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AGREEMENT NO.: 2006-07234-00-00

ACCT. NO._______________________

UNIVERSITY OF ILLINOIS

SPONSORED RESEARCH AGREEMENT

WITH

SUNGEN ENERGY, INC. 

This Agreement is made, effective as of  the date of last signature below (hereafter, “Effective Date”), between The Board of Trustees of the University of Illinois (hereafter  “Illinois”), a body politic and corporate of the State of Illinois, doing business on its Urbana-Champaign campus through the Office of Sponsored Programs and Research Administration, 1901 South First Street, Suite-A, Champaign IL 61820-7406 and Sungen Energy, Inc., a corporation organized and existing under the laws of the State of Nevada, with principal offices at Suite 123, 1628 West 1st Avenue, Vancouver, BC, V6J 1G1 (hereafter  “Company”).

WHEREAS, Illinois and Company desire to enter into this Agreement pertaining to a sponsored research project; and

WHEREAS, such research project is of mutual interest and benefit to Illinois and Company and will further the teaching, research and public service objectives of Illinois in a manner consistent with its status as a public educational institution;

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

1.0

RESEARCH PROJECT 

1.1

Statement of Work.  Illinois will, with the funds made available by Company, furnish the personnel, materials, services, facilities, and equipment for the conduct of the work described as “Power NanoWindows” (hereafter “Research Project”, and further described in Exhibit A attached and incorporated herein).  Any change to the Research Project, including the identity of the Principal Investigator(s), as specified in Section 1.2, will be made effective only by written amendment to this Agreement in accordance with Section 11.3.

1.2 

Principal Investigator.  The Principal Investigator assigned by Illinois for directing the performance of the Research Project is Dr. Munir Nayfeh.  If, for any reason, the Principal Investigator becomes unavailable, Illinois will notify Company.  If a mutually acceptable successor is not identified, this Agreement may be terminated by either party in accordance with Article 9.0 (Termination). 

1.3

Period of Performance.  The period of performance of the Research Project will be from August 23, 2006 to August 22, 2008 (hereafter “Period of Performance”).  Company and Illinois may elect to extend the Period of Performance under the same terms and conditions or such other terms and conditions as may be mutually agreed to by written amendment to this Agreement in accordance with Section 11.3.

2.0

COST OF RESEARCH

2.1  

Payment.  Company agrees to pay Illinois the fixed sum of $219,201 (U.S.) for the performance of the Research Project.  The budget will be designed to provide funds to reimburse Illinois’ direct costs and facilities and administrative (indirect) costs of conducting the Research Project.  Facilities and administrative costs will be assessed at the applicable rate(s) in effect for the Period of Performance.  Illinois will endeavor to perform the Research Project within the funding provided by Company; however, Illinois is not obligated to expend any other funds on the Research Project, and Company is not obligated to pay Illinois in excess of the stated amount.  Payments are to be made in accordance with the following schedule:

Payment #

Due Date

      Amount

     1

Upon execution of this Agreement

$2,000

2

1 month after the Effective Date of this Agreement

$27,150.12

3

4 months after the Effective Date of this Agreement

$27,150.12

4

7 months after the Effective Date of this Agreement

$27,150.12

5

10 months after the Effective Date of this Agreement

$27,150.12

6

13 months after the Effective Date of this Agreement

$27,150.13

7

16 months after the Effective Date of this Agreement

$27,150.13

8

19 months after the Effective Date of this Agreement

$27,150.13

9

23 months after the Effective Date of this Agreement

$27,150.13

____________

                                                                  

                                                                       TOTAL

$219,201

2.2

Remittance.  Payments due from Company will reference this Agreement, will be in U.S. currency, will be due and payable on the dates listed above, and will be remitted through one of the following payment options.  Company will provide written notice to 

Illinois, to the address specified in Article 10.0 (Notices), if Company requires an invoice from Illinois in order to generate required payments.

OPTION A -- By check:  Payments remitted by check will be payable to the "University of Illinois" and mailed to:

    

University of Illinois (Payee)

                

University of Illinois at Urbana-Champaign-Grants & Contracts

P.O. Box 4610

Springfield, IL  62708-4610

U.S.A.

OPTION B -- By ACH (Automated Clearing House):   Payments remitted by ACH will be sent to Illinois’ bank account as specified below:

Financial Institution:

J.P Morgan Chase Bank N.A.

Address:

East Old State Capitol Plaza

P.O. Box 19266

Springfield, Illinois 62794-9266  USA

Nine Digit Routing

Transit Number:

071000013

Depositor Account Title:

The Board of Trustees of the University of

Illinois EDI Receipts and Federal 

Depository

Depositor Account Number:

616002911

Type of Account:

Checking

2.3 

Fiscal Management.  Illinois will maintain complete and accurate accounting records in accordance with accepted accounting practices for institutions of higher education.  These records will be available for inspection, review and audit at reasonable times by Company, or its duly authorized representative, at Company's expense, for three (3) years following the end of Illinois' fiscal year (July 1 - June 30) in which such costs are incurred.

2.4 

Equipment / Supplies.  Title to equipment, supplies and all other items purchased with funds provided by Company will remain with Illinois.

3.0  

REPORTS 

3.1

Reports.  Illinois, through the Principal Investigator, will furnish technical reports summarizing the work performed under the Research Project and the results thereof according to the following schedule:

Every 30 days or at such other times, to be agreed to by Company and Principal Investigator.

4.0  

USE OF NAMES

4.1

Use of Names.  Neither party will use the name of the other in any form of advertising or publicity without the express written permission of the other party.  Public announcements pertaining to the Research Project or other uses of Illinois’ name should be submitted for approval to the Associate Chancellor for Public Affairs, University of Illinois, Third Floor Swanlund Administration Building, 601 East John Street, Champaign, IL 61820; fax (217) 244-7124. Illinois acknowledges that Company is a wholly-owned subsidiary of a corporation having a reporting obligation under the Securities Exchange Act of 1934, as amended, which has or may have certain disclosure and filing obligations under applicable law, including but not limited to the public announcement and disclosure of this Agreement and the filing of the same with the United States Securities and Exchange Commission; it is acknowledged and agreed that such disclosure and filing shall not be deemed a violation of this Agreement.

5.0  

CONFIDENTIAL INFORMATION

5.1  

Definition.  Illinois and Company agree that, for purposes of the Research Project, it may be necessary for certain personnel of either party who are performing work on the Research Project to have access to information of the other party which is considered to be proprietary and confidential (hereafter, “Confidential Information”).  Prior to Company disclosing its Confidential Information to Illinois personnel, Company will provide written notice to Illinois, in accordance with Article 10.0 (Notices), so that Illinois can implement the terms of Section 5.4.

