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LOAN AGREEMENT

by and between

HARTMAN COOPER STREET PLAZA, LLC, 

a Texas limited liability company

and

SECURITY LIFE OF DENVER INSURANCE COMPANY, 

a Colorado corporation

Dated as of June 13, 2014

[LOAN AGREEMENT]

Voya No. 29058

LOAN AGREEMENT

THIS AGREEMENT is made and entered into as of June 13, 2014 by and between HARTMAN COOPER STREET PLAZA, LLC, a Texas limited liability company (“Borrower”), and SECURITY LIFE OF DENVER INSURANCE COMPANY, a Colorado corporation (“Lender”).

WITNESSETH:

WHEREAS, Borrower, has requested that Lender make that certain loan (the “Loan”) to Borrower in the aggregate principal amount of $8,400,000.00; and

WHEREAS, Lender is willing to make the Loan to Borrower on the terms and subject to the conditions and requirements set forth in this Agreement.

NOW, THEREFORE, in consideration of the premises and the mutual covenants herein contained, the parties to this Agreement hereby agree as follows:

ARTICLE I

DEFINITIONS; CONSTRUCTION

Section 1.1

Definitions.  For purposes of this Agreement, the following terms shall have the indicated meanings as set forth below:

“Affiliate” shall mean any corporation, limited liability company, partnership or other entity which is controlling of, controlled by or under common control with Borrower.

“Affiliate Entities” shall mean, collectively, those entities set forth on Exhibit “A” attached hereto, but excluding Borrower.

“Affiliate Loans” shall mean, collectively, those certain loans Lender made to the Affiliate Entities of even date herewith, which Affiliate Loans, together with the Loan, are in the original aggregate principal amount of $49,725,000.00.

“Affiliate Notes” shall mean, collectively, those certain promissory notes executed by the Affiliate Entities and payable to the order of Lender as evidence of the Affiliate Loans, and any extension, renewal, modification or replacement thereof or therefor.

“Affiliate Properties” shall mean, collectively, the properties, including the land and all improvements, fixtures and related personal property located thereon, listed on Exhibit “A”, but excluding the Property, and as more particularly described as “Premises” in the mortgages, security deeds and deeds of trust executed this date by the Affiliate Entities in favor of Lender, to be recorded in the real estate records of the counties where the Affiliate Properties are located.

“Agreement” shall mean this Loan Agreement, as amended, supplemented or modified from time to time.

“Assignment of Management Agreement” shall mean, the Assignment, Consent and Subordination Regarding Management Agreement executed this date by Borrower in favor of Lender, and any modifications or replacements thereof or therefor.

“Assignments of Rents and Leases” shall mean the first priority Assignment of Rents and Leases executed this date by Borrower in favor of Lender, and any extensions, renewals, modifications or replacements thereof or therefor.

“Borrower” shall have the meaning given such term in the preamble to this Agreement and shall include its successors and assigns.

“Borrower Guarantees” shall mean, collectively, the Limited Guarantees executed this date by Borrower and Affiliates of Borrower in favor of Lender guaranteeing the Affiliate Loans, and any extensions, renewals, modifications or replacements thereof or therefor.

“Business Day” shall mean any day excluding Saturday, Sunday and any other day on which banks in Atlanta, Georgia are customarily closed.

“Code” shall mean the Internal Revenue Code of 1986, as amended from time to time.

“Collateral” shall mean any and all of the property which is granted, pledged or assigned to Lender or in which Lender is otherwise granted a Lien to secure the obligations pursuant to any and all of the Security Documents.

“Default” shall mean any condition or event which, with notice or lapse of time or both, would constitute an Event of Default.

“Environmental Indemnification Agreement” shall mean the Environmental Indemnification Agreement executed this date by Borrower in favor of Lender, and any extensions, renewals, modifications or replacements thereof or therefor.

“Event of Default” shall have the meaning provided in Article VII hereof.

“Improvements” shall mean all improvements constructed on the Land.

“Land” shall mean, collectively, all of the real property described and defined as “Land” in the Security Instruments.

“Leases” shall have the meaning given such term in the Security Instruments.

“Lender” shall have the meaning given such term in the preamble to this Agreement and shall include such Persons’ successors and assigns.

“Lien” shall mean any mortgage, deed to secure debt, deed of trust, pledge, security interest, security deposit, encumbrance, lien or charge of any kind (including any agreement to give any of the foregoing, any conditional sale or other title retention agreement, any lease in the nature thereof, and the filing of or agreement to give any financing statement under the Uniform Commercial Code of any jurisdiction).

“Loan” shall have the meaning given such term in the preamble to this Agreement.

“Loan Documents” shall mean, collectively, this Agreement, the Note, the Security Documents, and any other certificates or written undertakings of Borrower or guarantors in favor of Lender delivered contemporaneously with the delivery of this Agreement, other than the Environmental Indemnification Agreement.

“Material Adverse Effect” shall mean a material adverse effect upon, or a material adverse change in, any of the (i) results of operations, properties, or financial condition of Borrower, (ii) validity, binding effect or enforceability of any Loan Document or the Environmental Indemnification Agreement, or (iii) ability of Borrower to perform its payment obligations or other Obligations under the Loan Documents or the Environmental Indemnification Agreement.

“Mortgage” shall mean the first priority Deed of Trust, Security Agreement, Financing Statement, and Fixture Filing executed this date by Borrower in favor of Lender, to be recorded in the real estate records of the county where the Property is located, and any extensions, renewals, modifications or replacements thereof or therefor.

“Note” shall mean the Promissory Note executed by Borrower and payable to the order of Lender as evidence of the Loan, and any extension, renewal, modification or replacement thereof or therefor.

“Obligations” shall mean, collectively, all amounts now or hereafter owing to Lender by Borrower pursuant to the terms of or as a result of this Agreement, the Note, or any other Loan Documents or the Environmental Indemnification Agreement, including without limitation, the unpaid principal balance of the Loan and all interest, fees, expenses and other charges relating thereto or accruing thereon, as well as any and all other indebtedness, liabilities, covenants, duties and obligations of Borrower, whether direct or indirect, absolute or contingent, or liquidated or unliquidated, monetary or non-monetary, which may be now existing or may hereafter arise under or as a result of any of the Loan Documents, the Environmental Indemnification Agreement, the Borrower Guarantees, and together with any and all renewals, extensions, or modifications of any of the foregoing.

“Person” shall mean any individual, partnership, limited partnership, limited liability company, firm, corporation, association, joint venture, trust or other entity, or any government or political subdivision or agency, department or instrumentality thereof.

“Pooled Loans” shall mean, collectively, the Loan and the Affiliate Loans.

“Pooled Notes” shall mean, collectively, the Note and the Affiliate Notes.

“Pooled Properties” shall mean, collectively, the Property and the Affiliate Properties.

“Prepayment Premium” shall have the meaning given to such term in the Note.

“Property” shall mean, collectively, the Land and Improvements, fixtures and related personal property located thereon, and as more particularly described as “Premises” in the Security Instruments.  

“Requirements” shall have the meaning given such term in Section 4.12 hereof.

“Second Assignment of Rents and Leases” shall mean, the Assignment of Rents and Leases (Second Priority) executed this date by Borrower in favor of Lender, and any modifications or replacements thereof or therefor, which secures, in part, the obligations under the Borrower Guarantees and which shall be junior and subordinate to the Assignment of Rents and Leases.

“Second Mortgage” shall mean the Deed of Trust, Security Agreement, Financing Statement, and Fixture Filing (Second Priority) executed this date by Borrower in favor of Lender, to be recorded in the real estate records of the county where the Property is located, and any extensions, renewals, modifications or replacements thereof or therefor, which secures, in part, the obligations under the Borrower Guarantees and which shall be junior and subordinate to the Mortgage.

“Second Security Instruments” shall mean, collectively, the Second Mortgage, the Second Assignment of Rents, and the UCC Financing Statements, executed this date by Borrower in favor of Lender, to be recorded in the real estate records of the county where the Property is located, and any extensions, renewals, modifications or replacements thereof or therefor, which secure, in part, the obligations under the Borrower Guarantees.

“Security Documents” shall mean, collectively, the Security Instruments, the Assignment of Management Agreement, the Borrower Guarantees, and each other affidavit, certificate, security, mortgage, assignment, financing statements or other collateral document, whether now existing or hereafter executed and delivered in connection with, or securing any or all of, the Obligations.

“Security Instruments” shall mean, collectively, the Mortgage, the Assignment of Rents and Leases, the UCC Financing Statements, the Second Security Instruments, and other security instruments executed this date by Borrower in favor of Lender, to be recorded in the real estate records of the county where the Property is located, and any extensions, renewals, modifications or replacements thereof or therefor.

“Taxes” shall mean any present or future taxes, levies, imposts, duties, fees, assessments, deductions, withholdings or other charges of whatever nature, now or hereafter imposed or levied by the United States of America, or any state or local government or by any department, agency or other political subdivision or taxing authority thereof or therein and all interest, penalties, additions to tax and similar liabilities with respect thereto other than taxes on the income of Lender.

Section 1.2

Other Definitional Terms.  The words “hereof,” “herein” and “hereunder” and words of similar import when used in this Agreement shall refer to this Agreement as a whole, and not to any particular provision of this Agreement.  Any pronoun used herein shall be deemed to cover all genders and all singular terms used herein shall include the plural and vice versa.  Unless otherwise expressly indicated herein, all references herein to a period of time which runs “from” or “through” a particular date shall be deemed to include such date, and all references herein to a period of time which runs “to” or “until” a particular date shall be deemed to exclude such date.

ARTICLE II

LOANS

Section 2.1

Disbursement.  Subject to the terms and conditions of this Agreement, Lender agrees to advance to Borrower the Loan.

Section 2.2

Note; Repayment of Principal and Interest.  Borrower’s obligations to pay to Lender the principal of and interest on the Loan shall be evidenced by the records of Lender and by the Note.  The Loan shall bear interest at the rate or rates per annum specified in the Note and such interest shall be calculated and shall be paid and shall accrue in the manner specified in the Note.

ARTICLE III

GENERAL TERMS

Section 3.1

Fees.  In consideration of Lender’s entering into this Agreement and making the Loan hereunder, Borrower agrees to pay (from deposits previously delivered to Lender) to Lender, on the date of the funding of the Loan hereunder, a processing fee in the amount set forth in the Application Letter, as amended to date, which processing fee shall be deemed fully earned upon Lender’s execution and delivery of this Agreement and the funding of the Loan.

