EXHIBIT 10.14

 

ESCROW AGREEMENT

 

Wells Fargo Bank, N.A.

666 Walnut N8200-034

Corporate Trust Services, PFG

Des Moines, IA  50309

 

Re:                               Hartman Commercial Properties REIT Escrow
Agreement

 

Ladies and Gentlemen:

 

HARTMAN COMMERCIAL PROPERTIES REIT, a Maryland real estate investment trust (the
“Company”), the issuer for an offering (the “Offering”) of up to 11,000,000
common shares of beneficial interest, par value $.001 per share (the “Shares”),
pursuant to a registration statement originally filed on Form S-11 with the
Securities and Exchange Commission on December 31, 2003, File No. 333-111674. 
D.H. Hill Securities, LLP, a Texas limited liability partnership (the “Dealer
Manager”), will act as Dealer Manager for the offering of the Shares. The
Company is entering into this Escrow Agreement (the “Agreement”) to set forth
the terms on which Wells Fargo Bank, N.A. (“Escrow Agent”), will hold and
disburse the proceeds from subscriptions for the purchase of the Shares in the
Offering until such time as:  (i) in the case of subscriptions received from all
nonaffiliates of the Company, other than from Pennsylvania Subscribers or New
York Subscribers (each as defined below), the Company has received subscriptions
for Shares resulting in total minimum capital raised of $2,000,000 (the
“Required Capital”); (ii) in the case of subscriptions received from residents
of Pennsylvania (“Pennsylvania Subscribers”), the Company has received
subscriptions for Shares from nonaffiliates of the Company resulting in total
minimum capital raised of $5,475,000 (the “Pennsylvania Required Capital”); and
(iii) in the case of subscriptions received from residents of New York (“New
York Subscribers”), the Company has received subscriptions for Shares from
nonaffiliates of the Company, other than from Pennsylvania Subscribers,
resulting in total minimum capital raised of $2,500,000 (the “New York Required
Capital”).

 

The Company hereby appoints Escrow Agent as escrow agent for purposes of holding
the proceeds from the sale of the Shares, and the Company shall deposit with
Escrow Agent such proceeds to be held by Escrow Agent on the terms and
conditions hereinafter set forth below:

 

1.                                       Persons subscribing to purchase the
Shares (the “Subscribers”) will be instructed by the Dealer Manager or any
soliciting dealers to remit the purchase price in the form of checks
(hereinafter called “instruments of payment”) payable to the order of, or funds
wired in favor of, “Wells Fargo Bank, Hartman Commercial Properties REIT.”
Within one business day after receipt of instruments of payment from the
Offering, the Dealer Manager will send to the Escrow Agent: (a) an electronic
file in a compatible format containing each subscriber’s name, address, tax
identification number, number of Shares purchased, purchase price remitted and
whether a IRS Form W-9 has been obtained, and (b) the instruments of payment
from such Subscribers (the “Subscription Materials”) for deposit into the
deposit account entitled “Wells Fargo Bank, as Escrow Agent for the Benefit of
Subscribers of Hartman Commercial Properties REIT” (the “Escrow Account”). 
Instruments of payment received from Pennsylvania Subscribers (as identified as
such by the Company) shall be accounted for separately in a subaccount entitled
“Wells Fargo Bank, as Escrow Agent for the Benefit of Pennsylvania Subscribers
of Hartman Commercial Properties REIT” (the “Pennsylvania Escrow Account”),
until such Pennsylvania Escrow Account has closed pursuant to paragraph 3(a)
hereof.  Instruments of payment received from New York Subscribers (as
identified as such by the Company) shall be accounted for separately in a

 

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subaccount entitled “Wells Fargo Bank, as Escrow Agent for the Benefit of New
York Subscribers of Hartman Commercial Properties REIT” (the “New York Escrow
Account”), until such New York Escrow Account has closed pursuant to
paragraph 3(a) hereof.  The Escrow Account, the Pennsylvania Escrow Account, and
the New York Escrow Account will be established and maintained in such a way as
to permit the interest income calculations described in paragraph 7.

