                                Facilities

 

Buyer
and Seller have entered into a Facility Agreement dated January 9, 2009
that covers the responsibility for the installation, if any, ownership,
operation and maintenance of the pipeline, tap and meter facilities necessary
to receive Gas hereunder. Additional Facility Agreements may be entered into by
the Parties from time to time in the event additional delivery points are added
to this Agreement.

 

IV.                               Price

 

(a)                                  Subject to all
of the terms, conditions and provisions hereof, Buyer shall pay Seller for all
Gas purchased hereunder each Month a price per MMBtu equal to 91 percent of the
IF HSC Index. However, notwithstanding the forgoing, in the event the quality
of Gas delivered by Seller to Buyer hereunder during any three (3) consecutive
calendar Month period averages less than 200 MMBtu per Day, then effective on
the first Day of the following calendar Month the price for all gas purchased
hereunder shall be 89 percent of the IF HSC Index. The price shall remain at 89
percent of the IF HSC Index until such time as Seller delivers to Buyer
hereunder a quantity of Gas equal to or in excess of an average of 200 MMBtu
per Day during any three (3) consecutive calendar Month period, at which
time the price shall be 91 percent of the IF HSC Index effective on the first
Day of the following calendar Month.

 

The
IF HSC Index is defined as the price published by Platts, a Division of the
McGraw-Hill Companies, in the first issue of Inside F.E.R.C.’s Gas Market Report  during the Month of production under the
heading Market Center Spot-Gas Prices, subheading
East Texas, Houston Ship Channel Index.

 

(b)                                 In the event (i) Copano
Pipelines/Upper Gulf Coast, L.P., an affiliate of Buyer, establishes the
delivery point with Tennessee Gas Pipeline Company in Harris County, Texas
being contemplated as of the date hereof, and (ii) Seller delivers under
this Agreement at least 1,000 MMBtu per day on a consistent basis, then Seller
shall have the right and option to elect from time to time after April 1,
2009, to have the price provided in paragraph (a) above based on either
the IF Tennessee Index or the IF HSC Index. Seller shall provide Buyer with
written notice at least five (5) Business Days prior to the first day of
the Month for which the election is to take effect, and each such election
shall remain in effect for a minimum of three (3) calendar Months.

 

The
IF Tennessee Index is defined as the price published by Platts in the first
issue of Inside F.E.R.C.’s Gas Market
Report during the Month of production under the heading Market Center Spot-Gas  Delivered 
to  Pipelines,   subheading  Tennessee Gas

 

3

 

Pipeline
Co., Texas, Zone 0.

 

(c) Notwithstanding
paragraphs (a) and (b) above, should initial deliveries from a well
or increased deliveries from a workover well begin after the first Day of the
Month, the price to be paid by Buyer to Seller for such quantities of Seller’s
Gas delivered each Day from that well during said partial Month shall be equal
to either 89 or 91 percent of the Gas Daily HSC Index, based on whether the 89
or 91 percent price in effect under paragraph (a), or 91 percent of the Gas
Daily Tennessee Index, based on Seller’s election under paragraph (b) above.

 

The
Gas Daily HSC Index is defined as the daily midpoint price published each Day
of Gas flow in Platt’s Gas Daily under the heading Daily Price Survey, subheading
East-Houston-Katy, Houston Ship Channel Index.

 

The
Gas Daily Tennessee Index is defined as the daily midpoint price published each
Day of Gas flow in Platt’s Gas Daily under the heading Daily Price Survey, subheading Tennessee
Zone 0 South Corpus Christi Index.

 

(d)                                 Any fees due
from Seller to Buyer hereunder shall be deducted from Buyer’s payment to Seller
for Gas purchased each Month.

 

(e)                                  The price
payable by Buyer to Seller for Gas purchased hereunder is inclusive of
reimbursement to Seller for (i) 100 percent of Texas State severance
taxes, and (ii) Seller’s cost to conform such Gas to the quality and
pressure specifications set forth herein.

 

V.                                   Fees

 

(a)                                  Treating Fee. If at any
time Seller’s Gas at any Point of Delivery exceeds the maximum carbon dioxide
(C02) content
provided in Section 2 of the GT&C, Seller shall pay the appropriate
treating fees for removal or blending of CO2 for such Point of Delivery as follows:

 

	
  CO2 Limit

  	
   

  	
  Fee/Mcf

  	
   

  
	
  >3.0%

  	
   

  	
  $

  	
  .05

  	
   

  
	
  >4.0%

  	
   

  	
  $

  	
  .07

  	
   

  
	
  >5.0%

  	
   

  	
  $

  	
  .09

  	
   

  
	
  >6.0%

  	
   

  	
  $

  	
  .11

  	
   

  
	
  >7.0%

  	
   

  	
  Mutually agreed to

  	
   

  

 

(b)                                 Compressor and
Dehydration Fuel. Seller shall provide in-kind at no expense to Buyer
its pro rata share of compressor and dehydration fuel used in the operation of
Buyer’s Pipeline System.

 

(c)                                  Low Quantity
Fee. During any Month after the Month of initial deliveries hereunder, if
Gas quantities  delivered to Buyer
by  Seller at any Point of  Delivery are

 

4

 

less
than 50 MMBtu per Day averaged over the Month, then Seller shall pay Buyer a
low quantity fee of $350.00 per Month for such Point of Delivery.

 

VI.                               Term

 

The
primary term of this Agreement shall commence on and become effective as of February 1.
2009 and shall remain in full force and effect until March 1, 2014, (the “Primary
Term”), and shall continue from Month to Month thereafter, unless terminated by
either Party upon at least 30 Days’ written notice given to the other Party
prior to the end of the Primary Term or any Month thereafter. However, such
termination shall not discharge obligations theretofore incurred by the Parties
hereunder, including any payment obligations.

 

VII.                           Notices

 

All
notices provided for herein shall be in writing at the addresses listed below
or to such other address either Party shall designate by written notice from
time to time. Such notices shall be sent by certified U.S. mail, return receipt
requested, postage prepaid, by facsimile, or by courier. Notices sent by
certified mail or courier shall be deemed provided upon delivery as evidenced
by the receipt of delivery. Notices sent by facsimile shall be deemed to have
been provided upon the sending Party’s receipt of its facsimile machine’s
confirmation of successful transmission. However, if the Day on which such
facsimile is received is not a Business Day or such facsimile is received after
five p.m. on a Business Day, then notice provided by such facsimile shall
be deemed to have been provided on the next following Business Day.

 

Buyer:

 

For Notices, Correspondence and Nominations:

COPANO
FIELD SERVICES/UPPER GULF COAST, L.P.

2727
AlIen Parkway, Suite 1200

Houston,
Texas 77019

Attn:                    Contract Services

Telephone:                                    (713) 621-9547

Facsimile:                                          (713) 737-9047

E-Mail:                                                       contracts@copanoenergy.com

 

Seller:

 

For Correspondence, Invoices, Payments and Notices:

EVOLUTION
OPERATING CO., INC.

2500
City West Blvd., Suite 1300

Houston,
TX 77042

Attn:                    Daryl Mazzanti

Telephone:                                    (713) 935-0122

Facsimile:                                          (713) 935-0199

E-mail:dmazzanti@evolutionpetroleum.com

Tax
ID:                                                  

 

5

 

VIII.                     General Terms and Conditions

 

The
General Terms and Conditions attached hereto as Exhibit “A” (“GT&C”)
have been approved and accepted by both Parties hereto and they are hereby made
an integral part of this Agreement; provided, however, that if there should
exist any conflict or discrepancy between anything contained in the main body
of this Agreement and in the GT&C, then the provisions in the main body of
this Agreement shall at all times and in all cases govern and control.

