Exhibit 10.1


PROMISSORY
NOTE


	
  San Francisco, California

  	
   

  	
  $25,000,000.00

  
	
  May 26, 2006

  	
   

  	
   

  



For value received, the undersigned (“Borrower”)
promises to pay to the order of CMR INCOME FUND, LLC, a Nevada limited
liability company (together with any of its successors and assigns and/or any
other holder of this Note, “Lender”) to the Cash Management Account,
established pursuant to Section 2.6 of the Loan Agreement (as defined below),
or at such other place as the Lender may designate from time to time in
writing, in lawful money of the United States, the principal sum of TWENTY FIVE
MILLION DOLLARS ($25,000,000.00), with interest at the rate, and with principal
and interest due and payable without claim, notice, presentment or demand, all
as set forth below.


1.             Use of Proceeds.  Lender,
California Mortgage and Realty, Inc., a Delaware corporation and Wells Fargo
Foothill, Inc., a California corporation (“Wells Fargo”) are parties to that
certain Loan and Security Agreement, dated as of August 11, 2005 (“Original
Loan Agreement”), whereunder Wells Fargo agreed to make certain extensions of
credit from time to time to or for the account of Lender.  Thereafter the Original Loan Agreement was
amended pursuant to that certain First Amendment to Loan and Security Agreement
of even date herewith (together with the original Loan Agreement the “Loan
Agreement”), pursuant to which Wells Fargo has agreed to make an additional
term loan of Twenty Five Million Dollars ($25,000,000) to Lender (the “Term
Loan”) on the terms and conditions set forth in the Loan Agreement to enable
the Lender to fund the advance being made to the Borrower pursuant to this
Promissory Note. All of the loan proceeds payable to Borrower hereunder shall be
used, together with additional funds provided by Borrower, to fund that certain
Promissory Note, dated of even date herewith in the original principal amount
of $48,000,000, executed by each of Eagle Meadows of Wheatland 115, LLC, a
California limited liability company (“EMW-115”), Eagle Meadows of Wheatland
130, LLC, a California limited liability company (“EMW-130”), Eagle Meadows of
Wheatland 187, LLC, a  California limited
liability company (“EMW-187” and, together with EMW-115, and EMW-130, the “EMW Entities”),
payable to the order of Borrower (the “EMW Note”), which EMW Note is secured by
a first lien in certain unimproved real property located in Yuba County and Sutter
County, California (the “EMW Property”), a second lien in certain real property
located in San Mateo County, California (the “Brisbane Property”), and certain
real property located in Pinal County, Arizona (the “Casa Grande Property”).
All capitalized terms not otherwise defined herein shall have the meanings
given in the Loan Agreement.


2.             Interest and Maturity Date.  The
unpaid principal amount hereof shall bear interest at a per annum rate equal to
the rate of interest payable by the Lender on the Term Loan as set forth in
Section 17 of the Loan Agreement (i.e., the LIBOR Rate, plus six and one-half
percent (6.5%)), and shall be payable in arrears, on the first day of each
month, commencing July 1, 2006, through and until May 31, 2007 (the “Maturity
Date”).


All in accordance
with the obligations of the Lender for repayment of the Term Loan under Section
17 of the Loan Agreement.

















 


3.             Security Interest.  This
Note is secured by a Pledge and Security Agreement of even date herewith (the “Pledge”), whereby Borrower has pledged to Lender all of Borrower’s
right, title and interest in the EMW Note including all liens on the EMW
Property, the Brisbane Property and the Casa Grande Property now or hereinafter
held by Borrower.  Notwithstanding the
foregoing and upon the occurrence of an Event of Default, Lender shall have
full recourse against the assets of Borrower and shall not be limited to the
remedies under the Pledge and Lender shall not be required first to exhaust
Lender’s remedies under the Pledge before pursuing any remedies available to
Lender under this Note, at law, or in equity.


