Document:

Exhibit 10.3

MORTGAGE, ASSIGNMENT OF
RENTS

AND
LEASES, SECURITY AGREEMENT AND FIXTURE FILING

THIS
MORTGAGE, ASSIGNMENT OF RENTS AND LEASES, SECURITY AGREEMENT AND FIXTURE FILING
(“Security Instrument”) is
made as of the 17th day of August, 2006 by BEHRINGER HARVARD FERNCROFT, LLC, a
Delaware limited liability company, as mortgagor (“Borrower”), to BARCLAYS CAPITAL REAL
ESTATE INC., a Delaware corporation, as mortgagee (together with its successors
and assigns, “Lender”).

BACKGROUND

Borrower
and Lender are entering into a certain Loan Agreement of even date herewith (“Loan Agreement”) pursuant to which
Lender will make a loan (“Loan”)
to Borrower in the maximum principal amount of $18,000,000.00.  The Loan also will be evidenced by Borrower’s
promissory note to Lender of even date herewith (“Note”).  Borrower
desires to secure payment and performance of Borrower’s obligations in respect
of the Loan by granting to Lender the security described in this Security
Instrument.

NOW,
THEREFORE, to induce Lender to make the Loan to Borrower, and for other good
and valuable consideration, the receipt and sufficiency of which are hereby
acknowledged, and intending to be legally bound hereby, Borrower agrees as
follows:

ARTICLE
I

DEFINED TERMS

Section
1.01           Defined Terms.  Capitalized terms used in this Security
Instrument and not specifically defined in this Security Instrument have the
meaning provided in the Loan Agreement.

ARTICLE
II

GRANT OF SECURITY

Section
2.01           Property Mortgaged.  Borrower does hereby irrevocably deed,
mortgage, grant, bargain, sell, assign, pledge, warrant, transfer and convey to
Lender, and to its successors and assigns as Lender, as security for the
Obligations, with the statutory power of sale and WITH MORTGAGE COVENANTS, the
following property, rights, interests and estates, now owned or hereafter
acquired by Borrower to the full extent of Borrower’s right, title and interest
therein, including hereafter acquired rights, interests and property, and all
products and proceeds thereof and additions and accessions thereto
(collectively, “Property”):

(a)           Land.  The land described in Exhibit A attached
hereto and made a part hereof, together with all estates and development rights
now existing or hereafter acquired for use in connection therewith (“Land”);

 

(b)           Additional Land.  All land that, from time to time, by
supplemental deed or otherwise, may be expressly made subject to this Security
Instrument, and all estates and development rights hereafter acquired by
Borrower for use in connection with such land (also, the “Land”);

(c)           Improvements.  All buildings, structures, improvements and
fixtures now or hereafter erected or located on the Land (“Improvements”);

(d)           Easements.  All easements, rights-of-way or use, rights,
strips and gores of land, streets, ways, alleys, passages, sewer rights, water,
water courses, water rights and powers, air rights and development rights, and
all estates, rights, titles, interests, privileges, liberties, servitudes,
tenements, hereditaments and appurtenances of any nature whatsoever, in any way
now or hereafter belonging, relating or pertaining to the Property and the
reversion and reversions, remainder and remainders, and all land lying in the
bed of any street, road or avenue, opened or proposed, in front of or adjoining
the Land, to the center line thereof, and all the estates, rights, titles,
interests, dower and rights of dower, curtesy and rights of curtesy, property,
possession, claim and demand whatsoever, both at law and in equity, of Borrower
of, in and to the Property and every part and parcel thereof, with all
appurtenances thereto;

(e)           Fixtures and Personal Property.  All goods, inventory, machinery, equipment,
fixtures (including, without limitation, all heating, air conditioning,
plumbing, lighting, communications and elevator fixtures), furnishing, building
supplies and materials, and all other personal property of every kind and
nature whatsoever owned by Borrower (or in which Borrower has or hereafter
acquires an interest) and now or hereafter located upon, or appurtenant to, the
Property or used or useable in the present or future operation and occupancy of
the Property, along with all accessions, replacements or substitutions of all
or any portion thereof (collectively, “Personal
Property”);

(f)            Leases and Rents.  All leases, subleases, licenses and other
agreements granting others the right to use or occupy all or any part of the
Property together with all restatements, renewals, extensions, amendments and
supplements thereto (“Leases”),
now existing or hereafter entered into, and whether entered before or after the
filing by or against Borrower of any petition for relief under the Bankruptcy
Code, and all of Borrower’s right, title and interest in the Leases, including,
without limitation (i) all guarantees, letters of credit and any other
credit support given by any tenant or guarantor in connection therewith (“Lease Guaranties”), (ii) all cash,
notes, or security deposited thereunder to secure the performance by the
tenants of their obligations thereunder (“Tenant
Security Deposits”), (iii) all claims and rights to the
payment of damages and other claims arising from any rejection by a tenant of
its Lease under the Bankruptcy Code (“Bankruptcy
Claims”), (iv) all of the landlord’s rights in casualty or
condemnation proceeds of a tenant in respect of the leased premises (“Tenant Claims”), (v) all rents,
ground rents, additional rents, revenues, termination and similar payments,
issues and profits (including all oil and gas or other mineral royalties and bonuses)
from the Property (collectively with the Lease Guaranties, Tenant Security
Deposits, Bankruptcy Claims and Tenant Claims, “Rents”), whether paid or accruing before or after the
filing by or against Borrower of any petition for relief under the Bankruptcy
Code, (vi) all proceeds or streams of payment from the sale or other
disposition of the Leases or disposition of any Rents, and (vii) the right
to receive and apply the Rents to the payment of the Debt and to do all other

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things which Borrower or a lessor is or may become
entitled to do under the Leases or with respect to the Rents;

