By (signature): /s/ Erin Phillips
By (print name): Erin Phillips
Title: Member
Date: 8/14/2017
MANAGEMENT AGREEMENT
Between
COPR ENTERPRISES, LLC
And
STWC HOLDINGS, INC.
MANAGEMENT AGREEMENT
THIS MANAGEMENT AGREEMENT ("Agreement") is entered into this ____ day of __________________, 2018 ("Effective Date"), by and between, COPR Enterprises, LLC ("COPR"), a Puerto Rico limited liability company and STWC Holdings, Inc. ("Strainwise"), a Colorado corporation located at 1350 Independence Street, Suite 300, Lakewood, CO 80215 (for purposes of this Agreement, Strainwise shall be referred to as the "Manager")
WITNESSETH:
WHEREAS, COPR has acquired several provisional licenses to operate medical marijuana dispensaries in the Commonwealth of Puerto Rico (each a "Facility") (collectively, the "Enterprise");
WHEREAS, Strainwise provides branding, marketing, employee training and compliant dispensary management services; and
WHEREAS, COPR desires for Strainwise to (a) manage, operate, maintain and service the Enterprise on behalf of COPR subject to the terms of this Agreement and (b) provide other management services to COPR subject to the terms and provisions of this Agreement, and Manager desires to accept and assume such responsibilities upon the terms and conditions herein set forth.
NOW, THEREFORE, in consideration of the mutual covenants herein contained and of other good and valuable consideration, the parties hereto agree as follows:
Article 1
Appointment
COPR appoints Manager to provide those services described in this Agreement on behalf of COPR and undertakes to pay the Management Fee set forth herein, on the terms and conditions set forth herein. Manager accepts such appointment and undertakes to perform such duties during the Term (as hereinafter defined) on the terms and conditions set forth herein.
Article 2
Term
2.1 Term. The term of this Agreement shall commence on the Effective Date, and, unless sooner terminated in accordance with the terms hereof, shall continue until the earlier of five (5) years from the effective date (the "Term").
2.2 Termination For Cause.
(a) If Manager or COPR defaults in the performance of any obligation hereunder and said default is not cured within thirty (30) days after written notice thereof (a "Default Notice") is sent to such defaulting party (or, if said default is of such a nature that it cannot be reasonably cured within such thirty (30) day period, such defaulting party fails to commence the curing of said default within such thirty (30) day period and to thereafter prosecute and complete such cure with diligence within ninety (90) days after such Default Notice is sent to such defaulting party), then, in addition to its other remedies at law and in equity and subject to the terms of this Section 2.2(a), the non-defaulting party may terminate this Agreement as provided in this Section 2.2(a), in which event such termination shall be effective as of the date of such written notice of termination. If COPR is the defaulting party, Manager may terminate this Agreement as aforesaid by forwarding written notice to COPR. If Manager is the defaulting party, COPR may terminate this Agreement as aforesaid by forwarding written notice to Manager, in which event such termination shall be effective as of the date of such notice of termination.
2.3 Effect of Termination. Upon the effective date of any termination of this Agreement affected pursuant to this Agreement, no further obligations under this Agreement will accrue against Manager or COPR. Any such termination shall not, however, affect or impair any right that has accrued to either party prior to the date when such termination becomes effective.
2.4 Final Accounting. Upon the expiration or earlier termination of this Agreement, Manager shall:
(a) deliver to COPR all records, contracts, leases, receipts for deposits, unpaid bills and
other papers or documents which pertain to the Enterprise, to be delivered immediately upon such expiration or termination (and to the maximum extent reasonably possible, such items shall be delivered to COPR in an electronic format); provided, however, that Manager may retain copies of such information solely for its files, and in connection therewith, Manager agrees that it shall not, except as required by law or court order, make such information available to any third parties, including, without limitation, COPR's competitors other than Manager's employees, attorneys, accountants and other professionals; and
(b) for a reasonable period of time after the expiration or termination of this Agreement (not to exceed sixty (60) days) and for reasonable compensation for expert professional services, make itself available, at the option of COPR, to consult with and advise COPR or such other person or persons designated by COPR regarding the operation, use, management and maintenance thereof.
The provisions of this Article 2 shall survive the expiration or termination of this Agreement.
