EXECUTION VERSION
COMMERCIAL LOAN AGREEMENT
THIS COMMERCIAL LOAN AGREEMENT (this “Agreement”) is made and entered into as of July 22, 2019 (the “Closing Date”), by and betweenENCOMPASS MORE GROUP, INC., a Nevada corporation (“Borrower”), andGROW CAPITAL, INC., a Nevada corporation (“Lender”).
Recitals
WHEREAS, Lender desires to loan to Borrower the sum of $100,000 to Borrower in exchange for a promissory note under the terms of this Agreement.
WHEREAS, Borrower desires to accept the loan in exchange for a promissory note under the terms of this Agreement.
NOW, THEREFORE, for and in consideration of the foregoing recitals and the mutual promises set forth in this Agreement, the parties hereto agree as follows:
Section 1. AMOUNT AND TERMS OF THE LOAN.
1.1The Loan. At the Closing (as such term is hereinafter defined), Lender shall lend to Borrower the sum of One Hundred Thousand and No/100 Dollars ($100,000.00), against the issuance and delivery by Borrower of a promissory note for such amount, in the form attached hereto asExhibit A(the “Note”).
1.2Use of Proceeds. Borrower shall use the proceeds of the Loan for working capital and general corporate purposes.
Section 2. REPRESENTATIONS AND WARRANTIES OF THE COMPANY. Borrower represents and warrants to Lender as of the Closing as follows:
2.1Organization, Good Standing and Qualification. Borrower (a) is a corporation duly incorporated, validly existing and in good standing under the laws of the state of Nevada and is duly qualified to do business in each jurisdiction in which Borrower is required to be registered in order to conduct its business, (b) has the requisite power and authority, and the legal right, to own, lease, and operate its properties and assets and to conduct its business as it is now being conducted, and (c) is in compliance with all Laws and Orders except to the extent that the failure to comply therewith would not, reasonably be expected to have a Material Adverse Effect.
2.2Due Authorization. All corporate action on the part of Borrower, its officers, managers, and members necessary for the authorization, execution, delivery, and performance of all obligations of Borrower under this Agreement and the Note (together, the “Loan Documents”) has been taken as of Closing, and the Loan Documents constitute valid and legally binding obligations of Borrower, enforceable in accordance with their respective terms, except as may be limited by (i) applicable bankruptcy, insolvency, reorganization, or other laws of general application relating to or affecting the enforcement of creditors’ rights generally and (ii) the effect of rules of law governing the availability of equitable remedies.
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2.3Compliance with Other Instruments. The authorization, execution and delivery of this Agreement, and the issuance and delivery of the Note, will not constitute or result in a default or violation of any law or regulation applicable to Borrower or any term or provision of Borrower’s articles of incorporation, or bylaws or any agreement or instrument by which it is bound or to which its properties or assets are subject.
2.4Governmental Consents. No consent, approval, order, or authorization of or registration, qualification, designation, declaration, or filing with, any federal, state, or local governmental authority is required on the part of Borrower in order to enable Borrower to execute, deliver, and perform its obligations under the Loan Documents except for such qualifications or filings under applicable securities laws as may be required in connection with the transactions contemplated by this Agreement.
2.5Litigation. Borrower is not party to, and there is no claim, action, suit, proceeding, arbitration, complaint, charge or investigation pending or, to Borrower’s knowledge, currently threatened against Borrower or any manager, officer, or employee of Borrower. Neither Borrower nor, to Borrower’s knowledge, any of its managers, officers, or employees is a party or is named as subject to the provisions of any order, writ, injunction, judgment or decree of any court or government agency or instrumentality (in the case of officers, managers, or employees, such as would affect Borrower).
2.6Compliance with Laws. Borrower is not in violation or in default with respect to (a) any material provision of any applicable statute, rule, regulation, order, writ, decree, judgment or restriction of any domestic or foreign government or any instrumentality or agency thereof or (b) any material agreement, instrument or contract to which Borrower is a party or by which it is bound (nor is there any waiver in effect which, if not in effect, would result in such a violation or default).
Section 3. REPRESENTATIONS AND WARRANTIES OF LENDER. Lender represents and warrants to Borrower as of the Closing as follows:
3.1Organization, and Good Standing. Lender is a corporation duly incorporated, validly existing and in good standing under the laws of the state of Nevada.
