Note by and between Paladin Realty



 Exhibit 10.3 
  
 PROMISSORY NOTE 
  
 Date: 10/31/2005 
  

			
	BORROWER	  	 
	Name:	  	Paladin Realty Income Properties, Inc.
		
	Address:	  	10880 Wilshire Blvd
	 	  	Suite 1400
	 	  	Los Angeles, CA 90024
		
	LENDER	  	 
	 	  	Paladin Realty Partners, LLC
		
	Address:	  	10880 Wilshire Blvd
	 	  	Suite 1440
	 	  	Los Angeles, CA 90024

  
 Borrower promises to pay to the order
of Lender, in lawful money of the United States of America, at its office indicated above or wherever else Lender may specify, the sum of $1,700,000.00 or such sum as may be advanced and outstanding from time to time, with interest on the unpaid
principal balance at the rate and on the terms provided in this Promissory Note (including all renewals, extensions or modifications hereof, this “Note”). 
  
 LIBOR MARKET INDEX RATE. Interest shall accrue on the unpaid principal balance of this Note from the date hereof at the LIBOR Market
Index Rate plus 2.25% as that rate may change from day to day in accordance with changes in the LIBOR Market Index Rate (“Interest Rate”). “LIBOR Market Index Rate”, for any day, means the rate for 1 month U.S. dollar deposits as
reported on Telerate page 3750 as of 11:00 a.m., London time, on such day, or if such day is not a London business day, then the immediately preceding London business day (or if not so reported, then as determined by Lender from another recognized
source or interbank quotation). 
  
 INTEREST ONLY, PRINCIPAL AT MATURITY.
This Note shall be due and payable in consecutive monthly payments of accrued interest only, commencing on November 1, 2005, and continuing on the same day of each month thereafter until fully paid; provided that if the first day of
any month in which payment is due is not a business day, payment shall be due on the next succeeding business day of that month. In any event, all principal and accrued interest shall be due and payable ON DEMAND. 
  
 DEFAULT RATE. In addition to all other rights contained in this Note, if a default in
the payment of Obligations occurs, all outstanding Obligations shall bear interest at the Interest Rate plus 3% (“Default Rate”), except if the Note is governed by the laws of the State of North 








 
Carolina and the original principal amount is less than or equal to $300,000.00. The Default Rate shall apply from demand until the Obligations or any
judgment thereon is paid in full. 
  
 INTEREST AND FEE(S) COMPUTATION
(ACTUAL/360). Interest and fees, if any, shall be computed on the basis of a 360-day year for the actual number of days in the applicable period (“Actual/360 Computation”). The Actual/360 Computation determines the annual effective
interest yield by taking the stated (nominal) rate for a year’s period and dividing said rate by 360 to determine the daily periodic rate to be applied for each day in the applicable period. Application of the Actual/360 Computation produces an
annualized effective rate exceeding the nominal rate. 
  
 APPLICATION OF
PAYMENTS. Monies received by Lender from any source for application toward payment of the Obligations shall be applied to accrued interest and then to principal. Upon the occurrence of a default in the payment of the Obligations or a Default (as
defined in the other Loan Documents) under any other Loan Document, monies may be applied to the Obligations in any manner or order deemed appropriate by Lender. 
  
 If any payment received by Lender under this Note or other Loan Documents is rescinded, avoided or for any reason returned by Lender because
of any adverse claim or threatened action, the returned payment shall remain payable as an obligation of all persons liable under this Note or other Loan Documents as though such payment had not been made. 
  
 USE OF PROCEEDS. Borrower shall use the proceeds of the loan(s) evidenced by this Note
for the commercial purposes of Borrower. 
  
 DEFINITIONS. Loan Documents.
The term “Loan Documents”, as used in this Note and the other Loan Documents, refers to all documents executed in connection with the loan evidenced by this Note and any prior notes which evidence all or any portion of the loan evidenced
by this Note, and any guaranty agreements, security agreements, security instruments, financing statements, mortgage instruments, any renewals or modifications, whenever any of the foregoing are executed, but does not include swap agreements (as
defined in 11 U.S.C. § 101). Obligations. The term “Obligations”, as used in this Note and the other Loan Documents, refers to any and all indebtedness and other obligations under this Note, all other obligations under any
other Loan Document(s), and all obligations under any swap agreements (as defined in 11 U.S.C. § 101) between Borrower and Lender whenever executed. Certain Other Terms. All terms that are used but not otherwise defined in any
of the Loan Documents shall have the definitions provided in the Uniform Commercial Code. 
  
