ASSIGNMENT AND SUBORDINATION OF MANAGEMENT AGREEMENT

THIS ASSIGNMENT AND SUBORDINATION OF MANAGEMENT AGREEMENT (this “Agreement”) is
made and entered into as of July 2, 2014, by and among HARTMAN GULF PLAZA, LLC,
a Texas limited liability company (the “Grantor”), TEXAS CAPITAL BANK, NATIONAL
ASSOCIATION (together with its successors and assigns, the “Bank”), and HARTMAN
INCOME REIT MANAGEMENT, INC., a Texas corporation (“Manager”).

RECITALS:

A.

Grantor, HARTMAN SHORT TERM INCOME PROPERTIES XX, INC., a Maryland corporation
(“XX”), and HARTMAN PARKWAY LLC, a Texas limited liability company (“Hartman
Parkway” and collectively with Grantor and XX, the “Borrower”), and Bank are
parties to that certain Loan Agreement dated as of May 10, 2012 (as may be
amended, modified, supplemented or restated from time to time, the “Loan
Agreement”).

B.

The loan under the Loan Agreement is secured by, among other things, one or more
Deeds of Trust, Assignment of Rents, Security Agreement and Fixture Filing
executed in favor of Bank, encumbering various properties (the “Mortgage”),
including that certain Deed of Trust, Security Agreement, Financing Statement,
and Absolute Assignment of Rents dated on or about even date herewith executed
by Grantor for the benefit of the Bank (the “Grantor Mortgage”).  The Grantor
Mortgage covers certain Improvements as defined in the Grantor Mortgage (the
“Project”).  Capitalized terms not otherwise defined herein shall have the
meanings ascribed to them in the Loan Agreement.

C.

On or about the date hereof, Grantor and Manager have entered into that certain
Real Property Management Agreement (the “Management Agreement”) for the
management of the Project, a true, correct and complete copy of which is
attached hereto as Exhibit A.

D.

Grantor has agreed to assign its rights under the Management Agreement to Bank
as additional security for the loans.

E.

Manager is willing to consent to the assignment and to attorn to Bank upon a
default by Borrower under the documents evidencing and securing the loans, and
perform its obligations under the Management Agreement for Bank, or its
successors in interest, or to permit Bank to terminate the Management Agreement
without liability.

AGREEMENT:

NOW, THEREFORE, for good and valuable consideration, the receipt and sufficiency
of which are hereby acknowledged, Grantor, Bank and Manager agree as follows:

1.

Grantor hereby transfers, assigns and sets over to Bank, its successors and
assigns, all right, title and interest of Grantor in and to the Management
Agreement.  Manager hereby consents to the foregoing assignment.  The foregoing
assignment is being made by Grantor to Bank as additional security for the full
payment and performance by Borrower of all of Borrower’s obligations under all
documents evidencing and securing the loan.  However, until the occurrence of a
default or Event of Default under any Mortgage, Loan Agreement, or any other
Loan Document (an “Event of Default”), Grantor may exercise all rights as owner
of the Project and under the Management Agreement.  The foregoing assignment
shall remain in effect as long as any loan, or any part thereof, remains unpaid,
but shall automatically terminate upon the release of the Mortgage by Bank.
 Upon receipt by Manager of written notice from Bank that an Event of Default
has occurred and is continuing, Bank shall have the right (but not the
obligation) to exercise all rights as owner of the Project under the Management
Agreement.

2.

Grantor and Manager represent and warrant to Bank that (a) the Management
Agreement is unmodified and in full force and effect, (b) the Management
Agreement is a valid and binding agreement enforceable against the parties in
accordance with its terms, and (c) neither party is in default in performing any
of its obligations under the Management Agreement.  As long as any loan is
outstanding and unpaid, neither Grantor nor Manager shall make any material
change in the Management Agreement without Bank’s written consent, which consent
shall not be unreasonably withheld, conditioned or delayed.  As long as any loan
is outstanding and unpaid, neither Grantor nor Manager shall terminate the
Management Agreement without Bank’s written consent; provided, however, that,
(y) so long as at least thirty (30) days prior written notice is delivered to
Manager and Bank, Grantor may terminate the services of the Manager pursuant to
the terms of the Management Agreement if Manager defaults thereunder and Grantor
retains the services of a replacement manager reasonably acceptable to Bank on
terms reasonably acceptable to the Bank and (z) so long as at least ninety (90)
days prior written notice is delivered to the Bank, Manager may terminate the
Management Agreement pursuant to the terms of the Management Agreement if
Grantor defaults thereunder, which default is not cured within any applicable
grace or cure period and (i) Grantor fails to cure such default within any
applicable grace or cure period; (ii) Bank does not exercise its rights to cure
such default hereunder and (iii) such termination is not otherwise prohibited
pursuant to the terms of this Agreement.  