3.2Authorization. Lender has full power and authority to execute and deliver the Loan Documents and each of the Loan Documents constitutes Lender’s valid and legally binding obligation, enforceable in accordance with its terms except (a) as may be limited by applicable bankruptcy, insolvency, reorganization, or other laws of general application relating to or affecting the enforcement of creditors’ rights generally, and (b) as may be limited by the effect of rules of law governing the availability of equitable remedies.
Section 4. Affirmative Covenants. So long as any amount is unpaid under the Note, Borrower will:
4.1keep proper books of account in manner satisfactory to Lender;
4.2permit, at Borrower’s expense, inspections and audits by Lender or by Lender’s agents of all books, records and papers in the custody or control of Borrower or of others relating
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to any security for the obligations hereunder or Borrower’s financial or business condition, including the making of copies thereof and abstracts therefrom and inspection and appraisal of any of Borrower’s assets;
4.3furnish Lender with such financial information or other information pertaining to the operation of Borrower as Lender may from time to time request to demonstrate the continued compliance with any financial covenant in this Agreement.
4.4promptly pay all taxes, assessments and other governmental charges due from Borrower;
4.5promptly inform Lender of the commencement of any material action, suit, proceeding or investigation against Borrower, or the making of any counterclaim against Borrower in any action, suit or proceeding and of all liens against any of Borrower’s property, and of the occurrence of any default hereunder;
4.6pay all indebtedness to Lender when due;
4.7fully and punctually perform all of the terms and conditions of the Loan Documents; and
4.8maintain all licenses and permits necessary for the operation of Borrower’s business.
Section 5. Negative Covenants. So long as any amount is unpaid hereunder, Borrower will not, without Lender’s prior written consent:
5.1create, incur, assume or suffer to exist any additional indebtedness except from the Lender;
5.2create, incur, assume or suffer to exist any security interest, mortgage, pledge, lien or other encumbrance (collectively, “Liens”) upon any of Borrower’s property or assets, whether now owned or hereafter acquired, except for (a) Liens for taxes not yet due or which are being contested in good faith by appropriate proceedings; and (b) non-consensual Liens arising by operation of law, arising in the ordinary course of business, and for amounts which are not overdue for a period of more than 15 days or that are being contested in good faith by appropriate proceedings;
5.3sell, convey, lease or transfer any of Borrower’s assets other than in the ordinary course of business, or merge or consolidate with or into any other company or corporation, but in no event shall Borrower sell, convey, lease or transfer of Borrower’s assets with an aggregate value in excess of $10,000;
5.4become a guarantor, surety or otherwise become liable for the debts or other obligations of any person, firm or corporation, except as an endorser of instruments for the payment of money deposited to Borrower’s bank account for collection in the ordinary course of business;
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5.5make any investments in or loans or advances to any other person, firm or corporation (including, without limitation, loans or advances to Borrower’s officers, partners or employees) except direct obligations of the United States of America;
5.6change the business plan of Borrower or the form in which Borrower conducts its business or the location or fiscal year of such business or the nature of the business as conducted by Borrower on the date of this Agreement or fail to maintain Borrower’s business operation as a going concern; or
5.7sell, transfer, assign, or dispose of any of the capital stock or any membership, partnership, or beneficial interest of Borrower.
Section 6. CLOSING.
6.1Closing. The consummation of the transactions contemplated by this Agreement (the “Closing”) shall take place on the Closing Date. At the Closing, the parties shall execute and deliver the Loan Documents and Lender shall disburse the Loan proceeds in full to Borrower.
Section 7. GENERAL PROVISIONS.
7.1Survival of Representations and Warranties. The representations, warranties, and covenants of Borrower and Lender contained in or made pursuant to this Agreement shall survive for one(1) year following the execution and delivery of this Agreement and the Closing and shall in no way be affected by any investigation of the subject matter thereof made by or on behalf of Lender or Borrower, or their respective counsel, as the case may be.
7.2Successors and Assigns. Except as otherwise provided in this Agreement, the provisions of this Agreement shall inure to the benefit of and be binding upon the respective successors and permitted assigns of the parties to this Agreement (including transferees of any Securities).
7.3Third Parties. Nothing in this Agreement, express or implied, is intended to confer upon any person, other than the parties to this Agreement and their respective successors and assigns, any rights, remedies, obligations, or liabilities under or by reason of this Agreement, except as expressly provided in this Agreement.
7.4Governing Law; Jurisdiction; Waiver of Jury Trial.
(a)Governing Law. This Note shall be governed by and construed under the laws of the State of Nevada, without giving effect to its conflicts of law principles.
