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Exhibit 10.25
 
PROMISSORY NOTE
 
 
$10,000,000.00
Houston, Texas
March 1, 2007
 
FOR VALUE RECEIVED, HCP REIT Operating Company IV LLC, a Texas limited liability
company (“Borrower”), having its principal place of business at 1450 West Sam
Houston Pkwy, Suite 111, Houston, TX 77043 promises to pay to the order of
MidFirst Bank, a federally chartered savings association (“Lender”), at the
following address: MidFirst Plaza, P.O. Box 26750, Oklahoma City, Oklahoma
73126, or such other place as the holder hereof may from time to time designate
in writing, the principal sum of TEN MILLION AND NO/100 DOLLARS ($10,000,000.00)
in lawful money of the United States of America, with interest thereon to be
computed from the date of disbursement under this Promissory Note (this “Note”)
at the Applicable Interest Rate (hereinafter defined), and to be paid in
installments as follows:
 

 
A.
A constant payment of $60,212.46 (based upon an amortization schedule assuming a
360 day year consisting of 12 months of 30 days each) on the first day of April,
2007 and on the first day of each calendar month thereafter up to and including
the first day of February, 2014; and

 

 
B.
The balance of said principal sum, all unpaid interest thereon and all other
amounts owed pursuant to this Note, the Security Instrument (hereinafter
defined), the Other Security Documents (hereinafter defined), or otherwise in
connection with the loan evidenced by this Note shall be due and payable on the
first day of March, 2014 (the “Maturity Date”).

 
All payments to be made by Borrower to Lender shall be deemed received by Lender
only upon Lender’s actual receipt of same.
 
1.     Applicable Interest Rate. Interest accruing on the principal sum of this
Note shall be calculated on the basis of a 360-day year comprised of twelve (12)
thirty (30) day months, except that interest due and payable for a period of
less than a full month shall be calculated by multiplying the actual number of
days elapsed in such period by a daily rate based on said 360 day year, provided
that such method of calculation does not cause the effective rate of interest on
the loan evidenced hereby to exceed the maximum lawful rate of interest
applicable hereto as calculated on the basis of a 365 or 366 day year. The term
“Applicable Interest Rate” as used in this Note shall mean, from the date of
this Note through and including the Maturity Date, a rate of Six and 04/100
percent (6.04%) per annum.
 
2.    Application. All payments on this Note shall be applied at any time and
from time to time in the following order: (i) the payment or reimbursement of
any expenses (including but not limited to late charges), costs or obligations
(other than the principal hereof and interest hereon) for which Borrower shall
be obligated or Lender entitled pursuant to the provisions hereof or of the
Security Instrument or the Other Security Documents, (ii) the payment of accrued
but unpaid interest thereon, (iii) the payment of unpaid escrow amounts required
herein, in the Security Instrument or in the Other Security Documents, if any,
and (iv) the payment of all or any portion of the principal balance then
outstanding hereunder, in either the direct or inverse order of maturity, at
Lender’s option. Any payment made by Borrower must be received by Lender in
immediately available funds no later than 4:00 p.m. Oklahoma City time in order
to receive same day credit; any payment received thereafter shall be considered
to have been made on the following business day.
 
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3.    Late Charge. If any part of the Debt (hereinafter defined) is not actually
received by Lender by close of business on the fifteenth (15th) day after the
date on which it was due, Borrower shall pay to Lender an amount (the “Late
Charge”) equal to the lesser of four percent (4%) of such unpaid portion of the
missed payment or the maximum amount permitted by applicable law, to defray the
expenses incurred by Lender in handling and processing such delinquent payment
and to compensate Lender for the loss of the use of such delinquent payment. All
such Late Charges shall be automatically due and payable without notice or
demand and shall be secured by the Security Instrument and the Other Security
Documents. In addition, Borrower shall pay to Lender a charge of $25.00 if a
check or preauthorized charge with which Borrower makes a payment on this Note
is dishonored or refused by Borrower’s payor institution, and Lender may, at its
option, thereafter require any sums due under this Note to be paid by wire
transfer of federal funds, cashier’s check or certified funds. Borrower’s
payment of a Late Charge or the payment of interest at the default Rate (defined
below) shall not excuse late payment or constitute a waiver of any rights of
Lender.
 
