Document:

TEXAS CAPITAL BANK, NATIONAL ASSOCIATION
  
 PROMISSORY NOTE  
  
 $30,000,000.00                                                                                                             May 11, 2012
                                                                                                                                      Effective Date
  
 ______________                                                                                                          May 10, 2015
 Note Number                                                                                                                Maturity Date
  
  
             1.         Definitions.  As used in this Promissory Note, the following terms shall have the following meanings.
  
             “Bank” means Texas Capital Bank, National Association, and its successors and assigns.
  
             “Bank Rate” means the rate of interest per annum quoted by Bank from time to time and designated as its “Base Rate”.  The base rate may not necessarily be the lowest interest rate charged by Bank and is set by Bank in its sole discretion.
  
             “Borrower” means, whether one or more, HARTMAN RICHARDSON HEIGHTS PROPERTIES, LLC, a Texas limited liability company (“Richardson”), HARTMAN SHORT TERM INCOME PROPERTIES XX, INC., a Maryland corporation, and HARTMAN COOPER STREET PLAZA, LLC, a Texas limited liability company (“Cooper”).
  
             “Business Day” means a weekday, Monday through Friday, except a legal holiday or a day on which banking institutions in Dallas, Texas are authorized or required by law to be closed.  Unless otherwise provided, the term “days” when used herein shall mean calendar days.
  
             “Deed of Trust” means one or more Deeds of Trust, Financing Statement and Absolute Assignment of Rents of even date with this Note or executed from time to time executed in connection with the Loan Documents by Richardson, Cooper, or any other Person for the benefit of Bank covering certain personal and real property, as may be amended, restated, renewed, and extended from time to time.
  
             “Effective Date” means May 11, 2012.
  
             “Loan Agreement” means the Loan Agreement of even date with this Note between Bank and Borrower as such may be amended, renewed, extended and replaced from time to time.
             
             “Loan Documents” means this Note, the Loan Agreement, the Deed of Trust and any and all other agreements, documents, and instruments executed and delivered in connection with this Note, and any future amendments thereto, or restatements thereof, together with any and all renewals, extensions, amendments and modifications to any such agreements, documents, and instruments.
  
             “Loan Rate” means the Bank Rate as it may vary from day to day plus one percent (1.00%); provided, however, notwithstanding the amount of the Bank Rate, the Loan Rate shall never be lower than five percent (5.0%) per annum.
  
             “Maturity Date” means May 10, 2015.
  
             “Maximum Rate” means the maximum lawful rate of interest which may be contracted for, charged, taken, received or reserved by Bank in accordance with the applicable laws of the State of Texas (or applicable United States federal law to the extent that such law permits Bank to contract for, charge, take, receive or reserve a greater amount of interest than under Texas law).
  
             “Note” means this Promissory Note and all modifications, increases, replacements, renewals, and extensions of this Promissory Note.
  
             Any capitalized term used in this Note and not otherwise defined herein shall have the meaning ascribed to each such term in the Loan Agreement. All terms used herein, whether or not defined in this Note, and whether used in singular or plural form, shall be deemed to refer to the object of such term whether such is singular or plural in nature, as the context may suggest or require.
  
             2.         Promise to Pay.  For value received, Borrower (jointly and severally if more than one), unconditionally hereby promises to pay to the order of Bank, at its place of business located at 2000 McKinney Avenue, Suite 700, Dallas, Texas 75201 or at such other place as the holder of this Note may hereafter designate, the principal sum of THIRTY MILLION AND NO/100 DOLLARS ($30,000,000.00)or so much thereof as may be advanced, in lawful money of the United States of America for the payment of private debts, together with interest on the unpaid principal balance from time to time owing hereon computed from the date hereof until maturity at a per annum rate which shall be, except as otherwise provided in this Note, the lesser of (a) the Loan Rate in effect from day to day, or (b) the Maximum Rate.  Interest on this Note is computed on a 365/360 simple interest basis; that is by applying the ratio of the annual interest over a year of 360 days times the outstanding principal balance, times the actual number of days the principal balance is outstanding, unless such calculation would result in a usurious rate, in which case interest shall be calculated on a per diem basis of a year of 365 or 366 days, as the case may be.  For so long as any Event of Default exists under this Note or under any of the other Loan Documents, regardless of whether or not there has been an acceleration of the indebtedness evidenced by this Note, and at all times after the maturity of the indebtedness evidenced by this Note (whether by acceleration or otherwise), and in addition to all other rights and remedies of Bank hereunder, interest shall accrue on the outstanding principal balance hereof at the Maximum Rate, and such accrued interest shall be immediately due and payable.  
  