(b)Submission to Jurisdiction. Borrower hereby irrevocably and unconditionally (i) agrees that any legal action, suit, or proceeding arising out of or relating to this Note may be brought in the courts of the State of Nevada or of the United States of America for the District of Nevada and (ii) submits to the exclusive jurisdiction of any such court in any such action, suit, or proceeding. Final judgment against Borrower in any action, suit, or proceeding shall be conclusive and may be enforced in any other jurisdiction by suit on the judgment. Nothing in
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this Section 7.4(b) shall affect the right of Lender to (i) commence legal proceedings or otherwise sue Borrower in any other court having jurisdiction over Borrower or (ii) serve process upon Borrower in any manner authorized by the laws of any such jurisdiction.
(c)WAIVER OF JURY TRIAL. EACH PARTY HEREBY IRREVOCABLY WAIVES ANY AND ALL RIGHT TO TRIAL BY JURY IN ANY PROCEEDING ARISING OUT OF OR RELATED TO THIS AGREEMENT OR THE TRANSACTIONS CONTEMPLATED HEREBY.
7.5Specific Performance. The parties agree that, in the event of any breach or threatened breach by any party of any covenant, obligation or other provision set forth in this Agreement, for the benefit of any other party, (a) such other party shall be entitled (in addition to any other remedy that may be available to it) to seek an order granting (i) specific performance or mandamus to enforce the observance and performance of such covenant, obligation or other provision, (ii) an injunction (whether preliminary, temporary or permanent), and other emergency or interim relief, to restrain such breach or threatened breach and to preserve the status quo, and (b) such other party shall not be required to provide any bond or other security in connection with any such relief.
7.6Counterparts. This Agreement may be executed in two or more counterparts, each of which shall be deemed an original, but all of which together shall constitute one and the same agreement. Counterparts may be executed and/or delivered via DocuSign or other electronic signature solution, facsimile, electronic mail (including pdf), or other transmission method (or any combination thereof) and any counterpart so delivered shall be deemed to have been duly and validly delivered and be valid and effective for all purposes.
7.7Headings. The headings and captions used in this Agreement are used for convenience only and are not to be considered in construing or interpreting this Agreement. All references in this Agreement to Sections, unless otherwise provided, refer to Sections of this Agreement.
7.8Notices. Any notice or other communication required or permitted to be delivered to any Party under this Agreement shall be in writing and shall be deemed properly delivered, given and received when delivered by hand, by registered mail, by courier or express delivery service, electronic mail, or by facsimile to the address, electronic mail address, or facsimile telephone number set forth beneath the name of such Party below (or to such other address, electronic mail address, or facsimile telephone number as such Party has specified in a written notice given to the otherparties hereto):
if to Lender:
2485 Village View Drive, Suite 180,
Henderson, NV 89074
Telephone No.: (702) 830-7919
Attention: Jonathan Bonnette
E-Mail:jbonnette@growcapitalinc.com
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with a copy to (which shall not constitute notice):
Seyfarth Shaw LLP
700 Milam Street, Suite 1400
Houston, Texas 77002
Telephone No.: (713) 238-1887
Facsimile No.:(713) 225-2340
Attention:Mark Coffin
E-Mail:mcoffin@seyfarth.com
if to Borrower:
Encompass More Group, Inc.
2485 Village View Drive, Suite 190
Henderson, NV 89074
Telephone No.: 888-336-9559
Attention: Brock McKinley
E-mail:brockmckinley@outlook.com
with a copy to (which shall not constitute notice):
Ideal Business Partners
552 E. Charleston Blvd.
Las Vegas, NV 89104
Telephone No.: 702-852-6601
Facsimile No.: 702-947-4955
Attention: Glenn H. Truitt
E-mail:glenn@idealbusinesspartners.com
7.9No Finder’s Fees. Each party represents that it neither is nor shall be obligated for any finder’s or broker’s fee or commission in connection with the transactions contemplated by this Agreement. Lender agrees to indemnify and to hold harmless Borrower from any liability for any commission or compensation in the nature of a finder’s or broker’s fee arising out of this transaction (and the costs and expenses of defending against such liability or asserted liability) for which such Lender or any of its officers, employees, or representatives is responsible. Borrower agrees to indemnify and hold harmless Lender from any liability for any commission or compensation in the nature of a finder’s or broker’s fee (and any asserted liability) for which Borrower or any of its managers, officers, employees or representatives is responsible.
7.10Fees and Expenses. Borrower and Lender shall each pay their own expenses in connection with the transactions contemplated by this Agreement.
