Document:

Exhibit 10.1

FIFTH AMENDED AND
RESTATED

ADVISORY MANAGEMENT AGREEMENT

This FIFTH
AMENDED AND RESTATED ADVISORY MANAGEMENT AGREEMENT (this “Agreement”)
is entered into on this 29th day of December, 2006, by and between
BEHRINGER HARVARD REIT I, INC., a Maryland corporation (the “Company”), and BEHRINGER ADVISORS LP, a Texas limited
partnership (the “Advisor”).

WITNESSETH

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 Expenses paid or incurred by the
Advisor or any Affiliate are on behalf of the Company and will be reimbursed by
the Company in accordance with the terms of Section 3.02(a)(ii).

 

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

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

Board.  The Board of Directors of the Company.

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.

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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 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

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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 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.

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Net Sales Proceeds.  In the case of a transaction described in
clause (i)(A) of the definition of Sale, the proceeds of any such transaction
less the amount of selling expenses incurred by or on behalf of the Company,
including all real estate commissions, closing costs and legal fees and
expenses. In the case of a transaction described in clause (i)(B) of such
definition, Net Sales Proceeds means the proceeds of any such transaction less
the amount of selling expenses incurred by or on behalf of the Company,
including any legal fees and expenses and other selling expenses incurred in
connection with such transaction. In the case of a transaction described in
clause (i)(C) of such definition, Net Sales Proceeds means the proceeds of any
such transaction actually distributed to the Company from the Joint Venture
less the amount of any selling expenses, including legal fees and expenses
incurred by or on behalf of the 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.  Specified as 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. Organization and Offering Expenses paid or
incurred by the Advisor or any Affiliate are on behalf of the Company and will be
reimbursed by the Company in accordance with the terms of Section 3.02(a)(i).

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).

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

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

Proprietary Property.  All
modeling algorithms, tools, computer programs, know-how, methodologies,
processes, technologies, ideas, concepts, skills, routines, subroutines,
operating instructions and other materials and aides used in performing the
duties set forth in Section 2.02 that relate to investment advice regarding
current and potential Assets, and all modifications, enhancements and
derivative works of the foregoing.

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

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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.

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.

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

Total Operating Expenses.  All costs and expenses paid or incurred by
the Company, as determined under generally accepted accounting principles,
which are in any way related to the operation of the Company or to Company
business, including the Asset Management Fee, but excluding (i) the expenses of
raising capital such as Organization and Offering Expenses, legal, audit,
accounting, underwriting, brokerage, listing, registration, and other fees,
printing and other 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

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reserves, (v)
the Subordinated Share of Net Sales Proceeds, (vi) the Performance Fee, (vii)
the Subordinated Incentive Listing Fee, (viii) Acquisition Fees and
Acquisition Expenses, (ix) real estate commissions on the Sale of Property, and
(x) other fees and expenses connected with the acquisition, disposition,
management and ownership of real estate interests, mortgage loans or other property
(including the costs of foreclosure, insurance premiums, legal services,
maintenance, repair and improvement of property).

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

ARTICLE
II

THE ADVISOR

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

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

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investment
objectives and policies of the Company and in connection with any borrowings
proposed to be undertaken by the Company;

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

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

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

(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;

 10
 

 

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

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

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

2.03                        Authority
of Advisor.

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

 11

 

accountings of
such collections and payments to the Board, its Audit Committee and the
auditors of the Company.

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

2.06                        Limitations
on Activities. 
Anything else in this Agreement to the contrary notwithstanding, the
Advisor shall refrain from taking any action which, in its sole judgment made
in good faith, would (a) adversely affect the status of the Company as a REIT,
(b) subject the Company to regulation under the Investment Company Act of 1940,
as amended, or (c) violate any law, rule, regulation or statement of policy of
any governmental body or agency having jurisdiction over the Company, the
Shares or any of the Company’s securities, or otherwise not be permitted by the
Articles of Incorporation or Bylaws, except if such action shall be ordered by
the Board, in which case the Advisor shall notify promptly the Board of the
Advisor’s judgment of the potential impact of such action and shall refrain
from taking such action until it receives further clarification or instructions
from the Board.  In such event the
Advisor shall have no liability for acting in accordance with the specific
instructions of the Board so given.  The
Advisor, its directors, officers, employees and stockholders, and the
directors, officers, employees and stockholders of the Advisor’s Affiliates
shall not be liable to the Company or to the Board or Stockholders for any act
or omission by the Advisor, its directors, officers, employees or stockholders,
or for any act or omission of any Affiliate of the Advisor, its directors,
officers or employees or stockholders except as provided in Section 5.02 of
this Agreement.

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.

 12
 

 

ARTICLE
III

COMPENSATION AND REIMBURSEMENT OF SPECIFIED COSTS.

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 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 Acquisition and Advisory Fees include
reimbursements of allocable wages and compensation of employees of the Advisor
and its Affiliates and third-party expenses. 
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

 13
 

 

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
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

 14
 

 

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.  The Debt Financing Fee
includes the reimbursement of the specified cost incurred by the Advisor of
engaging third parties to source debt financing, and nothing herein shall
prevent the Advisor from entering fee-splitting arrangements with third parties
with respect to the Debt Financing Fee.

(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.

 15
 

 

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 the
specified cost of all 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 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 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,
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;

 16
 

 

(xi)                                expenses
of organizing, revising, amending, converting, modifying, or terminating the
Company or the Articles of Incorporation;

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

(xiii)                          administrative
service expenses (including personnel costs; provided, however, that no
reimbursement shall be made for costs of personnel to the extent that such
personnel perform services in transactions for which the Advisor receives a
separate fee); and

(xiv)                         audit,
accounting and legal fees.

(b)                                 Expenses
incurred by the Advisor on behalf of the Company and payable pursuant to this
Section 3.02 shall be reimbursed no less than quarterly to the Advisor within
60 days after the end of each quarter. 
The Advisor shall prepare a statement documenting the expenses of the
Company during each quarter, and shall deliver such statement to the Company
within 45 days after the end of each quarter.

3.03                        Other
Services.  Should the
Board request that the Advisor or any director, officer or employee thereof
render services for the Company other than set forth in Section 2.02, such
services shall be separately compensated at such rates and in such amounts as
are agreed by the Advisor and the Independent Directors, subject to the
limitations contained in the Articles of Incorporation, and shall not be deemed
to be services pursuant to the terms of this Agreement.

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

 17
 

 

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
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.

 18
 

 

(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;

(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.

 19
 

 

5.02                        Indemnification
by Advisor.  The
Advisor shall indemnify and hold harmless the Company from contract or other
liability, claims, damages, taxes or losses and related expenses including
attorneys’ fees, to the extent that such liability, claims, damages, taxes or
losses and related expenses are not fully reimbursed by insurance and are
incurred by reason of the Advisor’s bad faith, fraud, misfeasance, misconduct,
negligence or reckless disregard of its duties, but the Advisor shall not be
held responsible for any action of the Board in following or declining to follow
any advice or recommendation given by the Advisor.

