EXHIBIT 10.1

 

CONVERTIBLE LOAN AGREEMENT

 

This Agreement made effective March 15, 2019 (the “Effective Date”)

 

BETWEEN:

 

DEP NEVADA INC., a corporation incorporated under the laws of Nevada and having
an office at 3375 Pepper Ln, Las Vegas NV 89120.

 

(the “Lender”)

 

AND:

 

COMPREHENSIVE CARE GROUP LLC, a limited liability company incorporated under the
laws of Arkansas and having an office at 11323 Arcade Drive, Suite C107, Little
Rock, AR 72212

 

(the “Borrower”)

 

WHEREAS:

 

A. The Lender has agreed to make available a loan to the Borrower in the
aggregate total amount of up to USD $1,250,000.00 or such additional amount or
lesser amount as may be mutually agreed upon by the Lender and the Borrower, all
on the terms and conditions set out herein; and

 

B. The parties wish to record the terms and conditions of the loan, which will
be made pursuant to the terms of this Agreement.

 

NOW, THEREFORE, in consideration of the premises and the mutual covenants and
agreements herein contained and for other good and valuable consideration, the
receipt and sufficiency of which are hereby acknowledged, the parties hereto
covenant and agree as follows:

 

PART 1

 

DEFINITIONS AND INTERPRETATION

 

Definitions

 

1.1 For the purpose of this Agreement, the following words and phrases will have
meanings set forth below unless the parties or the context otherwise require(s):

 

(a) “Advance” means any advance made by the Lender under the Non-Revolving
Credit Facility evidenced by the Convertible Note;

 

 

   

 

(b) “Agreement” means this agreement and any schedules hereto, as amended or
supplemented from time to time;

 

(c) “Applicable Securities Laws” means, collectively, and as the context may
require, the securities legislation having application and the rules, policies,
notices and orders issued by securities regulatory authorities having
application in the circumstances;

 

(d) “Business” means business operations in connection with the Borrower’s
ownership and operation of a marijuana dispensary retail establishment at 203 N.
Ok St., West Memphis, AR 72301;

 

(e) “Business Day” means any day which is not a Saturday, Sunday or statutory
holiday in the State of Arkansas;

 

(f) “Closing Date” means March 15, 2019, or such later date upon which all
conditions set out in Part 10 have been satisfied or waived;

 

(g) “Closing” means closing of the Transaction;

 

(h) “Conversion” has the meaning set out in Section 6.1;

 

(i) “Convertible Note” has the meaning set out in Section 5.1;

 

(j) “Event of Default” means any of the events of default described in Section
9.1;

 

(k) “Governmental Authority” means: (i) any federal, provincial, state, county,
municipal or local government or governmental body, including any department,
agency, commission, board or other authority thereof, exercising any statutory,
regulatory, expropriation or taxing authority; (ii) any quasi-governmental body
acting under the valid authority of any of the foregoing; and (iii) any
domestic, foreign or international judicial, quasi-judicial or administrative
court, tribunal, commission, board, panel or arbitrator having competent
jurisdiction over the Lender or Borrower;

 

(l) “Indebtedness” means the principal amount, interest and all other amounts
due by the Borrower to the Lender pursuant to the Non-Revolving Credit Facility,
the Convertible Note, and this Agreement;

 

(m) “Interest” has the meaning set out in Part 4;

 

(n) “Material Adverse Effect” means a fact, circumstance, change or event that
(individually or in the aggregate with all such other facts, circumstances,
changes or events) is materially adverse to the business, operations, results of
operations, cash flow, revenue, assets, liabilities, obligations (whether
absolute, accrued, conditional or otherwise) or condition (financial or
otherwise) of the Borrower and its subsidiaries on a consolidated basis, other
than a change, event, violation, inaccuracy or circumstance:

 

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(i) relating to the global economy or securities markets in general; or

 

(ii) resulting from conditions affecting the cannabis industry as a whole.

