Document:

EXHIBIT
10.13

 

HARTMAN
COMMERCIAL PROPERTIES REIT

 

Up to 11,000,000 Common Shares
of Beneficial Interest

 

DEALER
MANAGER AGREEMENT

 

August 31, 2004

 

D.H. Hill Securties, LLP

19747 Hwy 59 North, Suite 101

Humble, Texas 
77338

Attention: Dan H. Hill

 

Ladies and Gentlemen:

 

Hartman Commercial Properties REIT, a Maryland real estate investment
trust (the “Company”), is registering for public sale a maximum of 11,000,000
common shares of beneficial interest (the “Shares” or the “Stock”), $0.001 par
value per share (the “Offering”), to be issued and sold for $10.00 per share at
an aggregate purchase price of $109,500,000 (10,000,000 Shares to be offered to
the public and 1,000,000 Shares to be offered pursuant to the Company’s
dividend reinvestment plan at $9.50 per share). 
There shall be a minimum purchase by any one person of 100 Shares
(except as otherwise indicated in the Prospectus or in any letter or memorandum
from the Company to D.H. Hill Securities, LLP (the “Dealer Manager”)). 
Terms not defined herein shall have the same meaning as in the
Prospectus.  In connection therewith, the
Company hereby agrees with you, the Dealer Manager, as follows:

 

1.                                       Representations
and Warranties of the Company

 

The Company represents and warrants to the Dealer Manager and each
dealer with whom the Dealer Manager has entered into or will enter into a
Selected Dealer Agreement in the form attached to this Agreement as Exhibit
A (said dealers being hereinafter called the “Dealers”) that:

 

1.1                                 A
registration statement with respect to the Company has been prepared by the
Company in accordance with applicable requirements of the Securities Act of
1933, as amended (the “Securities Act”), and the applicable rules and
regulations (the “Rules and Regulations”) of the Securities and Exchange
Commission (the “SEC”) promulgated thereunder, covering the Shares.  Such registration statement, which includes a
preliminary prospectus, was initially filed with the SEC on December 31,
2003.  Copies of such registration
statement and each amendment thereto have been or will be delivered to the
Dealer Manager.  (The registration
statement and prospectus contained therein, as finally amended and revised at
the effective date of the registration statement, are respectively hereinafter
referred to as the “Registration Statement” and the “Prospectus,” except that
if the Prospectus first filed by the Company pursuant to Rule 424(b) under the
Securities Act shall differ from the Prospectus, the term “Prospectus” shall
also include the Prospectus filed pursuant to Rule 424(b).)

 

1.2                                 The
Company has been duly and validly organized and formed as a corporation under
the laws of the state of Maryland, with the power and authority to conduct its
business as described in the Prospectus.

 

1.3                                 The
Registration Statement and Prospectus comply with the Securities Act and the
Rules and Regulations and do not contain any untrue statements of material
facts or omit to state any material fact required to be stated therein or
necessary in order to make the statements therein not misleading; provided,
however, that the foregoing provisions of this Section 1.3 will not extend
to such statements contained in or omitted from the Registration

 

 

Statement or Prospectus as are
primarily within the knowledge of the Dealer Manager or any of the Dealers and
are based upon information furnished by the Dealer Manager in writing to the
Company specifically for inclusion therein.

 

1.4                                 The
Company intends to use the funds received from the sale of the Shares as set
forth in the Prospectus.

 

1.5                                 No
consent, approval, authorization or other order of any governmental authority
is required in connection with the execution or delivery by the Company of this
Agreement or the issuance and sale by the Company of the Shares, except such as
may be required under the Securities Act or applicable state securities laws.

 

1.6                                 There
are no actions, suits or proceedings pending or to the knowledge of the
Company, threatened against the Company at law or in equity or before or by any
federal or state commission, regulatory body or administrative agency or other
governmental body, domestic or foreign, which will have a material adverse
effect on the business or property of the Company.

 

1.7                                 The
execution and delivery of this Agreement, the consummation of the transactions
herein contemplated and compliance with the terms of this Agreement by the
Company will not conflict with or constitute a default under any charter,
bylaw, indenture, mortgage, deed of trust, lease, rule, regulation, writ,
injunction or decree of any government, governmental instrumentality or court,
domestic or foreign, having jurisdiction over the Company, except to the extent
that the enforceability of the indemnity and/or contribution provisions
contained in Section 4 of this Agreement may be limited under applicable
securities laws.

 

1.8                                 The
Company has full legal right, power and authority to enter into this Agreement
and to perform the transactions contemplated hereby, except to the extent that
the enforceability of the indemnity and/or contribution provisions contained in
Section 4 of this Agreement may be limited under applicable securities
laws.

 

1.9                                 At
the time of the issuance of the Shares, the Shares will have been duly
authorized and validly issued, and upon payment therefor, will be fully paid
and nonassessable and will conform to the description thereof contained in the
Prospectus.

 

2.                                       Covenants
of the Company

 

The Company covenants and
agrees with the Dealer Manager that:

 

2.1                                 It
will, at no expense to the Dealer Manager, furnish the Dealer Manager with such
number of printed copies of the Registration Statement, including all
amendments and exhibits thereto, as the Dealer Manager may reasonably
request.  It will similarly furnish to
the Dealer Manager and others designated by the Dealer Manager as many copies
as the Dealer Manager may reasonably request in connection with the offering of
the Shares of: (a) the Prospectus in preliminary and final form and every form
of supplemental or amended prospectus; (b) this Agreement; and (c) any other
printed sales literature or other materials (provided that the use of said
sales literature and other materials has been first approved for use by the
Company and all appropriate regulatory agencies).

 

2.2                                 It
will furnish such proper information and execute and file such documents as may
be necessary for the Company to qualify the Shares for offer and sale under the
securities laws of such jurisdictions as the Dealer Manager may reasonably
designate and will file and make in each year such statements and reports as
may be required.  The Company will
furnish to the Dealer Manager a copy of such papers filed by the Company in
connection with any such qualification.

 

2.3                                 It
will: (a) use its best efforts to cause the Registration Statement to become
effective; (b) furnish copies of any proposed amendment or supplement of the
Registration Statement or Prospectus to the Dealer Manager; (c) file every
amendment or supplement to the Registration Statement or the Prospectus that
may be required by the SEC;

 

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and (d) if at any time the SEC shall issue any stop order suspending
the effectiveness of the Registration Statement, it will use its best efforts
to obtain the lifting of such order at the earliest possible time.

 

2.4                                 If
at any time when a Prospectus is required to be delivered under the Securities
Act any event occurs as a result of which, in the opinion of either the Company
or the Dealer Manager, the Prospectus or any other prospectus then in effect
would include an untrue statement of a material fact or, in view of the
circumstances under which they were made, omit to state any material fact
necessary to make the statements therein not misleading, the Company will
promptly notify the Dealer Manager thereof (unless the information shall have
been received from the Dealer Manager) and will effect the preparation of an
amended or supplemental prospectus which will correct such statement or
omission.  The Company will then promptly
prepare such amended or supplemental prospectus or prospectuses as may be
necessary to comply with the requirements of Section 10 of the Securities
Act.

 

3.                                       Obligations
and Compensation of Dealer Manager

 

3.1                                 The Company hereby appoints
the Dealer Manager as its agent and principal distributor for the purpose of
selling for cash up to a maximum of 10,000,000 Shares through Dealers, all of
whom shall be members of the National Association of Securities Dealers, Inc.
(NASD).  The Dealer Manager may also sell
Shares for cash directly to its own clients and customers at the public
offering price and subject to the terms and conditions stated in the
Prospectus.  The Dealer Manager hereby
accepts such agency and distributorship and agrees to use its best efforts to
sell the Shares on said terms and conditions. 
The Dealer Manager represents to the Company that (i) it is a member of
the NASD; (ii) it will at all times maintain and employ an adequate number of
administrative personnel (who shall be acceptable to the Company) to fulfill its
obligations under this agreement and any supplemental or successor agreement
and shall be solely responsible for the compensation of such personnel; (iii)
it will be responsible for payment of such other costs incurred by it in
connection with the Offering as shall be agreed between the Company and the
Dealer Manager, which costs are not expected to exceed the amounts received by
the Dealer Manager as a dealer manager fee (discussed below); (iv) it and its
employees and representatives have all required licenses and registrations to
act under this Agreement; and (v) it has established and implemented anti-money
laundering compliance programs in accordance with applicable law, including
applicable NASD rules, SEC rules and the USA PATRIOT Act of 2001, reasonably
expected to detect and cause the reporting of suspicious transactions in
connection with the sale of Shares of the Company.  The Dealer Manager agrees to be bound by the
terms of the Escrow Agreement executed as of August 31, 2004, among Wells
Fargo Bank, N.A., as escrow agent, the Dealer Manager and the Company, a copy
of which is enclosed (the “Escrow Agreement”).

 

3.2                                 Promptly
after the effective date of the Registration Statement, the Dealer Manager and
the Dealers shall commence the offering of the Shares for cash to the public in
jurisdictions in which the Shares are registered or qualified for sale or in
which such offering is otherwise permitted. 
The Dealer Manager and the Dealers will suspend or terminate offering of
the Shares upon request of the Company at any time and will resume offering the
Shares upon subsequent request of the Company.

 

3.3                                 Except
as provided in the “Plan of Distribution” Section of the Prospectus, as
compensation for the services rendered by the Dealer Manager, the Company
agrees that it will pay to the Dealer Manager selling commissions in the amount
of 7.0% of the gross proceeds of the Shares sold to the public, plus a dealer
manager fee in the amount of up to 2.5% of the gross proceeds of the Shares
sold.  As provided in the Prospectus, no
selling commissions will be paid to the Dealer Manager for sales made by
broker-dealers who are affiliated with the Company or by the Company’s
employees who may be registered with the NASD and sponsored by the Dealer
Manager, but only for sales made through Dealers.  Notwithstanding the foregoing, no
commissions, payments or amount whatsoever will be paid to the Dealer Manager
under this Section 3.3 unless or until the gross proceeds of the Shares
sold are disbursed to the Company pursuant to paragraph 3(a) of the Escrow
Agreement.  Until the Required Capital,
the Pennsylvania Required Capital or the New York Required Capital (as
applicable and as defined in the Escrow Agreement) is obtained, investments
will be held in escrow and, if the Required Capital, the Pennsylvania Required
Capital or the New York Required Capital, as applicable, is not obtained,
investments will be returned to the

 

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investors in accordance with the Prospectus.  The Company will not be liable or responsible
to any Dealer for direct payment of commissions to such Dealer, it being the
sole and exclusive responsibility of the Dealer Manager for payment of
commissions to Dealers.  Notwithstanding
the above, at its discretion, the Company may act as agent of the Dealer
Manager by making direct payment of commissions to such Dealers without
incurring any liability therefor.  No
sales commission or dealer manager fee will be paid with respect to Shares sold
pursuant to the Company’s dividend reinvestment plan.  Under the rules of the NASD, total
underwriting compensation, including sales commissions, the dealer manager fee
and underwriter expense reimbursement, may not exceed 10% of the gross proceeds
from the sale of the Shares, except for bona fide due diligence expenses, which
may not exceed 0.5% of the gross proceeds from the sale of the Shares.

 

3.4                                 The
Dealer Manager represents and warrants to the Company and each person and firm
that signs the Registration Statement that the information under the caption “Plan
of Distribution” in the Prospectus and all other information furnished to the
Company by the Dealer Manager in writing expressly for use in the Registration
Statement, any preliminary prospectus, the Prospectus, or any amendment or
supplement thereto does not contain any untrue statement of a material fact or
omit to state any material fact required to be stated therein or necessary to
make the statements therein not misleading.

 

3.5                                 The
Dealer Manager shall use and distribute in conjunction with the offer and sale
of any Shares only the Prospectus and such sales literature and advertising as
shall have been previously approved in writing by the Company.

 

3.6                                 The
Dealer Manager shall cause Shares to be offered and sold only in those
jurisdictions specified in writing by the Company for whose account Shares are
then offered for sale, and such list of jurisdictions shall be updated by the
Company as additional states are added. 
The Company shall specify only such jurisdictions in which the offering
and sale of its Shares has been authorized by appropriate state regulatory
authorities.  No Shares shall be offered
or sold for the account of the Company in any other states.

 

3.7                                 The
Dealer Manager represents and warrants to the Company that it will not
represent or imply that the escrow agent, as identified in the Prospectus, has
investigated the desirability or advisability of investment in the Company, or
has approved, endorsed or passed upon the merits of the Shares or the Company,
nor will it use the name of said escrow agent in any manner whatsoever in
connection with the offer or sale of the Shares other than by acknowledgment
that it has agreed to serve as escrow agent.