4.    Security; Defined Terms; Incorporation by Reference. This Note is secured
by the Security Instrument and the Other Security Documents. The term “Security
Instrument” as used in this Note shall mean the Deed of Trust, Security
Agreement, Assignment of Leases and Rents and Fixture Filing, executed and
delivered by Borrower contemporaneously with this Note and which secures the
Debt. The term “Other Security Documents” means all documents other than this
Note or the Security Instrument now or hereafter executed and/or delivered by
Borrower and/or others and to or in favor of Lender, which wholly or partially
secure, evidence or guarantee payment of the Debt, provide for any indemnity in
favor of or payment to Lender related to the Debt, this Note or the Mortgaged
Property (as defined in the Security Instrument), provide for any
escrow/holdback arrangements or for any actions to be completed by Borrower
subsequent to the date hereof, or are otherwise related to the loan evidenced by
this Note. All amounts due and payable under this Note, together with all sums
due under the Security Instrument and the Other Security Documents, including
any applicable Prepayment Consideration (hereinafter defined) and all applicable
attorney fees and costs, are collectively referred to herein as the “Debt.” The
term “business day” or “business days” shall mean those days (other than
Saturdays or Sundays) upon which banks are generally open in Texas and Oklahoma
for the conduct of substantially all of their commercial lending activities, and
wire transfers of funds can be made. Where appropriate, the singular number
shall include the plural, the plural shall include the singular, and the words
“Lender” and “Borrower” shall include their respective successors, assigns,
heirs, personal representatives, executors and administrators.
 
5.     Optional Prepayment; Prepayment Premium.
 
(a) Optional prepayments shall not be permitted except as specifically provided
in this Section 5, and Lender may refuse to accept any prepayment that does not
comply with this Section. Prepayments of principal may be made in full, but not
in part (except in the event of casualty loss or condemnation as described
below), on any installment payment due date described in paragraph B on the
first page of this Note, with advance written notice to Lender not later than 30
days prior to such prepayment stating that Borrower intends to prepay this Note
in full on the date specified in such notice. Any prepaid amounts specified in
such notice shall become due and payable at the time provided in such notice.
Such notice shall not suspend or defer the payment of regularly scheduled
principal and interest installments as they become due. Any prepayment by
Borrower, except as described in subparagraph (c) below, shall include a
prepayment consideration equal to: (i) three percent (3%) of the unpaid
principal balance if prepaid during the first, second or third Loan Year, (ii)
two percent (2%) of the unpaid principal balance if prepaid during the fourth
Loan Year, and (iii) one percent (1%) of the unpaid principal balance if prepaid
during the fifth Loan Year (the “Prepayment Consideration”). Subject to
compliance with the notice provisions provided above, no Prepayment
Consideration shall be due for a prepayment in full during the sixth and seventh
Loan Year. For purposes of the preceding sentences, a “Loan Year” shall mean the
period of time beginning March 1 of any given year and continuing through and
including the following February 28 or 29, as the case may be.
 
