Exhibit 10.3

PROMISSORY NOTE

 

Loan No.:                                               , 20          San Mateo,
California

FOR VALUABLE CONSIDERATION,                                         , (herein
“Maker”), hereby promises to pay to REDWOOD MORTGAGE INVESTORS IX, LLC, a
Delaware limited liability company, or order (herein “Payee”), at the address
set forth below, or at such other address as the holder hereof may from time to
time designate, the sum of                                         ($ 
           ), with interest on the unpaid balance of the principal sum disbursed
by Payee to or for the account of Maker at the interest rate specified below.

1. Interest and Payments

(a) Fixed Rate Interest. Maker agrees that fixed interest earned by and payable
to Payee hereunder (“Interest”) shall be equal to                     percent
(        %) per year of the principal sum disbursed by Payee. Interest shall be
calculated for actual days elapsed on the basis of a 360-day year, which results
in higher interest payments than if a 365-day were used.

(b) Payments. Interest shall be payable by Maker from the date of disbursement
of funds by Payee, with the Interest for the period through
                    , 20    , due and payable upon execution and delivery of
this Note. Beginning on                     , 20    , and on the first day of
each consecutive month thereafter until the Maturity Date (as defined below),
Maker shall make monthly payments of $            consisting of principal and
Interest. All payments received shall be credited first to costs, then to
Interest, and last to principal due hereunder.

2. Maturity Date. The outstanding principal balance of this Note and all accrued
but unpaid Interest shall be due and payable in full on
                    (“Maturity Date”).

3. Prepayment. The right is reserved by Maker to prepay the outstanding
principal amount in whole or in part together with accrued Interest thereon. All
prepayments shall be applied to the most remote principal installments then
unpaid under this Note.

 

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4. Late Charge. If Payee fails to receive any payments of Interest or principal
within ten (10) days after the date the same is due and payable, a late charge
to compensate Payee for damages Payee will suffer as a result shall be
immediately due and payable. Maker recognizes that a default by Maker in making
the payments agreed to be paid when due will result in Payee’s incurring
additional expenses in servicing the loan, including, but not limited to,
sending out notices of delinquency, computing interest, and segregating the
delinquent sums from not delinquent sums on all accounting, loan and data
processing records, in loss to Payee of the use of the money due, and in
frustration to Payee in meeting its other financial commitments. Maker agrees
that if for any reason Maker fails to pay any amounts due under this Note so
that Payee fails to receive such payments within ten (10) days after the same
are due and payable, Payee shall be entitled to damages for the detriment caused
thereby, but that it is extremely difficult and impractical to ascertain the
extent of such damages. Maker therefore agrees that a sum equal to $.06 for each
$1.00 of each payment that becomes delinquent ten (10) days after its due date,
is a reasonable estimate of the fair average compensation for the loss and
damages Payee will suffer, that such amount shall be presumed to be the amount
of damages sustained by Payee in such case, and that Maker agrees to pay Payee
this sum on demand.

5. Default. If there exists any Event of Default, as defined below, under the
terms of this Note or under the terms of the Deed of Trust, Assignment of Leases
and Rents, Security Agreement and Fixture Filing (“Deed of Trust”) dated on or
about the date of this Note executed by Maker to PLM Lender Services, Inc., a
California corporation, as Trustee, for the use and benefit of Payee covering
and relating to the interest of Maker in the property particularly described in
Exhibit A to the Deed of Trust (“Property”) or any other document executed in
connection with this Note (herein called “Loan Documents”), Payee or the holder
hereof is expressly authorized without notice or demand of any kind to make all
sums of Interest and principal and any other sums owing under this Note
immediately due and payable and to apply all payments made on this Note or any
of the Loan Documents to the payment of any such part of any Event of Default as
it may elect.

An Event of Default shall be either: (1) a default in the payment of the whole
or in any part of the several installments of this Note when due, or (2) any of
the Events of Default contained in any of the Loan Documents. At any time after
an Event of Default the entire unpaid balance of principal, together with
Interest accrued thereon, shall, at the option of the legal holder hereof and
without notice (except as specified in any Loan Documents) and without demand or
presentment, become due and payable at the place of payment. Anything contained
herein or in any of the Loan Documents to the contrary notwithstanding, the
principal balance together with accrued Interest thereon so accelerated and
declared due as aforesaid shall continue to bear Interest and shall include
compensation for late payments on any and all overdue installments as described
above.