5.2

Retention.  Unless otherwise expressly authorized by the disclosing party, the recipient of any Confidential Information agrees to retain Confidential Information in confidence for the duration of this Agreement and for a period of one (1) year thereafter, or until it no longer qualifies for such protection as specified at Section 5.3, whichever is shorter.  During such period the recipient will use reasonable efforts to not disclose Confidential Information to any third party, and will not use Confidential Information for any purpose other than as required under this Agreement.

5.3

Identification.  Confidential Information will be marked “confidential” at the time of disclosure by the disclosing party or if disclosed orally or visually and identified as confidential at the time of disclosure, summarized in writing and marked “confidential” 

within thirty (30) days after initial disclosure.  Recipient will not have any obligation of confidentiality with respect to any Confidential Information that:  

(a) 

Was in recipient’s possession on a non-confidential basis prior to receipt from disclosing party; or

(b) 

Is in the public domain or is general or public knowledge prior to disclosure, or after disclosure hereunder, enters the public domain or becomes general or public knowledge through no fault of recipient; or

© 

Is properly obtained by recipient from a third party not under a confidentiality obligation to disclosing party; or

(d) 

Is explicitly approved for release by written authorization of disclosing party; or

(e) 

Is or has been developed by recipient independent of recipient’s access to disclosing party’s Confidential Information; or

(f) 

Is required by law or court order to be disclosed.  In the event Illinois receives a request under the State of Illinois or U.S. Freedom of Information Acts or in response to any other court or Government order requiring disclosure, Illinois will use reasonable efforts to promptly provide notice to Company.  To the extent permitted by applicable law, Illinois will cooperate with Company to protect any Company Confidential Information. 

5.4

Illinois Implementation.  Illinois will implement its confidentiality obligations by using reasonable efforts in requiring the Principal Investigator and those Illinois employees and students identified by the Principal Investigator as needing access to Company’s Confidential Information to acknowledge their understanding and acceptance of the terms of this Agreement as a condition of such access.   

6.0 

PUBLICATION

6.1  

Company Review.  Illinois and its researchers will have the right to publish or otherwise disclose the results of Research Project.  Illinois, through the Principal Investigator, will furnish Company a copy of any proposed manuscript or presentation materials which incorporates information or results from the Research Project at least thirty (30) days prior to any submission for publication or public disclosure.

6.2

Confidential Information.  Company will review the manuscript or presentation materials and if Company believes that the manuscript or presentation materials contains Company’s Confidential Information, Company will notify Illinois in writing within thirty (30) days after Company’s receipt of the manuscript or presentation materials.  

Following such notice, such Confidential Information will be deleted from the manuscript or presentation materials.

6.3

Patentable Information.  If Company determines that potentially patentable subject matter is contained in any manuscript or presentation materials, Company will notify Illinois in writing within thirty (30) days after Company’s receipt of the manuscript or presentation materials.  Upon receipt of such notification, Illinois agrees to delay enabling public disclosure of such patentable subject matter for a period not to exceed three (3) months from the date of Company’s receipt of the manuscript or presentation materials in order to file for statutory protection in accordance with Article 7.0 (Rights in Intellectual Property).  Alternatively, Illinois researchers will have the option of revising the manuscript or presentation materials to avoid enabling disclosure of the potentially patentable subject matter before proceeding with publication or public disclosure without further delay. 

6.4

Failure to Respond.  Should Company fail to respond within the thirty (30) day review period, Illinois may proceed with publication or public disclosure.

6.5

Resolution of  Publication Issues.  Illinois will consider comments provided by Company and work with Company in good faith to settle all outstanding publication issues, prior to proceeding with the publication or public disclosure.  In the event Illinois disagrees with the comments provided by Company, both parties will endeavor in good faith to resolve any disputes through informal discussion or such other informal means as may be jointly agreed by the parties, but in no event will Illinois’ ability to publish or publicly disclose its own research results or non-confidential information be denied by Company.

6.6

Copies of Publications.  Illinois, through its Principal Investigator, will furnish Company with a copy of any publications resulting from the Research Project.

6.7

Acknowledgment.   As scientifically and professionally appropriate, Illinois and Company agree to acknowledge the contributions of the other party in any resulting publication or public disclosure. 

7.0

RIGHTS IN INTELLECTUAL PROPERTY

7.1

Background Intellectual Property

A.

“Background Intellectual Property” (hereafter, “BIP”) means any Illinois property and the legal rights therein that (i) was or is created, developed, or reduced to practice by or under the direction of the Principal Investigator prior to the completion of the Research Project but not funded by Company and (ii) is required by Company to fully exercise its license rights granted in this Agreement in Project Intellectual Property (as defined in Section 7.2).  Ownership and license rights in the subset of BIP specified as Program 

Material (as defined in Section 7.8) shall be determined in accordance with Section 7.8.

B.

Any BIP that is reasonably anticipated by the Principal Investigator to be required to perform the Research Project or to practice the results thereof will be specified in Exhibit B, “Specification of Illinois Background Intellectual Property”, attached and incorporated herein.

C.

Illinois grants to Company a non-exclusive, non-transferable, royalty-free license to use any BIP specified in Exhibit B in its internal research programs as required in order to exercise the internal use license to Project Intellectual Property granted under Section 7.5.

D.  To the extent not precluded by prior contractual agreements and to the extent Illinois can legally do so, Illinois grants to the Company the option to acquire a non-exclusive license to reproduce, make, have made, use, import, offer for sale and sell products and practice methods that are identified as BIP.  The terms of such license agreement, including the availability of exclusive license rights for such BIP (to be determined by Illinois), shall be negotiated by the parties in good faith in accordance with Section 7.6.

7.2

Project Intellectual Property.  “Project Intellectual Property” (hereafter, “PIP”) means property and the legal rights therein that either or both parties first create, develop or reduce to practice during the performance of the Research Project, including inventions, discoveries, tangible property, software, materials, mask works, methods, techniques, formulae, data, and processes.  Ownership and license rights in the subset of PIP that is Program Material (as defined in Section 7.8) shall be determined in accordance with Section 7.8.  All other PIP is subject to Sections 7.3 through 7.7.

 

7.3

Ownership of PIP:  

A.

