Exhibit 10.2

 

PROMISSORY NOTE

 

Borrower:

Eclipse Partners II, LLC

444 Gulf of Mexico Dr. #101

Longboat Key, FL 34228

Lender:

Shepherd's Finance, LLC

12627 San Jose Blvd, Ste. 203

Jacksonville, FL 32223

(302) 752-2688

 

Principal Amount:  $2,408,000.00 Initial Rate:  11.94% Date of Note:  November
4, 2015

 

PROMISE TO PAY. Eclipse Partners II, LLC ("Borrower") promises to pay to
Shepherd's Finance, LLC ("Lender"), or order, in lawful money of the United
States of America, on demand, but in no event later than November 30, 2017
(“Maturity Date”), the principal amount of Two Million Four Hundred Eight
Thousand and 00/100 dollars ($2,408,000.00) or so much as may be advanced under
the Loan Documents from time to time, together with interest on the unpaid
outstanding principal balance of each advance. Interest shall be calculated from
the date of each advance until repayment of each advance. Lender shall disburse
the funds in accordance with the Construction Loan Agreement and other Loan
Documents.

 

PAYMENT. Borrower will pay this loan in full immediately upon Lender's demand.
Borrower will pay by means of an ACH initiated by Lender regular monthly
payments of all accrued unpaid interest due as of each payment date, beginning
December 15, 2015 with all subsequent interest payments to be due on the same
day of each month after that. Unless otherwise agreed or required by applicable
law, payments will be applied first to any accrued unpaid interest; then to any
unpaid collection costs; and then to principal. Borrower will pay Lender at
Lender's address shown above or at such other place as Lender may designate in
writing.

 

LATE FEE. All scheduled payments shall be subject to a fifteen-day (15) grace
period. In the event any payment is not made as and when due, the Lender will
impose a late charge equal to the greater of five percent (5.00%) of the
delinquent amount or twenty-five dollars ($25.00).

 

VARIABLE INTEREST RATE. The interest rate on this Note is subject to change from
time to time based on changes in an independent index which is the Shepherd's
Finance, LLC Cost of Funds plus the Rate Adder. Lender’s Cost of Funds (the
"Index"), shall mean the greater of five percent (5.0%) or the weighted average
price paid by Lender on or in connection with all of its borrowed funds. Such
weighted average price shall include interest rates, loan fees, legal fees and
any and all other costs paid by Lender on its borrowed funds, and, in the case
of funds borrowed by Lender from an Affiliate of Lender, the weighted average
price paid by such Affiliate on or in connection with such borrowed funds.
Lender’s Cost of Funds is determined each month at the beginning of the month,
based on the cost of funds for the previous month. Each change in such rate
shall be effective as of the beginning of the month. The Index is not
necessarily the lowest rate charged by Lender on its loans. If the Index becomes
unavailable during the term of this loan, Lender may designate a substitute
index after notifying Borrower. Lender will tell Borrower the current Index rate
upon Borrower's request. The interest rate change will not occur more often than
each change in the Index. The interest rate on the Loan will be adjusted
contemporaneously with changes in the Index. Borrower understands that Lender
may make loans based on other rates as well. The Index currently is 9.940% per
annum. Interest on the unpaid principal balance of this Note will be calculated
as described in the "INTEREST CALCULATION METHOD" paragraph using a rate equal
to the percentage points over the Index, as set forth in the Rate Adder below,
adjusted if necessary for any minimum and maximum rate limitations described
below, resulting in an initial rate of 11.940% per annum. NOTICE: Under no
circumstances will the interest rate on this Note be less than 7.000% per annum
or more than the maximum rate allowed by applicable law.

 

“Rate Adder” shall be calculated each month, based on the number of full months
since the Closing Date.

 

Number of full months since

Closing Date

  Rate Adder 1-12   2% 13-18   4% 19-24   6% 25 – and greater   8%

 

INTEREST CALCULATION METHOD. Interest on this Note is computed on a 365/366
simple interest basis; that is, by applying the ratio of the interest rate over
the number of days in a year, multiplied by the outstanding principal balance,
multiplied by the actual number of days the principal balance is outstanding.
All interest payable under this Note is computed using this method.

  

Loan 1014688

 

 

 

  

PROMISSORY NOTE 

(Continued)

 

PREPAYMENT. Borrower agrees that all loan fees and other prepaid finance charges
are earned fully as of the date of the loan and will not be subject to refund
upon early payment (whether voluntary or as a result of default), except as
otherwise required by law. Except for the foregoing, Borrower may pay without
penalty all or a portion of the amount owed earlier than it is due. Early
payments will not, unless agreed to by Lender in writing, relieve Borrower of
Borrower's obligation to continue to make payments of accrued unpaid interest.
Rather, early payments will reduce the principal balance due. Borrower agrees
not to send Lender payments marked "paid in full", "without recourse", or
similar language. If Borrower sends such a payment, Lender may accept it without
losing any of Lender's rights under this Note, and Borrower will remain
obligated to pay any further amount owed to Lender. All written communications
concerning disputed amounts, including any check or other payment instrument
that indicates that the payment constitutes "payment in full" of the amount owed
or that is tendered with other conditions or limitations or as full satisfaction
of a disputed amount must be mailed or delivered to: Shepherd's Finance, LLC,
12627 San Jose Blvd, Ste. 203, Jacksonville, FL 32223.