             3.         Interest Rate.  The Loan Rate is subject to change as set forth in the definition of “Loan Rate.”
  
             4.         Payments.  This Note is payable as follows:  
  
 All accrued but unpaid interest on the outstanding principal balance of this Note shall be due and payable in monthly installments beginning on June 10, 2012, and continuing on the same day of each succeeding calendar month until the Maturity Date when the outstanding principal balance of this Note and any and all accrued but unpaid interest hereon shall be due and payable in full.  Borrower may from time to time during the term of this Note borrow, partially or wholly repay its outstanding borrowings, and reborrow, subject to all of the limitations, terms and conditions of this Note and of the other Loan Documents; provided however, that the total outstanding borrowings under this Note shall not at any time exceed the Borrowing Limit.  
  
             Except as expressly provided herein or in the Loan Agreement (if applicable) to the contrary, all payments on this Note shall be applied in the following order of priority: (a) the payment or reimbursement of any expenses, costs or obligations (other than the outstanding principal balance hereof and interest hereon) for which Borrower shall be obligated or Bank shall be entitled pursuant to the provisions of this Note or the other Loan Documents, (b) the payment of accrued but unpaid interest hereon, and (c) the payment of all or any portion of the principal balance hereof then outstanding hereunder. If an Event of Default exists under this Note, then Bank may, at the sole option of Bank, apply any such payments, at any time and from time to time, to any of the items specified in clauses (a), (b) or (c) above without regard to the order of priority otherwise specified in this Section 4 and any application to the outstanding principal balance hereof may be made in either direct or inverse order of maturity.  Payments by check or draft shall not constitute payment in immediately available funds until the required amount is actually received by Bank.  Payments in immediately available funds received by Bank in the place designated for payment on a Business Day prior to 11:00 a.m. Dallas, Texas time at said place of payment shall be credited prior to the close of business on the Business Day received, while payments received by Bank on a day other than a Business Day or after 11:00 a.m. Dallas, Texas time on a Business Day shall not be credited until the next succeeding Business Day.  If any payment of principal or interest on this Note shall become due and payable on a day other than a Business Day, such payment shall be made on the next succeeding Business Day.  Acceptance by Bank of any payment in an amount less than the full amount then due shall be deemed an acceptance on account only, and the failure to pay the entire amount then due may become an Event of Default.  Borrower agrees that all payments of any obligation due hereunder shall be final, and if any such payment is recovered in any bankruptcy, insolvency or similar proceedings instituted by or against Borrower, all obligations due hereunder shall be automatically reinstated in respect of the obligation as to which payment is so recovered.  
  
             5.         Prepayment.  Borrower may prepay this Note in part or in full without penalty before final maturity, whether by cash, a new loan, renewal, or otherwise.  Prepayment in full shall consist of payment of the remaining unpaid principal balance together with all accrued and unpaid interest and all other amounts, costs and expenses for which Borrower is responsible under this Note or any other agreement with Bank pertaining to this loan, and in no event will Borrower ever be required to pay any unearned interest.  Early payments will not, unless agreed in writing, relieve Borrower of Borrower’s obligation to continue to make payments under the above payment schedule.  Upon a prepayment in full, points, if any, are not refundable except and to the extent the total interest and points for the time the loan is outstanding would exceed the maximum interest allowed by law at the time of prepayment.  If at any time the outstanding principal balance hereof exceeds the Borrowing Limit, Borrower shall immediately pay to Bank an amount sufficient to eliminate such excess.
  