 

(o) “Maturity Date” means March 30, 2021, or, in the event that either party
unilaterally exercises a Maturity Date Extension Option as set forth in Section
6.3 below, such extended Maturity Date as determined by Section 6.3;

 

(p) “Net Profits” means, for each calendar month, an amount equal to Borrower’s
gross revenue for such calendar month less the Borrower’s operating expenses,
cost of goods sold, interest, and tax for said month, all as reasonably
determined in accordance with generally accepted accounting principles;

 

(q) “Non-Revolving Credit Facility” means the credit facility referred to and
provided for in Section 3.1;

 

(r) “Person” means any individual, partnership, corporation, trust, limited
liability company or other entity;

 

(s) “Transaction” means the transactions contemplated by this Agreement;

 

(t) “Transaction Documents” has the meaning set out in Section 5.1; and

 

(u) “Preferred Units” means preferred member units of Borrower that, when issued
to Lender pursuant to Lender’s Conversion right under Section 6.1, equal forty
percent (40%) of the overall member units of the Borrower with the following
preferred rights: (i) the right to an allocative share of sixty-six and 67/100
percent (66.67%) of the Net Profits of Borrower and the right to distributions
equal to sixty-six and 67/100 percent (66.67%) of the Net Profits on a monthly
basis; (ii) the right a share of sixty-six and 67/100 percent (66.67%) share of
Borrower’s assets upon dissolution of Borrower; and (iii) the right to sixty-six
and 67/100 percent (66.67%) of all voting rights of members of Borrower.

 

Interpretation

 

1.2 For the purposes of this Agreement:

 

(a) the word “person” includes in its meaning any firm and any body corporate or
politic;

 

(b) “herein”, “hereunder”, and similar terms refer to this Agreement as a whole
and not to any specific, section, clause or provision thereof;

 

(c) words importing the singular include the plural and vice versa, and words
importing gender include all genders,

 

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(d) any reference in this Agreement to a statute will include any amendment or
successor statute and any regulations thereunder in force from time to time;

 

(e) the headings appearing in this Agreement have been inserted for convenience
of reference only and in no way define, limit, or enlarge the scope of meaning
of the provisions of this Agreement;

 

(f) a reference to a Part is to a Part of this Agreement; and

 

(g) all references to any party, whether a party to this Agreement or not, will
be read with such changes in number or gender as the context or reference
requires.

 

1.3 Except where otherwise indicated or provided for all statements of or
references to monetary amounts in this Agreement mean lawful currency of the
United States.

 

Schedules

 

1.4 The following schedule attached hereto are incorporated in and deemed to be
an integral part of this Agreement:

 

(a) Schedule “A” – Form of Convertible Promissory Note

 

PART 2

 

PURPOSE

 

Loan Purpose

 

2.1 Unless otherwise agreed to by the Lender, the proceeds of the loan provided
under the Non-Revolving Credit Facility shall be used by the Borrower for
purposes of working capital and operating expenses, including, but not limited
to construction expenses and purposes, in connection with the Business.

 

PART 3

 

THE LOAN

 

Loan

 

3.1 Subject to the terms and conditions contained herein, the Lender agrees to
make Advances to the Borrower from time to time commencing from the Closing, as
requested by the Borrower in an aggregate (non-revolving) amount not to exceed
$1,250,000.00 (the “Credit Line Limit”) until the Maturity Date in the manner
more fully set forth in Section 3.3, provided, however, that, the parties may
mutually agree to adjust the Credit Line Limit to an increased amount or a
lesser amount from time to time based on the Borrower’s reasonable operation and
construction needs as set forth in one or more commercially reasonable budgets
to be prepared by the Borrower and presented to the Lender (collectively, the
“Budget”). The parties agree the spirit of this agreement is that Lender will
provide 66.67% of all the reasonably necessary funding for the operations of
this endeavour during the term of this Agreement; and that Borrower will provide
the remaining 33.33% of the reasonably necessary funding of same during the term
of this Agreement. The Borrower may not reborrow any amounts repaid to the
Lender under this Agreement or the Convertible Note.

