Instrument Prepared By And

When Recorded Return To:

Bryan Cave LLP

One Atlantic Center, 14th Floor

1201 W. Peachtree Street, NW

Atlanta, GA  30309-3488

Attention: Johnny D. Latzak, Jr., Esq.

 

NOTICE OF CONFIDENTIALITY RIGHTS:  IF YOU ARE A NATURAL PERSON, YOU MAY REMOVE
OR STRIKE ANY OR ALL OF THE FOLLOWING INFORMATION FROM ANY INSTRUMENT THAT
TRANSFERS AN INTEREST IN REAL PROPERTY BEFORE IT IS FILED FOR RECORD IN THE
PUBLIC RECORDS:  YOUR SOCIAL SECURITY NUMBER OR YOUR DRIVER'S LICENSE.

 

ASSIGNMENT OF RENTS AND LEASES

 

 

THIS ASSIGNMENT OF RENTS AND LEASES (“Assignment”) is made and entered into as
of _____________, 2014 by HARTMAN MITCHELLDALE BUSINESS PARK, LLC, a Texas
limited liability company (“Assignor”), with the address of c/o Hartman Short
Term Income Properties XX, Inc., 2909 Hillcroft, Suite 420, Houston, Texas
77057, for the benefit of SECURITY LIFE OF DENVER INSURANCE COMPANY, a Colorado
corporation (“Assignee”), with the address of c/o Voya Investment Management
LLC, 5780 Powers Ferry Road, NW, Suite 300, Atlanta, Georgia 30327-4349.

 

WITNESSETH:

 

WHEREAS, Assignor has executed and delivered to Assignee a Promissory Note dated
on or about this same date in the original principal amount of TWELVE MILLION
SEVEN HUNDRED TWENTY-FIVE THOUSAND AND NO/100 DOLLARS ($12,725,000.00) (the
“Note”), performance of which is secured, among other things, by a Deed of
Trust, Security Agreement, Financing Statement and Fixture Filing (the
“Mortgage”), which Mortgage encumbers certain real estate described in Exhibit
“A”, attached hereto and hereby made a part hereof, and improvements thereon
(together, the “Premises”); and

WHEREAS, as a condition to Assignee’s obligation to make the loan evidenced by
the Note and secured by the Mortgage (and any extensions and/or modifications
thereof) and made pursuant to or in connection with and secured by other
documents, including, but not limited to, any financing statements naming
Assignor as debtor and Assignee as secured party (this Assignment, the Note, the
Mortgage, that certain Loan Agreement dated of even date herewith by and between
Assignor and Assignee, and such other documents are sometimes hereinafter
collectively referred to as the “Loan Documents”), Assignor has agreed to
absolutely and uncon­ditionally assign to Assignee all of Assignor’s rights
under and title to various leases affecting the Premises, including Assignor’s
rights in and title to the rents therefrom, subject only to the terms and
conditions herein set forth.

 

NOW THEREFORE, in consideration of the foregoing recitals and other good and
valuable considera­tion, the receipt and sufficiency of which are hereby
ack­nowledged, and intending to be legally bound, Assignor hereby agrees as
follows:

 

1.                  Assignment of Leases.  Assignor hereby presently assigns,
transfers, grants, bargains, sells and conveys unto Assignee, its successors and
assigns, all leasehold estates of Assignor, as lessor, and all right, title and
interest of Assignor in, to and under all existing and future leases, subleases,
license agreements, concessions, tenancies and other use or occupancy
agreements, whether oral or written, covering or affecting any or all of the
Premises and all agreements for any use of, all or any part of the Premises, the
buildings, fixtures and other improvements located thereon (“Improvements”), and
all extensions, renewals and guaranties thereof and all amendments and
supplements thereto (collectively, the “Leases”), including without limitation
the following:

 

(a)                any and all rents, revenues, issues, income, royalties,
receipts, profits, contract rights, accounts receivable, general intangibles,
and other amounts now or hereafter becoming due to Assignor in connection with
or under the Leases (whether due for the letting of  space, for services,
materials or installations supplied by Assignor or for any other reason
whatsoever), including without limitation all “Rents” as defined in Chapter 64
of the Texas Property Code and all insurance, tax and other contributions,
insurance proceeds, condemnation awards, damages following defaults by tenants
under the Leases (“Tenants”), cash or securities deposited by Tenants to secure
performance of their obligations under the Leases, and all other extraordinary
receipts, and all proceeds thereof, both cash and non‑cash (all of the foregoing
being hereinafter collectively called the “Rents”) and all rights to direct the
payment of, make claim for, collect, receive and receipt for the Rents;