(g)           Condemnation Awards.  All awards or payments, including interest
thereon, which may heretofore and hereafter be made with respect to the
Property, whether from the exercise of the right of eminent domain (including,
without limitation, any transfer made in lieu of or in anticipation of the
exercise of the right), or for a change of grade, or for any other injury to or
decrease in the value of the Property;

(h)           Insurance Proceeds.  All proceeds of, and any unearned premiums
on, any insurance policies covering the Property, including, without
limitation, the exclusive right to receive and apply the proceeds of any claim
awards, judgments, or settlements made in lieu thereof, for damage to the
Property;

(i)            Tax Certiorari.  All refunds, rebates or credits in connection
with a reduction in Taxes, including, without limitation, rebates as a result
of tax certiorari or any other applications or proceedings for reduction;

(j)            Agreements.  All agreements, contracts (including, without
limitation, service, supply and maintenance contracts), registrations, permits,
licenses (including, without limitation, liquor licenses, if any, to the
fullest extent assignable by Borrower), franchise, plans, specifications and
other documents, now or hereafter entered into, and all rights therein and
thereto, respecting or pertaining to the use, occupation, construction,
management or operation of the Property, or respecting any business or activity
conducted from the Property, and all right, title and interest of Borrower
therein and thereunder, including, without limitation, the right, while an
Event of Default remains uncured, to receive and collect any sums payable to
Borrower thereunder (collectively, the “Operating
Agreements”);

(k)           Intangibles.  All accounts, escrows, chattel paper, claims,
deposits, trade names, trademarks, service marks, logos, copyrights, goodwill,
books and records and all other general intangibles relating to or used in connection
with the operation of the Property;

(l)            Accounts.  All reserves, escrows and deposit accounts
maintained by Borrower with respect to the Property (including, without
limitation, all reserves, escrows, deposit accounts and lockbox accounts established
pursuant to the Loan Agreement), together with all cash, checks, drafts,
certificates, accounts receivable, documents, letter of credit rights,
securities, investment property, financial assets, instruments and other
property from time to time held therein, and all proceeds, products,
distributions, dividends or substitutions thereon or thereof;

(m)          Rights to Conduct Legal Actions.  The right, in the name and on behalf of
Borrower, to commence any action or proceeding to protect the interest of
Lender in the Property and to appear in and defend any action or proceeding
brought with respect to the Property;

(n)           Proceeds.  All proceeds and profits arising from the
conversion, voluntary or involuntary, of any of the foregoing into cash
(whether made in one payment or a stream of payments) and any liquidation
claims applicable thereto; and

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(o)           Rights.  Any and all other rights of Borrower in and
to the items set forth in the foregoing subsections (a) through (n),
inclusive, and in and to the Property.

TO
HAVE AND TO HOLD the above granted and described Property unto Lender, and its
successors and assigns, with power of sale in accordance with the terms and
conditions hereof, forever; subject, however, to Section 2.05 below.

Section
2.02           Grant of Security Interest;
Security Agreement.  Borrower hereby
grants to Lender, as security for the Obligations, a security interest in the
Property to the fullest extent that the Property now or hereafter may be
subject to a security interest under the UCC. 
Borrower intends for this Security Instrument to be a “security
agreement” within the meaning of the UCC. 
Borrower hereby irrevocably authorizes Lender to prepare, execute and
file all initial financing statements, and any restatements, extensions,
continuations, renewals or amendments thereof, in such form as Lender may
require to perfect or continue the perfection of this security interest or
other statutory liens held by Lender. 
Unless prohibited by applicable law, Borrower agrees to pay all
reasonable expenses incident to the preparation, execution, filing and/or
recording of any of the foregoing.  With
respect to any of the Property in which a security interest is not perfected by
the filing of a financing statement, Borrower consents and agrees to undertake,
and to cooperate fully with Lender, to perfect the security interest hereby
granted to Lender in the Property. 
Without limiting the foregoing, if and to the extent any of the Property
is held by a bailee for the benefit of Borrower, Borrower shall promptly notify
Lender thereof and, if required by Lender, promptly obtain an acknowledgment
from such bailee that is satisfactory to Lender and confirms that such bailee
holds the Property for the benefit of Lender as secured party and shall only
act upon instructions from Lender with respect to the Property.

Section
2.03           Assignment of Leases and
Rents.

(a)           Rights Granted to Lender.  Borrower hereby absolutely and
unconditionally assigns to Lender all of Borrower’s right, title and interest
in and to all current and future Leases and Rents.  Borrower hereby declares its intention to
establish a present, absolute and irrevocable transfer and assignment to Lender
of all Rents and Leases and to authorize and empower Lender to collect and
receive all Rents and exercise all of Borrower’s rights under the Leases
(including, without limitation, the right to modify, extend or terminate any
Lease) without any further action by Borrower; it being intended that this
assignment is effective immediately and not an assignment made for security
only, not withstanding any provision hereof to the contrary.  For purposes of giving effect to this
assignment of Rents and Leases and for no other purpose, Rents and Leases shall
not be deemed to be part of the “Property” as that term is defined in
Section 2.01 of this Security Instrument. 
If, however, this assignment of Rents and Leases is not enforceable by
its terms under the laws of the State where the Property is located, then Rents
and Leases shall be included as part of the Property and it is Borrower’s
intention that, in this circumstance, this Security Instrument creates and
perfects a lien of the Rents and Leases in favor of Lender, which lien shall be
effective as of the date of this Security Instrument.

