EXHIBIT 10.2

 

CONVERTIBLE PROMISSORY NOTE 

(DEP Nevada Inc.)

 

Effective Date: March 15, 2019

 Amount: Up to USD $1,250,000.00

 

FOR VALUE RECEIVED, COMPREHENSIVE CARE GROUP LLC, an Arkansas limited liability
company (“Payor”), promises to pay to the order of DEP NEVADA INC., a Nevada
corporation (“Holder”), the principal sum of USD $1,250,000.00 or so much
thereof as is advanced or disbursed in the manner set forth in that certain
Convertible Loan Agreement of even date herewith between Payor, as the borrower,
and Holder, as the lender (the “Loan Agreement”), with interest on the balance
of such principal sum from time to time outstanding at the fixed rate of USD
$6,000.00 per month from and after the Effective Date until such time as the
parties mutually agree to adjust the interest hereunder to a fixed rate of some
other amount, such as to USD $10,000.00 per month, all as more fully set forth
below (“interest”) or to terminate such interest payments. Interest shall
commence with the date hereof and shall continue on the outstanding principal
balance until paid in accordance with the provisions hereof. Any capitalized
terms in this Convertible Promissory Note (this “Note”) not defined herein shall
have the meaning set forth in the Loan Agreement.

 

1. Note. This Note is being issued by Payor to document a non-revolving credit
facility in the principal amount of up to USD $1,250,000.00 (the “Facility”) to
be advanced or disbursed in the manner set forth in the Loan Agreement made by
Holder to Payor on the Effective Date hereof. The principal, interest thereon,
and all other amounts due hereunder and under the Loan Agreement is hereinafter
referenced as the “Indebtedness”. Payor may not reborrow any amounts repaid to
Holder under this Note or the Loan Agreement.

 

2. Interest. Interest on the outstanding principal will be at a fixed rate of
USD $6,000.00 per month from and after the Effective Date until such time as the
parties mutually agree to increase the interest on the outstanding principal to
a fixed rate of USD $10,000.00 per month, all payable monthly in arrears to
Holder by Payor on or before the first calendar day of each month commencing
March 1, 2019, and thereafter continuing until all amounts due hereunder and
under the Loan Agreement and this Note are paid in full.

 

3. Maturity. Payor shall pay interest to Holder in the manner set forth in
Section 2. Subject to the last sentence of Section 3, so long as no material
default has occurred hereunder, Payor shall not be obligated to pay any
principal outstanding hereunder until March 30, 2021 (the “Maturity Date”), at
which time, subject to the Parties’ remedies under Section 7(b) of this Note and
Section 9.2 of the Loan Agreement for a breach of the Note and/or Loan Agreement
by Payor, all accrued but unpaid interest together with the entire outstanding
principal and all other amounts due hereunder shall immediately become due and
payable by Payor. Principal may not be prepaid by Payor without the prior
written consent of Holder. Either the Payor or the Holder may unilaterally
extend the Maturity Date by one (1) year and may thereafter continue to extend
the Maturity Date on a yearly basis by increments of one (1) year (each, an
“Extension Option”) by providing written notice of the exercise of the Extension
Option by the party seeking an extension to the other party prior to the
expiration of the then-current Maturity Date, provided, however, that under no
circumstances shall any extended Maturity Date extend beyond the expiration of
the term of that certain Management Agreement of even date herewith between
Nevada Medical Group, a Nevada limited liability company, and Comprehensive Care
Group LLC, an Arkansas limited liability company. The Spirit of the Loan
Agreement and this Note is that the parties desire that a Conversion occur as
soon as possible, pursuant to the terms of the Loan Agreement and this Note.
Neither party may exercise an Extension Option at any time after the date of
actual Conversion.

 

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4. Use of Proceeds. The advances from the Facility will only be used by Payor as
working capital of Payor for operating and capital expenses, including but not
limited to the construction costs and purposes in connection with Payor’s
ownership and operation of a marijuana retail establishment at 203 N. Ok St.,
West Memphis, AR 72301, unless otherwise agreed to in writing by Holder and CCG.

 

5. Payments. All payments of principal, interest and any other payments required
hereunder shall be in lawful money of the United States of America to Holder, by
wire transfer of immediately available funds to a bank account designated in
writing by Holder. All cash payments shall be applied first to the costs of
collection, if any, then to accrued and unpaid interest, and thereafter to
principal.

 

6. Lost, Stolen, Destroyed or Mutilated Note. In case this Note shall be
mutilated, lost, stolen or destroyed, Payor shall issue a new Note of like date,
tenor and denomination and deliver the same in exchange and substitution for and
upon surrender and cancellation of any mutilated Note, or in lieu of any Note
lost, stolen or destroyed, upon receipt of evidence satisfactory to Payor of the
loss, theft or destruction of such Note.