Any PIP created, developed or reduced to practice solely by Illinois personnel will be owned by Illinois (hereafter, “Illinois PIP”).  

B.

Any PIP created, developed or reduced to practice solely by Company personnel will be owned by Company.

C.

Any PIP created, developed or reduced to practice jointly by Company personnel and Illinois personnel will be jointly owned by Company and Illinois as determined by applicable U.S. law (hereafter, “Joint PIP”).

D.

A copy of all written disclosures of Illinois PIP or Joint PIP that are submitted by the Principal Investigator to Illinois will be promptly forwarded to Company.  Likewise, Company will promptly forward to Illinois a copy of all disclosures of Joint PIP identified by Company’s 

personnel.  The party receiving such disclosure agrees to hold it in confidence and will not further disclose or use the invention in ways not previously agreed under this Agreement or in a separate written agreement between the parties.

7.4       Use and License Rights for Joint PIP.  Unless Joint PIP is subject to the terms of an exclusive commercial license agreement pursuant to Section 7.6, either Company or Illinois can freely practice any Joint PIP for any purpose, including licensing to third parties, without consultation with the other owner and without any accountability to the other owner.  In the event that Illinois and Company agree to an exclusive license agreement pursuant to Section 7.6, the terms of such exclusive agreement will take precedence over the license rights specified in this Section 7.4.

7.5

Grant of Limited Royalty-Free License Rights to Company for Illinois PIP.  In consideration of the funding provided for the Research Project, Illinois grants to Company a non-exclusive, non-transferable, royalty-free license to use any Illinois PIP in its own internal research programs.  This license does not include the right for Company to manufacture or sell products that include or use Illinois PIP. 

7.6

Option for Commercial License Rights: 

A.

Any other rights, other than those stated at Sections 7.1(C), 7.1(D), 7.4 and 7.5, to solely practice and commercialize Joint PIP or to practice and commercialize Illinois PIP or BIP, will be subject to a separate license agreement.  

B.

Illinois grants to Company the option to enter into good faith negotiation for a non-exclusive or exclusive commercial license to Illinois PIP, an exclusive commercial license to Joint PIP, and a non-exclusive license to BIP to the extent required to use specific Illinois PIP or Joint PIP.  For Illinois PIP, such option period will begin on Company’s receipt of a written disclosure of Illinois PIP and will extend for a total of six (6) months.  In the case of Joint PIP, such option period will begin from the earlier of either Company’s receipt of Illinois’ written disclosure of Joint PIP or Illinois’ receipt of Company’s written disclosure of Joint PIP and will extend for a total of six (6) months.  Said six (6) month option period for Illinois PIP or Joint PIP may be extended in writing upon mutual agreement of the Parties.  For BIP, such option period will be concurrent with the option period for the associated PIP.

C.   Any commercial license will contain at a minimum the following terms:

(i) 

Company’s reimbursement of all Illinois’ remaining out-of-pocket expenditures as of the effective date related to statutory protection for the patent application(s) and patent(s) subject to the license;

(ii)

For a non-exclusive commercial license, Company’s entitlement to deduct up to fifty percent (50%) of Company’s reimbursement to Illinois for Illinois’ expenditures related to statutory protection of the licensed PIP as a credit against Company’s royalty obligations;

(iii) 

Payment of reasonable royalties (not to exceed 5%) and fees (not to exceed $100,000); and 

(iv)

Reasonable Company due diligence obligations.

7.7

Statutory Protection for PIP.  Company will advise Illinois in writing, no later than sixty (60) days after its receipt of a disclosure of Illinois PIP or Joint PIP, whether it requests Illinois to file and prosecute patent applications at Company’s expense on such Illinois PIP or Joint PIP.   If Company makes no such request, Illinois has no obligation to file for statutory protection.  Illinois will control the preparation and prosecution of all patent applications and maintenance of all patents on Illinois PIP.  For Joint PIP, Company may, with Illinois’ written approval, control the patent application filing, prosecution and maintenance.

A.

When Illinois files for patent protection on either Illinois PIP or Joint PIP at the request of Company, then Company will reimburse Illinois for all documented expenses incurred in connection with the filing and prosecution of such patent application(s) and maintenance of issued patents within thirty (30) days after Company’s receipt of an invoice.  When Illinois files for patent protection on Illinois PIP or Joint PIP on its own volition, Company will not have any responsibility for reimbursement of such patent costs until such time as it executes a license, in accordance with Section 7.6.  

B.

If Company exercises any of its commercial license rights in accordance with Section 7.6 of this Agreement when Illinois files for patent protection on either Illinois PIP or Joint PIP or when Company, with the written approval of Illinois, files for patent protection on Joint PIP, the filing party will keep the non-filing party fully and promptly informed regarding the preparation and prosecution of such patent applications, including providing it with copies of all relevant documents, and will give the non-filing party reasonable opportunity to review and make comments with regard to such patent prosecution.  The non-filing party will provide the filing party with written responses of comments or concerns within a reasonable time prior to the filing party’s need to respond to any statutory deadlines, and the filing party will consider and work with the non-filing party to address such comments or concerns.

C.

All Illinois PIP and Joint PIP patent applications arising under this Agreement will be filed in the name(s) of the inventor(s) and will identify 

the inventor(s)’ assignee(s) as the owner(s).  For Illinois, such assignee designation is The Board of Trustees of the University of Illinois.

 

7.8 

Program Material

A.

For purposes of this Agreement, "Program Material" shall mean all copyrighted works including computer software programs that are created by Illinois personnel or visiting Company employee(s), including works not funded by Company that are used in the performance of the Research Project and required to practice the results thereof (i.e., a subset of BIP), and new works that result from the performance of the Research Project (i.e., a subset of PIP).

B.

Unless subject to prior written agreement between the parties, all literary right, title and interest in Program Material, including ownership of copyright in such materials, shall vest exclusively in the author(s) (e.g., for scholarly publications) or the employer(s) of the author(s), according to the employer's policies.

C.

Unless otherwise specified by the parties in writing, Illinois hereby grants to Company a non-exclusive, non-transferable, royalty-free license to use Illinois-owned Program Material for Company's internal purposes, including the right to reproduce copies and to make derivative works (as defined in §101 of the U.S. Copyright Act of 1976, as amended).  Should Company elect to market or sublicense Program Material or a derivative work thereof, Illinois and Company agree to enter into negotiations for a royalty-bearing commercial license.  The terms of such license agreement, including the availability of exclusive or non-exclusive commercial license rights for Illinois-owned Program Material, shall be negotiated in good faith and set forth in a separate written agreement.