 

4.                                       Indemnification

 

4.1                                 The
Company will indemnify and hold harmless the Dealers and the Dealer Manager,
their officers and directors and each person, if any, who controls such Dealer
or Dealer Manager within the meaning of Section 15 of the Securities Act
from and against any losses, claims, damages or liabilities, joint or several,
to which such Dealers or Dealer Manager, their officers and directors, or such
controlling person may become subject, under the Securities Act or otherwise,
insofar as such losses, claims, damages or liabilities (or actions in respect
thereof) arise out of or are based upon (a) any untrue statement or alleged
untrue statement of a material fact contained (i) in any Registration Statement
(including the Prospectus as a part thereof) or any post-effective amendment
thereto or in the Prospectus or any amendment or supplement to the Prospectus
or (ii) in any blue sky application or other document executed by the Company
or on its behalf specifically for the purpose of qualifying any or all of the
Shares for sale under the securities laws of any jurisdiction or based upon
written information furnished by the Company under the securities laws thereof
(any such application, document or information being hereinafter called a “Blue
Sky Application”), or (b) the omission or alleged omission to state in the
Registration Statement (including the Prospectus as a part thereof) or any
post-effective amendment thereof or in any Blue Sky Application a material fact
required to be stated therein or necessary to make the statements therein not
misleading, or (c) any untrue statement or alleged untrue statement of a
material fact contained in any preliminary prospectus, if used prior to the
effective date of the Registration Statement, or in the Prospectus or any
amendment or supplement to the

 

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Prospectus or the omission or alleged omission to state therein a
material fact required to be stated therein or necessary in order to make the
statements therein, in light of the circumstances under which they were made,
not misleading, and will reimburse each Dealer or Dealer Manager, its officers
and each such controlling person for any legal or other expenses reasonably
incurred by such Dealer or Dealer Manager, its officers and directors, or such controlling
person in connection with investigating or defending such loss, claim, damage,
liability or action; provided that the Company will not be liable in any such
case to the extent that any such loss, claim, damage or liability arises out
of, or is based upon an untrue statement or alleged untrue statement or
omission or alleged omission made in reliance upon and in conformity with
written information furnished to the Company or Dealer Manager by or on behalf
of any Dealer or Dealer Manager specifically for use with reference to such
Dealer or Dealer Manager in the preparation of the Registration Statement or
any such post-effective amendment thereof, any such Blue Sky Application or any
such preliminary prospectus or the Prospectus or any such amendment thereof or
supplement thereto; and further provided that the Company will not be liable in
any such case if it is determined that such Dealer or Dealer Manager was at
fault in connection with the loss, claim, damage, liability or action.  Notwithstanding the foregoing, the Company
may not indemnify or hold harmless the Dealer Manager, any Dealer or any of
their affiliates in any manner that would be inconsistent with the provisions
of Section II.G. of the Statement of Policy Regarding Real Estate Investment
Trusts of the North American Securities Administrators Association, Inc.
effective September 29, 1993, as amended (the “NASAA REIT Guidelines”).  In particular, but without limitation, the
Company may not indemnify or hold harmless the Dealer Manager, any Dealer or
any of their affiliates for liabilities arising from or out of a violation of
state or federal securities laws, unless one or more of the following
conditions are met:

 

(a)                                  there
has been a successful adjudication on the merits of each count involving
alleged securities law violations;

 

(b)                                 such
claims have been dismissed with prejudice on the merits by a court of competent
jurisdiction; or

 

(c)                                  a
court of competent jurisdiction approves a settlement of the claims against the
indemnitee and finds that indemnification of the settlement and the related
costs should be made, and the court considering the request for indemnification
has been advised of the position of the SEC and of the published position of
any state securities regulatory authority in which the securities were offered
as to indemnification for violations of securities laws.

 

4.2                                 The
Dealer Manager will indemnify and hold harmless the Company and each person or
firm which has signed the Registration Statement and each person, if any, who
controls the Company within the meaning of Section 15 of the Securities
Act, from and against any losses, claims, damages or liabilities to which any
of the aforesaid parties may become subject, under the Securities Act or
otherwise, insofar as such losses, claims, damages or liabilities (or actions
in respect thereof) arise out of or are based upon (a) any untrue statement of
a material fact contained (i) in the Registration Statement (including the
Prospectus as a part thereof) or any post-effective amendment thereof or (ii)
any Blue Sky Application, or (b) the omission to state in the Registration
Statement (including the Prospectus as a part thereof) or any post-effective
amendment thereof or in any Blue Sky Application a material fact required to be
stated therein or necessary to make the statements therein not misleading, or
(c) any untrue statement or alleged untrue statement of a material fact
contained in any preliminary prospectus, if used prior to the effective date of
the Registration Statement, or in the Prospectus, or in any amendment or
supplement to the Prospectus or the omission to state therein a material fact
required to be stated therein or necessary in order to make the statements
therein in the light of the circumstances under which they were made not
misleading in each case to the extent, but, for purposes of subsections (a),
(b) and (c) of this Section 4.2, only to the extent, that such untrue
statement or omission was made in reliance upon and in conformity with written
information furnished to the Company by or on behalf of the Dealer Manager
specifically for use with reference to the Dealer Manager in the preparation of
the Registration Statement or any such post-effective amendments thereof or any
such Blue Sky Application or any such preliminary prospectus or the Prospectus
or any such amendment

 

5

 

thereof or supplement thereto, or (d) any unauthorized use of sales
materials or use of unauthorized verbal representations concerning the Shares
by the Dealer Manager, or (e) any failure to comply with applicable laws
governing money laundry abatement and anti-terrorist financing efforts,
including applicable NASD rules, SEC rules and the USA PATRIOT Act of 2001, and
will reimburse the aforesaid parties, in connection with investigation or
defending such loss, claim, damage, liability or action.  This indemnity agreement will be in addition
to any liability which the Dealer Manager may otherwise have.

 

4.3                                 Each
Dealer severally will indemnify and hold harmless the Company, Dealer Manager
and each of their directors (including any persons named in any of the
Registration Statements with his consent, as about to become a director), each
of their officers who has signed any of the Registration Statements and each
person, if any, who controls the Company and the Dealer Manager within the
meaning of Section 15 of the Securities Act from and against any losses,
claims, damages or liabilities to which the Company, the Dealer Manager, any
such director or officer, or controlling person may become subject, under the
Securities Act or otherwise, insofar as such losses, claims, damages or
liabilities (or actions in respect thereof) arise out of or are based upon (a)
any untrue statement or alleged untrue statement of a material fact contained
(i) in the Registration Statement (including the Prospectus as a part thereof)
or any post-effective amendment thereof or (ii) in any Blue Sky Application, or
(b) the omission or alleged omission to state in the Registration Statement
(including the Prospectus as a part thereof or any post-effective amendment
thereof or in any Blue Sky Application a material fact required to be stated
therein or necessary to make the statements therein not misleading, or (c) any
untrue statement or alleged untrue statement of a material fact contained in
any preliminary prospectus, if used prior to the effective date of the
Registration Statement, or in the Prospectus, or in any amendment or supplement
to the Prospectus or the omission or alleged omission to state therein a
material fact required to be stated therein or necessary in order to make the
statements therein, in the light of the circumstances under which they were
made, not misleading in each case to the extent, but only to the extent, that
such untrue statement or alleged untrue statement or omission or alleged
omission was made in reliance upon and in conformity with written information
furnished to the Company or the Dealer Manager by or on behalf of such Dealer
specifically for use with reference to such Dealer in the preparation of the
Registration Statement or any such post-effective amendments thereof or any
such Blue Sky Application or any such preliminary prospectus or the Prospectus
or any such amendment thereof or supplement thereto, or (d) any unauthorized
use of sales materials or use of unauthorized verbal representations concerning
the Shares by such Dealer or Dealer’s representations or agents in violation of
Section VII of the Selected Dealer Agreement or otherwise, or (e) any
failure to comply with applicable laws governing money laundry abatement and
anti-terrorist financing efforts, including applicable NASD rules, SEC rules
and the USA PATRIOT Act of 2001, and will reimburse the Company and the Dealer
Manager and any such directors or officers, or controlling person, in
connection with investigating or defending any such loss, claim, damage,
liability or action.  This indemnity
agreement will be in addition to any liability which such Dealer may otherwise
have.

 

4.4                                 Within
thirty (30) business days after receipt by an indemnified party under this Section 4
of notice of the commencement of any action, such indemnified party will, if a
claim in respect thereof is to be made against any indemnifying party under this
Section 4, notify in writing the indemnifying party of the commencement
thereof and the omission so to notify the indemnifying party will relieve such
indemnifying party from any liability under this Section 4 as to the
particular item for which indemnification is then being sought, but not from
any other liability which it may have to any indemnified party.  In case any such action is brought against
any indemnified party, and it notifies an indemnifying party of the
commencement thereof, the indemnifying party will be entitled, to the extent it
may wish, jointly with any other indemnifying party similarly notified, to
participate in the defense thereof, with separate counsel.  Such participation shall not relieve such
indemnifying party of the obligation to reimburse the indemnified party for
reasonable legal and other expenses (subject to Section 4.5) incurred by
such indemnified party in defending itself, except for such expenses incurred
after the indemnifying party has deposited funds sufficient to effect the
settlement, with prejudice, of the claim in respect of which indemnity is
sought.  Any such indemnifying party
shall not be liable to any such indemnified party on account of any settlement
of any claim or action effected without the consent of such indemnifying party.

 

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4.5                                 The
indemnifying party shall pay all legal fees and expenses of the indemnified
party in the defense of such claims or actions; provided, however, that the
indemnifying party shall not be obligated to pay legal expenses and fees to
more than one law firm in connection with the defense of similar claims arising
out of the same alleged acts or omissions giving rise to such claims
notwithstanding that such actions or claims are alleged or brought by one or
more parties against more than one indemnified party.  If such claims or actions are alleged or
brought against more than one indemnified party, then the indemnifying party
shall only be obliged to reimburse the expenses and fees of the one law firm
that has been selected by a majority of the indemnified parties against which
such action is finally brought; and in the event a majority of such indemnified
parties is unable to agree on which law firm for which expenses or fees will be
reimbursable by the indemnifying party, then payment shall be made to the first
law firm of record representing an indemnified party against the action or
claim. Such law firm shall be paid only to the extent of services performed by
such law firm and no reimbursement shall be payable to such law firm on account
of legal services performed by another law firm.

 

4.6                                 The
indemnity agreements contained in this Section 4 shall remain operative
and in full force and effect regardless of (a) any investigation made by or on
behalf of any Dealer, or any person controlling any Dealer or by or on behalf
of the Company, the Dealer Manager or any officer or director thereof, or by or
on behalf of the Company or the Dealer Manager, (b) delivery of any Shares and
payment therefor, and (c) any termination of this Agreement.  A successor of any Dealer or of any of the
parties to this Agreement, as the case may be, shall be entitled to the
benefits of the indemnity agreements contained in this Section 4.

 

5.                                       Survival
of Provisions

 

The respective agreements, representations and warranties of the
Company and the Dealer Manager set forth in this Agreement shall remain
operative and in full force and effect regardless of (a) any termination of
this Agreement, (b) any investigation made by or on behalf of the Dealer
Manager or any Dealer or any person controlling the Dealer Manager or any
Dealer or by or on behalf of the Company or any person controlling the Company,
and (c) the acceptance of any payment for the Shares.

 

6.                                       Applicable
Law; Venue

 

This Agreement was executed and
delivered in, and its validity, interpretation and construction shall be
governed by the laws of, the State of Texas; provided however, that causes of
action for violations of federal or state securities laws shall not be governed
by this Section.  Venue for any action
brought hereunder shall lie exclusively in Houston, Texas.

 

7.                                       Counterparts

 

This Agreement may be executed
in any number of counterparts.  Each
counterpart, when executed and delivered, shall be an original contract, but
all counterparts, when taken together, shall constitute one and the same
Agreement.

 

8.                                       Successors
and Amendment

 

This Agreement shall inure to the benefit of and be binding upon the
Dealer Manager and the Company and their respective successors. Nothing in this
Agreement is intended or shall be construed to give to any other person any
right, remedy or claim, except as otherwise specifically provided herein.  This Agreement shall inure to the benefit of
the Dealers to the extent set forth in Sections 1 and 4 hereof.  This Agreement may be amended by the written
agreement of the Dealer Manager and the Company.

 

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9.                                       Term

 

This Agreement may be terminated by either party (i) immediately upon
notice to the other party in the event that the other party shall have
materially failed to comply with any of the material provisions of this
Agreement on its part to be performed during the term of this Agreement or if
any of the representations, warranties, covenants or agreements of such party
contained herein shall not have been materially complied with or satisfied
within the times specified or (ii) by either party on 60 days’ written notice.

 

In any case, this Agreement shall expire at the close of business on
the effective date that the Offering is terminated. The provisions of Section 4
hereof shall survive such termination. 
In addition, the Dealer Manager, upon the expiration or termination of
this Agreement, shall (i) promptly deposit any and all funds in its possession
which were received from investors for the sale of Shares into the appropriate
escrow account or, if the minimum number of Shares have been sold and accepted
by the Company, into such other account as the Company may designate; and (ii)
promptly deliver to the Company all records and documents in its possession
which relate to the Offering and are not designated as dealer copies.  The Dealer Manager, at its sole expense, may
make and retain copies of all such records and documents, but shall keep all
such information confidential.  The
Dealer Manager shall use its best efforts to cooperate with the Company to
accomplish an orderly transfer of management of the Offering to a party designated
by the Company.  Upon expiration or
termination of this Agreement, the Company shall pay to the Dealer Manager all
commissions to which the Dealer Manager is or becomes entitled under Section 3
at such time as such commissions become payable.

 

10.                                 Confirmation

 

The Company hereby agrees and assumes the duty to confirm on its behalf
and on behalf of dealers or brokers who sell the Shares all orders for purchase
of Shares accepted by the Company.  Such
confirmations will comply with the rules of the SEC and the NASD, and will
comply with applicable laws of such other jurisdictions to the extent the
Company is advised of such laws in writing by the Dealer Manager.

 

11.                                 Suitability
of Investors

 

The Dealer Manager will offer
Shares, and in its agreements with Dealers will require that the Dealers offer
Shares, only to persons who meet the financial qualifications set forth in the
Prospectus or in any suitability letter or memorandum sent to it by the Company
and will only make offers to persons in the states in which it is advised in
writing that the Shares are qualified for sale or that such qualification is
not required.  In offering Shares, the
Dealer Manager will, and in its agreements with Dealers, the Dealer Manager
will require that the Dealers will, comply with the provisions of all applicable
rules and regulations relating to suitability of investors, including without
limitation, the provisions of Article III.C. of the NASAA REIT Guidelines.