 

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Use of Proceeds

 

3.2 The Borrower will use the proceeds of the Advances for the purposes
described in Section 2.1 hereof.

 

Delivery of Advances

 

3.3 The Lender shall make an initial Advance to the Borrower in the amount of
$100,000.00 (the “Initial Advance”) within five (5) days of the Closing by
delivering the Initial Advance by wire transfer to the following bank account
held by the Borrower: _______________________________ (the “Bank Account”).
Thereafter, at least seven (7) days prior to the date of a requested Advance,
the Borrower shall request such Advance by the Lender in writing, accompanied by
proposals, bids, invoices, or other documentation satisfactory to the Lender
evidencing the need for the Advance (collectively, the “Supporting
Documentation”). It shall be a condition to each Advance that no Event of
material Default shall then exist, and all of the representations and warranties
made under this Agreement shall be true and correct at such time both with and
without giving effect to the Advance to be made at such time and the application
of the proceeds thereof. If the Lender approves the Advance, the Lender shall
deliver the Advance to the Borrower by wire transfer to the Bank Account.

 

PART 4

 

INTEREST

 

Interest

 

4.1 Interest on the outstanding Advances will be a fixed rate of USD $6,000.00
per month from and after the Closing Date until such time as the parties
mutually agree to increase the interest on the outstanding Advances to a fixed
rate of USD $10,000.00 per month, payable in the manner set forth in the
Convertible Note (the “Interest”).

 

PART 5

 

CONVERTIBLE NOTE

 

Convertible Note

 

5.1 The Borrower’s obligations to repay the Advances made by the Lender
hereunder shall be evidenced by a Convertible Note in substantially the form set
forth in Schedule “A” (the “Convertible Note”). The Borrower will execute and
deliver to the Lender;

 

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(a) the Convertible Note; and

 

(b) such other documents or instruments which the Lender or its solicitors
acting reasonably, may require from time to time,

 

(collectively, the “Transaction Documents”).

 

PART 6

 

CONVERSION, REPAYMENT AND PARTICIPATION RIGHTS

 

Lender’s Conversion Right

 

6.1 Upon the latter of: (a) one year after granting of a medical marijuana
dispensary license by the Arkansas Medical Marijuana Commission to the Borrower,
or (b) one year after entering into this Agreement Lender may, in its sole
discretion, subject to the last sentence of this Section 6.1, elect to convert
all of the Indebtedness into the Preferred Units at a conversion price equal to
the Indebtedness (a “Conversion”), subject to approval of the Arkansas Medical
Marijuana Commission (together, with Section 6.1(a) or Section 6.1(b), the
“Ownership Pre-Conditions”). The parties agree the spirit of this Section 6 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 within 5 days of notice and shall bear a
legend restricting transfer for a period of one year from the Conversion and any
other legend required under Applicable Securities Laws. Subject to the Lender’s
remedies under Section 9.2 of this Agreement or under the Note, in the event
that any of Ownership Pre-Conditions to Lender’s exercise of Conversion rights
under this Section 6.1 fail to occur prior to the Maturity Date, then Borrower
shall repay the loan plus accrued interest and any other amounts due hereunder
or under the Convertible Note. In the event that any Interest payable as of the
date of Conversion has not been paid to the Lender, such unpaid Interest shall
remain a payment obligation of the Borrower. The Borrower acknowledges and
agrees that it shall be required to obtain, and the Lender covenants to provide
all reasonable assistance to obtain, all necessary regulatory approvals from the
applicable Governmental Authorities to engage in the Business, including, but
not limited to, a medical marijuana dispensary license from the Arkansas Medical
Marijuana Commission.

 

Repayment of Principal and Interest

 

6.2 Borrower shall pay Interest to Lender in the manner set forth in Section
4.1. So long as no material default has occurred hereunder, the Borrower shall
not be obligated to pay any principal outstanding hereunder until the Maturity
Date, at which time all accrued but unpaid interest together with the entire
outstanding principal and all other amounts due hereunder shall immediately
become due and payable by the Borrower.

 

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Maturity Date Extension Option

 

6.3 Either the Borrower or the Lender 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 this Agreement is that the
parties desire that a Conversion occur as soon as possible, pursuant to the
terms of this Agreement. Neither party may unilaterally extend the Maturity
Date, nor may it exercise an Extension Option, any time after the date of
Conversion.

 

Prepayment

 

6.4 The Borrower is not entitled to prepay all or part of the principal before
the Maturity Date without prior written approval of the Lender.