7.9

Illinois’ Reserved License Rights.   In all licenses granted to Company, Illinois reserves the right to use Illinois PIP and Joint PIP in connection with Illinois’ teaching, research and public service missions, including authorizing other entities to use such Illinois PIP and Joint PIP for academic and non-commercial research purposes.  Unless restricted during the term of Company’s exclusive option period [as specified in Section 7.5(B)] or unless subject to a subsequently executed exclusive commercial license agreement, Illinois also reserves the right to use Illinois PIP and Joint PIP for any purpose, including licensing Illinois PIP and Joint PIP to third parties, without any further obligation to Company (so long as such use does not disclose Company Confidential Information).

7.10

Government Rights.  When applicable, the Agreement and options and licenses granted to Company herein may be subject to all of the terms and conditions of Title 35 United States Code Part II, Chapter 18, Sections 200 through 204, and other applicable 

rights, conditions and limitations imposed by Government grants and/or contracts associated with research performed under the Research Project.  Illinois will inform Company of the rights of any Government agency when it provides Company with a disclosure of Illinois PIP or Joint PIP or when it identifies BIP.

8.0

 DISCLAIMER OF WARRANTIES AND LIMITATION AND RELEASE OF LIABILITIES  

8.1

Disclaimer of Warranties.  ILLINOIS MAKES NO REPRESENTATIONS OR WARRANTIES, EXPRESS OR IMPLIED, REGARDING ITS PERFORMANCE UNDER THIS AGREEMENT.  ILLINOIS DISCLAIMS ANY WARRANTY OF MERCHANTABILITY, USE OR FITNESS FOR A PARTICULAR PURPOSE AND NON-INFRINGEMENT OF ANY INTELLECTUAL PROPERTY RIGHTS WITH REGARD TO DATA, INTELLECTUAL PROPERTY AND/OR OTHER RESEARCH RESULTS PROVIDED BY ILLINOIS.

8.2

Limitation of Liability.  ILLINOIS SHALL NOT BE RESPONSIBLE OR LIABLE FOR INDIRECT, SPECIAL, CONSEQUENTIAL, PUNITIVE, INCIDENTAL OR OTHER DAMAGES (INCLUDING LOST REVENUE, PROFITS, USE, DATA OR OTHER ECONOMIC LOSS OR DAMAGE) HOWEVER CAUSED AND REGARDLESS OF THEORY OF LIABILITY (WHETHER FOR BREACH OR IN TORT, INCLUDING NEGLIGENCE) ARISING FROM, RELATED TO, OR CONNECTED WITH COMPANY’S USE OF DATA, INTELLECTUAL PROPERTY AND/OR OTHER RESEARCH RESULTS PROVIDED BY ILLINOIS, EVEN IF ILLINOIS HAD BEEN ADVISED OF THE POSSIBILITY OF SUCH DAMAGE.

8.3

Release from Liability.  Company agrees to release Illinois and its employees and agents from, and agrees to be responsible for, any and all costs, damages, and expenses, including attorney's fees, arising from any claims, damages, and liabilities asserted by third parties arising from, related to, or connected with Company’s use of data, intellectual property and/or other research results provided by Illinois.

9.0

TERMINATION  

9.1  

Termination Without Cause.  This Agreement may be terminated without cause by either party providing thirty (30) days advance written notice to the other party.

9.2  

Termination for Default.  In the event that either party is in default of any of its material obligations under this Agreement and fails to remedy such default within sixty (60) days following receipt of written notice thereof, the party giving notice may, at its option and in addition to any other remedies which it may have at law or equity, terminate this Agreement by sending written notice of termination to the other party.   Any such termination will be effective as of the date of receipt of such written notice.

9.3  

Financial Responsibilities in the Event of Termination.  If Company terminates this Agreement, Company will pay for all direct costs and all applicable facilities and administrative costs incurred, and for all non-cancelable obligations made before Illinois’ receipt of notice of termination, even though they may extend beyond the effective date of termination.  If Illinois terminates this Agreement, Company will pay Illinois for all direct costs and applicable facilities and administrative costs incurred up to and including the effective date of termination.

9.4

Continuing Rights and Obligations.  Termination will not affect the rights and obligations of the parties accrued prior to termination.

10.0

NOTICES

10.1 

 Addresses.  Any notice given under this Agreement will be in writing and will be deemed given (a) when delivered personally; (b) when sent by confirmed facsimile; (c) three (3) days after having been sent by registered or certified mail, return receipt requested, postage prepaid; or (d) two (2) days after deposit with a commercial overnight carrier with confirmed verification of receipt.  All communications will be sent to the addresses set forth below or to such other address as may be designated by a party by giving written notice to the other party pursuant to this Section 10.1:

Illinois:

For matters related to the Sponsored Research Agreement:

University of Illinois

Attn.:  Director

OSPRA

1901 S. First St., Suite A

Champaign, IL  61820 

Telephone:

(217) 333-2187

Fax:

(217) 333-2189

Illinois:  For matters related to intellectual property and licensing:

University of Illinois

Attn.:  Director

Office of Technology Management

319 Ceramics Building

105 South Goodwin Avenue

Urbana, IL  61801

Telephone:  

(217) 333-7862

Fax:

(217) 265-5530

Company:

Sungen Energy, Inc.

Attn.: Terri DuMoulin, President

Suite 123 – 1628 West 1st Avenue

Vancouver, BC, V6J 1G1

Telephone: 604-736-9109

Fax:  

11.0

GENERAL PROVISIONS

11.1  

Relationship of the Parties.  Illinois will have sole control over the work performed by Illinois personnel under this Agreement.  Illinois’ relationship to the Company under this Agreement will be as an independent contractor and not as an agent, joint venture, or partner of Company.  Nothing in this Agreement will be construed as authorization for either party to act as agent for the other.

11.2 

Governing Law.  This Agreement will be governed by and construed in accordance with the laws of the State of Illinois, U.S.A., without reference to its conflict of law provisions.

11.3

Entire Agreement.  This Agreement and the attachments hereto embody the entire understanding of the parties and will supersede all previous or contemporaneous communications, either verbal or written, between the parties relating to this Agreement.  No modification, alteration or amendment will be effective unless confirmed in a written agreement signed by an authorized representative of each party.   All terms and conditions of any documents, purchase orders, etc., issued by Company to facilitate payment hereunder are null and void, even though they may be issued after the signing of this Agreement.