 

12.                                 Submission
of Orders

 

12.1                           Those
persons who purchase Shares will be instructed by the Dealer Manager or the
Dealer to make their checks payable to “Wells Fargo Bank, Hartman Commercial
Properties REIT.”  The Dealer Manager and
any Dealer receiving a check not conforming to the foregoing instructions shall
return such check directly to such subscriber not later than the end of the
next business day following its receipt. 
Checks received by the Dealer Manager or Dealer which conform to the
foregoing instructions shall be transmitted for deposit pursuant to one of the
methods described in this Section 12. 
Transmittal of received investor funds will be made in accordance with
the following procedures.  The Dealer
Manager may authorize certain Dealers which are “$250,000 broker-dealers” to
instruct their customers to make their checks for Shares subscribed for payable
directly to the Dealer.  In such case,
the Dealer will collect the proceeds of the subscribers’ checks and issue a
check for the aggregate amount of the subscription proceeds made payable to the
order of the escrow agent.

 

12.2                           If
a Dealer conducts its internal supervisory procedures at the location where
subscription documents and checks are initially received, the Dealer shall
forward (i) the subscription documents to the Dealer Manager and

 

8

 

(ii) the checks to the escrow agent by noon of the next business
day following receipt of the subscription documents and the check.

 

12.3                           If
a Dealer’s internal supervisory procedures are to be performed at a different
location (the “Final Review Office”), the subscription documents and check must
be transmitted to the Final Review Office by the end of the next business day
following receipt of the subscription documents and check by the Dealer.  The Final Review Office will, by the next
business day following receipt of the subscription documents and check, forward
both the subscription documents and check to the Dealer Manager as processing
broker-dealer in order that the Dealer Manager may complete its review of the
documentation and process the subscription documents and check.

 

12.4                           Any
check received by the Dealer Manager directly or as processing broker-dealer
from the Dealers will, in all cases, be forwarded to the escrow agent as soon
as practicable, but in any event by the end of the second business day
following receipt by the Dealer Manager of the subscription documents and
check.  Checks of rejected subscribers
will be promptly returned to such subscribers.

 

12.5                           If
requested by the Company, the Dealer Manager shall obtain, and shall cause the
Dealers to obtain, from subscribers for the Shares, other documentation
reasonably deemed by the Company to be required under applicable law or as may
be necessary to reflect the policies of the Company.  Such documentation may include, without limitation,
subscribers’ written acknowledgement and agreement to the privacy policies of
the Company.

 

13.                                 Selected
Investment Advisor Agreement

 

With respect to any provision of information
concerning the Offering by a selected investment advisor (the “Investment
Advisor”) presently registered under the Investment Advisers Act of 1940, as
amended, and presently and appropriately registered in each state in which the
Investment Advisor has clients, the Company and the Investment Advisor shall
enter into a Selected Investment Advisor Agreement in substantially the form
attached hereto as Exhibit B.

 

14.                                 Notices.

 

Any notice, approval, request, authorization, direction or other
communication under this Agreement shall be given in writing and shall be
deemed to be delivered when delivered in person or deposited in the United
States mail, properly addressed and stamped with the required postage,
registered or certified mail, return receipt requested, to the intended
recipient as set forth below:

 

	
  If to the Company:

  	
   

  	
  Hartman Commercial Properties REIT

  
	
   

  	
   

  	
  1450 W. Sam Houston Pkwy. N,
  Suite 100

  
	
   

  	
   

  	
  Houston, Texas 77043

  
	
   

  	
   

  	
  Attention: President

  
	
   

  	
   

  	
   

  
	
  If to the Dealer Manager:

  	
   

  	
  D.H. Hill Securities, LLP

  
	
   

  	
   

  	
  19747 Hwy 59 N., Suite 101

  
	
   

  	
   

  	
  Humble, Texas 77338

  
	
   

  	
   

  	
  Attention: Dan H. Hill

  

 

Any party may change its address specified
above by giving the other party notice of such change in accordance with this Section 14.

 

If the foregoing correctly sets forth our understanding, please
indicate your acceptance thereof in the space provided below for that purpose,
whereupon this letter and your acceptance shall constitute a binding agreement
between us as of the date first above written.

 

9

 

	
   

  	
  Very truly yours,

  
	
   

  	
   

  
	
   

  	
  HARTMAN COMMERCIAL PROPERTIES REIT

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  By:

  	
  /s/ Allen R. Hartman

  	
   

  
	
   

  	
   

  	
  Allen R. Hartman, President

  
	
   

  	
   

  
	
  Accepted and agreed as of the

  	
   

  
	
  date first above written.

  	
   

  
	
   

  	
   

  
	
  D.H. HILL SECURITIES, LLP

  	
   

  
	
   

  	
   

  
	
  By: H&H Services, Inc., general partner

  	
   

  
	
   

  	
   

  
	
   

  	
  By:

  	
  /s/ Dan H. Hill

  	
   

  	
   

  
	
   

  	
   

  	
    Dan
  H. Hill President

  	
   

  	
   

  

 

10

 

EXHIBIT
A

 

HARTMAN
COMMERCIAL PROPERTIES REIT

 

Up to 11,000,000 Common Shares
of Beneficial Interest

 

SELECTED
DEALER AGREEMENT

 

Ladies and Gentlemen:

 

D.H. Hill Securities, LLP, as the dealer
manager (“Dealer Manager”) for Hartman Commercial Properties REIT (the “Company”),
a Maryland real estate investment trust, invites you (the “Dealer”) to
participate in the distribution of shares of common stock (“Shares”) of the
Company subject to the following terms:

 

I.                                         Dealer Manager
Agreement

 

The Dealer Manager has entered
into an agreement with the Company called the Dealer Manager Agreement dated August 31,
2004, in the form attached hereto as Exhibit A (the “Dealer Manager
Agreement”; the terms of the Dealer Manager Agreement relating to the Dealer
are incorporated herein by reference as if set forth verbatim and capitalized
terms not otherwise defined herein shall have the meanings given them in the
Dealer Manager Agreement).  By your
acceptance of this Agreement, you will become one of the Dealers referred to in
the Dealer Manager Agreement and will be entitled and subject to the
indemnification provisions contained in the Dealer Manager Agreement, including
the provisions of the Dealer Manager Agreement wherein the Dealers severally
agree to indemnify and hold harmless the Company, the Dealer Manager and each
officer and director thereof, and each person, if any, who controls the Company
and the Dealer Manager within the meaning of the Securities Act of 1933, as
amended (the “Securities Act”).  Except
as otherwise specifically stated herein, all terms used in this Agreement have
the meanings provided in the Dealer Manager Agreement.  The Shares are offered solely through
broker-dealers who are members of the National Association of Securities
Dealers, Inc. (“NASD”).

 

Dealer hereby agrees to use its best efforts to sell the Shares for
cash on the terms and conditions stated in the Prospectus.  Nothing in this Agreement shall be deemed or
construed to make Dealer an employee, agent, representative or partner of the
Dealer Manager or of the Company, and Dealer is not authorized to act for the
Dealer Manager or the Company or to make any representations on their behalf
except as set forth in the Prospectus and such other printed information
furnished to Dealer by the Dealer Manager or the Company to supplement the
Prospectus (“supplemental information”).

 

II.                                     Submission of
Orders

 

Those persons who purchase
Shares will be instructed by the Dealer to make their checks payable to “Wells
Fargo Bank, Hartman Commercial Properties REIT.”  Any Dealer receiving a check not conforming
to the foregoing instructions shall return such check directly to such
subscriber not later than the end of the next business day following its
receipt.  Checks received by the Dealer
which conform to the foregoing instructions shall be transmitted for deposit
pursuant to one of the methods in this Article II.  The Dealer Manager may authorize Dealer if
Dealer is a “$250,000 broker-dealer” to instruct its customers to make its
checks for Shares subscribed for payable directly to the Dealer, in which case
the Dealer will collect the proceeds of the subscriber’s checks and issue a
check made payable to the order of the escrow agent for the aggregate amount of
the subscription proceeds.  Transmittal
of received investor funds will be made in accordance with the following
procedures:

 

(a)                                  If
the Dealer conducts its internal supervisory procedures at the location where
subscription documents and checks are initially received, the Dealer shall
forward (i) the subscription

 

11

 

documents to
the Dealer Manager and (ii) the checks to the escrow agent by noon of the
next business day following receipt of the subscription documents and the
check.

 

(b)                                 If
the internal supervisory procedures are to be performed at a different location
(the “Final Review Office”), the subscription documents and check must be
transmitted to the Final Review Office by the end of the next business day
following receipt of the subscription documents and check by the Dealer.  The Final Review Office will, by the next
business day following receipt of the subscription documents and check, forward
both the subscription documents and check to the Dealer Manager as processing
broker-dealer in order that the Dealer Manager may complete its review of the
documentation and process the subscription documents and check.

 

If requested by the Company or the Dealer Manager, the Dealer shall
obtain from subscribers for the Shares, other documentation reasonably deemed
by the Company or the Dealer Manager to be required under applicable law or as
may be necessary to reflect the policies of the Company or the Dealer Manager.  Such documentation may include, without
limitation, subscribers’ written acknowledgement and agreement to the privacy
policies of the Company or the Dealer Manager.

 

III.                                 Pricing

 

Shares shall be offered to the
public at the offering price of $10.00 per Share payable in cash, and shares
offered pursuant to the Company’s dividend reinvestment plan shall be offered
at $9.50 per share.  Except as otherwise
indicated in the Prospectus or in any letter or memorandum sent to the Dealer
by the Company or Dealer Manager, a minimum initial purchase of 100 Shares is
required.  Except as otherwise indicated
in the Prospectus, additional investments may be made in cash in minimal
increments of at least 2.5 Shares.  The
Shares are nonassessable.  The Dealer
hereby agrees to place any order for the full purchase price.

 

IV.                                 Dealers’ Commissions

 

Except for discounts described
in or as otherwise provided in the “Plan of Distribution” Section of the
Prospectus, the Dealer’s selling commission applicable to the total public
offering price of Shares sold by Dealer which it is authorized to sell
hereunder is 7.0% of the gross proceeds of Shares sold by it and accepted and
confirmed by the Company, which commission will be paid by the Dealer
Manager.  With respect to sales of Shares
pursuant to the Company’s dividend reinvestment plan, no selling commission
shall be paid.  For these purposes, a “sale
of Shares” shall occur if and only if a transaction has closed with a
securities purchaser pursuant to all applicable offering and subscription documents
and the Company has thereafter distributed the commission to the Dealer Manager
in connection with such transaction.  The
Dealer hereby waives any and all rights to receive payment of commissions due
until such time as the Dealer Manager is in receipt of the commission from the
Company.  The Dealer affirms that the
Dealer Manager’s liability for commissions payable is limited solely to the
proceeds of commissions receivable associated therewith.  In addition, as set forth in the Prospectus,
the Dealer Manager may reallow out of its dealer manager fee a marketing fee
and due diligence expense reimbursement of up to 1.5% of the gross proceeds of
Shares sold by Dealers participating in the offering of Shares, based on such
factors as the number of Shares sold by such participating Dealer, the
assistance of such participating Dealer in marketing the offering of Shares,
and bona fide conference fees incurred. 
Under the rules of the NASD, total underwriting compensation, including
sales commissions, the dealer manager fee and underwriter expense
reimbursement, may not exceed 10% of the gross proceeds from the sale of the
Shares, except for bona fide due diligence expenses, which may not exceed 0.5%
of the gross proceeds from the sale of the Shares.

 

Dealer acknowledges and agrees that no
commissions, payments or amount whatsoever will be paid to the Dealer unless or
until the gross proceeds of the Shares sold are disbursed to the Company
pursuant to paragraph 3(a) of the Escrow Agreement.  Until the Required Capital, the Pennsylvania
Required Capital or the New York Required Capital, as applicable and as defined
in the Escrow Agreement, is obtained, investments will be held in escrow and,

 

12

 

if the Required Capital or the Pennsylvania
Required Capital, as applicable, is not obtained, investments will be returned
to the investors in accordance with the Prospectus.

 

The parties hereby agree that the foregoing commission is not in excess
of the usual and customary distributors’ or sellers’ commission received in the
sale of securities similar to the Shares, that Dealer’s interest in the
offering is limited to such commission from the Dealer Manager and Dealer’s
indemnity referred to in Section 4 of the Dealer Manager Agreement, that
the Company is not liable or responsible for the direct payment of such
commission to the Dealer.

 

V.                                     Payment

 

Payments of selling commissions
will be made by the Dealer Manager (or by the Company as provided in the Dealer
Manager Agreement) to Dealer within 30 days of the receipt by the Dealer
Manager of the gross commission payments from the Company.

 

VI.                                 Right to Reject Orders
or Cancel Sales

 

All orders, whether initial or
additional, are subject to acceptance by and shall only become effective upon
confirmation by the Company, which reserves the right to reject any order for
any or no reason.  Orders not accompanied
by a Subscription Agreement and Signature Page and the required check in
payment for the Shares may be rejected. 
Issuance and delivery of the Shares will be made only after actual
receipt of payment therefor.  If any
check is not paid upon presentment, or if the Company is not in actual receipt
of clearinghouse funds or cash, certified or cashier’s check or the equivalent in
payment for the Shares within 15 days of sale, the Company reserves the right
to cancel the sale without notice.  In
the event an order is rejected, canceled or rescinded for any reason, the
Dealer agrees to return to the Dealer Manager any commission theretofore paid
with respect to such order.

