Exhibit 10.2

 

JOINT VENTURE AGREEMENT

TO OPERATE INTERNATIONAL CBD

MANUFACTURING AND DISTRIBUTION BUSINESS

 

THIS JOINT VENTURE AGREEMENT (the “Agreement”) is made and entered into as of
September 30, 2020, by and between:

 

I. Marijuana Company of America, Inc., a company duly organized and existing
under the laws of Utah, the United States of America, having its principal
office at 1340 W. Valley Parkway, Escondido, CO 92029, United States of America
(hereinafter referred to as “MCOA”); and

 

II. Marco Antonio Guerrero Frederico, an individual resident of Brazil, having
his principal office at Av. das Nações Unidas, 8.501, 17° andar, CEP 05425-070 -
São Paulo, SP, Brazil (hereinafter referred to as “Guerrero”); and

 

III. MR Hemp Uruguay S.A.S., a simplified stock corporation to be duly organized
and existing under the laws of Uruguay (hereinafter referred to as “Mr. Hemp
Uruguay”).

 

RECITALS

 

1. WHEREAS, MCOA is a global distributor of cannabinoid extracts and consumer
products containing cannabinoids, having established operations which are
engaged in the manufacture, distribution and sale of a variety of consumer
products containing cannabinoids; and

 

2. WHEREAS, Guerrero is a Brazilian business executive and a member of the board
of directors of MCOA, in the process of formation of Mr. Hemp Uruguay, an
Uruguayan entity to be named MR Hemp Uruguay S.A.S., a simplified stock
corporation to be duly organized and existing under the laws of Uruguay; and

 

3. WHEREAS, MCOA is interested in cooperating with Guerrero and Mr. Hemp Uruguay
through the formation of a jointly owned business entity in Uruguay and in
making available its technology, know-how and services to the said business
entity (hereinafter referred to as the “Company”) concerning the establishment
of manufacturing plants and distributors and other applications, to be
established in Uruguay; and

 

3. WHEREAS, MCOA, Guerrero and Mr. Hemp Uruguay desire that the Company will
engage in the business of cannabinoid consumer product manufacturing and
distribution operations in Uruguay upon the terms and conditions set forth in
this Agreement.

 

NOW, THEREFORE, in consideration of the premises and the mutual covenants herein
contained, MCOA and Mr. Hemp Uruguay agree as follows:

 

 

 

ARTICLE 1

 

The following terms shall have the meaning set forth respectively wherever the
same appear in this Agreement, unless the context otherwise requires.

 

A. “EXHIBIT” means a document attached to this Agreement at the time of the
approval and execution of this Agreement by all of the PARTIES.

 

B. “Company” means the entity to be established in accordance with Article 3
hereof.

 

C. “EFFECTIVE DATE” means the date to be determined pursuant to Article 32
hereof.

 

D. “GENERALLY ACCEPTED ACCOUNTING PRINCIPLES” means accounting principles
generally accepted by accountants, or required by applicable law, in the United
States of America, consistently applied.

 

E. “Laws of Uruguay” means all applicable legislation, including executive and
administrative regulations and policies of Uruguay.

 

F. “INTERNATIONAL JOINT VENTURER PARTY” means Guerrero and Mr. Hemp Uruguay.

 

G. “INTERNATIONAL JOINT VENTURER SHAREHOLDER” means INTERNATIONAL JOINT VENTURER
PARTY, as a shareholder of the Company.

 

H. “MCOA SHAREHOLDER” means MCOA, as a shareholder of the Company.

 

I. “SHAREHOLDERS” means the MCOA SHAREHOLDER and the INTERNATIONAL JOINT
VENTURER SHAREHOLDER.

 

J. “SHAREHOLDER” means any of the SHAREHOLDERS.

 

K. “SHAREHOLDERS’ MEETING” means a meeting of the SHAREHOLDERS in their capacity
as SHAREHOLDERS in the Company pursuant to the ARTICLES OF INCORPORATION and
BYLAWS of the Company.

 

L. “SHARES” means shares in the capital of the Company.

 

M. “PARTIES” means MCOA and the INTERNATIONAL JOINT VENTURER PARTY.

 

N. “PARTY” means any of the PARTIES.

 

O. “PROJECT FACILITIES” means any facility for the manufacture, distribution and
sale of consumer products containing cannabinoids, all related facilities and
utilities, which may be changed from time to time by unanimous agreement of the
SHAREHOLDERS at a SHAREHOLDERS’ MEETING.

 

P. “PRODUCTS” are consumer products containing cannabinoids in varying
formulations and compositions.

 

Q. “TOTAL FUNDS” means the total funds required to establish and commence the
operations of the PROJECT FACILITIES, together with initial working capital for
the Company as described in Articles 4.1.1 through 4.2.1 of this Agreement, the
total of which is US $50,000.00.

 

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R. “AFFILIATE” means an entity in which any PARTY holds a majority ownership
interest, or which holds a majority ownership interest in any PARTY, or which is
controlled by or controls any PARTY, or a subsidiary of such an entity.

 

ARTICLE 2

 

2.1. Assignment to Mr. Hemp Uruguay. Upon the finalization of the undergoing
formation of Mr. Hemp Uruguay, all rights and responsibilities of Guerrero under
this Agreement shall be deemed assigned from Guerrero to Mr. Hemp Uruguay with
no action required on the part of MCOA, Guerrero, or Mr. Hemp Uruguay beyond Mr.
Hemp Uruguay’s adherence to this Agreement. Upon its formation, Guerrero shall
sign the signature page to this Agreement on Mr. Hemp Uruguay’s behalf, which
action shall effect the assignment.

 

ARTICLE 3

 

3.1. The SHAREHOLDERS will incorporate a joint venture business entity under the
LAWS OF URUGUAY, in accordance with this Agreement.

 

3.1.1. The Company shall consist of a simplified joint stock company organized
and existing under the laws of Uruguay and bearing the name of “Hempsmart
Uruguay S.A.S.”, or such other name as shall be agreed to by the PARTIES and
approved by the appropriate authorities.