ARTICLE
VI

MISCELLANEOUS

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

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

6.03                        Treatment
Under Texas Margin Tax. 
For purposes of the Texas margin tax, the Advisor’s performance of the
services specified in this Agreement will cause the Advisor to conduct part of
the active trade or business of the Company, and the compensation specified in
Article III includes both the payment of management fees and the reimbursement
of specified costs incurred in the Advisor’s conduct of the active trade or
business of the Company.  Therefore, the
Advisor and Company intend Advisor to be, and shall treat Advisor as, a “management
company” within the meaning of Section 171.0001(11) of the Texas Tax Code.  The Company and the Advisor will apply
Sections 171.1011(m-1) and 171.1013(f)-(g) of the Texas Tax Code to the Company’s
reimbursements paid to the Advisor pursuant to this Agreement of specified
costs and wages and compensation.  The
Advisor and the Company further recognize and intend that (i) as a result of
the fiduciary relationship created by this Agreement and acknowledged in
Section 2.02, reimbursements paid to the Advisor pursuant to this Agreement are
“flow-though funds” that the Advisor is mandated by law or fiduciary duty to
distribute, within the meaning of Section 171.1011(f) of the Texas Tax Code,
and (ii) as a result of Advisor’s contractual duties under this Agreement,
certain reimbursements under this Agreement are “flow-through funds” mandated
by contract to be distributed within the meaning of Section 171.1011(g) of the
Texas Tax Code.  The terms of this
Agreement shall be interpreted in a manner consistent with the characterization
of the Advisor as a “management company” as defined in Section 171.0001(11),
and with the characterization of the reimbursements as “flow-though funds”
within the meaning of Section 171.1011(f)-(g) of the Texas Tax Code.

6.04                        Notices.  Any notice, report or other communication
required or permitted to be given hereunder shall be in writing unless some
other method of giving such notice, report or other communication is required
by the Articles of Incorporation, the Bylaws, or accepted by the party to whom

 20
 

 

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.

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

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

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

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

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

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

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

 21
 

 

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

6.13                        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.

6.14                        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.

6.15                        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]

 22

 

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

	
   

  	
   

  	
  BEHRINGER HARVARD REIT I, INC.

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
  By:

  	
  /s/ Gerald J. Reihsen, III

  
	
   

  	
   

  	
   

  	
  Gerald J. Reihsen, III

  
	
   

  	
   

  	
   

  	
  Executive Vice President – Corporate

  
	
   

  	
   

  	
   

  	
  Development & Legal

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
  BEHRINGER ADVISORS LP

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
  By:

  	
  Harvard Property Trust, LLC,

  
	
   

  	
   

  	
   

  	
  its General Partner

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
  By:

  	
   :/s/ Gerald J. Reihsen, III

  
	
   

  	
   

  	
   

  	
   

  	
   Gerald J. Reihsen, III

  
	
   

  	
   

  	
   

  	
   

  	
   Executive Vice President – Corporate

  
	
   

  	
   

  	
   

  	
   

  	
   Development & LegalExhibit 10.2

FOURTH AMENDED AND RESTATED 

PROPERTY MANAGEMENT AND LEASING AGREEMENT

This FOURTH AMENDED AND RESTATED PROPERTY MANAGEMENT AND LEASING AGREEMENT
(this “Management Agreement”) is made and entered into as of the 29th day of
December, 2006, by and among BEHRINGER HARVARD REIT I, INC., a Maryland
corporation (“BH REIT”), BEHRINGER HARVARD OPERATING PARTNERSHIP I LP, a Texas
limited partnership (“BH OP”), and HPT MANAGEMENT SERVICES LP, Texas
limited partnership (the “Manager”).

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

WHEREAS, BH OP and
BH REIT and Manager previously entered into that certain Property
Management and Leasing Agreement dated February 14, 2003 as amended and
restated by the Amended and Restated Property Management and Leasing Agreement
dated June 2, 2003 the Second Amended and Restated Property Management and
Leasing Agreement dated February 11, 2005, and the Third Amended and Restated
Property Management and Leasing Agreement dated March 20, 2006 (the “Original
Management Agreement”); and

WHEREAS, BH REIT intends to continue to raise money
from the sale of its common stock to be used, net of payment of certain
offering costs and expenses, for investment in the acquisition or construction
of income-producing real estate and other real estate-related investments
(including the making or purchase of mortgage loans), some or all of which are
to be acquired and held by Owner (as hereinafter defined) on behalf of BH REIT;
and

WHEREAS, Owner intends to continue to retain Manager
to manage and coordinate the leasing of certain of the real estate properties
acquired by Owner under the terms and conditions set forth in this Management
Agreement; and

WHEREAS, the parties desire to amend and restate the
Original Management Agreement in its entirety in accordance with the terms and
provisions hereof;

NOW, THEREFORE, in consideration of the premises and
other good and valuable consideration, the receipt and sufficiency of which are
hereby acknowledged, the parties hereto, intending to be legally bound hereby,
do hereby agree, as follows:

ARTICLE I

DEFINITIONS

Except as otherwise specified or as the context may
otherwise require, the following terms have the respective meanings set forth
below for all purposes of this Management Agreement, and the definitions of
such terms are equally applicable both to the singular and plural forms
thereof:

1.1                                 “Affiliate”
means, with respect to any Person, (i)
any Person directly or indirectly owning, controlling or holding, with the
power to vote, 10% or more of the outstanding voting securities of such other
Person; (ii) any Person 10% or more of whose outstanding voting securities are
directly or indirectly owned, controlled or held, with the power to vote, by
such other Person; (iii) any Person directly or indirectly controlling,
controlled by or under common control with such other Person; (iv) any

 

executive
officer, director, trustee or general partner of such other Person; and (v) any
legal entity for which such Person acts as an executive officer, director,
trustee or general partner.

1.2                                 “Gross Revenues” means all amounts actually
collected as rents or other charges for the use and occupancy of the
Properties, but shall exclude interest and other investment income of Owner and
proceeds received by Owner for a sale, exchange, condemnation, eminent domain
taking, casualty or other disposition of assets of Owner.

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

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

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

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

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

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

1.9                                 “Properties” means all real estate properties
owned by Owner and all tracts as yet unspecified but to be acquired `by Owner
containing income-producing improvements or on which Owner will construct
income-producing improvements.

1.10                           “Proprietary Properties” means all
modeling algorithms, tools, computer programs, know-how, methodologies,
processes, technologies, ideas, concepts, skills, routines, subroutines,
operating instructions and other materials and aides used in performing the
duties set forth in Article 2 that relate to management advice, services and
techniques regarding current and potential Properties, and all modifications,
enhancements and derivative works of the foregoing.

1.11                           “Texas
Tax Code” means the Texas Tax Code as amended by Texas H.B. 3, 79th Leg., 3rd
C.S. (2006), and reference to any provision of the Texas Tax Code Act shall
mean 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
administrative rules as in effect from time to time.