 

VII.                             Prospectus and
Supplemental Information

 

Dealer is not authorized or
permitted to give and will not give, any information or make any representation
concerning the Shares except as set forth in the Prospectus and supplemental
information.  The Dealer Manager will
supply Dealer with reasonable quantities of the Prospectus, any supplements
thereto and any amended Prospectus, as well as any supplemental information,
for delivery to investors, and Dealer will deliver a copy of the Prospectus and
all supplements thereto and any amended Prospectus to each investor to whom an
offer is made prior to or simultaneously with the first solicitation of an
offer to sell the Shares to an investor. 
The Dealer agrees that it will not send or give any supplements thereto
and any amended Prospectus to that investor unless it has previously sent or
given a Prospectus and all supplements thereto and any amended Prospectus to
that investor or has simultaneously sent or given a Prospectus and all
supplements thereto and any amended Prospectus with such supplemental
information. Dealer agrees that it will not show or give to any investor or
prospective investor or reproduce any material or writing which is supplied to
it by the Dealer Manager and marked “dealer only” or otherwise bearing a legend
denoting that it is not to be used in connection with the sale of Shares to
members of the public.  Dealer agrees
that it will not use in connection with the offer or sale of Shares any material
or writing which relates to another Company supplied to it by the Company or
the Dealer Manager bearing a legend which states that such material may not be
used in connection with the offer or sale of any securities other than the
Company to which it relates. Dealer further agrees that it will not use in
connection with the offer or sale of Shares any materials or writings which
have not been previously approved by the Dealer Manager. Each Dealer agrees, if
the Dealer Manager so requests, to furnish a copy of any revised preliminary
Prospectus to each person to whom it has furnished a copy of any previous
preliminary Prospectus, and further agrees that it will itself mail or
otherwise deliver all preliminary and final Prospectuses required for compliance
with the provisions of Rule 15c2-8 under the Securities Exchange Act of 1934,
as amended (the “Exchange Act”). 
Regardless of the termination of this Agreement, Dealer will deliver a
Prospectus in transactions in the Shares for a period of 90 days from the
effective

 

13

 

date of the Registration
Statement or such longer period as may be required by the Exchange Act.  On becoming a Dealer, and in offering and
selling Shares, Dealer agrees to comply with all the applicable requirements
under the Securities Act and the Exchange Act. 
Notwithstanding the termination of this Agreement or the payment of any
amount to Dealer, Dealer agrees to pay Dealer’s proportionate share of any
claim, demand or liability asserted against Dealer and the other Dealers on the
basis that Dealers or any of them constitute an association, unincorporated
business or other separate entity, including in each case Dealer’s
proportionate share of any expenses incurred in defending against any such
claim, demand or liability.

 

VIII.                         License and Association
Membership

 

Dealer’s acceptance of this
Agreement constitutes a representation to the Company and the Dealer Manager
that Dealer is a properly registered or licensed broker-dealer, duly authorized
to sell Shares under Federal and state securities laws and regulations and in
all states where it offers or sells Shares, and that it is a member in good
standing of the NASD.  This Agreement
shall automatically terminate if the Dealer ceases to be a member in good
standing of such association, or in the case of a foreign dealer, so to
conform.  Dealer agrees to notify the
Dealer Manager immediately if Dealer ceases to be a member in good standing, or
in the case of a foreign dealer, so to conform. The Dealer Manager also hereby
agrees to comply with the Conduct Rules of the NASD, including but not limited
to Rules 2730, 2740, 2420 and 2750.

 

IX.                                Anti-Money Laundering
Compliance Programs

 

Dealer represents to the Company and the Dealer Manager that Dealer has
established and implemented anti-money laundering compliance programs in
accordance with applicable law, including applicable NASD rules, SEC rules and
the USA PATRIOT Act of 2001, reasonably expected to detect and cause the
reporting of suspicious transactions in connection with the sale of Shares of
the Company.

 

X.                                    Limitation of Offer

 

Dealer will offer Shares only
to persons who meet the financial qualifications set forth in the Prospectus or
in any suitability letter or memorandum sent to it by the Company or the Dealer
Manager and will only make offers to persons in the states in which it is
advised in writing that the Shares are qualified for sale or that such
qualification is not required.  In
offering Shares, Dealer will comply with the provisions of the NASD Conduct
Rules set forth in the NASD Manual, as well as all other applicable rules and
regulations relating to suitability of investors, including without limitation,
the provisions of Article III.C. of the Statement of Policy Regarding Real
Estate Investment Trusts of the North American Securities Administrators
Association, Inc.

 

XI.                                Termination

 

Dealer will suspend or
terminate its offer and sale of Shares upon the request of the Company or the
Dealer Manager at any time and will resume its offer and sale of Shares
hereunder upon subsequent request of the Company or the Dealer Manager.  Any party may terminate this Agreement by
written notice.  Such termination shall
be effective 48 hours after the mailing of such notice.  This Agreement is the entire agreement of the
parties and supersedes all prior agreements, if any, between the parties
hereto.

 

This Agreement may be amended at any time by the Dealer Manager by
written notice to the Dealer, and any such amendment shall be deemed accepted
by Dealer upon placing an order for sale of Shares after he has received such
notice.

 

14

 

XII.         Privacy Laws

 

The Dealer Manager and Dealer
(each referred to individually in this section as “party”) agree as follows: 

 

(a)           Each party agrees to abide by and comply with (i) the
privacy standards and requirements of the Gramm-Leach-Bliley Act of 1999 (“GLB
Act”), (ii) the privacy standards and requirements of any other applicable
Federal or state law, and (iii) its own internal privacy policies and
procedures, each as may be amended from time to time.

 

(b)           Each party agrees to refrain from the use or disclosure of
nonpublic personal information (as defined under the GLB Act) of all customers
who have opted out of such disclosures except as necessary to service the
customers or as otherwise necessary or required by applicable law; and

 

(c)           Each party shall be responsible for determining which
customers have opted out of the disclosure of nonpublic personal information by
periodically reviewing and, if necessary, retrieving a list of such customers
(the “List”) as provided by each to identify customers that have exercised
their opt-out rights. In the event either party uses or discloses nonpublic
personal information of any customer for purposes other than servicing the
customer, or as otherwise required by applicable law, that party will consult
the List to determine whether the affected customer has exercised his or her
opt-out rights.  Each party understands
that each is prohibited from using or disclosing any nonpublic personal
information of any customer that is identified on the List as having opted out
of such disclosures.  

 

XIII.                        Notice

 

All notices will be in writing and will be duly given to the Dealer Manager
when mailed to D.H. Hill Securities, LLP, 19747 Hwy 59 North, Suite 101,
Humble, Texas 77338, Attention: Dan H. Hill, and to Dealer when mailed to the
address specified by Dealer herein.

 

XIV.                        Attorneys’ Fees, Applicable Law
and Venue

 

In any action to enforce the
provisions of this Agreement or to secure damages for its breach, the
prevailing party shall recover its costs and reasonable attorney’s fees.  This Agreement shall be construed under the
laws of the State of Texas and shall take effect when signed by Dealer and
countersigned by the Dealer Manager. 
Venue for any action (including arbitration) brought hereunder shall lie
exclusively in Houston, Texas.

 

[SIGNATURES
ON FOLLOWING PAGES]

 

15

 

IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be
executed on its behalf by its duly authorized agent.

 

	
   

  	
  THE DEALER MANAGER:

  
	
   

  	
   

  
	
   

  	
  D.H. HILL SECURITIES, LLP

  
	
   

  	
   

  
	
   

  	
  By: H&H Services, Inc., general partner

  
	
   

  	
   

  
	
   

  	
   

  	
  By:

  	
   

  	
   

  
	
   

  	
   

  	
  Dan H. Hill
  President

  

 

16

 

We have read the foregoing Agreement and we hereby accept and agree to
the terms and conditions therein set forth. 
We hereby represent that the list below of jurisdictions in which we are
registered or licensed as a broker or dealer and are fully authorized to sell
securities is true and correct, and we agree to advise you of any change in
such list during the term of this Agreement.

 

1.  Identity of Dealer:

 

	
  Name:

  	
   

  
	
   

  
	
  Type of entity:

  	
   

  
	
  (corporation, partnership, proprietorship, etc.)

  
	
   

  
	
  Organized in the State of:

  	
   

  
	
   

  
	
  Licensed as broker-dealer in the following
  States:

  	
   

  
	
   

  
	
   

  	
   

  
	
  Tax I.D. #:

  	
   

  
	
   

  
	
  2. Person to receive notice pursuant to Section XIII:

  
	
   

  
	
  Name:

  	
   

  
	
   

  
	
  Company:

  	
   

  
	
   

  
	
  Address:

  	
   

  
	
   

  
	
  City, State and Zip Code:

  	
   

  
	
   

  
	
  Telephone No.:

  	
   

  
	
   

  
	
  Facsimile No.:

  	
   

  
												

 

17

 

AGREED TO AND ACCEPTED BY THE DEALER:

 

 

	
   

  	
   

  
	
  (Dealer’s Firm Name)

  	
   

  
	
   

  	
   

  
	
  By:

  	
   

  	
   

  
	
  Signature

  	
   

  
	
   

  	
   

  
	
  Name:

  	
   

  	
   

  
	
   

  	
   

  
	
  Title:

  	
   

  	
   

  
				

 

18

 

EXHIBIT B

 

HARTMAN
COMMERCIAL PROPERTIES REIT

 

Up to 11,000,000 Common Shares
of Beneficial Interest

 

SELECTED INVESTMENT ADVISOR AGREEMENT

 

This Selected Investment
Advisor Agreement (the “Agreement”) is made and entered into as of the day
indicated on Exhibit A attached hereto and by this reference
incorporated herein, between Hartman Commercial Properties REIT, a Maryland
corporation (the “Company”), and the selected investment advisor (the “Investment
Advisor”) identified in Exhibit A hereto.

 

WHEREAS, the Company is
offering up to 11,000,000 common shares of beneficial interest (the “Shares”)
to the general public, pursuant to a public offering (the “Offering”) of the
Shares pursuant to a prospectus (the “Prospectus”) filed with the Securities
and Exchange Commission (the “SEC”), 1,000,000 of which Shares are being
offered pursuant to the Company’s dividend reinvestment plan (the “DRIP”); and

 

WHEREAS, the Investment
Advisor is an entity, as designated in Exhibit A hereto, organized and
presently in good standing in the state or states designated in Exhibit A
hereto, presently registered as an investment advisor under the Investment
Advisers Act of 1940, as amended, and presently registered or licensed as an
investment advisor by the appropriate regulatory agency of each state in which
the Investment Advisor has clients, or exempt from such registration
requirements; and

 

WHEREAS, the Company has a
currently effective registration statement on Form S-11, including a final
prospectus, for the registration of the Shares under the Securities Act of
1933, as amended (such registration statement, as it may be amended, and the
prospectus and exhibits on file with the SEC, as well as any post-effective
amendments or supplements to such registration statement or prospectus after
the effective date of registration, being herein respectively referred to as
the “Registration Statement” and the “Prospectus”); and

 

WHEREAS, the offer and sale
of the Shares shall be made pursuant to the terms and conditions of the Registration
Statement and the Prospectus and, further, pursuant to the terms and conditions
of all applicable federal securities laws and the applicable securities laws of
all states in which the Shares are offered and sold; and

 

WHEREAS, the Company desires
to give the clients of the Investment Advisor the opportunity to purchase the
Shares, and the Investment Advisor is willing and desires to provide its
clients with information concerning the Shares and the procedures for
subscribing for the Shares upon the following terms and conditions;

 

NOW, THEREFORE, in
consideration of the premises and terms and conditions thereof, it is agreed
between the Company and the Investment Advisor as follows.

 

1.                                       Purchase of Shares

 

(a)          Subject to the terms and
conditions herein set forth, the Company hereby makes available for purchase by
the clients of the Investment Advisor a portion of the Shares described in the
Registration Statement.  The Investment
Advisor hereby covenants, warrants and agrees that, in regard to any purchase
of the Shares by its clients, it will comply with all of the terms and
conditions of the Registration Statement and the Prospectus, all applicable
state and federal laws, including the Securities Act of 1933, as amended (the “Securities
Act”), the Investment Advisers Act of 1940, as amended, and any and all
regulations and rules pertaining thereto, heretofore or

 

19

 

hereafter issued by the
Securities and Exchange Commission (“SEC”). 
Neither the Investment Advisor nor any other person shall have any
authority to give any information or make any representations in connection
with the Shares other than as contained in the Registration Statement and the
Prospectus, as amended and supplemented, and as is otherwise expressly
authorized in writing by the Company.

 

(b)         Clients of the Investment
Advisor may, following receipt of
written notice by the Investment Advisor from the Company of the effective date
of the Registration Statement, purchase the Shares according to all such terms
as are contained in the Registration Statement and the Prospectus.  The Investment Advisor shall comply with all
requirements set forth in the Registration Statement and the Prospectus.  The Investment Advisor shall use and distribute,
in connection with the Shares, only the Prospectus and, if necessary, any
separate prospectus relating solely to the DRIP, and such sales literature and
advertising materials that shall conform in all respects to any restrictions of
local law and the applicable requirements of the Securities Act of 1933, as
amended, and that have been approved in writing by the Company.  The Company reserves the right to establish
such additional procedures as it may deem necessary to ensure compliance with
the requirements of the Registration Statement, and the Investment Advisor
shall comply with all such additional procedures to the extent that it has
received written notice thereof.

 

(c)          All monies received for
purchase of any of the Shares shall be forwarded by the Investment Advisor to
D.H. Hill Securities, LLP for delivery to Wells Fargo Bank, N.A. (the “Escrow
Agent”), where such monies will be deposited in an escrow account established
by the Company solely for such subscriptions, except that, until such time (if
any) that such monies are deliverable to the Company pursuant to the Escrow
Agreement between the Company and the Escrow Agent, the Investment Advisor
shall return any check not made payable to “Wells Fargo Bank, Hartman
Commercial Properties REIT” directly to the subscriber who submitted the
check.  Subscriptions will be accepted as
described in the Prospectus.  Each
Investment Advisor receiving a subscriber’s check will deliver such check to
the Escrow Agent no later than the close of business of the first business day
after receipt of the subscription documents by the Investment Advisor.