7.11Attorneys’ Fees. In case of an Event of Default, or any action at law or suit in equity to enforce the Loan Documents or the rights of Lender under the Loan Documents, Lender shall be entitled to receive a reasonable sum for its attorneys’ fees and all other reasonable costs and expenses incurred in such action or suit.
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EXECUTION VERSION
7.12Indemnification. Borrower agrees to indemnify, defend, and hold Lender harmless from and against any claim brought or threatened against Lender by Borrower or any third party (as well as attorneys’ fees and expenses in connection therewith) on account of Lender’s relationship with Borrower (each of which may be defended, compromised, settled, or pursued by Lender with counsel of Lender’s selection, but at Borrower’s expense). This indemnification shall survive payment of Borrower’s obligations to Lender and/or any termination, release, or discharge executed by Lender in Borrower’s favor.
7.14Severability. If one or more provisions of this Agreement are held to be unenforceable under applicable law, such provision(s) shall be excluded from this Agreement and the balance of this Agreement shall be interpreted as if such provision(s) were so excluded and shall be enforceable in accordance with its terms.
7.15Entire Agreement. This Agreement, together with all exhibits and schedules to this Agreement, constitutes the entire agreement and understanding of the parties with respect to the subject matter of this Agreement and supersedes any and all prior negotiations, correspondence, agreements, understandings, duties, or obligations between the parties with respect to the subject matter of this Agreement.
7.16Further Assurances. From and after the date of this Agreement, upon the request of Lender or Borrower, Borrower and Lender shall execute and deliver such instruments, documents, or other writings as may be reasonably necessary or desirable to confirm and carry out and to effectuate fully the intent and purposes of this Agreement.
[SIGNATURES FOLLOW]
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IN WITNESS WHEREOF, the parties to this Agreement have executed this Agreement as of the date first written above.
BORROWER:
ENCOMPASS MORE GROUP, INC.
By:/s/ Brock McKinley
Name: Brock McKinley
Title: President
LENDER:
GROW CAPITAL, INC.
By: /s/ Jonathan Bonnette
Name: Jonathan Bonnette
Title: CEO and President
[Signature Page to Commercial Loan Agreement]
EXECUTION VERSION
EXHIBIT A
FORM OF PROMISSORY NOTE
FOR VALUE RECEIVED, and subject to the terms and conditions set forth herein,ENCOMPASS MORE GROUP, INC., a Nevada corporation (the “Borrower”), hereby unconditionally promises to pay to the order ofGROW CAPITAL, INC., a Nevada corporation, or its assigns (the “Noteholder,” and together with the Borrower, the “Parties”), the principal amount of $100,000.00 (the “Loan”), together with all accrued interest thereon, as provided in this Promissory Note (the “Note”), dated July , 2019 (the “Effective Date”) and the Commercial Loan Agreement (the “Agreement”), dated as of the date hereof, by and between Borrower and the Noteholder.
1.Definitions. Capitalized terms used herein shall have the meanings set forth in this Section 1.
“Applicable Rate” means the rate equal to 5%.
“Borrower” has the meaning set forth in the introductory paragraph.
“Default Rate” means, at any time, the Applicable Rate plus 2%.
“Event of Default” has the meaning set forth in Section 8.
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“Loan” has the meaning set forth in the introductory paragraph.
“Note” has the meaning set forth in the introductory paragraph.
“Noteholder” has the meaning set forth in the introductory paragraph.
“Parties” has the meaning set forth in the introductory paragraph.
2.Payment Dates; Optional Prepayments.
2.2Final Payment. The aggregate unpaid principal amount of the Loan, all accrued and unpaid interest, and all other amounts payable under this Note shall be due and payable on the Maturity Date, unless otherwise provided in Section 9.
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3.2Default Interest. If any amount payable hereunder is not paid when due (without regard to any applicable grace periods), whether at stated maturity, by acceleration, or otherwise, such overdue amount shall bear interest at the Default Rate from the date of such non-payment until such amount is paid in full.
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extent that the failure to comply therewith would not, reasonably be expected to have a Material Adverse Effect.
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all Laws and Orders applicable to it and its business, except where the failure to do so would not reasonably be expected to have a Material Adverse Effect.
7.1Indebtedness. Incur, create, or assume any additional indebtedness.
8.3Breach of Covenants.The Borrower fails to observe or perform (a) any covenant, condition or agreement contained in Section 6 or (b) any other covenant,
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obligation, condition, or agreement contained in this Note, other than those specified in clause (a), and such default shall continue unremedied for a period of 10 days after the earlier of the date on which (x) any officer of the Borrower becomes aware of such failure or (y) written notice thereof shall have been given to the Borrower from Noteholder.