(b)           License to Borrower; Revocation.  Nevertheless, subject to the terms of this
Security Instrument, the Loan Agreement and the Lockbox Agreement, Lender
grants to Borrower a revocable license (i) to manage the leasing
activities of the Property as contemplated

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by the Loan Agreement, (ii) to exercise all of
Borrower’s rights under the Leases and (iii) to collect and receive the
Rents in trust for Lender and to apply the Rents to discharge all current
amounts due on the Debt and to pay the current costs of managing, operating and
maintaining the Property.  So long as no
Event of Default exists and subject to the provisions of the Lockbox Agreement,
the Rents remaining after application pursuant to the preceding sentence may be
retained by Borrower free and clear of, and released from, Lender’s rights with
respect to Rents under this Security Instrument.  From and after the occurrence of an Event of
Default, and for so long as such Event of Default exists, and without the
necessity of notice or prior demand or Lender’s entering upon and taking and
maintaining control of the Property (whether directly or through a receiver),
the license granted to Borrower by this Section shall terminate automatically,
and Lender shall be entitled to receive and collect the Rents as they become
due and payable and exercise all of Borrower’s rights or the rights of lessor
under the Leases and with respect to the Rent. 
Lender’s right to revoke the license granted to Borrower is in addition
to all other rights and remedies available to Lender following an Event of
Default.

Section
2.04           Pledge of Monies Held.  Borrower hereby pledges to Lender, as
security for the Obligations, all money now or hereafter held by Lender in
escrow or reserve or on deposit pursuant to the terms hereof or pursuant to the
Loan Agreement or any other Loan Document, until expended or applied as
provided in this Security Instrument or such other Loan Document.

Section
2.05           Release of Security.  The grants, mortgage, liens, security
interests, assignments, pledges and transfers by this Security Instrument are
subject to the express condition that, if Borrower pays to Lender the Debt at
the time and in the manner provided in the Loan Agreement and performs all
Obligations when and as required by the Loan Agreement and each other Loan Document,
Lender shall release the Property from the grants, mortgage, liens, security
interests, assignments, pledges and transfers created by this Security
Instrument and reconvey the Property to Borrower.  Lender shall prepare (at Borrower’s expense)
and deliver to Borrower such documents as are necessary to effect such release
and reconveyance.

ARTICLE III

DEBT AND OBLIGATIONS SECURED

Section
3.01           Debt.  This Security Instrument and the interests
created in favor of Lender hereunder are given for the purpose of securing
(a) payment of principal, interest and all other amounts due at anytime
under the Loan Agreement, the Note and each of the other Loan Documents to
which Borrower is a party, including, without limitation, interest at the
Default Rate, any late fee for delinquent payments and Prohibited Prepayment
Fee (if any) provided in the Loan Agreement, and amounts advanced by Lender to
protect and preserve the Property and the Liens hereby created for the benefit
of Lender (collectively “Debt”),
and (b) performance of all obligations of Borrower contained in the Loan
Agreement, the Note and each of the other Loan Documents (collectively with the
Debt, “Obligations”).  Notwithstanding any provision of this
Security Instrument to the contrary, the obligations of Borrower and the other
indemnitors under the Environmental Indemnity shall not be deemed secured by
this Security Instrument unless and until Lender expressly declares in writing
such obligations to be secured hereby.

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ARTICLE IV

BORROWER COVENANTS

Section
4.01           Payment of Debt and
Performance of Obligations.  Borrower
will pay the Debt at the time and in the manner provided in the Loan Documents
and fully and punctually perform the Obligations when and as required by the
Loan Documents.  Borrower may not prepay
the Debt except in strict accordance with the Loan Agreement.

Section
4.02           Compliance with Loan
Agreement.  Borrower shall comply
with all covenants and agreements in the Loan Agreement, including, without
limitation, all obligations regarding the ownership, operation, management and
condition of the Property and the protection and perfection of the Liens hereby
created in favor of Lender.  Without
limiting the foregoing, Borrower agrees:

(a)           No Transfers of the Property or
Interests in Borrower.  Borrower
shall not cause or permit any Transfer of the legal or beneficial ownership of
the Property, Borrower or SPE Equity Owner in violation of the Loan Agreement.

(b)           Payment of Taxes and Other
Lienable Charges.  Borrower shall pay
all Taxes and Other Charges assessed or imposed against the Property when and
as required by the Loan Agreement.

(c)           Insurance.  Borrower shall obtain and maintain, in full
force and effect at all times, all insurance with respect to Borrower and the
Property as required by the Loan Agreement.

(d)           Obligations upon Condemnation or
Casualty.  Borrower shall comply with
all obligations required under the Loan Agreement in the event the Property is
damaged by a Casualty or becomes involved in any Condemnation.  All proceeds or awards recovered or payable
to Borrower as a result of a Casualty or Condemnation shall be paid to, and
administered by Lender, in accordance with the Loan Agreement.

(e)           Leases and Rents.  Borrower shall not enter into any Leases for
all or any portion of the Property unless in accordance with the Loan
Agreement.

Section
4.03           Warranty of Title.  Borrower has good, marketable and insurable
fee simple title of record to the
Property, free and clear of all liens, encumbrances and charges whatsoever
except for the Permitted Encumbrances. 
Borrower shall forever warrant, defend and preserve the title and the
validity and priority of the lien of this Security Instrument and shall forever
warrant and defend the same to Lender against the claims of all Persons whomsoever,
subject to the Permitted Encumbrances.

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ARTICLE V

SUBROGATION

Section
5.01           Subrogation.  If the Loan is used to pay, satisfy,
discharge, extend or renew any indebtedness secured by a pre-existing mortgage,
or other lien encumbering the Property (“Prior
Lien”), then to the extent of funds so used, Lender shall
automatically, and without further action on its part, be subrogated to all
rights, including lien priority, held by the holder of the indebtedness secured
by the Prior Lien, whether or not the Prior Lien is released, and such former
rights are not waived but rather are continued in full force and effect in
favor of Lender and are merged with the lien and security interest created
herein as cumulative security for payment of the Debt and performance of the
Obligations.

