REAL PROPERTY AND COMPANY

MANAGEMENT AGREEMENT

 

              THIS REAL PROPERTY AND COMPANY MANAGEMENT AGREEMENT (“Agreement”)
is effective as of the 26th day of March, 2012, by and between Hartman Cooper
Street Plaza, LLC, a Texas limited liability company (“Company”), and Hartman
Income REIT Management, Inc., a Texas corporation (“Manager”).

 

ARTICLE I

AGENCY; TERM

 

            A.        Appointment/Acceptance.  Company hereby appoints Manager,
and Manager hereby accepts appointment, on the terms and conditions hereinafter
provided, as exclusive managing and leasing agent for all properties acquired by
Company.  All properties acquired by Company which from time to time are subject
to this Agreement are hereinafter referred to collectively as the “Properties”
and individually as the “Property.”

 

            B.        Term.  Subject to IV below, the term of this Agreement
(the "Term") shall be a period of one (1) year from the date first set forth
above and thereafter shall be automatically extended on an annual basis unless
terminated in writing by either Company or Manager at least thirty (30) days
prior to the expiration of the Term or extension thereof.

 

ARTICLE II

MANAGER’S DUTIES

 

            A.        Property Management.

 

                        1.         Power and Authority.  Manager shall have, and
is hereby granted, full power and authority to exercise all functions and
perform all duties in connection with the operation and management of the
Properties, subject to the right retained by Company to supervise the activities
of Manager pursuant to this Agreement.  The power and authority of Manager shall
include but not be limited to:

 

                                    a.         Investigating, hiring, paying,
supervising and discharging all personnel necessary or desirable, in Manager’s
good faith judgment, to be employed in connection with the maintenance and
operation of the Properties.  Compensation for the service of all such employees
and the cost of worker’s compensation insurance and any benefits with respect to
such employees shall be an operating expense of the Properties.  Manager, on
behalf of Company, may employ affiliated persons or entities of Manager or
Company (hereinafter “Affiliates”) as long as such employment is at rates that
do not exceed commercially reasonable rates that would be paid to an
unaffiliated person or entity for similar services, supplies, materials or other
such dealings.  Manager is authorized to engage, on behalf of and at the expense
of Company, professional persons (such as lawyers and accountants) and
consultants (such as tax and energy consultants) to render services for the
Properties.

 

                                    b.         Maintaining business-like
relations with tenants.

 

                                    c.         Using good faith efforts to lease
vacant space in the Properties and renew existing leases with tenants in
accordance with the current rental schedule from time to time submitted by
Manager and approved by Company (or in the absence of such current rental
schedule approved by Company, at rents reasonably determined by Manager taking
into consideration market factors then prevailing) and on such other terms and
conditions as Manager in its sole discretion shall determine.  Manager shall
execute leases and rental agreements with tenants and agreements with
concessionaires in Manager’s name as agent for Company on such terms and
conditions as Manager, in its sole discretion, shall determine.  Manager shall
have the right to reduce the rental rate by an amount up to ten percent (10%) of
the rental rate stipulated on the then current rental schedule approved by
Company (if any) if, in Manager’s sole discretion, such reduction is necessary
to expedite rental of such space under the competitive rental and economic
conditions then prevailing.

 

                                    d.         Collecting all monthly rentals
and other charges due from tenants, all rents and other charges due from
concessionaires, users of parking spaces and from users or lessees of other
facilities in the Properties.  Company hereby authorizes and directs Manager to
request, demand, collect, receive and receipt for any and all charges or rents
which may at any time be or become due to Company, and to take such legal action
as necessary to evict tenants delinquent in payment of monthly rent and to take
such legal action as necessary to collect any rentals owing from tenants.

 

                                    e.         Causing the buildings,
appurtenances and grounds on the Properties to be maintained according to
customary industry standards including, but not limited to, landscaping,
interior and exterior cleaning, painting and decorating, plumbing, steam
fitting, carpentry and other normal maintenance and repair work or any
extraordinary maintenance and repair work deemed necessary or desirable by
Manager, in Manager’s good faith judgment.