Section 3.2

Payments, Prepayments and Computations.  Except as may be otherwise specifically provided herein, all payments by Borrower with respect to the Loan or any other Obligations under this Agreement or any of the other Loan Documents or the Environmental Indemnification Agreement shall be made without defense, set-off or counterclaim to Lender not later than 2:00 p.m. (Eastern Time) on the date when due and shall be made in lawful money of the United States of America in immediately available funds.  Any payment received by Lender on a non-Business Day or after 2:00 p.m. (Eastern Time) on any Business Day shall be deemed received by Lender at the opening of its business on the next Business Day.  Whenever any payment to be made hereunder or under the Note or any of the other Loan Documents or the Environmental Indemnification Agreement shall be stated to be due on a day which is not a Business Day, the due date thereof shall be extended to the next succeeding Business Day and, with respect to payments of principal, interest thereon shall be payable at the applicable rate during such extension.  Interest shall be calculated on the basis of a year consisting of 360 days and with twelve thirty-day months, except that interest due and payable for less than a full month shall be calculated by multiplying the actual number of days elapsed in such period by a daily interest rate based on a 360-day year.  The Loan may not be prepaid in whole or in part except as specifically provided in the Note and this Agreement.

Section 3.3

Collateral.  The Obligations shall be secured pursuant to any or all Security Documents.  Borrower also shall execute or deliver (or cause to be executed and delivered) any and all financing statements and such other documents as Lender may reasonably request from time to time in order to perfect or maintain the perfection of Lender’s Liens under such Security Documents.

Section 3.4

Agreements Regarding Interest and Other Charges.  Borrower and Lender hereby agree that the only charges imposed or to be imposed by Lender upon Borrower for the use of money in connection with the Loan is and will be the interest required to be paid under the provisions of this Agreement as well as the related provisions of the Note.  In no event shall the amount of interest due and payable under this Agreement, the Note or any of the other Loan Documents or the Environmental Indemnification Agreement exceed the maximum rate of interest allowed by applicable law.  It is the express intent hereof that Borrower not pay and Lender not receive, directly or indirectly or in any manner, interest in excess of that which may be lawfully paid under applicable law.  Any and all charges, fees, and other amounts payable hereunder not identified as “interest” are not intended, and shall not be deemed, to be interest.  All interest, and all other charges, fees or other amounts deemed to be interest notwithstanding the preceding sentence, which are paid or agreed to be paid to Lender under this Agreement, the Note or any of the other Loan Documents shall, to the maximum extent permitted by applicable law, be amortized, allocated and spread on a pro rata basis throughout the entire actual term of the Loan (including any extension or renewal period), or at Lender’s election and to the extent permitted by applicable law, credited as a payment of principal (without any Prepayment Premium).

Section 3.5

Reserved.

Section 3.6

Cross-Default/Cross-Collateralization.  As additional security for the Loan, the terms of the Security Instruments shall provide for the cross-collateralization and cross-default of the Pooled Loans.  The Security Instruments provide, without limitation, that upon the occurrence of an Event of Default, under the terms and conditions of any of the Pooled Loans, Lender shall be entitled to exercise any and all remedies under any Security Instrument and/or mortgages, deeds to secure debt, or deeds of trust securing the Pooled Loans, including but not limited to, accelerating each of the Pooled Notes and conducting a foreclosure sale on any one or more of the Pooled Properties.  Lender has elected to structure such cross-collateralization and cross default in the following manner:

(a)

Borrower shall execute and deliver the Loan Documents required hereunder (including the Security Instruments) and the Environmental Indemnification Agreement;

(b)

Borrower shall execute and deliver the Borrower Guarantees which guarantees will be secured by the Second Security Instruments;

(c)

Upon the occurrence of an Event of Default under any of the Pooled Loans, Lender may elect to proceed to foreclose under any of the Security Instruments or the mortgages, deeds to secure debt, or deeds of trust securing the Affiliate Loans or any guarantees relating thereto in such order as it may elect in its sole discretion;

(d)

Lender shall not be required to accept prepayment of the Loan or any of the other Pooled Loans pursuant to the prepayment provisions of the Note or the respective Affiliate Notes (with applicable prepayment premium) without a simultaneous prepayment in full of the other Pooled Loans pursuant to the Note or the Affiliate Notes, respectively; provided, however, that Borrower may prepay the Loan pursuant to the Substitution provisions in Section 3.08 hereof without the simultaneous prepayment in full of the other Pooled Loans; and

(e)

Any transfer pursuant to Paragraph 30 [Due on Sale] of the Mortgage shall be subject to the cross-collateralization and cross default provisions herein, including the Borrower Guarantees and the Second Security Instruments.  Any transferee under such Section must assume all obligations under such cross-collateralization and cross default provisions.

Section 3.7

Reserved.  

Section 3.8

Substitution of Loan.  Notwithstanding the provisions of Paragraph 7 of the Note or Paragraph 30 of the Mortgage, Borrower may request that Lender permit Borrower to prepay the Loan in full at par from the proceeds of a substitute first mortgage loan (“Substitute Loan”) to be funded by Lender to Borrower and secured by a substitute property owned in fee simple as provided below (which was not previously any of the Pooled Properties hereunder) (“Substitute Property”) and to obtain a release of the Property from the Security Instruments upon and subject to the following terms and conditions (“Substitution”):

(a)

Borrower must submit a written request (“Substitution Request”) to Lender for the proposed Substitute Loan identifying the proposed Substitute Property at least ninety (90) days prior to the proposed closing date for the Substitution.  Lender shall evaluate the request for the proposed Substitute Loan and the proposed Substitute Property in its sole discretion pursuant to its then customary underwriting and pricing criteria.  The amount of the Substitute Loan requested must be at least the amount of the unpaid principal balance of the Loan. Lender may review such items as it may require in its sole discretion, including, but not limited to, location, occupancy, lease term, rollover, tenant exposure, and tenant’s credit.

(b)

The owner of the Substitute Property (and borrower under the Substitute Loan) must be either (1) the Borrower, or (2) a single asset affiliate of Guarantor having the identical beneficial ownership structure and management control as the Borrower.

(c)

The Substitute Property must be a similar income producing property as the Property.  Under no circumstances shall Lender permit any special purpose properties (for example, hotels, motels, mobile home parks, health or senior care facilities).  The Substitute Property must be located in the continental United States.

(d)

Lender in its sole discretion shall acknowledge within ten (10) business days of the Lender’s receipt of the Substitution Request whether the proposed Substitute Property appears to be acceptable to permit the Substitution.  If in the Lender’s sole discretion it is determined that the proposed Substitute Property is equal to or greater in quality than the Property, then Lender, through its loan correspondent, HFF,  will process the Borrower’s formal request to make the Substitute Loan.  The proposal will be reviewed by and presented to Lender’s and Voya Investment Management LLC’s investment review committee pursuant to each of their then current commercial mortgage loan policies, practices, standards and procedures for approval in their sole and absolute discretion.  If the investment review committee approves the formal request for Substitute Loan and Substitute Property, the Substitution will be subject to the other conditions outlined herein.

(e)

No more than two (2) Substitutions in the aggregate shall be closed during the entire term of the Pooled Loans among all of the Pooled Properties.  Of the total of two (2) Substitutions described in the preceding sentence, only one (1) Substitution may be closed prior to June 30, 2019, and only one (1) Substitution may be closed during the period commencing July 1, 2019 and ending June 30, 2024.  From and after July 1, 2024, the rights hereunder may not be exercised, and the terms of this Section 3.08 shall be deemed null and void.

(f)

Borrower shall pay a processing fee to Lender equal to $50,000 (“Processing Fee”) at closing of each and every approved Substitution.  A “Substitution Deposit” of $5,000 shall be required with submission of each Substitution Request, which deposit shall be applied to the Processing Fee at closing of the Substitution.  The Substitution Deposit and Processing Fee contemplated by this subsection are in addition to reasonable outside counsel attorneys’ fees and expenses incurred in the preparation, negotiation, documentation, due diligence review and closing of such Substitution.

(g)

All improvements on the Substitute Property shall have been completed in a good and workmanlike manner and in compliance, in all material respects, with all applicable Requirements prior to closing of the Substitution. The Substitute Property must be lien free and all land, improvements and personal property paid for in full.

(h)

The appraised fair market “As Is” value of the Substitute Property shall be equal to or greater than the greater of (1) the then-appraised fair market value, or gross sales proceeds, as the case may be, of the ’Property and (2) the original appraised value of the ’Property as set forth in the appraisal delivered to Lender in connection with the closing of this Loan.  The fair market “As Is” value of the Property and Substitute Property shall be determined by a firm of appraisers approved by the Lender, based on an MAI appraisal satisfactory to Lender, dated not more than ninety (90) days prior to the closing of the Substitute Loan.  All costs of such appraisals shall be paid by the Borrower on or prior to the closing of the Substitute Loan.

(i)

The actual net operating income relating to the Substitute Property (based upon the trailing twelve (12) month financial results or such shorter period, as Lender deems appropriate, for a Substitute Property opened for less than one year) shall equal or exceed the actual net operating income relating (based upon the trailing twelve (12) month financial results or such shorter period, as Lender deems appropriate, for the Substitute Property opened for less than one year) to the Property.

(j)

The Pooled Properties, excluding the Property and including the Substitute Property, must have a Debt Yield equal to or in excess of 13% and must be at least 90% leased and occupied on a square foot basis.  As used herein, “Debt Yield” shall mean the quotient of (A) net cash flow of all Pooled Properties (excluding the Property and including the Substitute Property) divided by (B) the projected outstanding principal balance of the Pooled Loans (excluding the Property and including the Substitute Property) on the date of the release.

(k)

Lender’s outside counsel shall prepare and owner of the Substitute Property (as described in subsection (b) above) shall execute a new note, mortgage, assignment of rents and leases, loan agreement, environmental indemnities, borrower’s certificate, and all other loan documents Lender shall deem appropriate, including, but not limited to, (1) all documents necessary to cross collateralize and cross default the Substitute Loan with the other Pooled Loans (as described in Section 3.06) and (2) any modification of the existing Loan Documents (all of which shall be substantially in the form of the applicable documents executed in connection with the Loan with such changes thereto as Lender reasonably deems appropriate to reflect the terms and circumstances of the Substitution Loan and Substitute Property) (collectively, the “Substitute Loan Documents”).

(l)

Prior to the closing of the Substitution Loan, Borrower shall be required to supply for Lender’s review and approval due diligence materials and such other materials as may then be customarily required as part of its then current commercial loan closing policies, procedures, standards and practices for properties of similar type and in similar locations as the Substitute Property, including, without limitation, a current as-built ALTA survey, proof of adequate insurance, title insurance in conformance with the Lender’s requirements, proof of compliance with governmental regulations, tenant estoppel certificates, and subordination, non-disturbance and attornment agreements.  At the Borrower’s sole cost and expense, Lender shall receive for review and approval all additional due diligence materials in any way relating to the Substitute Property, including but not limited to, an MAI appraisal, hazardous substance report, engineer report and seismic report as required by Lender in its sole discretion.  The items listed in this section are not exhaustive.