 

3.1.2. Unless otherwise agreed, the Company shall have its principal places of
business in Uruguay, and may establish branches and/or representative offices
and/or service centers in other places inside Uruguay and the United States of
America as may be decided from time to time by the Board of Directors with the
prior approval of the SHAREHOLDERS.

 

3.2. Purposes and Objects.

 

3.2.1. The object for which the Company is established is to engage in the
business of the distribution and sale of a variety of consumer products
containing cannabinoids (the “Project”).

 

3.2.2. In order to attain the above-mentioned object, the Company shall carry on
their business in the field of:

 

a. Production: To produce the Products under the trademarks or licenses of MCOA,
under license to the Company.

 

b. Trade: Subject to the laws of Uruguay and the United States of America, to
engage in manufacturing, distributional and trading activities inside Uruguay,
the United States of America, and other countries related to the Products, as
well as purchase and import of goods related to the Products, among others, raw
materials, auxiliary materials and manufacturing and processing equipment.

 

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3.3. The capital of the Company shall consist of 100,000,000 SHARES of common
stock and 100,000,000 shares of preferred stock as provided in Article 4. All
SHARES shall carry the same rights as to entitlement to profit distribution and
to distribution of capital and surplus upon winding up of the Company in
proportion to the current shareholdings.

 

3.4. The Management of the Company shall be determined pursuant to Articles 9
and 17 hereof and the BYLAWS.

3.5. The Company shall be established for a period of perpetual duration
commencing from the date the Company has become a legal entity.

 

ARTICLE 4

 

4.1. The PARTIES agree to structure the Company’s share capital as follows:

 

4.1.1. The authorized share capital of the Company shall be divided into two
classes of capital stock consisting of: 100,000,000 SHARES of Class A common
stock and 100,000,000 of Series A Preferred stock.

 

4.1.2. The aforesaid authorized share capital shall be subscribed by and issued
to:

 

a. Mr. Hemp Uruguay: 30% consisting of 30,000,000 SHARES of Class A common
stock;

 

b. MCOA: 70% consisting of 70,000,000 SHARES of Class A common stock.

 

ARTICLE 5

 

5.1. The SHARES of the Company shall be registered shares.

 

5.2. At the request of any shareholder a certificate shall be issued which shall
give evidence of ownership of SHARES owned by the said SHAREHOLDER in the
Company.

 

5.3. Duplicates of certificates may be issued in lieu of damaged or lost
certificates in accordance with the procedures set forth in the BYLAWS.

 

5.4. A register of all SHAREHOLDERS shall be kept at the principal offices of
the Company in which shall be recorded the full names and addresses of the
SHAREHOLDERS.

 

5.5. The share registers shall constitute the conclusive evidence regarding the
ownership of all SHARES.

 

5.6. If any PARTY wishes to sell or otherwise transfer all or any part of its
SHARES in the Company pursuant to a bona fide arms-length offer made by a person
or entity who is not a SHAREHOLDER or a permitted transferee under Article 5.13,
the intending transferor shall first offer all such SHARES to the Company by
written notice, at the price and upon all other terms and conditions offered by
the non-SHAREHOLDER, and the Company may elect to purchase all and not part only
of the offered SHARES within a period of 60 (sixty) days after the receipt of
the said notice.

 

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5.7. If the Company do not exercise their right to purchase all of such SHARES
within the period specified in Article 5.6 hereof, subject to the provisions of
Article 5.10, the other PARTY may elect to purchase all and not part only of the
offered SHARES at the price and upon all other terms and conditions offered by
the non-SHAREHOLDER within an additional 60 (sixty) day period commencing the
day after the expiration of the period specified in Article 5.6 hereof.

 

5.8. In the event that neither of the Company nor the other PARTY is willing or
able to purchase all of the offered shares pursuant to Articles 5.6 and 5.7 of
this Agreement, the Company and the other PARTY may each purchase some of the
offered SHARES in whatever proportion they desire, provided that all offered
SHARES are purchased within the time periods provided by Articles 5.6 and 5.7.

 

5.9. In the event that the Company or the other PARTY, or the Company and the
other PARTY, do not exercise their right to purchase the offered SHARES within
the time periods and on the terms specified in Articles 5.6, 5.7 and 5.8 hereof,
subject to the provisions in Article 5.10, the intending transferor may, with
the other PARTY’s written consent, sell all SHARES covered by the said notice to
the offering non-SHAREHOLDER, provided that:

 

5.9.1. The number of SHARES to be sold equals the number of SHARES offered under
Article 5.6 hereof;

 

5.9.2. The other terms and conditions of the offer are no more favorable to the
transferee than those offered under Article 5.6 hereof; and

 

5.9.3. The transferee agrees in writing to execute and be governed by the terms
and provisions of this Agreement.

 

If the SHARES to be sold are not transferred to such offering non-SHAREHOLDER
within thirty (30) days following expiration or termination of the 60 (sixty)
day first refusal period designated in Article 5.7 hereof, then the intending
transferor must again follow the procedure in Articles 5.6 and 5.7 hereof if it
still wishes to sell its SHARES.

 

5.10. None of the PARTIES shall pledge, encumber or otherwise use as collateral
or for any other purpose the SHARES of the Company unless consent to such
pledge, hypothecation or other such application has been received in writing
from the other PARTY.

 

5.11. The Company shall place a legend on the certificates representing all
SHARES of the Company containing a reference to the substantive terms of this
Article 5 so as to give notice thereof to any prospective or actual purchaser.

 

5.12. If any of the PARTIES should cease to hold any SHARES in the Company, it
shall thereupon cease to be a PARTY for the purposes hereof without prejudice to
any liabilities of such PARTY to the Company and the other SHAREHOLDERS existing
at that time, which liabilities shall survive until fully satisfied.