 

Manner of Payment

 

6.5 All payments to be made to the Lender hereunder will be made:

 

(a) without set-off or counterclaim,

 

(b) and each party will be responsible for its own tax liabilities.

 

Allocation

 

6.6 Payments made by the Borrower in respect of the Advances and moneys realized
from any security held therefor, including moneys realized from enforcement,
shall be applied firstly against the costs of collection upon default, if any,
then the interest accrued to the date of such payment and lastly, against the
principal amount.

Payments

 

6.7 Any payment of interest or principal delivered or made to the Lender by 4:00
p.m. Arkansas time on a Business Day will be credited as of that day, but if
made after that time will be credited as of the next Business Day.

 

PART 7

 

REPRESENTATIONS AND WARRANTIES

 

7.1 The Borrower represents and warrants to the Lender as follows:

 

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(a) the Borrower is a valid and subsisting company, duly formed and in good
standing under the laws of Arkansas and has all requisite company power,
capacity and authority to carry on its business as now conducted, to own, lease
and operate its properties and assets and to carry out the provisions hereof;

 

(b) the Borrower has the power and authority to create, issue and deliver the
Convertible Note and perform its obligations under the Convertible Note;

 

(c) the execution and delivery of this Agreement and all ancillary instruments
or documents issued, executed and delivered hereunder by the Borrower have been
duly and validly authorized by all necessary action of the Borrower and each
constitutes or will constitute a legal, valid and binding obligation of the
Borrower, enforceable against the Borrower in accordance with their terms,
subject to applicable bankruptcy, insolvency, reorganization, moratorium and
other similar laws affecting the rights and remedies of creditors and to the
general principles of equity;

 

(d) the Borrower holds or will hold all licences and permits and has effected or
will affect all registrations required for the conduct of its business and the
uses for which its property is used, such licences, permits, and registrations
are in good standing, and such conduct and uses are in compliance with the terms
of such licences and permits and with all laws, operating agreements, rules,
regulations, and ordinances applicable to the Borrower or any of its property;

 

(e) the Borrower is not a party to, nor has it issued, assumed, or granted, nor
is it bound by any deed, indenture, debenture, real property mortgage, chattel
mortgage, conditional sale contract, general or specific assignment of book
debts, or any other lien, charge, or encumbrance which charges the Borrower’s
property;

 

(f) the Preferred Units delivered upon Conversion, when paid for in accordance
with the provisions of this Agreement: (i) will be duly and validly issued as
fully paid and non-assessable member units in the capital of the Borrower; and
(ii) will constitute forty percent (40%) of the overall ownership interests of
the Borrower with the following preferred rights: (i) the right to an allocative
share of sixty-six and 67/100 percent (66.67%) of the Net Profits of Borrower
and the right to distributions equal to sixty-six and 67/100 percent (66.67%) of
the Net Profits on a monthly basis; (ii) the right a share of sixty-six and
67/100 percent (66.67%) share of Borrower’s assets upon dissolution of Borrower;
and (iii) the right to sixty-six and 67/100 percent (66.67%) of all voting
rights of members of Borrower;

 

(g) the authorized capital of the Borrower consists of 100 member units.

 

(h) except as disclosed to Lender, there are no member agreements, pooling
agreements voting trusts or other similar agreements with respect to the
ownership of any voting units of Borrower; and

 

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(i) neither the execution and delivery of this Agreement, the Convertible Note,
or any documents or instruments ancillary hereto nor the observance and
performance of the obligations of the Borrower thereunder will (i) result in any
violation of the constating documents of the Borrower or any deed, indenture,
debenture, mortgage, agreement, instrument, judgement, decree, order, statute,
rule, or regulation applicable to the Borrower or (ii) result in the
acceleration of the time for payment of any moneys payable or for performance of
any obligation to be performed by the Borrower.