 2
 

 

ARTICLE
II

APPOINTMENT
AND STATUS OF MANAGER; SERVICES TO BE PERFORMED

2.1                                 Appointment of Manager. 
Owner hereby engages and retains Manager as the manager and as tenant
coordinating agent of the Properties, and Manager hereby accepts such appointment
on the terms and conditions hereinafter set forth; it being understood that
this Management Agreement shall cause Manager to be, at law, Owner’s agent upon
the terms contained herein.

2.2                                 Treatment Under Texas Margin Tax. 
For purposes of the Texas margin tax, Manager’s performance of the
services specified in this Agreement will cause Manager to conduct part of the
active trade or business of the Owner, and Manager’s compensation includes both
the payment of management fees and the reimbursement of specified costs
incurred in Manager’s conduct of the active trade or business of the
Owner.  Therefore, Owner and Manager
intend Manager to be, and shall treat Manager as, a “management company” within
the meaning of Section 171.0001(11) of the Texas Tax Code.  Owner and Manager will apply Sections
171.1011(m-1) and 171.1013(f)-(g) of the Texas Tax Code to Owner’s
reimbursements paid to Manager pursuant to this Agreement of specified costs
and allocable wages and compensation. 
Owner and Manager further recognize and intend that as a result of the
relationship created by this Agreement, reimbursements paid to Manager pursuant
to this Agreement include (i) “flow-though funds” that Manager is mandated by
law or fiduciary duty to distribute, within the meaning of Section 171.1011(f)
of the Texas Tax Code, and (ii) “flow-through funds” that Manager is mandated
by contract to distribute, within the meaning of Section 171.1011(g).  The terms of this Agreement shall be
interpreted in a manner consistent with the characterization of the Manager as
a “management company” as defined in Section 171.0001(11), and with the
characterization of the reimbursements as “flow-though funds” within the
meaning of Section 171.1011(f)-(g) of the Texas Tax Code.

2.3                                 General Duties.  Manager
shall devote its best efforts to performing its duties hereunder to manage,
operate, maintain and lease the Properties in a diligent, careful and vigilant
manner.  The services of Manager are to
be of scope and quality not less than those generally performed by professional
property managers of other similar properties in the area.  Manager shall make available to Owner the
full benefit of the judgment, experience and advice of the members of Manager’s
organization and staff with respect to the policies to be pursued by Owner
relating to the operation and leasing of the Properties.

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

(a)                                  Lease
Obligations.  Manager shall perform
all duties of the landlord under all Leases insofar as such duties relate to
operation, maintenance, and day-to-day management.  Manager shall also provide or cause to be
provided, at Owner’s expense, all services normally provided to tenants of like premises, including where
applicable and without limitation, gas, electricity or other utilities
required to be furnished to tenants under Leases, normal repairs and
maintenance, and cleaning, and janitorial service.  Manager shall arrange for and supervise the
performance of all installations and improvements in space leased to any tenant
that are either expressly required under the terms of the lease of such space
or that are customarily provided to tenants.

(b)                                 Maintenance.  Manager shall cause the Properties to be
maintained in the same manner as similar properties in the area.  Manager’s duties and supervision in this
respect shall include, without limitation, cleaning of the interior and the
exterior of the Improvements and the public common areas on the Properties and
the making and supervision of repair, alterations, and decoration of the
Improvements, subject to and in strict compliance with this Management
Agreement and the Leases.  Construction
activities undertaken by Manager, if any, will be limited

 3
 

 

to activities
related to the management, operation, maintenance, and leasing of the Property
(e.g., repairs, renovations, and leasehold improvements).

(c)                                  Leasing
Functions.  Manager shall coordinate
the leasing of the Properties and shall negotiate and use its best efforts to
secure executed Leases from qualified tenants, and to execute same on behalf of
Owner, if requested, for available space in the Properties, such Leases to be
in form and on terms approved by Owner and Manager, and to bring about complete
leasing of the Properties.  Manager shall
be responsible for the hiring of all leasing agents, as necessary for the
leasing of the Properties, and to otherwise oversee and manage the leasing
process on behalf of Owner.

(d)                                 Notice
of Violations.  Manager shall forward
to Owner promptly upon receipt all notices of violation or other notices from
any governmental authority, and board of fire underwriters or any insurance
company, and shall make such recommendations regarding compliance with such
notice as shall be appropriate.

(e)                                  Personnel.  Any personnel hired by Manager to maintain,
operate and lease the Property shall be the employees or independent
contractors of Manager and not of Owner of such Property, BH OP or
BH REIT.  Manager shall use due care
in the selection and supervision of such employees or independent contractors.  Manager shall be responsible for the
preparation of and shall timely file all payroll tax reports and timely make
payments of all withholding and other payroll taxes with respect to each
employee.

(f)                                    Utilities
and Supplies.  Manager shall enter
into or renew contracts for electricity, gas, steam, landscaping, fuel, oil,
maintenance and other services as are customarily furnished or rendered in
connection with the operation of similar rental property in the area.

(g)                                 Expenses.  Manager shall analyze all bills received for
services, work and supplies in connection with maintaining and operating the
Properties, pay all such bills when due, and, if requested by Owner, pay, when
due, utility and water charges, sewer rent and assessments, and any other
amount payable in respect to the Properties. 
All bills shall be paid by Manager within the time required to obtain
discounts, if any. Owner may from time to time request that Manager forward
certain bills to Owner promptly after receipt, and Manager shall comply with
any such request.  Manager shall pay all
bills, assessments, real property taxes, insurance premiums and any other
amount payable in respect to the Properties out of the Account (as hereinafter
defined).  All expenses shall be billed
at net cost (i.e., less all rebates, commissions, discounts and allowances,
however designed).

(h)                                 Monies
Collected.  Manager shall timely
collect all rent and other monies, in the form of a check or money order, from
tenants and any sums otherwise due Owner with respect to the Properties in the
ordinary course of business.  Owner
authorizes Manager to request, demand, collect and provide receipt for all such
rent and other monies and to institute legal proceedings in the name of Owner
for the collection thereof and for the dispossession of any tenant in default
under its Lease.

(i)                                     Banking
Accommodations.  Manager shall
establish and maintain a separate checking account (the “Account”) for funds
relating to the Properties.  All monies
deposited from time to time in the Account shall be deemed to be trust funds
and shall be and remain the property of Owner and shall be withdrawn and
disbursed by Manager for the account of Owner only as expressly permitted by
this Management Agreement for the purposes of performing the obligations of
Manager hereunder.  No monies collected
by Manager on Owner’s behalf shall be

 4
 

 

commingled with
funds of Manager.  The Account shall be
maintained, and monies shall be deposited therein and withdrawn therefrom, in
accordance with the following:

(i)                                     All sums
received from rents and other income from the Properties shall be promptly
deposited by Manager in the Account. 
Manager shall have the right to designate two or more persons who shall
be authorized to draw against the Account, but only for purposes authorized by
this Management Agreement.

