MANAGEMENT AND SERVICES AGREEMENT
Exhibit
10.2
This
MANAGEMENT AND SERVICES AGREEMENT (this "Agreement") is made as of
July __, 2019, effective as of March 1, 2019, by and between
Exactus, Inc. (the "Company"), a Nevada corporation, Ceed2Med, LLC
(“C2M”), a Florida limited liability company, Xxxxxxxxx
Xxxxxxxxx (“Xxxxxxxxx”), Xxxxx Xxxxxxxxx
(“Xxxxxxxxx”) and Xxxxxxxx Xxxx
(“Xxxx”).
RECITALS
WHEREAS,
C2M was founded in 2018 by Xxxxxxxxx and Xxxxxxxxx (the
“Founders”) who together with Xxxx, have developed and
own valuable intellectual property, know-how, knowledge and
experience that the Company desires to access, and has established
strong relationships, expertise, contacts, opportunities, sources
of seed, agricultural expertise, raw materials, products,
extraction, production, manufacturing, testing and related
capabilities, for the growing, manufacture and sale of hemp-derived
CBD products, and are recognized experts in the field of
hemp-derived CBD in which they have participated at least 2014
around the world;
WHEREAS,
during November 2018 the Company became engaged in the business of
hemp-derived CBD following passage of the Agriculture Improvement
Act of 2018 (the “2018 Farm Xxxx”) and entered into
discussions for a relationship with C2M in order to prepare for
broad participation in the hemp-derived CBD market (the
“Company Purpose”);
WHEREAS,
in order to pursue the Company Purpose, the Company and C2M
determined that the Company would be required to initially obtain
sources of supply and/or distribution rights, products and
inventory in order to develop and offer retail products and
thereafter to seek to expand into additional businesses engaged in
CBD through the assistance of C2M;
WHEREAS,
C2M and the Company have cooperated in good faith in order to
pursue the Company Purpose and in furtherance thereof (A) on
January 8, 2019 entered into a Master Product Development and
Supply Agreement (the “Supply Agreement”) which
provides, among other things, that C2M shall provide ongoing
assistance, training, education, manufacturing, distribution,
support and supply of various finished products and (B) agreed, for
Consideration as described herein, to (i) assign to the Company
C2M’s rights (the “EOW Assets”) to subscribe for
and purchase a 50.1% interest in Exactus One World, LLC
(“EOW”)(formerly known as Burros and Pirates, LLC), an
Oregon limited liability company which possessed agricultural
assets, rights, including leases, permits and relationships, to
permit C2M to become engaged in farming of approximately 200 acres
for the production of industrial hemp located in Southwest Oregon,
and (ii) highly valuable relationships with seed suppliers and farm
operators;
WHEREAS,
the Company has determined the C2M relationship provides additional
opportunities to expand and desires to secure additional services,
assistance and opportunities and Company desires to issue to C2M,
the Founders and Xxxx, the Consideration set forth herein (the
“EOW Consideration”) for assignment (the
“Assignment”) of the EOW Assets, and to confirm C2M
will, on the terms and subject to the conditions herein and any
other agreements providing for additional assistance, the further
Consideration referenced herein;
WHEREAS,
the Company has engaged Scalar, LLC, an independent valuation
concern, to issue a fairness opinion (the “Fairness
Opinion”) and perform a valuation regarding the EOW Assets
and the EOW Consideration to be paid as provided herein, such
Fairness Opinion was presented to the Board of Directors of the
Company on May 9, 2019, and the Board of Directors has approved and
accepted such Fairness Opinion and has authorized the Company to
pay $10 million of its preferred stock, as Consideration for the
Assignment and in consideration of the EOW Assets to the persons
related to C2M set forth on Schedule A annexed hereto);
and
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WHEREAS,
the additional services, assistance and opportunities the Company
desires to secure from C2M, include the following:
●
right of
participation for further investment and business opportunities in
order to rapidly expand the Company’s business and operations
in hemp-derived CBD;
●
executive,
sourcing, vendor, product, production and other expertise and
resources;
●
appointment of Xxxx
to the position of President of the Company;
●
introductions to
farming and other financing;
●
designs for
international “Hemp-Café” store design and
franchise opportunities including plans, drawings, approvals and
authorizations, leads and contacts;
●
access to leasing
of prime real estate in Delray Beach Florida at a location owned by
Xxxxxxxxx with an option to purchase, and the continuing assistance
of Xxxxxxxxx in connection with management, design, and promotion
of the project;
●
drawings, designs
and specifications for extraction, production and manufacturing
facilities and resources;
●
brand development
and support services.