 

7.2 Lender represents and warrants to the Borrower as follows:

 

(a) the Lender is a valid and subsisting corporation under the laws of Nevada;

 

(b) the Lender has the corporate power and capacity to enter into this Agreement
and to perform all of its obligations hereunder. The execution and delivery of
this Agreement and the consummation by the Lender of the transactions hereunder
have been duly authorized by all necessary corporate action on the part of the
Lender;

 

(c) this Agreement has been duly executed and delivered by the Lender and is a
legal, valid and binding obligation of the Lender, enforceable against the
Lender in accordance with its terms, subject to applicable bankruptcy or similar
laws affecting enforcement of creditors’ rights generally and to the extent that
equitable remedies such as specific performance and injunction are in the
discretion of the court from which they are sought;

 

(d) the Convertible Note has not been and will not be registered under the U.S.
Securities Act and may not be offered or sold in the United States or to any
U.S. Person, except pursuant to applicable exemptions from United States federal
and state registration requirements;

 

(e) each of the execution and delivery of this Agreement and all documents
contemplated hereunder, the performance by the Lender of its obligations
hereunder or thereunder and the consummation of the transactions contemplated
hereby, do not and will not conflict with or result in a breach or violation of
any of the terms or provisions of, or constitute a default under (whether after
notice or lapse of time or both), (i) any statute, rule or regulation applicable
to the Lender; (ii) the constating documents or resolutions of the Lender which
are in effect at the date hereof; (iii) any debt instrument, material agreement,
mortgage, indenture, contract, agreement, instrument, lease or other document to
which the Lender is a party or by which it is bound; or (iv) any judgment,
decree or order binding the Lender or the property or assets thereof;

 

(f) the Lender acknowledges that no securities commission, agency, Governmental
Authority, stock exchange or other regulatory body has reviewed or passed on the
merits of the Purchased Securities and there are risks associated with the
purchase of the Purchased Securities;

 

(g) the Lender acknowledges that the referenced Convertible Note will bear the
following legends:

 

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“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.”

 

PART 8

 

BORROWER’S COVENANTS

 

Positive Covenants

 

8.1 At all times during the currency of this Agreement, the Borrower will:

 

(a) duly and punctually pay or cause to be paid to the Lender all payments in
respect of principal or interest and other amounts due under this Agreement on
the dates, at the places, and in the manner set forth herein;

 

(b) duly and punctually observe and perform all of the covenants, agreements,
terms, and conditions on its part to be observed or performed hereunder;

 

(c) maintain and preserve its existence in good standing;

 

(d) conduct its business in a proper and businesslike manner and diligently
preserve all of its licences, permits, registrations, rights, powers,
privileges, and goodwill;

 

(e) duly and punctually pay all debts and obligations to employees, contractors,
sub-contractors, and suppliers of material and all taxes, rates, and assessments
payable to Governmental Authorities and all other persons when such amounts are
due;

 

(f) make all payments and perform each and every covenant, agreement, and
obligation under any lease now held or hereafter acquired by each of them and
any deed, indenture, debenture, mortgage, agreement, or instrument charging the
property of each of them or any part thereof as and when the same are required
to be paid or performed;

 

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(g) deliver or cause to be delivered to the Lender such information and material
respecting the Borrower’s business and financial affairs as the Lender, acting
reasonably, may request from time to time;

 

(h) maintain a minimum cash balance of $100,000.00 in the Bank Account; and

 

(i) provide the Lender with monthly bank statements satisfactory to the Lender
evidencing Borrower’s maintenance of a minimum cash balance of $100,000.00 in
the Bank Account.

 

Negative Covenants

 

8.2 During the currency of this Agreement the Borrower will not, without the
prior written consent of the Lender:

 

(a) alter its constating instruments;

 

(b) become a party to any transaction whereby substantially the whole of the
undertaking, property or assets of the Borrower would become the property of any
other Person, whether by way of reorganization, amalgamation, merger, transfer,
sale, license, or otherwise;

 

(c) make loans to or investments in, or provide guarantees or indemnities or
otherwise give financial assistance to, any Person;

 

(d) incur, create or assume any indebtedness or liabilities, except that any
unsecured trade payables incurred in the ordinary course of its business that
are related to the ownership and operation of the Property are not to exceed
$10,000;

 

(e) authorize, issue, transfer, hypothecate, or otherwise grant, or agree to or
allow the authorization, issuance, transfer, hypothecation, or granting of, any
ownership interest in Borrower except as expressly set forth in this Agreement;
or

 

(f) materially change the nature of its business or operations, except CCG may
convert its entity to a C corporation for tax and other purposes so long as
CCG’s post-conversion ownership and management remain identical to its
pre-conversion ownership and management.

