SEC Contract Filing

Filing Date: 2016-07-12

Document Content:
<DOCUMENT>
<TYPE>EX-10.2
<SEQUENCE>3
<FILENAME>form8k071216ex10-2.htm
<DESCRIPTION>PROMISSORY NOTE
<TEXT>
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<div style="MARGIN-BOTTOM: 12pt; FONT-SIZE: 10pt; FONT-FAMILY: 'Times New Roman', Times, serif; FONT-WEIGHT: bold; TEXT-ALIGN: justify; LINE-HEIGHT: 12.55pt">THE INDEBTEDNESS EVIDENCED BY THIS INSTRUMENT IS SUBORDINATE TO THE PRIOR PAYMENT IN FULL OF CERTAIN SENIOR DEBT (AS DEFINED IN THE SUBORDINATION AGREEMENT HEREINAFTER REFERRED TO) PURSUANT TO, AND TO THE EXTENT PROVIDED IN, THAT CERTAIN SUBORDINATION AGREEMENT, DATED THE DATE HEREOF, IN FAVOR OF KOCH MINERALS, LLC, AS THE SAME MAY BE AMENDED, RESTATED, CONSOLIDATED, REPLACED OR OTHERWISE MODIFIED FROM TIME TO TIME (THE "<font style="FONT-SIZE: 10pt; FONT-FAMILY: 'Times New Roman', Times, serif"><u>SUBORDINATION AGREEMENT</u></font>").&#160; THIS INSTRUMENT MAY NOT BE OFFERED, SOLD OR OTHERWISE TRANSFERRED UNTIL THE PURCHASER, ASSIGNEE OR TRANSFEREE HAS BECOME A PARTY TO AND BOUND BY SUCH SUBORDINATION AGREEMENT.</div>

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<div style="MARGIN-BOTTOM: 12pt; FONT-SIZE: 10pt; FONT-FAMILY: 'Times New Roman', Times, serif; FONT-WEIGHT: bold; TEXT-ALIGN: center; LINE-HEIGHT: 12.55pt">NOTE</div>

<div style="MARGIN-BOTTOM: 12pt; FONT-SIZE: 10pt; FONT-FAMILY: 'Times New Roman', Times, serif; TEXT-ALIGN: justify; LINE-HEIGHT: 12.55pt">$1,500,000.00 June 27, 2016</div>

<div style="MARGIN-BOTTOM: 12pt; FONT-SIZE: 10pt; FONT-FAMILY: 'Times New Roman', Times, serif; TEXT-ALIGN: justify; LINE-HEIGHT: 12.55pt; TEXT-INDENT: 36pt">For value received, the undersigned, NEIL SINGER, an individual ("<font style="FONT-SIZE: 10pt; FONT-FAMILY: 'Times New Roman', Times, serif"><u>Borrower</u></font>", which term shall include any subsequent permitted assigns), promises to pay to the order of Capstone Companies, Inc., a Florida corporation ("<font style="FONT-SIZE: 10pt; FONT-FAMILY: 'Times New Roman', Times, serif"><u>Lender</u></font>"; which term shall include any subsequent holder hereof), in lawful money of the United States of America, without setoff, deduction or counterclaim, the principal amount of One Million Five Hundred Thousand Dollars (U.S. $1,500,000.00), together with interest thereon as provided below.</div>

<div style="MARGIN-BOTTOM: 12pt; FONT-SIZE: 10pt; FONT-FAMILY: 'Times New Roman', Times, serif; TEXT-ALIGN: justify; LINE-HEIGHT: 12.55pt; TEXT-INDENT: 36pt">Following execution of this Note, Borrower shall assign this Note (and all of his rights and obligations hereunder) to NLO Holdco, LLC, a Delaware limited liability company ("<font style="FONT-SIZE: 10pt; FONT-FAMILY: 'Times New Roman', Times, serif"><u>NLO</u></font>") and an affiliate of Borrower, and, immediately following such assignment, NLO shall assign this Note (and all of its rights and obligations hereunder) to ACK NLO, LLC, a Delaware limited liability company ("<font style="FONT-SIZE: 10pt; FONT-FAMILY: 'Times New Roman', Times, serif"><u>Newco</u></font>") and an affiliate of NLO and Borrower (collectively, the "<font style="FONT-SIZE: 10pt; FONT-FAMILY: 'Times New Roman', Times, serif"><u>Assignments</u></font>").&#160; Lender hereby acknowledges and agrees that the Assignments shall relieve Neil Singer of all of his individual obligations to Lender hereunder and waives and releases any and all claims or rights of any kind that Lender may have against Neil Singer in his individual capacity for the obligations hereunder following the Assignments.</div>

<div style="MARGIN-BOTTOM: 12pt; FONT-SIZE: 10pt; FONT-FAMILY: 'Times New Roman', Times, serif; TEXT-ALIGN: justify; LINE-HEIGHT: 12.55pt; TEXT-INDENT: 36pt">Interest shall accrue on the outstanding principal balance of this Note at an annual rate of 3.5% (the "<font style="FONT-SIZE: 10pt; FONT-FAMILY: 'Times New Roman', Times, serif"><u>Applicable Rate</u></font>"), which is the <font style="FONT-SIZE: 10pt; FONT-FAMILY: 'Times New Roman', Times, serif">rate of interest published in the Wall Street Journal as the </font><font style="FONT-SIZE: 10pt; FONT-FAMILY: 'Times New Roman', Times, serif">prime</font><font style="FONT-SIZE: 10pt; FONT-FAMILY: 'Times New Roman', Times, serif"> rate in effect as of the date hereof</font>.</div>

<div style="MARGIN-BOTTOM: 12pt; FONT-SIZE: 10pt; FONT-FAMILY: 'Times New Roman', Times, serif; TEXT-ALIGN: justify; LINE-HEIGHT: 12.55pt; TEXT-INDENT: 36pt">Interest on the outstanding principal balance of this Note shall be computed on the basis of a year of 365 or 366 days, as the case may be, for the actual number of days elapsed.&#160; Interest on the outstanding principal balance of the Note that has accrued and is outstanding on December 31 of each year shall be added to and treated as principal outstanding under the Note as of January 1 of the following year, and interest shall accrue thereon as otherwise provided herein.</div>

<div style="MARGIN-BOTTOM: 12pt; FONT-SIZE: 10pt; FONT-FAMILY: 'Times New Roman', Times, serif; TEXT-ALIGN: justify; LINE-HEIGHT: 12.55pt; TEXT-INDENT: 36pt">Subject to any restrictions contained in the Subordination Agreement, the outstanding principal amount under this Note, and all accrued and unpaid interest thereon, shall be due upon the earlier of (i) a Change in Control of Newco or (ii) June 27, 2025.&#160; "<font style="FONT-SIZE: 10pt; FONT-