Exhibit 10.3

 

MANAGEMENT SERVICES AGREEMENT

 

This Agreement is made this 31st day of May, 2017 (the “Effective Date”), by and
among Notis Global, Inc., a Nevada corporation (the “Company”), EWSD I LLC, a
Arizona limited liability company, and Pueblo Agriculture Supply and Equipment
LLC, a Delaware limited liability company (the “Company’s Subsidiaries”), on the
one hand, and Trava LLC, a Florida limited liability company (the “Manager”), on
the other hand.

 

WHEREAS, the Manager, is engaged in the hemp/cannabis business and has developed
substantial know-how and expertise in the hemp/cannabis business;

 

WHEREAS, the Company’s Subsidiaries own a hemp grow-and-extraction operation
located at 214 39th Lane, Pueblo, Colorado (the “Pueblo Farm”), and they desire
that the Manager (i) utilize its substantial know-how and expertise to provide
the Services (as defined below) and (ii) provide certain on-going economic
investments to the Company’s Subsidiaries for the operations of the Pueblo Farm;

 

WHEREAS, the Company’s Subsidiaries are willing to share with the Manager
certain of the revenues derived from the operations of the Pueblo Farm, all as
set forth in more detail hereinbelow;

 

WHEREAS, the Manager desires to provide the Services and certain Financial
Support (as defined below), as set forth in more detail hereinbelow;

 

NOW, THEREFORE, in consideration of these presents, and for such other good and
valuable consideration, the receipt and adequacy of which are hereby
acknowledged, the parties hereto, intending to be legally bound hereby, agree as
follows:

 

1.            Management Services; Financial Support; Representation.

 

(a)       The Company hereby retains Manager to utilize its operational
expertise and support of the daily operations, cultivation, extraction,
production, branding and packaging, compliance, and sales support (the
“Services”) of the Pueblo Farm. During the term of this Agreement and subject to
the terms and conditions hereof, Manager shall have full autonomy and discretion
to make regular, operational business decisions, for the benefit of the Company
and the Company’s Subsidiaries, without approval or direction from the Company
and the Company’s Subsidiaries; provided, however, Manager shall render the
Services at such times and places as shall be mutually agreed by Company and
Manager; provided, however, further, that, without the prior written approval of
the Company and the Company’s Subsidiaries, Manager shall make no expenditures
in excess of $25,000, individually, or $60,000, cumulatively during any
two-month period. Manager’s commitment hereunder does not prohibit Manager or
its members, and/or employees from participating in or working on other ventures
in the cannabis business during the term hereof.

 

(b)       The Company hereby retains Manager to satisfy all past due expenses
and, subject to the second proviso set forth in subsection 1(a), above, to pay
all current and future operational expenses of the Pueblo Farm during the term
of this Agreement. The registry of past-due expenses and acknowledged, projected
current and future operational expenses is attached as Exhibit A (collectively,
the “Financial Support”).

 

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(c)       The mortgage on the Pueblo Farm as described in Exhibit A shall be
paid by the Manager during the term of this Agreement except for the months of
June through September, 2017, inclusive, which payments shall be made by the
Company and/or the Company’s Subsidiaries. The Company and the Company’s
Subsidiaries represent that they are financially able make the June 1, 2017,
mortgage payment. The Company and/or the Company’s Subsidiaries shall also be
responsible for any and all “balloon payments” due under the mortgage during the
term of the Agreement.

 

(d)       The Company and the Company’s Subsidiaries are indebted to “Redwood
Capital” and/or “Magic Farms” in a certain amount that is secured by some or all
of the assets of the Pueblo Farm (the “Redwood Obligations”). Manager shall not
be responsible for the Redwood Obligations. The Company and the Company’s
Subsidiaries represent to the Manager that none of the Redwood Obligations need
to be satisfied in whole or in part through and including May 31, 2018.

 

(e)       The Manager shall have full control of all cash and bank accounts of
the Pueblo Farm during the term of this Agreement. As soon as practicable after
the Effective Date, the Company shall use commercially reasonable efforts to
enable the Manager to effectuate the Financial Support.

 

(f)       As soon as practicable after the Effective Date, the Manager shall
make all payments immediately necessary to begin planting for the 2017 summer
season.

 

(g)       The Company and the Company’s Subsidiaries represent and warrant that
one or more of them is legally permitted to grow hemp at the Pueblo Farm.

 

2.            Term.

 

This Agreement shall have a term of 36 months with two consecutive 12-month
unilateral options in the sole discretion of the Manager for a total of 60
months if both options are exercised. The Manager must notify the Company in
writing to exercise the option with not later than 60 days prior to the
expiration of the initial term of the Agreement or of the relevant option
period. If the Manager has properly exercised each of the two 12-months options,
at the expiration of the 60-month term, the Manager in its sole discretion shall
have the unilateral option to purchase the entire Pueblo Farm operation from the
Company at a four times multiple of the EBITDA of the Pueblo Farm of the mean
average of the fourth and fifth years of this Agreement.

