Document:

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  LOAN MODIFICATION AGREEMENT
 THIS LOAN MODIFICATION AGREEMENT (“Amendment”) is dated effective as of July 2, 2014 by and among HARTMAN PARKWAY, LLC, a Texas limited liability company (“Hartman Parkway”), HARTMAN SHORT TERM INCOME PROPERTIES XX, INC., a Maryland corporation (“XX” and, collectively with Hartman Parkway, the “Prior Borrowers”), and HARTMAN GULF PLAZA, LLC, a Texas limited liability company (“Gulf Plaza” and, collectively with the Prior Borrowers, the “Borrowers”); and TEXAS CAPITAL BANK, NATIONAL ASSOCIATION, a national banking association (together with its successors and assigns, the “Bank”).
 RECITALS
 A.
 Bank previously made a revolving loan (the “Loan”) in the principal sum of the lesser of the Borrowing Limit and $30,000,000 evidenced, governed and secured by, inter alia, that certain Loan Agreement made and entered into as of May 10, 2012 by Bank, XX, Hartman Richardson Heights Properties, LLC, a Texas limited liability company (“Richardson”) and Hartman Cooper Street Plaza, LLC, a Texas limited liability company (“Cooper”), as amended by (i) that certain Loan Modification Agreement dated October 16, 2012 by and among Bank, XX, Richardson, Cooper and Hartman Bent Tree Green, LLC, a Texas limited liability company (“Hartman Bent Tree”) pursuant to the terms of which, among other things, Hartman Bent Tree joined the Loan Documents as a “Borrower”, (ii) that certain Loan Modification Agreement dated March 15, 2013 by and among Bank, XX, Richardson, Cooper, Hartman Bent Tree and Hartman Parkway pursuant to the terms of which, among other things, Hartman Parkway joined the Loan Documents as a “Borrower”, (iii) that certain letter agreement dated September 30, 2013 regarding capital expenditures, and (iv) that certain Loan Modification Agreement dated June 13, 2014 by and among Bank, XX, Richardson, Cooper, Hartman Bent Tree and Hartman Parkway pursuant to the terms of which, among other things, Richardson, Cooper and Hartman Bent Tree were released from their obligations under the Loan Documents (the “Loan Agreement”).
 B.
 Each of the Prior Borrowers has requested that Bank (i) increase the amount of the Borrowing Base from $0.00 to $7,000,000; (ii) add Gulf Plaza as a “Borrower” under the Loan, the Loan Agreement and the other Loan Documents; and (iii) add the Gulf Plaza Property to the Borrowing Base Properties.  Bank is willing to so modify the Loan Documents, subject to the terms and conditions set forth herein.
 AGREEMENT
 NOW, THEREFORE, in consideration of the premises and mutual covenants herein contained and other good and valuable consideration, the receipt and sufficiency of which are hereby acknowledged and confessed, the parties, intending to be legally bound, hereby agree as follows:
 ARTICLE I
Recitals and Definitions
 Section 1.01.  Recitals.  The foregoing recitals are hereby incorporated into and made a part of this Amendment for all purposes.
 Section 1.02.  Definitions.  Capitalized terms used in this Amendment, to the extent not otherwise defined herein, shall have the same meaning as in the Loan Agreement.  Definitions contained in the Loan Agreement, as amended hereby, and in the other Loan Documents which identify agreements, instruments or documents shall be deemed to include all amendments and supplements to such agreements, instruments and documents and, without any obligation on the part of Bank to enter into any future 
 

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 amendments, modifications or supplements, all future amendments, modifications, and supplements thereto entered into from time to time.
 ARTICLE II
Amendments
 Section 2.01.  Amendments to Loan Agreement.
 (a)
 Section 1.1 of the Loan Agreement is hereby amended by adding the following definitions in their appropriate alphabetical order:
 “ʻGulf Plaza’ means Hartman Gulf Plaza, LLC, a Texas limited liability company.”
 “ʻGulf Plaza Deed of Trust’ means that certain Deed of Trust, Security Agreement, Financing Statement and Absolute Assignment of Rents dated effective as of July 2, 2014 covering the Gulf Plaza Property to secure payment and performance of the Indebtedness and Obligation, as such may be amended from time to time.” 
 “ʻGulf Plaza Land’ means the Land as defined in the Gulf Plaza Deed of Trust.”
 “ʻGulf Plaza Property’ means the Mortgaged Property as defined in the Gulf Plaza Deed of Trust.” 
 “ʻJuly 2014 Loan Modification Agreement’ means that certain Loan Modification Agreement dated effective as of July 2, 2014 by and among XX, Hartman Parkway, Gulf Plaza and Bank.”
 (b)
 Section 1.1 of the Loan Agreement is hereby amended by amending and restating the following definitions in their entirety:
 “ʻBorrowing Base’ means the amount most recently determined and designated by the Bank as the Borrowing Base in accordance with Section 2.13 hereof, as such Borrowing Base is reduced or increased in accordance with Section 2.13 hereof.  The Borrowing Base under Section 2.13 is, subject to the completion by the Borrowers satisfactory to Bank of all of the conditions precedent under the July 2014 Loan Modification Agreement, deemed to be, as of the date of the July 2014 Loan Modification Agreement, $7,000,000.”
 “ʻBorrowing Base Properties’ means the real property and improvements identified on Exhibit A to the July 2014 Loan Modification Agreement provided such real property and improvements are secured by a first and prior deed of trust liens encumbering such real property and improvements satisfactory to Bank.” 
 “ʻDeed of Trust’ means one or more Deeds of Trust, Security Agreement, Financing Statement and Absolute Assignment of Rents covering the Property to secure payment and performance of the Indebtedness and Obligation, as such may be amended from time to time, including without limitation the Gulf Plaza Deed of Trust.”
 

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 “ʻLand’ means the parcels of real property described in Exhibit B attached to the July 2014 Loan Modification Agreement.”
 (c)
 Article Four of the Loan Agreement is hereby amended by inserting the following Section 4.20:
 4.20
 Gulf Plaza Taxes.  
 