4.             Payment In Full Upon Maturity Date.  On
the Maturity Date, the entire unpaid principal balance and all accrued interest
shall be due and payable.


5.             Prepayments.  Borrower may prepay all
or any part of the principal balance at any time without charge or premium.


6.             Application of Payments.  All
payments received, whether delivered directly to the Cash Management Account or
to the Lender, shall be applied in this order: first, to amounts other than
interest and principal, if any, owing under this Note or under the Term Loan
under the Loan Agreement; second, to accrued interest; third, to principal;
except that, after the occurrence and during the continuation of any Event of
Default, all amounts received shall be applied in such order as Lender, in its
sole discretion, may elect.  Borrower
waives the application of Sections 1479 and 2822(a) of the California Civil
Code and any other statute or rule of law that would otherwise direct, or
permit Borrower to direct, the order of application of payments made by Borrower
or amounts otherwise received by Lender.


7.             No Waiver By Acceptance of Overdue or Partial
Payments.  If Lender accepts payment of any
overdue amount, or partial payment of an amount due and the remainder of such
amount is unpaid, such acceptance shall in no event: (a) constitute a cure or
waiver of Borrower’s default with respect to such overdue or unpaid amount; (b)
prevent Lender from exercising any of its rights and remedies with respect to
Borrower’s default; or (c) constitute a waiver of Lender’s right to require
full and timely payment of amounts becoming due thereafter or to exercise any
of Lender’s rights and remedies for any failure to so pay.


8.             Default.  Each of the following
events (“Events of Default”) constitute defaults under this Note:


(a)           a default in the payment of any amount due hereunder
within any applicable cure period; and


(b)           the occurrence of any “Event of Default” as defined in
the Pledge securing this Note or evidencing the loan reflected hereby that
remains uncured following any applicable notice and cure period.


9.             Acceleration Upon Default.  Upon
the occurrence of an Event of Default, Lender may, at its election, declare the
entire balance of principal and accrued interest immediately due


 


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and payable.  A delay by Lender
in exercising any right of acceleration after an Event of Default shall not
constitute a waiver of the Event of Default or of the right of acceleration or
any other right or remedy for such Event of Default.  The failure by Lender to exercise any right
of acceleration as a result of an Event of Default shall not constitute a
waiver of the right of acceleration or any other right or remedy with respect
to any other Event of Default, whenever occurring.


10.          Default Interest Rate.  Upon
the occurrence and during the continuation of an Event of Default, the outstanding principal balance due hereunder shall bear interest at a per annum rate equal to four (4)
percent above the per annum rate of
interest otherwise applicable hereunder;
provided; however that such default
interest shall only be due to the extent such default interest is due and owing on the Term Loan as set forth in the Loan Agreement.


11.          Enforcement Fees and Costs.  Borrower
shall immediately reimburse Lender for all fees and costs, including reasonable
attorneys’ fees and actual experts’ fees and costs, incurred by Lender for: (a)
enforcement of this Note or any of its terms, or the exercise of any rights or
remedies hereunder and/or at law, in equity or otherwise, whether or not any
action or proceeding is filed; (b) representation of Lender in any bankruptcy,
insolvency, reorganization or other debtor-relief or similar proceeding of or
relating to Borrower, to any person liable (by way of guaranty, assumption,
endorsement or otherwise) upon any of the obligations of this Note; or
(c) representation of Lender in any action or proceeding relating to any
security for this Note, whether commenced by Lender or any other person,
including foreclosure, receivership, lien or stop-notice enforcement,
bankruptcy, eminent domain and probate actions or proceedings. All such fees
and costs shall bear interest until paid at the rate applicable from time to
time under this Note.