3.

Manager shall deliver to Bank a copy of all notices of default under the
Management Agreement.  The Bank shall have the right (but not the obligation) to
cure any default of Grantor under the Management Agreement within thirty (30)
days after expiration of Grantor’s right to cure such default under the
Management Agreement; provided that if such default is not capable of being
cured within such thirty (30) day period, this grace or cure period shall be
extended for an additional ninety (90) days so long as Bank is diligently
attempting to cure the default.  

4.

If Bank acquires the Project through foreclosure, deed in lieu of foreclosure,
or judicial process, Bank shall have the right (but not the obligation) to be
recognized as the “Owner” under the Management Agreement.  Upon written notice
to the Manager by Bank, Manager agrees to recognize Bank as the “Owner” under
the Management Agreement, and Bank agrees, subject to its rights to terminate
the services of the Manager as set forth herein, to be bound by all obligations
of “Owner” accruing from and after the date of such acquisition.  Consequently,
Manager agrees that the Management Agreement shall not terminate so long as Bank
is diligently attempting to acquire possession of the Project.  

5.

After the occurrence of an Event of Default, Bank (or its nominee) shall have
the right at any time thereafter to terminate the Management Agreement, without
liability, by giving written notice to Manager of its election to do so.  Bank’s
notice shall specify the date of termination, which shall not be less than
thirty (30) days after the date of such notice.

6.

If the Management Agreement is terminated by Bank, on or before the effective
date of termination of the Management Agreement, Manager shall turn over to Bank
all books and records relating to the Project (copies of which may be made and
retained by Manager, at Manager’s expense), together with such authorizations
and letters of direction addressed to tenants, suppliers, employees, banks and
other parties as Bank may reasonably require; and Manager shall cooperate with
Bank in the transfer of management responsibilities to Bank or its designee.  A
final accounting of unpaid fees (if any) due to Manager under the Management
Agreement shall be made within thirty (30) days after the effective date of
termination, but Bank shall not have any liability or obligation to Manager for
unpaid fees or other amounts payable under the Management Agreement which accrue
before Bank (or its nominee) acquires title to the Project or Bank becomes a
mortgagee in possession.

7.

Bank’s, Grantor’s and Manager’s respective addresses for notice are set forth on
the signature page hereto.  All notices shall be given in the same manner as
notices to Grantor pursuant to the notice provisions contained in the Loan
Agreement.

8.

Manager agrees that, until such time as all of Borrower’s obligations under the
Loan Agreement and the other Loan Documents have been indefeasibly satisfied in
full, all of its right, title and interest in and to any management fees or
other compensation (collectively, the “Subordinated Management Fees”) are hereby
and shall at all times continue to be subject and unconditionally subordinate in
all respects to the payment obligations of Borrower under the Loan Agreement and
the other Loan Documents and any renewals, extensions, modifications,
assignments, replacements, or consolidations thereof and the rights, privileges,
and powers of Bank thereunder; provided, however, Grantor may pay, and Manager
may receive and retain, all regularly scheduled payments of Subordinated
Management Fees prior to Manager’s receipt of a notice from Bank of an Event of
Default.  Manager further agrees that any lien or liens which, by operation of
law or by filing of a notice of contract or otherwise, the Manager has or in the
future may have upon the Project or the assets of Grantor or any other Borrower
to secure the unpaid portion of any fees or sums contracted for with any party
relating to the Project, shall be, and hereby are, wholly subject and fully
subordinate to the mortgage interest and/or lien of any mortgage or security
interest now existing or hereafter executed in favor of Bank and encumbering the
Project or securing the loans, for the full indebtedness secured thereby
(collectively, the “First Liens”), and to all advances heretofore made under the
loans or which hereafter may be made under the loans (including, but not limited
to, fees, disbursements and charges in connection therewith), as said First
Liens may be consolidated, extended, modified, renewed, restated, replaced or
supplemented and to all consolidations, extensions, modifications, renewals,
restatements and replacements thereof and supplements thereto.  The undersigned
hereby stipulates and agrees that any foreclosure against all or any part of the
Project or other assets of Grantor or any other Borrower under the power of sale
contained in the First Liens or as otherwise authorized or permitted under the
First Liens or under any other document evidencing, securing or pertaining to
the loans shall operate fully to foreclose, extinguish and discharge any
mortgages, interests and/or liens held by the Manager, and that any purchaser at
any foreclosure sale or sales shall take title to the Project free and clear of
any and all such mortgages, interests and/or liens.  Additionally, the Manager
hereby waives any and all rights it may have (whether statutory or otherwise) to
remove personal property or fixtures from the Project.