 LATE CHARGE. If any payments are not timely made, Borrower shall also pay to Lender a late charge equal to 4% of each payment past due for 15 or more days. 
  
 Acceptance by Lender of any late payment without an accompanying late charge shall not be
deemed a waiver of Lender’s right to collect such late charge or to collect a late charge for any subsequent late payment received. 
  
 ATTORNEYS’ FEES AND OTHER COLLECTION COSTS. Borrower shall pay all of Lender’s reasonable expenses incurred to enforce or collect any of the Obligations
including, without limitation, reasonable arbitration, paralegals’, attorneys’ and experts’ fees and expenses, 

  

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whether incurred without the commencement of a suit, in any trial, arbitration, or administrative proceeding, or in any appellate or bankruptcy proceeding.

  
 USURY. If at any time the effective interest rate under this Note
would, but for this paragraph, exceed the maximum lawful rate, the effective interest rate under this Note shall be the maximum lawful rate, and any amount received by Lender in excess of such rate shall be applied to principal and then to fees and
expenses, or, if no such amounts are owing, returned to Borrower. 
  
 DEFAULT. If any of the following occurs, a default (“Default”) under this Note shall exist: Nonpayment; Nonperformance. The failure of timely payment or performance of the Obligations or Default under any other Loan
Documents. False Warranty. A warranty or representation made or deemed made in the Loan Documents or furnished Lender in connection with the loan evidenced by this Note proves materially false, or if of a continuing nature, becomes materially
false. Cross Default. At Lender’s option, any default in payment or performance of any obligation under any other loans, contracts or agreements of Borrower, any Subsidiary or Affiliate of Borrower, any general partner of or the
holder(s) of the majority ownership interests of Borrower with Lender or its affiliates (“Affiliate” shall have the meaning as defined in 11 U.S.C. § 101, except that the term “Borrower” shall be substituted for the term
“Debtor” therein; “Subsidiary” shall mean any business in which Borrower holds, directly or indirectly, a controlling interest). Cessation; Bankruptcy. The death of, appointment of a guardian for, dissolution of,
termination of existence of, loss of good standing status by, appointment of a receiver for, assignment for the benefit of creditors of, or commencement of any bankruptcy or insolvency proceeding by or against Borrower, its Subsidiaries or
Affiliates, if any, or any general partner of or the holder(s) of the majority ownership interests of Borrower, or any party to the Loan Documents. Material Capital Structure or Business Alteration. Without prior written consent of Lender,
(i) a material alteration in the kind or type of Borrower’s business or that of Borrower’s Subsidiaries or Affiliates, if any; (ii) the sale of substantially all of the business or assets of Borrower, any of Borrower’s
Subsidiaries or Affiliates or any guarantor, or a material portion (10% or more) of such business or assets if such a sale is outside the ordinary course of business of Borrower, or any of Borrower’s Subsidiaries or Affiliates or any guarantor,
or more than 50% of the outstanding stock or voting power of or in any such entity in a single transaction or a series of transactions; (iii) the acquisition of substantially all of the business or assets or more than 50% of the outstanding
stock or voting power of any other entity; or (iv) should any Borrower, or any of Borrower’s Subsidiaries or Affiliates or any guarantor enter into any merger or consolidation. 
  
 REMEDIES UPON DEFAULT. If a Default occurs under this Note or any Loan Documents, Lender may at any time thereafter, take the
following actions: Acceleration Upon Default. Accelerate the maturity of this Note and, at Lender’s option, any or all other Obligations, other than Obligations under any swap agreements (as defined in 11 U.S.C. § 101) between
Borrower and Lender, which shall be governed by the default and termination provisions of said swap agreements; whereupon this Note and the accelerated Obligations shall be immediately due and payable; provided, however, if the Default is based upon
a bankruptcy or insolvency proceeding commenced by or against Borrower or any guarantor or endorser of this Note, all Obligations (other than Obligations under any swap agreement as referenced above) shall automatically and 

  

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immediately be due and payable. Cumulative. Exercise any rights and remedies as provided under the Note and other Loan Documents, or as provided by
law or equity. 
  