 

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If an Event of Default has occurred, the failure of Payee or the holder hereof
to promptly exercise its rights to declare the indebtedness remaining unpaid
hereunder to be immediately due and payable shall not constitute a waiver of
such rights while such Event of Default continues nor a waiver of such right in
connection with any future Event of Default.

Maker hereby waives presentment for payment, protest and demand, and notice of
protest, demand, dishonor, nonpayment and nonperformance including notice of
dishonor with respect to any check or draft used in payment of any sum due
hereunder.

6. Legal Limits. All agreements between Maker and Payee are hereby expressly
limited so that in no event whatsoever, whether by reason of deferment in
accordance with this Note or under any agreement or by virtue of the advancement
of the loan proceeds, acceleration or maturity of the loan, or otherwise, shall
the amount paid or agreed to be paid to the Payee for the loan, use, forbearance
or detention of the money to be loaned hereunder or to compensate Payee for
damages to be suffered by reason of a late payment hereof, exceed the maximum
permissible under applicable law. If, from any circumstances whatsoever,
fulfillment of any provision hereof, or of any provision in any of the Loan
Documents at the time performance of such provision shall be due, shall involve
transcending the limit of validity prescribed by law, ipso facto the obligations
to be fulfilled shall be reduced to the limit of such validity. This provision
shall never be superseded or waived and shall control every other provision of
all agreements between Maker and Payee.

7. Attorneys’ Fees. If an action is instituted on this Note, or if any other
judicial or non-judicial action is instituted by the holder hereof or by any
other person, and an attorney is employed by the holder hereof to appear in any
such action or proceeding or to reclaim, sequester, protect, preserve or enforce
the holder’s interest in the real property security or any other security for
this Note, including, but not limited to, proceedings to foreclose the loan
evidenced hereby, proceedings under the United States Bankruptcy Code, or in
eminent domain, or under the probate code, or in connection with any state or
federal tax lien, or to enforce an assignment of rents, or for the appointment
of a receiver, the Maker and every endorser and guarantor hereof and every
person who assumes the obligations evidenced by this Note and the Loan
Documents, jointly and severally promise to pay reasonable attorney’s fees for
services performed by the holder’s attorneys, and all costs and expenses
incurred incident to such employment. If Maker is the prevailing party in any
action by Maker pursuant to this Note, Payee shall pay such attorneys fees as
the court may direct.

8. Interest After Expiration or Acceleration. If the entire balance of principal
and accrued Interest is not paid in full on the Maturity Date or upon
acceleration of this Note as provided in paragraphs 5 above or 10 below, without
waiving or modifying in any way any of the rights, remedies or recourse Payee
may have under this Note or under any of the Loan Documents by virtue of this
default, the entire unpaid balance of principal and accrued Interest shall bear
interest from the Maturity Date or the

 

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date of acceleration until paid in full at the higher of: (a) eighteen percent
(18%) per annum; or (b) a fluctuating rate per annum at all times equal to the
Discount Rate of the Federal Reserve Bank of San Francisco (“Discount Rate”)
plus                     percent (        %) (“Maturity Interest Rate”). If at
any time the Discount Rate (or any previously substituted alternative index) is
no longer available, is unverifiable, or is no longer calculated in
substantially the same manner as before, then Payee may, in its sole and
absolute discretion, select and substitute an alternative index over which Payee
has no control. In addition, the holder hereof shall have any and all other
rights and remedies available at law or in equity or under the Deed of Trust.

9. Security. This Note is secured by and is entitled to the benefits of the Deed
of Trust. The provisions of the Deed of Trust are incorporated herein by
reference as if set forth in full, and this Note is subject to all of the
covenants and conditions therein contained.