 

2.                                       The aforesaid instruments of payment
are to be promptly processed for collection by Escrow Agent following deposit by
the Dealer Manager into the applicable Escrow Account, Pennsylvania Escrow
Account, or New York Escrow Account, as applicable. The proceeds thereof are to
be held in the Escrow Account, Pennsylvania Escrow Account, or New York Escrow
Account, as applicable, until such funds are either returned to the Subscribers
in accordance with paragraph 3 hereof or otherwise disbursed in accordance with
paragraph 7 hereof. In the event any of the instruments of payment are returned
to Escrow Agent for nonpayment prior to receipt by Escrow Agent of the Required
Capital, the Pennsylvania Required Capital, or the New York Required Capital,
Escrow Agent shall promptly notify the Dealer Manager in writing of such
nonpayment, and Escrow Agent is authorized to debit the Escrow Account in the
amount of such return payment as well as any interest earned on the investment
represented by such payment and return to the Dealer Manager the returned item.

 

3.                                       (a)                                 
Subject to the provisions of subparagraphs 3(b)-3(f) below:

 

(i)                                     once the aggregate of all collected
funds in the Escrow Account, (for purposes of clarification, this amount will
not include funds in the Pennsylvania Escrow Account or the New York Escrow
Account) is an amount equal to or greater than the Required Capital, the Escrow
Agent shall promptly notify the Company and, upon receiving written instruction
from the Company, (A) disburse to the Company, by check, ACH or wire transfer,
the funds in the Escrow Account representing the gross purchase price for the
Shares, and (B) disburse to the Subscribers or the Company, as applicable, any
interest thereon pursuant to the provisions of subparagraph 3(f).  For purposes
of this Agreement, the term “collected funds” shall mean all funds received by
the Escrow Agent that have cleared normal banking channels and are in the form
of cash or a cash equivalent.  After such time the Escrow Account shall remain
open and the Company shall continue to cause subscriptions for the Shares that
are not to be deposited in either the Pennsylvania Escrow Account or the New
York Escrow Account to be deposited therein until the Company informs the Escrow
Agent in writing to close the Escrow Account, and thereafter any subscription
documents and instruments of payment received by the Escrow Agent from
Subscribers other than Pennsylvania Subscribers and New York Subscribers shall
be forwarded directly to the Company.

 

(ii)                                  regardless of any closing of the Escrow
Account, the Company and the Dealer Manager shall continue to forward
instruments of payment and Subscription Materials received from Pennsylvania
Subscribers for deposit into the Pennsylvania Escrow Account to the Escrow Agent
until such time as the Company notifies the Escrow Agent in writing that total
subscription proceeds (including the amount then in the Pennsylvania Escrow
Account) equal or exceed the Pennsylvania Required Capital.  Upon receipt of a
written notice and instruction from the Company that total subscription proceeds
(including the amount then in the Pennsylvania Escrow Account) equaling or
exceeding the Pennsylvania Required Capital have been received in collected
funds, the Escrow Agent shall (A) disburse to the Company, by check, ACH or wire
transfer, the funds then in the Pennsylvania Escrow Account representing the
gross purchase price for the Shares, and (B) disburse to the Pennsylvania
Subscribers or the Company, as applicable, any interest thereon pursuant to the
provisions of subparagraph 3(f).  Following such

 

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disbursements, the Escrow Agent shall close the Pennsylvania Escrow Account, and
thereafter any Subscription Materials and instruments of payment received by the
Escrow Agent from Pennsylvania Subscribers shall be deposited directly to the
Escrow Account (or to the Company, if it has closed the Escrow Account, as
instructed in writing by the Company).

 

(iii)                               regardless of any closing of the Escrow
Account, the Company and the Dealer Manager shall continue to forward
instruments of payment and Subscription Materials received from New York
Subscribers for deposit into the New York Escrow Account to the Escrow Agent
until such time as the Company notifies the Escrow Agent in writing that total
subscription proceeds (including the amount then in the New York Escrow Account
but not including the amount then in the Pennsylvania Escrow Account) equal or
exceed the New York Required Capital.  Upon receipt of a written notice and
instruction from the Company that total subscription proceeds (including the
amount then in the New York Escrow Account) equaling or exceeding the New York
Required Capital have been received in collected funds, the Escrow Agent shall
(A) disburse to the Company, by check, ACH or wire transfer, the funds then in
the New York Escrow Account representing the gross purchase price for the
Shares, and (B) disburse to the New York Subscribers or the Company, as
applicable, any interest thereon pursuant to the provisions of
subparagraph 3(f).  Following such disbursements, the Escrow Agent shall close
the New York Escrow Account, and thereafter any Subscription Materials and
instruments of payment received by the Escrow Agent from New York Subscribers
shall be deposited directly to the Escrow Account (or to the Company, if it has
closed the Escrow Account, as instructed in writing by the Company).