 

IX.                             Signatures

 

IN WITNESS WHEREOF, this Agreement is executed
in duplicate counterparts, each of which shall be an original as of the date
first hereinabove written, and shall be binding on each party that executes
same.

 

 

	
   

  	
  COPANO FIELD SERVICES/UPPER GULF COAST, L.P.

  
	
   

  	
  “BUYER”

  
	
   

  	
   

  
	
   

  	
  By:

  	
  Copano
  Field Services GP, L.L.C.

  
	
   

  	
   

  	
  its
  Managing General Partner

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
  By:

  	
  /s/
  Brian D. Eckhart

  
	
   

  	
   

  	
  Brian
  D. Eckhart

  
	
   

  	
   

  	
  Senior
  Vice President, Transportation and Supply

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
  EVOLUTION OPERATING CO., INC.

  
	
   

  	
  “SELLER”

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
  By:

  	
  /s/
  Daryl Mazzanti

  
	
   

  	
   

  	
  Daryl
  Mazzanti

  
	
   

  	
   

  	
  Vice
  President, Operations

  

 

IF SELLER AGREES THAT SECTION 10, CONFIDENTIALITY, IN
THE GENERAL TERMS AND CONDITIONS ATTACHED HERETO AS EXHIBIT “A”, SHALL BE
INCLUDED IN THIS AGREEMENT FOR THE PRIMARY TERM AND ANY EXTENSION THEREOF,
PLEASE INITIAL IN THE SPACE PROVIDED BELOW MARKED “YES”, OTHERWISE INITIAL THE
SPACE MARKED “NO”.

 

o YES, SECTION 10, CONFIDENTIALITY, IS INCLUDED IN THIS AGREEMENT

o NO, SECTION 10 IS NOT INCLUDED IN THIS AGREEMENT

 

6

 

Exhibit “A”

 

to Gas Purchase and Sales Agreement dated February 1,
2009, between

Copano Field Services/Upper Gulf Coast, LP. and

Evolution Operating Co., Inc.

(the “Agreement”)

 

GENERAL TERMS AND CONDITIONS

 

1.                                     DEFINITIONS

 

The
following terms shall have the meanings stated below for purposes of the
Agreement and these General Terms and Conditions:

 

1.1                               AGA—the American
Gas Association. “AGA standards” means any current manual, pamphlet or
recommended practice published by or under the auspices of the AGA applicable
to the type of measurement equipment used hereunder, whether or not it has been
accepted as an American National Standard.

 

1.2                               Btu— the quantity
of heat required to raise the temperature of one pound avoirdupois pure water
from 58.5 degrees to 59.5 degrees Fahrenheit, as defined in the American Gas
Association (AGA) Gas Measurement Manual and any subsequent revisions.

 

1.3                               Business
Day—any day except Saturday, Sunday or Federal Reserve Bank holidays.

 

1.4                               Cubic Foot or Standard Cubic Foot—the volume of Gas that
would occupy one cubic foot of space when the Gas is at a base temperature of
60°F and a base pressure of 14.65   psia using an assumed average atmospheric
(barometric) pressure of 14.7 psia. Mcf—
1,000 Cubic Feet.

 

1.5                               Day—a period of 24
consecutive hours beginning at 9:00 a.m. Central Time.

 

1.6                               Gas—natural gas,
including all hydrocarbon and non-hydrocarbon components, whether casinghead
gas produced from oil wells, gas well gas, or other sources of production.

 

1.7                               GPA—the Gas
Processors Association. “GPA Standards” means any current manual, pamphlet or
recommended practice published by or under the auspices of the GPA applicable
to the type of measurement equipment used hereunder, whether or not it has been
accepted as an American National Standard.

 

1.8                               Gross
Heating Value—the gross number of Btu that would be produced by
the complete combustion of one standard cubic foot of Gas with air at the same
temperature and pressure, when saturated with water vapor at 60°F and a
constant pressure of 14.65 psia, and when the products of combustion are cooled
to the initial temperature of the Gas and air, and the water formed by such
combustion is condensed to a liquid state. The Gross Heating Value of the Gas
shall be corrected for the water vapor content of the Gas being delivered;
provided, however, that if the water vapor content of the Gas is seven (7) pounds
or less per 1,000,000 cubic feet, the Gas shall be assumed to be dry and no
correction will be made.

 

1.9                               Month—a calendar
month beginning on the first Day of the month.

 

7

 

1.10                        Persons—any natural
person, corporation, partnership, joint venture, association, cooperative, or
other entity.

 

1.11                        Pipeline
System—the Gas pipelines and other facilities used by Buyer for receiving
Seller’s Gas covered by this Agreement.

 

1.12 Psia—pressure expressed in pounds
per square inch absolute.

 

1.13                        Thermally
Equivalent—an equal number of MMBtu.

 

Terms
not otherwise defined herein are as defined in the Agreement.

 

2.                                     GAS QUALITY

 

2.1                               Specifications.
Seller shall deliver at the Point(s) of Delivery merchantable
pipeline quality Gas that conforms to the following quality specifications:

 

(a)                                  has a total
Heating Value of not less than 950 Btu per Cubic Foot;

 

(b)                                 is commercially
free from dust, hydrocarbon liquids, free water, suspended matter, all gums and
gum forming constituents and any other substance that might become separated
from the Gas in the Pipeline System;

 

(c)                                  does not
contain more than 1/4 grain of hydrogen sulfide (H2S) or more than one (1) grain of total Sulfur(S) per
100 Standard Cubic Feet;

 

(d)                                 is free of
oxygen;

 

(e)                                  does not
contain more than three (3) percent CO2 by volume;

 

(f)                                    not contain
more than seven pounds (7#) of water vapor per one million cubic feet of Gas;

 

(g)                                 does not
contain more than one (1) percent Nitrogen by volume; and

 

(h)                                 has a
temperature of not more than 120°F, and not less than 40°F.

 

2.2                              Failure to
Meet Specifications.  If the Gas
tendered by Seller to Buyer at the Point of Delivery shall fail at any time to
conform to any of the specifications set forth herein, then upon prior written
notice by Buyer to Seller, Buyer may, at its option, either refuse to accept
such Gas or take any necessary action to bring such Gas into conformity. If the
quality specifications of any downstream pipeline to which Seller’s Gas is
delivered hereunder are more stringent than those set forth in Section 2.1,
Buyer shall use reasonable efforts to treat, blend or condition Seller’s Gas to
meet such quality specifications. If Buyer incurs expenses directly related to
Seller’s failure to meet the specifications set forth in Section 2.1, or
if Buyer treats, blends or conditions Seller’s Gas to meet the downstream
pipeline’s specifications, Seller shall reimburse Buyer for its reasonably
incurred allocable expenses, except with respect to CO2 content in which event the fees described in Article V
shall apply.