 

(b)               all claims, rights, privileges and remedies on the part of
Assignor, whether arising under the Leases or by statute or at law or in equity
or otherwise, arising out of or in connection with any failure by any Tenant to
pay the Rents or to perform any of its other obligations under its Lease;

 

(c)                all rights, powers and privileges of Assignor to exercise any
election or option or to give or receive any notice, consent, waiver or approval
under or with respect to the Leases; and

 

(d)               all other claims, rights, powers, privileges and remedies of
Assignor under or with respect to the Leases, including without limitation the
right, power and privilege (but not the obligation) to do any and all acts,
matters and other things that Assignor is entitled to do thereunder or with
respect thereto.

 

2.                  Purpose of Assignment; Security.  This Assignment is made
for the purpose of securing Assignor’s full and faithful (a) payment of the
indebtedness (including any extensions or renewals thereof) evidenced by the
Note, (b) payment of all other sums with interest thereon becoming due and
payable to Assignee under the provisions of the Mortgage or any other Loan
Documents, and (c) performance and discharge of each and every term, covenant
and condition contained in the Note, Mortgage, or any of the other Loan
Documents.  This Assignment is intended to be a present assignment and security
interest in all Rents pursuant to Chapter 64 of the Texas Property Code and
Assignee shall have all rights and remedies available to it at law or in equity,
including, without limitation, all rights and remedies available to Assignee
under said Chapter 64, subject to Assignee’s compliance with said Chapter 64.

 

3.                  Assignor’s Covenants.  Assignor covenants and agrees with
Assignee as follows:

(a)                That the sole ownership of the entire lessor’s interest in
the Leases and the Rents is, and as to future Leases shall be, vested in
Assignor, and that Assignor has not, and shall not, perform any acts or execute
any other instruments which might prevent Assignee from fully exercising its
rights under any of the terms, covenants and conditions of this Assignment.

 

(b)               That the Leases are and shall be valid and enforce­able
against the respective lessees thereunder in accordance with their terms and
have not been altered, modified, amended, terminated, cancelled, renewed or
surrendered nor have any Rents thereunder been collected more than one month in
advance nor have any of the terms and conditions thereof been waived in any
manner whatsoever except as approved in writing by Assignee or as permitted in
the Mortgage.

 

(c)                That none of the Leases entered into prior to the date
hereof, unless such Lease is by its express terms subordinated to the Mortgage,
shall be altered, modified, amended, terminated, cancelled, extended, renewed or
surrendered, nor any term or condition thereof waived, nor shall Assignor
consent to any assignment or sub­letting by any lessee thereunder without the
prior written approval of Assignee.  Notwithstanding the above, in no event
shall any Lease for which Assignee has executed a subordination, non-disturbance
and attornment agreement be altered, modified, amended, terminated, cancelled,
extended, renewed or surrendered, nor any term or condition thereof waived, nor
shall Assignor consent to any assignment or subletting by any lessee thereunder,
without the prior written approval of Assignee.  Under no Lease will any Rents
be abated or collected more than one month in advance.

 

                        Without in any way limiting the requirement of
Assignee’s prior written approval hereunder, any sums received by Assignor in
consideration of any termination (or release or discharge of any lessee) of any
Lease shall be held by Assignee and, provided no Event of Default (as
hereinafter defined) exists, made available to Assignor for the payment of
tenant improvement costs and leasing commissions to re-let the applicable
vacated space and any such sums received by Assignor shall be held in trust by
Assignor for such purpose.  Any such amounts which are not used to pay tenant
improvement costs and leasing commissions in connection with the re-letting of
such space within a reasonable period of time after the receipt thereof shall be
applied by Assignee, without the payment of any otherwise applicable Prepayment
Premium (as defined in the Note), to reduce the then outstanding principal
amount of the Indebtedness (as is defined in the Mortgage).