 

(b)                                 In the event that at the close of business
on the date exactly one year after the SEC grants an effective order under
Section 8(a) of the Securities Act of 1933, as amended (the “Expiration Date”),
which date will be communicated to the Escrow Agent in writing as soon as
possible after determination, Escrow Agent is not in receipt of evidence of
subscriptions accepted on or before such date, and instruments of payment dated
not later than that date (or actual wired funds), for the purchase of Shares
providing for total purchase proceeds that at least equal the Required Capital,
Escrow Agent shall promptly notify the Company that such instruments of payment
totaling an amount at least equal to the Required Capital have not been received
by Escrow Agent. Thereafter, Dealer Manager agrees to use its best efforts to
obtain an executed IRS Form W-9 from each subscriber. Promptly following the
Expiration Date, and in any event no later than the next business day after the
Expiration Date or as soon as possible thereafter, Escrow Agent shall promptly
return by check the funds deposited in the Escrow Account, the Pennsylvania
Escrow Account, and the New York Escrow Account, or shall return the instruments
of payment delivered to Escrow Agent if such instruments have not been processed
for collection prior to such time, directly to each Subscriber at the address
given to the Company. Included in the remittance shall be a proportionate share
of the income earned in the account allocable to each Subscriber’s investment in
accordance with the terms and conditions specified in paragraph 7 hereof, except
that in the case of Subscribers who have not provided to the Company an executed
Form W-9, Escrow Agent shall withhold a portion of the earnings attributable to
those Subscribers at the applicable rate in accordance with Section 3406 of the
Internal Revenue Code of 1986, as amended. Notwithstanding the foregoing, Escrow
Agent shall not be required to remit any payments until funds represented by
such payments have been collected by Escrow Agent.

 

(c)                                  Notwithstanding subparagraphs 3(a) and 3(b)
above, if the Escrow Agent is not in receipt of evidence of subscriptions
accepted on or before the close of business on such date that is 120 days after
the SEC grants an effective order under Section 8(a) of the Securities Act of
1933, as

 

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amended (the Company will notify the Escrow Agent of the date the SEC grants the
effective order) (the “Initial Escrow Period”), and instruments of payment dated
not later than that date, for the purchase of Shares providing for total
purchase proceeds from all nonaffiliated sources that equal or exceed the
Pennsylvania Required Capital, the Escrow Agent shall promptly notify the
Company.  Thereafter, the Company shall send to each Pennsylvania Subscriber by
certified mail within ten (10) calendar days after the end of the Initial Escrow
period a notification in the form of Exhibit A.  If, pursuant to such
notification, a Pennsylvania Subscriber requests the return of his or her
subscription funds within ten (10) calendar days after receipt of the
notification (the “Request Period”) and the Company is not in possession of an
executed IRS form W-9, the Company shall obtain an executed IRS Form W-9 from
each such Pennsylvania Subscriber within ten (10) calendar days after receiving
notice from such Pennsylvania Subscriber.  The Escrow Agent shall promptly
refund directly to each Pennsylvania Subscriber the collected funds deposited in
the Pennsylvania Escrow Account on behalf of such Pennsylvania Subscriber, or
shall return the instruments of payment delivered, but not yet processed for
collection prior to such time, to the address provided by the Dealer Manager or
the Company, together with interest income in the amounts calculated pursuant to
paragraph 7.  If an executed IRS Form W-9 is not received for such Pennsylvania
Subscriber within ten (10) calendar days, the Escrow Agent shall thereupon remit
an amount to such Pennsylvania Subscriber, in accordance with the provisions
hereof, withholding a portion of the earnings attributable to such Pennsylvania
Subscriber at the applicable rate in accordance with Section 3406 of the
Internal Revenue Code of 1986, as amended. However, the Escrow Agent shall not
be required to remit such payments until funds represented by such payments have
been collected by the Escrow Agent.

 

(d)                                 The subscription funds of Pennsylvania
Subscribers who do not request the return of their subscription funds within the
Request Period shall remain in the Pennsylvania Escrow Account for successive
120-day escrow periods (a “Successive Escrow Period”), each commencing
automatically upon the termination of the prior Successive Escrow Period, and
the Company and Escrow Agent shall follow the notification and payment procedure
set forth in subparagraph 3(c) above with respect to the Initial Escrow Period
for each Successive Escrow Period until the occurrence of the earliest of (i)
the Expiration Date, (ii) the receipt and acceptance by the Company of
subscriptions for the purchase of Shares with total purchase proceeds that equal
or exceed the Pennsylvania Required Capital and the disbursement of the
Pennsylvania Escrow Account on the terms specified herein, or (iii) all funds
held in the Pennsylvania Escrow Account having been returned to the Pennsylvania
Subscribers in accordance with the provisions hereof.