 

2.3                              Corrosion
Inhibition Program. For each Point of Delivery that the Parties have
mutually agreed to allow Gas to be delivered containing more than three (3) percent
C02, a 

 

8

 

corrosion
inhibition program shall be conducted by Seller at its expense by continuous
injection of inhibitor chemical upstream of each such Point of Delivery. Seller
agrees to inject such chemicals specified by Buyer and at injection rates
requested by Buyer, provided such requirements represent reasonable industry
practice, and shall allow Buyer access to such injection facilities at
reasonable times to monitor operation. Seller shall install and maintain such
injection facilities and shall be responsible for the cost of such inhibitor
chemicals injected.

 

3.                                     PRESSURES

 

3.1                               Delivery
Pressure. Seller shall deliver Gas to Buyer at the Point(s) of
Delivery at pressures sufficient to allow the Gas to enter the Pipeline System,
but not at pressures in excess of the maximum allowable operating pressure of
the Pipeline System (“MAOP”) as it may exist from time to time, at the Point(s) of
Delivery. Buyer is under no obligation to modify pipeline pressures to permit
the entry of Seller’s Gas into the Pipeline System. If Seller is required to
compress Gas to overcome operating pressure, then Seller shall equip its
compression and production equipment (i) with overpressure relief or
shut-off devices to prevent delivery to Buyer in excess of the MAOP, (ii) with
Gas cooling equipment to prevent discharge temperatures above 120°F into the
Pipeline System, and (iii) with pulsation dampening equipment acceptable
to Buyer to minimize pulsation induced measurement errors.

 

3.2                               Rates of
Flow. The Gas purchased hereunder shall be delivered and received as nearly
as practicable at uniform hourly and daily rates of flow. Seller shall have
agents or employees available at all reasonable times to receive from Buyer’s
dispatcher advice and requests for changes in the rates of delivery of Gas
hereunder as requested by Buyer from time to time. Seller agrees to advise
Buyer as soon as possible of any changes in rates of flow of Gas.

 

4.                                     GAS MEASUREMENT

 

4.1                               Unit of
Volume. The unit of volume for the purpose of measurement
shall be one Cubic Foot of Gas. Measured volumes shall be multiplied by the
Gross Heating Value, and the product thereof shall be divided by 1000 to
compute the MMBtu purchased and received hereunder.

 

4.2                               Computation
of Volume. The volumes of Gas measured hereunder shall be
calculated in accordance with specifications prescribed by AGA Report No. 3,
Third Edition, dated 1992, “Orifice Metering of Natural Gas and Other Related
Hydrocarbon Fluids,” including all appendices where applicable, as supplemented
and modified from time to time (‘AGA Report No. 3”).

 

4.3                               Meters. Buyer shall
provide transfer measurement by use of an orifice meter and chart-recorded or
electronic flow measurement, at Buyer’s option. Measurement equipment shall be
installed and operated in accordance with AGA Report No. 3 as it existed
at the time of installation. Metering equipment will be deemed to adhere to
industry standards providing that it met industry standards at the time of
installation. Seller shall have the right to inspect equipment installed or
furnished by Buyer and the charts and other measurement or testing data of
Buyer at all times during normal business hours of Buyer, but the reading,
calibration and adjustment of such equipment and changing of charts shall be
done only by Buyer.

 

4.4                               Gas
Measurement Computation Factors. The following measurement
factors shall be observed.

 

9

 

(a)                                  Buyer shall
determine the specific gravity of the Gas to the nearest one-thousandth (.001)
by calculation according to GPA Standard 2172. The specific gravity shall be
determined in conjunction with the determination of Gross Heating Value and
composition based on the Gas composition analysis.

 

(b)                                 Buyer shall
determine the total Gross Heating Value of the Gas, at base conditions, at each
Point of Delivery according to GPA Standard 2172.

 

(c)                                  Except as
provided below, the deviation of the Gas from Boyle’s Law shall be determined
from the AGA Transmission Measurement Committee Report No. 8, entitled “Compressibility
and Super Compressibility for Natural Gas and Other Hydrocarbon Gases,” (“Report
No. 8”) as amended from time to time, in conjunction with the
determination of Heating Value.

 

4.5                               Notice of
Meter and Equipment Tests. At least quarterly if
Seller’s Gas averages less than 1,000 MMBtu per Day, or Monthly if Seller’s Gas
averages more than 1,000 MMBtu per Day, Buyer shall give notice to Seller and
to the operator of the well of the time and location of all tests of Gas
delivered hereunder, or of any equipment used in measuring or determining the
nature or quality of the Gas, so that Seller may conveniently have its representative
present. As between Buyer and Seller, if Seller in the exercise of its
reasonable discretion is unsatisfied with any test, it shall so notify Buyer,
and Buyer shall perform retests as necessary to assure an accurate test. The
cost of a retest shall be borne by Seller if the difference between the
original test and the retest is equal to or less than one (1) percent. The
one (1) percent accuracy standard referred to in this Section 4.5 and
in Section 4.7 below shall mean the difference determined through testing
between the readings of the recording device of the measurement equipment being
tested and the readings of the recording device on the test instrument.

 

4.6                               Check
Meters and Non-Interference. Seller may, at its option
and expense, install and operate check meters to verify the accuracy of Buyer’s
primary measurement equipment, but Buyer shall measure Seller’s Gas with the
measurement equipment. Check meters shall be installed so as not to interfere
with the operation of the measurement equipment. The Parties shall exercise
care in the installation, maintenance, and operation of check measuring
equipment, pressure regulating equipment, and Gas compressors so as to prevent
any inaccuracy in the determination of the quantity or quality of Gas being
measured. Buyer may require installation of pulsation filters if unacceptable
square root error or gauge line error shift occurs. The Party responsible for
the source of unacceptable pulsation shall also be responsible for the
installation cost of remedial devices or filtering equipment to eliminate
pulsation. If the Parties disagree on the source of pulsation, the Parties
shall select a mutually agreeable consulting organization for the purposes of
resolving the disagreement. The Party responsible for the source of the
pulsation causing the square root error or gauge line error shift shall bear
the full costs associated with any consulting fees. In the event that the
determination by the consultant is inconclusive, the costs shall be borne
equally by the Parties.

 

4.7                              Adjustment
of Inaccuracies. Upon any test, if the percentage of inaccuracy of (i) an
electronic flow measurement is greater than one (1) percent, or (ii) a
chart-recorded meter is greater than two (2) percent, then the meter
registration shall be corrected for any period definitely known or agreed. If
the period of time is not definitely known or agreed upon, then the correction
shall be for a period extending back 1/2 of the time elapsed since the date of
the 

 

10

 

last
calibration. Buyer shall immediately restore as closely as possible to a
condition of accuracy any measurement equipment found inaccurate. If any
measurement equipment is out of service or out of repair for any reason so that
the amount of Gas delivered cannot be estimated or computed from the reading
thereof, the amount of Gas delivered through the meter during the period it is
out of service or out of repair shall be estimated and agreed upon by Buyer and
Seller upon the basis of the best data available using the first of the
following methods that is feasible:

 

(a)                                  by using the
registration of Seller’s check meter if installed and accurately registering;

 

(b)                                 by correcting
the error if the percentage of error is ascertainable by calibration, test, or
mathematical calculation; or

 

(c)                                  by estimating
the quantity of deliveries by comparison with deliveries during preceding
periods under similar conditions when the meter was registering accurately.

 

No
retroactive adjustment will be made for inaccuracies unless they exceed (i) one
(1) percent of affected volumes if measured by electronic flow
measurement, or (ii) two (2) percent of affected volumes if measured
by recording charts, but in no event shall any adjustment be made for inaccuracies
less than 100 Mcf per Month.