 

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3.            Compensation and reimbursement.

 

Manager shall be entitled to collect all revenue generated by the Pueblo Farm
operations. On a cumulative calendar monthly cash-on-cash basis, Manager shall
tender to the Company, or at its option, either or both of the Company’s
Subsidiaries, an amount equivalent to 51% of the net cash for each such calendar
month. Such monthly payments shall be on the 10th calendar day following the end
of a calendar month for which such tender is required. By way of examples,

 

(a)        if the Manager expends $100,000 in Financial Support in any given
calendar month and the Manager collects $200,000 in revenue generated by the
Pueblo Farm operations for such calendar month, the Manager shall tender to the
Company the sum of $51,000 and shall retain the sum of $49,000 for itself for
such calendar month,

 

(ii)        if the Manager expends $100,000 in Financial Support in any given
calendar month and the Manager collects $90,000 in revenue generated by the
Pueblo Farm operations for such calendar month, the Manager shall tender to the
Company the sum of $-0- and shall retain the sum of $-0- for itself for such
calendar month, and

 

(iii)       if the Manager expends $100,000 in Financial Support in any given
calendar month and the Manager collects $90,000 in revenue generated by the
Pueblo Farm operations for such calendar month and the Manager expends $100,000
in Financial Support in the immediately subsequent calendar month and the
Manager collects $210,000 in revenue generated by the Pueblo Farm operations for
such immediately subsequent calendar month, the Manager shall tender to the
Company the sum of $51,000 and shall retain the sum of $49,000 for itself for
such immediately subsequent calendar month.

 

If any Manager or Flock Brands LLC-specific products are created from Pueblo
Farm-produced CBD oil, the net revenue distribution shall be the same as the
prior Management Consulting Agreement between the parties, i.e, the Company and
Manager shall split 50/50 the net revenue received from the sales of any Trava
or its edibles subsidiary-branded products created at a Company facility during
the term of this Agreement.

 

4.            Independent contractor status.

 

This Agreement creates an independent contractor relationship, not an employment
relationship. The Manager acknowledges and agrees that none of the Company or
the Company’s Subsidiaries will provide the Manager with any employee benefits,
including without limitation any social security, unemployment, medical, or
pension payments, and that income tax withholding is Manager’s responsibility.
In addition, the parties acknowledge that none of the parties has, or shall be
deemed to have, the authority to bind any other party.

 

5.            Reserved.

 

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6.            Intellectual Property.

 

Manager understands and acknowledges that Company will be providing access to
proprietary and valuable information that Manager might otherwise not receive.
Likewise, Company and/or the Company’s Subsidiaries may be manufacturing
Manager’s own branded products, which may contain Manager’s intellectual
property. Except as may be required for such manufacturing, Company and the
Company’s Subsidiaries have absolutely no right, entitlement, or claim to any
intellectual property of the Manager, including but not limited to products
manufactured and/or distributed from the Pueblo Farm facilities. Should Manager,
in the course of providing Services, create branding or products specifically
for the Company’s and/or the Company’s Subsidiaries’ use, the Manager shall have
no right, entitlement, or claim to any such intellectual property.

 

7.            Confidential Information.

 

(a)       The parties acknowledge that, in connection with the Manager
performing the Services, the parties may disclose to each other confidential and
proprietary information and trade secrets of the other party, and that Manager
may also create such information within the scope and in the course of
performing the Services (hereinafter, subject to the exceptions below,
“Confidential Information”). Such information may take the form of, for example:
know-how; manufacturing strategies and processes; marketing plans; past,
present, and future business plans; strategy; or forecasts of sales and sales
data. Notwithstanding the above, the parties acknowledge and agree that none of
the information described in this Paragraph 7 will be considered Confidential
Information for purposes of this Agreement, unless the information is disclosed
by a party to another party in writing and is clearly marked as confidential,
or, where verbally disclosed, is followed within ten days of such verbal
disclosure by a writing confirming such disclosure and indicating that such
disclosure is confidential.

 

(b)       The parties hereby agree that no party shall divulge, disseminate,
publish, or otherwise disclose any Confidential Information without the prior
written consent of the party whose Confidential Information would be the subject
of such disclosure. Notwithstanding the above, the parties acknowledge and agree
that the obligations set out in this Paragraph 7 shall not apply to any portion
of Confidential Information that:

 

(i)        was at the time of disclosure to such party part of the public domain
by publication or otherwise; or

 

(ii)       became part of the public domain after disclosure by publication or
otherwise, except by breach of this Agreement; or

 

(iii)      was already properly and lawfully in such party’s possession at the
time it was received; or

 

(iv)      was or is lawfully received by such party from a third party who was
under no obligation of confidentiality with respect thereto; or

 

(v)       was or is independently developed by such party without reference to
Confidential Information; or

 

(vi)      is required to be disclosed by law, regulation, or judicial or
administrative process.