 (a)
 Property taxes on a portion of the Gulf Plaza Land (the “Additional Tax Portion”) are assessed, rather than on the basis of the Gulf Plaza Land, on the basis of a parcel of land and improvements adjacent to the Gulf Plaza Land (the “Adjacent Parcel”).  Until the Lender has notified the Borrowers that the Additional Tax Portion of the Gulf Plaza Land is taxed by property tax authorities solely on the basis of the Gulf Plaza Land in a manner reasonably satisfactory to Lender (the “Gulf Plaza Tax Escrow Termination Date”), Borrowers shall:
 

 (i) 
 maintain or cause to be maintained with Lender in a separate account cash in an amount equal to or in excess of the property tax liability for the Adjacent Parcel (the “Gulf Plaza Tax Escrow”); 
 

 (ii) 
 within ten (10) days after the last day of each calendar quarter, deliver to Lender (A) a report in form and substance reasonably satisfactory to Lender certified by the chief financial officer of Gulf Plaza specifying the then-current amount of the property tax liability for the Adjacent Parcel (the “Current Tax Liability”) and (B) if the Current Tax Liability exceeds the Gulf Plaza Tax Escrow, such amount as is necessary to cause the Gulf Plaza Tax Escrow to equal or exceed the Current Tax Liability.
 

 (b)
 If, following five (5) days of the earlier of notice from Lender or any Borrower’s knowledge thereof, the amount of the Gulf Plaza Tax Escrow is less than the Current Tax Liability, it shall be an Event of Default under the Loan Agreement and the other Loan Documents. 
 

 (c)
 Each of the Borrowers hereby assigns, transfers, and conveys to Lender all of such Borrower’s right, title and interest in and to the Gulf Plaza Tax Escrow, any and all accounts related thereto (together with any and all replacement accounts or substitutions), and all funds now or hereafter on deposit in connection with the Gulf Plaza Tax Escrow, including all cash, cash equivalents and deposits, certificates of deposit, securities, substitutions, additions, and proceeds thereof, and interest and earnings thereon (hereinafter collectively called the “Gulf Plaza Tax Escrow Collateral”).  Each of the Borrowers hereby grants to Lender a security interest in the Gulf Plaza Tax Escrow Collateral and, upon the occurrence of a Default or Event of Default under the Loan Agreement or any other Loan Document, or the failure of the Borrowers to strictly comply with the terms of this Section 4.20, Lender shall be 
 

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 entitled to withdraw and apply the Gulf Plaza Tax Escrow Collateral toward the Indebtedness or the Current Tax Liability at the option of Lender.  Each of the Borrowers acknowledges the Borrowers shall not be permitted to withdraw or otherwise use any Gulf Plaza Tax Escrow Collateral until the Gulf Plaza Tax Escrow Termination Date.
 

 (d)
 Each of the Borrowers hereby warrants to Lender that the Borrowers own the Gulf Plaza Tax Escrow Collateral free and clear of all Liens, and that the Borrowers have the unencumbered right to assign and transfer the Gulf Plaza Tax Escrow Collateral to Lender.
 

 (e)
 Each of the Borrowers agrees to execute any and all assignments or other forms necessary to further assign the Gulf Plaza Tax Escrow Collateral to Lender as Lender may reasonably request from time to time.  Each of the Borrowers acknowledges and agrees that it shall have no access or right to the Gulf Plaza Tax Escrow Collateral, and, furthermore, that the Gulf Plaza Tax Escrow Collateral is for the benefit of Lender and shall be under the sole dominion and control of Lender; provided, however, if no Default or Event of Default has occurred, upon the occurrence of the Gulf Plaza Tax Escrow Termination Date, Lender will withdraw and deliver to Borrowers (in accordance with wiring instructions delivered by Borrowers) funds of the Gulf Plaza Tax Escrow Collateral maintained with Lender.
 

 (f)
 Each of the Borrowers hereby appoints Lender as Borrower’s true and lawful attorney-in-fact, to execute all documents and instruments and take all actions, in the name of the Borrowers (or any of them) or otherwise, as Lender shall reasonably deem necessary or expedient, to cause the Gulf Plaza Tax Escrow Collateral to be received by, maintained with, made available to and utilized by Lender for the purposes of applying the same as specified herein.  The power of attorney contained herein is irrevocable and is coupled with an interest.
 

 (g)
 Each of the Borrowers agrees upon demand to pay, or reimburse Lender for all of Lender’s out-of-pocket costs and expenses of every type and nature (including, without limitation, the reasonable fees, expenses and disbursements of legal counsel) incurred by Lender in connection with the administration of the Gulf Plaza Tax Escrow and the matters contemplated hereunder, including consultation with attorneys in connection therewith and with respect to Lender’s rights and responsibilities, and exercise of Lender’s remedies in connection therewith.  Each of the Borrowers expressly authorizes Lender to use Gulf Plaza Tax Escrow Collateral for such purpose.
 

 (h)
 Each of the Borrowers shall pay, indemnify, defend, and hold Lender (together with its Affiliates, officers, directors, employees, agents, attorneys and attorneys-in-fact; each, an “Indemnified Person”) harmless (to the fullest extent permitted by applicable law) from and against any and all claims, demands, suits, actions, investigations, proceedings, and damages, and all reasonable attorneys’ fees and disbursements and other costs and expenses actually incurred in 
 

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 connection therewith (as and when they are incurred and irrespective of whether suit is brought), at any time asserted against, imposed upon, or incurred by any of them (a) in connection with or as a result of or related to the Gulf Plaza Tax Escrow, the Gulf Plaza Tax Escrow Collateral, or any transaction related thereto, and (b) with respect to any investigation, litigation, or proceeding related to the Gulf Plaza Tax Escrow or Gulf Plaza Tax Escrow Collateral (irrespective of whether any Indemnified Person is a party thereto), or any act, omission, event, or circumstance in any manner related thereto.  This provision shall survive the termination of the Loan Agreement and the repayment of the Indebtedness.
 