 

(d)               That, to the best of Assignor’s knowledge, there are no
defaults now existing under any of the Leases and there exists no state of facts
which, with the giving of notice or lapse of time or both, would constitute a
default under any of the Leases.

 

(e)                That Assignor shall give prompt notice to Assignee of any
written notice received by Assignor claiming that a default has occurred under
any of the Leases on the part of the Assignor, together with a complete copy of
any such notice.

 

(f)                That Assignor will not permit any Lease to become subordinate
to any lien other than the lien of the Mortgage.

 

(g)               That there shall be no merger of the Leases, or any of them,
by reason of the fact that the same person may acquire or hold directly or
indirectly the Leases, or any of them, as well as the fee estate in the Premises
or any interest in such fee estate.

 

4.                  Absolute Assignment/License to Collect Rents.  This
Assignment is entered into for the purpose of absolutely assigning the Leases
and the Rents to Assignee as additional collateral for the loan evidenced by the
Note and such Assignment is choate on the date hereof.  Notwithstanding the
foregoing, so long as no uncured Event of Default, as hereinafter defined, shall
exist, Assignor shall have a license, terminable by the Assignee upon any Event
of Default, to collect the Rents accruing from the Premises on or after, but in
no event more than one (1) month in advance of, the respective dates set forth
in the Leases on which the Rents become due (provided that in no event shall
Assignor be permitted to enter into any Lease which makes rent due earlier than
one (1) calendar month in advance of the current month (except for the last
month’s rent or security deposit)), and to hold the Rents as a trust fund for
the uses and purposes more particularly described in the Mortgage.  Upon the
occurrence of an Event of Default, the license granted to the Assignor shall be
automatically and immediately revoked without notice to the Assignor.  Upon the
revocation of such license the Assignee may at its option exercise its rights
under Chapter 64 of the Texas Property Code to give Tenants a written notice (a
“Tenant Notice”) requesting the Tenants to pay all Rents and other amounts due
under the Leases directly to Assignee and to perform any of the Tenants’
respective obligations under the Leases for the benefit of Assignee. 

 

5.                  Assignee’s Powers and Rights.  At any time during the term
of the Note or the Mortgage, Assignee may, at its option upon or after an Event
of Default and after giving a Tenant Notice in accordance with applicable law,
receive and collect all of the Rents as they become due.  Assignee shall
thereafter continue to receive and collect all of the Rents, as long as Assignee
deems such receipt and collection to be necessary or desirable, in Assignee’s
sole discretion.

 

Assignor hereby irrevocably appoints Assignee its true and lawful attorney,
coupled with an interest, with full power of substitution and with full power
for Assignee in its own name and capacity or in the name and capacity of
Assignor, from and after the occurrence of an Event of Default and after the
giving of a Tenant Notice in accordance with applicable law, to demand, collect,
receive and give complete acquittance for any and all Rents and at Assignee’s
discretion to file any claim or take any other action or proceeding and make any
settlement of any claims, either in its own name or in the name of Assignor or
otherwise, which Assignee may deem necessary or desirable in order to collect
and enforce the payment of the Rents.  Subject to Chapter 64 of the Texas
Property Code, Tenants are hereby expressly authorized and directed to pay all
Rents and any other amounts due Assignor pursuant to the Leases or otherwise, to
Assignee, or such nominee as Assignee may designate in a Tenant Notice delivered
to such Tenants, and the Tenants are expressly relieved of any and all duty,
liability or obligation to Assignor with respect to all payments so made.

 