Article 3
Manager's Responsibility
3.1 Management. COPR hereby grants to Manager the right, subject to the provisions hereof, to provide those services described in this Article 3 (collectively, the "Management Services") for the account of COPR, and Manager hereby accepts said grant and agrees that it will perform the Management Services in a professional and efficient manner and in a manner commensurate with that of physical asset managers, and COPR of a size, character and quality
comparable to the Enterprise, respectively, all pursuant to the terms, conditions and limitations of this Agreement and to the extent adequate funds and other necessary non-monetary support are provided therefor by COPR. In the event COPR requests services with respect to an additional asset or a subsidiary in addition to the Management Services, then upon the consent of Manager and COPR, each acting in its sole and absolute discretion, this Agreement may be amended to expand the scope of the Management Services and to reflect additional but under no circumstances less, remuneration, if any, to be paid therefor. Manager shall provide the Management Services in accordance with the requirements of this Agreement. Manager shall comply with all licensing and similar requirements of the applicable governmental authorities to which Manager is subject relating to performance by Manager.
3.2 Employees; Independent Contractor.
(a) Manager shall have in its employ at all times a sufficient number of capable employees to enable it to properly, adequately, safely and economically manage, operate, maintain and account for the Enterprise. All matters pertaining to the employment, supervision, compensation, promotion and discharge of such employees are the responsibility of Manager, which is in all respects the employer of such employees. Manager shall fully comply with all applicable laws and regulations to which Manager is subject having to do with worker's compensation, social security, unemployment insurance, hours of labor, wages, working conditions, and other employer/employee related subjects.
(b) This Agreement is not one of agency between Manager and COPR, but one in which Manager is engaged independently to provide the Management Services on its own behalf as an independent contractor. All employment arrangements with Manager are therefore solely Manager's concern, and COPR shall not have input or liability with respect thereto. Nothing contained in this Agreement or in the relationship of Manager with COPR shall be deemed to constitute a partnership, joint employer, joint venture or any relationship (other than a relationship between two independent contractors) between Manager and COPR. Manager's authority is limited to performing the Management Services set forth herein in accordance with the terms of this Agreement. Manager shall have no authority, without COPR's consent, (a) to execute any contract or agreement for or on behalf of COPR or (b) to provide services in addition to the Management Services. Manager is not granted any right or authority to assume or create any obligation or liability (except as otherwise provided herein) or to make (i) any written representation, covenant, agreement or warranty whatsoever (ii) or any oral representation, covenant, agreement or warranty, express or implied whatsoever to the extent that the same would be beyond the scope of Manager's authority hereunder.
3.3 Agreement on Annual Plan. On or before [], 2018, Manager shall prepare and submit to COPR for COPR's acceptance, an annual plan for the Enterprise (the "Annual Plan") for the period beginning on such date and ending on December 31st, 2018. On or before January 1st of each calendar year (beginning with January 1, 2019), Manager shall brief COPR regarding all material operating assumptions and shall prepare and submit to COPR for COPR's acceptance an Annual Plan for the ensuing calendar year. Items to be included and considered in the Annual Plan shall include those items listed in Exhibit A hereto. Manager shall use good faith efforts in estimating the expenses for the Enterprise, which will be incorporated into
the budget included as part of the Annual Plan (the "Budget"). Within ten (10) business days after receipt of an Annual Plan, COPR shall review such Annual Plan, providing any comments in COPR's reasonable discretion. Manager may incorporate such changes as Manager reasonably deems appropriate and re-submit the Annual Plan within ten (10) business days following Manager's receipt of comments. An Annual Plan shall not become effective until such Annual Plan has been accepted by COPR. An Annual Plan that has been accepted by COPR pursuant to this Section 3.3 shall be referred to as an "Annual Plan." The Budget that is included in an Approved Annual Plan shall be referred to as the "Accepted Budget". In the event COPR has not accepted the Annual Plan prior to January 1st of any calendar year, Manager shall continue to manage the Enterprise in accordance with the prior calendar year's Annual Plan.
3.4 Implementation of Annual Plan.
(a) Manager shall implement the Annual Plan and shall be authorized, without the need of further approval by COPR, to make the expenditures and incur the obligations provided for in the Budget. Manager's obligation to implement the Annual Plan and provide the Management Services shall be limited to the extent that sufficient funds are realized from the operation of the Enterprise in the applicable Budget to enable Manager to perform the Management Services in the manner required in this Agreement.
(b) Notwithstanding anything to the contrary in Section 3.4(a), if an emergency involving imminent danger to life or property exists (an "Emergency") with respect to which expenditures are necessary for the preservation or the safety of the Enterprise (collectively, the "Improvements"), for the safety of the public, or to avoid the suspension of any necessary service, such expenditures may be made by Manager without the prior approval of COPR; provided that Manager shall immediately notify COPR of any such expenditures.