ARTICLE
VI

DEFAULT

Section
6.01           Events of Default.  The occurrence of an “Event of Default” as
that term is defined under the Loan Agreement shall constitute an “Event of Default” under this Security
Instrument has occurred and remains uncured.

Section
6.02           Remedies.  If an Event of Default occurs, Lender may, at
its option, and without prior notice or demand, exercise and hereby is
authorized and empowered by Borrower so to exercise, any or all of the remedies
set forth in the Loan Agreement (including, without limitation, the right to
accelerate the Loan) or otherwise permitted by law or in equity.  THIS SECURITY INSTRUMENT IS UPON THE
STATUTORY CONDITION, FOR ANY BREACH OF WHICH, OR FOR ANY EVENT OF DEFAULT
HEREUNDER, LENDER SHALL HAVE THE STATUTORY POWER OF SALE.

Section
6.03           Cumulative Remedies; No
Waiver; Other Security.  Lender’s
remedies under this Security Instrument are cumulative with the remedies
provided in the other Loan Documents, by law or in equity and may be exercised
independently, concurrently or successively in Lender’s sole discretion and as
often as occasion therefore shall arise. 
Lender’s delay or failure to accelerate the Loan or exercise any other
remedy upon the occurrence of an Event of Default shall not be deemed a waiver
of such right as remedy.  No partial
exercise by Lender of any right or remedy will preclude further exercise
thereof.  Notice or demand given to
Borrower in any instance will not entitle Borrower to notice or demand in
similar or other circumstances nor constitute Lender’s waiver of its right to
take any future action in any circumstance without notice or demand (except
where expressly required by this Security Instrument to be given).  Lender may release other security for the
Debt, may release any party liable for the Debt, may grant extensions, renewals
or forbearances with respect thereto, may accept a partial or past due payment
or grant other indulgences, or may apply any other security held by it to
payment of the Debt, in each case without prejudice to its rights under this
Security Instrument and without such action being deemed an accord and
satisfaction or a reinstatement of the Debt. 
Lender will not be deemed as a consequence of its delay or failure to
act, or any forbearances granted, to have waived or be estopped from exercising
any of its rights or remedies.

 7
 

 

Section
6.04           Enforcement Costs.  Borrower shall pay, on written demand by
Lender, all costs incurred by Lender in (a) collecting any amount payable
under the Loan Documents, or (b) enforcing its rights under the Loan
Documents, in each case whether or not legal proceedings are commenced.  Such fees and expenses include, without
limitation, reasonable fees for attorneys, paralegals, law clerks and other
hired professionals, a reasonable assessment of the cost of services performed
by Lender’s default management staff, court fees, costs incurred in connection
with pre-trial, trial and appellate level proceedings, including discovery, and
costs incurred in post-judgment collection efforts or in any bankruptcy
proceeding.  Amounts incurred by Lender
shall be added to the Debt, shall be immediately due and payable, and shall
bear interest at the Default Rate from the date of disbursement until paid in
full, if not paid in full within five (5) days after Lender’s written demand
for payment.

Section
6.05           Application of Proceeds.  The proceeds from disposition of the Property
shall be applied by Lender to the payment of the Debt (including, without
limitation, advances made by Lender and enforcement costs incurred by Lender)
in such priority and proportion as Lender determines in its sole discretion.

Section
6.06           Continuing Lien; Right
to Release Property.  If less than
all of the Property is, at any time, sold through foreclosure, power of sale,
or otherwise, or if Lender releases any portion of the Property (for whatever
consideration Lender deems appropriate), this Security Instrument shall
continue as a lien and security interest on the remaining portion of the
Property, unimpaired and without loss of priority.

Section
6.07           LIMITATION ON PERSONAL
LIABILITY.  NOTWITHSTANDING ANY
PROVISION HEREOF TO THE CONTRARY, BORROWER’S PERSONAL LIABILITY FOR PAYMENT OF
THE DEBT AND PERFORMANCE OF THE OBLIGATIONS IS LIMITED HEREUNDER IN THE SAME MANNER
AND TO THE SAME EXTENT AS EXPRESSLY PROVIDED IN THE LOAN AGREEMENT.

ARTICLE
VII

WAIVER
OF RIGHT OF REDEMPTION AND OTHER RIGHTS

Section
7.01           Waiver of Rights of
Redemption, Marshalling and Other Rights. 
Borrower hereby waives, to the fullest extent permitted by law, the
benefit of all laws, now or hereafter in force, providing for (a) the
valuation or appraisement of the Property, or any party thereof, prior to any
sale or sales thereof pursuant to this Security Instrument or any decree,
judgment or order of a court of competent jurisdiction; (b) the right to
stay or extend any such proceeding, to have this Security Instrument reinstated
or to redeem the Property or any portion thereof so sold; (c) rights of
marshalling relating to any such sale or sales; (d) any right to require
that the Property be sold as separate tracts or units in connection with
enforcement of this Security Instrument; and (e) the benefit of any
moratorium, exemption or homestead rights now or hereafter provided.  Borrower makes such waivers on its own behalf
and on behalf of all parties now or hereafter claiming or having an interest
(direct or indirect) by, through or under Borrower.

 8
 

 

Section
7.02           Waiver of Counterclaim.  Borrower hereby waives, to the fullest extent
permitted by law, the right to assert a counterclaim, other than a mandatory or
compulsory counterclaim, in any action or proceeding brought against it by
Lender arising out of, or in any way connected with, the Obligations.

Section
7.03           Waiver of Foreclosure
Defense.  Borrower hereby waives, to
the fullest extent permitted by law, any defense Borrower might have by reason
of Lender’s failure to make any tenant or tenant of the Property a party
defendant in any foreclosure instituted by Lender.

Section
7.04           Waiver of Notices
Generally.  Borrower hereby waives,
to the fullest extent permitted by law, its rights to notice from Lender except
when this Security Instrument or the other Loan Documents expressly provides
for Lender to give notice to Borrower.