5.13. Notwithstanding the provisions of this Article 5, the PARTIES are free to
transfer SHARES as follows:

 

5.13.1. MCOA may transfer its SHARES to a wholly owned subsidiary which is
carrying on the business of MCOA or to a company which wholly owns MCOA;

 

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5.13.2. The SHARES owned by Mr. Hemp Uruguay may be transferred among or to a
wholly owned subsidiary of one of Mr. Hemp Uruguay or to a company which wholly
owns Mr. Hemp Uruguay.

 

5.14. Unless a SHAREHOLDERS’ MEETING unanimously decides otherwise for special
cases, the transfer of SHARES may only be affected in accordance with the
provisions of this Article 5.

 

5.15. Each SHAREHOLDER shall have the preemptive right to subscribe to any
additional SHARES issued by the Company in proportion to the SHAREHOLDER’S
ownership in the number of SHARES issued and outstanding immediately prior to
the issuance of the additional SHARES.

 

5.16. Tag Along Right of Sale When Majority Interest Is Being Purchased

 

5.16.1 Whenever any person who does not own directly or constructively, pursuant
to the stock attribution rules in Section 318 of the Internal Revenue Code, more
than 50 percent of the Company’s voting stock makes an offer or series of
related offers to purchase sufficient additional shares to enable that person to
have in the aggregate more than 50 percent ownership of all classes of voting
stock in a transaction or series of related transactions, the proposed transfer
can be effectuated if, but only if, the person making the offer agrees to
purchase the SHARES of all the remaining SHAREHOLDERS at the same price per
share as is contained in the proposed offer or series of related offers giving
the offeror voting control of the Company.

 

5.16.2 A SHAREHOLDER having the right to have its shares purchased pursuant to
this Subsection shall accept or reject this right be delivering to the offeree
written notice of its intentions within 30 calendar days of receiving written
notification of the purchase right from the offeror. Failure to deliver the
required notice of acceptance or rejection within the time period specified in
the preceding sentence shall be deemed to be a rejection of the purchase offer.

 

ARTICLE 6

 

6.1. The annual SHAREHOLDERS’ MEETING shall be held once a year not later than
the month of April, unless otherwise agreed by SHAREHOLDERS, beginning in the
year 2021.

 

6.1.1. At the said annual SHAREHOLDERS’ MEETING:

 

a. The Board of Directors shall report on the affairs of the Company and the
results achieved in the preceding financial year especially on its management;

 

b. The Company’ balance sheet and profit and loss accounts of the preceding
fiscal year shall be presented for consideration and approval;

 

c. A Board of Directors shall be nominated and elected pursuant to Article 9.2
hereof;

 

d. Policies for the coming fiscal year shall be determined and the supervision
of their implementation shall be entrusted to the Board of Directors; and

 

e. Matters presented by the Board of Directors and SHAREHOLDERS shall be
discussed.

 

6.1.2. The proposals of the SHAREHOLDERS may only be included in the agenda of a
meeting if a request in writing is made to the Board of Directors by a
SHAREHOLDER and if the proposal concerned is received at such time so as to give
the Board of Directors sufficient time to announce the same to the SHAREHOLDERS,
with due observance of the time required for calling a SHAREHOLDERS’ MEETING.

 

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6.2. An extraordinary SHAREHOLDERS’ MEETING shall be convened whenever deemed
necessary by the Board of Directors.

 

6.2.1. The Board of Directors shall also call and convene an extraordinary
SHAREHOLDERS’ MEETING at the request in writing of one (1) or more SHAREHOLDERS,
in which request the business to be transacted shall be specified.

 

6.2.2. If the Board of Directors fails to convene the said meeting within one
(1) month after receipt of the request, the requesting SHAREHOLDER(s) may call
the meeting at the expense of the Company, with due observance of the provisions
of the ARTICLES OF INCORPORATION, BYLAWS and this Agreement.

 

6.3. All SHAREHOLDERS’ MEETINGS shall be held at the principal office of the
Company or at any place within or without Uruguay or the United States of
America as designated by the Board of Directors; or remotely, by virtual
telephonic or digital presence.

 

ARTICLE 7

 

7.1. Unless otherwise stipulated in this Agreement, all SHAREHOLDERS’ MEETINGS
shall be chaired by the President. In case of disability of the President to
chair the meeting for whatever reason, the meeting shall be chaired by another
member of the Board of Directors, and if none of the Directors are present, the
meeting shall be chaired by a person elected by the SHAREHOLDERS from among
those present.

 

7.2. Minutes shall be taken of the business transacted at such meeting. Such
minutes shall be rendered in the English language and shall be signed by the
chairman of the meeting and by one (1) of the SHAREHOLDERS present at the
meeting and the executed minutes shall be kept by the Company, and the contents
thereof shall be concrete evidence to all the SHAREHOLDERS of actions taken by
the SHAREHOLDERS.

 

ARTICLE 8

 

8.1. Unless otherwise stipulated in this Agreement, all resolutions of the
SHAREHOLDERS’ MEETING shall be adopted by 75% of all outstanding SHARES
regardless of class.

 

8.2. At the SHAREHOLDERS’ MEETING, each share shall have the right to cast one
(1) vote.

 

8.3. A shareholder may be represented at the SHAREHOLDERS’ MEETING only by
another SHAREHOLDER or by another person appointed by a proxy in writing.

 

8.4. The Secretary of the Company shall have the right to request that all
proxies be produced to him during the meeting.

 

8.5. Unless otherwise decided by the SHAREHOLDERS ‘ MEETING, voting regarding
the election of persons to any office shall be effected by ballots and regarding
other matters the voting shall be done verbally.

 

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8.6. A quorum of the SHAREHOLDERS’ MEETING shall exist if 100% (one hundred
percent) of the number of the subscribed shares of all classes of the Company
are present or represented by proxy at the said meeting.