 

5.                                     OPERATING PROVISIONS

 

5.1                               Operational
Control. Buyer shall retain full operational control of the
Pipeline System and shall at all times be entitled to schedule deliveries and
to operate its facilities in a manner consistent with its obligations and with
operating conditions, inclusive of normal and routine maintenance, as they may
exist from time to time on the Pipeline System, and that will allow Buyer to
optimize the use of the Pipeline System now and in the future, consistent with
the terms of this Agreement. This right includes but is not limited to the
right to interrupt the receipt of Gas as necessary to test, alter, modify,
enlarge, maintain or repair any facility or property comprising a part of or an
appurtenance to the Pipeline System. Buyer shall not be required to add
compression to compress Seller’s Gas into the Pipeline System, lower its
Pipeline System operating pressure, alter the direction of Gas flow, alter
other operation or use of its facilities, or otherwise change its normal
operations to receive Seller’s Gas hereunder, except as specifically set forth
in this Agreement.

 

5.2                               Reservations
of Seller. Seller reserves the following rights:

 

(a)                                  To operate
Seller’s property free from any control by Buyer in such manner as Seller, in
Seller’s sole discretion, may deem advisable, including without limitation, the
right to drill new wells, to repair and rework old wells and to abandon any
well or surrender any lease or portion thereof.

 

(b)                                 To use gas
produced from the leases for drilling, gas-lifting, developing and operating
Seller’s leases subject hereto, for the operation of Seller’s pipelines, water
stations, compressors, camps and other miscellaneous uses incident to the
operation of Seller’s leases and to fulfill obligations to the lessor thereof,
or as to royalty obligations, if any.

 

11

 

(c)                                  To unitize any
of Seller’s leases with other properties of Seller and of others in which event
this Agreement will cover the interest owned or controlled by Seller in such
unit attributable to the leases and wells in the field. It is, however, agreed
and understood that in exercising such reserved and discretionary rights,
Seller will act as a reasonably prudent operator would act under the same or
similar circumstances.

 

5.3                               Rights-of-Way
and Access. Seller shall grant, and does hereby grant, to Buyer
the use of all requisite easements and rights-of-way, lease service rights, and
other rights of access, regardless of form, over, across, and under any land
where Seller has the right to grant use, and the right to perform there any
acts necessary or convenient in carrying out the terms of this Agreement and
Buyer’s obligations hereunder. Rights of access and use shall include but not
be limited to those under Seller’s or its suppliers’ mineral leases to
construct, operate, and maintain pipelines and appurtenant facilities for the
purpose of receiving Gas from the leaseholds. Any property of Buyer placed in
or upon any of the lease(s) or easement(s) shall remain the personal
property of Buyer, subject to removal by it at any time for any reason.

 

5.4                               Other
Pipeline Requirements. The Pipeline System is connected to the
facilities of other pipelines. As a result, Buyer may from time to time be
subject to certain requirements imposed by those pipelines. Buyer shall have
the right under this Agreement to require Seller to comply with the same third
party pipeline requirements with which Buyer must comply. SELLER AGREES TO INDEMNIFY, DEFEND, AND HOLD BUYER
HARMLESS FROM SELLER’S FAILURE TO COMPLY WITH THOSE REQUIREMENTS, PROVIDED
BUYER HAS PROVIDED SELLER REASONABLE NOTICE OF THE REQUIREMENTS.

 

6.                                     BILLING AND PAYMENT

 

6.1                               Statement. On or  before the 15th Day of each Month following
the Month of deliveries, Buyer shall mail or transmit electronically to Seller
its statement reflecting calculations of total quantities of Seller’s Gas,
expressed in Mcf and in MMBtu, measured and purchased during the previous
Month, amounts payable to Seller for Gas purchased, and any fees payable by
Seller and deducted from Seller’s payment under this Agreement for such Month.

 

6.2                               Payment. On or before
the last Day of each Month, Buyer shall make payment to Seller by check for the
amounts due to Seller as shown on its statement.

 

6.3                               Disputed
Statements. If Seller in good faith disputes any statement,
Seller shall, within the period for payment set out in Section 6.2, notify
Buyer in writing of the amounts in dispute. As soon thereafter as the Seller may
reasonably assemble documentation demonstrating the basis for the dispute,
Seller shall furnish such documentation to Buyer. Buyer shall have no
obligation to pay interest on the disputed amount until the dispute is
resolved. Any invoice tendered pursuant to this Section 6, or the
measurement data associated therewith, shall be contested, if at all, within
two (2) years from the date of the invoice; otherwise the statement shall
conclusively be deemed correct.

 

7.                                     INFORMATION AND AUDIT

 

7.1                               Information.
Seller will furnish Buyer upon request with copies of any and all forms
pertinent to this Agreement filed by Seller or its agent with any state or
federal regulatory agency covering Gas delivered under this Agreement.
Additionally, Buyer and Seller  shall  each preserve 
all  records applicable  to this 
Agreement,  including  all 
test  and 

 

12

 

measurement
data and charts, for a period of at least 24 Months following the end of each
calendar year, or such longer periods as shall be required under law or
regulation.

 

7.2                               Audit. Either Party,
upon notice in writing to the other Party and upon execution of a
confidentiality agreement with the other Party, shall have the right at
reasonable hours to audit the accounts and records relating to any invoice
under this Agreement within the 24 Month period following the date of such
invoice; provided however, that the auditing Party must make a claim in writing
to the other Party for all discrepancies disclosed by said audit within said 24
Months. Any audit shall be conducted by the auditing Party or its
representative at the auditing Party’s expense. Any invoices shall be final as
to all Parties unless questioned within 24 Months after the date of the
invoice.

 

8.                                      LIABILITY AND WARRANTIES

 

8.1                               Seller’s
Liability for Possession and Control of Gas. As between Seller and Buyer,
Seller shall be in control and possession of the Gas deliverable hereunder
until it is delivered at the Point(s) of Delivery. Seller shall be fully
responsible and liable for any and all Gas loss, damages, claims, actions,
expenses, liabilities, including reasonable attorney’s fees, injury to and
death of Persons, property damage claims, and penalties for environmental
damage, pollution, and contamination, caused or resulting from Seller’s Gas
while in its control and possession or Seller’s operation of its facilities. SELLER SHALL DEFEND, INDEMNIFY, AND HOLD BUYER
HARMLESS FROM AND AGAINST ANY AND ALL DAMAGES, CLAIMS, LOSSES, COSTS, EXPENSES
AND LIABILITIES RELATED TO THE MATTERS FOR WHICH SELLER IS RESPONSIBLE ABOVE,
AND FOR BUYER’S LOSSES, COSTS, DAMAGES, LIABILITIES AND EXPENSES, INCLUDING BUT
NOT LIMITED TO REASONABLE ATTORNEY’S FEES, RESULTING FROM SELLER’S GAS THAT
DOES NOT CONFORM TO THE QUALITY SPECIFICATIONS CONTAINED IN SECTION 2
HEREOF, REGARDLESS OF POSSESSION AND CONTROL.