Section
7.05           Waiver of Statute of
Limitations and Laches.  Borrower
hereby waives, to the fullest extent permitted by law, the benefit of any
statute of limitations or laches defense to payment of the Debt or performance
of the Obligations.

Section
7.06           WAIVER OF TRIAL BY JURY.  EACH OF BORROWER AND LENDER (BY ITS FUNDING
OF THE LOAN) WAIVES ITS RIGHT, TO THE FULLEST EXTENT PERMITTED BY LAW, AND
AGREES NOT TO ELECT, A TRIAL BY JURY WITH RESPECT TO ANY ISSUE ARISING OUT OF
THIS SECURITY INSTRUMENT OR THE RELATIONSHIP BETWEEN THE PARTIES AS BORROWER
AND LENDER.  BORROWER HEREBY WAIVES ANY
RIGHT IT MAY HAVE TO CLAIM OR RECOVER IN ANY TRIAL ACTION OR PROCEEDING
REFERRED TO IN THE PRECEDING SENTENCE, ANY SPECIAL, EXEMPLARY, PUNITIVE OR CONSEQUENTIAL
DAMAGES OR DAMAGES PURSUANT TO M.G.L. C.93A ET SEQ. OTHER THAN ACTUAL DAMAGES.

Section
7.07           Governing Law.  This Security Instrument shall be interpreted
and enforced according to the laws of the State where the Land is located
(without giving effect to rules regarding conflict of laws).

Section
7.08           Consent to Jurisdiction.  Borrower hereby consents and submits to the
exclusive jurisdiction and venue of any state or federal court sitting in the
county and State where the Land encumbered hereby is located with respect to
any legal action or proceeding arising with respect to this Security Instrument
and waives all objections which it may have to such jurisdiction and
venue.  Nothing herein shall, however,
preclude or prevent Lender from bringing actions against Borrower in any other
jurisdiction as may be necessary to enforce or realize upon the security for
the Loan provided in any of the Loan Documents.

ARTICLE
VIII

MISCELLANEOUS
PROVISIONS

Section
8.01           Incorporation from Loan
Agreement.  All provisions of
Articles 17 and 18, inclusive, of the Loan Agreement are incorporated into
this Security Instrument by this reference, as if fully reproduced herein.

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Section
8.02           Further Acts.  Borrower, at Borrower’s expense, agrees to
take such further actions and execute such further documents as Lender
reasonably may request to carry out the intent of this Security Instrument or
to establish and protect the rights and remedies created or intended to be
created in favor of Lender hereunder or to protect the value of the Property
and the Liens and security hereby created in favor of Lender.  Borrower agrees to pay all filing,
registration or recording fees or taxes, and all expenses incident to the
preparation, execution, acknowledgement or filing/recording of this Security
Instrument or any such instrument of further assurance, except where prohibited
by law so to do.

Section
8.03           No Third Party
Beneficiary.  Notwithstanding any
provision of this Security Instrument to the contrary, this Security Instrument
is not intended by the parties to create, and shall not create, benefits on
behalf of any tenant or other occupant of the Property or anyone claiming
rights through any tenant or other occupant of the Property.

Section
8.04           No Agency or Partnership.  Nothing contained in this Security Instrument
shall constitute Lender as a joint venturer, partner or agent of Borrower, or
render Lender liable for any debts, obligations, acts, omissions,
representations, or contracts of Borrower.

[Remainder of page is blank; signatures appear on next
page.]

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IN
WITNESS WHEREOF, this Security Instrument has been executed as an instrument
under seal by Borrower the day and year first above written.

	
  

  	
  BORROWER:

  
	
   

  	
   

  
	
   

  	
  BEHRINGER
  HARVARD FERNCROFT, LLC,

  
	
   

  	
  a Delaware
  limited liability company

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  By:

  	
   

  	
   

  
	
   

  	
   

  	
    Gerald
  J. Reihsen, III, Secretary

  

 

STATE OR COMMONWEALTH OF                                             

                                  
County

On this                 
day of                                     ,
2006, before me, the undersigned notary public, personally appeared Gerald J.
Reihsen, III, the Secretary of BEHRINGER HARVARD FERNCROFT, LLC, a Delaware
limited liability company, proved to me through satisfactory evidence of
identification, which were personal knowledge of identity or driver’s license
or other government issued form of identity, to be the person whose name is
signed on the preceding documents, and acknowledged to me that he/she signed it
voluntarily for its stated purpose.

	
   

  	
                                                                                      

  
	
   

  	
                                                            ,
  Notary Public

  
	
   

  	
    My
  commission expires:

  
	
   

  	
   

  
	
   

  	
  [SEAL]

  
	
   

  	
   

  
	
   

  	
  [Seal must be
  attached if documents executed

  outside Massachusetts]

  

 

 

EXHIBIT
“A”

(Legal
Description)

Real
property in the County of Essex, Commonwealth of Massachusetts, described as
follows:

Parcel
I (Recorded)

The land at 35 Village Road, Middleton, Essex County, Massachusetts,
being shown as Lot 5A on a plan entitled “Plan of Land in Middleton, Mass.,
owned by Thomas J. Flatley,” dated May 9, 1988, by The Russell A. Wheatley Co.,
Inc., Land Surveyors and Engineers, recorded with Essex South District Registry
of Deeds, Plan Book 245, Plan 70 (the “Plan”).

Said
Lot 5A contains 12.201 acres according to said plan to which reference is made
for a more particular description.