 

(d)         During the full term of this
Agreement, the Company shall have full authority to take such action as it may
deem advisable in respect to all matters pertaining to the performance of the
Investment Advisor under this Agreement.

 

(e)          The Shares may be purchased
by clients of the Investment Advisor only where the Shares may be legally
offered and sold, only by such persons who shall be legally qualified to
purchase the Shares, and only by such persons in such states in which the
Investment Advisor is registered as an investment advisor or exempt from any
applicable registration requirements.

 

(f)            The Investment Advisor shall
have no obligation under this Agreement to advise its clients to purchase any
of the Shares.

 

(g)         The Investment Advisor will
use every reasonable effort to assure that Shares are purchased only by
investors who:

 

(1)                      meet the “investor suitability” standards, including the minimum income
and net worth standards established by the Company and set forth in the
Prospectus, and minimum purchase requirements set forth in the Registration
Statement;

 

(2)                      can reasonably benefit from an investment in the Company based on each
prospective investor’s overall investment objectives and portfolio structure;

 

20

 

(3)       are able
to bear the economic risk of the investment based on each prospective investor’s
overall financial situation; and

 

(4)       have
apparent understanding of: (a) the fundamental risks of the investment; (b) the
risk that the prospective investor may lose the entire investment; (c) the lack
of liquidity of the Shares; (d) the restrictions on transferability of the
Shares; (e) the background and qualifications of the employees and agents of
Hartman Management, L.P., the advisor to the Company; and (f) the tax
consequences of an investment in the Shares.

 

(5)       The
Investment Advisor will make the determinations required to be made by it
pursuant to this subparagraph (g) based on information it has obtained from
each prospective investor, including, at a minimum, but not limited to, the
prospective investor’s age, investment objectives, investment experience,
income, net worth, financial situation and other investments of the prospective
investor, as well as any other pertinent factors deemed by the Investment
Advisor to be relevant.

 

(h)   In
addition to complying with the provisions of subparagraph (g) above, and not in
limitation of any other obligations of the Investment Advisor to determine
suitability imposed by state or federal law, the Investment Advisor agrees that
it will comply fully with the following provisions:

 

(1)       The
Investment Advisor shall have reasonable grounds to believe, based upon
information provided by the investor concerning his or her investment
objectives, other investments, financial situation and needs, and upon any
other information known by the Investment Advisor, that (A) each client of the
Investment Advisor that purchases Shares is or will be in a financial position
appropriate to enable him or her to realize to a significant extent the
benefits (including tax benefits) of an investment in the Shares, (B) each
client of the Investment Advisor that purchases Shares has a fair market net
worth sufficient to sustain the risks inherent in an investment in the Shares
(including potential loss and lack of liquidity), and (C) the Shares otherwise
are or will be a suitable investment for each client of the Investment Advisor
that purchases Shares, and the Investment Advisor shall maintain files
disclosing the basis upon which the determination of suitability was made;

 

(2)       The
Investment Advisor shall not execute any transaction involving the purchase of
Shares in a discretionary account without prior written approval of the
transactions by the investor;

 

(3)       The
Investment Advisor shall have reasonable grounds to believe, based upon the
information made available to it, that all material facts are adequately and
accurately disclosed in the Registration Statement and provide a basis for
evaluating the Shares;

 

(4)       In making
the determination set forth in subparagraph (3) above, the Investment Advisor
shall evaluate items of compensation, physical properties, tax aspects,
financial stability and experience of the sponsor, conflicts of interest and
risk factors, appraisals, as well as any other information deemed pertinent by
it;

 

(5)       The
Investment Advisor shall inform each prospective investor of all pertinent
facts relating to the lack of liquidity or marketability of the Shares.

 

(i)    The Investment
Advisor agrees to retain in its files, for a period of at least six years,
information that will establish that each purchaser of Shares falls within the
permitted class of investors.

 

(j)    The Investment
Advisor either (i) shall not purchase shares for its own account or (ii) shall
hold for investment any Shares purchased for its own account.

 

21

 

(k)   The Investment
Advisor hereby confirms that it is familiar with Securities Act Release No.
4968 and Rule 15c2-8 under the Securities Exchange Act of 1934, as amended,
relating to the distribution of preliminary and final prospectuses, and
confirms that it has complied and will comply therewith.

 

(l)    A sale of
Shares shall be deemed to be completed only after the Company receives a
properly completed subscription agreement for Shares from the Investment
Advisor evidencing the fact that the investor had received a final Prospectus
at least five full business days prior to the completion date, together with
payment of the full purchase price of each purchased Share, from a buyer who
satisfies each of the terms and conditions of the Registration Statement and
the Prospectus, and only after such subscription agreement has been accepted in
writing by the Company.

 

(m)  Clients of an
Investment Advisor who have been advised by such Investment Advisor on an
ongoing basis regarding investments other than in the Company, and who are not
being charged by such Investment Advisor, through the payment of commissions or
otherwise, direct transaction based fees in connection with the purchase of the
Shares, may reduce the amount of selling commissions payable with respect to
the purchase of their shares down to zero.

 

2.                                       Compensation to Investment Advisor

 

The Company shall pay no
fees, commissions or other compensation to the Investment Advisor.

 

3.                                       Association of the Company with Other Advisors and
Dealers

 

It is expressly understood
between the Company and the Investment Advisor that the Company may cooperate
with broker-dealers who are registered as broker-dealers with the National
Association of Securities Dealers, Inc. (the “NASD”) or with other investment
advisors registered under the Investment Advisers Act of 1940, as amended. Such
broker-dealers and investment advisors may enter into agreements with the
Company on terms and conditions identical or similar to this Agreement and
shall receive such rates of commission or other fees as are agreed to between
the Company and the respective broker-dealers and investment advisors and as
are in accordance with the terms of the Prospectus.

 

4.                                       Conditions of the Investment Advisor’s Obligations

 

The Investment Advisor’s
obligations hereunder are subject, during the full term of this Agreement and
the Offering to (a) the performance by the Company of its obligations hereunder
and compliance by the Company with the covenants set forth in Section 7
hereof and (b) the conditions
that: (i) the Registration Statement shall become and remain effective; and
(ii) no stop order shall have been issued suspending the effectiveness of the
Offering.

 

5.                                       Conditions to the Company’s Obligations

 

The obligations of the
Company hereunder are subject, during the full term of this Agreement and the
Offering, to the conditions that (a) at the effective date of the Registration
Statement and thereafter during the term of this Agreement while any Shares
remain unsold, the Registration Statement shall remain in full force and effect
authorizing the offer and sale of the Shares; (b) no stop order suspending the
effectiveness of the Offering or other order restraining the offer or sale of
the Shares shall have been issued nor proceedings therefor initiated or
threatened by any state regulatory agency or the SEC; and (c) the Investment
Advisor shall have satisfactorily performed all of its obligations hereunder
and complied with the covenants set forth in Section 6 hereof.

 

22

 

6.                                       Covenants of the Investment Advisor

 

The Investment Advisor
covenants, warrants and represents, during the full term of this Agreement,
that:

 

(a)          The Investment Advisor is
registered as an investment advisor under the Investment Advisers Act of 1940,
as amended, and registered or licensed as an investment advisor by the
appropriate regulatory agency of each state in which the advisor has clients,
or exempt from such registration requirements.

 

(b)         Neither the Investment
Advisor nor any person associated with the Investment Advisor is registered as
a broker-dealer or registered representative with the NASD.

 

(c)          The Investment Advisor shall
comply with all applicable federal and state securities laws, including,
without limitation, the disclosure requirements of the Investment Advisers Act
of 1940, as amended, and the provisions thereof requiring disclosure of the
existence of this Agreement and the compensation to be paid to the Investment
Advisor hereunder.

 

(d)         The Investment Advisor shall
maintain the records required by Section 204 of the Investment Advisers
Act of 1940, as amended, and Rule 204-2 thereunder in the form and for the
periods required thereby.

 

7.                                       Covenants of the Company

 

The Company covenants,
warrants and represents, during the full term of this Agreement, that:

 

(a)          It shall use its best
efforts to maintain the effectiveness of the Registration Statement and to file
such applications or amendments to the Registration Statement as may be
reasonably necessary for that purpose.

 

(b)         It shall promptly inform the
Investment Advisor whenever and as soon as it receives or learns of any order
issued by the SEC, any state regulatory agency or any other regulatory agency
which suspends the effectiveness of the Registration Statement or prevents the
use of the Prospectus or which otherwise prevents or suspends the offering or
sale of the Shares, or receives notice of any proceedings regarding any such
order.

 

(c)          It shall use its best
efforts to prevent the issuance of any order described herein at subparagraph
(b) hereof and to obtain the lifting of any such order if issued.

 

(d)         It shall give the Investment
Advisor written notice when the Registration Statement becomes effective and
shall deliver to the Investment Advisor such number of copies of the
Prospectus, and any supplements and amendments thereto, which are finally
approved by the SEC, as the Investment Advisor may reasonably request for sale
of the Shares.

 

(e)          It shall promptly notify the
Investment Advisor of any post-effective amendments or supplements to the
Registration Statement or Prospectus, and shall furnish the Investment Advisor
with copies of any revised Prospectus and/or supplements and amendments to the
Prospectus and/or any prospectus relating solely to the DRIP.

 

(f)            It shall keep the Investment
Advisor fully informed of any material development to which the Company is a
party or which concerns the business and condition of the Company.

 

23

 

(g)         It shall use its best
efforts to cause, at or prior to the time the Registration Statement becomes
effective, the qualification of the Shares for offering and sale under the
securities laws of such states as the Company shall elect.

 

8.                                       Payment of Costs and Expenses

 

The Investment Advisor shall
pay all costs and expenses incident to the performance of its obligations under
this Agreement.

 

9.                                       Indemnification

 

(a)          The Investment Advisor
agrees to indemnify, defend and hold harmless the Company, its affiliates and
their or its officers, directors, trustees, employees and agents, against all
losses, claims, demands, liabilities and expenses, joint or several, including
reasonable legal and other expenses incurred in defending such claims or
liabilities, whether or not resulting in any liability to the Company, its
affiliates and their or its officers, directors, trustees, employees or agents,
which they or any of them may incur arising out of (i) the offer or sale (as
such term is defined in the Securities Act) by the Investment Advisor, or any
person acting on its behalf, of any Shares pursuant to this Agreement, if such
loss, claim, demand, liability, or expense arises out of or is based upon an
untrue statement or alleged untrue statement of a material fact, or any
omission or alleged omission of a material fact, other than a statement,
omission, or alleged omission by the Investment Advisor which is also, as the
case may be, contained in or omitted from the Prospectus or the Registration
Statement and which statement or omission was not based on information supplied
to the Company by such Investment Advisor; (ii) the breach by the Investment
Advisor, or any person acting on its behalf, of any of the terms and conditions
of this Agreement; or (iii) the negligence, malpractice or malfeasance of the
Investment Advisor.  This indemnity
provision shall survive the termination of this Agreement.

 

(b)         The Company agrees to
indemnify, defend and hold harmless the Investment Advisor, its officers,
directors, employees and agents, against all losses, claims, demands,
liabilities and expenses, including reasonable legal and other expenses
incurred in defending such claims or liabilities, which they or any of them may
incur, including, but not limited to, alleged violations of the Securities Act,
but only to the extent that such losses, claims, demands, liabilities and
expenses shall arise out of or be based upon (i) any untrue statement of a
material fact contained in the Prospectus or the Registration Statement, as
filed and in effect with the SEC or in any amendment or supplement thereto, or
in any application prepared or approved in writing by counsel to the Company
and filed with the SEC or any state regulatory agency in order to register or
qualify the Shares under the securities laws thereof (the “Blue Sky
applications”), or (ii) any omission or alleged omission to state therein a
material fact required to be stated in the Prospectus or the Registration
Statement or the Blue Sky applications, or necessary to make such statements,
and any part thereof, not misleading; provided, further, that any such untrue
statement, omission or alleged omission is not based on information included in
any such document which was supplied to the Company, or any officer of the
Company by such Investment Advisor; provided in each case that such claims or
liabilities did not arise from Investment Advisor’s own negligence, malpractice
or malfeasance.  This indemnity provision
shall survive the termination of this Agreement.

 

(c)          No indemnifying party shall
be liable under the indemnity provisions contained in subparagraphs (a) and (b)
above unless the party to be indemnified shall have notified such indemnifying
party in writing promptly after the summons or other first legal process giving
information of the nature of the claim served upon the party to be indemnified,
but failure to notify an indemnifying party of any such claim shall not relieve
it from any liabilities that it may have to the indemnified party

 

24

 

against whom action is
brought other than on account of its indemnity agreement contained in
subparagraphs (a) and (b) above.  In the
case of any such claim, if the party to be indemnified notified the
indemnifying party of the commencement thereof as aforesaid, the indemnifying
party shall be entitled to participate at its own expense in the defense of
such claim.  If it so elects, in
accordance with arrangements satisfactory to any other indemnifying party or
parties similarly notified, the indemnifying party has the option to assume the
entire defense of the claim, with counsel who shall be satisfactory to such
indemnified party and all other indemnified parties who are defendants in such
action; and after notice from the indemnifying party of its election so to
assume the defense thereof and the retaining of such counsel by the
indemnifying party, the indemnifying party shall not be liable to such
indemnified party under subparagraphs (a) and (b) above for any legal or other
expenses subsequently incurred by such indemnified party in connection with the
defense thereof, other than for the reasonable costs of investigation.