 

8.2                               Buyer’s
Liability for Possession and Control of Gas. As between Buyer and Seller,
Buyer shall be in control and possession of the Gas after the time the Gas is
received at the Point(s) of Delivery. Buyer shall be fully responsible and
liable for any and all damages, claims, actions, expenses, liabilities,
including reasonable attorney’s fees, injury to and death of Persons, property
damage claims, and penalties for environmental damage, pollution, and
contamination caused or resulting from the operation of the Pipeline System or
Buyer’s handling of the Gas while in its control and possession. BUYER SHALL DEFEND, INDEMNIFY, AND HOLD SELLER
HARMLESS FROM AND AGAINST ANY AND ALL DAMAGES, CLAIMS, LOSSES, COSTS, EXPENSES
AND LIABILITIES RELATED TO THE MATTERS FOR WHICH BUYER IS RESPONSIBLE ABOVE,
EXCEPT FOR BUYER’S LOSSES, COSTS, DAMAGES, LIABILITIES AND EXPENSES RELATING TO
GAS RECEIVED FROM SELLER THAT DOES NOT CONFORM TO THE QUALITY
SPECIFICATIONS CONTAINED IN SECTION 2 HEREOF.

 

8.3                               Limitation
of Liability. Neither Party shall be  liable to the other for consequential damages, indirect
damages, loss of profits, punitive damages nor other similar damages.

 

8.4                               Warranty of
Title. Seller warrants that it has good, merchantable title to all Gas
delivered by it hereunder, that it has the right to deliver such Gas, free and
clear of all liens, encumbrances and claims whatsoever. Title to Seller’s Gas
shall transfer from Seller to Buyer at the Point(s) of Delivery. SELLER SHALL INDEMNIFY, SAVE, AND HOLD BUYER, ITS
SUBSIDIARIES AND AFFILIATES, AND ITS 
DIRECTORS, OFFICERS, EMPLOYEES,

 

13

 

AND AGENTS, FREE AND HARMLESS FROM ALL SUITS, ACTIONS, DEBTS,
ACCOUNTS, DAMAGES, COSTS, LOSSES, EXPENSES AND LIABILITIES, INCLUDING BUT NOT
LIMITED TO REASONABLE ATTORNEY’S FEES, ARISING FROM OR OUT OF A BREACH OF THE
WARRANTIES CONTAINED IN THIS SECTION 8.4.

 

8.5                               Ownership
Payments. Seller shall be responsible and liable for any and
all payments to working, royalty and other interest owners with respect to the
Gas delivered hereunder. BUYER SHALL
NOT HAVE ANY RESPONSIBILITY OR LIABILITY FOR
ANY PAYMENTS TO INTEREST OWNERS RELATIVE TO SELLER’S GAS, AND SELLER SHALL
DEFEND, INDEMNIFY, AND HOLD BUYER HARMLESS FROM AND AGAINST ANY AND ALL SUCH
PAYMENTS, AND ANY RELATED COSTS AND LIABILITIES.

 

8.6                               Adverse
Claims. IN THE EVENT ANY ADVERSE CLAIM IS ASSERTED WITH RESPECT TO ANY OF SAID
GAS, BUYER MAY WITHHOLD THE PURCHASE PRICE THEREOF UP TO THE AMOUNT OF AND
FROM THE DATE OF SUCH CLAIM WITHOUT INTEREST UNTIL SUCH CLAIM HAS BEEN FINALLY
DETERMINED OR UNTIL SELLER FURNISHES BUYER A BOND, IN FORM AND WITH
SURETIES REASONABLY ACCEPTABLE TO BUYER, CONDITIONED TO HOLD BUYER HARMLESS
FROM ANY SUCH CLAIMS.

 

8.7                               Seller’s
Security Interest. Nothing in this Agreement shall operate to waive,
release or otherwise limit the rights of Seller to the security interest
provided to Seller under Section 9.343 of the Texas Uniform Commercial
Code, which rights are expressly reserved by Seller.

 

9.                                     FORCE MAJEURE

 

In
the event either Party is rendered unable, wholly or in part, by force majeure
to carry out its obligations under this Agreement, other than to make payments
when due hereunder, it is agreed that upon such Party giving notice and
reasonably full particulars of such force majeure in writing or by electronic
means to the other Party within a reasonable time after the occurrence of the
cause relied on, then the obligations of the Party giving such notice, so far
as they are affected by such force majeure, shall be suspended during the
continuance of any inability so caused, but for no longer period, and such
cause shall be remedied so far as possible with all reasonable dispatch if
economically justifiable. The term “force majeure” as employed herein and for
all purposes relating hereto shall mean acts of God, strikes, lockouts or other
industrial disturbances, acts of the public enemy, acts of terrorism, wars,
blockades, insurrections, riots, epidemics, landslides, lightning, earthquake,
fires, storms, hurricane warnings, crevasses, floods, washouts, arrests and
restraints of government and people, civil disturbance, explosions, breakage or
accident to machinery or lines of pipe, the necessity for making repairs or
alterations to machinery or lines of pipe, freezing of wells or lines of pipe,
partial or entire failure of wells, inability of any party hereto to obtain
necessary materials, supplies, or permits due to existing or future rules,
regulations, orders, laws or proclamations of governmental authorities (both
federal and state), including both civil and military, any failure by third
parties to deliver Seller’s Gas to Buyer’s facilities or thereafter to
transport Gas received from Buyer, and any other causes of a similar nature
whether of the kind herein enumerated or otherwise, not within the control of
the party claiming suspension and which by the exercise of due diligence such
party is unable to prevent or overcome. The term Force Majeure shall also
include (a) the inability of such party to acquire, or the delays on the
part of such party in acquiring, at reasonable cost and after the exercise of
due diligence, any necessary servitudes, right-of-way grants, permits or licenses,
and (b)  the  inability  of each 
party to  acquire,  or the 
delays  of such  party 
in  acquiring  at 
reasonable cost and after

 

14

 

the
exercise of due diligence, any necessary materials and supplies, permits and
permissions. Notwithstanding anything to the contrary herein, the Parties agree
that settlement of strikes, lockouts, and other industrial disturbances shall
be within the sole discretion of the Party experiencing such disturbance.

 

10.                              CONFIDENTIALITY

 

During
the Primary Term and any extension thereof, the provisions of this Agreement
including, but not limited to, the MDQ and the price payable by Buyer to
Seller, shall not be disclosed to any third party (excluding the affiliates of
the parties) without the prior written consent of the other Party, which
consent shall not be unreasonably withheld, except to the extent disclosure is
required by laws, rules, regulations or orders of any governmental or
regulatory authority. A CONFIDENTIALITY
PROVISION CAN NOT BE UNILATERALLY REQUIRED IN A GAS SALE, TRANSPORTATION OR
GATHERING AGREEMENT TO WHICH A PRODUCER IS A PARTY AND THIS SECTION 10
WILL NOT BECOME A PART OF THIS AGREEMENT UNLESS SELLER’S AUTHORIZED
REPRESENTATIVE HAS INITIALED THE LINE MARKED “YES, SECTION 10,
CONFIDENTIALITY, IS INCLUDED IN THIS AGREEMENT,” PROVIDED UNDER SELLER’S
SIGNATURE BLOCK.

 

11.                              TAXES

 

11.1                        Tax
Responsibility. Seller shall bear sole responsibility and liability
for payment of all municipal, tribal, state, and federal taxes and charges (and
penalties and interest thereon) applicable to Seller’s Gas or to Buyer as the
result of purchasing Seller’s Gas hereunder, as such taxes are or may in the
future be constituted, including, but not limited to, any energy or Btu taxes,
but excluding ad valorem, franchise, and income taxes of Buyer. If Buyer is
required to pay any municipal, tribal, state, or federal taxes, fees, or
charges (or penalties or interest thereon) relative to Seller’s Gas or as the
result of purchasing Gas hereunder, Seller shall reimburse Buyer therefor, in
addition to the other rates and charges provided for herein.