 

                                    f.          Making contracts for water,
electricity, gas, fuel, oil, telephone, pest control, trash removal, insurance
and other necessary services as Manager shall deem necessary or desirable, in
Manager’s good faith judgment.  Additionally, Manager shall place purchase
orders for such equipment, tools, appliances, materials and supplies as are
necessary or desirable, in Manager’s good faith judgment, to properly maintain
the Properties.  All such contracts and orders may at Manager’s choice be made
in either the name of Manager or in the name of Company and shall be on such
terms and conditions as Manager deems advisable.  Manager shall use good faith
efforts to have such contracts provide that Manager (or Company, as applicable)
can terminate on thirty (30) days notice.

 

                                    g.         Taking such action as may be
necessary or desirable, in Manager’s good faith judgment, to comply with any
orders or requirements affecting the Properties issued by federal, state, county
or municipal authority having jurisdiction over the Properties.  Manager shall
promptly notify Company of the receipt and contents of any such governmental
orders or requirements.

 

                                    h.         Causing to be disbursed or paid,
from the monies collected from the operation of the Properties and such other
monies as may or shall be advanced by Company to Manager:  (1) salaries and any
other compensation or fees due and payable to Manager and employees of the
Properties in connection with the management of the Properties and the cost of
workers’ compensation insurance with respect to such employees; (2) payments
required to be made to the holders of any mortgages affecting the Properties;
(3) current amounts due for premium charges under contracts of insurance for
fire and other hazard insurance premiums and amounts due for ad valorem taxes or
other assessments on the Properties; (4) sums otherwise due and payable in
connection with the operation and management of the Properties, including but
not limited to, utility bills, service bills, supply bills license fees and
payroll taxes; (5) repair expenses, capital improvement costs and other sums
retained for such reserves as Manager deems necessary or desirable, in Manager’s
good faith judgment,  for the prudent management and operation of the
Properties; and (6) the balance of funds, if any, shall be paid monthly to
Company.  Unless otherwise agreed to in writing by Manager and Company, such
payments and disbursements shall be made by Manager in any order it may
determine.

 

            Company at all times shall have the right to supervise Manager in
its performance of any or all of these activities.  Company shall have the
right, if it so elects, to direct Manager in the conduct of any of these
activities.  Absent any such direction from Company, Manager shall be entitled
to perform its duties hereunder in accordance with its own good faith judgment.

 

                        2.         Agency; Payments.  Except for the employment,
supervision and discharge of personnel in connection with the maintenance and
operation of the Properties, who shall be employees of Manager and not of
Company (although all costs with respect to such employees shall, to the extent
allocable to the Properties, be deemed costs of the Properties), all action
taken by Manager pursuant to the provisions of this Agreement shall be done as
agent of Company and obligations or expenses incurred thereunder shall be for
the account, on behalf and at the expense of Company, but any such actions may
be taken or made either in Company’s name or Manager’s name.  Any payments to be
made by Manager hereunder shall be made out of such monies as are available from
rentals and other collections from the Properties and such other monies as may
be provided by Company.  In the event anticipated disbursements for Properties
expenses and Company management shall in any month be in excess of the
anticipated revenues, Company agrees to advance sufficient funds to meet the
obligations (including all costs with respect to the employees of the Properties
described in II(A)(1)(a) hereof, including Affiliates, the Management Fee,
reimbursement of expenses described in III(A) hereof, and fees and
reimbursements due Manager for post-Exchange services described in III(B)
hereof) within five (5) days after Manager’s request.  Manager shall not be
obligated to make any advance to or for the account of Company or to pay any sum
contemplated by this Agreement except out of funds held by Manager on behalf of
Company or out of funds provided by Company to Manager, nor shall Manager be
obligated to incur any liability of or for the account of Company without
assurance or proof from Company that the necessary funds for the discharge
thereof will be provided promptly.