 FINANCIAL AND OTHER INFORMATION. Borrower shall deliver
to Lender such information as Lender may reasonably request from time to time, including without limitation, financial statements and information pertaining to Borrower’s financial condition. Such information shall be true, complete, and
accurate. 
  
 WAIVERS AND AMENDMENTS. No waivers, amendments or
modifications of this Note and the other Loan Documents shall be valid unless in writing and signed by an officer of Lender. No waiver by Lender of any Default (as defined in the other Loan Documents) shall operate as a waiver of any other Default
or the same Default on a future occasion. Neither the failure nor any delay on the part of Lender in exercising any right, power, or remedy under this Note and other Loan Documents shall operate as a waiver thereof, nor shall a single or partial
exercise thereof preclude any other or further exercise thereof or the exercise of any other right, power or remedy. 
  
 Each Borrower or any person liable under this Note waives presentment, protest, notice of dishonor, notice of intention to accelerate maturity, notice of acceleration of
maturity, notice of sale and all other notices of any kind. Further, each agrees that Lender may extend, modify or renew this Note or make a novation of the loan evidenced by this Note for any period, and grant any releases, compromises or
indulgences with respect to any collateral securing this Note, or with respect to any other Borrower or any other person liable under this Note or other Loan Documents, all without notice to or consent of each Borrower or each person who may be
liable under this Note or any other Loan Document and without affecting the liability of Borrower or any person who may be liable under this Note or any other Loan Document. 
  
 MISCELLANEOUS PROVISIONS. Assignment. This Note and the other Loan Documents shall inure to the benefit of and be binding upon
the parties and their respective heirs, legal representatives, successors and assigns. Lender’s interests in and rights under this Note and the other Loan Documents are freely assignable, in whole or in part, by Lender. In addition, nothing in
this Note or any of the other Loan Documents shall prohibit Lender from pledging or assigning this Note or any of the other Loan Documents or any interest therein to any Federal Reserve Bank. Borrower shall not assign its rights and interest
hereunder without the prior written consent of Lender, and any attempt by Borrower to assign without Lender’s prior written consent is null and void. Any assignment shall not release Borrower from the Obligations. Organization; Powers.
Borrower represents that Borrower (i) is (a) an adult individual and is sui juris, or (b) a corporation, general partnership, limited partnership, limited liability company or other legal entity, duly organized, validly
existing and in good standing under the laws of its state of organization, and is authorized to do business in each other jurisdiction wherein its ownership of property or conduct of business legally requires such organization; (ii) has the
power and authority to own its properties and assets and to carry on its business as now being conducted and as now contemplated; and (iii) has the power and authority to execute, deliver and perform, and by all necessary action has authorized
the execution, delivery and performance of, all of its obligations under this Note and any other Loan Document to which it is a party. Applicable Law; Conflict Between Documents. This Note and, unless otherwise provided in any other Loan
Document, the other Loan Documents shall be governed by and construed under 

  

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the laws of the state named in Lender’s address on the first page hereof without regard to that state’s conflict of laws principles. If the terms
of this Note should conflict with the terms of the Loan Agreement or any commitment letter that survives closing, the terms of this Note shall control. Jurisdiction. Borrower irrevocably agrees to non-exclusive personal jurisdiction in the
state named in Lender’s address on the first page hereof. Severability. If any provision of this Note or of the other Loan Documents shall be prohibited or invalid under applicable law, such provision shall be ineffective but only to the
extent of such prohibition or invalidity, without invalidating the remainder of such provision or the remaining provisions of this Note or other such document. Notices. Any notices to Borrower shall be sufficiently given, if in writing and
mailed or delivered to the Borrower’s address shown above or such other address as provided hereunder, and to Lender, if in writing and mailed or delivered to Paladin Realty Partners, LLC, 10880 Wilshire Boulevard, Suite 1400, Los Angeles,
California 90024 or such other address as Lender may specify in writing from time to time. Notices to Lender must include the mail code. In the event that Borrower changes Borrower’s address at any time prior to the date the Obligations are
paid in full, Borrower agrees to promptly give written notice of said change of address by registered or certified mail, return receipt requested, all charges prepaid. Plural; Captions. All references in the Loan Documents to Borrower,
guarantor, person, document or other nouns of reference mean both the singular and plural form, as the case may be, and the term “person” shall mean any individual, person or entity. The captions contained in the Loan Documents are
inserted for convenience only and shall not affect the meaning or interpretation of the Loan Documents. Advances. Lender may, in its sole discretion, make other advances which shall be deemed to be advances under this Note, even though the
stated principal amount of this Note may be exceeded as a result thereof. Posting of Payments. All payments received during normal banking hours after 2:00 p.m. local time at the office of Lender first shown above shall be deemed received at
the opening of the next banking day. Joint and Several Obligations. Each person who signs this Note is a Borrower and is jointly and severally obligated. Fees and Taxes. Borrower shall promptly pay all documentary, intangible
recordation and/or similar taxes on this transaction whether assessed at closing or arising from time to time. Patriot Act Notice. To help fight the funding of terrorism and money laundering activities, Federal law requires all financial
institutions to obtain, verify, and record information that identifies each person who opens an account. For purposes of this section, account shall be understood to include loan accounts. FINAL AGREEMENT. This Note and the other Loan
Documents represent the final agreement between the parties 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. 
  