 

11.2                        Limitation
on  Tax Responsibility. Neither
Party shall be responsible or liable for the other Party’s income taxes or for
any taxes or other statutory charges levied or assessed against any of the
facilities of the other Party used for the purpose of carrying out the
provisions of this Agreement.

 

12.                              LAWS AND
REGULATIONS

 

This
Agreement is subject to all valid legislation and all valid present or future
laws, orders, rules, and regulations of duly constituted authorities now or
hereafter having jurisdiction or control over the Parties, the services
contemplated herein, or the facilities used to provide those services. Each of
Seller and Buyer warrants to the other that, at the time of any Gas purchase
transaction, it will have all requisite authority under applicable statutes and
regulations to conduct such transaction. Each of Seller and Buyer shall
indemnify the other against any damages or costs, including attorneys’ fees,
incurred as a result of any breach by it of this provision.

 

13.                              MISCELLANEOUS

 

13.1                        Waiver. A waiver by
either Party of any one or more defaults by the other Party hereunder shall not
operate as a waiver of any future default or defaults, whether of a like or of
a different character.

 

15

 

13.2                        Governing
Law. THIS AGREEMENT SHALL BE INTERPRETED, CONSTRUED, AND GOVERNED BY THE LAWS
OF THE STATE OF TEXAS, WITHOUT REFERENCE TO THOSE THAT MIGHT REFER TO THE LAW
OF ANOTHER JURISDICTION.

 

13.3                        Counterparts.
This Agreement may be executed in multiple counterparts, each of which
when so executed and delivered shall be an original, and the counterparts
together shall constitute one instrument.

 

13.4                        Assignment.
Either Party may assign this Agreement, but no assignment shall relieve
either Party of its obligations under to this Agreement without the written
consent of the other Party, which consent shall not be unreasonably withheld. Notwithstanding
the foregoing sentence, nothing contained in this Paragraph shall in any way
prevent either party from pledging or mortgaging its rights hereunder for
security of indebtedness.

 

13.5                        Third Party
Beneficiaries. This Agreement is intended to be for the sole
benefit of Buyer and Seller, and there are no third party beneficiaries to this
Agreement. No third party shall have any right to enforce the terms of this
Agreement against Buyer or Seller.

 

13.6                        Severability. Should any
section, paragraph, subparagraph, or other portion of this Agreement be found
invalid or be required to be modified as a matter of law by a court or
government agency, then only that portion of this Agreement shall be invalid or
modified. The remainder of this Agreement that is still valid and unaffected
shall remain in force. If the absence of the part that is held to be invalid,
illegal, or unenforceable, or modification of the part required to be modified,
substantially deprives a Party of material economic benefits under this
Agreement, the Parties shall negotiate in good faith reasonable and valid
provisions to restore the economic benefit to the affected Party.

 

13.7                        Entire
Agreement. This Agreement contains the entire agreement of
Buyer and Seller with respect to the matters addressed herein, and shall be
amended only by an instrument in writing signed by both Parties. Amendments by
electronic media are prohibited, but this Agreement when executed, and signed
amendments to it, may be delivered via facsimile. This Agreement shall be
considered for all purposes as prepared through the joint efforts of the
Parties, and shall not be construed against one Party or the other as a result
of its preparation, submittal, or other event or negotiation, drafting, or
execution.

 

END OF EXHIBIT “A”

 

16

 

EXHIBIT “B”

 

to Gas Purchase and Sales Agreement dated February 1,
2009, between

Copano Energy Services/Upper Gulf Coast, L.P. and

Evolution Operating Co., Inc.

(the “Agreement”)

 

DEDICATION

 

Pearson #1RE Well located in Grimes County, Texas.

 

POINT(S) OF DELIVERY

 

Copano Meter #SH2-10122 located in Grimes County, Texas.

 

END OF EXHIBIT “B”

 

17EXHIBIT 4.1

 

AMENDED AND RESTATED

DISTRIBUTION REINVESTMENT PLAN

OF

BEHRINGER HARVARD REIT I, INC.

 

Behringer Harvard REIT I, Inc.,
a Maryland corporation (the “Company”), has adopted this amended and restated distribution
reinvestment plan, effective as of May 14, 2009 (the “Plan”), administered
by the Company or an unaffiliated third-party (the “Administrator”), as agent
for participants in the Plan (“Participants”), on the terms and conditions set
forth below.

 

1.                                       Election to Participate. Subject to the terms hereof, any
purchaser of shares of common stock of the Company, par value $.0001 per share
(the “Shares”), may become a Participant by making a written election to
participate on the purchaser’s subscription agreement at the time of
subscription for Shares. Any stockholder who has not previously elected to
participate in the Plan may so elect at any time by completing and executing an
authorization form obtained from the Administrator or any other appropriate
documentation as may be required by the Administrator. Participants generally
are required to have the full amount of their cash distributions (other than “Designated
Special Distributions” as defined below) with respect to all Shares owned by
them reinvested pursuant to the Plan. However, the Administrator shall have the
sole discretion, upon the request of a Participant, to accommodate a
Participant’s request for less than all of the Participant’s Shares to be
subject to participation in the Plan.

 

2.                                       Distribution Reinvestment Plan. The Administrator will receive all cash
distributions (other than “Designated Special Distributions” as defined below)
paid by the Company with respect to Shares of Participants (collectively, the “Distributions”).
Participation will commence with the next Distribution payable after receipt of
the Participant’s election pursuant to Paragraph 1 hereof, provided it is
received at least ten days prior to the last day of the month to which the
Distribution relates. Subject to the preceding sentence, regardless of the date
of the election, a holder of Shares will become a Participant in the Plan
effective on the first day of the month following the election, and the
election will apply to all Distributions attributable to the month and to all
months thereafter. As used in this Plan, the term “Designated Special
Distributions” shall mean those cash or other distributions designated as
Designated Special Distributions by the board of directors of the Company (the “Board”).

 

3.                                       General Terms of Plan Investments. The Administrator will apply all
Distributions subject to this Plan, as follows:

 

(a)                                  Prior to the termination of the Company’s
public offering of the Shares reserved for issuance under the Plan pursuant to
the Company’s prospectus dated January 5, 2009, as thereafter amended or
supplemented (the “DRP Offering”), the Administrator will invest Distributions
in Shares at a price equal to 95% of the most recently disclosed estimated
value per Share (the “Valuation”) as determined in accordance with our
valuation policy (the “Valuation Policy”), as such Valuation Policy is amended
from time to time, regardless of the price per Share paid by the Participant
for the Shares in respect of which the Distributions are paid.  The Valuation Policy in effect as of the
effective date of this Plan is attached hereto as Exhibit A.