 Section 2.02.  Amendment to Environmental Indemnity Agreement.  Recital A to that certain Environmental Indemnity Agreement dated effective as of May 10, 2012 executed by the Original Borrowers and Bank (as later joined by Hartman Bent Tree and Hartman Parkway) is hereby amended and restated to read in its entirety as follows:
 “A.
 Lender made a (‘Loan’) to Indemnitor under and pursuant to the terms and provisions of that certain Loan Agreement between Lender and Borrower dated effective as of May 10, 2012 (as amended from time to time, the ‘Loan Agreement’) and evidenced by that certain Promissory Note (as amended from time to time, the ‘Note’) executed by Indemnitor and payable to the order of Lender in the original principal amount of THIRTY MILLION AND NO/100 DOLLARS ($30,000,000.00), secured by, among other things, one or more Deeds of Trust, Security Agreement, Financing Statement and Absolute Assignment of Rents (collectively, the ‘Deed of Trust’) which Indemnitor (or one of them) has executed and delivered or from time to time executes and delivers to John Hudgens, as Trustee (‘Trustee’), for the benefit of Lender, covering certain real property (‘Land’) described in Exhibit B attached to the July 2014 Loan Modification Agreement (as defined in the Loan Agreement), together with the Improvements located thereon and certain Personalty described in the Deed of Trust (the Land, together with said Improvements, Personalty and other property described in the Deed of Trust being referred to herein as the ‘Mortgaged Property’) (the Note, the Deed of Trust, the Loan Agreement, this Agreement and all other documents or instruments evidencing, securing or pertaining to the Loan, as may be amended from time to time, shall be collectively referred to as the ‘Loan Documents’); and”
 ARTICLE III
 Conditions
 

 Section 3.01.  Conditions Precedent.  The effectiveness of this Amendment is subject to the satisfaction of the following conditions precedent, in form and substance satisfactory to Bank, unless specifically waived in writing by Bank:
 (a)
 Bank shall have received this Amendment originally executed and delivered by Borrowers; 
 (b)
 Bank shall have received an Amended and Restated Note originally executed and delivered by Borrowers;
 (c)
 Bank shall have received the Gulf Plaza Deed of Trust executed by Gulf Plaza;
 (d)
 Bank shall have received an Assignment of Rents executed by Gulf Plaza;
 

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 (e)
 Bank shall have received an authority certificate executed by an officer of Borrowers; 
 (f)
 Bank shall have received each of the following with respect to the property described in the Gulf Plaza Deed of Trust:
 (i)
 copy of the existing owner’s policy;
 (ii)
 mortgagee title policy for the Gulf Plaza Property from a title company satisfactory to Bank;
 (iii)
 tax certificate;
 (iv)
 survey;
 (v)
 evidence of property and liability insurance;
 (vi)
 flood certificate;
 (vii)
 Phase I environmental report;
 (viii)
 property condition report;
 (ix)
 certificate of occupancy;
 (x)
 rent roll;
 (xi)
 copies of lease agreements;
 (xii)
 subject to the Agreement Regarding Post Closing Items dated of even date herewith, tenant estoppels executed by the tenants; 
 (xiii)
 subject to the Agreement Regarding Post Closing Items dated of even date herewith, subordination, non-disturbance and attornment agreements executed by the tenants; and
 (xiv)
 an appraisal of the Gulf Plaza Property indicating an appraised value satisfactory to Bank in all respects;
 (g)
 Borrowers shall have opened a bank account with Lender in connection with the Gulf Plaza Tax Escrow and deposited therein not less than $39,013.55;
 (h)
 Bank shall have received from Borrowers such UCC lien searches as Bank may require;
 (i)
 The representations and warranties contained herein, in the Loan Agreement, as amended hereby, and in each other Loan Document, as amended of even date herewith, shall be true and correct as of the date hereof, as if made on the date hereof;
 (j)
 No Default or Event of Default shall have occurred and be continuing;
 

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 (k)
 All corporate and limited liability company proceedings taken in connection with the transactions contemplated by this Amendment and all documents, instruments and other legal matters incident thereto, shall be satisfactory to Bank; 
 (l)
 Bank shall have received from Borrowers a modification fee in the amount of $70,000.00;
 (m)
 Bank shall have received from Borrowers payment of all expenses incurred by Bank to date, including attorneys’ fees and costs; and
 (n)
 Bank shall have received such other documents, instruments or certificates as Bank and its counsel may reasonably require, including such documents as Bank in its sole discretion deems necessary or appropriate to effectuate the terms and conditions of this Amendment and the Loan Documents.
 ARTICLE IV
Ratifications, Representations and Warranties
 Section 4.01.  Ratifications.  The terms and provisions set forth in this Amendment shall modify and supersede all inconsistent terms and provisions set forth in the Loan Agreement and the other Loan Documents, and, except as expressly modified and superseded by this Amendment, the terms and provisions of the Loan Agreement and the other Loan Documents are ratified and confirmed and shall continue in full force and effect.  The Loan Agreement, as amended, and the other Loan Documents, as amended, shall continue to be legal, valid, binding and enforceable in accordance with their respective terms.
 Section 4.02.  Representations and Warranties.  Each of the Borrowers hereby represents and warrants to Bank as follows:
 (a)
 the execution, delivery and performance of this Amendment and any and all other Loan Documents executed and/or delivered in connection herewith have been authorized by all requisite action on the part of Borrowers and do not and will not conflict with or violate any provision of any applicable law, the organizational documents of, or any agreement, document, judgment, license, order or permit applicable to or binding upon any of the Borrowers, or the Collateral; and no consent, approval, authorization or order of and no notice to or filing with, any court or governmental authority or third person is required in connection with the execution, delivery or performance of this Amendment or to consummate the transactions contemplated hereby;
 (b)
 the representations and warranties contained in the Loan Agreement, as amended, and in each of the other Loan Documents, as amended, are true and correct on and as of the date hereof as though made on and as of the date hereof, except to the extent such representations and warranties relate to an earlier date;
 (c)
 Each of the Borrowers is in full compliance with all covenants and agreements contained in the Loan Agreement, as amended, and in each of the other Loan Documents, as amended; 
 (d)
 Each of the Borrowers acknowledges and agrees that Bank is in full compliance with all covenants and agreements contained in the Loan Agreement, as amended, and in each of the other Loan Documents, as amended; 
 