11.4

Assignments.  This Agreement may not be assigned by either party without the prior written consent of the other, which consent will not be unreasonably withheld.

11.5

Force Majeure.  Each party will be relieved of its obligations hereunder to the extent that fulfillment of any such obligation is prevented by acts beyond the reasonable control of the party affected thereby.

11.6

Compliance with Laws.  Company and Illinois will comply with all United States (federal), state and local laws, regulations, rules, and orders applicable to performance of the Research Project and use of the research results thereof, including but without limitation to those laws applicable to recombinant DNA technology and export control.

11.7

Export Control Regulations.  Company acknowledges that export and/or re-export of technical data, laboratory prototypes, materials and other commodities (hereafter, “Controlled Commodities”) may be subject to export control laws and regulations of the United States (including the Arms Export Control Act and the Export Administration Act of 1979, as amended), and that such laws and regulations could preclude or delay 

communications between the parties of results from this investigation.  Illinois' obligations hereunder are contingent on compliance with such applicable laws and regulations.  

11.8

Resolution of Disputes.  Illinois and Company agree that if any of the terms herein are subject to questions of intent or interpretation or if the parties identify other issues that are not addressed in this Agreement, the parties will enter into good faith negotiations to resolve any such issues.  Resolution of any such issues will be confirmed by a written amendment to this Agreement in accordance with Section 11.3.  If any dispute or difference cannot be settled amicably through negotiation, either party may terminate this Agreement in accordance with Article 9.0 (Termination).

IN WITNESS WHEREOF, the parties hereto have executed this Agreement to be effective as of the date of last signature below.

THE BOARD OF TRUSTEES OF

THE UNIVERSITY OF ILLINOIS

SUNGEN ENERGY, INC.

 

/s/ Stephen K. Rugg

/s/ Terri DuMoulin

Stephen K. Rugg, Comptroller

Authorized Signature

Date:  August 25, 2006

Terri DuMoulin, President

Name and Title 

ATTEST:

Date: August 1, 2006

        

/s/ Michele M. Thompson

Michele M. Thompson, Secretary

UNDERSTOOD AND AGREED:

/s/ Munir Nayfeh

Munir Nayfeh, Principal Investigator 

Exhibit A: Statement of Work (Research Project)

Statement of Work 

Power NanoWindows

I. Summary

The proposal aims at the integration of films of silicon nanoparticle material on glass substrates. With appropriate connections, the film may act as a nanosilicon photovoltaic solar cell that converts solar radiation to electrical energy. This configuration has future applications in glass windows in buildings, converting them to power nanoWindows without major changes in manufacturing infrastructure.

II. Background and motivation 

Despite the overwhelming cost of fossil fuel, commercial photovoltaic solar cells account for less than 0.1% of the energy consumption in the US. This is partially due to the low conversion efficiency (~15%) and high installation cost of the current solar cell technology (~7$/W), far exceeding the generation of electricity from fossil fuel. In this context, semiconductor nonmaterial has promising applications in solar cell technology as they offer good photostability and conversion. However, to date, no significant advances have been achieved due either to size nonuniformity, low yield, or matrix inhomogeneity. Various methods exist for the production of Si nanoparticles, but most produce a wide size distribution. In addition, many methods, e.g. laser ablation, pyrolosis of gas, and ion beam deposition generally produce small quantities of particles, which cannot be readily integrated into subsequent processes and manufacturing scale up.  

III. Innovation 

Recent breakthrough research in our laboratory led to the synthesis of Si nanoparticles with commercial yield and novel characteristics that circumvent these difficulties (see Figs 1-3. We have the key discovery: Unlike pure Si, there exist magic sizes of H-capped Si nanoclusters. We homed in on a very efficient ex-situ electrochemical protocol that disperses Si into these discreetly sized Si nanoparticles (magic family) of high chemical, electronic, and photo quality (> 60% quantum efficiency). It provides control over the size, shape, and surface saturation, and film thickness or packing. The technology is protected by 18 patents in the US and Europe (10 issued). We recently presented a patent-pending technology that uses nanoSi to realize advanced energy devices with enhanced efficiency and functionality. The technology increases the efficiency of photovoltaic solar cells by more than 15% as well as prolongs the lifetime over current state-of-the-art.

[IMAGE DELETED]

IV. Proposed Research 

In this proposal, we propose to integrate the patent-pending technology on glass substrates for future applications in glass windows in buildings without major changes in manufacturing infrastructure. However, fundamental challenges remain, among which is homing in on choice of metal (workfunction) versus nanoparticle size/bandgap to produce appropriate Shottky barrier diode-like rectification for photo-induced charge collection of positive as well as negative charge. We believe that the outcome of the research will also lead to novel cascade architecture which utilizes multiple layers of nanoparticles and metals and which can be implemented in silicon solar cells. 

We will establish the proof-of-concept of a nano Si cell that consists of a glass plate.  Metal film or grid and buss lines will be laid down on the glass plate to collect the current. This will be covered with a film of closely packed nanoparticles, and topped by a thin layer of another metal or grid and buss lines for collection of the opposite charge. The film, electrically connected to the grid, forms a Schottky-type diode for charge collection. The type of metal used for the grid lines will be optimized VS the particle size/bandgap and to + or - charge collection. Because particles are identical, fast charge displacement, transport/collection occurs via resonant quantum tunneling. Efficient optoelectronic conversion requires that light absorption takes place in the depletion region of the Shottky junctions. 

We now present a detailed plan of research showing the objectives and cost.

A. Proof of concept

i) Construct a power NanoWindow prototype (2 cm  ́ 2 cm glass plate)

a) cut a 2 cm  ́ 2 cm prototype glass window 

b) coat the prototype with an ultrathin conducting coating (silver, aluminum, copper, tin, etc) to harness the electron charge. Metal films are transparent if they are thin (~ 10nm).

c) deposit an active 1 nm nanoparticle film on the metal coating

d) top the nanoparticles with an ultrathin conducting coating that is different form the material chosen for first layer (from ITO, aluminum, copper, tin, etc.) to 

harness the positive charge. ITO is a transparent material even for thick films. 

e) complete the electronic circuit: connect the conducting films to bus lines and electronic measuring equipment 

B) Test photovoltaic conversion in the prototype

a) measure open circuit voltage Voc and short circuit current Isc under light sources 

b) measure efficiency at several sections of sunlight: UV, blue, green, red, etc.)