From and after the occurrence of an Event of Default and after the giving of a
Tenant Notice in accordance with applicable law, Assignee is hereby vested with
full power to use all measures, legal and equitable, deemed by Assignee
necessary or proper to enforce this Assignment and to collect the Rents assigned
hereunder, including the right of Assignee or its designee to enter upon the
Premises, or any part thereof, with or without force and with or without process
of law and take posses­sion of all or any part of the Premises together with all
personal property, fixtures, documents, books, records, papers and accounts of
Assignor relating thereto, and may exclude the Assignor, its agents and
servants, wholly therefrom.  Assignor herein grants full power and authority to
Assignee to exercise all rights, privileges and powers herein granted at any and
all times after the occurrence of an Event of Default and after the giving of a
Tenant Notice in accordance with applicable law, without further notice to
Assignor, with full power to use and apply all of the Rents and other income
herein assigned to the payment of the costs of managing and operating the
Premises and of any indebtedness or liability of Assignor to Assignee,
including, but not limited to, the payment of taxes, special assessments,
insurance premiums, damage claims, the costs of maintaining, repairing,
rebuilding and restoring the improvements on the Premises or of making the same
rentable, reasonable attorneys’ fees incurred in connection with the enforcement
of this Assignment, and of principal and interest payments due (and all other
amounts due under the Mortgage) from Assignor to Assignee on the Note and the
Mortgage, all in such order as Assignee may determine.  Assignee shall be under
no obligation to exercise or prosecute any of the rights or claims assigned to
it hereunder or to perform or carry out any of the obligations of the lessor
under any of the Leases and does not assume any of the liabilities in connection
with or arising or growing out of the covenants and agreements of Assignor in
the Leases.   It is further understood that this Assignment shall not operate to
place responsibility for the control, care, management or repair of the
Premises, or parts thereof, upon Assignee, nor shall it operate to make Assignee
liable for the performance of any of the terms and conditions of any of the
Leases, or for any waste of the Premises by any Tenant or any other person, or
for any dangerous or defective condition of the Premises or for any negligence
in the management, upkeep, repair or control of the Premises resulting in loss
or injury or death to any Tenant, licensee, employee or stranger.  If Assignor
shall fail to pay, perform or observe any of its covenants or agreements
hereunder, Assignee may pay, perform or observe the same and collect the cost
thereof from Assignor all as more fully provided in the Mortgage.

 

6.                  Assignee Not Liable; Indemnification.  Anything contained
herein or in any of the Leases to the contrary notwithstanding:  (a) Assignor
shall at all times remain solely liable under the Leases to perform all of the
obligations of Assignor thereunder to the same extent as if this Assignment had
not been executed; (b) neither this Assignment nor any action or inaction on the
part of Assignor or Assignee shall release Assignor from any of its obligations
under the Leases or constitute an assumption of any such obligations by
Assignee; and (c) Assignee shall not have any obligation or liability under the
Leases or otherwise by reason of or arising out of this Assignment, nor shall
Assignee be required or obligated in any  manner to make any payment or perform
any other obligation of Assignor under or pursuant to the Leases, or to make any
inquiry as to the nature or sufficiency of any payment received by Assignee, or
to present or file any claim, or to take any action to collect or enforce the
payment of any amounts which have been assigned to Assignee or to which it may
be entitled at any time or times.  Assignor shall and does hereby agree to
indemnify Assignee and hold Assignee harmless from and against any and all
liability, loss or damage which Assignee may or might incur, and from and
against any and all claims and demands whatsoever which may be asserted against
Assignee, in connection with or with respect to the Leases or this Assignment,
whether by reason of any alleged obligation or undertaking on Assignee’s part to
perform or discharge any of the covenants or agreements contained in the Leases
or otherwise.  Should Assignee incur any such liability, loss or damage in
connection with or with respect to the Leases or this Assignment, or in the
defense of any such claims or demands, the amount thereof, including costs,
expenses and attorneys’ fees, shall be paid by Assignor to Assignee immediately
upon demand, together with interest thereon from the date of advancement at the
Default Rate (as defined in the Note) until paid.

 

7.                  Mortgage Foreclosure.  Upon foreclosure of the lien and
interest of the Mortgage and sale of the Premises pursuant thereto, or delivery
and acceptance of a deed in lieu of foreclosure, all right, title and interest
of Assignor in, to and under the Leases shall thereupon vest in and become the
absolute property of the purchaser of the Premises in such foreclosure
proceeding, or the grantee in such deed, without any further act or assignment
by Assignor.  Nevertheless, Assignor shall execute, acknowledge and deliver from
time to time such further instruments and assurances as Assignee may require in
connection therewith and hereby irrevocably appoints Assignee the
attorney-in-fact of Assignor in its name and stead to execute all appropriate
instruments of transfer or assignment, or any instrument of further assurance,
as Assignee may deem necessary or desirable, and Assignee may substitute one or
more persons with like power, Assignor hereby ratifying and confirming all that
its said attorney or such substitute or substitutes shall lawfully do by virtue
hereof.