(a)the Borrower commences any case, proceeding, or other action (i) under any existing or future Law relating to bankruptcy, insolvency, reorganization, or other relief of debtors, seeking to have an order for relief entered with respect to it, or seeking to adjudicate it as bankrupt or insolvent, or seeking reorganization, arrangement, adjustment, winding-up, liquidation, dissolution, composition, or other relief with respect to it or its debts or (ii) seeking appointment of a receiver, trustee, custodian, conservator, or other similar official for it or for all or any substantial part of its assets, or the Borrower makes a general assignment for the benefit of its creditors;
(b)there is commenced against the Borrower any case, proceeding, or other action of a nature referred to in Section 8.5(a) above which (i) results in the entry of an order for relief or any such adjudication or appointment or (ii) remains undismissed, undischarged, or unbonded for a period of 30 days;
(c)there is commenced against the Borrower any case, proceeding, or other action seeking issuance of a warrant of attachment, execution, or similar process against all or any substantial part of its assets which results in the entry of an order for any such relief which has not been vacated, discharged, or stayed or bonded pending appeal within 30 days from the entry thereof;
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accrued interest thereon and all other amounts payable hereunder, immediately due and payable; and/or (b) exercise any or all of its rights, powers or remedies under applicable Law;provided, however, that if an Event of Default described in Section 8.5 shall occur, the principal of and accrued interest on the Loan shall become immediately due and payable without any notice, declaration, or other act on the part of the Noteholder.
2485 Village View Drive, Suite 190
Henderson, NV 89074
Telephone No.: 888-336-9559
Attention: Brock McKinley
E-mail: brockmckinley@outlook.com
with a copy to (which shall not constitute notice):
Ideal Business Partners
552 E. Charleston Blvd.
Las Vegas, NV 89104
Telephone No.: 702-852-6601
Facsimile No.: 702-947-4955
Attention: Glenn H. Truitt
E-mail: glenn@idealbusinesspartners.com
Grow Capital, Inc.
2485 Village View Drive, Suite 180
Henderson, NV 89074
Telephone No.: (702) 830-7919
Attention: Jonathan Bonnette
E-Mail: jbonnette@growcapitalinc.com
with a copy to (which shall not constitute notice):
Seyfarth Shaw LLP
700 Milam Street, Suite 1400
Houston, Texas 77002
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Telephone No.: (713) 238-1887
Facsimile No.: (713) 225-2340
Attention:Mark Coffin
E-Mail:mcoffin@seyfarth.com
10.3Attorneys’ Fees. In case of an Event of Default, or any action at law or suit in equity to enforce this Note or the rights of the Noteholder under this Note, the Noteholder shall be entitled to receive a reasonable sum for its attorneys’ fees and all other reasonable costs and expenses incurred in such action or suit.
10.4Governing Law. This Note and any claim, controversy, dispute, or cause of action (whether in contract or tort or otherwise) based upon, arising out of, or relating to this Note, and the transactions contemplated hereby shall be governed by the laws of the State of Nevada.
10.5Submission to Jurisdiction.
(a)The Borrower hereby irrevocably and unconditionally (i) agrees that any legal action, suit, or proceeding arising out of or relating to this Note may be brought in the courts of the State of Nevada or of the United States of America for the District of Nevada and (ii) submits to the exclusive jurisdiction of any such court in any such action, suit, or proceeding. Final judgment against the Borrower in any action, suit, or proceeding shall be conclusive and may be enforced in any other jurisdiction by suit on the judgment.
(b)Nothing in this Section 10.5 shall affect the right of the Noteholder to (i) commence legal proceedings or otherwise sue the Borrower in any other court having jurisdiction over the Borrower or (ii) serve process upon the Borrower in any manner authorized by the laws of any such jurisdiction.
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shall constitute an original, but all taken together shall constitute a single contract. This Note constitutes the entire contract between the Parties with respect to the subject matter hereof and supersede all previous agreements and understandings, oral or written, with respect thereto. Delivery of an executed counterpart of a signature page to this Note by facsimile or in electronic (i.e., “pdf” or “tif”) format shall be effective as delivery of a manually executed counterpart of this Note.
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[signature page follows]
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IN WITNESS WHEREOF, the Borrower has executed this Note as of the Effective Date.
| ENCOMPASS MORE GROUP, INC. |
|
By__________________________________ |
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