(m)

The Substitute Loan Documents, financing statements and other instruments required to perfect the liens in the Substitute Property and all collateral under such documents shall have been recorded, registered and filed (as applicable) in such manner as may be required by law to create a valid, perfected lien and security interest with respect to the Substitute Property and the personal property related thereto.  The liens created by the Substitute Loan Documents shall be first liens and security interests on the Substitute Property and the personal property related thereto (except the second security instrument securing the guaranty), subject only to such exceptions as Lender shall approve in its sole discretion.  At closing of the Substitute Loan, the Borrower (or other new borrower permitted under subsection (b) above) shall have good and marketable title to the Substitute Property and good and valid title to any personal property located thereon or used in connection therewith, in each case satisfactory to the Lender.

(n)

Lender shall have received (1) a consent to the Substitution by any “Carve-Out” or other guarantors or indemnitors on the Loan in addition to Borrower and (2) such other instruments and agreements and such certificates and opinions of counsel, in form and substance satisfactory to the Lender in connection with such Substitution as it may reasonably request.

(o)

Borrower shall consider all implications for documentary stamp and intangibles taxes on the Substitute Loan that shall arise in connection with such Substitution.  Lender shall require payment of all such documentary stamp and intangibles taxes required by law and authorities having jurisdiction as a condition of closing the Substitute Loan in the jurisdiction where the Substitute Property is located regardless of whether the taxing authority imposes taxes duplicative of those incurred at the original closing of the Loan where the Property is located.

(p)

No uncured Event of Default shall exist under any other Loan Documents on the date of Substitution Request or at closing of the Substitute Loan.

(q)

Lender shall be satisfied that no material adverse change in the financial condition, operations or prospects of Borrower and its managers and other major principals has occurred after closing of the Pooled Loans.  Lender shall be entitled to request copies of financial statements and such other financial information as it shall reasonably require in order to assess the financial status of the Borrower (or new borrower permitted pursuant to subsection (b) above) and to determine and/or estimate the solvency of such entity prior to and following the closing of the Substitution.  Lender shall not be required to close a proposed Substitution in the event it reasonably determines that the Borrower (or new borrower under (b) above) is or, upon completion of the Substitution, may become insolvent within the meaning of the term under the federal bankruptcy code.

(r)

The Borrower shall pay all customary and reasonable out-of-pocket costs and expenses incurred in connection with any such Substitution and the customary and reasonable out-of-pocket fees and expenses incurred by Lender, its outside counsel and its loan correspondent and/or loan servicer in connection therewith.  Without limiting the generality of the foregoing, the Borrower shall, in connection with, and as a condition to, each Substitution, pay (1) the reasonable costs and expenses of obtaining all property condition assessments, appraisal reports, environmental site assessments and if applicable, seismic reports required by Lender in connection with such Substitution, and (2) all  recording charges, title insurance charges, and stamp and/or mortgage or similar taxes, transfer taxes relating to such Substitution.  Borrower may request estimates from the applicable appraisers and consultants before the reports and assessments contemplated under clause (1) above are ordered, and if the Borrower objects to paying the estimated costs of such reports, the Borrower may withdraw its request for Substitution and receive a refund of the Substitution Deposit. Once a report or assessment is ordered, the Borrower shall be responsible for payment of the associated cost thereof.

Section 3.9

Letter of Credit.  In the event Lender requires or agrees to accept a letter of credit in satisfaction of any requirement herein, said letter of credit and any extension, renewal, or replacement thereof shall be an unconditional, irrevocable letter of credit issued by a bank approved by Lender and in substance and form acceptable to Lender.  Said letter of credit shall not contain any conditions for its cashing beyond presentation by its authorized representative.  Its term shall be for not less than three (3) months beyond the end of the time period, or any extension thereof, specified by Lender for satisfaction of such requirement.

Section 3.10

Prohibition on Dry Cleaners.  Borrower shall not, during the term of the Pooled Loans, conduct or permit any tenant to conduct any dry cleaning operations on or at the Property.  Notwithstanding the foregoing, the operation of a dry cleaning facility by a tenant at any of the Pooled Properties will not constitute a default under the Loan Documents so long as such operation is conducted at all times in accordance with all applicable Environmental Laws (as defined in the Mortgage) and such tenant is actively taking all necessary steps related to its operations in order to prohibit a release of any Hazardous Substances (as defined in the Mortgage) on, in or under the applicable Pooled Property. Any such tenancy and its operation of a compliant dry cleaning system shall not be deemed a waiver of nor be deemed to void or limit any covenants and indemnifications provided by Borrower or any guarantor of the Loan under the Environmental Indemnification Agreement executed in connection herewith.

ARTICLE IV

REPRESENTATIONS AND WARRANTIES

Borrower hereby represents and warrants to Lender as follows:

Section 4.1

Organization; Authorization; Valid and Binding Obligations.  Borrower is a limited liability company duly organized and validly existing under the laws of the state of its incorporation or organization.  Borrower is duly qualified and authorized to do business and is in good standing in all other states and jurisdictions where the ownership of property or the nature of the business transacted by it, makes such qualification necessary, including, without limitation, the state where the Property is located.  Borrower has all requisite power and authority to execute and deliver the Loan Documents and the Environmental Indemnification Agreement, to perform its obligations under such Loan Documents and the Environmental Indemnification Agreement and to own its property and carry on its business.  The Loan Documents and the Environmental Indemnification Agreement have been duly authorized by all requisite corporate, partnership or other action on the part of Borrower and duly executed and delivered by authorized officers, partners or other representatives (as the case may be) of Borrower.  Each of the Loan Documents and the Environmental Indemnification Agreement constitutes a valid obligation of Borrower, legally binding upon and enforceable against Borrower in accordance with its terms, except as such enforceability may be limited by applicable bankruptcy, insolvency, reorganization, moratorium or similar laws affecting the enforcement of creditors’ rights generally or by general principles of equity.

Section 4.2

Financial Statements.  Borrower covenants and agrees that it will keep and maintain books and records of account, or cause books and records of account to be kept and maintained in accordance with Paragraph 25 of the Mortgage. 

Section 4.3

Actions Pending.  There is no action, suit, investigation or proceeding pending or, to the knowledge of Borrower, threatened against Borrower, the Property or any other properties, assets or rights of Borrower, by or before any court, arbitrator or administrative or governmental body.

Section 4.4

Title to Land.  The Land is free and clear of all liens and encumbrances, except for the Security Instruments and except as specifically set forth in the mortgagee title policy(ies) delivered to Lender in connection with the Loan.

Section 4.5

Taxes.  Borrower has filed all federal, state and other income tax returns prior to the required filing date which, to the knowledge of Borrower, are required to be filed, and has paid all Taxes as shown on such returns and on all assessments received by it to the extent that such Taxes have become due, except such Taxes as are not due or which are being contested in good faith by Borrower by appropriate proceedings for which adequate reserves have been established in accordance with sound accounting practices consistently applied or by any tenant under any Leases, in which case such contest is being conducted as permitted pursuant to the applicable Lease(s).

Section 4.6

Conflicting Agreements and Other Matters.  Neither the execution nor delivery of this Agreement, nor fulfillment of or compliance with the terms and provisions of this Agreement, will conflict with, or result in a breach of the terms, conditions or provisions of, or constitute a default under, or result in any violation of, or result in the creation of any Lien (other than any Lien arising under any Loan Document) upon the Property or any other properties or assets of Borrower, the charter or by-laws or other organizational documents of Borrower, any award of any arbitrator or any agreement, instrument, order, judgment, decree, statute, law, rule or regulation to which Borrower, the Property or any other properties or assets of Borrower is subject.

Section 4.7

Governmental Consent.  Except for any recording or filing which may be required by applicable law to perfect or maintain the perfection of Lender’s Liens in the Collateral, no consent, approval or authorization of, or declaration or filing with, any governmental authority is required for the valid execution, delivery and performance by Borrower of the Loan Documents or the Environmental Indemnification Agreement or the consummation of any of the transactions contemplated by the Loan Documents.

Section 4.8

Disclosure.  Neither this Agreement nor any other document, certificate or statement furnished to Lender by Borrower in connection herewith contains any untrue statement of a material fact or omits to state a material fact necessary in order to make the statements contained herein and therein not materially misleading.

Section 4.9

Organization Documents.  Borrower has been formed, and is existing pursuant to the terms of its organizational documents, true and exact copies of which have been delivered by Borrower to Lender.

Section 4.10

Improvements.  All certificates, permits and licenses required in connection with the ownership, operation and occupancy of the Property have been issued and are in full force and effect.

Section 4.11

No Event of Default.  The Loan Documents and the Environmental Indemnification Agreement have been complied with and are in full force and effect and no Events of Default exist thereunder; Borrower has no knowledge of any facts or circumstances, which with the giving of notice or passage of time (or both) would constitute an Event of Default thereunder, and all obligations and agreements required to be performed by Borrower thereunder have been performed.

Section 4.12

Compliance with Requirements.  To the best of Borrower’s knowledge, the Improvements have been constructed free from faults and defects, and in all respects conform to and comply with all valid and applicable laws, ordinances, regulations and rules of all governmental entities having jurisdiction over, and all covenants, conditions, restrictions and reservations affecting the Land and the Improvements (the “Requirements”). Borrower has no knowledge of any noncompliance (either substantial or unsubstantial) of the Improvements with any of the applicable Requirements.

Section 4.13

Condition of Land and Improvements.  Neither the Land nor the Improvements have been injured or damaged by fire or other casualty which has not been restored.

Section 4.14

Personalty.  Except as otherwise expressly provided in the Leases, title to all goods, materials, supplies, equipment, machinery and other personal property and fixtures used in the operation or maintenance of the Property, is vested in Borrower free and clear of all liens, encumbrances and security interests, other than the lien and security interest of the Security Instruments, and Borrower has not executed any security agreement, purchase order or other contract or agreement under which any person or other entity is granted or reserves the right to retain title to, remove or repossess any of such goods, materials, supplies, equipment, machinery or other personal property or fixtures.

Section 4.15

Zoning.  Under the applicable zoning ordinance of each jurisdiction in which each parcel of Land is located, each parcel of Land is zoned in a zoning classification that permits the use of the Land and Improvements for all purposes as currently used, without any conditions other than with respect to which such conditions have been complied in full and without exception.  Furthermore, to the best of Borrower’s knowledge, in the event the Improvements were damaged or destroyed, the Improvements could be restored or reconstructed as they now exist without the requirement of any zoning variance or waiver.

