Exhibit
10.2

    


    PROMISSORY
NOTE SECURED BY DEED OF TRUST

    


    
      
        	
                $1,000,000.00

              	
                August
      30, 2010

              


      

    

     Irvine,
California

     

    FOR VALUE RECEIVED, the undersigned
(the “Borrower”),
promises to pay to the order of CARDINAL INVESTMENT PROPERTIES –
UNDERWOOD, L.P., a California limited partnership (the “Lender”),
or its assignee, at the address set forth below for Lender or such other place
as may be designated from time to time in writing by Lender, the principal sum
of One Million and No/100 Dollars ($1,000,000.00) (the “Loan
Amount”), or so much as may be advanced (including any additional advance
of monies as may from time-to-time be made to Borrower by Lender) hereunder (the
“Loan”), in
lawful money of the United States of America, plus interest and other charges as
provided herein.

    


    1.           Except
as provided immediately below with regard to the “Default Rate” and the minimum
interest payable in the event this Note is prepaid as provided in Section 3 below,
interest on this Note shall accrue at a rate equal to Twelve Percent (12%) per
annum, simple interest, commencing upon the date on which Lender disburses the
Loan proceeds to Borrower (the “Disbursement
Date”). A non-refundable interest payment equal to the first year’s
interest for the Loan shall be prepaid out of the Loan Amount of the initial
Loan funding in the amount of One Hundred Twenty Thousand and No/100 Dollars
($120,000.00) (“Pre-Paid
Interest”); under no circumstances shall the Pre-Paid Interest, or any
portion thereof, be refundable, regardless of when the Loan is paid. Thereafter,
interest shall be due and payable quarterly, commencing on the date that is
three (3) months after the one (1)
year anniversary of the Disbursement Date, and continuing thereafter until the
entire principal balance under this Note has been paid. A fee of Five Percent
(5%) of the Loan Amount, or Fifty Thousand and No/100 Dollars (the “Service
Fee”), shall be deemed earned upon the funding of the Loan, and shall by
payable to Lender immediately upon the earliest to occur of: (a) full repayment
of the Loan, (b) a default by Borrower under the Loan, or (c) the first
anniversary date of the Note. During the pendency of any Event of Default (as
hereinafter defined), the default interest rate (the “Default
Rate”) shall be equal to Seventeen Percent (17%) per annum, simple
interest.

    


    2.           The
entire Loan Amount, and  all unpaid accrued interest under this Note,
shall collectively be due and payable on the two (2) year anniversary of the
Disbursement Date (the “Maturity
Date”); provided, however, that (a) Borrower may, at Borrower’s option,
provided that the Loan is not in default at that time, extend the Maturity Date
for up to two (2) additional periods of 6 months each (each, a “Loan Extension
Period”) by giving written notice to Lender not less than ten (10) days
prior to the then-current Maturity Date, which notice shall be accompanied by
payment to Lender of: (i) the non-refundable sum in good funds equal to Two
Percent (2%) of the then existing loan balance for each Loan Extension Period
(an “Extension
Payment”), (ii) any unpaid interest accrued under the Loan from the
Disbursement Date through the date upon which the Loan Extension Period
commences [which payment of interest shall be calculated for purposes of this
subpart without reference to the Minimum Interest] and (iii) the Service Fee (if
not previously paid) and (b) interest accruing under this Note during any Loan
Extension Period shall be paid monthly in arrears on the first day of each month
during the applicable Loan Extension Period.

     

    
      
        
        

      

      
        
        

        
          

        

      

      
        
        

      

    

    


    3.           This
Note may be prepaid in whole or in part without penalty before the Maturity
Date. Any payment under this Note shall be applied (i) first to payment of the
Extension Payment, if applicable, (ii) then to the payment of the Service Fee,
(iii) then to any unpaid third-party costs incurred by Lender with respect to
the Loan as provided in Section 5 of the Loan Agreement, (iv) then to any
accrued but unpaid interest under the Loan and (v) last to the reduction of the
outstanding principal balance hereunder.

    


    4.           Time
is of the essence of the performance of Borrower’s obligations under this Note.
An “Event
of Default” is defined as Borrower’s: (a) failure to pay the entire
unpaid principal balance of (and all unpaid accrued interest on) this Note on or
before the Maturity Date; or (b) failure to pay any other payment required
hereunder by the delinquency date defined in Section 5, below; or (c) failure to
comply with the “Due on Sale/Encumbrance” provision of the Trust Deed as
described in Section 8, below; or (d) failure to cure any non-monetary even of
default under the Trust Deed [other than as covered in (c) above] within the
thirty (30) days next following written notice thereof from Lender to Borrower.
Upon the occurrence of an Event of Default, the entire unpaid principal balance
of and all unpaid accrued interest on this Note shall become immediately due and
payable at Holder’s option and without further notice. Holder’s failure to
exercise such option, or any other remedy provided herein, shall not constitute
a waiver of the right to do so upon the occurrence of any subsequent Event of
Default.

    


    5.           Any
payment required under this Note which is not received by Holder within ten (10)
days of its due date hereunder shall be considered to be delinquent and Borrower
shall pay to Holder on demand a late charge in the amount equal to three percent
(3%) of the late payment. Borrower and Holder agree that the late charge is
intended to be a reasonable approximation of the actual damages incurred by
Lender as a result of such overdo payment, which damages the parties acknowledge
are difficult to estimate. The imposition or collection of a late charge is in
addition to and not in lieu of the increase of the rate of interest to the
Default Rate or any other rights or remedies Holder may have as a result of the
late payment.