 

8.                  Non-Waiver.  Waiver or acquiescence by Assignee of any
default by the Assignor, or failure of the Assignee to insist upon strict
performance by the Assignor of any covenants, conditions or agreements in this
Assignment, shall not constitute a waiver of any subsequent or other default or
failure, whether similar or dissimilar.

 

9.                  Rights and Remedies Cumulative.  The rights and remedies of
Assignee under this Assignment are cumulative and are not in lieu of, but are in
addition to any other rights or remedies which Assignee shall have under the
Note, Mortgage, or any other Loan Document, or at law or in equity.

 

10.              Severability.  If any term of this Assignment, or the
application thereof to any person or circumstances, shall, to any extent, be
invalid or unenforceable, the remainder of this Assignment, or the application
of such term to persons or cir­cumstances other than those as to which it is
invalid or unenforce­able, shall not be affected thereby, and each term of this
Assignment shall be valid and enforceable to the full extent permitted by law.

 

11.              Notices. 

(a)                All notices, demands, requests, and other communications
desired or required to be given hereunder  (“Notices”), shall be in writing and
shall be given by: (i) hand delivery to the address for Notices; (ii) delivery
by overnight courier service to the address for Notices; or (iii) sending the
same by United States mail, postage prepaid, certified mail, return receipt
requested, addressed to the address for Notices; provided, however, that Notices
given in respect of Chapter 64 of the Texas Property Code shall be given in
compliance with such Chapter 64.

 

(b)               All Notices shall be deemed given and effective upon the
earlier to occur of: (x) the hand delivery of such Notice to the address for
Notices; (y) one business day after the deposit of such Notice with an overnight
courier service by the time deadline for next day delivery addressed to the
address for Notices; or (z) three business days after depositing the Notice in
the United States mail as set forth in (a)(iii) above.  All Notices shall be
addressed to the following addresses:

 

Assignor:                Hartman Mitchelldale Business Park, LLC

c/o Hartman Short Term Income Properties XX, Inc.

2909 Hillcroft, Suite 420

Houston, Texas  77057

Attention:  Louis T. Fox, III, CFO

 

With a copy to:       Hartman Mitchelldale Business Park, LLC

c/o Hartman Short Term Income Properties XX, Inc.

2909 Hillcroft, Suite 420

Houston, Texas  77057

Attention:  Katherine N. O’Connell, General Counsel

 

Assignee:               Security Life of Denver Insurance Company

c/o Voya Investment Management LLC

5780 Powers Ferry Road, NW, Suite 300

Atlanta, Georgia  30327-4349

Attention: Mortgage Loan Servicing Department

 

and to:                   Voya Investment Management LLC

5780 Powers Ferry Road, NW, Suite 300

Atlanta, Georgia 30327-4349      

Attention:  Real Estate Law Department

 

With a copy to:     Bryan Cave LLP

One Atlantic Center

Fourteenth Floor

1201 West Peachtree Street, NW

Atlanta, Georgia  30309-3488

Attention:  Johnny D. Latzak, Jr., Esq.

 

or to such other persons or at such other place as any party hereto may by
Notice designate as a place for service of Notice.  Provided, that the “copy to”
Notice to be given as set forth above is a courtesy copy only; and a Notice
given to such person is not sufficient to effect giving a Notice to the
principal party, nor does a failure to give such a courtesy copy of a Notice
constitute a failure to give Notice to the principal party.

 

12.              Heirs, Successors and Assigns.  The terms “Assignor” and
“Assignee” shall be construed to include the respective heirs, personal
representatives, successors and assigns of Assignor and Assignee.  The gender
and number used in this Assignment are used as a reference term only and shall
apply with the same effect whether the parties are of the masculine or feminine
gender, corporate or other form, and the singular shall likewise include the
plural.

 

13.              Amendment.  This Assignment may not be amended, modified or
changed nor shall any waiver of any provisions hereof be effective, except only
by an instrument in writing and signed by the party against whom enforcement of
any waiver, amendment, change, modification or discharge is sought.

 

14.              Captions.  The captions or headings preceding the text of the
Paragraphs of this Assignment are inserted only for convenience of reference and
shall not constitute a part of this Assignment, nor shall they in any way affect
its meaning, construc­tion or effect.