NOW,
THEREFORE, in consideration of the mutual covenants, agreements,
representations and warranties contained herein, and intending to
be legally bound hereby, the parties hereto hereby agree as
follows:
1.
Appointment of President;
Relationship of Company and the President.
Company
agrees to appoint Xxxx as President and Xxxx agrees to accept such
appointment as President. C2M and Company hereby agree and do
hereby waive any and all conflicts of interest and duties to C2M
and the Company incumbent upon Xxxx in connection with his
appointment hereunder and his continuing assistance to C2M. Xxxx
shall have such rights and authority as normally accustom such
position, and shall report directly to the Chief Executive Officer
and the Board of Directors of the Company.
Xxxx
shall provide management and operational support services to the
Company, as President, and as hereinafter provided until his
resignation or removal in accordance with the Bylaws of the
Company. Until such time as a separate employment agreement is
entered into with Xxxx and the Company, Xxxx shall be entitled to
participate in all benefit, incentive, reimbursement and equity
plans available to the senior executives of the Company, and shall
be entitled to receive such salary and other benefits, paid by the
Company.
On and
following the date of his appointment as President, Xxxx shall be
entitled to continue and complete any and all work in process and
proposals accepted by C2M, and receive Consideration and benefits
from C2M during and after appointment as President hereunder, if
any, and distribution or assignment of property (including shares
of common stock of the Company owned by C2M) which shall not be
deemed a conflict of interest (“In-Process Projects”).
Following completion of the In-Process Projects with the parties
thereto (including any renewals or extensions thereof), Xxxx shall
enter into negotiations for customary employment agreement terms
under which Xxxx will agree to devote his full time efforts and
activities to the Company.
Nothing
contained herein shall be deemed to make or render the Company a
partner, co-venturer or other participant in the business or
operations of Xxxx, the Founders, or C2M, or in any manner to
render Company liable, as principal, surety, guarantor, agent or
otherwise for any of the debts, obligations or liabilities of Xxxx,
the Founders or C2M. Similarly, nothing contained herein shall be
deemed to make or render the Founders, Xxxx or C2M a partner,
co-venturer or other participant in the business or operations of
the Company, or in any manner to render the Founders, Xxxx or C2M
liable, as principal, surety, guarantor, agent or otherwise for any
of the debts, obligations or liabilities of Company. The
relationship of C2M and the Company is that of shareholder and
issuer.
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C2M
agrees to indemnify and hold harmless the Company, its officers and
directors, employees and its affiliates and their respective
successors and assigns and each other person, if any, who controls
any thereof, against any loss, liability, claim, damage and expense
whatsoever (including, but not limited to, any and all expenses
whatsoever reasonably incurred in investigating, preparing or
defending against any litigation commenced or threatened or any
claim whatsoever) arising out of or based upon any matter or
circumstance arising under or in connection with this Agreement,
the business or affairs of C2M, its founders, members or managers,
this Agreement or the appointment of Xxxx as an executive of the
Company, or the inaccuracy or falsity of any representation or
warranty or breach or failure by C2M to comply with any covenant or
agreement made herein or in any other document furnished by C2M to
any of the foregoing in connection with this
transaction.
2.
Project Management
Services.
Commencing
on the date of this Agreement, C2M and the Founders will provide,
supply and render such additional project management and
operational support services as are from time to time requested in
order to assist Xxxx, as President, and to provide service to the
Company, as more specifically described below:
Administer and
supervise EOW and agricultural opportunities and farm ventures,
initially consisting of 200 acres located in southwest Oregon
majority-owned and jointly controlled by the Company.
Administer and
supervise the personnel of C2M deployed to service the
Company’s business, such as white label/private label sales
and support, sales and marketing, sourcing, customer service,
project finance and reporting.
Source
raw material, extraction, production and manufacturing vendors and
acquisition opportunities which shall be presented to the Company
for participation or acquisition.
Prepare
and oversee financial reports regarding the Company’s assets,
inventory and accounts and coordinate such reporting, budgets and
forecasts with the Company’s chief financial
officer.
Oversee
EOW and the agricultural operations of the Company and shall
endeavor to timely and accurately report such information to the
Company’s chief financial officer and otherwise render
assistance with the preparation of the Company’s financial
statements and audit thereof.
Provide
the Company with such periodic operating reports and statements
including but not limited to cash flow statements, income
statements, accounts payable and accounts receivable reports and
such other reports and information as may be requested by Company
from time to time in such form and in such detail as shall be
required by the Company according to generally accepted accounting
principles consistently applied in the United States.