(ii)                                  All sums due to
Manager hereunder, whether for compensation, reimbursement for expenditures, or
otherwise, as herein provided, shall be a charge against the operating revenues
of the Properties and shall be paid and/or withdrawn by Manager from the
Account prior to the making of any other disbursements therefrom.

(iii)                               By the 15th day after the end of each month, Manager shall
forward to Owner all monies contained in the Account other than a reserve of
$5,000 and any other amounts otherwise provided in the budget, which shall
remain in the Account.

(j)                                     Ownership
Agreements.  Manager has received
copies of (and will be provided with copies of future) Articles of
Incorporation, Agreements of Limited Partnership, Joint Venture Partnership
Agreements and Operating Agreements, each as may be amended from time to time,
of Owner, as applicable (the “Ownership Agreements”) and is familiar with the
terms thereof.  Manager shall use
reasonable care to avoid any act or omission that, in the performance of its
duties hereunder, shall in any way conflict with the terms of Ownership
Agreements.

(k)                                  Signs.  Manager shall place and remove, or cause to
be placed and removed, such signs upon the Properties as Manager deems
appropriate, subject, however, to the terms and conditions of the Leases and to
any applicable ordinances and regulations.

2.5                                 Approval of Leases, Contracts, Etc.  In
fulfilling its duties to Owner, Manager may and hereby is authorized to enter
into any leases, contracts or agreements on behalf of Owner in the ordinary
course of the management, operation, maintenance and leasing of the Property.

2.6                                 Accounting, Records and Reports.

(a)                                  Records.  Manager shall maintain all office records and
books of account and shall record therein, and keep copies of, each invoice
received from services, work and supplies ordered in connection with the
maintenance and operation of the Properties. 
Such records shall be maintained on a double entry basis.  Owner and persons designated by Owner shall
at all reasonable time have access to and the right to audit and make
independent examinations of such records, books and accounts and all vouchers,
files and all other material pertaining to the Properties and this Management
Agreement, all of which Manager agrees to keep safe, available and separate
from any records not pertaining to the Properties, at a place recommended by
Manager and approved by Owner.

(b)                                 Monthly
Reports.  On or before the 15th day after the end of each month during the
term of this Management Agreement, Manager shall prepare and submit to Owner
the following reports and statements:

(i)                                     rental
collection record;

(ii)                                  monthly
operating statement;

 5
 

 

(iii)                               copy of cash
disbursements ledger entries for such period, if requested;

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

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

(vi)                              copy of ledger
entries for such period relating to security deposits maintained by Manager, if
requested.

(c)                                  Budgets
and Leasing Plans.  Not later than
November 15 of each calendar year, Manager shall prepare and submit to Owner
for its approval an operating budget and a marketing and leasing plan on each
Property for the calendar year immediately following such submission.  In connection with any acquisition of a
Property by Owner, Manager shall prepare a budget and marketing and leasing
plan for the remainder of the calendar year. 
The budget and marketing and leasing plan shall be in the form of the
budget and plan approved by Owner prior to the date thereof.  As often as reasonably necessary during the
period covered by any such budget, Manager may submit to Owner for its approval
an updated budget or plan incorporating such changes as shall be necessary to
reflect cost over-runs and the like during such period.  If Owner does not disapprove any such budget
within 30 days after receipt thereof by Owner, such budget shall be deemed
approved.  If Owner shall disapprove any
such budget or plan, it shall so notify Manager within said 30-day period and
explain the reasons therefor.  If Owner
disapproves of any budget or plan, Manager shall submit a revised budget or
plan, as applicable, within 10 (ten) days of receipt of the notice of
disapproval, and Owner shall have 10 (ten) days to provide notice to Manager if
it disapproves of any such revised budget or plan.  Manager will not incur any costs other than
those estimated in any budget except for:

(i)                                     tenant
improvements and real estate commissions required under a Lease;

(ii)                                  maintenance or
repair costs under $5,000 per Property;

(iii)                               costs incurred
in emergency situations in which action is immediately necessary for the
preservation or safety of the Property, or for the safety of occupants or other
persons (or to avoid the suspension of any necessary service of the Property);

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

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

Budgets prepared by
Manager shall be for planning and informational purposes only, and Manager
shall have no liability to Owner for any failure to meet any such budget.  However, Manager will use its best efforts to
operate within the approved budget.

(d)                                 Legal
Requirements.  Manager shall execute
and file when due all forms, reports, and returns required by law relating to
the employment of its personnel.  Manager
shall be responsible for notifying Owner in the event it receives notice that
any Improvement on a Property or any equipment therein does not comply with the
requirements of any statute, ordinance, law or regulation of any governmental
body or of any public authority or official thereof having or claiming to have
jurisdiction thereover.  Manager shall
promptly forward to

 6
 

 

Owner any
complaints, warnings, notices or summonses received by it relating to such
matters.  Owner represents that to the
best of its knowledge each of its Properties and any equipment thereon will
upon acquisition by Owner comply with all such requirements.  Owner authorizes Manager to disclose the
ownership of the Property by Owner to any such officials.  Owner agrees to indemnify, protect, defend,
save and hold Manager and its stockholders, officers, directors, employees,
managers, successors and assigns (collectively, the “Indemnified Parties”)
harmless of and from any and all Losses (as defined in Section 3.5(a)
hereof) that may be imposed on them or any or all of them by reason of the
failure of Owner to correct any present or future violation or alleged
violation of any and all present or future laws, ordinances, statutes, or
regulations of any public authority or official thereof, having or claiming to
have jurisdiction thereover, of which it has actual notice.

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

ARTICLE
III

AUTHORITY
GRANTED TO MANAGER AND CERTAIN OWNER OBLIGATIONS

3.1                                 Authority As To Tenants, Etc.  Owner
agrees and does hereby give Manager the following exclusive authority and
powers (all of which shall be exercised either in the name of Manager, as
Manager for Owner, or in the name or Owner entered into by Manager as Owner’s
authorized agent, and Owner shall assume all expenses in connection with such
matters):

(a)                                  to
advertise each Property or any part thereof and to display signs thereon, as
permitted by law;

(b)                                 to
lease the Properties to tenants;

(c)                                  to
pay all expenses of leasing such Property, including but not limited to,
newspaper and other advertising, signage, banners, brochures, referral
commissions, leasing commissions, finder’s fees and salaries, bonuses and other
compensation of leasing personnel responsible for the leasing of the Property;

(d)                                 to
cause references of prospective tenants to be investigated, it being understood
and agreed by the parties hereto that Manager does not guarantee the
creditworthiness or collectibility of accounts receivable from tenants, users
or lessees; and to negotiate new Leases and renewals and cancellations of
existing Leases that shall be subject to Manager obtaining Owner’s approval;

(e)                                  to
collect from tenants all or any of the following: a late rent administrative
charge, a non-negotiable check charge, credit report fee, a subleasing
administrative charge and/or broker’s commission; and Manager need not account
for such charges and/or commission to Owner;

 7
 

 

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

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

(ii)                                  with Owner’s
authorization, to sue for and in the name of Owner and recover rent and other
sums due; and to settle, compromise, and release such actions or suits, or
reinstate such tenancies.  All expenses
of litigation including, but not limited to, attorneys’ fees, filing fees, and
court costs that Manager shall incur in connection with the collecting of rent
and other sums, or to recover possession of any Property or any portion
thereof, shall be deemed to be an operational expense of the Property.  Manager and Owner shall concur on the
selection of the attorneys to handle such litigation.