 

(e)                                  In the event that the Company rejects any
subscription for which Escrow Agent has already collected funds, Escrow Agent
shall promptly issue a refund check to the rejected Subscriber. If the Company
rejects any subscription for which Escrow Agent has not yet collected funds but
have submitted the Subscriber’s check for collection, Escrow Agent shall
promptly issue a check in the amount of the Subscriber’s check to the rejected
Subscriber after Escrow Agent has collected such funds. If Escrow Agent has not
yet submitted a rejected Subscriber’s check for collection, Escrow Agent shall
promptly remit the Subscriber’s check directly to the Subscriber.

 

(f)                                    At any time after funds are disbursed
upon the Company’s acceptance of subscriptions pursuant to subparagraph 3(a)
above on the tenth (10th) day following the date of such acceptance, the Escrow
Agent shall promptly provide directly to each Subscriber the amount of the
interest payable to the Subscribers as calculated in accordance with paragraph
7; provided that the Company is in possession of such Subscriber’s executed IRS
Form W-9.  In the event the Company is not in possession of an executed IRS Form
W-9 from any Subscriber, the Company shall obtain an executed IRS Form W-9 from
such Subscriber within ten (10) calendar days after

 

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acceptance of such subscription.  In the event an executed IRS Form W-9 is not
received for each Subscriber within such period, the Escrow Agent shall remit an
amount to the Subscribers in accordance with the provisions hereof, withholding
a portion of the earnings attributable to those Subscribers at the applicable
rate in accordance with Section 3406 of the Internal Revenue Code of 1986, as
amended. However, the Escrow Agent shall not be required to remit any payments
until funds represented by such payments have been collected by the Escrow
Agent.  The forgoing notwithstanding, interest, if any, earned on accepted
subscription proceeds will be payable to a Subscriber only if the Subscriber’s
funds have been held in escrow by the Escrow Agent for at least 35 days;
interest, if any, earned on accepted subscription proceeds of Subscribers’ funds
held less than 35 days will be payable to the Company.

 

In the event that instruments of payment are returned for nonpayment, the Escrow
Agent is authorized to debit the Escrow Account, the Pennsylvania Escrow
Account, or the New York Escrow Account, as applicable, in accordance with
paragraph 2 hereof.

 

4.                                       Following receipt by Escrow Agent of
instruments of payment (or wired funds) of the Required Capital prior to the
time provided in paragraph 3 hereinabove, Escrow Agent shall notify the Company
in writing and/or via secure online real-time account access service within one
business day when such funds have been deposited in the Escrow Account, the
Pennsylvania Escrow Account, or the New York Escrow Account, as applicable, and
collected through normal banking channels.

 

5.                                       Prior to the disbursement of funds
deposited in the Escrow Account, the Pennsylvania Escrow Account, or the New
York Escrow Account, as applicable, in accordance with the provisions of
paragraph 3 or 7 hereof, Escrow Agent shall invest all of the funds deposited in
the Escrow Account, the Pennsylvania Account, and the New York Account, as
applicable, in “Short-term Investments” (as defined below) and Escrow Agent is
further authorized and Escrow Agent agrees to reinvest all earnings and interest
derived therefrom in any of the Short-term Investments specified below. In the
absence of written direction from the Company, funds deposited in the Escrow
Account, the Pennsylvania Escrow Account, and the New York Escrow Account will
be invested in the Wells Fargo 100% Treasury Money Market Fund as long as such
Fund maintains the highest rating available by Standard & Poor’s or Moody’s. 
(Wells Fargo Bank, N.A. is the investment advisor and custodian and receives
compensation for these services.  These investments are not deposits of or
obligations of Wells Fargo Bank, N.A. nor are they insured or guaranteed by the
FDIC or any other government agency). In the event that instruments of payment
are returned to Escrow Agent for nonpayment, Escrow Agent is authorized to debit
the Escrow Account in accordance with paragraph 2 hereof.

 

“Short-term Investments” include obligations of, or obligations guaranteed by,
the United States government or bank money-market accounts or certificates of
deposit of national or state banks that have deposits insured by the Federal
Deposit Insurance Corporation (including certificates of deposit of any bank
acting as a depository or custodian for any such funds, including, without
limitation, such certificates or instruments of the Escrow Agent, which mature
on or before the Expiration Date, unless such instrument cannot be readily sold
or otherwise disposed of for cash by the Expiration Date without any dissipation
of the offering proceeds invested).

