Document:

PROMISSORY
NOTE

 

	 	 	Darin R. Pastor
	 	 	Newport Beach, California
	 	 	 
	 	 	 
	  Principal Loan Amount:	 	 
	  $577,373.47	Date:    	October 22, 2012

 

FOR
VALUE RECEIVED , the undersigned Capstone Affluent
Strategies, Inc. ("Borrower") of 895 Dove Street, 3rd Floor, Newport Beach, CA 92660, promises to pay to the
order of Darin R. Pastor  ("Pastor") at his office at 895 Dove Street, 3rd Floor, Newport Beach, CA 92660, or at such other place as the
holder thereof may designate, in lawful money of the United States of America and in immediately available funds,
the principal loan amount of $577,373.47 ("Principal"), or so much thereof as may be outstanding with
interest thereon, whether before or after any breach hereof.

 

Subject
to the obligation of Pastor to forgive the principal and interest on the Note in
accordance with provisions
below, Borrower will be required to repay the Principal on this Note no later than  October
4, 2017 (the "Maturity Date") or upon an Event of Default as described below, whichever occurs 
first.  The Principal balance shall bear interest at the minimum federal rate
per annum published by the  Internal Revenue
Service (computed on the basis of a 360-day year, actual days elapsed).
 Interest shall
begin accruing on the date proceeds are advanced under this Note.

 

Prepayment.
Borrower may from time to time partially or wholly repay the outstanding principal. All
payments under this Note shall be applied first to current interest, second to accrued and unpaid interest, and third to
Principal.

 

Forgiveness
of Principal and Interest. Pastor shall forgive the Principal plus calculated accrued interest on this Note in accordance with the terms set forth in Exhibit
A hereto. The forgiveness of Principal
and interest under this Note will cease upon the occurrence of an Event of Default as defined below.
Upon the occurrence of an Event of Default (defined below) this Note shall bear interest on the remaining unpaid principal
balance at the default rate of interest equal to the interest rate determined as stated in the 2nd paragraph above PLUS an
additional three percent  (3%).

 

Income
Taxes. Borrower hereby acknowledges responsibility for the payment of income taxes
in connection with the forgiveness of principal and interest under this Note.

 

Right
to Offset.  Borrower 
acknowledges  and  agrees
 that  in
 order to
contribute to the 
satisfaction  of the repayment 
obligation hereunder,  Pastor
is authorized  to the necessary  deductions
from Borrower's  interest or entitlement
in any commissions  or fees
payable  by Pastor 
to Borrower,  or in
any other amounts owed by Pastor to
Borrower. Borrower also agrees that Pastor
has and shall have the right to
apply any funds held in 
Borrower's accounts  in  which 
Pastor is  legally  entitled 
to satisfy any  amounts  remaining
outstanding pursuant to the terms of the Note.

 

Borrower
Initials _______

Lender
Initials _______

 

    	1

    	 

    

Events
of Default. A Default under this Note shall consist of any of the following events:
 (i) 
any payment to
Pastor is not
made when due
(including when there
is a material default on any other
material obligation Borrower has with Pastor) ;
there is material failure to abide by any of the
terms and conditions contained in any agreement Borrower
has with Pastor but only after Pastor gives
Borrower written notice of any such failure and a reasonable opportunity to cure; (iii) any warranty, representation or
statement made or furnished to Pastor by or on behalf of the Borrower proves to have been false in
any material respect when made or furnished ; (iv)
the death, dissolution
, termination of existence, merger,
consolidation, insolvency
, business failure,
appointment of a receiver of any part of the property of,
assignment for the benefit of creditors by, or
the commencement of any proceedings under bankruptcy or insolvency laws by or against
the Borrower or any guarantor or surety for
Borrower; (v) any violation or breach
of any provision or,
or any defined event of default under,
any addendum to this note, letter agreement , guaranty,
security agreement,
deed of trust or 
other contract or  instrument executed 
in connection with this note or securing
this note; or (vi) Pastor has a good faith
belief that the prospect of timely repayment
is impaired based on Pastor's commercially reasonable assessment that Borrower's prospects of repayment
are materially diminished .

 

Upon
the occurrence of
any Event of
Default described under
clauses (i) through
(vi) above,
Pastor, at his option,
may declare all sums of principal and interest outstanding hereunder to be immediately due
and payable without presentment , demand,
protest or advice of dishonor, all
of which are expressly waived by Borrower. In
the Event of Default, the
Borrower agrees that Pastor
may offset any outstanding
principal and interest due under
this Note against any
amounts due from Pastor for Borrower,
up to the
maximum amount legally permitted.