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(b) In the event that Lender accelerates the maturity of this Note at any time
during which a Prepayment Consideration applies, and a tender of payment in
excess of the minimum amount necessary to reinstate the Loan is made by or on
behalf of Borrower in an amount sufficient to satisfy the Debt prior to or at a
sheriffs sale, trustee’s sale or other foreclosure sale of the Mortgaged
Property, or during any redemption period following such sale, such tender shall
be considered to constitute a voluntary prepayment and shall require payment of
the Prepayment Consideration provided for in this Section 5, and Lender shall
not be required to accept such payment if it does not include the Prepayment
Consideration required under this Section 5. Alternatively or additionally,
Lender may seek injunctive relief in a court of competent jurisdiction to
restrain or prohibit a purposeful default by Borrower, in which event Borrower
shall pay to Lender legal and other expenses incurred by Lender in connection
with such default and Lender’s efforts to restrain such default. Lender shall be
entitled to include the amount of the Prepayment Consideration in any credit bid
at a sheriffs sale, trustee’s sale or other foreclosure of the Mortgaged
Property. Borrower expressly waives the provisions of any present or future
statute or law which prohibits or may prohibit the collection of a prepayment
premium, prepayment consideration or charge upon acceleration, and acknowledges
and agrees that the foregoing waiver constitutes separate consideration for
Lender’s agreement to make the loan evidenced hereby, and that Lender would not
have made such loan and/or would have charged a higher interest rate without
such a waiver.
 
(c) Notwithstanding the foregoing: (A) no Prepayment Consideration shall be
charged on any prepayment caused by Lender’s election to apply insurance
proceeds or condemnation awards to the Debt under the terms of the Security
Instrument; (B) no Prepayment Consideration shall be charged on any prepayment
made within the sixty (60) day period immediately preceding the Maturity Date;
and (C) in no event shall the Prepayment Consideration exceed an amount equal to
the excess, if any, of (i) interest calculated at the highest applicable rate
permitted by applicable law, as construed by courts having jurisdiction thereof,
on the principal balance of this Note from time to time outstanding from the
date of closing of the Loan to the date of such acceleration, over (ii) interest
theretofore paid and accrued on this Note. The amount of any prepayment shall
never be less than the full amount of the then outstanding principal and
interest.
 
6.     Default. An “Event of Default” shall occur if:
 
(a) Borrower fails to make the full and punctual payment of any amount payable
hereunder or under the Security Instrument or Other Security Documents as and
when the same becomes due and payable;
 
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(b) Borrower fails to pay the entire outstanding principal balance hereunder,
together with all accrued and unpaid interest, on the date when due, whether on
the Maturity Date, upon acceleration or prepayment or otherwise; or
 
(c) an Event of Default (as defined in the Security Instrument or any of the
Other Security Documents) has occurred under the Security Instrument and/or
Other Security Documents.
 
7.    Acceleration. The whole of the Debt, including without limitation, the
principal sum of this Note, all accrued interest and all other sums due under
this Note, the Security Instrument and the Other Security Documents, together
with any applicable Prepayment Consideration, shall become immediately due and
payable at the option of Lender, without notice, at any time following the
occurrence of an Event of Default.
 
8.    Default Interest. Upon the occurrence of an Event of Default (including
without limitation, the failure of Borrower to pay the Debt in full on the
Maturity Date), Lender shall be entitled to receive and Borrower shall pay
interest on the entire unpaid principal balance at the rate (the “Default Rate”)
equal to four percent (4%) above the Applicable Interest Rate. The Default Rate
shall be computed from the occurrence of the Event of Default until the actual
payment in full of the Debt. This charge shall be added to the Debt, and shall
be deemed secured by the Security Instrument. This clause, however, shall not be
construed as an agreement or privilege to extend the Maturity Date, nor as a
waiver of any other right or remedy accruing to Lender by reason of the
occurrence of any Event of Default.
 
9.    Attorney Fees. In the event that Lender employs attorney(s) to collect the
Debt, to enforce the provisions of this Note or to protect or foreclose the
security herefor, Borrower agrees to pay Lender’s attorney fees and
disbursements, whether or not suit be brought. Such fees shall be immediately
due and payable.
 