 

                        3.         Bank Account.  Manager shall establish and
maintain, in a manner to indicate the custodial nature thereof, with a bank,
whose deposits are insured by the Federal Deposit Insurance Corporation, a
separate bank account as agent of Company for the deposit of rentals and
collections from the Properties, which shall not be commingled by Manager with
funds from other projects or other funds of Manager or its Affiliates.  Manager
has authority to draw thereon (a) for any payments to be made by Manager
pursuant to the terms of this Agreement, (b) to discharge any liabilities or
obligations incurred pursuant to this Agreement, (c) for the payment of the
Management Fee described in III(A) hereof and the various expense reimbursements
due Manager hereunder, and (d) for the payment of the fees and reimbursements
due Manager for services described in III(B) hereof.

 

                        4.         Operating Budget.  On or before December 1 of
each year, Manager shall prepare and submit to Company for its consent an
operating budget with respect to the Properties for the next ensuing calendar
year (the “Budget”).  If Company does not consent to the Budget submitted By
Manager then, pending such consent or the submission to Manager by Company of an
alternative Budget, Manager shall be authorized to rely on the Budget for the
prior year, but with a four percent (4%) increase in each line item.

 

                        5.         Discretion.  Manager shall have and is hereby
granted sole and complete discretion to exercise the powers and functions
granted herein and Manager shall not be required to consult with Company or
obtain Company’s approval before taking any action permitted hereunder;
provided, however, except in cases of emergency, Manager shall not incur any
obligation in excess of $10,000.00 without the consent of Company.  The approval
by Company of a Budget shall be deemed the consent of Company to the expenses
indicated on such Budget.  For these purposes, an “emergency” shall be deemed to
exist if in the good faith judgment of Manager, prompt maintenance or repairs
are needed in order to prevent death, bodily injury or material property damage.

 

                        6.         Records.  Manager shall maintain, or cause to
be maintained, books of account of all receipts and disbursements from the
management of the Properties.  Manager shall provide monthly statements to
Company containing occupancy information and collection and disbursement
reports.  Manager shall allow Company’s accountant or other representatives to
review the books and records of the Properties during reasonable business
hours.  Manager also shall provide Company with an annual report for the
Properties containing information about occupancy and receipts and disbursements
for the immediately preceding calendar year.

 

            B.        Company Management.

 

                        1.         Administrative Services.  Manager shall
perform the following administrative services for the Company:

 

                                    a.         Forwarding to the Company, within
a reasonable time after receipt thereof, all statements, reports and other
information to be sent to them pursuant to this Agreement or as required by law.

 

                                    b.         Forwarding to the Company, within
a reasonable time after receipt thereof, checks of Company, payable to the order
of  the shareholders of Company, representing cash distributions to be made
pursuant to this Agreement.  All statements, reports, other information and
checks that are to be forwarded to the  Company, as aforesaid, shall be deemed
to have been so forwarded when the same are deposited in the United States mail
addressed to the addresses set forth in the  Company’s stock register,
respectively, or at such other addresses of which Manager has been notified in
writing.

 

ARTICLE III

COMPENSATION OF MANAGER

 

            A.        Property Management.

 

                        1.         Management Fee.  Company shall pay to
Manager, as base compensation for Manager’s duties and obligations under this
Agreement, a management fee (the “Management Fee”) equal to five percent (5%) of
the Effective Gross Revenues (as hereinafter defined) monthly, within ten (10)
days after the end of each calendar month, based upon the Effective Gross
Revenues during said calendar month.  For purposes of this Agreement, “Effective
Gross Revenues” shall mean all payments actually collected from tenants and
occupants of the Properties, exclusive of (a) security and deposits (unless and
until such deposits have been applied to the payment of current or past due
rent) and (b) payments received from tenants in reimbursement of expenses of
repairing damage caused by tenants.

 

                        2.         Leasing Fee.  Company shall pay to Manager a
leasing fee (the “Leasing Fee”) in the amount of (a) six percent (6%) of the
Base Rental Revenues to be received from new leases and (b) four (4%) of the
Base Rental Revenues from expansion of existing leases and from renewals of
existing leases.  The Leasing Fee shall be payable upon execution of each
lease.  For purposes of this Agreement, “Base Rental Revenues” shall mean the
amount of rental revenues that are fixed or otherwise determinable at the time
the related lease is executed.