             6.         Waiver.  Except as otherwise provided herein and in the other Loan Documents, Borrower hereby waives all notices of nonpayment, demands for payment, presentments for payment, notices of intention to accelerate maturity, notices of actual acceleration of maturity, grace, protests, notices of protest, and any other demands or notices of any kind as to this Note, diligence in collection hereof and in bringing suit hereon, and any notice of, or defense on account of, the extension of time of payments or change in the method of payments, and without further notice hereby consents to any and all renewals and extensions in the time of payment hereof either before or after maturity and the release of any party primarily or secondarily liable hereon.  Borrower agrees that Bank’s acceptance of partial or delinquent payments, or failure of Bank to exercise any right or remedy contained herein or in any instrument given as security for the payment of this Note shall not be a waiver of any obligation of Borrower to Bank or constitute waiver of any similar default subsequently occurring.  The holder of this Note is entitled to the benefits and security provided in the Loan Documents.
  
             7.         Events of Default and Remedies.  At the option of Bank, the entire unpaid principal balance and accrued interest owing hereon shall at once become due and payable upon the occurrence at any time of any of the following “Events of Default” (herein so called):
  
                         A.        The failure of Borrower to pay (or cause to be paid) when due any installment of principal or interest of this Note in accordance with its terms, through acceleration, or otherwise; or
  
                         B.         A Default or Event of Default occurs under any other Loan Document.
  
             It is understood and agreed by Borrower that the foregoing “Events of Default” are cumulative and in addition to any “Defaults” or “Events of Default” contained in the other Loan Documents, or other documents modifying, renewing, extending, evidencing, securing or pertaining to this Note or the loan evidenced hereby. Upon the occurrence of any of the Events of Default, then the holder hereof may, at its option, do any one or more of the following: (a) declare the entire unpaid balance of principal of and accrued, unpaid interest upon this Note to be immediately due and payable, (b) reduce any claim to judgment, (c) foreclose all liens and security interests securing payment thereof or any part thereof, and/or (d) without notice of default or demand, pursue and enforce any of Bank’s other rights and remedies provided under or pursuant to any applicable laws or agreements.  All rights and remedies of Bank shall be cumulative and concurrent and may be pursued singularly, successively, or together, at the sole discretion of Bank, and may be exercised as often as the occasion therefor shall arise and whether or not Bank has initiated any foreclosure proceeding, judicial or otherwise.  Failure by Bank to exercise any right or remedy upon the occurrence of an Event of Default shall not constitute a waiver of the right to exercise such right or remedy upon the occurrence of any subsequent Event of Default.  In the event that Bank, after the occurrence of an Event of Default hereunder, consults an attorney regarding the enforcement of any of its rights under this Note, or if this Note is placed in the hands of an attorney for collection or if suit be brought to enforce this Note, Borrower promises to pay all costs thereof, including reasonable attorneys’ fees.  Such costs and attorneys’ fees shall include, without limitation, costs and reasonable attorneys’ fees incurred by Bank in any appellate proceedings or in any proceedings under any present or future federal bankruptcy act, state receivership law or probate.
  