12.          Waivers By Maker and Other Parties.  The
makers, endorsers, guarantors and sureties of this Note hereby waive diligence,
demand, presentment, notice of non-payment, notice of dishonor, protest and
notice of protest, agree that the time for performance of any obligation under
this Note may be extended from time to time without notice, consent to the
release without notice of any party liable hereon or herefor, consent to the
addition without notice of parties liable hereon or herefor, and consent to the
acceptance without notice of further security for this Note, including other
types of security, all without in any way affecting their liability, and waive
the right to plead any and all statutes of limitations as a defense to this
Note, any guaranty hereof or any agreement to pay the obligations hereof, to
the full extent permitted by law.


13.          Time of the Essence.  Time
is of the essence with respect to the payment and performance of the
obligations of this Note.


14.          No Oral Waivers or Modifications.  No
provision of this Note may be waived or modified orally, but only in a writing
signed by Lender.


15.          Governing Law.  This
Note shall be governed by and construed under the internal laws of the State of
California, without regard to conflict of law provisions.


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16.          Severability.  Every
provision of this Note is intended to be several.  If any provision of this Note is determined
by a court of competent jurisdiction to be illegal, invalid or unenforceable,
such illegality, invalidity or unenforceability shall not affect the other
provisions hereof, which shall remain binding and enforceable.


17.          Limitation Upon Interest.  All
agreements between the Borrower and Lender, now existing or hereafter arising,
are hereby expressly limited so that in no event whatsoever shall the amount
paid or agreed to be paid to Lender hereof for the use, forbearance or
detention of money to be loaned hereunder or otherwise, or for the performance
or payment of any covenant or obligation contained herein, exceed the maximum
amount permissible under applicable law. 
If from any circumstance whatsoever fulfillment of any provision hereof
exceeds the limit of validity prescribed by law, then, ipso facto, the
obligation to be fulfilled shall be reduced to the limit of such validity, and
if from any such circumstance Lender hereof shall ever receive as interest
under this Note or otherwise an amount that would exceed the highest lawful
rate, such amount that would be excessive interest shall be applied to the
reduction of the principal amount owing hereunder (without charge for
prepayment) and not to the payment of interest, or if such excessive interest
exceeds the unpaid balance of principal, such excess shall be refunded to
Borrower.


18.          Headings.  Headings herein are used
for convenience of reference only and do not define or limit the scope of
provisions of this Note.


19.          Successors and Assigns.  This
Note binds Borrower and its successors, assigns, heirs, administrators and
executors, and inures to the benefit of Lender and its successors, assigns,
participants, heirs, administrators and executors.


[Signature
Page Follows Immediately]


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IN WITNESS WHEREOF, Borrower has caused this Promissory Note to
be duly executed and delivered by its officer thereunto duly authorized as of
the day and year first above written.


 


	
  BORROWER:

  	
   

  	
  CMR MORTGAGE
  FUND II, LLC,

  
	
   

  	
   

  	
  a California
  limited liability company,

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
  By

  	
  CALIFORNIA
  MORTGAGE AND REALITY,

  
	
   

  	
   

  	
   

  	
  INC., a Delaware
  corporation,

  
	
   

  	
   

  	
   

  	
  Its Manager,

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
  By 

  	
  /s/ Craig
  Raymond

  
	
   

  	
   

  	
  Its 

  	
  Senior Vice
  President

  
					



 

















 


ALLONGE


(Promissory Note Endorsement)


Loan No.


This Allonge is affixed
to that certain Promissory Note, dated May 26, 2006, in the original principal
amount of $25,000,000.00, executed by CMR Mortgage Fund II, LLC, a California
limited liability company, payable to the order of CMR Income Fund, LLC.


Pay to the order of: Wells Fargo Foothill, Inc.


Dated:  May 26, 2006


	
   

  	
  CMR Income Fund, LLC,

  
	
   

  	
  a Nevada Limited
  Liability Company

  
	
   

  	
   

  
	
  

  	
  By:

  	
  /s/ Henry Park

  	
   

  
	
   

  	
  Name:

  	
  Henry Park

  	
   

  
	
   

  	
  Title:

  	
  Manager