 

10.                                 Term of Agreement

 

This Agreement shall become
effective on the date on which this Agreement is executed by the Company and
the Investment Advisor.  The Investment
Advisor and the Company may each prevent this Agreement from becoming
effective, without liability to the other, by written notice before the time
this Agreement otherwise would become effective.  After this Agreement becomes effective,
either party may terminate it at any time for any reason by giving thirty (30)
days’ written notice to the other party; provided, however, that this Agreement
shall in any event automatically terminate at the first occurrence of any of
the following events: (a) the Registration Statement for offer and sale of the
Shares shall cease to be effective; (b) the Offering shall be terminated; or
(c) the Investment Advisor’s license or registration to act as an investment
advisor shall be revoked or suspended by any federal, self-regulatory or state agency
and such revocation or suspension is not cured within ten (10) days from the
date of such occurrence.  In any event,
this Agreement shall be deemed suspended during any period for which such
license is revoked or suspended.

 

11.                                 Notices

 

All notices and
communications hereunder shall be in writing and shall be deemed to have been
given and delivered when deposited in the United States mail, postage prepaid,
registered or certified mail, to the applicable address set forth below.

 

	
  If sent to the Company:

  	
   

  	
  Hartman Commercial Properties REIT

  
	
   

  	
   

  	
  1450 W. Sam Houston Pkwy. N,
  Suite 100

  
	
   

  	
   

  	
  Houston, Texas 77043

  
	
   

  	
   

  	
  Attention: President

  

 

If sent to the Investment
Advisor: to the person whose name and address are identified in Exhibit A
hereto.

 

12.                                 Successors

 

This Agreement shall be
binding upon and inure to the benefit of the parties hereto, and shall not be
assigned or transferred by the Investment Advisor by operation of law or
otherwise.

 

13.                                 Miscellaneous

 

(a)          This Agreement shall be
construed in accordance with the applicable laws of the State of Maryland.

 

25

 

(b)         Nothing in this Agreement
shall constitute the Investment Advisor as in association with or in
partnership with the Company.

 

(c)          This Agreement, including Exhibit
A hereto, embodies the entire understanding, between the parties to the
Agreement, and no variation, modification or amendment to this Agreement shall
be deemed valid or effective unless it is in writing and signed by both parties
hereto.

 

(d)         If any provision of this
Agreement shall be deemed void, invalid or ineffective for any reason, the
remainder of the Agreement shall remain in full force and effect.

 

(e)          This Agreement may be
executed in counterpart copies, each of which shall be deemed an original but
all of which together shall constitute one and the same instrument comprising
this Agreement.

 

[SIGNATURES ON FOLLOWING PAGES]

 

26

 

IN WITNESS WHEREOF, the
parties have executed this Agreement on the date and year indicated on Exhibit
A hereto.

 

	
  SELECTED INVESTMENT ADVISOR:

  	
   

  	
  COMPANY:

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
  HARTMAN COMMERCIAL PROPERTIES

  
	
  (Name of Investment Advisor)

  	
   

  	
  REIT

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
  By:

  	
   

  	
   

  	
  By:

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
  Print Name:

  	
   

  	
   

  	
   

  	
  Print Name:

  	
   

  	
   

  
	
   

  	
  Title:

  	
   

  	
   

  	
   

  	
  Title:

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
  Witness

  	
   

  	
  Witness

  
												

 

27

 

EXHIBIT A

TO

SELECTED
INVESTMENT ADVISOR AGREEMENT

OF

HARTMAN
COMMERCIAL PROPERTIES REIT

 

This Exhibit
A is attached to and made a part of that certain Selected Investment Advisor
Agreement, dated as of the       day of                                          ,
200 , by and between Hartman Commercial Properties REIT, (the “Company”)
and                                                          (the
“Advisor”).

 

	
  1.

  	
  Date of Agreement:
                                 ,
  200  

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
  2.

  	
  Identity of
  Advisor:

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
  Name:

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
  Type of Entity:

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
  State Organized in:

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
  Qualified to Do Business and in Good Standing in:

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
  Registered as an Investment Advisor in the Following States:

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
  3.

  	
  Name and Address
  for Notice Purposes:

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
  Name:

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
  Title:

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
  Company:

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
  Address:

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
  City, State and Zip Code:

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
  Telephone Number (including area code):

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
  4.

  	
  Please complete
  the following for our records:

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
  How many registered investment advisors are with your firm?

  	
   

  	
   

  	
   

  
														

(Please enclose a current list.)

 

28

 

Does your firm publish a newsletter?   o Yes   o
No

 

What is/are the frequency of the
publication(s)?  o Weekly    o Monthly    o Quarterly

 

o
Bi-weekly     o
Bi-monthly     o Other
(please specify)                                               

 

PLEASE PLACE HARTMAN COMMERCIAL PROPERTIES REIT ON YOUR MAILING LIST
AND

PROVIDE A SAMPLE OF THE PUBLICATION IF AVAILABLE.

 

Does your firm have regular internal
mailings, or bulk package mailings to its registered investment advisors?    o Yes     o No

 

PLEASE PLACE
HARTMAN COMMERCIAL PROPERTIES REIT ON YOUR MAILING LIST

AND PROVIDE A SAMPLE OF THE PUBLICATION IF AVAILABLE.

 

Does your firm
have a computerized electronic mail (E-Mail) system for your registered
investment advisors?    o Yes    o No

 

	
  If so, please provide e-mail address:

  	
   

  
	
   

  
	
  Website address:

  	
   

  
	
   

  
	
  Person responsible:

  	
   

  
				

 

29EXHIBIT
10.14

 

ESCROW AGREEMENT

 

Wells Fargo Bank, N.A.

666 Walnut N8200-034

Corporate Trust Services, PFG

Des Moines, IA  50309

 

Re:                               Hartman
Commercial Properties REIT Escrow Agreement

 

Ladies and
Gentlemen:

 

HARTMAN COMMERCIAL
PROPERTIES REIT, a Maryland real estate investment trust (the “Company”), the
issuer for an offering (the “Offering”) of up to 11,000,000 common shares of
beneficial interest, par value $.001 per share (the “Shares”), pursuant to a
registration statement originally filed on Form S-11 with the Securities and
Exchange Commission on December 31, 2003, File No. 333-111674.  D.H. Hill Securities, LLP, a Texas limited
liability partnership (the “Dealer Manager”), will act as Dealer Manager for
the offering of the Shares. The Company is entering into this Escrow Agreement
(the “Agreement”) to set forth the terms on which Wells Fargo Bank, N.A.
(“Escrow Agent”), will hold and disburse the proceeds from subscriptions for
the purchase of the Shares in the Offering until such time as:  (i) in the case of subscriptions received
from all nonaffiliates of the Company, other than from Pennsylvania Subscribers
or New York Subscribers (each as defined below), the Company has received
subscriptions for Shares resulting in total minimum capital raised of
$2,000,000 (the “Required Capital”); (ii) in the case of subscriptions received
from residents of Pennsylvania (“Pennsylvania Subscribers”), the Company has
received subscriptions for Shares from nonaffiliates of the Company resulting
in total minimum capital raised of $5,475,000 (the “Pennsylvania Required
Capital”); and (iii) in the case of subscriptions received from residents of
New York (“New York Subscribers”), the Company has received subscriptions for
Shares from nonaffiliates of the Company, other than from Pennsylvania
Subscribers, resulting in total minimum capital raised of $2,500,000 (the “New
York Required Capital”).

 

The Company
hereby appoints Escrow Agent as escrow agent for purposes of holding the
proceeds from the sale of the Shares, and the Company shall deposit with Escrow
Agent such proceeds to be held by Escrow Agent on the terms and conditions
hereinafter set forth below:

 

1.                                       Persons
subscribing to purchase the Shares (the “Subscribers”) will be instructed by
the Dealer Manager or any soliciting dealers to remit the purchase price in the
form of checks (hereinafter called “instruments of payment”) payable to the
order of, or funds wired in favor of, “Wells Fargo Bank, Hartman Commercial
Properties REIT.” Within one business day after receipt of instruments of
payment from the Offering, the Dealer Manager will send to the Escrow Agent:
(a) an electronic file in a compatible format containing each subscriber’s
name, address, tax identification number, number of Shares purchased, purchase price
remitted and whether a IRS Form W-9 has been obtained, and (b) the instruments
of payment from such Subscribers (the “Subscription Materials”) for deposit
into the deposit account entitled “Wells Fargo Bank, as Escrow Agent for the
Benefit of Subscribers of Hartman Commercial Properties REIT” (the “Escrow
Account”).  Instruments of payment
received from Pennsylvania Subscribers (as identified as such by the Company)
shall be accounted for separately in a subaccount entitled “Wells Fargo Bank,
as Escrow Agent for the Benefit of Pennsylvania Subscribers of Hartman
Commercial Properties REIT” (the “Pennsylvania Escrow Account”), until such
Pennsylvania Escrow Account has closed pursuant to paragraph 3(a)
hereof.  Instruments of payment received
from New York Subscribers (as identified as such by the Company) shall be
accounted for separately in a

 

 

subaccount
entitled “Wells Fargo Bank, as Escrow Agent for the Benefit of New York
Subscribers of Hartman Commercial Properties REIT” (the “New York Escrow Account”),
until such New York Escrow Account has closed pursuant to paragraph 3(a)
hereof.  The Escrow Account, the
Pennsylvania Escrow Account, and the New York Escrow Account will be
established and maintained in such a way as to permit the interest income
calculations described in paragraph 7.

 

2.                                       The
aforesaid instruments of payment are to be promptly processed for collection by
Escrow Agent following deposit by the Dealer Manager into the applicable Escrow
Account, Pennsylvania Escrow Account, or New York Escrow Account, as
applicable. The proceeds thereof are to be held in the Escrow Account,
Pennsylvania Escrow Account, or New York Escrow Account, as applicable, until
such funds are either returned to the Subscribers in accordance with paragraph
3 hereof or otherwise disbursed in accordance with paragraph 7 hereof. In the
event any of the instruments of payment are returned to Escrow Agent for
nonpayment prior to receipt by Escrow Agent of the Required Capital, the
Pennsylvania Required Capital, or the New York Required Capital, Escrow Agent
shall promptly notify the Dealer Manager in writing of such nonpayment, and
Escrow Agent is authorized to debit the Escrow Account in the amount of such
return payment as well as any interest earned on the investment represented by
such payment and return to the Dealer Manager the returned item.

 

3.                                       (a)                                  Subject
to the provisions of subparagraphs 3(b)-3(f) below:

 

(i)                                     once the aggregate
of all collected funds in the Escrow Account, (for purposes of clarification,
this amount will not include funds in the Pennsylvania Escrow Account or the
New York Escrow Account) is an amount equal to or greater than the Required
Capital, the Escrow Agent shall promptly notify the Company and, upon receiving
written instruction from the Company, (A) disburse to the Company, by check,
ACH or wire transfer, the funds in the Escrow Account representing the gross
purchase price for the Shares, and (B) disburse to the Subscribers or the
Company, as applicable, any interest thereon pursuant to the provisions of
subparagraph 3(f).  For purposes of
this Agreement, the term “collected funds” shall mean all funds received by the
Escrow Agent that have cleared normal banking channels and are in the form of
cash or a cash equivalent.  After such
time the Escrow Account shall remain open and the Company shall continue to
cause subscriptions for the Shares that are not to be deposited in either the
Pennsylvania Escrow Account or the New York Escrow Account to be deposited
therein until the Company informs the Escrow Agent in writing to close the
Escrow Account, and thereafter any subscription documents and instruments of
payment received by the Escrow Agent from Subscribers other than Pennsylvania
Subscribers and New York Subscribers shall be forwarded directly to the
Company.

 

(ii)                                  regardless of any
closing of the Escrow Account, the Company and the Dealer Manager shall
continue to forward instruments of payment and Subscription Materials received
from Pennsylvania Subscribers for deposit into the Pennsylvania Escrow Account
to the Escrow Agent until such time as the Company notifies the Escrow Agent in
writing that total subscription proceeds (including the amount then in the
Pennsylvania Escrow Account) equal or exceed the Pennsylvania Required Capital.  Upon receipt of a written notice and
instruction from the Company that total subscription proceeds (including the
amount then in the Pennsylvania Escrow Account) equaling or exceeding the
Pennsylvania Required Capital have been received in collected funds, the Escrow
Agent shall (A) disburse to the Company, by check, ACH or wire transfer, the
funds then in the Pennsylvania Escrow Account representing the gross purchase
price for the Shares, and (B) disburse to the Pennsylvania Subscribers or the
Company, as applicable, any interest thereon pursuant to the provisions of
subparagraph 3(f).  Following such

 

2

 

disbursements, the Escrow Agent shall close
the Pennsylvania Escrow Account, and thereafter any Subscription Materials and
instruments of payment received by the Escrow Agent from Pennsylvania
Subscribers shall be deposited directly to the Escrow Account (or to the
Company, if it has closed the Escrow Account, as instructed in writing by the
Company).

 

(iii)                               regardless of any
closing of the Escrow Account, the Company and the Dealer Manager shall
continue to forward instruments of payment and Subscription Materials received
from New York Subscribers for deposit into the New York Escrow Account to the
Escrow Agent until such time as the Company notifies the Escrow Agent in
writing that total subscription proceeds (including the amount then in the New
York Escrow Account but not including the amount then in the Pennsylvania
Escrow Account) equal or exceed the New York Required Capital.  Upon receipt of a written notice and
instruction from the Company that total subscription proceeds (including the
amount then in the New York Escrow Account) equaling or exceeding the New York
Required Capital have been received in collected funds, the Escrow Agent shall
(A) disburse to the Company, by check, ACH or wire transfer, the funds then in
the New York Escrow Account representing the gross purchase price for the
Shares, and (B) disburse to the New York Subscribers or the Company, as
applicable, any interest thereon pursuant to the provisions of
subparagraph 3(f).  Following such
disbursements, the Escrow Agent shall close the New York Escrow Account, and
thereafter any Subscription Materials and instruments of payment received by
the Escrow Agent from New York Subscribers shall be deposited directly to the
Escrow Account (or to the Company, if it has closed the Escrow Account, as
instructed in writing by the Company).