3.5 Enterprise Evaluation.
(a) Manager shall perform the following services in accordance with the applicable Annual Plan:
(i) Manager shall undertake and perform all due diligence and other services required with respect to the evaluation, economic and otherwise, of the Enterprise pursuant to the applicable Annual Plan;
(ii) Manager shall manage, administer, coordinate and supervise the due diligence and evaluation activities relating to the Enterprise;
(iii) Manager shall diligently pursue the development of the Enterprise.
(b) Manager acknowledges that it will not have authority once executed, absent the approval of COPR, to make any change to the Annual Plan unless specifically set forth in COPR's operating agreement.
(c) Based on established procedures, the Manager shall use diligent efforts to timely bill and collect all charges and other fees which may become due at any time from any customer for services provided in connection with or for the use of the Enterprise. All monies so collected shall be deposited in the applicable Operating Account designated by the COPR. Manager will not terminate any vendor contract for products or services or institute a suit for collection or other proceedings without the prior approval of COPR. COPR shall be responsible for the payment of all reasonable expenses incurred by Manager or the Enterprise in connection with the prosecution of any suits or proceedings authorized by COPR, including reasonable legal fees. Manager shall monitor the progress of such legal suits or proceedings and shall keep COPR appraised of the status of such legal suits or proceedings.
(d) Any legal notices, summonses, complaints, liens, levies, subpoenas, etc. (or copies thereof), received by or served upon Manager relating or pertaining to (i) COPR, (ii) the collection of income by COPR, or (iii) any other aspect of the management, operation, or operation and maintenance of the Enterprise, or any portion thereof, shall be immediately delivered to COPR by Manager.
3.6 Asset Management Services.
(a) Manager shall perform the following management services in accordance with the applicable Annual Plan:
(i) Manager shall oversee and manage daily operations on behalf of COPR pursuant to the Annual Plan, as well as the inventory and physical delivery of the inventory to the Facility.
(ii) Manager shall help secure, negotiate, manage, administer, train, coordinate and supervise all contract labors of contractors and subcontractors involved in Facility operations;
(iii) Manager shall use diligent efforts to cause all contractors to complete any work performed with respect to the Enterprise or the property on which such Enterprise is located in a good and workmanlike manner;
(iv) Manager shall perform regular inspections and take other actions to (A) determine that any work performed with respect to the Enterprise or the property on which such Enterprise is located is being performed in accordance with all applicable contracts and Governmental Requirements applicable to the Enterprise; (B) endeavor to guard the Enterprise against defects and deficiencies in the work performed for it; and (C) subject to review by COPR, reject work that does not conform to the provisions of contracts relating to such work; and
(vii) Manager shall notify COPR promptly upon (A) becoming aware of any default in performance by any contractor or subcontractors, any discovery of work which is not in conformity with the applicable contract or any repudiation by any contractor or subcontractor of its obligations under any applicable contract; and (B) receipt of any notice or claim that COPR is in default in its performance under any applicable contract.
3.7 Marketing Services & Vendor Management.
(a) Manager shall perform the following services in accordance with the applicable Annual Plan:
(i) Manager shall negotiate, on behalf of COPR, to market the services of COPR with respect to the Enterprise. Any contracts providing for the sale of services must be within the bounds of the Budget, and shall be executed by Manager;
(ii) Manager shall manage, administer, coordinate and supervise all sales and marketing activities;
(iii) Manager shall assist COPR in the negotiation of any sale contract with respect to any assets of COPR, if such sales are contemplated in the Annual Plan; and
(iv) Manager shall use diligent efforts to cause any marketing representative employed by Manager to diligently pursue the sale of the services of COPR with respect to the Enterprise.
(b) Manager acknowledges that it will not have authority absent the approval of COPR, or as otherwise provided for in the COPR operating agreement, to make any change to any marketing or sales agreement entered into by COPR or to agree to make any concessions thereunder or pay, by way of bonus or brokerage fee, any additional compensation to any third party.
3.8 Taxes and Assessment Verification Services. Manager shall obtain and verify bills for real estate and personal property taxes, improvement assessments and other like charges, including, but not limited to charges that are or may become liens against the Enterprise, or any portion thereof. Upon receipt, Manager shall promptly give notice of and deliver to COPR copies of any and all such bills or notices and, upon approval by COPR, shall cause COPR to pay such taxes and assessments, on behalf of COPR and at COPR's expense. At the request of COPR and on COPR's behalf and expense, Manager is hereby authorized to contest any such taxes or charges, and to pursue any such contests diligently.
3.9 Payroll Records. Manager shall, at Manager's expense, pay all payroll related taxes applicable to Manager in connection with Manager's employees. In addition, Manager shall, at Manager's expense, prepare all payroll, file all payroll tax forms, and maintain comprehensive payroll records in connection with Manager's employees.