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 Section 4.03.  Modification.  Each of the Borrowers acknowledges and agrees that (a) this Amendment shall not constitute a novation or otherwise extinguish the Indebtedness and Obligations evidenced by the Loan Agreement, as amended, or the other Loan Documents, as amended; (b) the Indebtedness shall be paid in accordance with the terms and conditions of the Loan Agreement, as amended, and the other Loan Documents, as amended; and (c) Borrowers have no right of offset, defense, or counterclaim to the payment and performance of the Indebtedness and Obligations under the Loan Agreement, as amended, or any other Loan Document, as amended.  Each of the Borrowers hereby acknowledges, ratifies, reaffirms, grants, and re-grants to Bank a first priority, perfected lien and security interest in the Collateral to secure the payment and performance of the Indebtedness and Obligations, which security interest is and shall remain in full force and effect and binding on Borrowers, and each Borrower acknowledges and agrees that the liens and security interests of each Deed of Trust are valid and subsisting liens and security interests and are superior to all other liens and security interests.  Nothing herein contained shall affect or impair the validity or priority of the liens and security interests under each Deed of Trust and the other Loan Documents.  Bank has made no commitment, either express or implied, to extend the Maturity Date, or to provide Borrowers with any financing, beyond the Maturity Date, it being expressly acknowledged and agreed to by Borrowers that the Indebtedness shall be due and payable in full on the Maturity Date.
 Section 4.04.  Joinder of Gulf Plaza.  Gulf Plaza hereby makes each representation and warranty set forth in Article Three of the Loan Agreement to the same extent as each other Borrower, and hereby agrees, as of the date first above written, (a) to be bound as a Borrower by all of the terms and provisions of the Loan Agreement and the other Loan Documents to the same extent of each of the other Borrowers and (b) to comply with and be subject to all of the terms, conditions, covenants, agreements and obligations set forth in the Loan Agreement and the other Loan Documents.  Gulf Plaza further agrees, as of the date first above written that each reference in the Loan Agreement to a “Borrower” shall also mean and be a reference to Gulf Plaza.
 ARTICLE V
Miscellaneous
 Section 5.01.  Survival of Representations and Warranties.  All representations and warranties made in this Amendment, the Loan Agreement or any other document or documents relating thereto, including, without limitation, any Loan Document furnished in connection with this Amendment, shall survive the execution and delivery of this Amendment and the other Loan Documents, and no investigation by Bank or any closing shall affect the representations and warranties or the right of Bank to rely upon them.
 Section 5.02.  Reference to Loan Agreement and the Other Loan Documents.  Each of the Loan Documents, including the Loan Agreement and any and all other agreements, documents or instruments now or hereafter executed and delivered pursuant to the terms hereof or pursuant to the terms of the Loan Agreement and the other Loan Documents, as amended hereby, are hereby amended so that any reference in such Loan Documents to the Loan Agreement or any other Loan Document shall mean a reference to the Loan Agreement and the other Loan Documents as amended hereby or of even date herewith, and as may be further amended from time to time.  
 Section 5.03.  Expenses of Bank.  As provided in the Loan Agreement, Borrowers agree to pay on demand all reasonable costs and expenses incurred by Bank in connection with the preparation, negotiation and execution of this Amendment and the other Loan Documents executed pursuant hereto and any and all amendments, modifications, and supplements hereto, including, without limitation, the reasonable costs and fees of Bank’s legal counsel, and all reasonable costs and expenses incurred by Bank 
 

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 in connection with the enforcement or preservation of any rights under the Loan Agreement, as amended hereby, or any other Loan Document.
 Section 5.04.  RELEASE.  EACH OF THE BORROWERS HEREBY ACKNOWLEDGES THAT IT HAS NO DEFENSE, COUNTERCLAIM, OFFSET, CROSS-COMPLAINT, CLAIM OR DEMAND OF ANY KIND OR NATURE WHATSOEVER THAT CAN BE ASSERTED TO REDUCE OR ELIMINATE ALL OR ANY PART OF ITS LIABILITY TO PAY AND PERFORM THE INDEBTEDNESS AND OBLIGATIONS UNDER THE LOAN DOCUMENTS OR TO SEEK AFFIRMATIVE RELIEF OR DAMAGES OF ANY KIND OR NATURE FROM THE BANK.  EACH OF THE BORROWERS HEREBY VOLUNTARILY AND KNOWINGLY RELEASES AND FOREVER DISCHARGES THE BANK, ITS PREDECESSORS, AGENTS, EMPLOYEES, ATTORNEYS, SUCCESSORS AND ASSIGNS (COLLECTIVELY, THE “RELEASED PARTIES”), FROM ALL POSSIBLE CLAIMS, DEMANDS, ACTIONS, CAUSES OF ACTION, DAMAGES, COSTS, EXPENSES, AND LIABILITIES WHATSOEVER, KNOWN OR UNKNOWN, ANTICIPATED OR UNANTICIPATED, SUSPECTED OR UNSUSPECTED, FIXED, CONTINGENT, OR CONDITIONAL, AT LAW OR IN EQUITY, ORIGINATING IN WHOLE OR IN PART ON OR BEFORE THE DATE THIS AMENDMENT IS EXECUTED, WHICH ANY OF THE BORROWERS MAY NOW OR HEREAFTER HAVE AGAINST THE RELEASED PARTIES (OR ANY OF THEM), IF ANY, AND IRRESPECTIVE OF WHETHER ANY SUCH CLAIMS ARISE OUT OF CONTRACT, TORT, VIOLATION OF LAW OR REGULATIONS, OR OTHERWISE, AND ARISING FROM ANY OF THE OBLIGATIONS, INCLUDING, WITHOUT LIMITATION, ANY CONTRACTING FOR, CHARGING, TAKING, RESERVING, COLLECTING OR RECEIVING INTEREST IN EXCESS OF THE HIGHEST LAWFUL RATE APPLICABLE, THE EXERCISE OF ANY RIGHTS AND REMEDIES UNDER THE LOAN AGREEMENT, AS AMENDED, OR OTHER LOAN DOCUMENTS, AS AMENDED, AND NEGOTIATION FOR AND EXECUTION OF THIS AMENDMENT.  WITHOUT LIMITING ANY PROVISION OF THIS AMENDMENT OR ANY OTHER LOAN DOCUMENT, IT IS THE EXPRESS INTENTION OF THE PARTIES HERETO THAT THE RELEASED CLAIMS INCLUDE ALL POSSIBLE CLAIMS, DEMANDS, ACTIONS, CAUSES OF ACTION, DAMAGES, COSTS, EXPENSES, AND LIABILITIES WHATSOEVER (INCLUDING ATTORNEYS’ FEES) ARISING OUT OF OR RESULTING FROM THE SOLE CONTRIBUTORY OR ORDINARY NEGLIGENCE OF THE RELEASED PARTIES (OR ANY ONE OF THEM).
 Section 5.05.  Severability.  Any provision of this Amendment held by a court of competent jurisdiction to be invalid or unenforceable shall not impair or invalidate the remainder of this Amendment and the effect thereof shall be confined to the provision so held to be invalid or unenforceable in such jurisdiction.
 Section 5.06.  APPLICABLE LAW.  THIS AMENDMENT AND, EXCEPT AS OTHERWISE SET FORTH THEREIN, THE OTHER LOAN DOCUMENTS SHALL BE GOVERNED BY AND CONSTRUED IN ACCORDANCE WITH THE LAWS OF THE STATE OF TEXAS APPLICABLE TO AGREEMENTS MADE AND TO BE PERFORMED ENTIRELY WITHIN SUCH STATE; PROVIDED THAT THE BANK SHALL RETAIN ALL RIGHTS ARISING UNDER FEDERAL LAW.
 Section 5.07.  Successors and Assigns.  This Amendment is binding upon and shall inure to the benefit of the Bank, the Borrowers, and their respective successors and assigns, except the Borrowers may not assign or transfer any of its rights or obligations hereunder without the prior written consent of Bank.
 Section 5.08.  Counterparts; Facsimiles.  This Amendment may be executed in one or more counterparts, each of which when so executed shall be deemed to be an original, but all of which when taken together shall constitute one and the same instrument.  Delivery of an executed counterpart of this 
 