C) Material optimization

a)  optimize device (choice of type of conducting material for the top and bottom conducting layers

b) optimize device for 2.85 nm active film

D) Photovoltaic efficiency VS targeted transmission through window of 70%

a) target light transmission of 70% through the prototype

b) calculate the thickness of the conducting films

c) measure the light transmission of the prototype

d) optimize the thickness of the conducting layers

e) optimize the thickness of the nanoparticles film

E) Cost benefit engineering analysis

a) optimize the working efficiency versus the cost and light transmission for 1 nm particle films

b) optimize the prototype cost for films of other size nanoparticles

V. References

1. Observation of a magic discrete family of ultrabright Si nanoparticles, G. Belomoin and M. H. Nayfeh et. al, A.P.L. 80, 841 (2002) 

2. Enhanced silicon solar cells in the UV and visible using silicon nanoparticles, M. Stupka, M. Alsalhi, T. Alsaud, A. Almuhanna, M. Nayfeh, submitted (May 2006) to IEEE PTL. 

3. UV photodetectors with thin film Si nanoparticle active medium, M. Nayfeh, S. Rao, O. Nayfeh, A. Smith, J. Therrien, IEEE Transactions on Nanotechnology 4, 660 (2005); 

4. M. Nayfeh et al., Family of Discretely Sized Silicon Nanoparticles and Method for Producing the Same": US Patent 6,743,406, issued on 6/1/04; US Patent 6,585,947, issued on 7/1/03 (method claims) 

VI. Biography (Munir Nayfeh)

Education & Employment: B.S., Physics (American Univ. of Beirut, 1968); Ph.D., Physics (Stanford University, 1974); Postdoctoral and Research physicist (Oak Ridge National Lab. and Univ. of Kentucky 1974-1977); Lecturer and Research Associate (Yale University, 1977-1978); Professor of Physics (University of Illinois, 1979–Present)

Thesis Advisors: Professors Arthur Schawlow and Theodor Hansch, Stanford University

Synergistic Activities: IR 100; AT&T Award; Beckman Award, Energy 100American Men and Women of Science; Who's Who in Science & Technology; Who's Who in  Technology Today; Who's Who in Engineering; Leading consultants in Technology; Dictionary of International Biography; Men of Achievement 

Recent Research Interest: Munir Nayfeh's present work concentrates at understanding the nature of Si nanocrystallites. We developed a process for converting bulk silicon crystals into ultra-small, nano-sized particles. The nanoparticles, which come in magic discrete sizes, the smallest of which is one billionth of a meter in diameter and contain about 30 silicon atoms, can be formed into colloids, crystals, films, and collimated beams for unique applications in the electronics, optoelectronics and biomedical industries. These nanoparticles have many useful properties that are unlike those of bulk silicon, including being a source of stimulated emission. Potential uses include single-electron electronics, semiconductor lasers and markers for biological materials

Fields of interests: Atomic excitation, resonance multiphoton ionization, collisions and laser spectroscopy; highly excited atoms, classical and quantum chaos, deposition on surfaces, scanning tunneling microscopy, nanolithography, nanoelectronics and technology, silicon nanoparticles, Si biosensors

Books 1.M. Nayfeh and M. Brussel, Electricity and Magnetism, John Wiley and Sons, New York (1985). 2. M. H. Nayfeh and C. Clark, eds.  Atomic Excitation and Recombination in External Fields, Harwood Academic Publishers, New York (1985). 3. K. Taylor, M. Nayfeh, and C. Clark, eds. Atomic Spectra and Collisions in External Fields, Plenum (1988). 4.C. Nicholaides, M. H. Nayfeh, and C. W. Clark, eds. Atoms in Strong Fields, Plenum (1989).

Selected Publications relevant  to the project

Observation of a magic discrete family of ultrabright Si nanoparticles, G. Belomoin, J. Therrien, A. Smith, S. Rao, S. Chaieb,  M. H. Nayfeh, Appl. Phys. Lett. 80, 841 (2002)

UV photodetectors with thin film Si nanoparticle active medium, M. Nayfeh, S. Rao, O. Nayfeh, A. Smith, J. Therrien, IEEE Transactions on Nanotechnology 4, 660 (2005)

Observation of strong direct-like oscillator strength in the photoluminescence of 1 nm silicon nanoparticles, A. Smith, Z. Yamani, J. Turner, S. Habbal, S. Granick, and M.H. Nayfeh, PRB 72, 205307 (2005)

Light-induced conductance resonance in ultrasmall Si nanoparticles, J. Therrien, G. Belomoin, and M. H. Nayfeh, Appl. Phys. Lett 77, 1668 (2000)

Cathodoluminescence of small silicon nanoparticles under electron-beam excitation, L. Abuhassan, M. Khanlary, P. Townsend, and M. H. Nayfeh, J. Appl. Phys 97, 104314 (2005); 

Stimulated blue emission in reconstituted films of ultrasmall silicon nanoparticles, M. H. Nayfeh, N. Barry, J. Therrien, O. Akcakir, E. Gratton, and G. Belomoin, Appl. Phys. Lett. 78, 1131 (2001).

Observation of laser oscillation in aggregates of ultrasmall silicon nanoparticles, M. H. Nayfeh, S. Chaieb, S. Rao, N. Barry, J. Therrien, G. Belomoin, and A. Smith, Appl. Phys. Lett. 80, 121 (2002).

Effect of surface termination on the band gap of ultrabright Si29 nanoparticles: Experiments and computational models, G. Belomoin, E. Rogozhina, J. Therrien, P. V. Braun, L. Abuhassan, M. H. Nayfeh, L. Wagner, and L. Mitas, Phys. Rev. B 65, 193406 (2002)

Spatially selective electrochemical deposition of composite films of metal and luminescent Si nanoparticles, A Smith, G. Belomoin, M. H. Nayfeh, and T. Nayfeh, Chemical Physics Letters 372, 415-418 (2003)

Patents by Munir Nayfeh on synthesis and applications of Si nanoparticles:

1) “Si nanoparticle photovoltaic solar cell devices”, submitted Nov 21, 2005 (pending); 2) "Family of Discretely Sized Si Nanoparticles and Method for Producing the Same": US Patent 6,743,406, "Family of Discretely Sized Silicon Nanoparticles and Method for Producing the Same" issued on 6/1/04; 3)  "Si Nanoparticles and Method for Producing the Same": US Patent 6,585,947, "Silicon Nanoparticle and Method for Producing the Same" issued on 7/1/03 (method claims); 4) "Si Nanoparticles composition of matter US Patent 6,846,474, "Silicon Nanoparticle and Method for Producing the Same" issued on 1/25/05, composition of matter claims for the 1 nm (blue) particle, 5)  "Si Nanoparticle Stimulated Emission Devices" US Patent 6,597,496, "Silicon Nanoparticle Stimulated Emission Devices", issued on 7/22/03; 6)  "Elemental Si Nanoparticle Plating and Method for the Same": US Patent 6,660,152, "Elemental Silicon Nanoparticle Plating and Method for the Same", issued on 12/9/03; 7) "Si Nanoparticle-Based UV Photodiodes":  US Patent Application 10/374,683, "Coated Spherical Si Nanoparticle Thin Film UV Detector with UV Response and Method of Making", filed on 2/25/03. allowed. 