 

                        3.         Reimbursement of Expenses.  Company, within
fifteen (15) days of a request by Manager, shall reimburse Manager for all
reasonable and necessary expenses incurred or monies advanced by Manager in
connection with the management and operation of the Properties.  However,
Manager shall not be reimbursed for its overhead, including the salaries and
expenses of employees relating to the management of the Properties except as
expressly provided in II(A)(1)(a) hereof.  Manager shall have no obligation to
advance any of its own funds for the management of the Properties.

 

            B.        Company Management.  Manager shall perform the
administrative services and be entitled to all the fees and reimbursements
otherwise due the Company as provided in this Agreement, including but not
limited to the items set forth below in III(B).

 

                        1.         Management and Other Services.  Company will
pay Manager a management fee of one percent (1%) of the Effective Gross Revenues
from the Properties for managing the day-to-day affairs of Company, and
providing the administrative services described in II(B).  Such fee shall be
payable monthly within ten (10) days after the end of each calendar month, based
upon the Effective Gross Revenues during such calendar month.

 

                        2.         Reimbursements and Expenses.  Company will
reimburse Manager for the actual cost to Manager or its Affiliates of goods,
materials and services furnished or performed by unaffiliated parties.  However,
no payment will be made to Manager for Manager’s overhead expenses, except as
specifically provided in II(A)(1)(a) hereof.  In the event that Manager or an
Affiliate thereof advances funds to Company or directly pays Company’s expenses,
they shall be fully reimbursed by Company.

 

                        3.         Payment of Expenses of Company.  Company will
pay the following expenses of Company:

 

                                    a.         Expenses of Company
administration, including all accounting, documentation, professional and
reporting expenses of Company, which may include, but are not limited to: (1)
preparation and documentation of bookkeeping, accounting and audits; (2)
preparation and documentation of budgets, economic surveys, cash flow
projections and working capital requirements; (3) preparation and documentation
of Company state and federal income tax returns; (4) printing, engraving, and
other expenses and taxes incurred in connection with the issuance, distribution,
transfer, registration, and recording of documents evidencing ownership of
shares in Company or in connection with the business of  Company; (5) expenses
of insurance; (6) expenses in connection with distributions of dividends made by
Company to, and communications, bookkeeping and clerical work necessary in
maintaining relations with, shareholders of Company, including the cost of
printing and mailing to such persons of reports, and of preparation of proxy
statements and solicitations of proxies in connection therewith, and the
corresponding expenses in connection therewith; (7) corresponding expenses in
connection with preparing and mailing reports required to be furnished to
shareholders of Company for investor, tax reporting, or other reasonable
business purposes, or expenses associated with furnishing reports to
shareholders of Company as Manager deems to be in the best interests of 
Company; (8) expenses of revising, amending, converting, modifying or
terminating Company; (9) costs incurred in connection with any litigation in
which Company is involved as well as any examination, investigation or other
proceedings conducted by any regulatory agency of Company, including legal and
accounting fees incurred in connection therewith; (10) costs of any computer
equipment or services used for or by Company; (11) costs of any accounting,
statistical or bookkeeping equipment necessary for the maintenance of the books
and records of Company; (12) costs of preparation and dissemination of
information material and documentation relating to potential sale, refinancing
or other disposition of Company; (13) supervision and expenses of professionals
employed by Company in connection with any of the foregoing, including
attorneys, accountants and appraisers; and (14) other Company accountants, and
appraisers engaged by Manager for the benefit of Company and Company; and (15)
other Company administration expenses directly and reasonable related to
Company’s operations or activities.

 

                                    b.         Other expenses, necessary or
desirable for the operation of the business of Company, in the reasonable
discretion of Manager.

 

            C.        Miscellaneous.  The fees and reimbursements set forth in
III are cumulative; and the obligations of Company pursuant to III shall survive
the termination of this Agreement.

 

ARTICLE IV

TERMINATION

 

            A.        Termination.  Notwithstanding anything herein to the
contrary, but subject to V(B) below, Manager and Company shall each have the
right, upon sixty (60) days prior written notice to the other party to terminate
this Agreement in its entirety or as to a specific Property or Properties with
the mutual consent of Company and Manager.