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 Amendment by facsimile or portable document format (pdf) shall be equally as effective as delivery of an executed original counterpart and shall constitute a covenant to deliver an executed original counterpart, but the failure to do so shall not affect the validity, enforceability and binding effect of this Amendment.  
 Section 5.09.  Further Assurances.  Borrowers shall execute and deliver, or cause to be executed and delivered, to the Bank such documents and agreements, and shall take or cause to be taken such actions as the Bank may, from time to time, reasonably request to carry out the terms of this Amendment and the other Loan Documents.
 Section 5.10.  Headings.  The headings, captions, and arrangements used in this Amendment are for convenience only and shall not affect the interpretation of this Amendment.
 Section 5.11.  ENTIRE AGREEMENT.  THIS AMENDMENT, THE LOAN AGREEMENT, THE NOTE, AND THE OTHER LOAN DOCUMENTS, EACH AS AMENDED, REPRESENT THE ENTIRE AGREEMENT AMONG THE PARTIES RELATED TO THE SUBJECT MATTER HEREOF AND THEREOF AND MAY NOT BE CONTRADICTED BY EVIDENCE OF PRIOR, CONTEMPORANEOUS OR SUBSEQUENT ORAL AGREEMENTS OF THE PARTIES.  THERE ARE NO UNWRITTEN ORAL AGREEMENTS BETWEEN THE PARTIES.
 Section 5.12.  Amendment as a Loan Document.  This Amendment constitutes a Loan Document and any failure of the Borrowers to comply with the terms and conditions of this Amendment shall result in an Event of Default under the Loan Agreement.
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 IN WITNESS WHEREOF, the parties have executed this Amendment to be effective as of the date first written above.
 BANK: 
 TEXAS CAPITAL BANK, NATIONAL ASSOCIATION
 By:
 Deborah T. Purvin, SVP Corporate Banking
 

 LOAN MODIFICATION AGREEMENT – SIGNATURE PAGE
 

 
 BORROWERS:
 HARTMAN SHORT TERM INCOME PROPERTIES XX, INC., 
 a Maryland corporation
 By:
 Allen R. Hartman, President
 HARTMAN PARKWAY, LLC, 
 a Texas limited liability company
 By:
 Allen R. Hartman, President
 

 HARTMAN GULF PLAZA, LLC, 
 a Texas limited liability company
 By:
 Allen R. Hartman, President
 

 

 

 LOAN MODIFICATION AGREEMENT – SIGNATURE PAGE
 

 
 EXHIBIT A
 BORROWING BASE PROPERTIES
 Borrowing Base Properties.  As of the date of the July 2014 Loan Modification Agreement, the Borrowing Base Properties are as follows:
 Parkway Plaza I and II – (14110 – 14114 North Dallas Parkway, Dallas, Texas 75254)
 Gulf Plaza – (16010 Barkers Point, Houston, Texas 77079)
 

 

 

 LOAN MODIFICATION AGREEMENT – EXHIBIT A
 

 
 EXHIBIT B
 LAND
 

 [see attached]TEXAS CAPITAL BANK, NATIONAL ASSOCIATION

  

 

 