10. Acceleration. Without limiting the obligations of Maker or the rights and
remedies of Payee or the holder hereof under the terms and covenants of this
Note and the Deed of Trust, Maker agrees that Payee shall have the right, at its
sole option, to declare any indebtedness and obligations hereunder or under the
Deed of Trust, irrespective of the Maturity Date specified herein, due and
payable in full if: (1) Maker or any one or more of the tenants-in-common, joint
tenants, or other persons comprising Maker sells, enters into a contract of
sale, conveys, alienates or encumbers the Property or any portion thereof or any
fractional undivided interest therein, or suffers Maker’s title or any interest
therein to be divested or encumbered, whether voluntarily or involuntarily, or
leases with an option to sell, or changes or permits to be changed the character
or use of the Property, or drills or extracts or enters into a lease for the
drilling for or extracting of oil, gas or other hydrocarbon substances or any
mineral of any kind or character on the Property; (2) The interest of any
general partner of Maker (or the interest of any general partner in a
partnership that is a partner) is assigned or transferred; (3) If Maker is a
corporation or partnership, more than twenty-five percent (25%) of the corporate
stock of Maker (or of any corporate partner or other corporation comprising
Maker) is sold, transferred or assigned; (4) There is a change in beneficial
ownership with respect to more than twenty-five percent (25%) of Maker (if Maker
is a limited liability company, trust or other legal entity) or of any partner
or tenant-in-common of Maker which is a limited liability company, trust or
other legal entity; or (5) a default has occurred hereunder or under any Loan
Document and is continuing. In such case, Payee or other holder of this Note may
exercise any and all of the rights and remedies and recourses set forth in the
Deed of Trust and as granted by law. Maker and any successor who acquires any
record interest in the Property agrees to notify Payee promptly in writing of
any transaction or event described in this section.

 

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11. Governing Law and Severability. This Note is made pursuant to, and shall be
construed and governed by, the laws of the State of California. If any
paragraph, clause or provision of this Note or any of the Loan Documents is
construed or interpreted by a court of competent jurisdiction to be void,
invalid or unenforceable, such decision shall affect only those paragraphs,
clauses or provisions so construed or interpreted and shall not affect the
remaining paragraphs, clauses and provisions of this Note or the other Loan
Documents.

12. Time of Essence. Time is of the essence of this Note.

13. Payment Without Offset. Principal and Interest shall be paid without
deduction or offset in immediately available funds in lawful money of the United
States of America. Payments shall be deemed received only upon actual receipt by
Payee and upon Payee’s application of such payments as provided herein.

14. Notices. All notices under this Note shall be in writing and shall be
effective upon personal delivery to the authorized representatives of either
party or upon being sent by certified or first class mail, postage prepaid,
addressed to the following respective parties as follows:

 

MAKER:  

 

   

 

   

 

    Attn:  

 

 

 

PAYEE:   Redwood Mortgage Investors IX, LLC     c/o Redwood Mortgage Corp.    
1825 South Grant Street, Suite 250     San Mateo, CA 94402     Attn: Michael
Burwell  

15. Collection. Any remittances by check or draft may be handled for collection
in accordance with the practices of the collecting party and any receipt issued
therefor shall be void unless the amount due is actually received by Payee.

16. Assignment. Payee or other holder of this Note may assign all of its rights,
title and interest in this Note to any person, firm, corporation or other entity
without the consent of Maker.

17. Relationship. The relationship of the parties hereto is that of borrower and
lender and it is expressly understood and agreed that nothing contained herein
or in any of the Loan Documents shall be interpreted or construed to make the
parties partners, joint venturers or participants in any other legal
relationship except for borrower and lender.

 

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18. Remedies. No right, power or remedy given Payee by the terms of this Note,
or in the Loan Documents is intended to be exclusive of any right, power or
remedy, and each and every such right, power or remedy shall be cumulative and
in addition to every other right, power or remedy given to Payee by the terms of
any of the Loan Documents or by any statute against Maker or any other person.
Every right, power and remedy of Payee shall continue in full force and effect
until such right, power or remedy is specifically waived by an instrument in
writing, executed by Payee.

19. Joint and Several Liability. If Maker is composed of more than one person,
then each person comprising Maker shall be jointly and severally liable for the
obligations, covenants and agreements created by or arising out of this Note.

20. Headings. The subject headings of the paragraphs of this Note are included
for purposes of convenience only, and shall not affect the construction or
interpretation of any of its provisions.

 

Maker:  

 

       

 

     

 

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