3.10 General Record Keeping. Manager shall maintain complete and readily identifiable records and files on all matters pertaining to the Enterprise including, without limitation, all revenues and expenditures, Service or Product Contracts (hereinafter defined) and leases, the entries to which shall be supported by sufficient documentation to ascertain that said entries are properly and accurately recorded. Such books and records shall be maintained as reasonably provided by COPR, and shall at all times be the property of COPR. Such records and files shall be maintained at such location as may be mutually agreed upon by Manager and COPR in writing.
3.11 Communication with COPR. During regular business hours, Manager shall be available for, or shall cause a representative of Manager to be available for communications with COPR and will keep COPR advised of material items affecting the Enterprise. At the request of COPR, COPR and Manager shall have a weekly telephone conference to review and discuss material items affecting the Enterprise.
3.12 Compliance with Laws;
(c) To the extent sufficient funds are provided in the Budget therefor, Manager shall use commercially reasonable efforts to comply with all (i) federal, state and municipal laws, ordinances, regulations and orders (including, without limitation, those relating to hazardous substances and environmental protection, and the law commonly known as the Americans With Disabilities Act of 1990) relating to the management, leasing, use, operation, repair and maintenance of the Enterprise (excluding the U.S. Controlled Substances Act, 21 U.S.C. Ch. 13, et. seq. and corresponding federal laws), (ii) the rules, regulations or orders of the local board of fire underwriters or other similar body and any insurer issuing an insurance policy to COPR or a Subsidiary (to the extent Manager receives copies of the insurance policy) in respect of an Improvement and/or the use, repair, operation and maintenance thereof (collectively, the "Requirements", individually, a "Requirement"). Manager shall promptly notify COPR of any possible or actual existence of a violation of any such Requirement that comes to its attention and, at COPR's request and expense, will remedy the same.
(d) Manager shall comply, in all material respects, with the terms and conditions contained in any ground lease, mortgage, deed of trust or other security instruments of record affecting an asset to the extent of the authority granted to Manager under this Agreement and to the extent Manager receives copies of the same. Manager shall cause COPR to make all payments on account of any ground lease, mortgage, deed of trust or other security instrument, if any, affecting an asset unless instructed otherwise in writing by COPR, and Manager shall not be required to incur any liability on account thereof. Manager shall promptly deliver to COPR all time-sensitive notices (i.e., requiring prompt action on the part of COPR) received by Manager from COPR's lender, ground lessor, governmental or official entity or agency, or any other party with respect to the applicable asset or any portion thereof. Manager shall, no less often than monthly, deliver to COPR all other notices received by Manager from COPR's lender, ground lessor, governmental or official entity or agency, or any other party with respect to the Enterprise or any portion thereof.
3.13 Provision of Management Services. Manager acknowledges that COPR is engaging Manager to provide the Management Services due to Manager's knowledge of the Enterprise and the markets in which the Enterprise is located. As a result, Manager acknowledges and agrees that: (a) the key employees shall provide or directly oversee substantially all of the Management Services on behalf of Manager pursuant to the terms of this Agreement.
Article 4
Management Authority
4.1 Manager's Authority. Manager's authority is expressly limited to the provisions provided herein or as may be amended in writing from time to time executed by COPR and mutually agreed to and executed by Manager in writing.
4.2 Service or Product Contracts. Manager shall direct and supervise the maintenance and operation of the Enterprise as approved by COPR in the applicable Annual Plan. In connection therewith Manager may, on COPR's behalf and at COPR's expense, solicit bids with respect to the negotiation of contracts for services ("Service or Product Contracts"). Manager shall have the authority to execute Service or Product Contracts on behalf of COPR. Manager shall deliver fully executed originals of such Service or Product Contracts to COPR promptly following Manager's receipt thereof. Subject to Section 3.4 and provided such contracts comply with the applicable Budget, the Service or Product Contracts shall contain terms and provisions acceptable to COPR. Manager shall cause all warranties and guaranties relating to all material services and products obtained at the expense of COPR for the Enterprise to be in the name of COPR. Subject to Section 3.4, COPR agrees that Manager may negotiate and execute Service or Product Contracts with persons that are affiliated with Manager, provided the cost of any such Service Contract is no greater than, and the terms of such Service Contract are substantially similar to, those which Manager or COPR would receive in an arm's length transaction.