 ARBITRATION. Upon demand of any party hereto, whether made before or after institution
of any judicial proceeding, any claim or controversy arising out of or relating to the Loan Documents between the parties hereto (a “Dispute”) shall be resolved by binding arbitration conducted under and governed by the Commercial
Financial Disputes Arbitration Rules (the “Arbitration Rules”) of the American Arbitration Association (the “AAA”) and the Federal Arbitration Act. Disputes may include, without limitation, tort claims, counterclaims, a dispute
as to whether a matter is subject to arbitration, claims brought as class actions, or claims arising from documents executed in the future. A judgment upon the award may be entered in any court having jurisdiction. Notwithstanding the foregoing,
this arbitration provision does not apply to disputes under or related to swap agreements. Special Rules. All arbitration hearings shall be conducted in the city named in the address of Lender first stated above. A hearing shall begin 

  

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within 90 days of demand for arbitration and all hearings shall conclude within 120 days of demand for arbitration. These time limitations may not be
extended unless a party shows cause for extension and then for no more than a total of 60 days. The expedited procedures set forth in Rule 51 et seq. of the Arbitration Rules shall be applicable to claims of less than $1,000,000.00.
Arbitrators shall be licensed attorneys selected from the Commercial Financial Dispute Arbitration Panel of the AAA. The parties do not waive applicable Federal or state substantive law except as provided herein. Preservation and Limitation of
Remedies. Notwithstanding the preceding binding arbitration provisions, the parties agree to preserve, without diminution, certain remedies that any party may exercise before or after an arbitration proceeding is brought. The parties shall have
the right to proceed in any court of proper jurisdiction or by self-help to exercise or prosecute the following remedies, as applicable: (i) all rights to foreclose against any real or personal property or other security by exercising a power
of sale or under applicable law by judicial foreclosure including a proceeding to confirm the sale; (ii) all rights of self-help including peaceful occupation of real property and collection of rents, set-off, and peaceful possession of
personal property; (iii) obtaining provisional or ancillary remedies including injunctive relief, sequestration, garnishment, attachment, appointment of receiver and filing an involuntary bankruptcy proceeding; and (iv) when applicable, a
judgment by confession of judgment. Any claim or controversy with regard to any party’s entitlement to such remedies is a Dispute. Waiver of Exemplary Damages. The parties agree that they shall not have a remedy of punitive or exemplary
damages against other parties in any Dispute and hereby waive any right or claim to punitive or exemplary damages they have now or which may arise in the future in connection with any Dispute whether the Dispute is resolved by arbitration or
judicially. Waiver of Jury Trial. THE PARTIES ACKNOWLEDGE THAT BY AGREEING TO BINDING ARBITRATION THEY HAVE IRREVOCABLY WAIVED ANY RIGHT THEY MAY HAVE TO JURY TRIAL WITH REGARD TO A DISPUTE. 
  
 [Signature page follows.] 
  

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 IN WITNESS WHEREOF, Borrower, on the day and year first above written, has caused
this Note to be executed under seal. 
  
 Place of Execution and Delivery.
Borrower hereby certifies that this note was executed in the state of New Jersey and delivered to the Lender in the state of California. 
  

			
	BORROWER:
	
	 Paladin Realty Income Properties, Inc.

		
	By:	 	 /s/ John A. Gerson

	Name:	 	John A. Gerson
	Title:	 	 Chief Financial Officer



  

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