 

PART 9

 

EVENTS OF DEFAULT AND REMEDIES

 

Events of Default

 

9.1 Any one of the following events will constitute an Event of Default under
this Agreement (whether such event is voluntary or involuntary or is effected by
operation of law or pursuant to or in compliance with any judgement, decree, or
order of any court or any order, rule, or regulation of any administrative or
governmental body):

 

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(a) if the Borrower defaults in payment of any principal, interest or other
amounts due hereunder;

 

(b) if the Borrower defaults in observing or performing any covenant, agreement,
or condition hereunder on its part to be observed or performed and such default,
if curable, is not cured within 15 days after notice of default is given by the
Lender;

 

(c) if any other event, circumstance, or condition occurs or comes into being
which constitutes an event of default under any other indebtedness or material
agreement of the Borrower;

 

(d) if the Borrower becomes bankrupt or insolvent or makes an assignment for the
benefit of, a proposal to, or an arrangement with its creditors or an action is
taken or a proceeding is instituted by any person whereby the Borrower may be
dissolved, wound up, reorganized, or declared bankrupt or insolvent;

 

(e) if any material warranty or representation made by or on behalf of the
Borrower hereunder or in any document, instrument, or certificate delivered in
connection herewith proves at any time to be materially incorrect as of the date
made;

 

(f) if the Borrower ceases or demonstrates an intention to cease to carry on its
business;

 

(g) if a receiver or receiver-manager of the property of the Borrower or any
part thereof is appointed;

 

(h) if an encumbrancer takes possession of the property of the Borrower or any
part thereof;

 

(i) if the Borrower engages in any business outside of the normal course of its
business presently conducted; or

 

(j) if the Borrower materially defaults under, or otherwise breaches, the
Convertible Note.

 

Remedies

 

9.2 Upon the happening of any Event of Default, the Lender may do any one or
more of the following: (i) notwithstanding anything in this Agreement to the
contrary, the Lender may elect to effectuate a Conversion at any time after the
occurrence of the Ownership Pre-Conditions, in which event the Lender may, at
its sole option, prohibit the Borrower from repaying any of the principal amount
to the Lender on or prior to the Conversion without the prior written approval
of the Lender; (ii) the Lender may declare that the Indebtedness has become
immediately due and payable, whereupon the Borrower will pay the same to the
Lender forthwith, without presentment, demand, protest, or other notice of any
kind, all of which are hereby expressly waived, and the Lender, without notice
to or demand upon the Borrower (which is expressly waived by the Borrower), may
proceed to protect, exercise and enforce its rights and remedies under this
Agreement including making demand for payment of all money secured thereby, and
such other rights and remedies as are provided by law or by equity or by
statutes; and/or (iii) the Lender may terminate the Non-Revolving Credit
Facility and any other right of the Borrower to request Advances hereunder.

 

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Waiver

 

9.3 The Lender may in its sole discretion waive any Event of Default or any
breach of any of the provisions contained herein. No waiver or consent by the
Lender will extend to or be taken to affect any subsequent breach or default or
the rights resulting therefrom, and no waiver or consent by the Lender will bind
the Lender unless it is in writing. The Borrower may in its sole discretion
waive any Lender Default or any breach of any of the provisions contained
herein. No waiver or consent by the Borrower will extend to or be taken to
affect any subsequent breach or default or the rights resulting therefrom, and
no waiver or consent by the Borrower will bind the Borrower unless it is in
writing.

 

Lender Default

 

9.4 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.

 

Lender Default Remedies

 

9.5 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 Convertible Note as of such date and
immediately thereafter terminate this Agreement, in which event the Parties
shall have no further rights or obligations under this Agreement and the
Convertible Note shall be deemed paid in full.