Parcel
II (Registered)

The
land situated in Middleton in the County of Essex and Commonwealth of
Massachusetts, bounded and described as follows:

SOUTHWESTERLY
by Locust Street two hundred fifty and 46/100 (250.46) feet;

NORTHWESTERLY
on a curving line by lot 28 (shown as Village Road) as shown on plan
hereinafter mentioned, fifty eight and 82/100 (58.82) feet;

NORTHEASTERLY
by said lot 28, two hundred twenty three and 29/100 (223.29) feet; and

EASTERLY
by land now or formerly of Charlotte E. Sills ninety eight and 54/100 (98.54)
feet.

All
of said boundaries are determined by the Court to be located as shown upon plan
numbered 16270-F drawn by Boston Survey Consultants Surveyors, dated August 31,
1984, as modified and approved by the Court, filed in the Land Registration
Office, a copy of a portion of which is filed with Certificate of Title 54507
in said Registry, and the above described land is shown as lot 12, sheet 6, on
last mentioned plan.

Together
with the benefit of Amended and Restated Easement Agreement by and between
Thomas J. Flatley and Nynex Properties Company, dated February 16, 1990 filed
as Document No. 254638, and recorded in book 10459, Page 228, which restates
Easement Agreement by and between Thomas J. Flatley and Nynex Properties
Company, dated October 20, 1988, filed as Document No. 254637, and recorded in
Book 9750, Page 37.

Together
with the benefit of Amended and Restated Water Use Agreement between Middleton
Investors, Inc. and Ferncroft Water Systems, Inc., dated November 15, 2004,
recorded in Book 23630, Page 466, in common with other entitled thereto.Exhibit 10.4

ASSIGNMENT OF

LEASES
AND RENTS

THIS ASSIGNMENT OF LEASES AND RENTS (“Assignment”) is made as of the 17th day
of August, 2006, by BEHRINGER HARVARD FERNCROFT, LLC, a Delaware limited
liability company (“Borrower”),
as assignor, to BARCLAYS CAPITAL REAL ESTATE INC., a Delaware corporation
(together with its successors and assigns, “Lender”), as assignee.

BACKGROUND

Borrower and Lender are entering into a certain Loan
Agreement of even date herewith (“Loan
Agreement”) pursuant to which Lender will make a loan (“Loan”) to Borrower in the maximum
principal amount of $18,000,000.00.  The
Loan also will be evidenced by Borrower’s promissory note to Lender of even
date herewith (“Note”) and
will be secured by, among other things, a mortgage, deed of trust, deed to
secure debt or similar security instrument made by Borrower to Lender also of
even date herewith (“Security Instrument”)
which encumbers the property described on Exhibit A hereto (“Property”).  As a condition to making the Loan, Lender
requires that Borrower assign to Lender all rents, leases and other profits
arising out of the Property.

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

ARTICLE
1

ASSIGNMENT

Section 1.01           Defined
Terms.  Capitalized terms used in
this Assignment and not specifically defined in this Assignment have the
meaning provided in the Loan Agreement.

Section 1.02           Assignment;
Property Assigned.  Borrower hereby
irrevocably, absolutely and unconditionally assigns, sets over and transfers to
Lender all of Borrower’s right, title and interest in and to (but none of
Borrower’s obligations under) all current and future Leases and Rents arising
with respect to the Property, all proceeds or streams of payment arising from
the sale or other disposition of all or any of the Leases or Rents, and the
right to receive and apply the Rents to the payment of the Debt and to do all
other things which Borrower or any lessor is or may become entitled to do under
the Leases or the Lease Guaranties or with respect to the Rents (collectively, “Assigned Property”).  The “Assigned Property” shall include all
sums payable to Borrower or to be received by Borrower in consideration of any
termination, modification or amendment of any Lease or any release or discharge
of any tenant under any Lease from any obligation thereunder; and, upon  Borrower’s receipt thereof, Borrower shall
deposit such sums with Lender to be held by Lender as additional

 

collateral for the Loan.  So 
long as no Event of Default shall have occurred and be continuing, such
sums shall be deposited by Lender into the TI/LC Reserve Account (as defined in
the Loan Agreement) to be disbursed in accordance with the terms of Section
4.06 and Article 5 thereof.

Section 1.03           Termination
of Assignment.  Upon payment in full
of the Debt and release or discharge of the Security Instrument of record, this
Assignment, and all of Lender’s right, title and interest in the Assigned
Property, shall automatically terminate.

Section 1.04           Present
Assignment; License to Collect. 
Borrower intends this Assignment to be a present, unconditional,
absolute and executed assignment of the Assigned Property and not an assignment
for security only.  Nevertheless, subject
to the terms of this Assignment, Lender hereby grants to Borrower a revocable
license (a) to manage the leasing activities of the Property as
contemplated by the Loan Agreement and (b) to collect and receive the
Rents in trust for Lender and to apply the Rents to discharge all current
amounts due on the Debt and to pay the current costs, so long as incurred in
the ordinary course of business, of managing, operating and maintaining the
Property.  So long as no Event of Default
exists, the Rents remaining after application pursuant to the preceding
sentence may be retained by Borrower, free and clear of, and released from,
Lender’s rights with respect to Rents under this Assignment.  From and after the occurrence of an Event of
Default, and without the necessity of notice or prior demand by Lender or
Lender’s entering upon and taking and maintaining control of the Property
(whether directly or through a receiver), the license granted hereunder to
Borrower shall terminate automatically, and Lender shall be entitled to receive
and collect the Rents as they become due and payable and exercise all of
Borrower’s rights or the rights of lessor under the Leases and with respect to
the Rents.