 TEXAS CAPITAL BANK, NATIONAL ASSOCIATION
 AMENDED AND RESTATED PROMISSORY NOTE
 $30,000,000.00
 July 2, 2014
 Effective Date
 ______________
 May 9, 2015
 Note Number 
 Maturity Date
 1.
 Definitions.  As used in this Note, the following terms shall have the following meanings.
 “Bank” means Texas Capital Bank, National Association, and its successors and assigns.
 “Bank Rate” means the rate of interest per annum quoted by Bank from time to time and designated as its “Prime Rate”.  The base rate may not necessarily be the lowest interest rate charged by Bank and is set by Bank in its sole discretion.
 “Borrower” means, whether one or more, HARTMAN GULF PLAZA, LLC, a Texas limited liability company (“Gulf Plaza”), HARTMAN PARKWAY LLC, a Texas limited liability company (“Hartman Parkway”), and HARTMAN SHORT TERM INCOME PROPERTIES XX, INC., a Maryland corporation (“XX”).
 “Business Day” means a weekday, Monday through Friday, except a legal holiday or a day on which banking institutions in Dallas, Texas are authorized or required by law to be closed.  Unless otherwise provided, the term “days” when used herein shall mean calendar days.
 “Deed of Trust” means, whether one or more, that certain Deed of Trust, Security Agreement, Financing Statement and Absolute Assignment of Rents executed by Hartman Parkway for the benefit of Bank dated March 15, 2013 as recorded in the Official Public Records of Dallas County as document number 201300080707, that certain Deed of Trust, Security Agreement, Financing Statement and Absolute Assignment of Rents executed by Gulf Plaza for the benefit of Bank dated of even date herewith, and any other deed of trust executed from time to time in connection with the Loan Documents for the benefit of Bank covering certain personal and real property, as may be amended, restated, renewed, and extended from time to time.
 “Effective Date” means July 2, 2014.
 “Loan Agreement” means that certain Loan Agreement dated as of May 10, 2012, as amended by that certain Loan Modification Agreement dated as of October 16, 2012, that certain Loan Modification Agreement dated as of March 15, 2013, that certain letter agreement dated September 30, 2013, that certain Loan Modification Agreement dated June 13, 2014, that certain Loan Modification Agreement dated of even date herewith, and as such may be further amended, renewed, extended and replaced from time to time.
 “Loan Documents” means this Note, the Loan Agreement, the Deed of Trust and any and all other agreements, documents, and instruments executed and delivered in connection with this Note, and any future amendments thereto, or restatements thereof, together with any and all renewals, extensions, amendments and modifications to any such agreements, documents, and instruments.
 “Loan Rate” means the Bank Rate as it may vary from day to day plus one percent (1.00%); provided, however, notwithstanding the amount of the Bank Rate, the Loan Rate shall never be lower than four and one half percent (4.5%) per annum.
 “Maturity Date” means May 9, 2015.
 “Maximum Rate” means the maximum lawful rate of interest which may be contracted for, charged, taken, received or reserved by Bank in accordance with the applicable laws of the State of Texas (or applicable United States federal law to the extent that such law permits Bank to contract for, charge, take, receive or reserve a greater amount of interest than under Texas law).
 “Note” means this Amended and Restated Promissory Note and all modifications, increases, replacements, renewals, and extensions of this Amended and Restated Promissory Note.
 Any capitalized term used in this Note and not otherwise defined herein shall have the meaning ascribed to each such term in the Loan Agreement.  All terms used herein, whether or not defined in this Note, and whether used in singular or plural form, shall be deemed to refer to the object of such term whether such is singular or plural in nature, as the context may suggest or require.
 2.
 Promise to Pay.  For value received, Borrower (jointly and severally if more than one), unconditionally hereby promises to pay to the order of Bank, at its place of business located at 2000 McKinney Avenue, Suite 700, Dallas, Texas 75201 or at such other place as the holder of this Note may hereafter designate, the principal sum of THIRTY MILLION AND NO/100 DOLLARS ($30,000,000.00) or so much thereof as may be advanced, in lawful money of the United States of America for the payment of private debts, together with interest on the unpaid principal balance from time to time owing hereon computed from the date hereof until maturity at a per annum rate which shall be, except as otherwise provided in this Note, the lesser of (a) the Loan Rate in effect from day to day, or (b) the Maximum Rate.  Interest on this Note is computed on a 365/360 simple interest basis; that is by applying the ratio of the annual interest over a year of 360 days times the outstanding principal balance, times the actual number of days the principal balance is outstanding, unless such calculation would result in a usurious rate, in which case interest shall be calculated on a per diem basis of a year of 365 or 366 days, as the case may be.  For so long as any Event of Default exists under this Note or under any of the other Loan Documents, regardless of whether or not there has been an acceleration of the indebtedness evidenced by this Note, and at all times after the maturity of the indebtedness evidenced by this Note (whether by acceleration or otherwise), and in addition to all other rights and remedies of Bank hereunder, interest shall accrue on the outstanding principal balance hereof at the Maximum Rate, and such accrued interest shall be immediately due and payable.  
 3.
 Interest Rate.  The Loan Rate is subject to change as set forth in the definition of “Loan Rate.”
 4.
 Payments.  This Note is payable as follows:  
 All accrued but unpaid interest on the outstanding principal balance of this Note shall be due and payable in monthly installments beginning on July 10, 2014, and continuing on the same day of each succeeding calendar month until the Maturity Date when the outstanding principal balance of this Note and any and all accrued but unpaid interest hereon shall be due and payable in full.  Borrower may from time to time during the term of this Note borrow, partially or wholly repay its outstanding borrowings, and reborrow, subject to all of the limitations, terms and conditions of this Note and of the other Loan Documents; provided however, that the total outstanding borrowings under this Note shall not at any time exceed the Borrowing Limit.  
 Except as expressly provided herein or in the Loan Agreement (if applicable) to the contrary, all payments on this Note shall be applied in the following order of priority: (a) the payment or reimbursement of any expenses, costs or obligations (other than the outstanding principal balance hereof and interest hereon) for which Borrower shall be obligated or Bank shall be entitled pursuant to the provisions of this Note or the other Loan Documents, (b) the payment of accrued but unpaid interest hereon, and (c) the payment of all or any portion of the principal balance hereof then outstanding hereunder.  If an Event of Default exists under this Note, then Bank may, at the sole option of Bank, apply any such payments, at any time and from time to time, to any of the items specified in clauses (a), (b) or (c) above without regard to the order of priority otherwise specified in this Section 4 and any application to the outstanding principal balance hereof may be made in either direct or inverse order of maturity.  Payments by check or draft shall not constitute payment in immediately available funds until the required amount is actually received by Bank.  Payments in immediately available funds received by Bank in the place designated for payment on a Business Day prior to 11:00 a.m. Dallas, Texas time at said place of payment shall be credited prior to the close of business on the Business Day received, while payments received by Bank on a day other than a Business Day or after 11:00 a.m. Dallas, Texas time on a Business Day shall not be credited until the next succeeding Business Day.  If any payment of principal or interest on this Note shall become due and payable on a day other than a Business Day, such payment shall be made on the next succeeding Business Day.  Acceptance by Bank of any payment in an amount less than the full amount then due shall be deemed an acceptance on account only, and the failure to pay the entire amount then due may become an Event of Default.  Borrower agrees that all payments of any obligation due hereunder shall be final, and if any such payment is recovered in any bankruptcy, insolvency or similar proceedings instituted by or against Borrower, all obligations due hereunder shall be automatically reinstated in respect of the obligation as to which payment is so recovered.  