 

8.7. The SHAREHOLDERS may also adopt valid resolutions outside the meeting
provided all SHAREHOLDERS have approved in writing the resolution(s) to be
adopted. Such resolution(s) shall be recorded in the minutes as if they were
adopted at a meeting of the SHAREHOLDERS.

 

8.8. The following decisions or actions of the Company shall require the
approval of the SHAREHOLDERS, by vote as provided in Article 8 hereof:

 

a. An expansion or other change in the scope of the Company’ objectives.

 

b. Amendment or any alteration of the articles of incorporation or bylaws.

 

c. Any merger, consolidation, dissolution or other important change in the
organization or legal status of the Company or disposition of any substantial
part of the assets or termination of business of the Company.

 

d. Subject to Article 9.2, the appointment, election and suspension from office
of any member of the Board of Directors.

 

e. Any agreement between the Company and any of the PARTIES, SHAREHOLDERS or
their respective AFFILIATES or any entity in which any PARTY or SHAREHOLDER has
an ownership interest or with whom any PARTY or SHAREHOLDER has common
management personnel.

 

f. Any other matter as to which the vote of the SHAREHOLDERS is required by
applicable laws.

 

ARTICLE 9

 

9.1. The Company shall be managed by a Board of Directors, consisting of three
(3) persons.

 

9.2. Each member of the Board of Directors shall be nominated and elected by the
SHAREHOLDERS’ MEETING for a term of one (1) year, or until his successor is duly
elected and qualified, by a majority vote of the SHARES of Class A common stock.

 

9.3. After the expiration of their respective term of office, the members of the
Board of Directors shall be eligible for reelection for the same term. Any
vacancy on the Board of Directors shall be filled by the SHAREHOLDERS of the
particular class of common stock having previously elected the director to the
director position then vacant.

 

9.4. The Board of Directors shall meet so often as may be necessary for and
shall undertake the proper conduct and management of the Company in accordance
with the BYLAWS.

 

9.5. A majority of the Board of Directors shall constitute a quorum for the
transaction of business at any meeting of the Board of Directors.

 

9.6. The act of the majority of the members of the Board of Directors shall be
the act of the Board of Directors.

 

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9.7. The Board of Directors shall approve all purchases and sales of property,
materials and equipment by the Company (including any related purchases in the
aggregate) which exceeds $50,000.00; provided, however, the purchase of raw
materials and the tolling and sales of cannabinoids and other essential
ingredients, shall not require Board of Director’s approval to the extent same
is conducted in the ordinary course of business.

 

9.8. The following decisions or actions of the Company shall require the
approval of the Board of Directors, by vote as provided in Article 10 hereof:

 

9.8.1. Approval of the final PROJECT specifications, final cost estimates and
schedule for the manufacture of the Products.

 

9.8.2. Approval of the Annual Report including balance sheet, profit and loss
account, and other financial statements.

 

9.8.3. Determination of policies as to the application or distribution of
profits.

 

9.8.4. Any other matter as to which the vote of the Board of Directors is
required by applicable laws.

 

ARTICLE 10

 

10.1. A meeting of the Board of Directors shall be convened at any time the
business of the Company requires or at the request of one (1) of the DIRECTORS.

 

10.2. The notice calling the meeting of the Board of Directors shall be given in
writing at least three (3) days before such meeting: provided, however, in
urgent matters and if all directors have agreed in writing, notice may be given
a minimum of twenty-four (24) hours before such meeting. In the event that all
members of the Board of Directors are present at a meeting in person or
remotely, prior notice of meeting shall not be required.

 

10.3. The President will call the meeting of the Board of Directors to order and
will be the Chairman of such meeting. In the case of disability of the President
to call the meeting to order or to act as Chairman, one of the other Directors
may call the meeting to order and may act as Chairman.

 

10.4. A meeting of the members of the Board of Directors is only lawful if all
of the members are present in person or by means of telephonic or digital,
remote communication whereby each person present shall be able to hear and be
heard by all other persons present.

 

10.5. At the meeting of the Board of Directors each member is entitled to cast
one (1) vote.

 

10.6. All resolutions at the meeting of the Board of Directors shall be adopted
by vote of a majority of the entire Board of Directors, whether or not the
entire Board of Directors is present at the meeting. In case of an equality of
votes, the proposal is deemed rejected and shall be submitted to a SHAREHOLDERS’
MEETING for a decision.

 

10.7. The Board of Directors may also adopt binding resolutions without
convening a meeting of the Board of Directors, if all members have indicated in
writing their respective approval of the resolution(s) to be adopted.

 

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10.8. Minutes shall be taken of the business transacted at the meeting of the
Board of Directors. Such minutes shall be rendered in the English language and
shall be signed by the Chairman and members of the Board of Directors present at
the meeting and kept by the Company.

 

ARTICLE 11

 

11.1. A Management Committee shall be designated by the Board of Directors, to
consist of the Presidents of the Company and the Executive Vice Presidents of
the Company.

 

11.2. The Management Committee shall meet so often as may be necessary and shall
decide all matters concerning the management and operation of the Company
delegated to the Management Committee in the BYLAWS or otherwise by the Board of
Directors.

 

11.3. Except as provided in the following sentence, the Management Committee
shall approve all purchases and sales of property, materials and equipment by
the Company (including any related purchases in the aggregate) which exceed
$50,000.00, pursuant to Article 9.7 hereof. The Management Committee shall
review all actions and inactions of the President, including all purchases of
raw materials and manufacturing, marketing and sales of Product.

 

11.4. The Management Committee shall act through the unanimous decision of its
members.

 

11.5. The Management Committee shall not be construed to constitute an
“Executive Committee” under the laws of the United States of America.

 

ARTICLE 12

 

The officers of the Company shall consist of officers appointed by the Board of
Directors and shall have those respective duties set forth in the BYLAWS and
shall be subject to the policy direction of the Board of Directors.

 

ARTICLE 13

 

The Company shall employ a General Manager of the Project, upon the
recommendation of Mr. Hemp Uruguay, who shall have the day to day responsibility
for the operation of the Project, subject to the direction of the Management
Committee described in Article 11.