Exhibit B:  Specification of Illinois Background Intellectual

Property (if applicable)

1)  UIUC Technology T99088, “Silicon Nanoparticles and Method for Producing the Same”: 

a.       US Patent 6,585,947, “Silicon Nanoparticle and Method for Producing the Same” issued on 7/1/03 (method claims). 

b.      US Patent 6,846,474, “Silicon Nanoparticle and Method for Producing the Same” issued on 1/25/05, composition of matter claims for the 1 nm (blue) particle.

c.       PCT Patent Application US00/41376, “Silicon Nanoparticle and Method for Producing the same”, filed on 10/20/00, expired on 4/20/03, and nationalized in: Canada Serial No. 2,388,815, European Regional Serial No. 00992225.3 [Granted (Allowed) on 2/5/06. Decision to pay grant fee of $4000 for initial phase due 7/15/06], and Japan Serial No. 2001-539786.

2)  UIUC Technology TF01054, “Family of Discretely Sized Silicon Nanoparticles and Method for Producing the Same”:

a.       US Patent 6,743,406, “Family of Discretely Sized Silicon Nanoparticles and Method for Producing the Same” issued on 6/1/04.

b.      US Patent 7,001,578, “Family of Discretely Sized Silicon Nanoparticles and Method for Producing the Same” issued on 2/21/06.

c.       PCT Patent Application US02/33457, “Family of Discretely Sized Silicon Nanoparticles and Method for Producing the Same”, filed on 10/18/02, expired on 5/21/04, and nationalized in: Canada Serial No. 2,461,974 and European Regional Serial No. 02803286.0.

 

3) UIUC Technology TF05100, “Silicon Nanoparticle Photovoltaic Solar Cell Devices”:

a.       US Provisional Patent Application 60/736,139, “Silicon Nanoparticle Photovoltaic Solar Cell Device”, filed on 11/20/05.EXHIBIT 10.3

FOURTH
AMENDED AND RESTATED

ADVISORY AGREEMENT

This FOURTH AMENDED AND RESTATED ADVISORY AGREEMENT
(this “Agreement”) is entered into on this the
[       ] day of [            ],
2006, by and between BEHRINGER HARVARD REIT I, INC., a Maryland corporation
(the “Company”), and BEHRINGER ADVISORS LP, a
Texas limited partnership (the “Advisor”).

W I T N E
S S E T H

WHEREAS, the Company has issued and will continue to be
issuing shares of its common stock, par value $0.0001, to the public, such shares
to be registered with the Securities and Exchange Commission and may
subsequently issue additional securities;

WHEREAS, the Company and the Advisor previously entered into
that certain Advisory Agreement, dated February 14, 2003 (as amended,
supplemented or restated from time to time, the “Original Advisory Agreement”),
and it is intended that this Agreement amend and restate the Original Advisory
Agreement effective as of and for all periods after the date hereof;

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

WHEREAS, the Company desires to continue to avail itself of
the experience, sources of information, advice, assistance and certain
facilities available to the Advisor and to have the Advisor continue to
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 continue to provide 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 I

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.  

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

Advisor. 
Behringer Advisors LP, a Texas limited partnership, any successor
advisor to the Company, or any Person to which Behringer Advisors 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,
supplemented or restated 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

 2
 

 

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.

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-3 of the Securities Exchange Act of 1934, as amended),
directly or indirectly, of securities of the Company or the Partnership
representing greater than 50% 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 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 or
admitted to trading on a principal national securities exchange 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 any
successor market or exchange), 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 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 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 disagrees 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

 3
 

 

good faith to the appointment of one other appraiser
whose determination of the actual value of the Company as a going concern shall
be final and binding on the parties as to Company Value.  The cost of any such appraisal shall be split
evenly between the Company and the Advisor.

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.

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 $0.0001 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
American Institute of Real Estate Appraisers or the Society of Real Estate
Appraisers 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

 4
 

 

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 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
outstanding by $10.00, 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 (or
any successor market or exchange).  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.

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

 5
 

 

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 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 public offering of Shares pursuant to an effective registration
statement filed under the Securities Act 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 Operating Partnership 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) or (c).

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

 6
 

 

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

Prospectus. 
Prospectus has the meaning set forth in Section 2(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 $0.0001 per
share.  

 7
 

 

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.  

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’ 9%
Return.  As of any date, an aggregate amount equal to
a 9% cumulative, noncompounded, annual return on Invested Capital (calculated
like simple interest); provided, however, that for purposes of calculating the
Stockholders’ 9% Return, any Stock Dividend shall not be included as a
Distribution; and provided further that for purposes of determining the
Stockholders’ 9% 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.  

 8
 

 

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.

2.02         Duties
of the Advisor.  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; 

 9
 

 

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

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

(i)            negotiate
on behalf of the Company with banks or lenders for loans to be made to the
Company, negotiate on behalf of the Company with investment banking firms and
broker-dealers, and negotiate private sales of Shares and other securities of
the Company or obtain loans for the Company, as and when appropriate, but in no
event in such a way so that the Advisor shall be acting as broker-dealer or
underwriter; and provided, further, that any fees and costs payable to third
parties incurred by the Advisor in connection with the foregoing shall be the
responsibility of the Company; 

(j)            obtain
reports (which may be prepared by or for the Advisor or its Affiliates), where
appropriate, concerning the value of investments or contemplated investments of
the Company in Assets; 

(k)           from
time to time, or at any time reasonably requested by the Board, make reports to
the Board of its performance of services to the Company under this Agreement; 

(l)            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

 10
 

 

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 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

 11
 

 

have no
liability for acting in accordance with the specific instructions of the Board
so given.  The Advisor, its directors,
officers, employees and stockholders, and the directors, officers, employees
and stockholders of the Advisor’s Affiliates shall not be liable to the Company
or to the Board or Stockholders for any act or omission by the Advisor, its
directors, officers, employees or stockholders, or for any act or omission of
any Affiliate of the Advisor, its directors, officers or employees or
stockholders except as provided in Section 5.02 of this Agreement.