 

Attorney’s
Fees. The Borrower shall pay Pastor the full amount of all costs and  expenses,
 including reasonable attorney's fees (to include outside counsel fees) incurred by
the holder  in connection with the enforcement
of the holder's rights and/or the collection of any amount  which
becomes due to Pastor under this Note or the prosecution and defense of any action in any way 
related  to this Note,
including without limitation any action to declaratory 
relief.

 

Binding
on Heirs and Assigns. This Note inures to and binds the heirs, legal  representatives,
successors and
assigns of Borrower
and Pastor; provided,
however,
that Borrower
may not assign
this Note or any proceeds of it or assign
or delegate any of its rights or
obligations without Pastor's prior written
consent in each instance. Pastor,
in his sole discretion, may
transfer this Note and may sell or assign interest without notice to Borrower.

 

Choice
of Law. This
note shall be
construed in accordance
with the laws
of the state
of California. 

 

DARIN R.
PASTOR CAPSTONE AFFLUENT STRATEGIES, INC

BY:____________________________________________

TITLE:____________________________________________

 

Borrower
Initials _______

Lender
Initials _______

    	-2-

    	 

    

Exhibit
A

Forgiveness
of Note Terms

Notwithstanding
any other provisions of this Note to the contrary, the
terms of this Exhibit A shall take priority.

 

For
purposes of this
Exhibit A, the
following terms shall
have the following
meanings:

 

"Borrower"
shall mean the individual or entity listed as Borrower in
the first paragraph of this Note. "Forgiveness Amount” shall mean the
following:

	 	End Year 1	End Year 2	End Year 3	End Year 4	End Year 5
	Forgiveness Amount: (1/5th of P&I)	
         

        $267,954.50

        Plus
        Interest
	
         

        $267,954.50

        Plus
        Interest
	
         

        $267,954.50

        Plus
        Interest
	
         

        $267
        ,954.50

        Plus
        Interest
	
         

        $267,954.50

        Plus
        Interest

 

As
specified above, for
each year that
passes from the
Anniversary Date
of this
Note, the corresponding
amount of principal
and accrued interest
shall be forgiven
as set forth
above. For any
of the five years listed above for
which the Borrower is not affiliated with Pastor on the Anniversary Date,
the remaining balance of the loan will be immediately
due in  full.

 

 

 
  

 

 

 

 

 

 

 

 

 

 

 

 

Borrower
Initials _______

Lender
Initials _______

    	-3-PROMISSORY
NOTE

 

	 	 	Darin R. Pastor
	 	 	Newport Beach, California
	 	 	 
	 	 	 
	  Principal Loan Amount:	 	 
	  $1,339,772.50	Date:    	December 31, 2012

 

FOR
VALUE RECEIVED, the undersigned Capstone Affluent Strategies, Inc. ("Borrower") of 895 Dove
Street 3rd Floor, Newport Beach, CA 92660, promises to pay to the order of Darin R. Pastor
("Pastor") at his office at 895 Dove Street, 3rd Floor, Newport
Beach, CA 92660, or at such other place as the holder thereof may designate, in
lawful money of the United States of America and in immediately available funds,
the principal loan amount of $1,339,772.50 ("Principal"),
or so much thereof as may be outstanding with interest thereon, whether before or
after any breach hereof.

 

Subject
to the obligation of Pastor to forgive the principal and interest on the Note in accordance
with provisions
below, Borrower will be required to repay the Principal on this Note no later than October
4, 2017 (the "Maturity
Date") or upon an Event of Default as described below, whichever occurs first. The
Principal balance shall bear interest at the minimum federal rate per annum published by the
Internal Revenue Service (computed on the basis of a 360-day year, actual days elapsed). Interest shall
begin accruing on
the date proceeds are advanced under this Note.

 

Prepayment.
Borrower may from time to time partially or wholly repay the outstanding principal. All
payments under this Note shall be applied first to current interest, second to accrued and unpaid
interest, and third to Principal.

 

Forgiveness
of Principal and Interest. Pastor shall forgive the Principal plus calculated accrued
interest on this
Note in accordance
with the terms
set forth in
Exhibit A hereto.
The forgiveness of
Principal and interest under this Note will cease upon the occurrence of an Event of Default as
defined below. Upon the occurrence
of an Event of Default (defined below) this Note shall bear interest on the
remaining unpaid principal balance at the default rate of interest equal to the interest rate 
determined as stated in the 2nd paragraph above PLUS an additional three percent (3%).

 

Income
Taxes. Borrower
hereby acknowledges responsibility for the payment of income  taxes 
m connection with the forgiveness of principal and interest under this Note.