10.   Use of Proceeds; Limit of Validity. The proceeds of this Note are to be
used for business, commercial, investment or other similar purposes and no
portion thereof will be used for personal, family or household use. It is
expressly stipulated and agreed to be the intent of Borrower and Lender at all
times to comply with the applicable Texas law governing the maximum rate or
amount of interest payable on this Note or the Debt and by the Other Security
Documents (or applicable United States federal law to the extent that it permits
Lender to contract for, take, reserve or receive a greater amount of interest
than under Texas law) (the “Maximum Rate”). If (i) the applicable law is ever
judicially interpreted so as to render usurious any amount called for under this
Note, the Security Instrument, or under any of the Other Security Documents, or
contracted for, charged, taken, reserved or received with respect to the
indebtedness evidenced by this Note, the Security Instrument, or the Other
Security Documents, or (ii) Lender’s exercise of the option herein contained to
accelerate the maturity of this Note or any prepayment by Borrower results in
Borrower having paid any interest in excess of that permitted by applicable law,
then it is Borrower’s and Lender’s express intent that (a) all excess amounts
theretofore collected by Lender be credited on the principal balance of this
Note (or, if this Note has been or would thereby be paid in full, refunded to
Borrower), and (b) the provisions of this Note, the Security Instrument, and the
Other Security Documents 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. All sums paid or agreed to be paid to Lender for the
use, forbearance and detention of the indebtedness evidenced hereby and by the
Security Instrument, and the Other Security Documents shall, to the extent
permitted by applicable law, be amortized, prorated, allocated and spread
throughout the full term of such indebtedness until payment in full so that the
rate or amount of interest on account of such indebtedness does not exceed the
usury ceiling from time to time in effect and applicable to such indebtedness
for so long as Debt is outstanding. To the extent that Lender is relying on
Chapter 303, as amended, of the Texas Finance Code to determine the maximum
amount of interest permitted by applicable law on the principal of this Note,
Lender will utilize the weekly rate ceiling from time to time in effect as
provided in such Chapter 303, as amended. To the extent United States federal
law permits a greater amount of interest than is permitted under Texas law,
Lender will rely on United States federal law instead of such Chapter 303, as
amended, for the purpose of determining the maximum amount permitted by
applicable law. Additionally, to the extent permitted by applicable law now or
hereafter in effect, Lender may, at its option and from time to time, implement
any other method of computing the maximum lawful rate under such Chapter 303, as
amended, or under other applicable law by giving notice, if required, to
Borrower as provided by applicable law now or hereafter in effect. In no event
shall the provisions of Chapter 346 of the Texas Finance Code (which regulates
certain revolving credit loan accounts and revolving triparty accounts) apply to
the indebtedness evidenced hereby. Notwithstanding anything to the contrary
contained herein, or in the Security Instrument, or in any of the Other Security
Documents, it is not the intention of Lender to accelerate the maturity of any
interest that has not accrued at the time of such acceleration or to collect
unearned interest at the time of such acceleration.
 
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11.   No Oral Amendments. This Note may not be modified, amended, waived,
extended, changed, discharged or terminated orally or by any act or failure to
act on the part of Borrower or Lender, but only by an agreement in writing
signed by the party against whom enforcement of any modification, amendment,
waiver, extension, change, discharge or termination is sought.
 
12.   Assignment. Lender and its successors, endorsees and assigns may freely
transfer and assign this Note. Borrower’s right to transfer its rights and
obligations with respect to the Debt, and to be released from liability under
this Note, shall be governed by the Security Instrument.
 
13.   Applicable Law., Jurisdiction. This Note shall be governed and construed
in accordance with the laws of the state in which the real property encumbered
by the Security Instrument is located and the laws of the United States
applicable to transactions in such state. Borrower hereby submits to personal
jurisdiction in the state courts located in said state and the federal courts of
the United States of America located in said state for the enforcement of
Borrower’s obligations hereunder and waives any and all personal rights under
the law of any other state to object to jurisdiction within such state for the
purposes of any action, suit, proceeding or litigation to enforce such
obligations of Borrower.
 
14.   Joint and Several Liability. If Borrower consists of more than one person
or entity, the obligations and liabilities of each such person or entity shall
be joint and several.
 