 

PART 10

 

CONDITIONS PRECEDENT

 

Mutual Conditions

 

10.1 The respective obligations of the Lender and Borrower under this Agreement
are subject to the fulfillment of the following conditions being satisfied at or
before the Closing:

 

  - 13 -

   

 

(a) receipt of all required regulatory, member/shareholder and third-party
approvals, and compliance with all applicable regulatory requirements and
conditions necessary to complete the Transaction;

 

(b) this Agreement will not have been terminated pursuant to Part 11; and

 

(c) there being no prohibition at law against the completion of the
Non-Revolving Credit Facility and the issuance of the Convertible Note.

 

Conditions for the Benefit of the Borrower

 

10.2 The transactions contemplated herein are subject to the following
conditions to be fulfilled or performed on or prior to the Closing Date, which
conditions are for the exclusive benefit of the Borrower and may be waived, in
whole or in part by the Borrower in its sole discretion:

 

(a) the Lender complying with all terms, covenants and conditions of this
Agreement on its part to be complied with up to the Closing; and

 

(b) the representations and warranties of the Lender contained in this Agreement
as of the date of this Agreement being true and correct in all material respects
as of the Closing as if made at and as of the Closing.

 

Conditions for the Benefit of the Lender

 

10.3 The transactions contemplated herein are subject to the following
conditions to be fulfilled or performed on or prior to the Closing Date, which
conditions are for the exclusive benefit of the Lender and may be waived, in
whole or in part by the Lender in its sole discretion:

 

(a) the Borrower complying with all terms, covenants and conditions of this
Agreement on its part to be complied with up to the Closing;

 

(b) there being no material change or change in a material fact or a new
material fact or an undisclosed material fact or change in respect of the
Borrower which might reasonably be expected to have a Material Adverse Effect
and the Lender will be satisfied that the Borrower will not have taken any act,
entered into or become a party to or subject to any agreement or transaction or
incurred or become liable for any obligation except in the ordinary course of
business;

 

(c) the representations and warranties of the Borrower contained in this
Agreement as of the date of this Agreement being true and correct in all
material respects as of the Closing as if made at and as of the Closing;

 

(d) waiver of all pre-emptive rights and rights of first refusal, duly executed
by all members of the Borrower in respect of the Transaction; and

 

(e) the Borrower having delivered the Transaction Documents as contemplated by
Section 5.1 of this Agreement.

 

  - 14 -

   

 

PART 11

 

TERM AND TERMINATION

 

Termination

 

11.1 This Agreement may be terminated at any time prior to the Closing Date:

 

(a) by mutual written agreement of the Parties;

 

(b) by the Borrower if a breach of any representation or warranty or failure to
perform any obligation on the part of the Lender as set forth in this Agreement
will have occurred that would cause the conditions set forth in Section 10.1 and
Section 10.2 not to be satisfied or such conditions are incapable of being
satisfied by the Closing Date, as reasonably determined by the Lender, provided
however that the Lender is not then in breach of this Agreement so as to cause
any condition in Section 10.1 or Section 10.2 not to be satisfied; or

 

(c) by the Lender if a breach of any representation or warranty or failure to
perform any obligation on the part of the Borrower as set forth in this
Agreement will have occurred that would cause the conditions set forth in
Section 10.1 or Section 10.3 not to be satisfied, or such conditions are
incapable of being satisfied by the Closing Date as reasonably determined by the
Borrower, provided however, that the Borrower is not then in breach of this
Agreement so as to cause any condition in Section 10.1 or Section 10.3 not to be
satisfied.

 

PART 12

 

GENERAL PROVISIONS

 

Time of Essence

 

12.1 Time will be of the essence in this Agreement.

 

Governing Law

 

12.2 This Agreement will be construed in accordance with and governed by the
laws of the State of Arkansas without giving effect to any choice or conflict of
law provision or rule (whether of the State of Arkansas or any other
jurisdiction). All disputes and controversies arising out of or in connection
with this Agreement shall be resolved exclusively by the state and federal
courts located in Pulaski County in the State of Arkansas, and each of Borrower
and Lender hereto agrees to submit to the jurisdiction of said courts and agrees
that venue shall lie exclusively with such courts.