Section 4.16

Restrictions.  To the best of Borrower’s knowledge, the Land is not subject to: (i) any use or occupancy restrictions, except those imposed by applicable zoning laws and regulations, except any such restrictions described in the mortgagee title policy(ies) delivered to Lender in connection with the Loan and those restrictions set forth in the Security Instruments; (ii) special taxes or assessments; (iii) utility tap-in fees, except those generally applicable throughout the tax districts in which the Land is located; or (iv) charges or restrictions, whether existing of record or arising by operation of law, unrecorded agreement, the passage of time or otherwise, except any such charges or restrictions described in the mortgagee title policy(ies) delivered to Lender in connection with the Loan.

Section 4.17

Status of Service Contracts.  Borrower is not in default under any development, management, service or other agreements and contracts relating to the operation or management of the Property in a manner which could reasonably be expected to have a Material Adverse Effect; there is no material default on the part of any other party to any of such contracts, there is no material default of Borrower under any such contracts or the existence of any facts or circumstances, which with the giving of notice or passage of time (or both), would constitute a material default under any of such contracts, which defaults could reasonably be expected to have a Material Adverse Effect.  Such contracts have not been modified or amended in any material respect since the date true and correct copies of the same were delivered to Lender by Borrower.  Borrower has not done or omitted to do any act so as to be estopped from exercising any of its rights under any of such contracts, and there is no assignment of any of Borrower’s rights under any of such contracts to any person or entity, other than Lender.

Section 4.18

Status of Leases.  Borrower is not in default under any of the Leases, and there is no default on the part of any other party to any Lease, which defaults could reasonably be expected to have a Material Adverse Effect.  The Leases are legal, valid and binding agreements enforceable against Borrower and the tenants thereunder in accordance with their terms, and none of the Leases have been modified or amended in any material respect since the date true and correct copies of the same were delivered to Lender by Borrower.  Borrower has not done or omitted to do any act so as to be estopped from exercising any of its rights under any of the Leases, and there is no assignment of any of Borrower’s right under any of such contracts to any person or entity other than Lender.

Section 4.19

Encroachments.  Except as shown on those certain surveys previously delivered to Lender in connection with the Loan, there are no encroachments on the Land; there are no strips or gores within or affecting the boundaries of the Land; and all Improvements are situated entirely within the boundaries of the Land and within any applicable building lines.

Section 4.20

Access.  All streets and roads necessary for access to the Land have been completed, dedicated to public use and accepted for maintenance for all necessary governmental entities.

Section 4.21

Availability of Utilities.  Except as set forth in that certain Certificate of Borrower executed and delivered in connection herewith, all utility facilities and services necessary for the full use, occupancy and operation of the Improvements are available to the Land through public or private easements or rights-of-way at the boundaries of the Land, including, without limitation, water, storm and sanitary sewer, electricity and telephone.

Section 4.22

Brokerage Commissions.  All real estate and land brokerage commissions payable in connection with the acquisition of the Land, construction of the Improvements and the Loan, and all brokerage commissions or finders fees due and payable in connection with the current terms of any of the Leases, have been paid in full, or will be paid in full upon the execution of this Agreement.

Section 4.23

Composition of Property.  Subject to the matters disclosed in the title policies delivered to Lender in connection with the Loan, the Property includes all improvements and land, and other estates and rights (including, without limitation, any appurtenant easement rights and covenants and restrictions) which are necessary to allow for the continued use thereof as industrial buildings or other uses presently in effect as of the date of this Agreement, and as may be required by any of the Requirements, or to satisfy all tenant requirements under the Leases.

ARTICLE V

COVENANTS

For so long as this Agreement is in effect, and unless Lender expressly consents in writing to the contrary, Borrower covenants and agrees to comply with the following covenants:

Section 5.1

Operating Statements and Rent Roll.  Borrower shall deliver to Lender operating statements and rent rolls as required in Paragraph 25 of the Mortgage.

Section 5.2

Books and Records.  Borrower shall keep its books, records and accounts in accordance with accepted industry standards and as required hereunder and under the Loan Documents.

Section 5.3

Maintenance of Existence, Properties, Licenses, Etc.  Except to the extent otherwise permitted hereby, Borrower will do or cause to be done all things reasonably necessary to preserve, renew and keep in full force and effect the corporate, partnership or other legal existence of Borrower and the patents, trademarks, service marks, trade names, service names, copyrights, licenses, leases, permits, franchises and other rights, that continue to be useful in some material respect to the business of Borrower or to the operation of the Property, and at all times maintain, preserve and protect all licenses, leases, permits, franchises and other rights that continue to be useful in some related material respect to the business of Borrower or to the operation of the Property.

Section 5.4

Payment of Taxes and Claims.  Borrower will pay and discharge or cause to be paid and discharged all Taxes, assessments and governmental charges or levies imposed upon it or upon its respective income and profits or upon any of its property, real, personal or mixed or upon any part thereof, before the same shall become in default as well as all lawful claims for labor, materials and supplies or otherwise, which, if unpaid, might become a Lien or charge upon such properties or any part thereof.

Notwithstanding anything contained herein to the contrary, Borrower shall not be required to pay or discharge any taxes, assessments or other charges of the nature referred to in the Mortgage Paragraphs 2 (Maintenance, Repair and Restoration of Improvements, Payment of Liens, etc.) and 3 (Payment of Taxes) so long as the Borrower shall in good faith contest the same or the validity thereof by appropriate legal proceedings which shall operate to prevent the collection of the levy, lien or imposition so contested and the sale of the Premises, or any part thereof, to satisfy any obligation arising therefrom, provided that the Borrower shall give such security as may be demanded by the Lender to insure such payments and prevent any sale or forfeiture of the Property by reason of such nonpayment, failure of performance or contest by Borrower.  Any such contest shall be prosecuted with due diligence and the Borrower shall promptly after final determination thereof pay the amount of any levy, lien or imposition so determined, together with all interest and penalties, which may be payable in connection therewith.  Notwithstanding the provisions of this paragraph, Borrower shall (and if Borrower shall fail so to do, Lender may but shall not be required to) pay any such levy, lien or imposition notwithstanding such contest if in the reasonable opinion of the Lender, the Property shall be in jeopardy or in danger of being forfeited or foreclosed.

Section 5.5

Parking Requirements.  At all times during the term of the Loan, there shall be sufficient parking spaces to satisfy requirements of all Leases, parking or cross-parking agreements, and applicable zoning requirements and other Requirements.

Section 5.6

Expenses.  Borrower shall pay all cost, fees, documentary stamp taxes, intangibles taxes and charges of closing of the Loan, including, without limitation, Lender’s attorneys’ fees, recording costs, environmental audit costs, survey and appraisal costs, title examination fees, and title insurance premiums.

Section 5.7

Indemnity.  Borrower covenants and agrees to indemnify and hold Lender harmless from and against any and all claims for brokerage fees or commissions with respect to the making or consummation of the Loan, and all claims, actions, suits, proceedings, costs, expenses, losses, damages and liabilities of any kind, including but not limited to attorneys’ fees, expenses, penalties and interest, which may be asserted against or incurred by Lender by reason of any matter relating directly to the Loan, and arising out of the ownership, condition, development, construction, sale, rental or financing of the Property or any part thereof, other than to the extent arising as a direct result of the gross negligence or willful misconduct of Lender.  The foregoing indemnity shall survive the payment and performance of all Obligations to Lender under the Loan Documents, and should Lender incur any liability for or in defense of any of the foregoing matters, the amount thereof (and all costs, expenses and attorneys’ fees incurred by Lender in connection therewith) shall be added to the principal amount of the Loan and shall bear interest at the Default Rate (as defined in the Note) to the extent permitted by applicable law.  Furthermore, Borrower covenants that, upon notice from Lender that any action or proceeding has been brought against Lender by reason of any such matters, Borrower shall promptly resist or defend such action or proceeding in a manner satisfactory to Lender at Borrower’s expense.

Section 5.8

Fiscal Year.  Borrower shall not change its fiscal year except upon prior written notice to Lender.

Section 5.9

Estoppel Certificates.  Borrower shall, from time to time, upon request by Lender, promptly execute, acknowledge and deliver to Lender a certificate of Borrower stating the amount of principal and interest then owing on the Obligations, whether or not any setoffs or defenses exist with respect to all or any part of the Obligations, and, if any such setoffs or defenses exist, stating in detail the specific facts relating to each such setoff or defense.  Any such certificate may be relied upon by any prospective assignee of Lender.

Section 5.10

Replacement of Note.  Upon receipt of notice from Lender of the loss, theft, destruction or mutilation of the Note, Borrower shall execute and deliver, in lieu thereof, a replacement note identical in form and substance to the Note and dated as of the date of the Note, and upon such execution and delivery all references in the Loan Documents and the Environmental Indemnification Agreement, or in the loan documents and the environmental indemnification agreements for the Affiliate Loans, to such Note so replaced shall be deemed to refer to such replacement note.

Section 5.11

Notification of Name Change; Location.  Borrower shall furnish Lender with notice of any change in Borrower’s name or address or principal place of business within fifteen (15) days of the effective date of such change, and Borrower shall promptly execute any financing statements or other instruments deemed necessary by Lender to prevent any filed financing statement from becoming misleading or losing its perfected status.

Section 5.12

No Joint Venture.  Neither the provisions of any of the Loan Documents or the Environmental Indemnification Agreement nor the acts of the parties thereto shall be construed to create a partnership or joint venture between Borrower and Lender.

Section 5.13

Loans by Partners and Affiliates.  Borrower agrees that any loan or other advance heretofore or hereafter made to Borrower by a partner, member or any Affiliate shall be subordinate in all respects to the Loan, and Borrower agrees that, following any Event of Default, and until repayment of the Obligations, Borrower shall make no repayment to the partner, member or Affiliate of any such loan or advance.

ARTICLE VI

NO FURTHER DISBURSEMENTS

Section 6.1

No Further Disbursements.  Borrower agrees that the Loan has been fully disbursed by Lender.  Lender shall have no further duty or obligation to make any additional advances or disbursements to Borrower under the Loan or otherwise.

ARTICLE VII

EVENTS OF DEFAULT

Section 7.1

Events of Default.  Each of the following events shall constitute an Event of Default under this Agreement:

(a)

The occurrence of an Event of Default under the Security Instruments or any of the other Loan Documents or the Environmental Indemnification Agreement.

