ASSIGNMENT, CONSENT AND SUBORDINATION

REGARDING MANAGEMENT AGREEMENT

 

            THIS ASSIGNMENT, CONSENT AND SUBORDINATION REGARDING MANAGEMENT
AGREEMENT (this “Assignment”) dated as of the ________ day of ______________,
2014;

 

WITNESSETH:

 

WHEREAS, HARTMAN MITCHELLDALE BUSINESS PARK, LLC, a Texas limited liability
company (“Owner”), and HARTMAN INCOME REIT MANAGEMENT, INC., a Texas corporation
(“Manager”), have entered into a certain Management Agreement (the “Agreement”)
dated June 13, 2014, covering the management of the property set out in Exhibit
“A” attached hereto and incorporated herein by this reference (“Premises”);

 

WHEREAS, SECURITY LIFE OF DENVER INSURANCE COMPANY, a Colorado corporation
(“Lender”), is making a loan to Owner in the amount of $12,725,000.00 (“Loan”)
which Loan is evidenced by a Promissory Note in the aforesaid amount secured by
(without limitation) a first priority Deed of Trust, Security Agreement,
Financing Statement and Fixture Filing (“Mortgage”) and Assignment of Rents and
Leases encumbering the Premises;

 

WHEREAS, to secure the Loan, Owner has agreed to assign to Lender all of Owner’s
rights and interest in, to and under the Agreement; and

 

WHEREAS, to make the Loan to Owner, Lender has required that Manager consent to
this Assignment and subordinate the Agreement to the lien of the Mortgage.

 

NOW, THEREFORE, KNOW ALL PEOPLE BY THESE PRESENTS:  That the undersigned, for
valuable consideration, and to induce Lender to close the Loan, expressly agrees
as follows:

1.                  Assignment of Agreement.  Owner, as security for the Loan,
hereby assigns to Lender all of Owner’s right, title and interest in and to the
Agreement.

2.                  Acknowledgment.  Manager represents and warrants to Lender
that, to the best of Manager’s knowledge, the Agreement is currently in full
force and effect, and no event of default or default on the part of either
Manager or Owner exists.

3.                  Consent.  Manager consents to and acquiesces in the
assignment of the Agreement to Lender.

4.                  Subordination.  Manager agrees that the Agreement and all
rights and duties thereunder shall be and remain and are hereby expressly made
SUBORDINATE AND INFERIOR to the Mortgage and also agrees that the Mortgage shall
be and remain PRIOR AND SUPERIOR to the Agreement and to all of the rights of
the Manager thereunder regardless of how often or in what manner the Loan,
together with the lien or liens securing the same, may be renewed, extended,
changed or altered.

5.                  Succession to Ownership.  Manager agrees that if Lender
should succeed to the interest of Owner in and to the Premises, or any portion
thereof which is subject to the Agreement, by means of foreclosure pursuant to
the exercise of the power of sale contained in the Mortgage, judicial
foreclosure, or conveyance in lieu of foreclosure, then, at the option and in
the discretion of Lender exercised by written notice to Manager, either: (a) the
Agreement shall be terminated; or (b) the Agreement shall remain in full force
and effect, and Lender shall have the right to enforce the rights of the Owner
under the Agreement, and to otherwise assume the rights and interests of Owner
in, to and under the Agreement.  In the event Lender elects the option specified
in clause (b) of the immediately preceding sentence, then Manager will perform
its duties and obligations for Lender under the Agreement in accordance with the
terms and provisions of the Agreement, and the Agreement shall continue in full
force and effect as a direct agreement between Lender and Manager with the same
force and effect as if Lender were originally named there as the Owner, and
Manager and Lender shall be bound to each other under the terms, covenants and
provisions of the Agreement; provided, however, that (i) Lender shall not be
liable for any act, omission or obligation of Owner under the Agreement, or for
any matter arising under the Agreement prior to the date Lender succeeds to the
interest of Owner in and to the Premises and takes possession of the Premises;
(ii) Lender shall not be responsible for the payment of any fees which are due
and payable to Manager under the Agreement, for, during or with respect to any
period of time prior to the date Lender succeeds to the interest of Owner in and
to the Premises; (iii) Lender shall not be subject to any claims, offsets or
defenses which Manager may have against Owner; (iv) Lender shall not be bound by
any amendment to or modification of the Agreement made without the written
consent of Lender; (v) Lender shall have no obligation to repair or restore all
or any portion of the Premises in the event of damage or destruction to, or
condemnation of, any portion of the Premises or any component thereof; and (vi)
Lender shall have no personal liability to Manager for any of the duties and
obligations of the Manager under the Agreement, the liability of Lender for the
performance of such duties and obligations being limited solely to Lender’s
interest in the Premises.  Furthermore, in the event Lender terminates the
Agreement pursuant to this paragraph 5, Lender shall not be liable to Manager
for any damages of any sort or any termination fees, reimbursements or
liquidated damages pursuant to the Agreement.