 5.
 Prepayment.  Borrower may prepay this Note in part or in full without penalty before final maturity, whether by cash, a new loan, renewal, or otherwise.  Prepayment in full shall consist of payment of the remaining unpaid principal balance together with all accrued and unpaid interest and all other amounts, costs and expenses for which Borrower is responsible under this Note or any other agreement with Bank pertaining to this loan, and in no event will Borrower ever be required to pay any unearned interest.  Early payments will not, unless agreed in writing, relieve Borrower of Borrower’s obligation to continue to make payments under the above payment schedule.  Upon a prepayment in full, points, if any, are not refundable except and to the extent the total interest and points for the time the loan is outstanding would exceed the maximum interest allowed by law at the time of prepayment.  If at any time the outstanding principal balance hereof exceeds the Borrowing Limit, Borrower shall immediately pay to Bank an amount sufficient to eliminate such excess.
 6.
 Waiver.  Except as otherwise provided herein and in the other Loan Documents, Borrower hereby waives all notices of nonpayment, demands for payment, presentments for payment, notices of intention to accelerate maturity, notices of actual acceleration of maturity, grace, protests, notices of protest, and any other demands or notices of any kind as to this Note, diligence in collection hereof and in bringing suit hereon, and any notice of, or defense on account of, the extension of time of payments or change in the method of payments, and without further notice hereby consents to any and all renewals and extensions in the time of payment hereof either before or after maturity and the release of any party primarily or secondarily liable hereon.  Borrower agrees that Bank’s acceptance of partial or delinquent payments, or failure of Bank to exercise any right or remedy contained herein or in any instrument given as security for the payment of this Note shall not be a waiver of any obligation of Borrower to Bank or constitute waiver of any similar default subsequently occurring.  The holder of this Note is entitled to the benefits and security provided in the Loan Documents.
 7.
 Events of Default and Remedies.  At the option of Bank, the entire unpaid principal balance and accrued interest owing hereon shall at once become due and payable upon the occurrence at any time of any of the following “Events of Default” (herein so called):
 A.
 The failure of Borrower to pay (or cause to be paid) when due any installment of principal or interest of this Note in accordance with its terms, through acceleration, or otherwise; or
 B.
 A Default or Event of Default occurs under any other Loan Document.
 It is understood and agreed by Borrower that the foregoing “Events of Default” are cumulative and in addition to any “Defaults” or “Events of Default” contained in the other Loan Documents, or other documents modifying, renewing, extending, evidencing, securing or pertaining to this Note or the loan evidenced hereby.  Upon the occurrence of any of the Events of Default, then the holder hereof may, at its option, do any one or more of the following: (a) declare the entire unpaid balance of principal of and accrued, unpaid interest upon this Note to be immediately due and payable, (b) reduce any claim to judgment, (c) foreclose all liens and security interests securing payment thereof or any part thereof, and/or (d) without notice of default or demand, pursue and enforce any of Bank’s other rights and remedies provided under or pursuant to any applicable laws or agreements.  All rights and remedies of Bank shall be cumulative and concurrent and may be pursued singularly, successively, or together, at the sole discretion of Bank, and may be exercised as often as the occasion therefor shall arise and whether or not Bank has initiated any foreclosure proceeding, judicial or otherwise.  Failure by Bank to exercise any right or remedy upon the occurrence of an Event of Default shall not constitute a waiver of the right to exercise such right or remedy upon the occurrence of any subsequent Event of Default.  In the event that Bank, after the occurrence of an Event of Default hereunder, consults an attorney regarding the enforcement of any of its rights under this Note, or if this Note is placed in the hands of an attorney for collection or if suit be brought to enforce this Note, Borrower promises to pay all costs thereof, including reasonable attorneys’ fees.  Such costs and attorneys’ fees shall include, without limitation, costs and reasonable attorneys’ fees incurred by Bank in any appellate proceedings or in any proceedings under any present or future federal bankruptcy act, state receivership law or probate.
 8.
 Savings Clause; Ceiling Election.  It is expressly stipulated and agreed to be the intent of Borrower and Bank at all times to comply strictly with the applicable Texas law governing the maximum rate or amount of interest payable on the indebtedness evidenced by this Note and the Related Indebtedness (or applicable United States federal law to the extent that it permits Bank to contract for, charge, take, reserve or receive a greater amount of interest than under Texas law).  If the applicable law is ever judicially interpreted so as to render usurious any amount (a) contracted for, charged, taken, reserved or received pursuant to this Note, any of the other Loan Documents or any other communication or writing by or between Borrower and Bank related to the transaction or transactions that are the subject matter of the Loan Documents, (b) contracted for, charged, taken, reserved or received by reason of Bank’s exercise of the option to accelerate the maturity of this Note and/or any and all indebtedness paid or payable by Borrower to Bank pursuant to any Loan Document other than the Note (such other indebtedness being referred to in this Section as the “Related Indebtedness”), or (c) Borrower will have paid or Bank will have received by reason of any prepayment by Borrower of this Note and/or the Related Indebtedness, then it is Borrower’s and Bank’s express intent that all amounts charged in excess of the Maximum Rate shall be automatically canceled, ab initio, and all amounts in excess of the Maximum Rate theretofore collected by Bank shall be credited on the principal balance of this Note and/or the Related Indebtedness (or, if this Note and the Related Indebtedness have been or would thereby be paid in full, refunded to Borrower), and the provisions of this Note and the other Loan Documents shall immediately be deemed reformed and the amounts thereafter collectible hereunder and thereunder reduced, without the necessity of the execution of any new document, so as to comply with the applicable law, but so as to permit the recovery of the fullest amount otherwise called for hereunder and thereunder; provided, however, if this Note has been paid in full before the end of the stated term of this Note, then Borrower and Bank agree that Bank shall, with reasonable promptness after Bank discovers or is advised by Borrower that interest was received in an amount in excess of the Maximum Rate, either refund such excess interest to Borrower and/or credit such excess interest against this Note then owing by Borrower to Bank.  