 

(b)                                 After termination of the DRP Offering,
the Administrator will invest Distributions in Shares that may (but are not
required to) be supplied from either (1) Shares registered with the
Securities and Exchange Commission (the “Commission”) pursuant to an effective
registration statement for Shares for use in the Plan (a “Future Registration”)
or (2) Shares purchased by the Administrator for the Plan in a secondary
market (if available) or on a national stock exchange (if listed)
(collectively, the “Secondary Market”) and registered with the Commission for
resale pursuant to the Plan.  Shares
registered in a Future Registration that are not purchased by the Administrator
in the Secondary Market will be issued at a price equal to 95% of the most
recently disclosed Valuation.  Shares
purchased on the Secondary Market as set forth in (2) above will be
purchased at the then-prevailing market price, and the average price paid by
the Administrator for all purchases for a single Distribution will be utilized
for purposes of determining the purchase price for Shares purchased under the
Plan on the investment date; however, in no event will the purchase price for
Shares purchased under the Plan be less than 95% of the market price for Shares
on the investment date. Shares acquired by the Administrator on the Secondary
Market or registered in a Future Registration for use in the Plan may be at
prices lower or higher than the per Share price that will be paid for the
Shares purchased for the Plan pursuant to the DRP Offering and any subsequent 

 

 

offering. If the
Administrator acquires Shares in the Secondary Market for use in the Plan, the
Administrator shall use reasonable efforts to acquire Shares for use in the
Plan at the lowest price then reasonably available. However, the Administrator
does not in any respect guaranty or warrant that the Shares so acquired and
purchased by the Participants in the Plan will be at the lowest possible price.
Further, irrespective of the Administrator’s ability to acquire Shares in the
Secondary Market or the Company’s ability to complete a Future Registration for
shares to be used in the Plan, neither the Administrator nor the Company is in
any way obligated to do either.

 

(c)                                  Regardless of the pricing determined
pursuant to Paragraphs 3(a) and 3(b) above, the Board may determine,
from time to time, in its sole discretion, the price at which the Administrator
will invest Distributions in Shares; provided that if the Board takes such
action under this Paragraph 3(c), the Company shall deliver a notice regarding
the new price to each Participant at least 30 days prior to the effective date
of the new price.  No advance notice of
pricing pursuant to Paragraphs (a) or (b) above shall be required.

 

(d)                                 No selling commission or dealer manager
fee will be paid for Shares purchased pursuant to the Plan.

 

(e)                                  For each Participant, the Administrator
will maintain an account that shall reflect for each month the Distributions
received by the Administrator on behalf of the Participant. A Participant’s
account shall be reduced as purchases of Shares are made on behalf of the
Participant.

 

(f)                                    Distributions shall be invested in Shares
by the Administrator promptly following the payment date with respect to the Distributions
to the extent Shares are available for purchase under the Plan. If sufficient
Shares are not available, any funds that have not been invested in Shares
within 30 days after receipt by the Administrator will be distributed to the
Participants. Any interest earned on the accounts will be paid to the Company
and is and will become the property of the Company.

 

(g)                                 Fractional Shares, computed to four
decimal places, shall be purchased for each Participant account, if applicable.
The ownership of the Shares shall be reflected on the books of the Company or
its transfer agent.

 

4.                                       Distribution of Funds. In making purchases for Participants’
accounts, the Administrator may commingle Distributions attributable to Shares
owned by Participants and any additional payments received from Participants in
respect of the purchase of Shares.

 

5.                                       Absence of Liability. Neither the Company nor the
Administrator shall have any responsibility or liability as to the value of the
Shares, any change in the value of the Shares acquired for the Participant’s
account, or the rate of return earned on, or the value of, the interest-bearing
accounts in which Distributions are invested. Neither the Company nor the
Administrator shall be liable for any act done in good faith, or for any good
faith omission to act, including, without limitation, any claims of liability (a) arising
out of the failure to terminate a Participant’s participation in the Plan upon
the Participant’s death prior to receipt of notice in writing of the death and
the expiration of ten days from the date of receipt of the notice and (b) with
respect to the time and the prices at which Shares are purchased for a
Participant.

 

6.                                       Suitability.

 

(a)                                  Each Participant shall notify the
Administrator in the event that, at any time during his participation in the
Plan, there is any material change in the Participant’s financial condition or
inaccuracy of any representation under the Subscription Agreement for the
Participant’s initial purchase of Shares.

 

(b)                                 For purposes of this Paragraph 6, a
material change shall include any anticipated or actual decrease in net worth
or annual gross income or any other change in circumstances that would cause
the Participant to fail to meet the suitability standards set forth in the Company’s
prospectus for the Participant’s initial purchase of Shares.

 

7.                                       Reports to Participants. Within 60 days after the end of each
fiscal quarter, the Administrator will deliver to each Participant a statement
of account describing, as to the Participant, the Distributions received during
the

 

2

 

quarter, the number of
Shares purchased during the quarter and the calendar year pursuant to the Plan,
and the per Share purchase price for the Shares. Each statement shall also
advise the Participant that, in accordance with Paragraph 6(a) hereof, the
Participant is required to notify the Administrator in the event that there is
any material change in the Participant’s financial condition or if any
representation made by the Participant under the subscription agreement for the
Participant’s initial purchase of Shares becomes inaccurate. Tax information
regarding a Participant’s participation in the Plan will be sent to each
Participant by the Company or the Administrator at least annually.

 

8.                                       No Drawing. No Participant shall have any right to
draw checks or drafts against the Participant’s account or give instructions to
the Company or the Administrator except as expressly provided herein.

 

9.                                       Taxes. Taxable Participants may incur a tax liability for
Company Distributions even though they have elected not to receive their
Distributions in cash but rather to have their Distributions held in their
account under the Plan.

 

10.                                 Termination.

 

(a)                                  A Participant may terminate or modify his
participation in the Plan at any time by written notice mailed to the
Administrator. To be effective for any Distribution, the notice must be
received by the Administrator at least ten days prior to the last day of the
month to which the Distribution relates.

 

(b)                                 Prior to the listing of the Shares on a
national stock exchange, a Participant’s transfer of Shares will terminate
participation in the Plan with respect to the transferred Shares as of the
first day of the month in which the transfer is effective, unless the
transferee of the Shares in connection with the transfer demonstrates to the
Administrator that the transferee meets the requirements for participation
hereunder and affirmatively elects participation by delivering an executed
authorization form or other instrument required by the Administrator.

 

(c)                                  The Administrator may terminate a
Participant’s individual participation in the Plan, and the Company may suspend
or terminate the Plan itself, at any time by ten days’ prior written notice to
a Participant, or to all Participants, as the case may be.

 

(d)                                 After termination of the Plan or
termination of a Participant’s participation in the Plan, the Administrator
will send to each Participant (1) a statement of account in accordance
with Paragraph 7 hereof, and (2) a check for the amount of any
Distributions in the Participant’s account that have not been invested in
Shares. Any future Distributions with respect to the former Participant’s
Shares made after the effective date of the termination of the Participant’s
participation in the Plan will be sent directly to the former Participant or to
the other party as the Participant has designated pursuant to an authorization
form or other documentation satisfactory to the Administrator.

 

11.                                 State Regulatory Restrictions. The Administrator is authorized to deny
participation in the Plan to residents of any state that imposes restrictions
on participation in the Plan that conflict with the general terms and
provisions of this Plan.

 

12.                                 Notice. Any notice or other communication required or
permitted to be given by any provision of this Plan shall be in writing and, if
to the Administrator, addressed to Behringer Harvard Investment Services, P.O. Box
219768, Kansas City, MO 64121-9768, or any other address as may be specified by
the Administrator by written notice to all Participants. Notices to a
Participant may be given by letter addressed to the Participant at the
Participant’s last address of record with the Administrator or delivered by
electronic means to any address specified by the Participant. Each Participant
shall notify the Administrator promptly in writing of any change of address.