 

ARTICLE 14

 

14.1. The fiscal year of the Company shall be the first day of January up to and
including the 31st day of December of every year.

 

14.2. From the books that have been closed, the Board of Directors shall have
prepared the balance sheet and profit and loss account together with other
annual reports of conduct of business which shall be opened to the inspection of
SHAREHOLDERS at the offices of the Company not later than five (5) days before
the annual SHAREHOLDERS’ MEETING described hereafter.

 

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14.3. The said balance sheet and profit and loss account shall be executed by
the President or by another individual delegated by him, after having been
audited by an independent certified public accountant appointed by MCOA for the
purpose of examining and auditing the accounts of the Company, who will give a
statement to the effect that it has audited the balance sheet and profit and
loss account and same has been prepared in accordance with GAAP.

 

14.4. The balance sheet and profit and loss account shall be submitted by the
Board of Directors to the SHAREHOLDERS’ MEETING for the approval of the
SHAREHOLDERS.

 

14.5. The Board of Directors shall have prepared in accordance with GAAP
consistently applied a quarterly unaudited balance sheet and profit and loss
statement which shall be submitted to the Board of Directors for review each
calendar quarter.

 

ARTICLE 15

 

The Board of Directors may declare dividends out of surplus, or if none, out of
net profits earned by the Company during the fiscal year in which a dividend is
declared and/or the preceding fiscal year; provided, any such declaration and
the amount thereof shall be ratified by the SHAREHOLDERS. The PARTIES
acknowledge and agree that no dividend shall be paid until such time as the
profits generated from the operations of the Company are sufficient to
adequately provide for expenses, debt service and cash flow requirements. To the
extent that net profits are available for distribution, at the discretion of the
Board of Directors, the Board of Directors shall make monthly distributions to
SHAREHOLDERS on a pro rata basis, no later than fifteen (15) days after the
closing of the previous month’s financial books.

 

ARTICLE 16

 

16.1. Nothing in this Agreement shall be deemed to prohibit MCOA or the
International Joint Venturer Party from conducting the businesses presently
operated by MCOA and the International Joint Venturer Party.

16.2. The Company will function as independent business enterprises, maintaining
arms-length relationships with the PARTIES, SHAREHOLDERS and their AFFILIATES or
any entity in which any PARTY or SHAREHOLDER has an ownership interest or with
whom any PARTY or SHAREHOLDER has common management personnel.

 

16.3. The Company will be managed and operated on a sound and efficient
commercial basis in accordance with the laws of their respective jurisdictions.

 

16.4. The books and records, including but not limited to all purchases,
processing and sales orders, and invoices, of the Company shall be complete and
accurate in order that financial statements can be prepared in accordance with
GAAP. Such records and supporting documents shall be available for inspection by
the PARTIES at all reasonable times.

 

16.5. The books and records of the Company shall be audited at the end of each
financial year during the term of this Agreement by MCOA’s independent certified
public accountant referred to in Article 14.3 above. Such firm shall provide the
PARTIES with the financial report in the English language in accordance with
GAAP. Copies of the audit shall be provided to the PARTIES at the Company’
expense. Such audits shall be final and binding upon the PARTIES as to the
revenue, cost, fees, expenses, losses and profits of the Company absent manifest
error and fraud.

 

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16.6. The Company will maintain or cause to be maintained, at their own cost,
with financially sound and reputable insurers, such insurance with respect to
its properties, assets and business, against loss or damage of the kinds
customarily insured against by corporations of established reputation engaged in
the same or a similar business and similarly situated, of such types and in
amounts as are customarily carried under similar circumstances by such other
corporations in amounts determined by the Management Committee, but in no event
less than: [i] insurance on its properties and assets against loss or damage by
fire, lightning, hail, windstorm, riot, riot attending a strike, civil
commotion, explosion, aircraft, vehicle and smoke, and such other risks, if any,
as from time to time may be included in “Broad Form” policies, in amounts
sufficient to prevent the Company from becoming a co-insurer of any partial loss
under the applicable policies; [ii] insurance against flood, if properties
insured by the Company are located in a flood zone, and against hurricane in
amounts identical to [i] above if, in each case, such insurance is available;
[iii] comprehensive public liability insurance against claims for bodily injury
or death of persons and damage to or destruction of property; [iv] workers’
compensation insurance to the extent and in such amounts as are customarily
carried (or maintained) by corporations of established reputation operating
similar properties in comparable locations, but in any event not less than
required by all applicable legal requirements; [v] product liability insurance
against claims for bodily injury or death of persons and damages to or
destruction of property; and [vi] business interruption insurance for lost
profits caused by damage to or destruction of the Company’ business premises.
Except as otherwise agreed by the SHAREHOLDERS, the Parties shall be named as
“additional insureds” on all insurance required by this Article 16.6.

 

ARTICLE 17

 

17.1. All the activities of the Company, including planning, preparation,
coordination and supervision of the PROJECT FACILITIES and all necessary
procurement, review of detailed operational specifications and all the day to
day activities shall be conducted by the Company with the assistance and
expertise of the SHAREHOLDERS and PARTIES as and when required.

 

17.2. Subject to Article 8.8(e), any SHAREHOLDER or PARTY may enter into
separate arms-length agreements with the Company to provide management,
technological, procurement, operation and/or marketing assistance to the Company
in the operation of the PROJECT FACILITIES and the PROJECT for any period as may
be required by the Company.

 

ARTICLE 18

 

This Agreement shall continue in effect so long as the Company is in existence
unless earlier terminated pursuant to Article 19 of this Agreement.

 

ARTICLE 19

 

19.1. This Agreement shall be automatically terminated upon the occurrence of
any of the following events:

 

19.1.1. Dissolution of the Company; or

 

19.1.2. By mutual agreement of the PARTIES in writing.

19.2. Termination of this Agreement shall be without prejudice to the accrued
rights and liabilities of the PARTIES at the date of termination.