 

  - 15 -

   

 

Further Acts

 

12.3 Forthwith upon request by the Lender, the Borrower will execute and deliver
all such further deeds, documents, and instruments and will do all such further
acts and things as in the reasonable opinion of the Lender or its solicitors are
necessary or advisable in order to carry out the terms of this Agreement.

 

Severability

 

12.4 If any provision contained in this Agreement is for any reason held by a
Court of competent jurisdiction to be invalid, illegal, or unenforceable in any
respect, then at the option of the Lender such invalid, illegal, or
unenforceable provision will be severable from and will not affect any other
provision of this Agreement and this Agreement will be construed as if such
invalid, illegal, or unenforceable provision had never been contained herein.

 

Survival

 

12.5 All representations, warranties, covenants, and agreements made in this
Agreement or in any declaration, certificate, or other instrument delivered in
connection herewith are material and will conclusively be deemed to have been
relied upon by the Lender notwithstanding any prior or subsequent investigation
by the Lender, will survive Advances and the fulfilment of all transactions and
deliveries contemplated hereunder, and will continue in full force and effect so
long as any of the Indebtedness remains outstanding, provided, however, that the
parties’ representations, warranties, covenants, and agreements under Section
6.1, Section 7.1, and Section 7.2 will survive and continue in full force and
effect for a period of two (2) years following a Conversion.

 

Notice

 

12.6 Notwithstanding anything herein contained and whether or not expressly
stipulated herein, every notice or other communication contemplated hereby or
otherwise relating hereto shall be in writing. Every notice required or
permitted to be communicated hereunder, may be delivered personally by leaving
it with the party to whom it is to be communicated.

 

Such notice shall be deemed to have been validly communicated to and received by
the party to whom it was addressed on the date on which it was delivered. The
address of any party may be changed by written notice as contemplated by this
Section 12.6, and the respective addresses of the parties hereto for the
communication of notice shall be as follows:

 

(a) As to the Lender:

 

DEP Nevada Inc.

3375 Pepper Ln

Las Vegas NV 89120

 

Attention: Leonard Clough

Email: len@altuscapital.ca

 

  - 16 -

   

 

(b) As to the Borrower:

 

Comprehensive Care Group LLC

11323 Arcade Drive, Suite C107

Little Rock, AR 72212

 

Attention: Don Marshall

E-mail: donjmar@yahoo.com

 

Expenses

 

12.7 If any action at law or in equity is necessary to enforce or interpret the
terms of this Agreement, 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.

 

Entire Agreement

 

12.8 This Agreement merges and supersedes all prior negotiations,
representations, and agreements, and expresses the entire agreement of the
parties hereto with respect to the subject matter hereof.

 

Amendments

 

12.9 This Agreement may not be amended nor may any term or covenant hereof be
waived, discharged, or terminated except by an instrument executed by the party
affected thereby.

 

Counterparts

 

12.10 This Agreement may be signed in as many counterparts as may be necessary,
each of which so signed will be deemed to be an original (and each signed copy
sent by electronic facsimile transmission will be deemed to be an original), and
such counterparts together will constitute one and the same instrument and
notwithstanding the date of execution will be deemed to bear the date first
above written.

 

Assigns

 

12.11 This Agreement may be assigned by the Lender to a related entity of the
Lender without the consent of the Borrower but may not otherwise be assigned in
whole or in part by the Lender, without the prior consent of the Borrower. This
Agreement is not assignable by the Borrower except with the prior written
consent of the Lender.

 

Enurement

 

12.12 This Agreement shall be binding upon, and inure to the benefit of the
parties hereto and their respective successors, and permitted assigns.

 

[Signature Page Follows]

 

  - 17 -

   

 

IN WITNESS WHEREOF the parties have executed this Agreement as of the day and
year first above written.

 

COMPREHENSIVE CARE GROUP LLC

 

DEP NEVADA INC.

 

 

 

 

 

 

 

By:

/s/ Don Marshall

 

By:

/s/ Robert Hasman

 

Name:

Don Marshall

 

Name:

Robert Hasman

 

Its:

Manager and Member

 

Its:

President

 

 

  - 18 -

   

 

SCHEDULE “A”

 

FORM OF CONVERTIBLE NOTE