 

15.              Termination of Assignment.  Upon payment in full of the
indebtedness described in Paragraph 2, this Assignment shall terminate and be
void and of no force or effect, and Assignee shall release its lien and security
interest on the Rents and Leases without costs or expenses to Assignee, Assignor
hereby agreeing to reimburse Assignee for such costs and expenses.

 

16.              Choice of Law.  THE VALIDITY AND INTERPRETATION OF THIS
ASSIGNMENT SHALL BE CONSTRUED IN ACCORDANCE WITH THE LAWS (EXCLUDING CONFLICTS
OF LAWS RULES) OF THE STATE OF TEXAS.

 

17.              Event of Default.  As used herein, “Event of Default” means the
failure of Assignor to comply with any term or provision of this Assignment
within the time specified herein or the occurrence of an event which constitutes
an Event of Default as defined in the Note, the Mortgage, or any of the other
Loan Documents.  Any Event of Default hereunder shall constitute an Event of
Default under each and all of the other Loan Documents.

 

18.              Exculpatory.  The liability of Assignor personally to pay the
Note or any interest that may accrue thereon, or any indebtedness or obligation
accruing or arising hereunder is limited to the extent set forth in the Note.

 

19.              Integration.  This Assignment, together with the other Loan
Documents, constitutes the entire agreement between the parties hereto
pertaining to the subject matters hereof and supersedes all negotiations,
preliminary agreements and all prior or contemporaneous discussions and
understandings of the parties hereto in connection with the subject matters
hereof.

 

20.              Time of Essence.  Time is of the essence in the performance of
this Assignment.

 

21.              WAIVER OF JURY TRIAL.  THE PARTIES HERETO, AFTER CONSULTING OR
HAVING HAD THE OPPORTUNITY TO CONSULT WITH COUNSEL, KNOWINGLY, VOLUNTARILY, AND
INTENTIONALLY WAIVE ANY RIGHT THEY MAY HAVE TO A TRIAL BY JURY IN ANY LITIGATION
BASED ON OR ARISING OUT OF THIS AGREEMENT OR INSTRUMENT, OR ANY RELATED
INSTRUMENT OR AGREEMENT, OR ANY OF THE TRANSACTIONS CONTEMPLATED HEREBY OR ANY
COURSE OF CONDUCT, DEALING, STATEMENTS, WHETHER ORAL OR WRITTEN, OR ACTION OF
ANY PARTY HERETO.  NO PARTY SHALL SEEK TO CONSOLIDATE BY COUNTERCLAIM OR
OTHERWISE, ANY SUCH ACTION IN WHICH A JURY TRIAL HAS BEEN WAIVED WITH ANY OTHER
ACTION IN WHICH A JURY TRIAL CANNOT BE OR HAS NOT BEEN WAIVED.  THESE PROVISIONS
SHALL NOT BE DEEMED TO HAVE BEEN MODIFIED IN ANY RESPECT OR RELINQUISHED BY ANY
PARTY HERETO EXCEPT BY A WRITTEN INSTRUMENT EXECUTED BY ALL PARTIES.

 

6356340.3

 

[REMAINDER OF PAGE INTENTIONALLY LEFT BLANK]

 

 

            IN WITNESS WHEREOF, Assignor has caused this instrument to be
executed as of the date first above written, and acknowledges receipt of a copy
hereof at the time of execution.

 

 

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

 

 

 

STATE OF TEXAS                      §

                                                      §

COUNTY OF ___________        §

                        Before me, ___________________________, a Notary Public
in and for said County and State, on this day personally appeared Allen R.
Hartman, known to me (or proved to me on the oath of ______________________ or
through ________________________ [description of identity card or other
document]) to be the President of Hartman Income REIT Management, Inc., a Texas
corporation, the manager of HARTMAN MITCHELLDALE BUSINESS PARK, LLC, a Texas
limited liability company, whose name is subscribed to the foregoing instrument
and acknowledged to me that he/she executed the same for the purposes and
consideration therein expressed.          

            Given under my hand and seal of office this ____ day of
_______________, 2014.

 

                                                                                   
                                                                       

[AFFIX NOTARIAL SEAL]                                    Notary Public in and
for                                

Printed Name:                                                

My Commission Expires:                               

 

 

EXHIBIT A

 

Legal Description