9.

Nothing contained herein or in the Management Agreement shall alter, supersede,
or contradict any of Borrower’s obligations set forth in the Loan Agreement and
the other Loan Documents.  In the event of a conflict between the terms of the
Loan Documents and the Management Agreement, the terms of the Loan Documents
will control as between the Borrower and the Bank.  Manager acknowledges and
agrees that all funds derived from operation of the Project, including any such
funds held in accounts controlled by the Manager, are the property of the
Grantor and have been pledged to Bank as security for the loans.  As such,
Manager’s interest in such funds and accounts, if any, shall remain subordinate
to Bank’s interests created under the Loan Documents, and Manager shall, upon
request of Bank, remit such funds to Bank or open an account or accounts for
funds derived from operation of the Project with a financial institution, and
pursuant to terms, acceptable to Bank (including upon request the execution of
one or more blocked account or deposit account control agreements acceptable to
Bank) and deposit all such funds into such account or accounts.

10.

Bank may collaterally assign this Agreement, and such assignee will succeed to
the rights of Bank hereunder.

11.

This Agreement may be executed in multiple counterparts, each of which shall
constitute an original, but all of which shall constitute one document.
 Delivery of an executed counterpart of this Agreement by facsimile shall be
equally as effective as delivery of an executed original counterpart and shall
constitute a covenant to deliver an executed original counterpart, but the
failure to do so shall not affect the validity, enforceability and binding
effect of this Agreement.

12.

THIS AGREEMENT SHALL BE DEEMED TO BE A CONTRACT ENTERED INTO PURSUANT TO THE
LAWS OF THE STATE OF TEXAS AND SHALL IN ALL RESPECTS BE GOVERNED, CONSTRUED,
APPLIED AND ENFORCED IN ACCORDANCE WITH THE LAWS OF THE STATE OF TEXAS (WITHOUT
REGARD TO PRINCIPLES OF CONFLICTS OF LAWS).

[Remainder of page intentionally left blank.]

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IN WITNESS WHEREOF, Grantor, Bank and Manager have signed this Agreement as of
the day and year first above written.

Grantor’s address for notices:

2909 Hillcroft, Ste 420

Houston, Texas 77057

Facsimile No.:  713.465.3132

Attention:  Katherine O’Connell, General    

                  Counsel

GRANTOR:

HARTMAN GULF PLAZA, LLC, a Texas limited liability company

By:

      Allen R. Hartman, President

ASSIGNMENT AND SUBORDINATION OF MANAGEMENT AGREEMENT – Signature Page

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Manager’s address for notices:

2909 Hillcroft, Ste 420

Houston, Texas 77057

Facsimile No.:  713.465.3132

Attention:  Katherine O’Connell, General    

                  Counsel

MANAGER:

HARTMAN INCOME REIT MANAGEMENT, INC.,

a Texas corporation

By:

      Allen R. Hartman, President

ASSIGNMENT AND SUBORDINATION OF MANAGEMENT AGREEMENT – Signature Page

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Bank’s address for notices:

2000 McKinney Avenue, Suite 700

Dallas, Texas 75201

Facsimile No.:  (214) 932-6607

Attention:  Elizabeth W. Falco

BANK:

TEXAS CAPITAL BANK, NATIONAL ASSOCIATION

By:

       Deborah T. Purvin, SVP Corporate Banking

 

 

ASSIGNMENT AND SUBORDINATION OF MANAGEMENT AGREEMENT – Signature Page

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EXHIBIT A

True, Correct and Complete Copy of Management Agreement

[see attached]