 

7. Events of Default and Remedies.

 

(a) Events of Default. The occurrence or existence of any one or more of the
following events are referred to herein individually as an “Event of Default”,
and collectively as “Events of Default”:

 

(i) Payor defaults in payment of any principal, interest or other amounts due
hereunder;

 

(ii) Payor dissolves or suspends or discontinues doing business;

 

(iii) A case or proceeding under the bankruptcy laws of the United States of
America is filed by Payor for all or any part of their property, or is filed
against Payor and such petition or application is not dismissed within sixty
(60) days after the date of its filing;

 

(iv) there is a sale, transfer or other disposition of all or substantially all
of Payor’s assets in one transaction or series of related transactions;

 

(v) Payor breaches the Loan Agreement; or

 

(vi) Payor fails to use the proceeds hereof as described in Section 4.

 

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(b) Remedies.

 

(i) At any time an Event of Default exists or has occurred and is continuing,
Holder shall have all rights and remedies provided in this Note, in the Loan
Agreement (including, but not limited to, the right to effectuate a Conversion
at any time after the occurrence of the Ownership Pre-Conditions, and the right,
at Holder’s sole option, to prohibit Payor from repaying any principal amount
under the Agreement and this Note to Holder on or prior to the Conversion
without the prior written approval of Holder), and other applicable law, all of
which rights and remedies may be exercised without notice to or consent by
Payor, except as such notice or consent is expressly provided for hereunder or
required by applicable law.

 

(ii) At any time an Event of Default exists or has occurred and is continuing,
Holder may, in its discretion, provide written notice to Payor declaring all or
a portion of the outstanding balance of unpaid principal and interest owed to
Holder under this Note immediately due and payable.

 

(iii) Upon the occurrence of an Event of Default, Holder may, without notice,
take all actions available to it as lender under the Loan Agreement, including,
but not limited to, declaring the Loan and all interest thereon and other
amounts payable under the Loan Agreement, immediately due and payable.

 

8. Lender Default and Remedies.

 

(a) Lender Default. Any of the following events will constitute a Lender Default
under this agreement: (i) Lender fails to reasonably perform any of its funding
obligations hereunder, including the making of timely delivery of any funding or
payments under this Agreement; (ii) Lender has notified Borrower that it does
not intend to comply with its funding obligations or has made a public statement
to that effect with respect to its funding obligations hereunder; or (iii)
Lender has become the subject of a proceeding under any debtor relief law,
including, but not limited to, bankruptcy, has had a receiver, conservator,
trustee, administrator or an assignee for the benefit of creditors charged with
reorganization or liquidation of its business.

 

(b) Lender Default Remedies. Upon Lender Default, and if no Event of Default has
occurred and is continuing, any interest due to Lender under this Agreement
shall cease to accrue for the lessor of (i) a period of six (6) months or (ii)
until such time as the Lender has cured any default. If a Lender Default is not
cured within thirty (30) days from the date of Lender Default (when Borrower
first received notice of Lender Default), Borrower, at its sole discretion, may
pay all accrued but unpaid interest together with the entire outstanding
principal and all other amounts due hereunder and under the Loan Agreement as of
such date and immediately thereafter terminate the Loan Agreement, in which
event the Parties shall have no further rights or obligations under the Loan
Agreement and this Note shall be deemed paid in full.

 

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9. Conversion. Upon the latter of: (a) one year after granting of a medical
marijuana dispensary license by the Arkansas Medical Marijuana Commission to
Payor, or (b) one year after entering into the Loan Agreement, Holder may, in
its sole discretion, subject to the last sentence of this Section 8, elect to
convert all of the Indebtedness into the Preferred Units, as defined in the Loan
Agreement, at a conversion price equal to the Indebtedness (a “Conversion”),
subject to approval of the Arkansas Medical Marijuana Commission (together, with
Section 8(a) or Section 8(b), the “Ownership Pre-Conditions”). The parties agree
the spirit of this Section 8 is that Holder will finalize the conversion as soon
as possible and as near to the one-year mark post execution of the Loan
Agreement. All Preferred Units so acquired on Conversion shall be issued in the
manner set forth in the Loan Agreement. In the event Holder elects to effect the
Conversion, subject to the last sentence of this Section 8, all principal and
unaccrued interest under this note shall be deemed satisfied in full and applied
towards the purchase price of all Preferred Units of Payor on the effective date
of the Conversion and, except as otherwise set forth in this Note and in the
Loan Agreement, all obligations of Payor under this Note and the Loan Agreement
shall be deemed satisfied in full. On the effective date of the Conversion,
Payor shall execute and deliver all agreements and documents reasonably
necessary to effect the transfer of the Preferred Units to Holder. Payor
acknowledges and agrees that the forgiveness of the amounts owed under this Note
(except as otherwise set forth in the last sentence of this Section 8) shall
constitute good and valid consideration for the Preferred Units. In the event
that any interest payable hereunder or under the Loan Agreement as of the date
of Conversion has not been paid to Holder, such unpaid interest shall not be
converted into the Conversion price and such unpaid interest shall remain a
payment obligation of Payor.