             8.         Savings Clause; Ceiling Election.  It is expressly stipulated and agreed to be the intent of Borrower and Bank at all times to comply strictly with the applicable Texas law governing the maximum rate or amount of interest payable on the indebtedness evidenced by this Note and the Related Indebtedness (or applicable United States federal law to the extent that it permits Bank to contract for, charge, take, reserve or receive a greater amount of interest than under Texas law).  If the applicable law is ever judicially interpreted so as to render usurious any amount (a) contracted for, charged, taken, reserved or received pursuant to this Note, any of the other Loan Documents or any other communication or writing by or between Borrower and Bank related to the transaction or transactions that are the subject matter of the Loan Documents, (b) contracted for, charged, taken, reserved or received by reason of Bank’s exercise of the option to accelerate the maturity of this Note and/or any and all indebtedness paid or payable by Borrower to Bank pursuant to any Loan Document other than the Note (such other indebtedness being referred to in this Section as the “Related Indebtedness”), or (c) Borrower will have paid or Bank will have received by reason of any prepayment by Borrower of this Note and/or the Related Indebtedness, then it is Borrower’s and Bank’s express intent that all amounts charged in excess of the Maximum Rate shall be automatically canceled, ab initio, and all amounts in excess of the Maximum Rate theretofore collected by Bank shall be credited on the principal balance of this Note and/or the Related Indebtedness (or, if this Note and the Related Indebtedness have been or would thereby be paid in full, refunded to Borrower), and the provisions of this Note and the other Loan Documents shall immediately be deemed reformed and the amounts thereafter collectible hereunder and thereunder reduced, without the necessity of the execution of any new document, so as to comply with the applicable law, but so as to permit the recovery of the fullest amount otherwise called for hereunder and thereunder; provided, however, if this Note has been paid in full before the end of the stated term of this Note, then Borrower and Bank agree that Bank shall, with reasonable promptness after Bank discovers or is advised by Borrower that interest was received in an amount in excess of the Maximum Rate, either refund such excess interest to Borrower and/or credit such excess interest against this Note then owing by Borrower to Bank. Borrower hereby agrees that as a condition precedent to any claim or counterclaim (in which event such proceeding shall be abated for such time period) seeking usury penalties against Bank, Borrower will provide written notice to Bank, advising Bank in reasonable detail of the nature and amount of the violation, and Bank shall have sixty (60) days after receipt of such notice in which to correct such usury violation, if any, by either refunding such excess interest to Borrower or crediting such excess interest against this Note then owing by Borrower to Bank.  All sums contracted for, charged, taken, reserved or received by Bank for the use, forbearance or detention of any debt evidenced by this Note and/or the other Loan Documents shall, to the extent permitted by applicable law, be amortized or spread, using the actuarial method, throughout the stated term of this Note (including any and all renewal and extension periods) until payment in full so that the rate or amount of interest on account of this Note does not exceed the Maximum Rate from time to time in effect and applicable to this Note for so long as debt is outstanding.  In no event shall the provisions of Chapter 346 of the Texas Finance Code apply to this Note.  To the extent that Bank is relying on Chapter 303 of the Texas Finance Code to determine the Maximum Rate payable on the Note, Bank will utilize the weekly ceiling from time to time in effect as provided in such Chapter 303, as amended.  To the extent United States federal law permits Bank to contract for, charge, take, receive or reserve a greater amount of interest than under Texas law, Bank will rely on United States federal law instead of such Chapter 303 for the purpose of determining the Maximum Rate.  Additionally, to the extent permitted by applicable law now or hereafter in effect, Bank may, at its option and from time to time, utilize any other method of establishing the Maximum Rate under such Chapter 303 or under other applicable law by giving notice, if required, to Borrower as provided by applicable law now or hereafter in effect.
  
             9.         GOVERNING LAW AND VENUE.  THIS NOTE IS BEING EXECUTED AND DELIVERED, AND IS INTENDED TO BE PERFORMED, IN DALLAS COUNTY, TEXAS, AND THE LAWS (EXCLUDING CHOICE OF LAW PROVISIONS) OF SUCH STATE SHALL GOVERN THE VALIDITY, CONSTRUCTION, ENFORCEMENT AND INTERPRETATION OF THIS NOTE, EXCEPT TO THE EXTENT FEDERAL LAWS OTHERWISE GOVERN THE VALIDITY, CONSTRUCTION, ENFORCEMENT AND INTERPRETATION OF ALL OR ANY PART OF THIS NOTE.  ALL LEGAL ACTIONS RELATED TO THIS NOTE SHALL BE BROUGHT IN THE APPROPRIATECOURT OF LAW LOCATED IN DALLAS COUNTY, TEXAS, TO THE EXCLUSION OF ALL OTHER VENUES.
  
