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


 





















 


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]


 


9





















 


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

  	
   

  
					



 


10





















 


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:


	
   

  	
   

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
   

  



 


11





















 


EXHIBIT B


 


States Prohibiting Deductions


 


1. Alabama


 


2. New Mexico


 


3. North Carolina


 


4. Oklahoma


 


5. Texas


 


12





















 


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.


 


13





















 


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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