Section 1.05           Notices
to Tenants.  At any time on or after
Lender’s demand for the Rents, Lender may give, and Borrower hereby irrevocably
authorizes Lender to give, notice to all tenants of the Property instructing
them to pay all Rents to Lender.  Borrower
agrees that each tenant may rely on Lender’s notice without inquiring further
as to Lender’s right to receive the Rents and that no tenant shall be liable to
Borrower for any amounts which are actually paid to Lender in response to such
a notice.  Borrower shall not interfere
with, and shall cooperate with, Lender’s collection of the Rents.  Borrower irrevocably appoints Lender its true
and lawful attorney-in-fact, which appointment is coupled with an interest, to
execute any or all of the rights or powers described in this Assignment, with
the same force and effect as if executed by the Borrower, and Borrower ratifies
and confirms any and all acts lawfully done or omitted to be done by Lender,
its agents, servants, employees or attorneys under the authority of such power
of attorney.  Nothing in this
Section 1.05 shall be deemed to limit in any way Lender’s rights pursuant
to the Lockbox Agreement.

Section 1.06           Borrower
Bankruptcy.  If a petition under the
Bankruptcy Code is filed by or against Borrower, and Borrower determines to
exercise its rights under the Bankruptcy Code to reject any Lease, Borrower
shall give Lender written notice not less than ten (10) days prior to the date
on which Borrower shall apply to the bankruptcy court for authority to reject
the Lease.  Lender has the right to serve
Borrower within such

 

ten-day period a notice stating (a) that Lender
demands that Borrower assume the Lease and assign the Lease to Lender pursuant
to Section 365 of the Bankruptcy Code and (b) that Lender agrees to
cure Borrower’s default under the Lease or provide adequate assurance of future
performance under the Lease.  If Lender
so notifies Borrower, Borrower shall (subject to the approval of the bankruptcy
court having jurisdiction over Borrower’s case) not seek to reject the Lease
and shall assume and assign such Lease to Lender within thirty (30) days after
Lender’s notice is given.

ARTICLE
2

DEFAULT AND REMEDIES

Section 2.01           Events
of Default.  The occurrence of an “Event
of Default” as that term is defined under the Loan Agreement shall constitute
an “Event of Default” under
this Assignment.

Section 2.02           Remedies.  Following an Event of Default (which has not
been waived in writing by Lender), Lender, without notice or consent from
Borrower, shall be entitled to exercise all rights and remedies as have been
provided to Lender hereunder, under the other Loan Documents, by law or in
equity.  Such rights and remedies are
cumulative and may be exercised independently, concurrently or successively in
Lender’s sole discretion and as often as occasion therefor shall arise.  Lender’s delay or failure to accelerate the
Loan or exercise any other remedy upon the occurrence of an Event of Default
shall not be deemed a waiver of such right as remedy.  No partial exercise by Lender of any right or
remedy will preclude further exercise thereof. 
Notice or demand given to Borrower in any instance will not entitle
Borrower to notice or demand in similar or other circumstances nor constitute
Lender’s waiver of its right to take any future action in any circumstance
without notice or demand (except where expressly required by this Assignment to
be given).  Lender may release other
security for the Loan, may release any party liable for the Loan, may grant
extensions, renewals or forbearances with respect thereto, may accept a partial
or past due payment or grant other indulgences, or may apply any other security
held by it to payment of the Loan, in each case without prejudice to its rights
under this Assignment and without such action being deemed an accord and
satisfaction or a reinstatement of the Loan. 
Lender will not be deemed as a consequence of its delay or failure to
act, or any forbearances granted, to have waived or be estopped from exercising
any of its rights or remedies.

ARTICLE
3

LIMITATIONS ON LENDER LIABILITY

Section 3.01           No
Mortgagee in Possession.  Neither the
granting of this Assignment to Lender, nor Lender’s exercise of any rights or
remedies under this Assignment, shall be construed to make Lender a “mortgagee
in possession” of the Property in the absence of Lender itself taking actual
possession of the Property.

 

Section 3.02           No
Obligation for Lease Performance or Property Condition.  Lender’s acceptance of this Assignment shall
not at any time obligate Lender to take any action with respect to the Leases,
including, without limitation, the performance of any obligation to be
performed on the part of Borrower under any of the Leases, which shall remain
exclusively with Borrower.  Without
limiting the foregoing, this Assignment shall not operate to place on Lender
any obligation or liability for: 
(a) the control, care, management or repair of the Property;
(b) for carrying out any of the terms and conditions of the Leases;
(c) any waste committed on the Property by tenants or any other parties;
(d) any dangerous or defective condition of the Property (including,
without limitation, the presence of any Hazardous Materials as defined in the
Environmental Indemnity); or (e) any negligence in the management, upkeep,
repair or control of the Property resulting in injury or death to any tenant or
any other party or any loss of personal property.  Borrower, for itself and any party claiming
under or through Borrower, hereby releases and discharges Lender from any such
liability to the fullest extent permitted by law.

Section 3.03           Application
of Rents Received.  The Rents
collected by Lender may be applied by Lender as it determines in its
discretion.  Lender shall not be liable
for any loss sustained by Borrower resulting from Lender’s failure to lease the
Property after an Event of Default.

ARTICLE
4

MISCELLANEOUS PROVISIONS

Section 4.01           Governing
Law.  This Assignment shall be
interpreted and enforced according to the laws of the state where the Land is
located (without giving effect to rules regarding conflict of laws).

Section 4.02           Consent
to Jurisdiction.  Borrower hereby
consents and submits to the exclusive jurisdiction and venue of any state or
federal court sitting in the county and state where the Land is located with
respect to any legal action or proceeding arising with respect to this
Assignment and waives all objections which it may have to such jurisdiction and
venue.  Nothing herein shall, however,
preclude or prevent Lender from bringing actions against Borrower in any other
jurisdiction as may be necessary to enforce or realize upon the security for
the Loan provided in any of the Loan Documents.

Section 4.03           Incorporation
from Loan Agreement.  All provisions
Articles 17 and 18, inclusive, of the Loan Agreement are incorporated into
this Assignment by this reference, as if fully reproduced and stated herein.