3.2                                 Operational
Authority.  Owner agrees and does
hereby give Manager the following exclusive authority and powers (all of which
shall be exercised either in the name of Manager, as Manager for Owner, or in
the name or Owner entered into by Manager as Owner’s authorized agent, and
Owner shall assume all expenses in connection with such matters):

(a)                                  to
hire, supervise, discharge, and pay all labor required for the operation and
maintenance of each Property including but not limited to on-site personnel,
managers, assistant managers, leasing consultants, engineers, janitors,
maintenance supervisors and other employees required for the operation and
maintenance of the Property, including personnel spending a portion of their
working hours (to be charged on a pro rata basis) at the Property.  All expenses of such employment shall be
deemed operational expenses of the Property.

(b)                                 to
make or cause to be made all ordinary repairs and replacements necessary to
preserve each Property in its present condition and for the operating
efficiency thereof and all alterations required to comply with lease
requirements, and to decorate the Property;

(c)                                  to
negotiate and enter into, as Manager of the Property, contracts for all items
on budgets that have been approved by Owner, any emergency services or repairs
for items not exceeding $5,000, appropriate service agreements and labor
agreements for normal operation of the Property, which have terms not to exceed
three years, and agreements for all budgeted maintenance, minor alterations, and
utility services, including, but not limited to, electricity, gas, fuel, water,
telephone, window washing, scavenger service, landscaping, snow removal, pest
exterminating, decorating and legal services in connection with the Leases and
service agreements relating to the Property, and other services or such of them
as Manager may consider appropriate; and

(d)                                 to
purchase supplies and pay all bills.

Manager shall use
its best efforts to obtain the foregoing services and utilities for the
Property under terms that are as cost-effective and otherwise favorable to
Manager as possible for the quality of services and utilities required.  Owner hereby appoints Manager as Owner’s
authorized Manager for the purpose of executing, as Manager for said Owner, all
such contracts.  In addition, Owner
agrees to specifically assume in writing all obligations under all such
contracts so entered into by Manager, on behalf of Owner of the Property, upon
the termination of this Agreement, and Owner shall indemnify, protect, save,
defend and hold Manager and the other Indemnified Parties harmless from and
against any and all Losses resulting from, arising out of or in any way related
to such contracts and that relate to or concern matters occurring after
termination of this Agreement, but excluding matters arising out of

 8
 

 

Manager’s willful
misconduct, gross negligence and/or unlawful acts.  Manager shall secure the approval of, and
execution of appropriate contracts by, Owner for any non-budgeted and
non-emergency/contingency capital items, alterations or other expenditures in
excess of $5,000 for any one item, securing for each item at least three
written bids, if practicable, or providing evidence satisfactory to Owner that
the contract amount is lower than industry standard pricing, from responsible
contractors.  Manager shall have the
right from time to time during the term hereof, to contract with and make
purchases from Affiliates of Manager, provided that contract rates and prices
are competitive with other available sources. 
Manager may at any time and from time to time request and receive the
prior written authorization of Owner of the Property of any one or more
purchases or other expenditures, notwithstanding that Manager may otherwise be
authorized hereunder to make such purchases or expenditures.

3.3                                 Rent
and Other Collections.  Owner agrees
and does hereby give Manager the exclusive authority and powers (all of which
shall be exercised either in the name of Manager, as Manager for Owner, or in
the name or Owner entered into by Manager as Owner’s authorized agent, and
Owner shall assume all expenses in connection with such matters) to collect
rents and/or assessments and other items, including but not limited to tenant
payments for real estate taxes, property liability and other insurance, damages
and repairs, common area maintenance, tax reduction fees and all other tenant
reimbursements, administrative charges, proceeds of rental interruption
insurance, parking fees, income from coin operated machines and other miscellaneous
income, due or to become due and give receipts therefor and to deposit all such
Gross Revenue collected hereunder in the Account.  Manager may endorse any and all checks
received in connection with the operation of any Property and drawn to the
order of Owner, and Owner shall, upon request, furnish Manager’s depository
with an appropriate authorization for Manager to make such endorsement.  Manager shall also have the exclusive
authority to collect and handle tenants’ security deposits, including the right
to apply such security deposits to unpaid rent, and to comply, on behalf of
Owner of the Property, with applicable state or local laws concerning security
deposits and interest thereon, if any. 
Manager shall not be required to advance any monies for the care or
management of any Property.  Owner agrees
to advance all monies necessary therefor. 
If Manager shall elect to advance any money in connection with a
Property, Owner agrees to reimburse Manager forthwith and hereby authorizes
Manager to deduct such advances from any monies due Owner.  In connection with any insured losses or
damages relating to any Property, Manager shall have the exclusive authority to
handle all steps necessary regarding any such claim; provided that Manager will
not make any adjustments or settlements in excess of $10,000 without Owner’s
prior written consent.

3.4                                 Payment of Expenses. 
Owner agrees and does hereby give Manager the exclusive authority and
power (all of which shall be exercised either in the name of Manager, as Manager
for Owner, or in the name or Owner entered into by Manager as Owner’s
authorized agent, and Owner shall assume all expenses in connection with such
matters) to pay all expenses of the Property from the Gross Revenue collected
in accordance with Section 3.3 above, from the Account.  It is understood that the Gross Revenue will
be used first to pay the compensation to Manager as contained in Article 5
below, then operational expenses and then any mortgage indebtedness, including
real estate tax and insurance impounds, but only as directed by Owner in
writing and only if sufficient Gross Revenue is available for such
payments.  Nothing in this Agreement
shall be interpreted in such a manner as to obligate Manager to pay from Gross
Revenue, any expenses incurred by Owner prior to the commencement of this
Agreement, except to the extent Owner advances additional funds to pay such
expenses.

3.5                                 Certain Owner Indemnification Obligations.

(a)                                  On
Termination.  In the event this
Agreement is terminated for any reason prior to the expiration of its original
term or any renewal term, Owner shall indemnify, protect, defend, save and hold
Manager and all of the other Indemnified Parties harmless from and against any

 9

 

and all claims,
causes of action, demands, suits, proceedings, loss, judgments, damage, awards,
liens, fines, costs, attorney’s fees and expenses, of every kind and nature
whatsoever (collectively, “Losses”), that may be imposed on or incurred by
Manager by reason of the willful misconduct, gross negligence and/or unlawful
acts (such unlawfulness having been adjudicated by a court of proper
jurisdiction) of Owner.