    


    6.           If,
upon the occurrence of an Event of Default, Holder consults with an attorney
regarding the enforcement of any of its rights under this Note or the Trust
Deed, or if this Note is placed in the hands of an attorney for collection, or
if a lawsuit, litigation or other action is instituted to enforce this Note or
Trust Deed, or if Borrower files for or is otherwise involved in a Bankruptcy
which in any way affects the rights of Lender to enforce its rights under this
Note, then in any such event, Borrower promises to pay all costs thereof,
including reasonable attorneys’ fees or costs of litigation. Such costs and
attorneys’ fees shall include, without limitation, those incurred on any appeal
and in any proceeding under any present or future bankruptcy or similar act or
state receivership.

    


    7.           Borrower
acknowledges and agrees that the Loan has been arranged by Park Place Partners,
Inc., a licensed California real estate broker (License No. 01225173). Park
Place Partners, Inc., has been retained by Lender and Borrower has no
responsibility for any fee or commission payable to said broker. Notwithstanding
anything to the contrary set forth elsewhere herein, this Note is hereby
expressly limited so that in no contingency or event whatsoever, whether by
acceleration of maturity of the debt evidenced hereby or otherwise, shall the
amount paid or agreed to be paid to Lender for the use, forbearance or detention
of the money advanced or to be advanced under this Note exceed the highest
lawful rate permissible under the laws of the State of California as applicable
to Borrower. If, from any circumstances whatsoever, fulfillment of any provision
hereof or of any other agreement, evidencing or securing the debt, at the time
performance of such provisions shall be due, shall involve the payment of
interest in excess of that authorized by law, the obligation to be fulfilled
shall be reduced to the limit so authorized by law; and if from any
circumstances, Lender shall ever receive as interest an amount which would
exceed the highest lawful rate applicable to the Borrower, such amount would be
excessive interest shall be applied to the reduction of the unpaid principal
balance of the debt evidenced hereby and not to the payment of interest. In the
event any such excess exceeds the then unpaid principal balance hereunder, such
interest as is so in excess of the then unpaid balance hereunder shall be
refunded to Borrower.

     

    
      
        
        

      

      
        
        

        
          

        

      

      
        
        

      

    

    


    8.           This
Note is secured by, among other things, that certain Deed of Trust with
Assignment of Rents (Long Form) with Rider attached of an even date herewith
describing real property and other assets (the “Collateral”)
owned by Borrower and located in the City of Menifee, Riverside County,
California (the “Trust
Deed”). The Trust Deed provides in part:

    


    Due on
Sale/Encumbrance: Trustor shall not sell, transfer, assign, further
encumber, hypothecate, or in any way dispose of or use as collateral for another
loan or obligation of Trustor, the Property or any interest therein without
first obtaining the prior written consent of Beneficiary, which consent may be
granted, conditioned or withheld in the sole discretion of Beneficiary. Any
violation of the restrictions set forth herein, whether by act, omission of by
virtue of law, shall be considered a default in the performance of the
obligations of Trustor under the Trust Deed and Beneficiary shall have the same
rights with respect thereto as are provided to Beneficiary under the Trust Deed
with respect to any default by Trustor in the payment of any indebtedness
secured under the Trust Deed or in Trustor’s performance of any agreement
thereunder.

    


    9.           Borrower
hereby waives presentment, demand for payment, notice of dishonor, protest, and
notice of protest. Any modification to this Note must be set forth in writing
which, to the extent enforcement thereof may be sought against Holder, must be
executed by Holder. This Note shall be governed by and construed and enforced in
accordance with the laws of the state of California. The liability of all
persons and entities who are in any manner obligated hereunder shall be joint
and several.

    


    10.           Any
notice to Lender under this Note shall be in writing and shall be considered
given when delivered by personal service or three (3) business days after
placement in the U.S. mails, certified or registered mail, postage prepaid,
addressed to Lender: c/o Cardinal
Development, 375 Bristol Street, Suite 50, Costa Mesa, California 92626,
Attention: David J. Seidner, or such other address as Lender may designate by
written notice to Borrower. Any notice to Borrower under this Note shall be in
writing and shall be considered given three (3) business days after placement in
the U.S. mails, certified or registered mail, postage prepaid, addressed to
Borrower: c/o
Shopoff Advisors, L.P., 8951 Research Drive, Irvine, California 92618, Attention
William A. Shopoff, or such other address as Borrower may designate by written
notice to Lender.

    


    11.           This
Note is the controlling document concerning the matters addressed herein.
Therefore, in the event of a conflict between the specific terms of this Note
and those contained in other Loan Documents, such specific terms of this Note
shall prevail.

    


    12.           As
used herein, the word “days” shall mean and refer to calendar days; provided,
however, in the event of a payment date or deadline falls on a Saturday, Sunday
or federal holiday, such payment date or deadline shall be extended to the next
following calendar day that is not a Saturday, Sunday or federal
holiday.

     

    
      
        
        

      

      
        
        

        
          

        

      

      
        
        

      

    

    


    This
Promissory Note Secured by Deed of Trust is executed as of the date first
written above.

    


    SPT-LAKE ELSINORE HOLDING CO.,
LLC,

    a
Delaware limited liability company

     

    By: 
Shopoff Partners, L.P., a Delaware limited

    partnership,
sole member

     

    By: 
Shopoff General Partner, LLC, a Delaware limited

    liability
company, general partner

     

    By: 
Shopoff Properties Trust, Inc.,

    a
Maryland corporation, manager

    


    By: 
/s/ William A.
Shopoff

    William
A. Shopoff, President and CEO