Section 4.04           Further
Assurances.  Borrower, at Borrower’s
expense, agrees to take such further actions and execute such further documents
as Lender reasonably may request to carry out the intent of this Assignment or
to establish and protect the rights and remedies created or intended to be
created in favor of Lender hereunder. 
Borrower agrees to pay all filing, registration or recording fees or
taxes, and all expenses incident to

 

the preparation, execution, acknowledgement or
filing/recording of this Assignment or any such instrument of further
assurance, except where prohibited by law so to do.

Section 4.05           No
Third Party Beneficiary.  Notwithstanding
any provision of this Assignment to the contrary, this Assignment is not
intended by the parties to create, and shall not create, benefits on behalf of
any tenant or other occupant of the Property or anyone claiming rights through
any tenant or other occupant of the Property.

Section 4.06           No
Agency or Partnership.  Nothing
contained in this Assignment shall constitute Lender as a joint venturer,
partner or agent of Borrower, or render Lender liable for any debts,
obligations, acts, omissions, representations, or contracts of Borrower.

Section 4.07           WAIVER OF TRIAL BY JURY.  EACH OF BORROWER AND LENDER (BY ITS FUNDING
OF THE LOAN) WAIVES ITS RIGHT, TO THE FULLEST EXTENT PERMITTED BY LAW, AND
AGREES NOT TO ELECT, A TRIAL BY JURY WITH RESPECT TO ANY ISSUE ARISING OUT OF
THIS ASSIGNMENT OR THE RELATIONSHIP BETWEEN THE PARTIES AS BORROWER AND LENDER.
BORROWER HEREBY WAIVES ANY RIGHT IT MAY HAVE TO CLAIM OR RECOVER IN ANY TRIAL
ACTION OR PROCEEDING REFERRED TO IN THE PRECEDING SENTENCE, ANY SPECIAL, EXEMPLARY,
PUNITIVE OR CONSEQUENTIAL DAMAGES OR DAMAGES PURSUANT TO M.G.L. C.93A ET SEQ.
OTHER THAN ACTUAL DAMAGES.

[REMAINDER OF PAGE
INTENTIONALLY LEFT BLANK]

IN WITNESS WHEREOF, this Assignment has been executed
as an instrument under seal by Borrower the day and year first above written.

	
  

  	
  BORROWER:

  
	
   

  	
   

  
	
   

  	
  BEHRINGER
  HARVARD FERNCROFT, LLC,

  
	
   

  	
  a Delaware
  limited liability company

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  By:

  	
   

  	
   

  
	
   

  	
   

  	
  Gerald J.
  Reihsen, III, Secretary

  

 

 

STATE OR COMMONWEALTH OF                                             

                                  
County

On this                 
day of                                     ,
2006, before me, the undersigned notary public, personally appeared Gerald J.
Reihsen, III, the Secretary of BEHRINGER HARVARD FERNCROFT, LLC, a Delaware
limited liability company, proved to me through satisfactory evidence of
identification, which were personal knowledge of identity or driver’s license
or other government issued form of identity, to be the person whose name is
signed on the preceding documents, and acknowledged to me that he/she signed it
voluntarily for its stated purpose.

	
   

  	
                                                                                      

  
	
   

  	
   

  
	
   

  	
                                                            ,
  Notary Public

  
	
   

  	
   

  
	
   

  	
    My
  commission expires:

  
	
   

  	
   

  
	
   

  	
  [SEAL]

  
	
   

  	
   

  
	
   

  	
  [Seal must be
  attached if documents

  executed outside Massachusetts]

  

 

EXHIBIT “A”

(Legal
Description)

Real property in the County of Essex, Commonwealth of
Massachusetts, described as follows:

Parcel I (Recorded)

The land at 35 Village Road, Middleton, Essex County,
Massachusetts, being shown as Lot 5A on a plan entitled “Plan of Land in
Middleton, Mass., owned by Thomas J. Flatley,” dated May 9, 1988, by The
Russell A. Wheatley Co., Inc., Land Surveyors and Engineers, recorded with
Essex South District Registry of Deeds, Plan Book 245, Plan 70 (the “Plan”).

Said Lot 5A contains 12.201 acres according to said
plan to which reference is made for a more particular description.

 

Parcel II (Registered)

The land situated in Middleton in the County of Essex
and Commonwealth of Massachusetts, bounded and described as follows:

SOUTHWESTERLY by Locust Street two hundred fifty and
46/100 (250.46) feet;

NORTHWESTERLY on a curving line by lot 28 (shown as
Village Road) as shown on plan hereinafter mentioned, fifty eight and 82/100
(58.82) feet;

NORTHEASTERLY by said lot 28, two hundred twenty three
and 29/100 (223.29) feet; and

EASTERLY by land now or formerly of Charlotte E. Sills
ninety eight and 54/100 (98.54) feet.

All of said boundaries are determined by the Court to
be located as shown upon plan numbered 16270-F drawn by Boston Survey
Consultants Surveyors, dated August 31, 1984, as modified and approved by the
Court, filed in the Land Registration Office, a copy of a portion of which is
filed with Certificate of Title 54507 in said Registry, and the above described
land is shown as lot 12, sheet 6, on last mentioned plan.

Together with the benefit of Amended and Restated
Easement Agreement by and between Thomas J. Flatley and Nynex Properties
Company, dated February 16, 1990 filed as Document No. 254638, and recorded in
book 10459, Page 228, which restates Easement Agreement by and between Thomas
J. Flatley and Nynex Properties Company, dated October 20, 1988, filed as
Document No. 254637, and recorded in Book 9750, Page 37.

Together with the benefit of Amended and Restated
Water Use Agreement between Middleton Investors, Inc. and Ferncroft Water
Systems, Inc., dated November 15, 2004, recorded in Book 23630, Page 466, in
common with other entitled thereto.

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