(b)                                 Property
Damage, Etc.  Owner agrees to
indemnify, defend, protect, save and hold Manager and all of the other
Indemnified Parties harmless from any and all Losses in connection with or in
any way related to the Property and from liability for damage to the Property
and injuries to or death of any person whomsoever, and damage to property; provided,
however, that such indemnification shall not extend to any such Losses arising
out of the willful misconduct, gross negligence and/or unlawful acts (such
unlawfulness having been adjudicated by a court of proper jurisdiction) of
Manager or any of the other Indemnified Parties.  Manager shall not be liable for any error of
judgment or for any mistake of fact or law, or for any thing that it may do or
refrain from doing, except in cases of willful misconduct, gross negligence
and/or unlawful acts (such unlawfulness having been adjudicated by a court of
proper jurisdiction).

3.6                                 Environmental Matters. 
Owner hereby warrants and represents to Manager that to the best of
Owner’s knowledge, no Property, upon acquisition by Owner, nor any part
thereof, will be used to treat, deposit, store, dispose of or place any
hazardous substance that may subject Manager to liability or claims under the
Comprehensive Environmental Response, Compensation and Liability Act of 1980
(42 U.S.C.A. Section 9607) or any constitutional provision, statute, ordinance,
law, or regulation of any governmental body or of any order or ruling of any
public authority or official thereof, having or claiming to have jurisdiction
thereover.  Furthermore, Owner agrees to
indemnify, protect, defend, save and hold Manager and all of the other
Indemnified Parties from any and all Losses involving, concerning or in any way
related to any past, current or future allegations regarding treatment,
depositing, storage, disposal or placement by any party other than Manager of
hazardous substances on the Property.

3.7                                 Legal Status of Properties. 
Owner represents that to the best of its knowledge each Property and any
equipment thereon, when acquired by Owner, will comply with all legal
requirements and authorizes Manager to disclose the identity of the Owner of
the Property to any such officials and agrees to indemnify, protect, defend,
save and hold Manager and the other Indemnified Parties harmless of and from
any and all Losses that may be imposed on them or any of them by reason of the
failure of Owner to correct any present or future violation or alleged
violation of any and all present or future laws, ordinances, statutes, or
regulations of any public authority or official thereof, having or claiming to have
jurisdiction thereover, of which it has actual notice.  In the event it is alleged or charged that
any Improvement or any equipment on a Property or any act or failure to act by
Owner with respect to the Property or the sale, rental, or other disposition
thereof fails to comply with, or is in violation of, any of the requirements of
any constitutional provision, statute, ordinance, law, or regulation of any
governmental body or any order or ruling of any public authority or official
thereof having or claiming to have jurisdiction thereover, and Manager, in its
sole and absolute discretion, considers that the action or position of Owner,
with respect thereto may result in damage or liability to Manager, Manager
shall have the right to cancel this Agreement at any time by written notice to
Owner of its election so to do, which cancellation shall be effective upon the
service of such notice.  Such
cancellation shall not release the indemnities of Owner set forth in this
Agreement and shall not terminate any liability or obligation of Owner to
Manager for any payment, reimbursement, or other sum of money then due and
payable to Manager hereunder.

3.8                                 Extraordinary Payments. 
Owner agrees to give adequate advance written notice to Manager if Owner
desires that Manager make any extraordinary payment, out of Gross Revenue, to
the extent funds are available after the payment of Manager’s compensation as
provided for herein and all

 10
 

 

operational
expenses, of mortgage indebtedness, general taxes, special assessments, or
fire, boiler or any other insurance premiums.

ARTICLE
IV

EXPENSES

4.1                                 Owner’s Expenses. 
Except as otherwise specifically provided, all costs and expenses
incurred hereunder by Manager in fulfilling its duties to Owner shall be for
the account of and on behalf of Owner. 
Such costs and expenses shall include the wages and salaries and other
employee-related expenses of all on-site and off-site employees of Manager who
are engaged in the operation, management, maintenance and leasing or access
control of the Properties, including taxes, insurance and benefits relating to
such employees, and legal, travel and other out-of-pocket expenses that are
directly related to the management of specific Properties.  All costs and expenses for which Owner is
responsible under this Management Agreement shall be paid by Manager out of the
Account.  In the event the Account does
not contain sufficient funds to pay all said expenses, Owner shall fund all
sums necessary to meet such additional costs and expenses.

4.2                                 Manager’s Expenses. 
Manager shall, out of its own funds, pay all of its general overhead and
administrative expenses.

ARTICLE V

MANAGER’S
COMPENSATION

5.1                                 Management Fees. 
Commencing on the date hereof, Owner shall pay Manager property
management and leasing fees in an amount equal to three percent (3.0%) of Gross
Revenues (the “Management Fees”) on a monthly basis from the rental income
received from the Properties over the term of this Management Agreement. 
In the event that Owner contracts directly with a non-affiliated
third-party property manager in respect of a Property, Owner shall pay Manager
an oversight fee equal to one percent (1%) of Gross Revenues of such Property
to compensate Manager for transition services to coordinate and align the
systems and policies of the third-party property manager with those of
Manager.  Manager’s compensation under
this Section 5.1 shall apply to all renewals, extensions or expansions of
Leases that Manager has
originally negotiated.  In the event
Manager assists with planning and coordinating the construction of any
tenant-paid finish-out or improvements, Manager shall be entitled to receive
from any such tenant an amount
equal to not greater than five percent (5.0%) of the cost of such tenant
improvements.  The Management Fees may
include the reimbursement of the specified cost incurred by the Manger of
engaging another person or entity to perform Manager’s responsibilities
hereunder, provided, however, that Manager shall be responsible for payment to
such third parties.  Nothing herein shall
prevent Manager from entering fee-splitting arrangements with third parties
with respect to the Management Fees.

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

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

 11
 

 

such
audit discloses an overpayment of Management Fees for any fiscal year of more
than the correct Management Fees for such fiscal year, Manager shall bear the
cost of such audit.

ARTICLE
VI

INSURANCE
AND INDEMNIFICATION

6.1                                 Insurance to be Carried.

(a)                                  Manager
shall obtain and keep in full force and effect insurance on the Properties
against such hazards as Owner and Manager shall deem appropriate, but in any
event insurance sufficient to comply with the Leases and Ownership Agreements
shall be maintained. All liability policies shall provide sufficient insurance
satisfactory to both Owner and Manager and shall contain waivers of subrogation
for the benefit of Manager.