15.   Waiver of Presentment, Etc. Borrower and all others who may become liable
for the payment of all or any part of the Debt do hereby severally waive
presentment and demand for payment, notice of dishonor, protest, notice of
protest, and notice of intent to accelerate the maturity hereof (and of such
acceleration), except to the extent that specific notices are required by this
Note, the Security Instrument or the Other Security Documents.
 
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16.   No Waiver. Any failure by Lender to insist upon strict performance by
Borrower of any of the provisions of this Note, the Security Instrument or the
Other Security Documents shall not be deemed to be a waiver of any of the terms
or provisions of this Note, the Security Instrument or the Other Security
Documents, and Lender shall have the right thereafter to insist upon strict
performance by Borrower of any and all of the terms and provisions of this Note,
the Security Instrument or the Other Security Documents.
 
17.   Notices. Except as otherwise specified herein, any notice, consent,
request or other communication required or permitted to be given hereunder shall
be in writing, addressed to the other party as set forth below (or to such other
address or person as either party or person entitled to notice may by notice to
the other party specify), and shall be: (a) personally delivered; (b) delivered
by Federal Express or other comparable overnight delivery service; or (c)
transmitted by United States certified mail, return receipt requested with
postage prepaid; to:
 
Lender:     MidFirst Bank, a federally chartered savings association
MidFirst Plaza
P.O. Box 26750
Oklahoma City, Oklahoma 73126
Attention: Closing Department
 
Borrower:   HCP REIT Operating Company IV LLC
                    1450 West Sam Houston Pkwy, Suite 111
                    Houston, TX 77043
 
Unless otherwise specified, all notices and other communications shall be deemed
to have been duly given on the first to occur of actual receipt of the same or:
(i) the date of delivery if personally delivered; (ii) one (1) business day
after depositing the same with the delivery service if by overnight delivery
service; and (iii) three (3) days following posting if transmitted by mail.
Borrower must prominently display Lender’s Loan Number (set forth on page 1 of
this Note) on all notices or communications to Lender.
 
18.   Severability. If any term, covenant or condition of this Note is held to
be invalid, illegal or unenforceable in any respect, this Note shall be
construed without such provision.
 
19.   Time of the Essence. Time shall be of the essence in the performance of
all obligations of Borrower hereunder.
 
BORROWER AND LENDER HEREBY KNOWINGLY, VOLUNTARILY AND INTENTIONALLY WAIVE ANY
RIGHT THEY, OR THEIR RESPECTIVE SUCCESSORS AND ASSIGNS, MAY HAVE TO A TRIAL BY
JURY IN RESPECT OF ANY LITIGATION BASED ON THE LOAN EVIDENCED BY THIS NOTE OR
ARISING OUT OF, UNDER OR IN CONNECTION WITH THIS NOTE, THE SECURITY INSTRUMENT
OR ANY OF THE OTHER SECURITY DOCUMENTS, OR ANY COURSE OF CONDUCT, COURSE OF
DEALING, STATEMENT (WHETHER VERBAL OR WRITTEN) OR ACTION OF BORROWER OR LENDER.
THIS PROVISION IS A MATERIAL INDUCEMENT FOR LENDER’S MAKING OF THE LOAN SECURED
BY THE SECURITY INSTRUMENT AND THE OTHER SECURITY DOCUMENTS.
 
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IN WITNESS WHEREOF, Borrower has duly executed this Promissory Note to be
effective the day and year first above written.
 

 
“BORROWER”
 
HCP REIT Operating Company IV LLC, a
Texas limited liability company
 
By:
Hartman REIT Operating Partnership, L.P.,
a Delaware limited partnership,
its Sole Member/Manager
       
 
 
By:
Hartman Commercial Properties REIT,
a Maryland real estate investment trust,
its sole General Partner
       
 
   
By:  /s/ John J. Dee

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Name: John J. Dee
Title: Executive Vice President