(b)

Should any Default occur in the performance or observance of any term, condition or provision contained in this Agreement which does not relate to the nonpayment of any monetary sum, and such Default is not cured within thirty (30) days following written notice thereof by Lender to Borrower or within such longer period of time, not exceeding an additional thirty (30) days, as may be reasonably necessary to cure such non-compliance if Borrower is diligently and with continuity of effort pursuing such cure and the failure is susceptible of cure within such additional period of thirty (30) days.

(c)

Should any representation or warranty made by Borrower herein or in any of the other Loan Documents or the Environmental Indemnification Agreement be false or misleading in any material respect on the date as of which made (or deemed made).

(d)

Should Borrower be terminated, liquidated, dissolved or otherwise cease to exist.

Section 7.2

Remedies.  Upon the occurrence of an Event of Default, Lender may, in its discretion, exercise one or more of the following remedies:

(a)

To accelerate the maturity of the Obligations and declare the entire unpaid principal balance of, and any unpaid interest then accrued on, the Note, together with any Prepayment Premium, without demand or notice of any kind to Borrower or any other Person, to be immediately due and payable.

(b)

Take all, any or any combination of the actions Lender may take under any of the other Loan Documents or the Environmental Indemnification Agreement upon the occurrence of a default or an event of default thereunder, notwithstanding the fact that the event that is an Event of Default hereunder may not constitute a default or an event of default under any such other Loan Document or the Environmental Indemnification Agreement, including, without limitation acceleration of the Obligations evidenced by the Note and foreclosure and sale of the Land and the Improvements under the Security Instruments.

(c)

Perform, or cause to be performed, any obligation, covenant or agreement that Borrower has failed to perform or comply with, and in such event all costs and expenses incurred by Lender in performing any such obligation, covenant or agreement shall be added to the Obligations and shall be secured by the Security Instruments, and shall bear interest at the Default Rate (as defined in the Note) from the date paid or incurred by Lender, and the interest thereon shall also be added to and become a part of the Obligations and shall be secured by the Security Instruments.

(d)

Continue to act, with respect to Borrower and the Loan, as if no Event of Default had occurred, which continuance shall not be or be construed as a waiver of Lender’s rights; and assert the Event of Default and take any action provided for herein at any time after the occurrence and during the existence of the Event of Default.

(e)

Proceed as authorized by law to obtain payment of the Loan.

(f)

Take all, any, or any combination of the actions Lender may take under applicable law or equity subject to the limitations on liability of Borrower contained herein and in the Note and the Security Instruments.

No failure or delay on the part of Lender to exercise any right or remedy hereunder or under the Loan Documents or the Environmental Indemnification Agreement shall operate as a waiver thereof, nor shall any single or partial exercise of any right or remedy hereunder preclude any further exercise thereof or the exercise of any further right or remedy hereunder or under the Loan Documents or the Environmental Indemnification Agreement.  No exercise by Lender of any remedy under the other Loan Documents or the Environmental Indemnification Agreement shall operate as a limitation on any rights or remedies of Lender under this Agreement, except to the extent of moneys actually received by Lender under the other Loan Documents or the Environmental Indemnification Agreement.

Section 7.3

Costs and Expenses.  All costs and expenses incurred by Lender in connection with any of the actions authorized in this Article, including without limitation attorneys’ fees, shall be and constitute a portion of the Loan, secured in the same manner and to the same extent as the Loan, even though such costs and expenses may cause the amount of the Loan to exceed the face amount of the Note.  Whenever the terms of this Agreement require Borrower to pay attorneys’ fees of Lender, such obligation shall extend only to reasonable attorneys’ fees, without regard to statutory interpretations, actually incurred at normal hourly rates.

Section 7.4

Remedies Cumulative.  The foregoing remedies are cumulative of, and in addition to, and not restrictive or in lieu of, the other remedies provided for herein and the remedies provided for or allowed by the other Loan Documents or the Environmental Indemnification Agreement, or provided for or allowed by law, or in equity.

ARTICLE VIII

MISCELLANEOUS

Section 8.1

Notices.

(a)

All notices, demands, requests, and other communications desired or required to be given hereunder (“Notices”), shall be in writing and shall be given by: (i) hand delivery to the address for Notices; (ii) delivery by overnight courier service to the address for Notices; or (iii) sending the same by United States mail, postage prepaid, certified mail, return receipt requested, addressed to the address for Notices.

(b)

All Notices shall be deemed given and effective upon the earlier to occur of (i) the hand delivery of such Notice to the address for Notices; (ii) one business day after the deposit of such Notice with an overnight courier service by the time deadline for next day delivery addressed to the address for Notices; or (iii) three business days after depositing the Notice in the United States mail as set forth in (a)(iii) above.  All Notices shall be addressed to the following addresses:

Borrower:

Hartman Cooper Street Plaza, LLC

c/o Hartman Short Term Income Properties XX, Inc.

2909 Hillcroft, Suite 420

Houston, Texas  77057

Attention:  Louis T. Fox, III, CFO

With a copy to:

Hartman Cooper Street Plaza, LLC

c/o Hartman Short Term Income Properties XX, Inc.

2909 Hillcroft, Suite 420

Houston, Texas  77057

Attention:  Katherine N. O’Connell, General Counsel

Lender:

Security Life of Denver Insurance Company

c/o Voya Investment Management LLC

5780 Powers Ferry Road, NW, Suite 300

Atlanta, Georgia 30327-4349

Attention:  Mortgage Loan Servicing Department

and to:

Voya Investment Management LLC 

5780 Powers Ferry Road, NW, Suite 300

Atlanta, Georgia 30327-4349

Attention:  Real Estate Law Department

With a copy to:

Bryan Cave LLP

One Atlantic Center

Fourteenth Floor

1201 West Peachtree Street, NW

Atlanta, Georgia  30309-3488

Attention:  Johnny D. Latzak, Jr., Esq.

or to such other persons or at such other place as any party hereto may by Notice designate as a place for service of Notice; provided, however, that the “copy to” Notice to be given as set forth above is a courtesy copy only; and a Notice given to such person is not sufficient to effect giving a Notice to the principal party, nor does a failure to give such a courtesy copy of a Notice constitute a failure to give Notice to the principal party.

Section 8.2

No Waiver; Remedies Cumulative.  No failure or delay on the part of Lender in exercising any right or remedy hereunder and no course of dealing between Borrower and Lender shall operate as a waiver thereof, nor shall any single or partial exercise of any right or remedy hereunder or under the Note preclude any other or further exercise thereof or the exercise of any other right or remedy hereunder.  The rights and remedies herein expressly provided are cumulative and not exclusive of any rights or remedies which Lender would otherwise have.  No notice to or demand on Borrower not required hereunder or under any other Loan Document in any case shall entitle Borrower to any other or further notice or demand in similar or other circumstances or constitute a waiver of the rights of Lender to any other or further action in any circumstances without notice or demand.

Section 8.3

Successors and Assigns; Sale of Interest.  This Agreement shall be binding upon and inure to the benefit of and be enforceable by the respective legal representatives, successors and permitted assigns of the parties hereto; provided that Borrower may not assign or transfer any of its rights or obligations hereunder without the prior written consent of Lender, other than to the extent expressly permitted by the Security Instruments.  Lender may sell or assign all or any part of Lender’s rights, title or interests hereunder and under the other Loan Documents or the Environmental Indemnification Agreement without the prior written consent of Borrower; provided, however that any such assignment shall not increase any of the obligations of Borrower under the Loan Documents or the Environmental Indemnification Agreement.  In that event, such successor or assignee shall be entitled to all of the rights of Lender under the Loan Documents or the Environmental Indemnification Agreement.

Section 8.4

Modification.  This Agreement shall not be modified or amended in any respect except by a written agreement executed by the parties in the same manner as this Agreement is executed.

Section 8.5

Time of Essence.  Time is of the essence of this Agreement and each of the other Loan Documents and the Environmental Indemnification Agreement.

Section 8.6

Governing Law.  This Agreement shall be construed and enforced in accordance with, and the rights of the parties shall be governed by, the laws of the State of Texas, without regard to principles of conflicts of laws thereof.

Section 8.7

Counterparts.  This Agreement may be executed in any number of counterparts and by the different parties hereto on separate counterparts, each of which when so executed and delivered shall be an original, but all of which shall together constitute one and the same instrument.

Section 8.8

Effectiveness; Survival.

(a)

This Agreement shall become effective on the date on which all of the parties hereto shall have signed a copy hereof (whether the same or different copies) and Lender shall have received the same.

(b)

All representations and warranties made herein, in the certificates, reports, notices, and other documents delivered pursuant to this Agreement shall survive the execution and delivery of this Agreement, the other Loan Documents, the Environmental Indemnification Agreement, and such other agreements and documents, the making of the Loan hereunder and the execution and delivery of the Note, and shall terminate at such time as the Obligations have been paid and satisfied in full; provided, however, that the Environmental Indemnification Agreement shall remain in full force and effect in accordance with the terms thereof notwithstanding any payment and satisfaction of the Obligations.

Section 8.9

Severability.  In case any provision in or Obligation under this Agreement or the other Loan Documents or the Environmental Indemnification Agreement shall be invalid, illegal or unenforceable, in whole or in part, in any jurisdiction, the validity, legality and enforceability of the remaining provisions or obligations, or of such provision or obligation in any other jurisdiction, shall not in any way be affected or impaired thereby.

Section 8.10

Independence of Covenants.  All covenants hereunder shall be given independent effect so that if a particular action or condition is not permitted by any of such covenants, the fact that it would be permitted by an exception to, or be otherwise within the limitation of, another covenant, shall not avoid the occurrence of a Default or an Event of Default if such action is taken or condition exists.

Section 8.11

Headings Descriptive.  The headings of the several sections and subsections of this Agreement are inserted for convenience only and shall not in any way affect the meaning or construction of any provision of this Agreement.

Section 8.12

Termination of Agreement.  At such time as all Obligations have been paid and satisfied in full, this Agreement shall terminate; provided however, that any and all indemnity obligations of Borrower to Lender arising hereunder or under any of the other Loan Documents, which are expressly stated to survive satisfaction of the Obligations shall survive the termination of this Agreement or such other Loan Documents, and provided further that all indemnity obligations under the Environmental Indemnification Agreement shall survive such payment and satisfaction of the Obligations as set forth in the Environmental Indemnification Agreement.

Section 8.13

Entire Agreement. This Agreement and the other Loan Documents and the Environmental Indemnification Agreement constitute the entire agreement between Borrower and Lender with respect to the Loan, the other Obligations and the Collateral and supersede all prior agreements, representations and understandings related to such subject matters.

Section 8.14

Jury Trial Waiver; Consent to Forum.