 

The following securities are not permissible investments:

(a)                                  corporate equity or debt securities:

(b)                                 repurchase agreements;

(c)                                  bankers’ acceptances;

(d)                                 commercial paper; and

(e)                                  municipal securities;

 

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6.                                       The Escrow Agent is entitled to rely
upon written instructions received from the Company, unless the Escrow Agent has
actual knowledge that such instructions are not valid or genuine; provided that,
if in the Escrow Agent’s opinion, any instructions from the Company are unclear,
the Escrow Agent may request clarification from the Company prior to taking any
action, and if such instructions continue to be unclear, the Escrow Agent may
rely upon written instructions from the Company’s legal counsel in distributing
or continuing to hold any funds.  However, the Escrow Agent shall not be
required to disburse any funds attributable to instruments of payment that have
not been processed for collection, until such funds are collected and then shall
disburse such funds in compliance with the disbursement instructions from the
Company.

 

7.                                       If the Offering terminates prior to
receipt of the Required Capital or one or more Pennsylvania Subscribers elects
to have his or her subscription returned in accordance with paragraph 3,
interest income earned on subscription proceeds deposited in the Escrow Account
(the “Escrow Income”), the Pennsylvania Escrow Account (the “Pennsylvania Escrow
Income”), or the New York Escrow Account (the “New York Escrow Income”), as
applicable, shall be remitted to Subscribers, or to the Company if the
applicable Subscriber’s funds have been held in escrow by the Escrow Agent for
less than 35 days, in accordance with paragraph 3.  For each such Subscriber who
has invested funds that have been held in escrow by the Escrow Agent for at
least 35 days, such Subscriber’s pro rata portion of Escrow Income, Pennsylvania
Escrow Income, or New York Escrow Income, as applicable, shall be determined as
follows: the total amount of Escrow Income (or Pennsylvania Escrow Income or New
York Escrow Income, as appropriate) minus interest earned on accepted
subscription proceeds held by the Escrow Agent for less than 35 days shall be
multiplied by a fraction, (i) the numerator of which is determined by
multiplying the number of Shares purchased by said Subscriber times the number
of days said Subscriber’s proceeds are held in the Escrow Account, the
Pennsylvania Escrow Account, or the New York Escrow Account, as applicable,
prior to the date of disbursement, and (ii) the denominator of which is the
total of the numerators for all Subscribers in such account who have invested
funds that have been held in escrow by the Escrow Agent for at least 35 days. 
The Escrow Agent shall remit all such Escrow Income, Pennsylvania Escrow Income,
and New York Escrow Income in accordance with paragraph 3.  Notwithstanding the
foregoing, (i) escrow expenses, if any, may be deducted from Escrow Income,
Pennsylvania Escrow Income, or New York Escrow Income, as applicable, and the
Company shall reimburse the Escrow Agent any reasonable expenses in excess of
such amount, and (ii) residents of states where deductions for escrow expenses
are prohibited, as set forth on Exhibit B attached hereto, shall be paid their
pro rata portion of Escrow Income, Pennsylvania Escrow Income, or New York
Escrow Income, as applicable, without any deduction for escrow expenses.  Escrow
Agent shall promptly notify the Company of the amount of pro rata escrow
expenses attributable to residents of states where deductions are prohibited,
and the Company shall reimburse Escrow Agent for such pro rata escrow expenses
attributable to such residents.  If the Company chooses to leave the Escrow
Account open after receiving the Required Capital then it shall make regular
acceptances of subscriptions therein, but no less frequently than monthly, and
the Escrow Income from the last such acceptance shall be calculated and remitted
to the Subscribers or the Company, as applicable, pursuant to the provisions of
paragraph 3(f).

 

8.                                       As compensation for serving as Escrow
Agent hereunder, Escrow Agent shall receive a fee, as set forth on Exhibit C
attached hereto.  Notwithstanding anything contained herein to the contrary, the
Escrow Agent shall look to the Company for payment of the fees and expenses, and
waives all right of offset against the funds held in escrow pursuant to the
terms of this Agreement.