             10.       WAIVER OF JURY TRIAL. BORROWER, TO THE FULLEST EXTENT PERMITTED BY APPLICABLE LAW, HEREBY KNOWINGLY, INTENTIONALLY, IRREVOCABLY, UNCONDITIONALLY AND VOLUNTARILY, WITH AND UPON THE ADVICE OF COMPETENT COUNSEL, WAIVES, RELINQUISHES AND FOREVER FORGOES THE RIGHT TO A TRIAL BY JURY IN ANY ACTION OR PROCEEDING BASED UPON, ARISING OUT OF, OR IN ANY WAY RELATING TO THIS NOTE OR ANY CONDUCT, ACT OR OMISSION OF BANK OR BORROWER, OR ANY OF THEIR DIRECTORS, OFFICERS, PARTNERS, MEMBERS, EMPLOYEES, AGENTS OR ATTORNEYS, OR ANY OTHER PERSONS AFFILIATED WITH BANK OR BORROWER, IN EACH OF THE FOREGOING CASES, WHETHER SOUNDING IN CONTRACT, TORT OR OTHERWISE.
  
             11.       Miscellaneous.  
  
                         A.        Notices or communications to be given under this Note shall be given to the respective parties in writing as set forth in the Loan Agreement.
  
                         B.         Time is of the essence of this Note.
  
                         C.         This Note may not be changed or terminated orally, but only by an agreement in writing signed by the party against whom enforcement of any waiver, change, modification, termination or discharge is sought.
  
                         D.        This Note is secured, in part, by the Deed of Trust to which reference is hereby made for a description of the collateral, the nature and extent of the security, and the rights of the Bank in respect thereof. 
  
                         E.         This Note and all the covenants, promises and agreements contained herein shall be binding upon Borrower’s successors, assigns, heirs and personal representatives and inure to the benefit of Bank’s successors and assigns. 
  
 F.         At the option of Bank, Borrower will pay Bank, on demand, (i) a “late charge” equal to five percent (5%) of the amount of any installment on this Note when such installment is not paid within fifteen (15) days following the date such installment is due, and (ii) a processing fee in the amount of $25.00 for each check which is provided to Bank by Borrower in payment for an obligation owing to Bank under any Loan Document but is returned or dishonored for any reason, in order to cover the additional expenses involved in handling delinquent and returned or dishonored payments.
  
 G.        If Borrower consists of more than one person or entity, each shall be jointly and severally liable to perform the obligations of Borrower under this Note.
  
 H.        If any provision of this Note or the application thereof to any person or circumstance shall, for any reason and to any extent, be invalid or unenforceable, then neither the remainder of this Note nor the application of such provision to other persons or circumstances nor the other instruments referred to herein shall be affected thereby, but rather shall be enforced to the greatest extent permitted by applicable law.
  
 I.          THIS NOTE AND THE OTHER LOAN DOCUMENTS CONTAIN THE FINAL, ENTIRE AGREEMENT BETWEEN THE PARTIES HERETO RELATING TO THE SUBJECT MATTER HEREOF AND THEREOFAND ALL PRIOR AGREEMENTS, WHETHER WRITTEN OR ORAL, RELATIVE HERETO AND THERETO WHICH ARE NOT CONTAINED HEREIN OR THEREIN ARE SUPERSEDED AND TERMINATED HEREBY, AND THIS NOTE AND THE OTHER LOAN DOCUMENTS MAY NOT BE CONTRADICTED OR VARIED BY EVIDENCE OF PRIOR, CONTEMPORANEOUS OR SUBSEQUENT ORAL AGREEMENTS OR DISCUSSIONS OF THE PARTIES HERETO.  THERE ARE NO UNWRITTEN ORAL AGREEMENTS AMONG THE PARTIES HERETO.
  
 [Signature Page Follows]
  

  IN WITNESS WHEREOF, Borrower, intending to be legally bound hereby, has duly executed this Note as of the Effective Date.
  
 BORROWER:
  
 HARTMANCOOPER STREET PLAZA, LLC,
 a Texas limited liability company
  
  
 By:                                                                               
 Allen R. Hartman, President
  
 HARTMAN RICHARDSON HEIGHTS PROPERTIES, LLC,
 a Texas limited liability company
  
  
 By:                                                                               
 Allen R. Hartman, President
  