 

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ARTICLE 20

 

20.1. Failure to insist upon the strict and punctual performance of any
provision hereof shall not constitute waiver of the right to require such
performance, nor should a waiver in one case constitute a waiver with respect to
a later breach, whether of similar nature or otherwise. Nothing shall constitute
or have the effect of waiver except an instrument in writing, signed by a duly
authorized officer or representative of the PARTY or SHAREHOLDER against whom
the waiver is sought to be enforced, which expressly waives an option, election
or right under this Agreement.

 

20.2. This Agreement may not be released, discharged or abandoned (other than as
a result of the termination of this Agreement as provided herein) or changed or
modified in any manner except by an instrument in writing signed by the duly
authorized officer or representative of all the PARTIES.

 

20.3. The failure at any time of any PARTY or SHAREHOLDER to enforce any option,
election or right which is herein provided shall in no way be construed to be a
waiver of such provisions, nor in any way to effect the validity of this
Agreement or any part thereof or the right of any PARTY or SHAREHOLDER to
thereafter enforce each and every such provision and to exercise any such
option, election or right.

 

ARTICLE 21

 

If any terms of this Agreement shall be or become invalid, illegal or
unenforceable in any respect, each PARTY shall endeavor to agree to such
amendments as shall be necessary to validly give effect to the intentions herein
set out. If such amendments adversely affect any PARTY to a material degree,
such PARTY shall have the right to terminate this Agreement by giving at least
thirty (30) days prior written notice.

 

ARTICLE 22

 

22.1. The failure or delay of any of the PARTIES hereto to perform any
obligation under this Agreement solely by reason of Acts of God, acts of
Government, health pandemics, public emergencies, riots, wars, strikes,
lockouts, accidents in transportation other causes beyond its control shall not
be deemed to be a breach of this Agreement; provided, however, that the PARTY so
prevented from complying herewith shall continue to take all actions within its
power to comply as fully as possible herewith.

 

22.2. Except where the nature of the events shall prevent it from doing so, the
PARTY suffering such force majeure shall notify the other PARTY in writing
within ten (10) days after the occurrence of such force majeure and shall in
every instance, to the extent it is capable of doing so, use its best efforts to
remove or remedy such cause with all reasonable dispatch.

 

ARTICLE 23

 

This Agreement shall not be deemed to constitute the Company as an agent of any
PARTY hereto, or any PARTY is an agent of the Company, nor shall the Company or
any PARTY be deemed to be a partner of any other PARTY. The relationship of the
International Joint Venturer and MCOA pursuant to this Agreement shall be
limited to the scope of this Agreement and the express purposes set forth
herein.

 

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ARTICLE 24

 

This Agreement and each and every covenant, term and condition hereof shall be
binding upon, and inure to the benefit of, the PARTIES and their respective
successors, assigns and transferees, but neither this Agreement nor any rights
hereunder shall be assignable directly or indirectly (including by operation of
law) by any PARTY without the prior written consent of the other PARTY;
provided, however, each of the PARTIES may assign this Agreement to a wholly
owned subsidiary which is carrying on the business of the assigning PARTY or to
a company which wholly owns the PARTY, if the assigning PARTY guarantees the
performance of its assignee.

 

ARTICLE 25

 

25.1. Each of the PARTIES undertakes to the other:

 

25.1.1. To ensure (as far as it is able by the exercise of voting rights or
otherwise) that the Company will at all times perform and observe all of the
provisions of this Agreement and any agreements which may be entered into
between the Company and any of the PARTIES;

 

25.1.2. To take all necessary steps on their part to give full effect to the
provisions of this Agreement; and

 

25.1.3. Without prejudice to the generality of the foregoing to exercise and
ensure that every person representing it will exercise or refrain from
exercising any rights of voting, as the case may be, at any meeting of the
SHAREHOLDERS of the Company or the Board of Directors so as to ensure the
passing of any and every resolution necessary or desirable to ensure that the
affairs of the Company are conducted in accordance with this Agreement and
otherwise to give full effect to the provisions of this Agreement and likewise
so as to ensure that no resolution is passed which does not accord with such
provisions.

25.2. Each Party undertakes to carry out this Agreement in good faith and to
respect the spirit as well as the letter of its provisions.

 

25.3. Each party warrants and represents to the others that it has no
outstanding commitments or obligations which would impede its ability and right
to enter into this Agreement and/or fulfill its obligation hereunder except
those which have been disclosed in writing at the time of the execution of this
Agreement.

25.4. The PARTIES agree to enter into and execute any and all such further
agreements, documents and the like as may be necessary or beneficial to carry
out the purposes of this Agreement.

 

25.5. Each PARTY hereby represents and warrants to the other PARTIES that it is
duly organized and validly existing as heretofore set forth in this Agreement;
that its execution and delivery of this Agreement has been duly authorized; that
its execution and delivery of this Agreement and the performance required
hereunder will not violate any existing contract, agreement, commitment, pledge,
security interest, restriction, regulation, statute or order applicable to it;
and that this Agreement is a valid and binding obligation of said PARTY.

 

ARTICLE 26

 

26.1. Each PARTY hereto agrees to pay and discharge all reasonable costs,
attorney fees and expenses, (including, but not limited to the costs of
litigation or arbitration) that are incurred by the other PARTY in enforcing the
terms of this Agreement, provided that such other shall prevail in such
proceedings.

 

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26.2. Each PARTY shall indemnify the other PARTY and hold the other PARTY
harmless from, any and all claims, actions, damages, expenses (including court
costs, arbitration costs, and reasonable attorney’s fees), obligations, losses,
liabilities and liens, imposed or incurred by, or asserted against the other
PARTY, its successors or assigns, occurring solely as a result of its breach of
this Agreement.

 

Notwithstanding the above to the contrary, in no event shall any PARTY be liable
to any other PARTY for incidental or consequential damages for its breach of
this Agreement.