Supervise the
purchase of materials and supplies at the Company’s
locations, and assist the Company to acquire, lease, dispose of and
repair equipment and facilities necessary to provide extraction,
production, end product design, testing, labelling, warehousing and
storage for the Company.
Manage
design, development, zoning, improvement, construction, architects,
engineers, legal and similar services and costs associated with
developing the Hemp Café concept and location venue on the
premises of the property owned by Xxxxxxxxx in Delray Beach,
Florida, provided the Company and C2M shall determine a fair lease
rental to be paid by Company to Xxxxxxxxx and cost allocation
methodology, as to which project Xxxxxxxxx shall transfer and
convey all rights and hereby assigns all right, title and interest
in and to such project, including, without limitation, any and all
drawings, designs, plans, blueprints, models, contracts, agreements
and understandings and Xxxxxxxxx and C2M on their own behalf and on
behalf of their owners, officers, directors, employees, agents and
assigns, agree that they shall not compete with the business by
entering into or financing, supporting or supplying any hemp
café or similar business for a period of five (5) years
following the date hereof anywhere in the world.
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Notwithstanding the
foregoing, neither C2M or the Founders, or any of their agents or
employees, shall have the authority, without the express written
consent of the Company, to purchase in the name of the Company, or
for use by the Company, any assets, or incur any indebtedness on
behalf of the Company.
3.
Additional Agreements of
C2M.
C2M,
the Founders and Xxxx agree that at all times during the term of
this Agreement it shall:
(a)
Do nothing, and
permit nothing to be done (which is within the control of C2M),
which will or might cause the Company to operate in an improper or
illegal manner or disparage the Company or its
business.
(b)
Not cause a default
in any of the terms, conditions and obligations of any of the
contracts and other agreements of the Company.
(c)
To the extent
permissible by law, assist the Company and obtain and maintain in
full force all licenses and permits in the State of Florida and
Oregon (and other locations where operating) and comply fully with
all laws respecting its formation, existence, activities and
operations.
(d)
Allow the Company
and the employees, attorneys, accountants and other representatives
of the Company, full and free access to its books and records, and
all of the facilities of C2M, related to the Company and
EOW.
4.
Consideration
“Vesting Conditions”.
“Vesting
Conditions” shall mean, unless waived by the
Company:
1)
The EOW Valuation
shall provide that the value of the Company’s 50.1% interest
in EOW is not less than $25,000,000, the stated value of the shares
of Preferred Stock shall be $10,000,000 representing the face
amount of the shares of Preferred Stock issued hereunder, and
Scaler, LLC shall confirm in writing and render is opinion as to
the fairness of the EOW transaction (Assignment of EOW Assets) from
a financial point of view and the Board of Directors of the Company
shall have accepted such valuation and fairness opinion prior to
the issuance of the Preferred Stock;
2)
C2M shall have
taken steps to prepare for manufacture and delivery of product
against Purchase Order No. 001 (not less than 25% of which will be
delivered on or prior to June 30, 2019).
5.
Consideration
(A) C2M
has previously transferred and recorded on the transfer agent
records of the Company the issuance to C2M shares of common stock,
par value $0.0001 per share, of Company (the “Common
Stock”) previously issued to C2M pursuant to the Supply
Agreement (and shall assist C2M to transfer or assign to the
Founders and Xxxx, upon request, or such other designees of C2M as
shall be requested in writing accompanied by appropriate transfer
agent instructions), such amount as C2M shall designate in writing
and authorize the transfer agent for the Common Stock to effectuate
such transfers, provided, such assignees shall agree to be bound by
the terms of transfer documents required by the Company and its
transfer agent.
(B)
Company shall authorize and issue $10 million of its Series E
Convertible Redeemable Preferred Stock, par value $0.0001 per share
(the “Preferred Stock”) to such persons in such amounts
as set forth on Schedule
A annexed hereto (the
“Consideration”).
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The
Consideration set forth in this Paragraph 5(B) shall constitute all
amounts due and owing to C2M, the Founders and Xxxx from any and
all agreements, understandings or contracts related to the
Assignment of the Assets effectuated pursuant to that certain
Assignment Agreement and Membership Interest Purchase Agreement
dated March 11, 2019 for the right and opportunity for the
Company’s subscription for thirty (30%) percent of the
membership interests of EOW from C2M and the assignment from C2M to
the Company of the option and right to purchase from the members of
EOW an additional twenty and one-tenth (20.1%) percent interest of
EOW. The Consideration shall satisfy, and C2M, the Founders and
Xxxx shall accept, such consideration, and neither Company nor EOW
shall be required to pay or provide for any additional payments to
C2M, the Founders, or Xxxx for any matters or things that exist or
could exist prior to the date hereof or hereafter including,
without limitation, those set forth and contemplated in the
preliminary paragraphs hereto, without the express written
agreement of the Company.