 

9.                                       In performing any of Escrow Agent’s
duties hereunder, Escrow Agent shall not incur any liability to anyone for any
damages, losses or expenses, except for willful default, breach of trust, or
gross negligence, and accordingly Escrow Agent shall not incur any such
liability with respect to any action taken or omitted (1) in good faith upon
advice of Escrow Agent’s counsel given with respect to any questions relating to
Escrow Agent’s duties and responsibilities under this Escrow Agreement, or (2)
in

 

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reliance upon any instrument, including any written instrument or instruction
provided for in this Escrow Agreement, not only as to its due execution and
validity and effectiveness of its provisions but also as to the truth and
accuracy of information contained therein, which Escrow Agent shall in good
faith believe to be genuine, to have been signed or presented by a proper person
or persons and to conform to the provisions of this Escrow Agreement.

 

10.                                 The Company hereby agrees to indemnify and
hold Escrow Agent harmless against any and all losses, claims, damages,
liabilities and expenses, including the reasonable cost of attorneys’ fees and
expenses and disbursements, that may be imposed on Escrow Agent or incurred by
Escrow Agent in connection with Escrow Agent’s acceptance of appointment as the
Escrow Agent hereunder, or the performance of Escrow Agent’s duties hereunder,
including any litigation arising from this Escrow Agreement or involving the
subject matter hereof, except where such losses, claims, damages, liabilities
and expenses result from willful default, breach of trust or gross negligence.

 

11.                                 In the event of a dispute between the
parties hereto sufficient in Escrow Agent’s discretion to justify doing so,
Escrow Agent shall be entitled to tender into the registry or custody of any
court of competent jurisdiction all money or property in Escrow Agent hands
under this Escrow Agreement, together with such legal pleadings as Escrow Agent
deems appropriate, and thereupon be discharged from all further duties and
liabilities under this Escrow Agreement. In the event of any uncertainty as to
Escrow Agent’s duties hereunder, Escrow Agent may refuse to act under the
provisions of this Escrow Agreement pending order of a court of competent
jurisdiction and Escrow Agent shall have no liability to the Company or to any
other person as a result of such action. Any such legal action may be brought in
such court as Escrow Agent shall determine to have jurisdiction thereof. The
filing of any such legal proceedings shall not deprive Escrow Agent of
compensation earned prior to such filing.

 

12.                                 All written notices and letters required
hereunder to Escrow Agent shall only be effective if delivered personally or by
certified mail, return receipt requested to:

 

Wells Fargo Bank, N.A.

666 Walnut N8200-034

Corporate Trust Services, PFG

Des Moines, IA  50309

Attn:  M.J. Dolan or Teresa A. Smith.

 

All written notices and letters required hereunder to the Company shall only be
effective if delivered personally or by certified mail, return receipt requested
to Hartman Commercial Properties REIT, 1450 West Sam Houston Parkway, North,
Suite 100, Houston, Texas 77043, Attn:  Allen R. Hartman, President.  All
written notices and letters required hereunder to the Dealer Manager shall only
be effective if delivered personally or by certified mail, return receipt
requested to D.H. Hill Securities, LLP, 19747 US Hwy 59 North, Suite 101,
Humble, Texas 77338, Attn:  President.  Each party hereto may, from time to
time, change the address to which notices to it are to be delivered or mailed
hereunder by notice in accordance herewith to the other parties.

 

13.                                 This Escrow Agreement shall be governed by
the laws of the State of Louisiana as to both interpretation and performance.

 

14.                                 The provisions of this Escrow Agreement
shall be binding upon the legal representatives, heirs, successors and assigns
of the parties hereto.

 

15.                                 The Company and Dealer Manager hereby
acknowledge that Escrow Agent is serving as escrow agent only for the limited
purposes herein set forth, and hereby agrees that it will not represent or imply

 

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that Escrow Agent, by serving as escrow agent hereunder or otherwise, has
investigated the desirabilities or advisability of investment in the Company, or
has approved, endorsed or passed upon the merits of the Shares or the Company.
The Company further agrees to instruct the Dealer Manager, and each of its
representatives, and any other representative who may offer Shares to persons
from time to time, that they shall not represent or imply that Escrow Agent has
investigated the desirability or advisability of investment in the Company, or
has approved, endorsed or passed upon the merits of the Shares or the Company,
nor shall they use Escrow Agent’s name in any manner whatsoever in connection
with the offer or sale of the Shares other than by acknowledgment that Escrow
Agent has agreed to serve as escrow agent for the limited purposes herein set
forth.

 

16.                                 This Escrow Agreement and any amendment
hereto may be executed by the parties hereto in one or more counterparts, each
of which shall be deemed to be an original.