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

2.08                           Other Activities of the Advisor.  Nothing herein contained shall prevent the
Advisor or its Affiliates from engaging in other activities, including, without
limitation, 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 of (i) with respect to operating
Assets, 0.6% of the Aggregate Assets Value for such operating Assets (including
any debt attributable to the Assets), payable on the 15th day of each month in
an amount equal to 1/12th of 0.6% of the Aggregate Assets Value for such
operating Assets as of the last day of the immediately preceding month, and
(ii) with respect to development or redevelopment Assets, 0.6% of the Contract
Purchase Price (including any debt attributable to the Assets and any budgeted
improvement costs therefor) for such development or redevelopment Assets,
payable on the 15th day of each month in an amount equal to 1/12th of 0.6% of
the total Contract Purchase Price for such development or redevelopment Assets
as of the date such amount is determinable. 
In any given month, in no event shall the Advisor be paid Asset
Management Fees pursuant to both clause (i) and clause (ii) of this Section
3.01(a) with respect to the same Asset.

(b)           Acquisition
and Advisory Fees.  The Company shall
pay the Advisor an Acquisition and Advisory Fee in an amount equal to (i) with
respect to each Asset acquired directly by the

 12
 

 

Company, 2.5% of the Contract Purchase Price
of such Asset and (ii) with respect to each Asset acquired indirectly by the
Company through one or more of its Affiliates or Joint Ventures, 2.5% of the
Contract Purchase Price of such Asset multiplied by the Company’s
percentage equity interest in such Affiliates or Joint Ventures, in each case
payable at the time and in respect of the funds expended for (A) the
acquisition of such Asset (including any debt attributable to the Asset), (B)
to the extent that such funds are capitalized, for the development,
construction or improvement of such Asset (including any debt attributable to
the Asset) or (C) the making of a Mortgage; provided, however,
that in no event shall the Company pay the Advisor Acquisition and Advisory
Fees with respect to any temporary investment in Assets.  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 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’ 9% 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’ 9% 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’ 9% 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’ 9% Return through the date of

 13
 

 

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 but after the Stockholders have received total Distributions in an
amount equal to the sum of their aggregate Invested Capital and Stockholders’
9% Return, 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.  

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’ 9% 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’ 9%
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 or assumption 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.

 14
 

 

(g)           Limitations
on Payments.  Notwithstanding the
foregoing, no payments shall be made under Sections 3.01(d), 3.01(e), 4.03(b)
or 4.03(c) 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 Sections 4.03(b) and 4.03(c), the determination of
the number of Shares issuable upon conversion of the Convertible Shares has
been made in accordance with Article First, Section (iii)(c) of the Articles Supplementary,
dated as of March 22, 2006, to 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 Sections 4.03(b) and 4.03(c), the determination
of the number of Shares issuable upon conversion of the Convertible Shares has
been made in accordance with Article First, Section (iii)(c) of the Articles
Supplementary, dated as of March 22, 2006, to 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 Section 3.01(e),
4.03(b) or 4.03(c) 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 1.5% of the Gross Proceeds (2.0% for Offerings conducted
prior to the date hereof but after February 19, 2005, and 2.5% for Offerings
conducted prior on or prior to February 19, 2005) 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 1.5% of the
Gross Proceeds (2.0% for Offerings conducted prior to the date hereof but after
February 19, 2005, and 2.5% for Offerings conducted prior on or prior to
February 19, 2005) 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,

 15
 

 

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; 

(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

 16
 

 

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 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).  Upon termination, the SILF Note
shall become immediately due and payable and shall be promptly paid by the

 17
 

 

Company. 
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) or (c) below.

(b)           Upon
termination, unless such termination is by the Company because of a material
breach of this Agreement by the Advisor or occurs upon a Change of Control, 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’ 9% 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, 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.

(c)           Notwithstanding
the foregoing, if termination occurs upon a Change of Control, the Advisor
shall be entitled to payment of a Performance Fee 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’ 9% Return.  No deferral of payment of the Performance Fee
may be made under this Section 4.03(c).

(d)           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.

(e)           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; 

 18
 

 

(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.  The Company shall indemnify and hold harmless
the Advisor and its Affiliates, including their respective officers, directors,
partners and employees, from all liability, claims, damages or losses arising
in the performance of their duties hereunder, and related expenses, including
reasonable attorneys’ fees, to the extent such liability, claims, damages or
losses and related expenses are not fully reimbursed by insurance, subject to
any limitations imposed by the laws of the State of Maryland, the Articles of
Incorporation and the NASAA Guidelines. 
The foregoing indemnity 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 foregoing, 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. Any indemnification of the Advisor may be
made only out of the net assets of the Company and not from Stockholders.  

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

 19
 

 

required by
the Articles of Incorporation, the Bylaws, or accepted by the party to whom it
is given, and shall be given by being delivered by hand or by overnight mail or
other overnight delivery service to the addresses set forth herein:

	
  To the Directors and to the
  Company:

  	
   

  	
  Behringer Harvard REIT I, Inc.

  
	
   

  	
   

  	
  15601 Dallas
  Parkway

  
	
   

  	
   

  	
  Suite 600

  
	
   

  	
   

  	
  Addison, Texas
  75001

  
	
   

  	
   

  	
   

  
	
  To the Advisor:

  	
   

  	
  Behringer Advisors 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.

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.

 20
 

 

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 Advisors 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 Advisors LP or an
Affiliate thereof to perform the services of Advisor, the Company will,
promptly after receipt of written request from Behringer Advisors 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 other word or words that might, in the sole discretion of Behringer
Advisors LP, be susceptible of indication of some form of relationship between
the Company and Behringer Advisors LP or any Affiliate thereof. Consistent with
the foregoing, it is specifically recognized that Behringer Advisors 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.

[The remainder of this page intentionally blank]

 21

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

	
  

  	
  BEHRINGER HARVARD REIT I, INC.

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
  By:

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
  BEHRINGER ADVISORS LP

  
	
   

  	
   

  	
   

  
	
   

  	
  By:

  	
  Harvard Property Trust, LLC,

  
	
   

  	
   

  	
  its General Partner

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
  By:

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