 HARTMAN SHORT TERM INCOME PROPERTIES XX, INC., a Maryland corporation
  
  
 By:                                                                               
             Allen R. Hartman, PresidentASSIGNMENT AND SUBORDINATION OF MANAGEMENT AGREEMENT
 THIS ASSIGNMENT AND SUBORDINATION OF MANAGEMENT AGREEMENT (this “Agreement”) is made and entered into as of the 11th day of May, 2012, by and among HARTMAN RICHARDSON HEIGHTS PROPERTIES, LLC, a Texas limited liability company(the “Grantor”), TEXAS CAPITAL BANK, NATIONAL ASSOCIATION (together with its successors and assigns, the “Bank”), and HARTMAN INCOME REIT MANAGEMENT, INC., a Texas corporation (“Manager”).
 RECITALS:
 A.                  Grantor, HARTMAN COOPER STREET PLAZA, LLC, a Texas limited liability company (“Cooper”), and HARTMAN SHORT TERM INCOME PROPERTIES XX, INC., a Maryland corporation (collectively with Grantor and Cooper, the “Borrower”), and Bank entered into that certain Loan Agreement dated as of even date herewith (as may be amended, modified, supplemented or restated from time to time, the “Loan Agreement”).
 B.                  The loan under the Loan Agreement is secured by, among other things, one or more Deeds of Trust, Assignment of Rents, Security Agreement and Fixture Filing executed in favor of Bank, encumbering various properties (the “Mortgage”), upon which have been constructed certain improvements (the “Project”).  Capitalized terms not otherwise defined herein shall have the meanings ascribed to them in the Loan Agreement.
 C.                  On or about the date hereof, Grantor and Manager have entered or intend to enter into that certain Real Property and Company Management Agreement (the “Management Agreement”) for the management of the Project, a true, correct and complete copy of which is attached hereto as Exhibit A.
 D.                  Grantor has agreed to assign its rights under the Management Agreement to Bank as additional security for the loans.
 E.                   Manager is willing to consent to the assignment and to attorn to Bank upon a default by Borrower under the documents evidencing and securing the loans, and perform its obligations under the Management Agreement for Bank, or its successors in interest, or to permit Bank to terminate the Management Agreement without liability.
 AGREEMENT:
 NOW, THEREFORE, for good and valuable consideration, the receipt and sufficiency of which are hereby acknowledged, Grantor, Bank and Manager agree as follows:
 1.                   Grantor hereby transfers, assigns and sets over to Bank, its successors and assigns, all right, title and interest of Grantor in and to the Management Agreement.  Manager hereby consents to the foregoing assignment.  The foregoing assignment is being made by Grantor to Bank as additional security for the full payment and performance by Borrower of all of Borrower’s obligations under all documents evidencing and securing the loan.  However, until the occurrence of a default or Event of Default under any Mortgage, Loan Agreement, or any other Loan Document (an “Event of Default”), Grantor may exercise all rights as owner of the Project and under the Management Agreement.  The foregoing assignment shall remain in effect as long as any loan, or any part thereof, remains unpaid, but shall automatically terminate upon the release of the Mortgage by Bank.  Upon receipt by Manager of written notice from Bank that an Event of Default has occurred and is continuing, Bank shall have the right (but not the obligation) to exercise all rights as owner of the Project under the Management Agreement.
 2.                   Grantor and Manager represent and warrant to Bank that (a) the Management Agreement is unmodified and in full force and effect, (b) the Management Agreement is a valid and binding agreement enforceable against the parties in accordance with its terms, and (c) neither party is in default in performing any of its obligations under the Management Agreement.  As long as any loan is outstanding and unpaid, neither Grantor nor Manager shall make any material change in the Management Agreement without Bank’s written consent, which consent shall not be unreasonably withheld, conditioned or delayed.  As long as any loan is outstanding and unpaid, neither Grantor nor Manager shall terminate the Management Agreement without Bank’s written consent; provided, however, that, (y) so long as at least thirty (30) days prior written notice is delivered to Manager and Bank, Grantor may terminate the services of the Manager pursuant to the terms of the Management Agreement if Manager defaults thereunder and Grantor retains the services of a replacement manager reasonably acceptable to Bank on terms reasonably acceptable to the Bank and (z) so long as at least ninety (90) days prior written notice is delivered to the Bank, Manager may terminate the Management Agreement pursuant to the terms of the Management Agreement if Grantor defaults thereunder, which default is not cured within any applicable grace or cure period and (i) Grantor fails to cure such default within any applicable grace or cure period; (ii) Bank does not exercise its rights to cure such default hereunder and (iii) such termination is not otherwise prohibited pursuant to the terms of this Agreement.  
 3.                   Manager shall deliver to Bank a copy of all notices of default under the Management Agreement.  The Bank shall have the right (but not the obligation) to cure any default of Grantor under the Management Agreement within thirty (30) days after expiration of Grantor’s right to cure such default under the Management Agreement; provided that if such default is not capable of being cured within such thirty (30) day period, this grace or cure period shall be extended for an additional ninety (90) days so long as Bank is diligently attempting to cure the default.  
 4.                   If Bank acquires the Project through foreclosure, deed in lieu of foreclosure, or judicial process, Bank shall have the right (but not the obligation) to be recognized as the “Owner” under the Management Agreement.  Upon written notice to the Manager by Bank, Manager agrees to recognize Bank as the “Owner” under the Management Agreement, and Bank agrees, subject to its rights to terminate the services of the Manager as set forth herein, to be bound by all obligations of “Owner” accruing from and after the date of such acquisition.  Consequently, Manager agrees that the Management Agreement shall not terminate so long as Bank is diligently attempting to acquire possession of the Project.  