 

INTEREST AFTER MATURITY OR DEFAULT. After the principal amount of any part of
the debt, accrued interest thereon, or any fees or any other sums payable
hereunder become due and remain unpaid (whether upon demand by Lender, upon the
occurrence of an Event of Default, by acceleration or otherwise), including a
failure to pay upon final maturity, the interest rate on this Note shall be
increased by adding an additional 4.000 percentage point margin ("Default Rate
Margin"). The Default Rate Margin shall also apply to each succeeding interest
rate change that would have applied had there been no default; however, in no
event will the interest rate exceed the maximum interest rate limitations under
applicable law. The default interest rate(s) shall apply to the entire
outstanding principal balance of the Loan. Upon Borrower curing the default, the
interest rate on the Loan shall revert to the initially agreed upon interest
rate hereunder, effective as of the date on which Borrower cures the default.

 

LENDER'S RIGHTS. Upon Lender's demand, Lender may declare the entire unpaid
principal balance under this Note and all accrued unpaid interest immediately
due, and then Borrower will pay that amount.

 

ATTORNEYS' FEES; EXPENSES. Lender may hire or pay someone else to help collect
this Note if Borrower does not pay. Borrower will pay Lender that amount. This
includes, subject to any limits under applicable law, Lender's reasonable
attorneys' fees and Lender's legal expenses whether or not there is a lawsuit,
including reasonable attorneys' fees and legal expenses for bankruptcy
proceedings (including efforts to modify or vacate any automatic stay or
injunction), and appeals. Lender may also recover from Borrower all court,
alternative dispute resolution or other collection costs (including, without
limitation, fees and charges of collection agencies) actually incurred by
Lender.

 

JURY WAIVER. Lender and Borrower hereby waive the right to any jury trial in any
action, proceeding, or counterclaim brought by either Lender or Borrower against
the other.

 

GOVERNING LAW. This Note will be governed by federal law applicable to Lender
and, to the extent not preempted by federal law, the laws of the State of
Florida without regard to its conflicts of law provisions. This Note has been
given by Borrower and accepted by Lender in the State of Florida.

 

CHOICE OF VENUE. If there is a lawsuit, Borrower agrees upon Lender's request to
submit to the jurisdiction of the courts of Sarasota County, State of Florida.

 

COLLATERAL. Borrower acknowledges this Note is secured by the following
collateral described in the security instrument listed herein: a Mortgage and
Security Agreement dated November 4, 2015, to Lender on real property located in
Sarasota County, State of Florida commonly known as 165 Whittier Dr., Sarasota,
FL 34236.

 

LINE OF CREDIT. This Note evidences a straight line of credit. Once the total
amount of principal has been advanced, Borrower is not entitled to further loan
advances. Borrower agrees to be liable for all sums either: (A) advanced in
accordance with the instructions of an authorized person or (B) credited to any
of Borrower's accounts with Lender. The unpaid principal balance owing on this
Note at any time may be evidenced by endorsements on this Note or by Lender's
internal records, including daily computer print-outs.

 

SUCCESSOR INTERESTS. The terms of this Note shall be binding upon Borrower, and
upon Borrower's heirs, personal representatives, successors and assigns, and
shall inure to the benefit of Lender and its successors and assigns.

   

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GENERAL PROVISIONS. If any part of this Note cannot be enforced, this fact will
not affect the rest of the Note. Lender may delay or forgo enforcing any of its
rights or remedies under this Note without losing them. Borrower and any other
person who signs, guarantees or endorses this Note, to the extent allowed by
law, waive presentment, demand for payment, and notice of dishonor. Upon any
change in the terms of this Note, and unless otherwise expressly stated in
writing, no party who signs this Note, whether as maker, guarantor,
accommodation maker or endorser, shall be released from liability. All such
parties agree that Lender may renew or extend (repeatedly and for any length of
time) this loan or release any party or guarantor or collateral; or impair, fail
to realize upon or perfect Lender's security interest in the collateral; and
take any other action deemed necessary by Lender without the consent of or
notice to anyone. All such parties also agree that Lender may modify this loan
without the consent of or notice to anyone other than the party with whom the
modification is made. The obligations under this Note are joint and several.

 

PRIOR TO SIGNING THIS NOTE, BORROWER READ AND UNDERSTOOD ALL THE PROVISIONS OF
THIS NOTE, INCLUDING THE VARIABLE INTEREST RATE PROVISIONS. BORROWER AGREES TO
THE TERMS OF THE NOTE.

 

BORROWER ACKNOWLEDGES RECEIPT OF A COMPLETED COPY OF THIS PROMISSORY NOTE.

 

THIS NOTE IS DELIVERED UNDER SEAL AND IT IS INTENDED THAT THIS NOTE IS AND SHALL
CONSTITUTE AND HAVE THE EFFECT OF A SEALED INSTRUMENT ACCORDING TO LAW.

 

BORROWER:

 

Eclipse Partners II, LLC

 

By: /s/ Steven Hanson  

Steven Hanson, Manager and Member of Eclipse Partners II, LLC

 

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