 

            B.        Default.  Notwithstanding anything herein to the contrary,
either party shall have the right (without limitation of its other rights and
remedies) to terminate this Agreement in the event of a default by the other
party if such default is not cured within ten (10) days after written notice is
given to the other party (provided that if such default cannot reasonably be
cured within such ten (10) day period, the cure period shall be extended as may
reasonably be required provided that the party obligated to cure such default
endeavors with diligence to do so).  Additionally, Company shall have the right
(without limitation of its other rights and remedies) to immediately terminate
this Agreement at any time upon written notice to Manager in the event of
Manager’s fraud, gross malfeasance, gross negligence or willful misconduct.

 

            C.        Termination Payments.  Upon termination in whole or as to
any Properties, Company and Manager shall immediately account to each other with
respect to all matters outstanding and all sums owing each other as of the
effective date of termination.  Manager shall be entitled to retain copies of
such books and records pertaining to such Properties as Manager deems
appropriate, provided Manager shall bear the cost of such photocopying.

 

ARTICLE V

INSURANCE; INDEMNIFICATION OF MANAGER

 

            A.        Insurance.  Except as otherwise agreed in writing between
the parties hereto, Manager shall maintain (subject to reimbursement as an
expense of the Properties) all risk casualty insurance, and public liability
insurance for the Properties with a broad form comprehensive general liability
endorsement, in such amounts as Manager may deem appropriate.  Any and all other
insurance maintained for the Properties shall be the sole responsibility of
Company.  Each party shall provide the other with copies of all insurance
policies maintained by such party with respect to the Properties.

 

            B.        Indemnification.  Manager shall have no liability to
Company for any loss suffered by Company which arises out of any action or
inaction of Manager if Manager, in good faith, determined that such course of
conduct was in the best interest of Company and such course of conduct did not
constitute gross negligence or willful misconduct of Manager.  Company shall
indemnify Manager against all claims, actions, damages, losses, judgments,
liabilities, costs and expenses (including attorneys’ fees) and amounts paid in
settlement of any claims sustained by Manager in connection with the management
of the Properties and the management services provided pursuant to this
Agreement, provided that the same were not the result of gross negligence or
willful misconduct on the part of Manager (collectively, “Unauthorized Acts”). 
Manager shall indemnify Company against all claims, actions, damages, losses,
judgments, liabilities, costs and expenses (including attorneys’ fees) and
amounts paid in settlement of any claims sustained by Company arising out of or
in connection with Unauthorized Acts.  Indemnities herein contained shall not
apply to any claim with respect to which the indemnified party is covered by
insurance, provided that the foregoing exclusion does not invalidate the
indemnified party’s insurance coverage.  The indemnification provisions set
forth herein shall survive termination of this Agreement.

 

            C.        Waiver.  Notwithstanding anything herein to the contrary,
each party hereby waives any claim against the other to the extent recoverable
by insurance carried or required to be carried by the claimant hereunder.

 

ARTICLE VI

MISCELLANEOUS

 

            A.        Binding Obligation; Assignment.  This Agreement shall
inure to the benefit of and constitute a binding obligation upon the parties
hereto and their respective successors and assigns.  Subject to VI(G), no party
may assign its rights or delegate its duties hereunder without the prior written
consent of the other party, such consent not to be unreasonably withheld.

 

            B.        Entire Agreement.  This Agreement constitutes the entire
agreement between the parties hereto with respect to the matters set forth
herein, and shall not be changed, modified or amended, except by an instrument
in writing after this date signed by both of the parties hereto with the same
formalities as the execution of this Agreement.

 

            C.        Relief.  Company and Manager each shall be entitled to
injunctive and other equitable relief to enforce the provisions of this
Agreement.