 5.                   After the occurrence of an Event of Default, Bank (or its nominee) shall have the right at any time thereafter to terminate the Management Agreement, without liability, by giving written notice to Manager of its election to do so.  Bank’s notice shall specify the date of termination, which shall not be less than thirty (30) days after the date of such notice.
 6.                   If the Management Agreement is terminated by Bank, on or before the effective date of termination of the Management Agreement, Manager shall turn over to Bank all books and records relating to the Project (copies of which may be made and retained by Manager, at Manager’s expense), together with such authorizations and letters of direction addressed to tenants, suppliers, employees, banks and other parties as Bank may reasonably require; and Manager shall cooperate with Bank in the transfer of management responsibilities to Bank or its designee.  A final accounting of unpaid fees (if any) due to Manager under the Management Agreement shall be made within thirty (30) days after the effective date of termination, but Bank shall not have any liability or obligation to Manager for unpaid fees or other amounts payable under the Management Agreement which accrue before Bank (or its nominee) acquires title to the Project or Bank becomes a mortgagee in possession.
 7.                   Bank’s, Grantor’s and Manager’s respective addresses for notice are set forth on the signature page hereto.  All notices shall be given in the same manner as notices to Grantor pursuant to the notice provisions contained in the Loan Agreement.
 8.                   Manager agrees that, until such time as all of Borrower’s obligations under the Loan Agreement and the other Loan Documents have been indefeasibly satisfied in full, all of its right, title and interest in and to any management fees or other compensation (collectively, the “Subordinated Management Fees”) are hereby and shall at all times continue to be subject and unconditionally subordinate in all respects to the payment obligations of Borrower under the Loan Agreement and the other Loan Documents and any renewals, extensions, modifications, assignments, replacements, or consolidations thereof and the rights, privileges, and powers of Bank thereunder; provided, however, Grantor may pay, and Manager may receive and retain, all regularly scheduled payments of Subordinated Management Fees prior to Manager’s receipt of a notice from Bank of an Event of Default.  Manager further agrees that any lien or liens which, by operation of law or by filing of a notice of contract or otherwise, the Manager has or in the future may have upon the Project or the assets of Grantor or any other Borrower to secure the unpaid portion of any fees or sums contracted for with any party relating to the Project, shall be, and hereby are, wholly subject and fully subordinate to the mortgage interest and/or lien of any mortgage or security interest now existing or hereafter executed in favor of Bank and encumbering the Project or securing the loans, for the full indebtedness secured thereby (collectively, the “First Liens”), and to all advances heretofore made under the loans or which hereafter may be made under the loans (including, but not limited to, fees, disbursements and charges in connection therewith), as said First Liens may be consolidated, extended, modified, renewed, restated, replaced or supplemented and to all consolidations, extensions, modifications, renewals, restatements and replacements thereof and supplements thereto.  The undersigned hereby stipulates and agrees that any foreclosure against all or any part of the Project or other assets of Grantor or any other Borrower under the power of sale contained in the First Liens or as otherwise authorized or permitted under the First Liens or under any other document evidencing, securing or pertaining to the loans shall operate fully to foreclose, extinguish and discharge any mortgages, interests and/or liens held by the Manager, and that any purchaser at any foreclosure sale or sales shall take title to the Project free and clear of any and all such mortgages, interests and/or liens.  Additionally, the Manager hereby waives any and all rights it may have (whether statutory or otherwise) to remove personal property or fixtures from the Project.
 9.                   Nothing contained herein or in the Management Agreement shall alter, supersede, or contradict any of Borrower’s obligations set forth in the Loan Agreement and the other Loan Documents.  In the event of a conflict between the terms of the Loan Documents and the Management Agreement, the terms of the Loan Documents will control as between the Borrower and the Bank.  Manager acknowledges and agrees that all funds derived from operation of the Project, including any such funds held in accounts controlled by the Manager, are the property of the Grantor and have been pledged to Bank as security for the loans.  As such, Manager’s interest in such funds and accounts, if any, shall remain subordinate to Bank’s interests created under the Loan Documents, and Manager shall, upon request of Bank, remit such funds to Bank or open an account or accounts for funds derived from operation of the Project with a financial institution, and pursuant to terms, acceptable to Bank (including upon request the execution of one or more blocked account or deposit account control agreements acceptable to Bank) and deposit all such funds into such account or accounts.
 10.                Bank may collaterally assign this Agreement, and such assignee will succeed to the rights of Bank hereunder.
 11.                This Agreement may be executed in multiple counterparts, each of which shall constitute an original, but all of which shall constitute one document.  Delivery of an executed counterpart of this Agreement by facsimile shall be equally as effective as delivery of an executed original counterpart and shall constitute a covenant to deliver an executed original counterpart, but the failure to do so shall not affect the validity, enforceability and binding effect of this Agreement.
 12.                THIS AGREEMENT SHALL BE DEEMED TO BE A CONTRACT ENTERED INTO PURSUANT TO THE LAWS OF THE STATE OF TEXAS AND SHALL IN ALL RESPECTS BE GOVERNED, CONSTRUED, APPLIED AND ENFORCED IN ACCORDANCE WITH THE LAWS OF THE STATE OF TEXAS (WITHOUT REGARD TO PRINCIPLES OF CONFLICTS OF LAWS).
 [Remainder of page intentionally left blank.]
  