 

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(c)       Notwithstanding any other term of this Agreement, the parties agree
not to disclose any information that is Confidential Information (i) except to
the extent necessary for such party to fulfill its obligations under this
Agreement or (ii) unless a potentially receiving party has agreed in writing to
accept such disclosure. All other information and communications among the
parties shall be deemed to have been provided on a non-confidential basis. The
parties may share the terms of this Agreement on a confidential basis with their
respective employees and consultants, legal and financial advisors, insurers,
and other third parties who have a legitimate need to know about them.

 

8.            Miscellaneous Provisions.

 

(a)       Notices. Any notice, communication, request, reply or advice to be
provided or permitted to be given between the Parties in connection with this
Agreement must be in writing and may be given or served by sending same by
Federal Express next day priority delivery addressed to the party to be
notified, or by e-mail or facsimile to the attention of the persons listed below
as provided below. Notice sent by Federal Express in the manner herein described
shall be effective two days after such deposit. Notice by facsimile or e-mail
shall be effective one business day after receipt of the notice. For purposes of
notice, the addresses of the parties shall, unless changed as herein provided,
be as follows:

 

If to the Manager:   Trava LLC     c/o Daniel Sands     50 W. 77th Street, Apt.
5G     New York, NY 10024     E-Mail: dsands@rdwcapital.com       If to the
Company:   Notis Global Inc. Or the Company’s   633 West 5th Street, 28th Floor
Subsidiaries   Los Angeles, CA  90071     Attn.: Chief Executive Officer    
E-Mail:  _____________

 

(b)       Modification. This Agreement may be changed, amended, terminated,
modified, extended, or superseded, or compliance with any term or condition
hereof may be waived, only if agreed to in writing by the parties hereto, or, in
the case of a waiver, by the party waiving compliance. No waiver by either party
hereto of any provision of this Agreement shall be deemed a waiver of any other
provision hereof or a waiver of the same provision at any prior or subsequent
time.

 

(c)       Assignment. No party may assign any of its rights or delegate any of
its duties hereunder without the prior written consent of the other parties,
except that a party may assign its rights under this Agreement and any
agreements related hereto to an affiliate as long as such affiliate agrees to be
bound by the terms of this Agreement. “Affiliate” shall mean, with respect to
any person, any person who directly or indirectly through one or more
intermediaries controls, is controlled by, or is under common control with such
person.

 

(d)       Severability. If any provision hereof shall be determined to be
invalid or unenforceable in any respect, that provision shall be deemed deleted
and the remaining provisions of this Agreement shall remain in full force and
effect to the fullest extent possible.

 

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(e)       Governing Law; Jurisdiction. This Agreement shall be governed by and
construed in accordance with the laws of Florida, without regard to the
conflicts of law principles thereof. EACH PARTY AGREES THAT ANY ACTION, SUIT, OR
PROCEEDING IN RESPECT OF OR ARISING OUT OF THIS AGREEMENT SHALL BE INITIATED AND
PROSECUTED IN THE COURTS HAVING PROPER SUBJECT-MATTER JURISDICTION LOCATED IN
MIAMI-DADE COUNTY FLORIDA. EACH PARTY CONSENTS TO AND SUBMITS TO THE EXERCISE OF
JURISDICTION OVER ITS PERSON BY ANY SUCH COURT HAVING JURISDICTION OVER THE
SUBJECT MATTER.

 

(f)       Counterparts; Facsimile Signatures. This Agreement may be executed in
multiple counterparts, all of which shall be deemed an original, but all of
which taken together shall constitute one and the same instrument. Signed copies
of this Agreement transmitted by facsimile will be accepted by the parties, and
the parties shall be entitled to rely upon such copies as though they bear
original signatures.

 

(g)       Further Assurances. Each party hereto, upon the request of the other
party, agrees to perform all further acts and assurances and execute,
acknowledge, and deliver all documents and instruments that may be reasonably
necessary, appropriate, or desirable to carry out the provisions and intent of
this Agreement. Therefore the parties expressly agree that no party may assign
this Agreement without the written consent of the other.

 

IN WITNESS WHEREOF, the parties have executed this Agreement on the dates
indicated below.

 

TRAVA LLC

 

By:           NOTIS GLOBAL, INC.         By:           EWSD I LLC         By:  
        PUEBLO AGRICULTURE SUPPLY AND EQUIPMENT LLC       By:    

 

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