 

10. Legend. Upon a Conversion, as also described and provided by the Loan
Agreement, any certificate(s) issued to Holder as to the Preferred Units will
bear the following legends:

 

“THE SECURITIES REPRESENTED HEREBY HAVE NOT BEEN REGISTERED UNDER THE UNITED
STATES SECURITIES ACT OF 1933, AS AMENDED (THE “U.S. SECURITIES ACT”), OR ANY
APPLICABLE STATE SECURITIES LAWS. THESE SECURITIES MAY NOT BE OFFERED, SOLD,
PLEDGED OR OTHERWISE TRANSFERRED UNLESS THERE IS AN EFFECTIVE REGISTRATION
STATEMENT UNDER THE U.S. SECURITIES ACT AND SUCH LAWS COVERING SUCH SECURITIES,
OR THE COMPANY RECEIVES AN OPINION OF COUNSEL ACCEPTABLE TO THE COMPANY STATING
THAT SUCH OFFER, SALE, PLEDGE OR OTHER TRANSFER IS EXEMPT FROM THE REGISTRATION
AND PROSPECTUS DELIVERY REQUIREMENTS OF THE U.S. SECURITIES ACT AND SUCH LAWS.
THE SECURITIES REPRESENTED BY THE CERTIFICATE HEREBY CANNOT BE THE SUBJECT OF
HEDGING TRANSACTIONS UNLESS SUCH TRANSACTIONS ARE CONDUCTED IN COMPLIANCE WITH
THE U.S. SECURITIES ACT.

 

UNLESS PERMITTED UNDER SECURITIES LEGISLATION, THE HOLDER OF THIS SECURITY MUST
NOT TRADE THE SECURITY BEFORE ONE YEAR FROM THE ISSUANCE OF THE SECURITY.”

 

12. Governing Law. This Note is to be construed in accordance with and governed
by the internal laws of the State of Arkansas without giving effect to any
choice of law rule that would cause the application of the laws of any
jurisdiction other than the internal laws of the State of Arkansas to the rights
and duties of Payor and the Holder. All disputes and controversies arising out
of or in connection with this Note shall be resolved exclusively by the state
and federal courts located in Pulaski County in the State of Arkansas, and each
of Payor and the Holder hereto agrees to submit to the jurisdiction of said
courts and agrees that venue shall lie exclusively with such courts.

 

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11. Amendment. Any term of this Note may be amended and the observance of any
term of this Note may be waived (either generally or in a particular instance
and either retroactively or prospectively) if in writing by both Payor and
Holder.

 

12. Notices. Except as may be otherwise provided herein, all notices or other
communications hereunder shall be in writing and shall be deemed given upon
delivery if delivered personally, two business days after mailing if mailed by
prepaid registered or certified mail, return receipt requested, or upon
confirmation of good transmission if sent by email, addressed as follows:

 

(a) If to Holder, to:

 

DEP Nevada Inc.

3375 Pepper Lane

Las Vegas, NV 89120

Attention: Leonard Clough

Email: Len@altuscapital.ca

(b) If to Payor, to:

 

Comprehensive Care Group LLC

11323 Arcade Drive, Suite C107

Little Rock, AR 72212

Attention: Don Marshall

Email:____________________

 

13. Expenses. If any action at law or in equity is necessary to enforce or
interpret the terms of this Note, the prevailing party shall be entitled to
reasonable attorney’s fees, costs and necessary disbursements in addition to any
other relief to which such party may be entitled.

 

14. Severability. If one or more provisions of this Note are held to be
unenforceable under applicable law, such provision shall be excluded from this
Note and the balance of the Note shall be interpreted as if such provision were
so excluded and shall be enforceable in accordance with its terms.

 

15. Delivery. This Note, to the extent signed and delivered by means of a
facsimile machine or PDF attachment to electronic mail, shall be treated in all
manner and respects as an original agreement or instrument and shall be
considered to have the same binding legal effect as if it were the original
signed version thereof delivered in person.

 

[Signature follows on next page]

 

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IN WITNESS WHEREOF, Payor has caused this Note to be duly executed by its
officer, thereunto duly authorized as of the date first above written.

 

PAYOR

 

Comprehensive Care Group LLC, an Arkansas limited liability company

 

By: /s/ Don Marshall

 

Name: Don Marshall

 

Its: Manager and Member

 

 

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