 

ARTICLE 27

 

27.1. Any notice required or permitted to be given hereunder shall be in
writing, confirmed by email to the following addresses:

 

TO: Marijuana Company of America, Inc.

ATTENTION: Jesus Quintero, CEO

EMAIL ADDRESS: jesus@hempsmart.com

 

TO: MR Hemp de Uruguay S.A.S.

ATTENTION: Marco Guerrero, CEO

EMAIL ADDRESS: marco@hempsmart.com

27.2. Any notice so given shall be deemed to be received if by letter or by
electronic mail:

 

27.2.1. Upon receipt or three (3) days after posting, whichever is less, for air
mail; or

 

27.2.2. If by electronic mail, twelve (12) hours after sending.

27.3. To prove service of notice, it shall be sufficient to prove that a letter
or email containing the notice was properly addressed and properly sent.

 

ARTICLE 28

 

This Agreement is written in the English language and executed in any number of
counterparts, each of which shall be deemed an original.

 

ARTICLE 29

 

All disputes, controversies or differences which may arise between the PARTIES
out of or in relation to this Agreement or the breach thereof shall be settled
by mutual consultation and consent. If the PARTIES should be unable to reach
such mutual consent for disputes, controversies or differences other than those
set forth in Article 30, the matter in question shall be finally settled under
the Rules and Procedures of the American Arbitration Association by three (3)
arbitrators in accordance with such Rules. The place of arbitration shall be
Florida, United States of America, or such other place as the PARTIES may agree.
The decision of the arbitrators shall be final and binding and shall be limited
to an interpretation and application of the terms of this Agreement and any
supplemental agreements or documents. The arbitrators shall have no authority to
add to, delete from or modify the terms of this Agreement or any supplemental
agreements or documents.

 

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ARTICLE 30

 

30.1. In the event the laws of Uruguay, the laws of the United States of America
or the laws of any state in the United States shall at any time substantially
frustrate the accomplishment of the purposes and objectives for which the
Company was established; or in the event the SHAREHOLDERS are unable in good
faith to reach agreement with respect to the operations and/or management of the
Company or the PROJECT and said disagreement unreasonably interferes with the
management and operation of the Company or the PROJECT resulting in the
inability of the Company to effectively and profitably perform the objectives
and purposes for which it was organized for a period of one (1) month or more;
or in the event the SHAREHOLDERS are unable in good faith to agree upon the
desirability of discontinuing the PROJECT and disposing of the assets of the
Company; or in the event a PARTY acts or threatens to act in such a manner as
will irreparably harm the Company, then, in any of those events, a majority vote
of the SHAREHOLDERs shall have the right to institute the following compulsory
buy-sell procedures. The SHAREHOLDER or SHAREHOLDERS to whom the compulsory
buy-sell offer is made are referred to as the “Offeree(s).” The majority
SHAREHOLDER or SHAREHOLDERS making the offer are referred to as the
“Offeror(s).”

 

30.1.1. The Offeror(s) may make to the Offeree(s) an offer that, at the option
of the Offeree(s), the Offeror(s) will sell all the SHARES of the Offeror(s) or
purchase all the SHARES of the Offeree(s) (the “Offer”). Except as expressly
provided in clauses 30.1.2 or 30.1.3 of this Article 30, no Offer shall be
subject to the provisions of this Article 30 unless such Offer is both an Offer
to sell all the SHARES of the Offeror(s) and an Offer to purchase all the SHARES
of the Offeree(s). The Offer must specify that the price of the SHARES to be
sold or transferred is payable in cash or by bank certified or cashier’s check,
and must be accompanied by evidence of the Offeree(s) ability to pay the full
selling price at the clouding for the sale of any such SHARES. The per share
selling price and the per share purchase price specified in such Offer must be
identical in amount and must be proportionate to the respective shareholdings of
the Offeree(s) (that is, the selling price and the purchase price so specified
must be identical on a per share basis). Such Offer shall be irrevocable for a
period of thirty (30) days, and the Offeree(s) may, on or before the thirtieth
(30th) day after the date of such Offer, accept either the Offer to sell or the
Offer to purchase (not both), and upon acceptance the Offeror(s) shall be
required to sell or to purchase, as the case may be. If the Offeree(s) fail
within such thirty (30) day period to accept either of such Offers, then the
Offer shall automatically expire and be of no further force or effect; provided,
however, that the Offeror(s) shall thereupon have the right, on or before the
30th (thirtieth) day after the expiration of such thirty (30) day period, to
purchase the SHARES of the Offeree(s), at the applicable price specified in the
original Offer, and if the Offeror(s) exercise such right, the Offeree(s) shall
be required to sell their SHARES, notwithstanding any other provisions of this
Agreement to the contrary. If the Offeror(s) fail to exercise their right to buy
within the time specified, the Offeror(s) may thereafter make a new Offer
pursuant to this Article 30.

 

30.1.2. Any Offer shall be an Offer to sell all the SHARES of the Offeror to the
Offeree(s) and to purchase all the SHARES of each Offeree. As among the
Offeree(s) the Offer to sell shall be an Offer to sell to each Offeree the
proportion of all the Offeror(s)’ SHARES which the number of all SHARES held by
such Offeree bears to the number of all SHARES held by all Offeree(s), but by
agreement among the Offeree(s) such Offer to sell may be accepted in varying
proportions. In the event that less than all of the Offeree(s) act, the
Offeror(s) shall thereupon have the right, on or before the 30th (thirtieth) day
after the expiration of the original thirty (30) day period, to purchase the
SHARES of all the Offeree(s), at the applicable price specified in the original
Offer, and if the Offeror(s) exercise such right the Offeree(s) shall be
required to sell their SHARES.