Borrower hereby agrees that as a condition precedent to any claim or counterclaim (in which event such proceeding shall be abated for such time period) seeking usury penalties against Bank, Borrower will provide written notice to Bank, advising Bank in reasonable detail of the nature and amount of the violation, and Bank shall have sixty (60) days after receipt of such notice in which to correct such usury violation, if any, by either refunding such excess interest to Borrower or crediting such excess interest against this Note then owing by Borrower to Bank.  All sums contracted for, charged, taken, reserved or received by Bank for the use, forbearance or detention of any debt evidenced by this Note and/or the other Loan Documents shall, to the extent permitted by applicable law, be amortized or spread, using the actuarial method, throughout the stated term of this Note (including any and all renewal and extension periods) until payment in full so that the rate or amount of interest on account of this Note does not exceed the Maximum Rate from time to time in effect and applicable to this Note for so long as debt is outstanding.  In no event shall the provisions of Chapter 346 of the Texas Finance Code apply to this Note.  To the extent that Bank is relying on Chapter 303 of the Texas Finance Code to determine the Maximum Rate payable on the Note, Bank will utilize the weekly ceiling from time to time in effect as provided in such Chapter 303, as amended.  To the extent United States federal law permits Bank to contract for, charge, take, receive or reserve a greater amount of interest than under Texas law, Bank will rely on United States federal law instead of such Chapter 303 for the purpose of determining the Maximum Rate.  Additionally, to the extent permitted by applicable law now or hereafter in effect, Bank may, at its option and from time to time, utilize any other method of establishing the Maximum Rate under such Chapter 303 or under other applicable law by giving notice, if required, to Borrower as provided by applicable law now or hereafter in effect.
 9.
 GOVERNING LAW AND VENUE.  THIS NOTE IS BEING EXECUTED AND DELIVERED, AND IS INTENDED TO BE PERFORMED, IN DALLAS COUNTY, TEXAS, AND THE LAWS (EXCLUDING CHOICE OF LAW PROVISIONS) OF SUCH STATE SHALL GOVERN THE VALIDITY, CONSTRUCTION, ENFORCEMENT AND INTERPRETATION OF THIS NOTE, EXCEPT TO THE EXTENT FEDERAL LAWS OTHERWISE GOVERN THE VALIDITY, CONSTRUCTION, ENFORCEMENT AND INTERPRETATION OF ALL OR ANY PART OF THIS NOTE.   ALL LEGAL ACTIONS RELATED TO THIS NOTE SHALL BE BROUGHT IN THE APPROPRIATE COURT OF LAW LOCATED IN DALLAS COUNTY, TEXAS, TO THE EXCLUSION OF ALL OTHER VENUES. 
 10.
 WAIVER OF JURY TRIAL. BORROWER, TO THE FULLEST EXTENT PERMITTED BY APPLICABLE LAW, HEREBY KNOWINGLY, INTENTIONALLY, IRREVOCABLY, UNCONDITIONALLY AND VOLUNTARILY, WITH AND UPON THE ADVICE OF COMPETENT COUNSEL, WAIVES, RELINQUISHES AND FOREVER FORGOES THE RIGHT TO A TRIAL BY JURY IN ANY ACTION OR PROCEEDING BASED UPON, ARISING OUT OF, OR IN ANY WAY RELATING TO THIS NOTE OR ANY CONDUCT, ACT OR OMISSION OF BANK OR BORROWER, OR ANY OF THEIR DIRECTORS, OFFICERS, PARTNERS, MEMBERS, EMPLOYEES, AGENTS OR ATTORNEYS, OR ANY OTHER PERSONS AFFILIATED WITH BANK OR BORROWER, IN EACH OF THE FOREGOING CASES, WHETHER SOUNDING IN CONTRACT, TORT OR OTHERWISE.
 11.
 Miscellaneous.  
 A.
 Notices or communications to be given under this Note shall be given to the respective parties in writing as set forth in the Loan Agreement.
 B.
 Time is of the essence of this Note.
 C.
 This Note may not be changed or terminated orally, but only by an agreement in writing signed by the party against whom enforcement of any waiver, change, modification, termination or discharge is sought.
 D.
 This Note is secured, in part, by the Deed of Trust to which reference is hereby made for a description of the collateral, the nature and extent of the security, and the rights of the Bank in respect thereof. 
 E.
 This Note and all the covenants, promises and agreements contained herein shall be binding upon Borrower’s successors, assigns, heirs and personal representatives and inure to the benefit of Bank’s successors and assigns. 
 F.
 At the option of Bank, Borrower will pay Bank, on demand, (i) a “late charge” equal to five percent (5%) of the amount of any installment on this Note when such installment is not paid within fifteen (15) days following the date such installment is due, and (ii) a processing fee in the amount of $25.00 for each check which is provided to Bank by Borrower in payment for an obligation owing to Bank under any Loan Document but is returned or dishonored for any reason, in order to cover the additional expenses involved in handling delinquent and returned or dishonored payments.
 G.
 If Borrower consists of more than one person or entity, each shall be jointly and severally liable to perform the obligations of Borrower under this Note.
 H.
 If any provision of this Note or the application thereof to any person or circumstance shall, for any reason and to any extent, be invalid or unenforceable, then neither the remainder of this Note nor the application of such provision to other persons or circumstances nor the other instruments referred to herein shall be affected thereby, but rather shall be enforced to the greatest extent permitted by applicable law.
 I.
 THIS NOTE AND THE OTHER LOAN DOCUMENTS CONTAIN THE FINAL, ENTIRE AGREEMENT BETWEEN THE PARTIES HERETO RELATING TO THE SUBJECT MATTER HEREOF AND THEREOF AND ALL PRIOR AGREEMENTS, WHETHER WRITTEN OR ORAL, RELATIVE HERETO AND THERETO WHICH ARE NOT CONTAINED HEREIN OR THEREIN ARE SUPERSEDED AND TERMINATED HEREBY, AND THIS NOTE AND THE OTHER LOAN DOCUMENTS MAY NOT BE CONTRADICTED OR VARIED BY EVIDENCE OF PRIOR, CONTEMPORANEOUS OR SUBSEQUENT ORAL AGREEMENTS OR DISCUSSIONS OF THE PARTIES HERETO.  THERE ARE NO UNWRITTEN ORAL AGREEMENTS AMONG THE PARTIES HERETO.
 12.
 Amendment and Restatement.  This Note is an amendment and restatement of that certain Amended and Restated Promissory Note dated effective as of March 15, 2013 in the stated principal amount of $30,000,000.00 (the “Original Note”).  This Note is executed in amendment and modification of the Original Note and shall not extinguish the indebtedness evidenced by the Original Note, and the obligations thereof and hereof shall be paid in accordance with the terms and conditions herein and in the other Loan Documents.  Notwithstanding the foregoing, the obligations to Bank of each of Hartman Bent Tree Green, LLC, Hartman Richardson Heights Properties, LLC, and Hartman Cooper Street Plaza, LLC under the Original Note and the other Loan Documents were released by Bank under and to the extent set forth in that certain Loan Modification Agreement dated June 13, 2014.
 [Signature Page Follows]
 

 AMENDED AND RESTATED PROMISSORY NOTE – Signature Page
 

 
 

 

 IN WITNESS WHEREOF, Borrower, intending to be legally bound hereby, has duly executed this Note as of the Effective Date.
 BORROWER:
 HARTMAN SHORT TERM INCOME PROPERTIES XX, INC., a Maryland corporation
 By:
 Allen R. Hartman, President
 HARTMAN PARKWAY LLC, 
 a Texas limited liability company
 By:
 Allen R. Hartman, President
 

 HARTMAN GULF PLAZA, LLC, 
 a Texas limited liability company
 By:
 Allen R. Hartman, President

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