 

17.                                 Except as otherwise required for
subscription funds received from Pennsylvania Subscribers and New York
Subscribers as provided herein, in the event that Escrow Agent receives
instruments of payment (or wired funds) after the Required Capital has been
received and the proceeds of the Escrow Account have been distributed to the
Company, Escrow Agent is hereby authorized to deposit such instruments of
payment to any deposit account as directed by the Company. The application of
said funds into a deposit account directed by the Company shall be a full
acquittance to Escrow Agent and Escrow Agent shall not be responsible for the
application of said funds.

 

18.                                 Escrow Agent shall be bound only by the
terms of this Escrow Agreement and shall not be bound or incur any liability
with respect to any other agreements or understanding between any other parties,
whether or not the Escrow Agent has knowledge of any such agreements or
understandings.

 

19.                                 Indemnification provisions set forth herein
shall survive the termination of this Escrow Agreement.

 

20.                                 In the event that any part of this Agreement
is declared by any court or other judicial or administrative body to be null,
void, or unenforceable, said provision shall survive to the extent it is not so
declared, and all of the other provisions of this Agreement shall remain in full
force and effect.

 

21.                                 Unless otherwise provided in this Agreement,
final termination of this Escrow Agreement shall occur on the date that all
funds held in the Escrow Account, the Pennsylvania Escrow Account, and the New
York Escrow Account are distributed either (a) to the Company or to Subscribers
and the Company has informed the Escrow Agent in writing to close the Escrow
Account, the Pennsylvania Escrow Account, and the New York Escrow Account
pursuant to paragraph 3 hereof or (b) to a successor escrow agent upon written
instructions from the Company.

 

22.                                 Escrow Agent has no responsibility for
accepting, rejecting or approving subscriptions.  The Escrow Agent shall
complete an OFAC search, in compliance with its policy and procedures, of each
subscription check prior to depositing the check in the Escrow Account, the
Pennsylvania Escrow Account, or the New York Escrow Account, as applicable, and
shall inform the Company if a subscription check fails the OFAC search.

 

23.                                 This Escrow Agreement shall not be modified,
revoked, released or terminated unless reduced to writing and signed by all
parties hereto, subject to the following paragraph.

 

Should, at any time, any attempt be made to modify this Escrow Agreement in a
manner that would increase the duties and responsibilities of Escrow Agent or to
modify this Escrow Agreement in any manner which Escrow Agent shall deem
undesirable, or at any other time, Escrow Agent may resign by

 

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notifying the Company in writing, by certified mail, and until (i) the
acceptance by a successor escrow agent as shall be appointed by the Company; or
(ii) thirty (30) days following the date upon which notice was mailed, whichever
occurs sooner, Escrow Agent’s only remaining obligation shall be to perform its
duties hereunder in accordance with the terms of the Escrow Agreement.

 

24.                                 Escrow Agent may resign at any time from its
obligations under this Escrow Agreement by providing written notice to the
Company. Such resignation shall be effective on the date specified in such
notice which shall be not less than thirty (30) days after such written notice
has been given. Escrow Agent shall have no responsibility for the appointment of
a successor escrow agent.

 

25.                                 Escrow Agent may be removed for cause by the
Company by 30 days written notice to the Escrow Agent unless otherwise agreed
upon effective on the date specified in such notice. The removal of Escrow Agent
shall not deprive Escrow Agent of its compensation earned prior to such removal.

 

26. To help the government fight the funding of terrorism and money laundering
activities, Federal law requires all financial institutions, including Escrow
Agent, to obtain, verify and record information that identifies each
person/entity opening an account.  For this account, Escrow Agent will need the
principal name and address of each party, tax payer identification number, and
other information, such as certified articles of incorporation, a
government-issued business license, a partnership agreement, and annual report
filed with the Secretary of State (or equivalent), or a trust agreement, that
will allow the Escrow Agent to identify the parties to the Escrow.

 

[THE REMAINDER OF THIS PAGE INTENTIONALLY LEFT BLANK]

 

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Agreed to as of the 31st day of August, 2004.

 

 

 

HARTMAN COMMERCIAL PROPERTIES REIT

 

 

 

 

 

By:

/s/ Allen R. Hartman

 

 

 

Allen R. Hartman, President

 

 

 

 

 

WUNDERLICH SECURITIES, INC.