6.                  Transition.  In the event Lender terminates the Agreement
pursuant to paragraph 5, above, then, in order to ensure an orderly transition
of management of the Premises, Manager agrees as follows:

(a)                Following Manager’s receipt of notice from Lender that Lender
is terminating the Agreement, on the date of termination specified in such
notice (or as soon thereafter as circumstances permit), Manager shall surrender
and turn over to Lender all accounts, receipts and funds of Owner pertaining to
the Premises, including, without limitation, all operating accounts, reserve
accounts, debt service accounts, income accounts, payroll accounts (other than
to the extent of existing obligations of Manager to employees), and all other
bank accounts, receipts or deposits of every kind or nature.

(b)               Manager shall deliver to Lender all information in the
possession, custody or control of Manager relating to the occupancy, leasing and
operation of the Premises.

7.                  Amendments and Assignments.  Without the prior written
consent of Lender, Manager shall not modify or amend the Agreement, consent to
any mutual termination of the Agreement by Owner and Manager, or transfer or
assign any of Manager’s rights and interests under the Agreement.

8.                  Default of Owner.  Manager shall transmit to Lender a copy
of any notice or statement of default under the Agreement transmitted to Owner
by Manager, and in the event Owner shall fail to cure any such default within
any applicable cure period provided in the Agreement, Manager shall not
terminate the Agreement on account of such default unless and until Manager
shall have given Lender written notice of Owner’s failure to cure such default
and afforded Lender thirty (30) days from its receipt of such notice, within
which time Lender shall have the right,  but not the obligation, to cure such
default; provided, however, that if the default is of such a nature that more
than thirty (30) days are required to cure such default, then Lender shall be
afforded a reasonable time to cure such default provided that Lender undertakes
promptly to cure such default and thereafter diligently continues such cure to
completion; provided, further, however, that Lender shall have no obligation to
cure any such default.  The provisions of this paragraph shall apply only to
defaults, or events or circumstances which would constitute defaults, occurring
prior to the date on which Lender succeeds to the interest of Owner in and to
the Premises, and from and after such date, the provisions of the Agreement
shall govern the giving of notice to, and curing of defaults by, Lender.

9.                  Governing Law.  This Assignment shall be governed by, and
construed, interpreted and enforced in accordance with the laws of the state in
which the Premises are located.

10.              Successor and Assigns.  This Assignment shall be binding upon
Manager and its successor, legal representatives and assigns and shall inure to
the benefit of Lender and its successors, legal representatives and assigns
(including any person or entity which succeeds to the interest of Lender in and
to the Mortgage).  Notwithstanding any provision of the Agreement to the
contrary, in the event Lender transfers and conveys its interest in the
Premises, Lender (without the consent of Manager) may transfer and assign its
right, title and interest in and to the Agreement to the transferee of the
Premises, and upon such transfer and assignment, any obligations and liabilities
of Lender under the Agreement shall terminate and shall thereafter be the
responsibility of such transferee, and such transferee shall thereafter be
subject to all transfer restrictions contained in the Agreement.

 

6356274.2

 

 [REMAINDER OF PAGE INTENTIONALLY LEFT BLANK]

 

            IN WITNESS WHEREOF, Manager and Borrower have caused this Assignment
to be executed as of the day and year first above written.

 

 

                                                                        MANAGER:

 

HARTMAN INCOME REIT MANAGEMENT, INC., a Texas corporation

 

 

 

By:                                                                 

Allen R. Hartman, President

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

[SIGNATURES CONTINUED ON FOLLOWING PAGE]

 

[SIGNATURES CONTINUED FROM PRECEDING PAGE]

 

 

OWNER:

 

 

HARTMAN MITCHELLDALE BUSINESS PARK, LLC, a Texas limited liability company

 

 

By:   Hartman Income REIT Management, Inc.,
a Texas corporation, Manager

 

 

 

By:                                                         

                Allen R. Hartman, President

 

 

 

 

 

 

EXHIBIT A

 

LEGAL DESCRIPTION