(b)                                 Manager
shall obtain and keep in full force and effect, in accordance with the laws of
the state in which each Property is located, employer’s liability insurance
applicable to and covering all employees of Manager at the Properties and all
persons engaged in the performance of any work required hereunder, and Manager
shall furnish Owner certificates of insurers naming Owner as a co-insured and
evidencing that such insurance is in effect. 
If any work under this Management Agreement is subcontracted as
permitted herein, Manager shall include in each subcontract a provision that
the subcontractor shall also furnish Owner with 
such a certificate.

6.2                                 Insurance Expenses. 
Premiums and other expenses of such insurance, as well as any applicable
payments in respect of deductibles shall be borne by Owner.

6.3                                 Cooperation with Insurers. 
Manager shall cooperate with and provide reasonable access to the
Properties to representatives of insurance companies and insurance brokers or
agents with respect to insurance that is in effect or for which application has
been made.  Manager shall use its best
efforts to comply with all requirements of insurers.

6.4                                 Accidents and Claims. 
Manager shall promptly investigate and shall report in detail to Owner
all accidents, claims for damage relating to Ownership, operation or
maintenance of the Properties, and any damage or destruction to the Properties
and the estimated costs of repair thereof, and shall prepare for approval by
Owner all reports required by an insurance company in connection with any such
accident, claim, damage, or destruction. 
Such reports shall be given to Owner promptly, and any report not so
given within 10 (ten) days after the occurrence of any such accident, claim,
damage or destruction shall be noted in the monthly operating statement
delivered to Owner pursuant to Section 2.5(b). 
Manager is authorized to settle any claim against an insurance company
arising out of any policy and, in connection with such claim, to execute proofs
of loss and adjustments of loss and to collect and receipt for loss proceeds.

6.5                                 Indemnification. 
Manager shall hold Owner harmless from and indemnify and defend Owner
against any and all claims or liability for any injury or damage to any person
or property whatsoever for which Manager is responsible occurring in, on, or
about the Properties, including, without limitation, the Improvements when such
injury or damage shall be caused by the negligence of Manager, its agents,
servants, or employees, except to the extent that Owner recovers insurance
proceeds with respect to such matter. 
Owner will indemnify and hold Manager harmless against all liability for
injury to persons and damage to property caused by Owner’s negligence and which
did not result from the

 12
 

 

negligence
of misconduct of Manager, except to the extent Manager recovers insurance
proceeds with respect to such matter.

ARTICLE
VII

TERM AND
TERMINATION

7.1                                 Term.  This Agreement shall commence
on the date first above written and shall continue until the seventh (7th)
anniversary of such date and thereafter for successive seven (7) year renewal
periods, unless on or before 30 days prior to the date last above mentioned or
on or before 30 days prior to the expiration of any such renewal period,
Manager shall notify Owner in writing that it elects to terminate this
Agreement, in which case this Agreement shall be thereby terminated on said
last mentioned date.  In addition, and
notwithstanding the foregoing, Owner may terminate this Agreement at any time
upon delivery of written notice to Manager not less than thirty (30) days prior
to the effective date of termination, in the event of (and only in the event
of) a showing by Owner of willful misconduct, gross negligence, or deliberate
malfeasance by Manager in the performance of Manager’s duties hereunder.  In addition, either party may terminate this
Agreement immediately upon the occurrence of any of the following:

(a)                                  A
decree or order is rendered by a court having jurisdiction (i) adjudging
Manager as bankrupt or insolvent, or (ii) approving as properly filed a
petition seeking reorganization, readjustment, arrangement, composition or
similar relief for Manager under the federal bankruptcy laws or any similar
applicable law or practice, or (iii) appointing a receiver or liquidator or
trustee or assignee in bankruptcy or insolvency of Manager or a substantial
part of the property of Manager, or for the winding up or liquidation of its
affairs, or

(b)                                 Manager
(i) institutes proceedings to be adjudicated a voluntary bankrupt or an
insolvent, (ii) consents to the filing of a bankruptcy proceeding against it,
(iii) files a petition or answer or consent seeking reorganization,
readjustment, arrangement, composition or relief under any similar applicable
law or practice, (iv) consents to the filing of any such petition, or to the
appointment of a receiver or liquidator or trustee or assignee in bankruptcy or
insolvency for it or for a substantial part of its property, (v) makes an
assignment for the benefit of creditors, (vi) is unable to or admits in writing
its inability to pay its debts generally as they become due unless such
inability shall be the fault of the other party, or (iv) takes corporate or
other action in furtherance of any of the aforesaid purposes.

7.2                                 Manager’s Obligations Upon Termination.  Upon
the termination of this Management Agreement, Manager shall have the following
duties:

(a)                                  Manager
shall deliver to Owner or its designee, all books and records with respect to
the Properties.

(b)                                 Manager
shall transfer and assign to Owner, or its designee, all service contracts and
personal property relating to or used in the operation and maintenance of the
Properties, except personal property paid for and owned by Manager.  Manager shall also, for a period of sixty
(60) days immediately following the date of such termination, make itself
available to consult with and advise Owner, or its designee, regarding the
operation, maintenance and leasing of the Properties.

(c)                                  Manager
shall render to Owner an accounting of all funds of Owner in its possession and
shall deliver to Owner a statement of all Management Fees claimed to be due to

 13
 

 

Manager and shall
cause funds of Owner held by Manager relating to the Properties to be paid to
Owner or its designee.

7.3                                 Owner’s Obligations Upon Termination. 
Owner shall pay or reimburse Manager for any sums of money due it under
this Agreement for services and expenses prior to termination of this
Agreement.  All provisions of this
Agreement that require Owner to have insured, or to protect, defend, save, hold
and indemnify or to reimburse Manager shall survive any expiration or
termination of this Agreement and, if Manager is or becomes involved in any
claim, proceeding or litigation by reason of having been Manager of Owner, such
provisions shall apply as if this Agreement were still in effect.

The parties understand and agree that Manager may withhold funds for
sixty (60) days after the end of the month in which this Agreement is
terminated to pay bills previously incurred but not yet invoiced and to close
accounts. Should the funds withheld be insufficient to meet the obligation of
Manager to pay bills previously incurred, Owner will, upon demand, advance
sufficient funds to Manager to ensure fulfillment of Manager’s obligation to do
so, within ten (10) days of receipt of notice and an itemization of such unpaid
bills.

ARTICLE
VIII

MISCELLANEOUS

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

	
  

  	
  Owner:

  	
   

  	
  BEHRINGER HARVARD OPERATING PARTNERSHIP I LP

  
	
   

  	
   

  	
  c/o Behringer
  Harvard REIT I, Inc.

  
	
   

  	
   

  	
  15601 Dallas
  Parkway

  
	
   

  	
   

  	
  Suite 600

  
	
   

  	
   

  	
  Addison, Texas
  75001

  
	
   

  	
   

  	
  Attention: Chief
  Legal Officer

  
	
   

  	
   

  	
   

  
	
   

  	
  Manager:

  	
   

  	
  HPT MANAGEMENT SERVICES LP

  
	
   

  	
   

  	
  15601 Dallas
  Parkway

  
	
   

  	
   

  	
  Suite 600

  
	
   

  	
   

  	
  Addison, Texas
  75001

  
	
   

  	
   

  	
  Attention: Chief
  Legal Officer

  

 

8.2                                 Governing Law; Venue.  This
Management Agreement shall be governed by and construed in accordance with the
laws of the State of Texas, and any action brought to enforce the agreements
made hereunder or any action which arises out of the relationship created
hereunder shall be brought exclusively in Dallas County, Texas.