 

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30.1.3. The Offeree(s) may accept all offers to sell or all Offers to buy (but
may not accept one or more Offers to buy and one or more Offers to sell), and
may not accept with respect to one Offeror and fail to accept with respect to
other Offeror(s). If the Offeree(s) fail within such original thirty (30) day
period to accept either all Offers to sell or all Offers to buy, then the
Offeror(s) shall thereupon have the right, on or before the 30th (thirtieth) day
after the expiration of such thirty (30) day period, to purchase all the SHARES
of the Offeree(s) at the price specified in the original Offer, and if the
Offeror(s) exercise such right, the Offeree(s) shall be required to sell all
their respective SHARES.

 

30.1.4. If the Offeror(s) or Offeree(s), as the case may be, exercise their
rights hereunder to buy or sell, a closing thereunder shall be held at the time
and place and on a date specified by the purchaser(s) by written notice to the
seller(s) which dates shall in any case be on or prior to the 30th (thirtieth)
day after such right to buy or sell has been exercised.

30.2. The PARTIES, individually and as SHAREHOLDERS, as the case may be, hereby
irrevocably appoints each other PARTY or SHAREHOLDER, as the case may be, its
lawful attorney-in-fact for the purposes of transferring any SHARES on the stock
register of the Company upon exercising its rights pursuant to the provisions of
this Article 30.

 

ARTICLE 31

 

This Agreement shall be interpreted in accordance with and governed by the laws
of Florida, United States of America.

 

ARTICLE 32

 

This Agreement shall come into effect upon the first date by which all PARTIES
hereto have affixed their signatures on this Agreement.

 

32.1. Notwithstanding any other provisions hereof, this Agreement is conditioned
upon all necessary and appropriate governmental and other approvals, consents
and validations being obtained for the incorporation of the Company in form and
substance mutually acceptable to the PARTIES.

 

32.2. The PARTIES shall cooperate to ensure that all necessary consents,
approvals and validations are obtained and shall keep the other PARTIES informed
of the steps taken for such purpose.

 

ARTICLE 33

 

The PARTIES shall at all times act to assure that the Company shall comply with
the laws of their jurisdictions of incorporation and places of business.

 

ARTICLE 34

 

34.1. This Agreement supersedes all previous representations, understandings or
agreements, oral or written, between the PARTIES with respect to the subject
matter hereof, and together with the documents contemplated hereby contains the
entire understanding of the PARTIES as to the terms and conditions of their
relationship.

 

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34.2. This Agreement may not be released, discharged, abandoned (other than as a
result of the termination of this Agreement as provided herein), changed or
modified in any manner except by an instrument in writing signed by the duly
authorized officer or representative of each of the PARTIES.

 

34.3. The table of contents and Article headings in this Agreement are for
convenience only and do not substantively affect the terms of this Agreement.

 

ARTICLE 35

 

Legal counsel acceptable to the PARTIES will be retained on behalf of the
Company to prepare all appropriate articles of incorporation, contracts,
agreements, and related documents necessary for the operation of the Project by
the Company.

 

ARTICLE 36

 

36.1. Each PARTY agrees that it will maintain, and cause its officers,
directors, employees and agents to maintain, the confidentiality of all patents,
trade secrets, technology, know-how, customer lists, financial projections,
business plans, designs, processes, formulas, devices, or materials with respect
to any past, present, or future product composition, developmental efforts, or
operations, research and/or manufacturing relating to the Company’ business,
products or activities, information or documentation relating to the records of
SHAREHOLDERS’ MEETINGs, meetings of the Board of Directors, or other corporate
activities of the Company, or other proprietary information (collectively
referred to hereafter as “Proprietary Information”) of the Company that has or
becomes known to any PARTY as the result of the discussions heretofore or
hereafter conducted between the PARTIES with respect to the Company, or the
Project, or as the result of management and/or operation of the Company, except
for such information which: (a) such PARTY may be required to disclose [i] at
the express direction of any authorized government agency, [ii] pursuant to a
subpoena or other court process, or [iii] as otherwise required by law or
regulation, or order of any regulatory body; (b) prior to the date of this
Agreement, has become generally available to the public or was within the public
domain at the time it was disclosed; (c) was generally available or known to
such other PARTY on a non-confidential basis prior to its disclosure by the
other PARTY hereunder; or (d) prior to the date of this Agreement was lawfully
received by such PARTY from a source other than the other PARTY or the Company.

 

36.2. The PARTIES further agree to maintain as confidential the proposed Project
and agree that neither PARTY will disclose to the news media or any other person
the facts or substance of their negotiations or discussions or plans with the
other PARTY for the Project without first obtaining the consent of the other
PARTY, which shall not be unreasonably withheld, unless such PARTY is advised by
counsel that such disclosure is required by law.

 

36.3. Each PARTY acknowledges, confirms, and agrees that the other PARTY and the
Company would be irreparably damaged in the event that any of the Proprietary
Information is disclosed in violation of this Agreement and further agrees that
the Company or the other nondisclosing PARTY shall be entitled to obtain
restraining orders, an injunction or injunctions or other appropriate means to
prevent any actual or threatened breach of this Article and to specifically
enforce each of the terms and provisions of this Article in any action or
proceedings instituted in any court or other appropriate tribunal having subject
matter jurisdiction. The remedies provided herein shall be exclusive and shall
be in addition to any of remedy to which the Company or any PARTY or any of them
may be entitled to seek or obtain in law and equity.

 

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ARTICLE 37

 

Except as limited by any licensing agreements between any PARTY and the Company,
each PARTY agrees that all patents, inventions and discoveries made or obtained
by the Company, or any of its employees or agents shall belong to and be the
property of the Company.

 

IN WITNESS WHEREOF, the authorized representatives of the PARTIES have set their
hands the day and year first above written.

 

Marijuana Company of America, Inc.   MR Hemp Uruguay S.A.S.       /s/ Jesus
Quintero   /s/ Marco Guerrero Jesus Quintero, CEO   Marco Antonio Guerrero
Frederico, CEO       Marco Antonio Guerrero Frederico           /s/ Marco
Guerrero     Marco Antonio Guerrero Frederico, Individually    

 

 

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