 

 

 

 

 

By:

/s/ Dan H. Hill

 

 

 

Dan H. Hill, President

 

The terms and conditions contained above are hereby accepted and agreed to by:

 

WELLS FARGO BANK IOWA, NATIONAL ASSOCIATION, as Escrow Agent

 

 

By:

/s/ M. J. Dolan

 

Name:

M. J. Dolan

 

Title:

V.P. Corporate Trust

 

 

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EXHIBIT A

 

[Form of Notice to Pennsylvania Subscribers]

 

You have tendered a subscription to purchase shares of beneficial interest of
Hartman Commercial Properties REIT. (the “Company”).  Your subscription is
currently being held in escrow.  The guidelines of the Pennsylvania Securities
Commission do not permit the Company to accept subscriptions from Pennsylvania
residents until an aggregate of $5,475,000 of gross offering proceeds have been
received by the Company.  The Pennsylvania guidelines provide that until this
minimum amount of offering proceeds is received by the Company, every 120 days
during the offering period Pennsylvania Subscribers may request that their
subscription be returned.

 

If you wish to continue your subscription in escrow until the Pennsylvania
minimum subscription amount is received, nothing further is required.

 

If you wish to terminate your subscription for the Company’s shares of
beneficial interest and have your subscription returned please so indicate
below, sign, date, and return to the Escrow Agent, Wells Fargo Bank, N.A., 666
Walnut N8200-034, Corporate Trust Services, PFG, Des Moines, IA  50309.

 

I hereby terminate my prior subscription to purchase shares of beneficial
interest of Hartman Commercial Properties REIT and request the return of my
subscription funds.  I certify to Hartman Commercial Properties REIT that I am a
resident of Pennsylvania.

 

 

 

Signature:

 

 

 

 

 

Name:

 

 

 

 

(please print)

 

 

 

Date:

 

 

 

Please send the subscription refund to:

 

 

 

 

 

 

 

 

 

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EXHIBIT B

 

States Prohibiting Deductions

 

1. Alabama

 

2. New Mexico

 

3. North Carolina

 

4. Oklahoma

 

5. Texas

 

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EXHIBIT C

 

Hartman Commercial Properties REIT

Escrow Agent Fee Schedule

 

Acceptance Fee:

 

$

1,000.00

 

For initial services including examination of the Escrow Agent Agreement and all
supporting documents as well as database development. This is a one-time fee
payable upon the execution of the Escrow Agent Agreement.

 

Annual Administration Fee:

 

$

4,000.00

 

This annual administration fee covers standard services required under the
documents. An additional charge of $500 per sub-account will be billed for
accounts opened in connection with certain state regulations or escrow break
limits (i.e. Pennsylvania, Nebraska and similar states). Transaction charges
noted below apply for certain responsibilities including payments to
subscribers. Customer will be responsible for 1099 Tax Reporting. This fee is
payable upon the execution of the Escrow Agreement and annually thereafter for
any 12 month period or portion thereof. This fee shall be reviewed at the end of
the first year and may be renegotiated in accordance with new volume estimates.

 

Transaction Fees:

 

 

Wire transfer of funds to investors

 

$17.00 per item

Check transfer of funds to investors

 

$10.00 per item

Receipt and posting of incoming wires

 

No charge

Receipt and posting of incoming check

 

No charge

1099 INT Tax reporting

 

Customer will be
responsible

ACH transfer of funds

 

No charge

Electronic pre-determined reports

 

No charge

Interest calculations

 

No charge

OFAC check on check deposits with copy to the Fund

 

No charge

 

Assumptions

•                  Receipt by Wells Fargo of the electronic transmission of
subscriber data in a format compatible with Wells Fargo systems

•                  WF has no responsibility for collecting or handling
subscription documents

•                  WF receives funds via deposit by issuer in the escrow bank
account maintained at the Issuer’s expense

•                  Continuation of the Escrow Account after the initial break
until the maximum REIT amount is reached

•                  Investment of Funds

•                  Monthly reporting

 

Extraordinary Services:

Additional reasonable compensation will be charged for extraordinary services
based on the then current standard hourly charge. Extraordinary services
include, but are not limited to, attending escrow closings, processing
assignments of escrow interest, specialized reports (e.g. tax reporting other
than 1099s), unusual certifications, reviewing and accepting modifications or
amendments to the escrow agreement, and letter of credit draws, etc. You will be
informed in advance of Wells Fargo’s performance of services that are considered
extraordinary.

 

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All out-of-pockets expenses incurred in the administration of the account,
including, but not limited to, postage, telephone charges, insurance,
photocopies, supplies, and legal fees with the exception of legal fees incurred
at the inception of the account, will be billed to the customer at cost.

 

Billings over 30 days past due are subject to a 1.5% per month late payment
penalty of the balance due.

 

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