 

Right
to Offset. Borrower
acknowledges and agrees that in order to contribute to the satisfaction of the repayment
obligation hereunder, Pastor is authorized to the necessary deductions from Borrower's interest
or entitlement in any commissions or fees payable by Pastor to Borrower, or in any other amounts owed by
Pastor to Borrower.
Borrower also agrees
that Pastor has
and shall have
the right to
apply any funds held in Borrower's accounts in which Pastor is legally entitled
to satisfy any amounts remaining outstanding pursuant to the terms of the Note.

 

 

Borrower
Initials _______

Lender
Initials _______

    	1

    	 

    

Events
of Default. A
Default under this
Note shall consist
of any of
the following events: 
(i) any payment
to Pastor is
not made when due (including when there is
a material default on
any other material obligation Borrower
has with Pastor); there
is material failure to abide by any of
the terms and conditions contained in any agreement Borrower has with Pastor
but only after Pastor gives Borrower written notice of any such failure and a reasonable opportunity to cure;
(iii) any warranty , representation
or statement made or furnished to Pastor by or on behalf
of the Borrower proves to have been false in any  material respect when made or furnished;
(iv) the death, dissolution,
termination of existence, merger, consolidation, insolvency
, business failure, appointment of a receiver of any part
of the property of,
assignment for the benefit of creditors by, or
the commencement of any proceedings under bankruptcy or insolvency laws by or against the Borrower or any guarantor or surety for
Borrower; (v)
any violation or breach of any provision or, or any defined event of default under,
any addendum to this note, letter agreement,
guaranty,
security agreement , deed
of trust or other contract or instrument executed in connection with this note or securing
this note; or (vi) Pastor has a good faith belief that
the prospect of timely repayment is impaired based on Pastor's commercially reasonable assessment that Borrower's prospects of
repayment are materially diminished.

 

Upon
the occurrence of
any Event of
Default described under
clauses (i) through
(vi) above, Pastor,
at his option,
may declare all sums of principal and interest outstanding hereunder to be immediately due
and payable without presentment , demand,
protest or advice of dishonor, all
of which are expressly waived by Borrower. In
the Event of Default, the Borrower agrees that Pastor
may offset any outstanding principal and interest due under this Note against any amounts due from Pastor for Borrower,
up to the maximum amount legally permitted.

 

Attorney’s
Fees. The
Borrower shall pay Pastor the full amount of all costs and  expenses,
 including reasonable attorney's
fees (to include outside counsel fees) incurred by the holder in
connection with the enforcement of the holder's rights and/or the collection of any amount 
which becomes due to Pastor under this Note or the prosecution and defense of
any action in any way related  to this Note,
including without limitation any action to declaratory 
relief.

 

Binding
on Heirs and Assigns.
This Note inures to and binds the heirs, legal
representatives, successors and
assigns of Borrower and Pastor; provided , however, that
Borrower may not assign this Note or any proceeds
of it or
assign or delegate
any of its rights
or obligations without
Pastor's prior written
consent in each instance.
Pastor, in
his sole discretion,
may transfer this Note and
may sell or assign interest without
notice to Borrower.

 

Choice
of Law.
This note shall
be construed in
accordance with the
laws of the
state of California.

DARIN R.
PASTOR CAPSTONE AFFLUENT STRATEGIES, INC

BY:___________________________________________

TITLE:___________________________________________

 

Borrower
Initials _______

Lender
Initials _______

    	-2-

    	 

    

Exhibit
A Forgiveness of Note Terms

Notwithstanding
any other provisions of this Note to the contrary, the terms of this Exhibit A shall
take priority.

 

For purposes of this Exhibit
A, the following terms shall have the following  meanings:

 

"Borrower" shall mean
the individual or entity listed as Borrower in the first paragraph of this Note. "Forgiveness
Amount" shall mean the following:

	 	End Year 1	End Year 2	End Year 3	End Year 4	End Year 5
	Forgiveness Amount: (1/5th of P&I)	
         

        $115,474
        .69

        Plus
        Interest
	
         

        $115,474
        .69

        Plus
        Interest
	
         

        $115,474.69

        Plus
        Interest
	
         

        $115,474.69

        Plus
        Interest
	
         

        $115,474.69

        Plus
        Interest

 

As
specified above, for
each year that
passes from the
Anniversary Date of
this Note, the
corresponding amount of principal
and accrued interest
shall be forgiven
as set forth above.
For any of the
five years listed above for which
the Borrower is not affiliated
with Pastor on the Anniversary Date,
the remaining balance of the loan will be
immediately due in full.

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Borrower
Initials _______

Lender
Initials _______

 

    	-3-

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