(a)

TO THE MAXIMUM EXTENT PERMITTED BY LAW, BORROWER IRREVOCABLY WAIVES ALL RIGHT OF TRIAL BY JURY IN ANY ACTION, PROCEEDING OR COUNTERCLAIM ARISING OUT OF OR IN CONNECTION WITH THIS AGREEMENT OR ANY OF THE OTHER LOAN DOCUMENTS OR THE ENVIRONMENTAL INDEMNIFICATION AGREEMENTS OR ANY MATTER ARISING HEREUNDER OR THEREUNDER.

(b)

BORROWER ALSO AGREES THAT ANY LEGAL ACTION OR PROCEEDING WITH RESPECT TO THIS AGREEMENT OR ANY OF THE OTHER LOAN DOCUMENTS OR THE ENVIRONMENTAL INDEMNIFICATION AGREEMENTS OR TO ENFORCE ANY JUDGMENT OBTAINED AGAINST BORROWER IN CONNECTION WITH THIS AGREEMENT OR SUCH OTHER LOAN DOCUMENT, MAY BE BROUGHT BY LENDER IN ANY STATE OR FEDERAL COURT SITTING IN THE COUNTY OF THE STATE IN WHICH LENDER’S ADDRESS SHOWN ABOVE IS LOCATED, OR IN ANY ONE OR MORE OTHER STATE OR FEDERAL COURTS SITTING IN ANY COUNTY AND STATE IN WHICH ANY OF THE POOLED PROPERTIES IS LOCATED.  BORROWER IRREVOCABLY SUBMITS TO THE JURISDICTION OF THE AFORESAID STATE AND FEDERAL COURTS, AND IRREVOCABLY WAIVES ANY PRESENT OR FUTURE OBJECTION TO VENUE IN ANY SUCH COURT, AND ANY PRESENT OR FUTURE CLAIM THAT ANY SUCH COURT IS AN INCONVENIENT FORUM, IN CONNECTION WITH ANY ACTION OR PROCEEDING RELATING TO THIS AGREEMENT OR ANY OF THE OTHER LOAN DOCUMENTS OR THE ENVIRONMENTAL INDEMNIFICATION AGREEMENTS.

Section 8.15

Exculpation.  The personal liability of Borrower under this Agreement is limited to the extent set forth in the Note.

6359001.1

[REMAINDER OF PAGE INTENTIONALLY LEFT BLANK]

[LOAN AGREEMENT]

Voya No. 29058

IN WITNESS WHEREOF, the parties hereto have caused this Loan Agreement to be duly executed and delivered on their behalf as of the date first above stated.

	 
	HARTMAN COOPER STREET PLAZA, LLC, a Texas limited liability company

	 
	

By:   Hartman Income REIT Management, Inc.,

a Texas corporation, Manager

By:

   Allen R. Hartman, President

[SIGNATURES CONTINUED ON FOLLOWING PAGE]

[LOAN AGREEMENT]

 Voya No. 29058

S-1

[SIGNATURES CONTINUED FROM PRECEDING PAGE]

	 
	LENDER:

	 
	SECURITY LIFE OF DENVER INSURANCE COMPANY, a Colorado corporation

	 
	

By:

Voya Investment Management LLC, as 

Authorized Agent

By:

Name:

Title:

S-2

[LOAN AGREEMENT]

Voya No. 29058

EXHIBIT “A”

SCHEDULE OF ENTITIES AND PROPERTIES

	ENTITY

	PROPERTY

	Hartman Bent Tree Green, LLC

	17300 N. Dallas Pkwy., Dallas, TX 75248

	Hartman Cooper Street Plaza, LLC

	4601 S. Cooper St., Arlington, TX 76017

	Hartman Richardson Heights Properties, LLC

	100 S. Central Expressway, Richardson, TX 75090

	Hartman Mitchelldale Business Park, LLC

	5400 Mitchelldale Rd., Houston, TX 77092;

533 N. Park Central Dr., Houston, TX 77092; and

600 N. Park Central Dr., Houston, TX 77092

[LOAN AGREEMENT]

Voya No. 29058

A-1Converted by EDGARwiz

PROMISSORY NOTE

$8,400,000.00

June 13, 2014

FOR VALUE RECEIVED, the undersigned, HARTMAN COOPER STREET PLAZA, LLC, a Texas limited liability company (“Maker”), hereby promises to pay to the order of SECURITY LIFE OF DENVER INSURANCE COMPANY, a Colorado corporation, or any subsequent holder hereof (“Payee”), at the office of Payee, c/o Voya Investment Management LLC, 5780 Powers Ferry Road, NW, Suite 300, Atlanta, Georgia 30327-4349, or at such other place as Payee may from time to time designate in writing, the principal sum of EIGHT MILLION FOUR HUNDRED THOUSAND AND N0/100 DOLLARS ($8,400,000.00) and interest thereon from and after the date of disbursement hereunder at four and sixty-one one-hundredths percent (4.61%) per annum (“Note Rate”), to be paid in lawful money of the United States of America, as follows: 

1.

Payments of Principal and Interest.  Both principal and interest to be paid as follows:

(i)

Interest only from and including the date of disbursement of the loan proceeds through and including the last day of the month, shall be paid on the first day of the month following the date hereof or, at the option of Payee, on the date hereof; and 

(ii)

Payments of principal and interest shall be made in  successive monthly installments commencing on August 1, 2014, and continuing on the first day of each and every calendar month thereafter up to and including July 1, 2041 (the “Maturity Date”) or, upon exercise of Payee’s right under the following paragraph, the Call Date as to which Payee has exercised its right, all but the final installment thereof to be in the amount of Forty-Five Thousand Three Hundred Sixty-Eight and 59/100 Dollars ($45,368.59), and the final installment payable on the Maturity Date, or, if earlier, the exercised Call Date to be in the full amount of outstanding principal of this Promissory Note (this “Note”), interest and all other sums remaining unpaid hereunder and under the Mortgage (as hereinafter defined).  

1.

Call Option. Notwithstanding any provisions of this Note to the contrary, Payee reserves the right (the “Call Option”) to declare the entire amount of outstanding principal of this Note, interest and all other sums remaining unpaid hereunder and under the Mortgage to be due and payable on either of the following dates (each referred to as a “Call Date,” and collectively the “Call Dates”):

(i)

July 1, 2024; 

(ii)

July 1, 2029;

(iii)

 July 1, 2034; or 

(iv)

 July 1, 2039.

Such right shall be exercised by Payee, in its sole and absolute discretion, by giving written notice to Maker at least six (6) months prior to the Call Date as to which Payee is electing, which notice shall refer to this Note and state the Call Date elected by Payee.  The exercise of such right by Payee shall not relieve Maker of its obligation to make scheduled payments hereunder, or to pay any other sums due and owing hereunder, between the date of such notice and the elected Call Date.  The exercise of such right by Payee will result in the original principal amount of this Note not having been fully amortized by the payment of the monthly installments hereunder prior to the exercised Call Date, and Maker shall be obligated to make a payment of the entire amount of outstanding principal of this Note and interest and all other sums remaining unpaid hereunder and under the Mortgage on the Call Date.

1.

Application of Payments.  All payments on account of the Indebtedness (as hereinafter defined) shall be applied: (i) first, to further advances, if any, made by Payee as provided in the Loan Documents (as hereinafter defined); (ii) next, to any Late Charge (as hereinafter defined); (iii) next, to interest at the Default Rate (as hereinafter defined), if applicable; (iv) next, to the Prepayment Premium (as hereinafter defined), if applicable; (v) next, to interest at the Note Rate on the unpaid principal balance of this Note unless interest at the Default Rate is applicable; and (vi) last, to reduce the unpaid principal balance of this Note.  Interest shall be calculated on the basis of a year consisting of 360 days and with twelve thirty-day months, except that interest due and payable for less than a full month shall be calculated by multiplying the actual number of days elapsed in such period by a daily interest rate based on a 360-day year.  As used herein, the term “Indebtedness” shall mean the aggregate of the unpaid principal amount of this Note, accrued interest, all Late Charges, any Prepayment Premium, and advances made by Payee under the Loan Documents.

2.

Late Charges.  In the event any installment of principal or interest due hereunder, or any escrow fund payment for real estate taxes, assessments, other similar charges or insurance premiums due under the Mortgage shall be more than ten (10) days overdue, Maker shall pay to the holder hereof a late charge (“Late Charge”) of four cents ($.04) for each dollar so overdue or, if less, the maximum amount permitted under applicable law, in order to defray part of the cost of collection and of handling delinquent payments.

3.

No Usury.    For purposes of this paragraph of this Note, the term “interest” shall mean interest as such term is defined by the applicable usury laws of the State of Texas.  It is the intention of the parties hereto to comply with the usury laws of the State of Texas; accordingly, it is agreed that notwithstanding any provisions to the contrary in this Note, or in any of the Loan Documents securing payment hereof or otherwise related hereto, in no event shall this Note or such Loan Documents require the payment or permit the collection of interest in excess of the maximum amount permitted by such laws.  If when considered independently of this paragraph, any such excess of interest would be contracted for, charged, or received under this Note or under the terms of any of the Loan Documents securing payment hereof or otherwise relating hereto, or in the event the maturity of the indebtedness evidenced by this Note is accelerated in whole or in part, or in the event that all or part of the principal or interest of this Note shall be prepaid, so that under any of such circumstances the amount of interest contracted for, charged, or received under this Note or under any of the Loan Documents, including, but not limited to, any prepayment premiums deemed to be interest under the applicable usury laws of the State of Texas, securing payment hereof or otherwise relating hereto, on the amount of principal actually outstanding from time to time under this Note would exceed the maximum amount of interest permitted by the applicable usury laws of the State of Texas, then in any such event (a) the provisions of this paragraph shall govern and control, (b) neither the undersigned nor any other person or entity now or hereafter liable for the payment hereof, shall be obligated to pay the amount of such interest to the extent that it is in excess of the maximum amount of interest permitted by the applicable usury laws of the State of Texas, (c) any such excess which may have been collected shall be either applied as a credit against the then unpaid principal amount hereof or refunded to the undersigned, at the holder’s option, and (d) the effective rate of interest shall be automatically reduced to the maximum lawful contract rate allowed under the applicable usury laws of the State of Texas as now or hereafter construed by the court having jurisdiction thereof.  It is further agreed that without limitation of the foregoing, all calculations of the rate of interest contracted for, charged, or received under this Note or under such other Loan Documents, which are made for the purpose of determining whether such rate exceeds such maximum lawful contract rate, shall be made, to the extent permitted by the laws of the State of Texas, by amortizing, prorating, allocating, and spreading in equal parts during the period of the full stated term of the loan evidenced hereby, all interest at any time contracted for, charged, or received from the undersigned or otherwise by the holder or holders hereof in connection with such loan.