 

(b)                                 In
the event that at the close of business on the date exactly one year after the
SEC grants an effective order under Section 8(a) of the Securities Act of
1933, as amended (the “Expiration Date”), which date will be communicated to
the Escrow Agent in writing as soon as possible after determination, Escrow
Agent is not in receipt of evidence of subscriptions accepted on or before such
date, and instruments of payment dated not later than that date (or actual
wired funds), for the purchase of Shares providing for total purchase proceeds
that at least equal the Required Capital, Escrow Agent shall promptly notify
the Company that such instruments of payment totaling an amount at least equal
to the Required Capital have not been received by Escrow Agent. Thereafter,
Dealer Manager agrees to use its best efforts to obtain an executed IRS Form
W-9 from each subscriber. Promptly following the Expiration Date, and in any
event no later than the next business day after the Expiration Date or as soon
as possible thereafter, Escrow Agent shall promptly return by check the funds
deposited in the Escrow Account, the Pennsylvania Escrow Account, and the New
York Escrow Account, or shall return the instruments of payment delivered to
Escrow Agent if such instruments have not been processed for collection prior
to such time, directly to each Subscriber at the address given to the Company.
Included in the remittance shall be a proportionate share of the income earned
in the account allocable to each Subscriber’s investment in accordance with the
terms and conditions specified in paragraph 7 hereof, except that in the case
of Subscribers who have not provided to the Company an executed Form W-9,
Escrow Agent shall withhold a portion of the earnings attributable to those
Subscribers at the applicable rate in accordance with Section 3406 of the
Internal Revenue Code of 1986, as amended. Notwithstanding the foregoing,
Escrow Agent shall not be required to remit any payments until funds
represented by such payments have been collected by Escrow Agent.

 

(c)                                  Notwithstanding
subparagraphs 3(a) and 3(b) above, if the Escrow Agent is not in receipt of
evidence of subscriptions accepted on or before the close of business on such
date that is 120 days after the SEC grants an effective order under Section 8(a)
of the Securities Act of 1933, as

 

3

 

amended (the Company will notify the Escrow
Agent of the date the SEC grants the effective order) (the “Initial Escrow
Period”), and instruments of payment dated not later than that date, for the purchase
of Shares providing for total purchase proceeds from all nonaffiliated sources
that equal or exceed the Pennsylvania Required Capital, the Escrow Agent shall
promptly notify the Company.  Thereafter,
the Company shall send to each Pennsylvania Subscriber by certified mail within
ten (10) calendar days after the end of the Initial Escrow period a
notification in the form of Exhibit A. 
If, pursuant to such notification, a Pennsylvania Subscriber requests
the return of his or her subscription funds within ten (10) calendar days after
receipt of the notification (the “Request Period”) and the Company is not in
possession of an executed IRS form W-9, the Company shall obtain an executed
IRS Form W-9 from each such Pennsylvania Subscriber within ten (10) calendar
days after receiving notice from such Pennsylvania Subscriber.  The Escrow Agent shall promptly refund
directly to each Pennsylvania Subscriber the collected funds deposited in the
Pennsylvania Escrow Account on behalf of such Pennsylvania Subscriber, or shall
return the instruments of payment delivered, but not yet processed for
collection prior to such time, to the address provided by the Dealer Manager or
the Company, together with interest income in the amounts calculated pursuant
to paragraph 7.  If an executed IRS Form
W-9 is not received for such Pennsylvania Subscriber within ten (10) calendar
days, the Escrow Agent shall thereupon remit an amount to such Pennsylvania
Subscriber, in accordance with the provisions hereof, withholding a portion of
the earnings attributable to such Pennsylvania Subscriber at the applicable
rate in accordance with Section 3406 of the Internal Revenue Code of 1986,
as amended. However, the Escrow Agent shall not be required to remit such
payments until funds represented by such payments have been collected by the
Escrow Agent.

 

(d)                                 The subscription funds of Pennsylvania
Subscribers who do not request the return of their subscription funds within
the Request Period shall remain in the Pennsylvania Escrow Account for successive
120-day escrow periods (a “Successive Escrow Period”), each commencing
automatically upon the termination of the prior Successive Escrow Period, and
the Company and Escrow Agent shall follow the notification and payment
procedure set forth in subparagraph 3(c) above with respect to the Initial
Escrow Period for each Successive Escrow Period until the occurrence of the
earliest of (i) the Expiration Date, (ii) the receipt and acceptance by the
Company of subscriptions for the purchase of Shares with total purchase
proceeds that equal or exceed the Pennsylvania Required Capital and the
disbursement of the Pennsylvania Escrow Account on the terms specified herein,
or (iii) all funds held in the Pennsylvania Escrow Account having been returned
to the Pennsylvania Subscribers in accordance with the provisions hereof.

 

(e)                                  In the event that the
Company rejects any subscription for which Escrow Agent has already collected
funds, Escrow Agent shall promptly issue a refund check to the rejected
Subscriber. If the Company rejects any subscription for which Escrow Agent has
not yet collected funds but have submitted the Subscriber’s check for
collection, Escrow Agent shall promptly issue a check in the amount of the
Subscriber’s check to the rejected Subscriber after Escrow Agent has collected
such funds. If Escrow Agent has not yet submitted a rejected Subscriber’s check
for collection, Escrow Agent shall promptly remit the Subscriber’s check
directly to the Subscriber.

 

(f)                                    At any time after
funds are disbursed upon the Company’s acceptance of subscriptions pursuant to
subparagraph 3(a) above on the tenth (10th) day following the date of such
acceptance, the Escrow Agent shall promptly provide directly to each Subscriber
the amount of the interest payable to the Subscribers as calculated in
accordance with paragraph 7; provided that the Company is in possession of such
Subscriber’s executed IRS Form W-9.  In
the event the Company is not in possession of an executed IRS Form W-9 from any
Subscriber, the Company shall obtain an executed IRS Form W-9 from such
Subscriber within ten (10) calendar days after

 

4

 

acceptance of such subscription.  In the event an executed IRS Form W-9 is not
received for each Subscriber within such period, the Escrow Agent shall remit
an amount to the Subscribers in accordance with the provisions hereof,
withholding a portion of the earnings attributable to those Subscribers at the
applicable rate in accordance with Section 3406 of the Internal Revenue
Code of 1986, as amended. However, the Escrow Agent shall not be required to
remit any payments until funds represented by such payments have been collected
by the Escrow Agent.  The forgoing
notwithstanding, interest, if any, earned on accepted subscription proceeds
will be payable to a Subscriber only if the Subscriber’s funds have been held
in escrow by the Escrow Agent for at least 35 days; interest, if any, earned on
accepted subscription proceeds of Subscribers’ funds held less than 35 days
will be payable to the Company.

 

In the event
that instruments of payment are returned for nonpayment, the Escrow Agent is
authorized to debit the Escrow Account, the Pennsylvania Escrow Account, or the
New York Escrow Account, as applicable, in accordance with paragraph 2 hereof.

 

4.                                       Following
receipt by Escrow Agent of instruments of payment (or wired funds) of the
Required Capital prior to the time provided in paragraph 3 hereinabove, Escrow
Agent shall notify the Company in writing and/or via secure online real-time
account access service within one business day when such funds have been
deposited in the Escrow Account, the Pennsylvania Escrow Account, or the New
York Escrow Account, as applicable, and collected through normal banking
channels.

 

5.                                       Prior
to the disbursement of funds deposited in the Escrow Account, the Pennsylvania
Escrow Account, or the New York Escrow Account, as applicable, in accordance
with the provisions of paragraph 3 or 7 hereof, Escrow Agent shall invest all
of the funds deposited in the Escrow Account, the Pennsylvania Account, and the
New York Account, as applicable, in “Short-term Investments” (as defined below)
and Escrow Agent is further authorized and Escrow Agent agrees to reinvest all
earnings and interest derived therefrom in any of the Short-term Investments
specified below. In the absence of written direction from the Company, funds
deposited in the Escrow Account, the Pennsylvania Escrow Account, and the New
York Escrow Account will be invested in the Wells Fargo 100% Treasury Money
Market Fund as long as such Fund maintains the highest rating available by
Standard & Poor’s or Moody’s.  (Wells
Fargo Bank, N.A. is the investment advisor and custodian and receives
compensation for these services.  These
investments are not deposits of or obligations of Wells Fargo Bank, N.A. nor
are they insured or guaranteed by the FDIC or any other government agency). In
the event that instruments of payment are returned to Escrow Agent for
nonpayment, Escrow Agent is authorized to debit the Escrow Account in
accordance with paragraph 2 hereof.

 

“Short-term
Investments” include obligations of, or obligations guaranteed by, the United
States government or bank money-market accounts or certificates of deposit of
national or state banks that have deposits insured by the Federal Deposit
Insurance Corporation (including certificates of deposit of any bank acting as
a depository or custodian for any such funds, including, without limitation,
such certificates or instruments of the Escrow Agent, which mature on or before
the Expiration Date, unless such instrument cannot be readily sold or otherwise
disposed of for cash by the Expiration Date without any dissipation of the
offering proceeds invested).

 

The following
securities are not permissible investments:

(a)                                  corporate
equity or debt securities:

(b)                                 repurchase
agreements;

(c)                                  bankers’
acceptances;

(d)                                 commercial
paper; and

(e)                                  municipal
securities;

 

5

 

6.                                       The
Escrow Agent is entitled to rely upon written instructions received from the
Company, unless the Escrow Agent has actual knowledge that such instructions
are not valid or genuine; provided that, if in the Escrow Agent’s opinion, any
instructions from the Company are unclear, the Escrow Agent may request
clarification from the Company prior to taking any action, and if such
instructions continue to be unclear, the Escrow Agent may rely upon written
instructions from the Company’s legal counsel in distributing or continuing to
hold any funds.  However, the Escrow
Agent shall not be required to disburse any funds attributable to instruments
of payment that have not been processed for collection, until such funds are
collected and then shall disburse such funds in compliance with the
disbursement instructions from the Company.

 

7.                                       If
the Offering terminates prior to receipt of the Required Capital or one or more
Pennsylvania Subscribers elects to have his or her subscription returned in
accordance with paragraph 3, interest income earned on subscription proceeds
deposited in the Escrow Account (the “Escrow Income”), the Pennsylvania Escrow
Account (the “Pennsylvania Escrow Income”), or the New York Escrow Account (the
“New York Escrow Income”), as applicable, shall be remitted to Subscribers, or to
the Company if the applicable Subscriber’s funds have been held in escrow by
the Escrow Agent for less than 35 days, in accordance with paragraph 3.  For each such Subscriber who has invested
funds that have been held in escrow by the Escrow Agent for at least 35 days,
such Subscriber’s pro rata portion of Escrow Income, Pennsylvania Escrow
Income, or New York Escrow Income, as applicable, shall be determined as
follows: the total amount of Escrow Income (or Pennsylvania Escrow Income or
New York Escrow Income, as appropriate) minus interest earned on accepted
subscription proceeds held by the Escrow Agent for less than 35 days shall be
multiplied by a fraction, (i) the numerator of which is determined by
multiplying the number of Shares purchased by said Subscriber times the number
of days said Subscriber’s proceeds are held in the Escrow Account, the
Pennsylvania Escrow Account, or the New York Escrow Account, as applicable,
prior to the date of disbursement, and (ii) the denominator of which is the
total of the numerators for all Subscribers in such account who have invested
funds that have been held in escrow by the Escrow Agent for at least 35
days.  The Escrow Agent shall remit all
such Escrow Income, Pennsylvania Escrow Income, and New York Escrow Income in
accordance with paragraph 3. 
Notwithstanding the foregoing, (i) escrow expenses, if any, may be
deducted from Escrow Income, Pennsylvania Escrow Income, or New York Escrow
Income, as applicable, and the Company shall reimburse the Escrow Agent any reasonable
expenses in excess of such amount, and (ii) residents of states where
deductions for escrow expenses are prohibited, as set forth on Exhibit B
attached hereto, shall be paid their pro rata portion of Escrow Income,
Pennsylvania Escrow Income, or New York Escrow Income, as applicable, without
any deduction for escrow expenses. 
Escrow Agent shall promptly notify the Company of the amount of pro rata
escrow expenses attributable to residents of states where deductions are
prohibited, and the Company shall reimburse Escrow Agent for such pro rata
escrow expenses attributable to such residents. 
If the Company chooses to leave the Escrow Account open after receiving
the Required Capital then it shall make regular acceptances of subscriptions
therein, but no less frequently than monthly, and the Escrow Income from the
last such acceptance shall be calculated and remitted to the Subscribers or the
Company, as applicable, pursuant to the provisions of paragraph 3(f).

 

8.                                       As
compensation for serving as Escrow Agent hereunder, Escrow Agent shall receive
a fee, as set forth on Exhibit C attached hereto.  Notwithstanding anything contained herein to
the contrary, the Escrow Agent shall look to the Company for payment of the
fees and expenses, and waives all right of offset against the funds held in
escrow pursuant to the terms of this Agreement.

 

9.                                       In
performing any of Escrow Agent’s duties hereunder, Escrow Agent shall not incur
any liability to anyone for any damages, losses or expenses, except for willful
default, breach of trust, or gross negligence, and accordingly Escrow Agent
shall not incur any such liability with respect to any action taken or omitted
(1) in good faith upon advice of Escrow Agent’s counsel given with respect to
any questions relating to Escrow Agent’s duties and responsibilities under this
Escrow Agreement, or (2) in

 

6

 

reliance upon
any instrument, including any written instrument or instruction provided for in
this Escrow Agreement, not only as to its due execution and validity and
effectiveness of its provisions but also as to the truth and accuracy of
information contained therein, which Escrow Agent shall in good faith believe
to be genuine, to have been signed or presented by a proper person or persons
and to conform to the provisions of this Escrow Agreement.