  IN WITNESS WHEREOF, Grantor, Bank and Manager have signed this Agreement as of the day and year first above written. 
 	  
  
 Grantor’s address for notices:
 2909 Hillcroft, Ste 420
 Houston, Texas 77057
 Facsimile No.:  713.465.3132
 Attention:  Jim Stokes, General Counsel
  
  
	 GRANTOR:
  
 HARTMAN RICHARDSON HEIGHTS PROPERTIES, LLC, a Texas limited liability company
  
  
 By:                                                                                         
       Allen R. Hartman, President
  
  

  	  
	  

	  
  
 Manager’s address for notices:
 2909 Hillcroft, Ste 420
 Houston, Texas 77057
 Facsimile No.:  713.465.3132
 Attention:  Jim Stokes, General Counsel
  
	 MANAGER:
  
 HARTMAN INCOME REIT MANAGEMENT, INC.,
 a Texas corporation
  
  
 By:                                                                         
       Allen R. Hartman, President
  
  

  	  
	  

	  
  
 Bank’s address for notices:
 2000 McKinney Avenue, Suite 700
 Dallas, Texas 75201
 Facsimile No.:  (214) 932-6607
 Attention:  Elizabeth W. Falco
  
	 BANK:
  
 TEXAS CAPITAL BANK, NATIONAL ASSOCIATION
  
  
 By:                                                                                         
        Elizabeth W. Falco, SVP Corporate Banking
  

	  
	  

  EXHIBIT A
  
 True, Correct and Complete Copy of Management Agreement
  
 [see attached]

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