4.

Security; Loan Documents. Payment of this Note is secured by a Deed of Trust, Security Agreement, Financing Statement and Fixture Filing (the “Mortgage”) and an Assignment of Rents and Leases (the “Assignment”) dated on or about this same date by Maker, as Grantor, for the benefit of Payee, as Beneficiary, encumbering certain real estate and other property interests situated in Tarrant County, Texas and more particularly described in the Mortgage (the “Premises”).  This Note, the Mortgage, and all other instruments now or hereafter evidencing, securing or guarantying the loan evidenced hereby, as may be modified, amended, extended, supplemented, replaced or restated, are sometimes collectively referred to as the “Loan Documents”.  The Mortgage contains  “due on sale or further encumbrance” provisions which, together with all other terms of the Mortgage, are incorporated herein by this reference.

5.

Prepayment Privilege.  Except as expressly stated in this Note, there shall be no right to prepay the principal portion of the Indebtedness prior to  August 1, 2015 (the “Lock Out Period”).  Maker reserves, however, the privilege to prepay, in full but not in part, the principal portion of the Indebtedness on August 1, 2015 and on any installment payment date thereafter, upon sixty (60) days prior written notice to Payee (such notice specifying the date of prepayment) and payment of a premium (the “Prepayment Premium”) equal to the greater of:

(a)

an amount (the “Treasury Obligation Amount”) equal to the sum of (a) the present value of the scheduled monthly installments on this Note from the date of prepayment to the Maturity Date or, if earlier, the next applicable Call Date, and (b) the present value of the amount of principal and interest due on the Maturity Date or, if earlier, the next applicable Call Date (assuming all scheduled monthly installments due prior thereto were made when due) minus (c) the outstanding principal balance of this Note as of the date of prepayment.  The present values described in clauses (a) and (b) shall be computed on a monthly basis as of the date of prepayment, discounted at the yield of the U.S. Treasury obligation closest in maturity to the Maturity Date or, if earlier, the next applicable Call Date, as published in the Federal Reserve Statistical Release H.15 (519) Selected Interest Rates listed under the U.S. Governmental Securities, Treasury Constant Maturities (“Treasury Rate”).  The Treasury Rate so used shall be the “Week Ending” yield for the week immediately preceding the date of such prepayment.  If no Treasury Constant Maturities are published for the specific length of time from the date of prepayment of this Note to the Maturity Date or to the next applicable Call Date, whichever is next to occur, the Treasury Rate that shall be used shall be computed based on a linearly interpolated interest rate yield between the two Treasury Constant Maturities that (i) most closely correspond with the Maturity Date, or the next applicable Call Date, whichever is next to occur, as of the date of such prepayment and (ii) bracket in time such Maturity Date, or the next applicable Call Date, one being before the Maturity Date, or the next applicable Call Date, and the other being after the Maturity Date, or the next applicable Call Date.  If for any reason the above Treasury Rate is no longer published in the Federal Reserve Statistical Release H.15 (519) Selected Interest Rates, the Treasury Rate shall be based on the yields reported in another publication of comparable reliability and institutional acceptance as selected by Payee in its sole and absolute discretion which most closely approximates yields in percent per annum of actively traded U.S. Treasuries of varying maturities.  The Treasury Obligation Amount is intended to be that amount which, together with the amount prepaid, shall be sufficient to enable Payee to invest in a U.S. Treasury obligation for the remaining term of this Note to provide the same effective yield on the amount paid from the date of prepayment to the Maturity Date or, if earlier, the next applicable Call Date, as would have been produced under this Note if such amount had not been prepaid; or

b.

one percent (1.0%) of the outstanding principal balance of this Note as of the prepayment date.

Notwithstanding the foregoing, and except as permitted in Section 3.08 of the Loan Agreement, no single Pooled Loan (as that term is defined in the Loan Agreement) may be prepaid unless all Pooled Loans are simultaneously prepaid.

Except as provided in the next two (2) sentences, in no event shall the amount prepaid be less than the total amount of the then outstanding principal and accrued and unpaid interest thereon plus one percent (1%) of the then outstanding principal.  Notwithstanding the Lock Out Period, in the event of acceleration of this Note at any time and subsequent involuntary or voluntary prepayment, the Prepayment Premium shall be payable.  Notwithstanding anything in this Note to the contrary, no Prepayment Premium shall be payable with respect to any prepayment which results from application of proceeds from insured damage, condemnation or other taking of the Premises when no Event of Default exists.  No Prepayment Premium shall be due for any prepayment which is made within thirty (30) days prior to the Maturity Date or a Call Date (regardless of whether Payee has exercised its Call Option).  In the event the Prepayment Premium were ever construed by a court having jurisdiction thereof to be an interest payment, the Prepayment Premium shall not exceed an amount equal to the excess, if any, of (i) interest calculated at the highest rate permitted by applicable law, as construed by courts having jurisdiction thereof, on the principal balance of this Note from time to time outstanding from the date thereof to the date of such payment, less (ii) interest theretofore paid on this Note.

In the event Payee applies any insurance proceeds or condemnation proceeds to the reduction of the principal portion of the Indebtedness in accordance with the terms of the Mortgage, and if at such time no Event of Default exists hereunder and no event has occurred which with the passage of time or the giving of notice would be or become an Event of Default, then no Prepayment Premium shall be due or payable as a result of such application.

If the maturity of the Indebtedness is accelerated by Payee as a consequence of the occurrence of an Event of Default, or in the event the right to foreclose the Mortgage shall otherwise accrue to Payee, Maker agrees that an amount equal to the Prepayment Premium (determined as if prepayment were made on the date of acceleration) shall be added to the balance of unpaid principal and interest then outstanding, and that the Indebtedness shall not be discharged except:  (i) by payment of such Prepayment Premium, together with the balance of principal and interest and all other sums then outstanding, if Maker tenders payment of the Indebtedness prior to completion of a non-judicial foreclosure sale (if applicable in the State in which the Premises are located), judicial order or judgment of foreclosure sale; or (ii) by inclusion of such Prepayment Premium as a part of the Indebtedness in any such completion of a non-judicial foreclosure sale (if applicable in the State in which the Premises are located), judicial order or judgment of foreclosure.  

6.

Default.

a.  

Event of Default.  It is hereby expressly agreed by Maker that time is of the essence in the performance of this Note and that each of the following occurrences shall constitute a default (“Event of Default”) under this Note:

(i)

The failure of Maker to: 

(A)

make any payment of principal or interest under this Note within ten (10) days after the same shall fall due, or 

(B)

comply with any of the other terms of this Note within thirty (30) days after written notice of such failure has been given by Payee to Maker or within such longer period of time, not to exceed an additional thirty (30) days, as may be reasonably necessary to cure such non-compliance if Maker is diligently and with continuity of effort pursuing such cure and the failure is susceptible of cure within such additional thirty-day period.

(ii)

The failure of Maker to make payment of any amount due Payee under any Loan Document other than this Note, on the date the same shall fall due (including any applicable grace period).

(iii)

The occurrence of any breach, default, event of default or failure of performance (however denominated) under any Loan Document other than this Note, and the expiration of any applicable cure period without the same having been cured.

b.

Default Rate.  From and after the date of the occurrence of any Event of Default and continuing until such Event of Default is fully cured (if Maker is entitled under this Note to cure such default) or until this Note is paid in full, Maker promises to pay interest on the principal balance of this Note then outstanding at the rate (the “Default Rate”) equal to the Note Rate plus five percentage points (5%) per annum or, if less, the maximum rate permitted under applicable law.  Interest at the Default Rate shall accrue on the amount of any judgment rendered hereon or in connection with any foreclosure of the Mortgage.  Maker agrees that such additional interest which has accrued shall be paid at the time of and as a condition precedent to the curing of such Event of Default.  During the existence of any such Event of Default Payee may apply payments received on any amounts due hereunder or under the terms of any of the Loan Documents as Payee shall determine.

7.

Remedies.  Payee shall have the following rights, powers, privileges, options and remedies whenever any Event of Default shall occur under this Note:

(i)

To foreclose, or exercise any power of sale under, the Mortgage.

(ii)

To accelerate the maturity of the Indebtedness and declare the entire unpaid principal balance of, and any unpaid interest then accrued on, this Note, together with any Prepayment Premium, without demand or notice of any kind to Maker or any other person, to be immediately due and payable.

(iii)

To exercise any and all rights, powers, privileges, options and remedies available at law or in equity and as provided in any of the Loan Documents.

Upon the occurrence of an Event of Default, Maker expressly agrees to pay all costs of collection and enforcement of every kind, including without limitation, all reasonable attorneys’ fees and expenses, court costs, costs of title evidence and insurance, inspection and appraisal costs and expenses of every kind incurred by Payee in connection with the protection or realization of any or all of the security for this Note, whether or not any lawsuit is filed with respect thereto.  The occurrence of an Event of Default under this Note shall constitute a default under each and all of the other Loan Documents.

The rights, powers, privileges, options and remedies of Payee, as provided in this Note, in any of the Loan Documents, or otherwise available at law or in equity shall be cumulative and concurrent, and may be pursued singly, successively or together at the sole discretion of Payee, and may be exercised as often as occasion therefor shall occur.  No delay or discontinuance in the exercise of any right, power, privilege, option or remedy hereunder shall be deemed a waiver of such right, power, privilege, option or remedy, nor shall the exercise of any right, power, privilege, option or remedy be deemed an election of remedies or a waiver of any other right, power, privilege, option or remedy.  Without limiting the generality of the foregoing, the failure of Payee after the occurrence of any Event of Default to exercise Payee’s right to declare the Indebtedness remaining unmatured hereunder to be immediately due and payable shall not constitute a waiver of such right in connection with any future Event of Default.  Acceleration of maturity, once elected by Payee, may be, in Payee’s sole and absolute discretion rescinded by Payee’s written acknowledgment to that effect, but without limiting the foregoing the tender and acceptance of partial payment or partial performance shall not, by itself, in any way affect or rescind such acceleration.

Maker waives presentment for payment, demand, notice of nonpayment, notice of dishonor, protest of any dishonor, notice of protest, notice of intent to accelerate, notice of acceleration of maturity, and all other notices in connection with the delivery, acceptance, performance, default or enforcement of the payment of this Note, except as otherwise provided herein, and agrees that if more than one the liability of each of them hereunder shall be joint, several and unconditional without regard to the liability of any other party and shall not be in any manner affected by any indulgence, extension of time, renewal, waiver or modification granted or consented to by Payee; and Maker consents to any and all extensions of time, renewals, waivers or modifications that may be granted by Payee with respect to the payment or other provisions of this Note, and to the release of any collateral given to secure the payment hereof, or any part thereof, with or without substitution, and agrees that additional makers or guarantors may become parties hereto without notice to any of them or affecting any of their liability hereunder.