 

10.                                 The
Company hereby agrees to indemnify and hold Escrow Agent harmless against any
and all losses, claims, damages, liabilities and expenses, including the
reasonable cost of attorneys’ fees and expenses and disbursements, that may be
imposed on Escrow Agent or incurred by Escrow Agent in connection with Escrow
Agent’s acceptance of appointment as the Escrow Agent hereunder, or the
performance of Escrow Agent’s duties hereunder, including any litigation
arising from this Escrow Agreement or involving the subject matter hereof,
except where such losses, claims, damages, liabilities and expenses result from
willful default, breach of trust or gross negligence.

 

11.                                 In
the event of a dispute between the parties hereto sufficient in Escrow Agent’s
discretion to justify doing so, Escrow Agent shall be entitled to tender into
the registry or custody of any court of competent jurisdiction all money or
property in Escrow Agent hands under this Escrow Agreement, together with such
legal pleadings as Escrow Agent deems appropriate, and thereupon be discharged
from all further duties and liabilities under this Escrow Agreement. In the
event of any uncertainty as to Escrow Agent’s duties hereunder, Escrow Agent
may refuse to act under the provisions of this Escrow Agreement pending order
of a court of competent jurisdiction and Escrow Agent shall have no liability
to the Company or to any other person as a result of such action. Any such legal
action may be brought in such court as Escrow Agent shall determine to have
jurisdiction thereof. The filing of any such legal proceedings shall not
deprive Escrow Agent of compensation earned prior to such filing.

 

12.                                 All
written notices and letters required hereunder to Escrow Agent shall only be
effective if delivered personally or by certified mail, return receipt
requested to:

 

Wells Fargo Bank, N.A.

666 Walnut N8200-034

Corporate Trust Services, PFG

Des Moines, IA  50309

Attn: 
M.J. Dolan or Teresa A. Smith.

 

All written notices and letters required hereunder to the Company shall
only be effective if delivered personally or by certified mail, return receipt
requested to Hartman Commercial Properties REIT, 1450 West Sam Houston Parkway,
North, Suite 100, Houston, Texas 77043, Attn: 
Allen R. Hartman, President.  All
written notices and letters required hereunder to the Dealer Manager shall only
be effective if delivered personally or by certified mail, return receipt
requested to D.H. Hill Securities, LLP, 19747 US Hwy 59 North, Suite 101,
Humble, Texas 77338, Attn: 
President.  Each party hereto may,
from time to time, change the address to which notices to it are to be delivered
or mailed hereunder by notice in accordance herewith to the other parties.

 

13.                                 This
Escrow Agreement shall be governed by the laws of the State of Louisiana as to
both interpretation and performance.

 

14.                                 The
provisions of this Escrow Agreement shall be binding upon the legal
representatives, heirs, successors and assigns of the parties hereto.

 

15.                                 The
Company and Dealer Manager hereby acknowledge that Escrow Agent is serving as
escrow agent only for the limited purposes herein set forth, and hereby agrees
that it will not represent or imply

 

7

 

that Escrow
Agent, by serving as escrow agent hereunder or otherwise, has investigated the
desirabilities or advisability of investment in the Company, or has approved,
endorsed or passed upon the merits of the Shares or the Company. The Company
further agrees to instruct the Dealer Manager, and each of its representatives,
and any other representative who may offer Shares to persons from time to time,
that they shall not represent or imply that Escrow Agent has investigated the
desirability or advisability of investment in the Company, or has approved,
endorsed or passed upon the merits of the Shares or the Company, nor shall they
use Escrow Agent’s name in any manner whatsoever in connection with the offer
or sale of the Shares other than by acknowledgment that Escrow Agent has agreed
to serve as escrow agent for the limited purposes herein set forth.

 

16.                                 This
Escrow Agreement and any amendment hereto may be executed by the parties hereto
in one or more counterparts, each of which shall be deemed to be an original.

 

17.                                 Except
as otherwise required for subscription funds received from Pennsylvania
Subscribers and New York Subscribers as provided herein, in the event that
Escrow Agent receives instruments of payment (or wired funds) after the
Required Capital has been received and the proceeds of the Escrow Account have
been distributed to the Company, Escrow Agent is hereby authorized to deposit
such instruments of payment to any deposit account as directed by the Company.
The application of said funds into a deposit account directed by the Company
shall be a full acquittance to Escrow Agent and Escrow Agent shall not be
responsible for the application of said funds.

 

18.                                 Escrow
Agent shall be bound only by the terms of this Escrow Agreement and shall not
be bound or incur any liability with respect to any other agreements or
understanding between any other parties, whether or not the Escrow Agent has
knowledge of any such agreements or understandings.

 

19.                                 Indemnification
provisions set forth herein shall survive the termination of this Escrow
Agreement.

 

20.                                 In the event that any part of this Agreement is
declared by any court or other judicial or administrative body to be null,
void, or unenforceable, said provision shall survive to the extent it is not so
declared, and all of the other provisions of this Agreement shall remain in
full force and effect.

 

21.                                 Unless
otherwise provided in this Agreement, final termination of this Escrow
Agreement shall occur on the date that all funds held in the Escrow Account,
the Pennsylvania Escrow Account, and the New York Escrow Account are
distributed either (a) to the Company or to Subscribers and the Company has
informed the Escrow Agent in writing to close the Escrow Account, the
Pennsylvania Escrow Account, and the New York Escrow Account pursuant to
paragraph 3 hereof or (b) to a successor escrow agent upon written instructions
from the Company.

 

22.                                 Escrow
Agent has no responsibility for accepting, rejecting or approving
subscriptions.  The Escrow Agent shall
complete an OFAC search, in compliance with its policy and procedures, of each
subscription check prior to depositing the check in the Escrow Account, the
Pennsylvania Escrow Account, or the New York Escrow Account, as applicable, and
shall inform the Company if a subscription check fails the OFAC search.

 

23.                                 This
Escrow Agreement shall not be modified, revoked, released or terminated unless
reduced to writing and signed by all parties hereto, subject to the following
paragraph.

 

Should, at any
time, any attempt be made to modify this Escrow Agreement in a manner that
would increase the duties and responsibilities of Escrow Agent or to modify
this Escrow Agreement in any manner which Escrow Agent shall deem undesirable,
or at any other time, Escrow Agent may resign by

 

8

 

notifying the
Company in writing, by certified mail, and until (i) the acceptance by a
successor escrow agent as shall be appointed by the Company; or (ii) thirty
(30) days following the date upon which notice was mailed, whichever occurs
sooner, Escrow Agent’s only remaining obligation shall be to perform its duties
hereunder in accordance with the terms of the Escrow Agreement.

 

24.                                 Escrow
Agent may resign at any time from its obligations under this Escrow Agreement
by providing written notice to the Company. Such resignation shall be effective
on the date specified in such notice which shall be not less than thirty (30)
days after such written notice has been given. Escrow Agent shall have no
responsibility for the appointment of a successor escrow agent.

 

25.                                 Escrow
Agent may be removed for cause by the Company by 30 days written notice to the
Escrow Agent unless otherwise agreed upon effective on the date specified in
such notice. The removal of Escrow Agent shall not deprive Escrow Agent of its
compensation earned prior to such removal.

 

26. To help the government fight the funding of terrorism and money
laundering activities, Federal law requires all financial institutions, including
Escrow Agent, to obtain, verify and record information that identifies each
person/entity opening an account.  For
this account, Escrow Agent will need the principal name and address of each
party, tax payer identification number, and other information, such as
certified articles of incorporation, a government-issued business license, a
partnership agreement, and annual report filed with the Secretary of State (or
equivalent), or a trust agreement, that will allow the Escrow Agent to identify
the parties to the Escrow.

 

[THE REMAINDER OF THIS PAGE INTENTIONALLY
LEFT BLANK]

 

9

 

Agreed to as
of the 31st day of August, 2004.

 

 

	
   

  	
  HARTMAN COMMERCIAL PROPERTIES REIT

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  By:

  	
  /s/ Allen R. Hartman

  	
   

  
	
   

  	
   

  	
  Allen R. Hartman, President

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  WUNDERLICH SECURITIES, INC.

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  By:

  	
  /s/ Dan H. Hill

  	
   

  
	
   

  	
   

  	
  Dan H. Hill, President

  

 

The terms and conditions contained above are hereby accepted and agreed
to by:

 

WELLS FARGO BANK IOWA, NATIONAL ASSOCIATION,
as Escrow Agent

 

 

	
  By:

  	
  /s/ M. J. Dolan

  	
   

  
	
  Name:

  	
  M. J. Dolan

  	
   

  
	
  Title:

  	
  V.P. Corporate Trust

  	
   

  
					

 

10

 

EXHIBIT
A

 

[Form of Notice to Pennsylvania
Subscribers]

 

You have tendered a subscription to purchase shares of beneficial
interest of Hartman Commercial Properties REIT. (the “Company”).  Your subscription is currently being held in
escrow.  The guidelines of the
Pennsylvania Securities Commission do not permit the Company to accept
subscriptions from Pennsylvania residents until an aggregate of $5,475,000 of
gross offering proceeds have been received by the Company.  The Pennsylvania guidelines provide that
until this minimum amount of offering proceeds is received by the Company,
every 120 days during the offering period Pennsylvania Subscribers may request
that their subscription be returned.

 

If you wish to continue your subscription in escrow until the
Pennsylvania minimum subscription amount is received, nothing further is
required.

 

If you wish to terminate your subscription for the Company’s shares of
beneficial interest and have your subscription returned please so indicate
below, sign, date, and return to the Escrow Agent, Wells Fargo Bank, N.A., 666
Walnut N8200-034, Corporate Trust Services, PFG, Des Moines, IA  50309.

 

I hereby terminate my prior subscription to purchase shares of
beneficial interest of Hartman Commercial Properties REIT and request the
return of my subscription funds.  I
certify to Hartman Commercial Properties REIT that I am a resident of
Pennsylvania.

 

 

	
   

  	
  Signature:

  	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  Name:

  	
   

  	
   

  
	
   

  	
   

  	
  (please print)

  
	
   

  	
   

  
	
   

  	
  Date:

  	
   

  	
   

  
					

 

Please send the subscription refund to:

	
   

  	
   

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
   

  

 

11

 

EXHIBIT B

 

States Prohibiting Deductions

 

1. Alabama

 

2. New Mexico

 

3. North Carolina

 

4. Oklahoma

 

5. Texas

 

12

 

EXHIBIT C

 

Hartman Commercial Properties REIT

Escrow Agent Fee Schedule

 

	
  Acceptance Fee:

  	
   

  	
  $

  	
  1,000.00

  

 

For initial services
including examination of the Escrow Agent Agreement and all supporting
documents as well as database development. This is a one-time fee payable upon
the execution of the Escrow Agent Agreement.

 

	
  Annual Administration
  Fee:

  	
   

  	
  $

  	
  4,000.00

  

 

This annual administration
fee covers standard services required under the documents. An additional charge
of $500 per sub-account will be billed for accounts opened in connection with
certain state regulations or escrow break limits (i.e. Pennsylvania, Nebraska
and similar states). Transaction charges noted below apply for certain responsibilities
including payments to subscribers. Customer will be responsible for 1099 Tax
Reporting. This fee is payable upon the execution of the Escrow Agreement and
annually thereafter for any 12 month period or portion thereof. This fee shall
be reviewed at the end of the first year and may be renegotiated in accordance
with new volume estimates.

 

	
  Transaction Fees:

  	
   

  	
   

  
	
  Wire transfer of funds to
  investors

  	
   

  	
  $17.00 per item

  
	
  Check transfer of funds to
  investors

  	
   

  	
  $10.00 per item

  
	
  Receipt and posting of
  incoming wires

  	
   

  	
  No charge

  
	
  Receipt and posting of
  incoming check

  	
   

  	
  No charge

  
	
  1099 INT Tax reporting

  	
   

  	
  Customer will be

  responsible

  
	
  ACH transfer of funds

  	
   

  	
  No charge

  
	
  Electronic pre-determined
  reports

  	
   

  	
  No charge

  
	
  Interest calculations

  	
   

  	
  No charge

  
	
  OFAC check on check
  deposits with copy to the Fund

  	
   

  	
  No charge

  

 

Assumptions

•                  Receipt by Wells Fargo of the electronic
transmission of subscriber data in a format compatible with Wells Fargo systems

•                  WF has no responsibility for collecting or
handling subscription documents

•                  WF receives funds via deposit by issuer in
the escrow bank account maintained at the Issuer’s expense

•                  Continuation of the Escrow Account after the
initial break until the maximum REIT amount is reached

•                  Investment of Funds

•                  Monthly reporting

 

Extraordinary Services:

Additional
reasonable compensation will be charged for extraordinary services based on the
then current standard hourly charge. Extraordinary services include, but are
not limited to, attending escrow closings, processing assignments of escrow
interest, specialized reports (e.g. tax reporting other than 1099s), unusual
certifications, reviewing and accepting modifications or amendments to the
escrow agreement, and letter of credit draws, etc. You will be informed in
advance of Wells Fargo’s performance of services that are considered
extraordinary.

 

13

 

All out-of-pockets expenses
incurred in the administration of the account, including, but not limited to,
postage, telephone charges, insurance, photocopies, supplies, and legal fees
with the exception of legal fees incurred at the inception of the account, will
be billed to the customer at cost.

 

Billings over 30 days past due
are subject to a 1.5% per month late payment penalty of the balance due.

 

14

Source: [{"source": "alea-institute/alea-institute/kl3m-data-edgar-agreements/train-00082-of-00352.parquet"}, [{"source": "alea-institute/alea-institute/kl3m-data-edgar-agreements/train-00082-of-00352.parquet"}]]