Upon
delivery of certificates representing the Preferred Stock as set
forth on Schedule A
pursuant to the terms hereof, each of C2M, Founders and Xxxx do
hereby release and discharge Company from all actions, cause of
action, suits, debts, dues, sums of money, accounts, reckonings,
bonds, bills, specialties, covenants, contracts, controversies,
agreements, promises, variances, trespasses, damages, judgments,
extents, executions, claims, and demands whatsoever, in law,
admiralty or equity, against Company (including, without
limitation, arising in connection with the Supply Agreement and
EOW), that C2M, Founders or Xxxx, or its or their successors,
officers, directors, principals, control persons, past and present
officers, directors, employees, advisors, accountants, auditors,
attorneys, and assigns ever had, now have or hereafter can, shall
or may, have for, upon, or by reason of any matter, cause or thing
whatsoever, whether or not known or unknown, from the beginning of
the world to the day of the date of this Agreement.
6.
Term of Agreement;
Termination of Rights.
(a) The
term of this Agreement shall commence on its execution, and expire,
unless terminated or extended in writing, on December 31, 2019.
Upon termination of this Agreement, all books and records relating
to the operation of the Company Business shall be immediately
returned to the Company. Notwithstanding the foregoing, the Company
may terminate this Agreement prior to the expiration of its term
upon thirty (30) days advance notice and the payment in full of the
Consideration.
7.
Miscellaneous.
(a)
This Agreement sets forth the entire understanding and agreement
among the parties hereto with reference to the subject matter
hereof and may not be modified, amended, discharged or terminated
except by a written instrument signed by the parties
hereto.
(b)
This Agreement shall be governed by, and construed in accordance
with, the laws of the State of Nevada, without reference to
principles of conflicts of laws.
(c)
This Agreement may not be assigned by Company or Xxxx, except that
Company may in its sole discretion assign this Agreement to any of
its parents or subsidiaries.
(d) All
of the terms and provisions of this Agreement shall be binding
upon, inure to the benefit of, and be enforceable by each of the
parties hereto and their respective successors and assigns. Except
for affiliates of the Company and C2M and their respective
shareholders, officers, directors, employees and agents, no person
other than the parties hereto shall be a third party beneficiary of
this Agreement or have any rights hereunder.
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(e) No
failure on the part of any party hereto to exercise, and no delay
in exercising, any right, power or remedy hereunder shall operate
as a waiver thereof, nor shall any single or partial exercise of
any right, power or remedy hereunder preclude any other or further
exercise thereof or the exercise of any other rights, power or
remedy.
(f) No
publicity release or announcement concerning this Agreement or the
transactions contemplated hereby shall be issued without advance
approval of the form and substance thereof by Company.
(g) Any
legal action, suit or proceeding arising out of or relating to this
Agreement or the transactions contemplated hereby may be instituted
in any state or Federal court located in the State of Nevada,
County of Xxxx, and each party waives any objection which such
party may now or hereafter have to the laying of the venue of any
such action, suit or proceeding, and irrevocably submits to the
jurisdiction of any such court in any such action, suit or
proceeding. Any and all service of process and any other notice in
any such action, suit or proceeding shall be effective against any
party if given by registered or certified mail, return receipt
requested, or by any other means of mail which requires a signed
receipt, postage prepaid, mailed to such party as herein provided.
Nothing herein contained shall be deemed to affect the right to any
party to service of process in any other manner permitted by
law.
(h) If
any provision of this Agreement shall be determined by a court of
competent jurisdiction to be invalid or unenforceable, such
determination shall not affect the remaining provisions of this
Agreement, all of which shall remain in full force and
effect.
(i)
This Agreement may be executed in one or more counterparts, each of
which shall be deemed an original but all of which shall constitute
one and the same instrument.
(j) The
headings in this Agreement are for reference purposes only and
shall not in any way affect the meaning or interpretation of this
Agreement.
IN
WITNESS WHEREOF, the parties have executed this Management
Agreement as of the date first above written.
Signed
this ____ day of July, 2019.
Name:
Xxxxxxx Xxxxxx
Title:
Chief Financial Officer
CEED2MED,
LLC
By:
___________________________
Name:
Title:
XXXXX
XXXXXXXXX
By:
___________________________
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XXXXXXXX
XXXXXXXXX
By:
___________________________
XXXXXXXX
XXXX
By:
___________________________
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SCHEDULE A
CEED2MED,
LLC – $10,000,000 Series E Convertible Preferred
Stock
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