Payee shall not by any acts of omission or commission be deemed to have waived any rights or remedies hereunder unless such waiver is in writing and signed by Payee, and then only to the extent specifically set forth therein; a waiver in respect of one event shall not be construed as continuing or as a bar to the exercise or waiver of such right or remedy in respect of a subsequent event.

1.

Notices.  All notices, demands, requests, and other communications desired or required to be given hereunder (“Notices”) shall be in writing and shall be given by: (i) hand delivery to the address for Notices; (ii) delivery by overnight courier service to the address for Notices; or (iii) sending the same by United States mail, postage prepaid, certified mail, return receipt requested, addressed to the address for Notices.

All Notices shall be deemed given and effective upon the earliest to occur of: (x) the hand delivery of such Notice to the address for Notices; (y) one business day after the deposit of such Notice with an overnight courier service by the time deadline for next day delivery addressed to the address for Notices; or (z) three business days after depositing the Notice in the United States mail as set forth in (iii) above.  All Notices shall be addressed to the following addresses:

Notice Addresses:

Maker:

Hartman Cooper Street Plaza, LLC

c/o Hartman Short Term Income Properties XX, Inc.

2909 Hillcroft, Suite 420

Houston, Texas  77057

Attention:  Louis T. Fox, III, CFO

 

With a copy to:

Hartman Mitchelldale Business Park, LLC

c/o Hartman Short Term Income Properties XX, Inc.

2909 Hillcroft, Suite 420

Houston, Texas  77057

Attention:  Katherine N. O’Connell, General Counsel

Payee:

Security Life of Denver Insurance Company

c/o Voya Investment Management LLC

5780 Powers Ferry Road, NW, Suite 300

Atlanta, Georgia 30327-4349

Attention: Mortgage Loan Servicing Department

                          and

Voya Investment Management LLC

5780 Powers Ferry Road, NW, Suite 300

Atlanta, Georgia  30327-4349

Attention:  Real Estate Law Department

With a copy to:

Bryan Cave LLP

One Atlantic Center

Fourteenth Floor

1201 West Peachtree Street, NW

Atlanta, Georgia  30309-3488

Attention:  Johnny D. Latzak, Jr., Esq.

or to such other persons or at such other place as any party hereto may by Notice designate as a place for service of Notice.  Provided, that the “copy to” Notice to be given as set forth above is a courtesy copy only; and a Notice given to such person is not sufficient to effect giving a Notice to the principal party, nor does a failure to give such a courtesy copy of a Notice constitute a failure to give Notice to the principal party.

2.

Governing Law.  This Note shall be governed by and construed in accordance with the laws (excluding conflicts of laws rules) of the State of Texas.

3.

Liability of Maker.  Subject to the terms of the next succeeding paragraph and notwithstanding anything to the contrary otherwise contained in this Note, but without in any way releasing, impairing or otherwise affecting this Note or any of the other Loan Documents (including without limitation any guaranties or indemnification agreements) or the certain Environmental Indemnification Agreement to which Maker is a party, or the validity hereof or thereof, or the lien of the Mortgage, it is agreed that Payee’s source of satisfaction of the Indebtedness and Maker’s other obligations hereunder and under the Loan Documents other than any separate guaranty agreement or the Environmental Indemnification Agreement is limited to (a) the Premises and proceeds thereof,  (b) rents, income, issues, proceeds and profits arising out of the Premises, and (c) any separate guaranty or indemnification agreements guarantying or indemnifying Payee with respect to the payment of any amounts due hereunder and under the Loan Documents and/or Maker’s performance hereunder and under the Loan Documents; provided, however, that nothing herein contained shall be deemed to be a release or impairment of said Indebtedness or the security therefor intended by the Mortgage, or be deemed to preclude Payee from foreclosing the Mortgage or from enforcing any of Payee’s rights or remedies in law or in equity thereunder, or in any way or manner affecting Payee’s rights and privileges under any of the Loan Documents or any separate guaranty or indemnification agreements guarantying Maker’s payment and/or performance hereunder and/or under the Loan Documents.

PROVIDED, HOWEVER, NOTWITHSTANDING ANYTHING IN THIS NOTE TO THE CONTRARY, MAKER SHALL PAY, AND THERE SHALL AT NO TIME BE ANY LIMITATION ON MAKER’S PERSONAL LIABILITY FOR THE PAYMENT TO PAYEE OF:

(i)

the application of rents, security deposits, or other income, issues, profits, and revenues derived from the Premises during an uncured Event of Default to the extent applied to anything other than (a) normal and necessary operating expenses of the Premises, or (b) the Indebtedness.  It is understood that any rents collected more than one month in advance as of the time of the Event of Default shall be considered to have been collected after the Event of Default;

(ii)

any and all loss, cost or damage arising out of or in connection with fraud or material misrepresentations to Payee by Maker (or by any of its general partners, officers, shareholders, members, or their agents, if applicable);

(iii)

any and all loss, cost or damage arising out of or in connection with Maker’s use or misapplication of (a) any proceeds paid under any insurance policies by reason of damage, loss or destruction to any portion of the Premises, or (b) proceeds or awards resulting from the condemnation or other taking in lieu of condemnation of any portion of the Premises, for purposes other than those set forth in the Mortgage;

(iv)

any and all loss, cost or damage arising out of or in connection with any material physical waste of the Premises or any portion thereof and all reasonable costs incurred by Payee in order to protect the Premises;

(v)

any taxes, assessments and insurance premiums for which Maker is liable under this Note, the Mortgage or any of the other Loan Documents and which are paid by Payee (but not the proportionate amount of any such taxes, assessments and insurance premiums which accrue following the date of foreclosure plus any applicable redemption period or acceptance of a deed in lieu of foreclosure);

(vi)

any and all loss, cost or damage arising out of or in connection with Maker’s covenants, obligations and liabilities contained in Paragraph 31 of the Mortgage and under the Environmental Indemnification Agreement dated of even date herewith executed by Maker in favor of Payee;

(vii)

any and all loss, cost or damage to Payee arising out of or in connection with any construction lien, mechanic’s lien, materialman’s lien or similar lien against the Premises arising out of acts or omissions of Maker;

(viii)

any and all loss, cost or damage arising out of or incurred in order to cause the Improvements to comply with the accessibility provisions of The Americans with Disabilities Act and each of the regulations promulgated thereunder, as the same may be amended from time to time which are required by any governmental authority; 

(ix)

the total Indebtedness in the event that (a) Payee is prevented from acquiring title to the Premises after any Event of Default because of failure of Maker’s title under federal, state or local laws, less any recovery received by Payee from any title insurance policy it holds in connection with the Premises, or (b) Maker or any guarantor of all or any portion of the Indebtedness or any general partner, beneficiary, trustee or member of the foregoing, voluntarily files a petition in bankruptcy or commences a case or insolvency proceeding under any provision or chapter of the Federal Bankruptcy Code;

(x)

any and all loss, damage, cost, expense and liability, including, but not limited to, reasonable attorneys’ fees and costs, resulting from any act of Maker or its general partners, members, shareholders, officers, directors, beneficiaries, and/or trustees, as the case may be, to obstruct, delay or impede Payee from exercising any of its rights or remedies under the Loan Documents; 

(xi)

the total Indebtedness in the event that (a) Maker makes an unpermitted transfer of an interest in Maker or in the Premises without the prior written approval of Payee, or (b) Maker makes an unpermitted encumbrance on the Premises or the holder of an ownership interest in Maker encumbers such interest, without the prior written approval of Payee;

(xii)

all costs and fees, including without limitation reasonable attorneys’ fees and costs, incurred by Payee in the enforcement of subparagraphs (i) through (xi) above.

With the exception of those items of liability specifically set forth in items (i) through (xii) above, the lien of any judgment against Maker in any proceeding instituted on, under or in connection with this Note shall not extend to any property now or hereafter owned by Maker other than the interest of Maker in the Premises and the other security for the payment of this Note.

1.

Entire Agreement.  This Note, together with the other Loan Documents and the certain Environmental Indemnification Agreement executed by Maker, constitute the entire agreement between the parties hereto pertaining to the subject matters hereof and thereof and supersede all negotiations, preliminary agreements and all prior or contemporaneous discussions and understandings of the parties hereto in connection with the subject matters hereof and thereof.

2.

WAIVER OF JURY TRIAL. THE PARTIES HERETO, AFTER CONSULTING OR HAVING HAD THE OPPORTUNITY TO CONSULT WITH COUNSEL, KNOWINGLY, VOLUNTARILY, AND INTENTIONALLY WAIVE, TO THE EXTENT PERMITTED BY APPLICABLE LAW, ANY RIGHT THEY MAY HAVE TO A TRIAL BY JURY IN ANY LITIGATION BASED ON OR ARISING OUT OF THIS AGREEMENT OR INSTRUMENT, OR ANY RELATED INSTRUMENT OR AGREEMENT, OR ANY OF THE TRANSACTIONS CONTEMPLATED HEREBY OR ANY COURSE OF CONDUCT, DEALING, STATEMENTS, WHETHER ORAL OR WRITTEN, OR ACTION OF ANY PARTY HERETO.  NO PARTY SHALL SEEK TO CONSOLIDATE BY COUNTERCLAIM OR OTHERWISE, ANY SUCH ACTION IN WHICH A JURY TRIAL HAS BEEN WAIVED WITH ANY OTHER ACTION IN WHICH A JURY TRIAL CANNOT BE OR HAS NOT BEEN WAIVED.  THESE PROVISIONS SHALL NOT BE DEEMED TO HAVE BEEN MODIFIED IN ANY RESPECT OR RELINQUISHED BY ANY PARTY HERETO EXCEPT BY A WRITTEN INSTRUMENT EXECUTED BY ALL PARTIES.

Maker acknowledges receipt of a copy of this instrument at the time it was signed

6358764.1

[REMAINDER OF PAGE INTENTIONALLY LEFT BLANK]

[PROMISSORY NOTE]

Voya No. 29058

IN WITNESS WHEREOF, Maker has executed and delivered this Note as of the day and date first above written.

MAKER:

	 
	HARTMAN COOPER STREET PLAZA, LLC, a Texas limited liability company

	 
	

By:   Hartman Income REIT Management, Inc.,

a Texas corporation, Manager

By:

   Allen R. Hartman, President

S-1

[PROMISSORY NOTE]

Voya No. 29058

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