8.3                                 Assignment.  Manager may delegate partially
or in full its duties and rights under this Management Agreement but only with
the prior written consent of Owner. 
Owner acknowledges and agrees that any or all of the duties of Manager
as contained herein may be delegated by Manager and performed by a person or
entity (“Submanager”) with whom Manager contracts for the purpose of performing
such duties.  Owner specifically grants
Manager the authority to enter into such a contract

 14
 

 

with
a Submanager; provided that, unless Owner otherwise agrees in writing with such
Submanager, Owner shall have no liability or responsibility to any such Submanager
for the payment of the Submanager’s fee or for reimbursement to the Submanager
of its expenses or to indemnify the Submanager in any manner for any matter;
and provided further that Manager shall require such Submanager to agree, in
the written agreement setting forth the duties and obligations of such
Submanager, to indemnify Owner for all Losses incurred by Owner as a result of
the willful misconduct or gross negligence of the Submanager, except that such
indemnity shall not be required to the extent that Owner recovers issuance
proceeds with respect to such matter. 
Any contract entered into between Manager and a Submanager pursuant to
this Section 8.3 shall be consistent with the provisions of this Agreement,
except to the extent Owner otherwise specifically agrees in writing.  This Management Agreement shall be binding
upon and shall inure to the benefit of the parties hereto and their respective
successors and assigns.

8.4                                 Third Party Leasing Services. 
Manager acknowledges that from time to time Owner may determine that it
is in the best interests of Owner to retain a third party to provide certain
leasing services with respect to certain Properties and to compensate such
third party for such leasing services. 
Upon the prior written consent of Manager, Owner shall have the
authority to enter into such a contract for leasing services with a third party
(a “Third Party Leasing Agreement”); provided that Manager shall have no
liability or responsibility to Owner for any of the duties and obligations undertaken
by such party, and Owner agrees to indemnify Manager for all Losses incurred by
Manager as a result of acts of such third party pursuant to the Third Party
Leasing Agreement.  To the extent that
leasing services are specifically required to be performed by a third party
pursuant to such Third Party Leasing Agreement, Manager shall have no
obligation to perform such leasing services and Owner shall have no obligation
to Manager for leasing fees pursuant to Section 5.2 hereof.

8.5                                 Third Party Management Services. 
Manager acknowledges that from time to time Owner may acquire interests
in Properties in which Owner does not control the determination of the party
that is engaged to provide property management and other services to be
provided by Manager with respect to all Properties acquired by Owner
hereunder.  Upon the prior written
consent of Manager, Owner shall have the authority to acquire such
non-controlling interests in Properties for which a third party provides some
or all of the services otherwise required to be performed by Manager hereunder
(a “Third Party Management Agreement”); provided that Manager shall have no
liability or responsibility to Owner for any of the duties and obligations
undertaken by such third party, and Owner agrees to indemnify Manager for all
Losses incurred by Manager as a result of the acts of such third party pursuant
to the Third Party Management Agreement. 
To the extent that property management and other services are specifically
required to be performed by a third party pursuant to such Third Party
Management Agreement, Manager shall have no obligation to perform such services
and Owner shall have no obligation to Manager for compensation for such
services pursuant to Article V hereof.

8.6                                 No Waiver.  The failure of Owner to seek
redress for violation or to insist upon the strict performance of any covenant
or condition of this Management Agreement shall not constitute a waiver thereof
for the future.

8.7                                 Amendments.  This Management Agreement may
be amended only by an instrument in writing signed by the party against whom
enforcement of the amendment is sought.

8.8                                 Headings.  The headings of the various
subdivisions of this Management Agreement are for reference only and shall not
define or limit any of the terms or provisions hereof.

 15
 

 

8.9                                 Counterparts.  This
Management Agreement may be executed in two or more counterparts, each of which
shall be deemed an original, and it shall not be necessary in making proof of
this Management Agreement to produce or account for more than one such
counterpart.

8.10                           Entire Agreement.  This
Management Agreement contains the entire understanding and all agreements
between Owner and Manager respecting the management of the Properties.  There are no representations, agreements,
arrangements or understandings, oral or written, between Owner and Manager
relating to the management of the Properties that are not fully expressed
herein.

8.11                           Disputes.  If there shall be a dispute
between Owner and Manager relating to this Management Agreement resulting in
litigation, the prevailing party in such litigation shall be entitled to
recover from the other party to such litigation such amount as the court shall
fix as reasonable attorneys’ fees.

8.12                           Activities of Manager.  The
obligations of Manager pursuant to the terms and provisions of this Management
Agreement shall not be construed to preclude Manager from engaging in other
activities or business ventures, whether or not such other activities or
ventures are in competition with Owner or the business of Owner.

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

8.14                           No
Third-Party Rights.  Nothing
expressed or referred to in this Management Agreement will be construed to give
any Person other than the parties to this Management Agreement any legal or
equitable right, remedy or claim under or with respect to this Management
Agreement or any provision of this Management Agreement, except such rights as
shall inure to a successor or permitted assignee pursuant to Section 8.3.

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

[The remainder of this page has been intentionally left blank]

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

	
   

  	
   

  	
  BEHRINGER HARVARD REIT I, INC.

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
  By:

  	
  /s/ Gerald J.
  Reihsen, III

  
	
   

  	
   

  	
   

  	
  Gerald J.
  Reihsen, III

  
	
   

  	
   

  	
   

  	
  Executive Vice
  President – Corporate

  
	
   

  	
   

  	
   

  	
  Development
  & Legal

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
  BEHRINGER
  HARVARD OPERATING

  
	
   

  	
   

  	
  PARTNERSHIP I LP

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
  By:

  	
  Behringer
  Harvard REIT I, Inc.

  
	
   

  	
   

  	
   

  	
  General Partner

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
  By:

  	
  /s/ Gerald J.
  Reihsen, III

  
	
   

  	
   

  	
   

  	
  Gerald J.
  Reihsen, III

  
	
   

  	
   

  	
   

  	
  Executive Vice
  President – Corporate

  
	
   

  	
   

  	
   

  	
  Development
  & Legal

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
  HPT
  MANAGEMENT SERVICES LP

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
  By:

  	
  /s/ Gerald J.
  Reihsen, III

  
	
   

  	
   

  	
   

  	
  Gerald J.
  Reihsen, III

  
	
   

  	
   

  	
   

  	
  Executive Vice
  President – Corporate

  
	
   

  	
   

  	
   

  	
  Development
  & Legal

  
						

 

 17

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