 

            D.        Competitive Activities.  Manager (and any Affiliate) may
acquire, own, promote, develop, operate and manage real property (or any one or
more of the foregoing) on its own behalf or on behalf of any other person or
entity.  Manager (and any Affiliate), notwithstanding the existence of this
Agreement, may engage in any activity it so chooses, whether such activity is
competitive with the Properties or Company or otherwise, without having or
incurring any obligation to offer any interest in such activities to Company. 
Neither this Agreement nor any activity undertaken pursuant hereto shall prevent
Manager (and any Affiliate) from engaging in such activities or require Manager
(and any Affiliate) to permit Company to participate in such activities, and, as
a material part of the consideration for Manager’s execution hereof, Company
hereby waives, relinquishes and reserves any such right or claim of
participation.

 

            E.         Time Obligation.  Manager shall not be required to spend
all of its time in the performance of its duties hereunder, but, rather, shall
spend such time as it deems reasonably necessary for the business-like
management of the Properties.

 

            F.         Notices.  Notices or other communications required or
permitted to be given hereunder shall be deemed duly made or given, as the case
may be, if in writing, signed by or on behalf of the person making or giving the
same, and shall be deemed completed upon the first to occur of receipt or two
(2) days after deposit in the United States mail, first class, postage prepaid,
addressed to the person or persons to whom such offer, acceptance, election,
approval, consent, certification, request, waiver, or notice is to be made or
given, at their respective addresses:

 

 

If to Company:                       Hartman Cooper Street Plaza, LLC

                                                2909 Hillcroft, Suite 420

                                                Houston, Texas  77057

                                                Attention:  Allen R. Hartman

 

If to Manager:                         Hartman Income REIT Management, Inc.

                                                2909 Hillcroft, Suite 420

                                                Houston, Texas  77057

                                                Attention:  Allen R. Hartman

 

or, in any case, at such other address as shall have been set forth in a notice
sent pursuant to the provisions of this paragraph.

 

            G.        Consents; Approval.  Wherever in this Agreement the
consent or approval of a party is required, such consent or approval shall not
be withheld unreasonably (except as expressly set forth herein to the contrary)
and shall be deemed to have been given if the party whose consent or approval is
requested does not notify in writing the party requesting such consent or
approval otherwise within ten (10) days after receipt of a written request for
such consent or approval.

 

            H.        Counterparts.  This Agreement may be executed in multiple
counterparts, each of which shall be an original, but all of which shall
constitute one instrument.

 

            I.          Situs.  This Agreement and the rights and obligations of
the parties hereto shall be governed by and construed in accordance with the
laws of the State of Texas, without regard to the conflict of laws provisions
thereof.

 

            J.          Headings.  Article and section titles or captions
contained in this Agreement are inserted only as a matter of convenience and for
reference and shall not be construed in any way to define, limit, extend or
describe the scope of any of the provisions hereof.

 

            K.        Definitions.  The words such as “herein,” “hereinafter,”
“hereof,” and “hereunder” refer to this Agreement as a whole and not merely to a
subdivision in which such words appear unless the context otherwise requires. 
The singular shall include the plural, and the masculine gender shall include
the feminine and neuter, and vice versa, unless the context otherwise requires.

 

            L.         Severability; Invalidity.  Each provision of this
Agreement shall be considered separable and if for any reason any provision or
provisions herein are determined to be invalid and contrary to any existing or
future law, such invalidity shall not impair the operation of or affect those
portions of this Agreement which are valid.

 

            M.        Additional Instruments, Acts.  Each of the parties hereto
shall hereafter execute and deliver such further instruments and do such further
acts and things as may be required or useful to carry out the intent and purpose
of this Agreement and as are not inconsistent with the provisions hereof.

 

            N.        Time.  Time is of the essence with respect to the dates
set forth in this Agreement.

 

            IN WITNESS WHEREOF, the parties hereto have executed this Agreement
as of the date first above written pursuant to due authority.

 

                                                HARTMAN COOPER STREET PLAZA, LLC

                                                a Texas limited liability
company

 

                                               

                                                By:     
___________________________________

                                                            Allen R. Hartman,
President

                                                                       

 

                                                HARTMAN INCOME REIT MANAGEMENT,
INC.

                                                a Texas corporation

                                                           

 

                                                By:     
________________________________________

                                                            Allen R. Hartman,
President