 

13.                                 Amendment. The terms and conditions of this Plan may be amended
or supplemented by the Company at any time, including but not limited to an
amendment to the Plan to substitute a new Administrator to act as agent for the
Participants, by delivering an appropriate notice to each Participant at least
30 days prior to the effective date of the amendment or supplement. The
amendment or supplement shall be deemed conclusively accepted by each
Participant except those Participants from whom the Administrator receives
written notice of termination prior to the effective date thereof.

 

3

 

In the event that the
Plan is amended pursuant to this Paragraph 13 or suspended pursuant to
Paragraph 10(c) hereof, each Participant shall remain a Participant in the
Plan receiving cash distributions during such period that the Plan is suspended
or the Shares cannot otherwise be distributed hereunder, unless the Participant
terminates his participation in accordance with the procedures set forth under
Paragraph 10(a) above.   Once such suspension or other inability to
distribute Shares hereunder ceases, the Participant will then receive Shares
hereunder.

 

14.                                 Governing Law. THIS PLAN AND
PARTICIPANT’S ELECTION TO PARTICIPATE IN THE PLAN SHALL BE GOVERNED BY THE LAWS
OF THE STATE OF MARYLAND.

 

4

 

EXHIBIT A

 

POLICY
FOR ESTIMATION OF COMMON STOCK VALUE

OF

BEHRINGER
HARVARD REIT I, INC.

 

In order to assist
fiduciaries in discharging their obligations under ERISA reporting requirements
and to assist broker-dealers in connection with their obligations under
applicable FINRA Rules with respect to customer account statements,
Behringer Harvard REIT I, Inc. (the “Company”) has adopted this policy in
respect of estimating the per share value of its common stock (the “Common
Stock”) as of May 14, 2009.  This
policy may be amended by the Board of Directors of the Company (the “Board”) at
any time in its sole discretion.  In
addition, although this policy expresses the intent of the Board at the time of
its adoption, there is no limitation on the ability of the Board to cause the
Company to vary from this policy to the extent it deems appropriate, with or
without an express amendment of this policy.

 

The Company shall provide
its stockholders a per share estimated value of its common stock on a periodic
basis, generally annually.  Until 18
months have passed without a sale in an offering of the Common Stock (or other
securities from which the Board believes the value of a share of common stock
can be estimated), the Company shall use the gross offering price of a share of
the Common Stock in its most recent offering as the per share estimated value
thereof or, with respect to an offering of other securities from which the
value of a share of Common Stock can be estimated, the Company shall use the
value derived from the gross offering price of such other security as the per
share estimated value of the Common Stock. 
For purposes of the foregoing, an offering shall not include an offering
related to a distribution reinvestment plan, employee benefit plan or the
redemption of interests in the Company’s operating partnership.

 

No later than 18 months
after the last sale in an offering of the securities described above, the
Company shall disclose an estimated per share value that is not based solely on
the offering price of securities in the most recent offering.  This estimate shall be determined by the
Board, or a committee thereof, after consultation with Behringer Advisors, LLC
(the “Advisor”), or if the Company shall no longer be administered by the
Advisor, the Company’s officers and employees. 
The Advisor or the Company may engage such experts and third parties as
it may deem appropriate.  If a committee
of the Board of Directors estimates the value, a majority of the voting members
of the committee will be independent directors; however, the committee may also
include officers or employees of the Company, the Advisor or the Advisor’s
affiliates.

 

If the Company has sold
assets and made distributions to stockholders of net proceeds from such sales
since the termination of the most recent offering, the estimated value per
share shall generally be net of the amount of those distributions.

 

The Board or committee
thereof will have the discretion to choose a methodology or combination of
methodologies as it deems reasonable under then current circumstances for
estimating the per share value of the Common Stock.  These methodologies may take account numerous
factors including, without limitation, the following:

 

·                  net
amounts that might be realized in a sale of the Company’s assets in an orderly
liquidation;

 

·                  net
amounts that might be realized in a bulk portfolio sale of the Company’s
assets;

 

·                  separate
valuations of the Company’s assets;

 

·                  private
real estate market conditions;

 

·                  public
real estate market conditions;

 

·                  the
business plan of the Company and characteristics and factors specific to the
portfolio or securities;

 

A-1

 

·                  the
prices at which the Company’s securities were sold in other offerings, such as
a distribution reinvestment plan offering;

 

·                  the
prices paid for Company securities in other transactions, including secondary
market trades;

 

·                  the
relative prices paid for comparable companies listed on a national securities
exchange; and

 

·                  the
Company’s going concern value.

 

The Board may rely on the
Advisor or a third-party valuation expert to assist in estimating the value of
the Company’s assets or its shares of Common Stock.  However, with respect to asset valuations,
the Board shall not be required to obtain asset-by-asset appraisals prepared by
appraisers certified by a Member of the Appraisal Institute or other trade
organization that monitors appraisers, nor must any appraisals conform to formats
or standards promulgated by any such trade organization.  The Company shall disclose the effective date
of the estimated valuation.  The Company
shall not release individual property value estimates or any of the data
supporting the estimated per share value, and the Board is under no obligation
to describe the factors on which it relied or the methodologies utilized in
estimating the estimated value of a share of Common Stock.

 

After first
publishing an estimate by the Board within 18 months after an offering as
described above, the Company shall repeat the process of estimating share value
of the Common Stock periodically thereafter. 
However, if deemed appropriate by the Board, the Company may return to
the publication of an estimated value based solely on the offering price of a
share of Common Stock or other securities if the Company has conducted another
offering within 18 months of the disclosure of an estimated per share
value.  The Company shall provide this
information in its annual report on Form 10-K.  The Company may also disseminate this
information by a posting on the web site maintained for the Company and the
Advisor and its affiliates at www.behringerharvard.com
or by other means.

 

Estimates based solely on
an offering price will be subject to numerous limitations.  For example, such estimates will not take
into account:

 

·                  individual or aggregate values of the Company’s
assets;

 

·                  real estate market fluctuations affecting the Company’s
assets generally;

 

·                  adverse or beneficial developments with respect to one
or more assets in the Company’s portfolio;

 

·                  the Company’s costs of the offering; or

 

·                  the Company’s costs of acquiring assets.

 

After the estimated value hereunder is based on
factors in addition to the most recent offering price of a share of Common
Stock or other security, the estimated value will not reflect developments that
occur after the most recent estimated valuation date.  Further, such valuations will be estimates
only and may be based upon a number of estimates, assumptions and opinions that
may not be or may later prove not to be accurate or complete, which could make
the estimated valuations incorrect.

 

With respect to any
estimate of the value of Common Stock made pursuant to this policy, there can
be no assurance that:

 

·                  the
estimated value per share would actually be realized by the Company’s
stockholders upon liquidation, bulk portfolio sales of the Company’s assets,
sale of the Company or listing of the Common Stock on an exchange;

 

·                  any
stockholder of the Company would be able to realize estimated share values in
any attempt to sell shares;

 

A-2

 

·                  the
estimated value per share would be related to any individual or aggregated
value estimates or appraisals of the Company’s assets; or

 

·                  the
estimated value, or method used to estimate value, would be found by any
regulatory authority to comply with the ERISA, FINRA or other regulatory
requirements.

 

A-3

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