Manager shall exercise good faith efforts to negotiate provisions for all Service or Product Contracts that will be substantially in the form provided by COPR (if provided previously by COPR to Manager) or provided by Manager and approved in advance by COPR. Notwithstanding the foregoing, Managers execution of a Service Contract shall be deemed an approval of all the terms and conditions contained in such Service Contract.
Article 5
Insurance
5.1 COPR's Insurance. Throughout the term of this Agreement, COPR shall obtain and maintain, at its sole cost and expense, the following insurance coverages:
(a) All-risks property insurance on a full replacement cost basis covering the Improvements; and
(b) Commercial general liability insurance on an occurrence basis with the applicable Subsidiary and Manager as insured(s) with limits of not less than Five Million and No/100 Dollars ($5,000,000) each occurrence combined single limit on bodily injury, death or property damage.
Notwithstanding anything to the contrary contained in this Agreement, each insurance policy obtained by COPR shall be primary and non-contributory to any insurance otherwise carried by Manager. Manager shall furnish all information requested by COPR for the purpose of establishing the placement of insurance coverages and shall aid and cooperate in every reasonable way with respect to such insurance and any loss covered thereunder. If requested in writing by Manager, COPR shall provide Manager a certificate evidencing the insurance required under this Section 5.1.
5.2 Manager's Insurance. Throughout the term of this Agreement, Manager shall satisfy, at its sole cost and expense, its own insurance obligations, provided such insurance is available at commercially reasonable rates, is customarily provided by similarly situated managers of properties similar to the Enterprise and, unless the Manager determines otherwise, shall not include any errors and omissions insurance. If requested in writing by COPR, Manager shall provide COPR a certificate evidencing the insurance required under this Section 5.2.
Article 6
Financial Reporting
6.1 Revenue and Expense Records. Manager, in the discharge of its duties hereunder, shall maintain complete, accurate and separate books and records for the Enterprise, the entries to which shall be supported by sufficient documentation to ascertain that said entries are properly and accurately recorded.
6.2 Monthly Reports. No later than fifteen (15) days after the end of each month, Manager shall deliver to COPR a report covering the following matters with respect to the operation and management of the Enterprise for the preceding month:
(a) a statement of the operating income or loss for such month and year to date;
(b) a summary of the net cash flow for such month and year to date, including descriptions of capital additions;
(c) an aged accounts receivable report with comments on collection status; and
(d) if Manager is projecting a deficiency in an Operating Account, a projection of cash requirements in reasonable detail.
Manager shall cooperate with and give reasonable assistance to any independent public accountant retained by COPR or a Subsidiary to examine any and all reports, books and records pertaining to the Enterprise.
6.3 Additional Financial Information. Manager shall maintain the originals or copies of the following for at least seven (7) calendar years following Manager's preparation or receipt of the same:
(a) detailed cash receipts and disbursements records;
(b) paid invoices;
(c) summaries of adjusting journal entries; and
(d) billing statements and supporting documentation.
6.4 Accounting Principles. All financial statements and reports shall be prepared in accordance with U.S. generally accepted accounting principles consistently applied, provided however, that footnotes shall not be required.
6.5 Tax Return Information. Manager shall provide, at the expense of COPR, any and all information in the possession of Manager reasonably required by COPR's independent public accounts in connection such accountants preparation of all tax returns required (if any) to be filed by COPR and each Subsidiary.
The provisions of this Article 6 shall survive the expiration or termination of this Agreement.
Article 7
Bank Accounts
7.1 Operating Account.
(a) COPR, if able, shall establish from time to time separate accounts (each an "Operating Account") in the name of each Facility owned by the Enterprise (so that at all times the funds deposited therein shall be the sole and exclusive property of COPR, provided however, that the designated representative(s) of the Manager will be the only signator(ies) with respect to, and with the power to withdraw funds from, any and all banking and other financial accounts relating to the Enterprise). Manager shall promptly deposit in such accounts all sums collected or otherwise received by Manager, the Enterprise or any of the Facilities.
(b) The Manager is hereby authorized to use any or all funds belonging to the Enterprise to pay, on behalf of the Enterprise, all expenses with respect to the Enterprise (collectively, the "Operating Expenses") to the extent such Operating Expenses (i) are included in the applicable Budget (subject to variances permitted pursuant to Sections 3.3 and 3.4), (ii) exceed approved budgetary guidelines but which result from Emergencies (subject to the terms of Section 3.4) or (iii) are otherwise approved in writing in advance by COPR. Notwithstanding anything to the contrary in this Agreement, unless specifically set forth in the Annual Budget, Operating Expenses shall not include: (i) overhead and general expenses of Manager not related to the management of the Enterprise; (ii) rental costs for machinery or equipment not used in connection with the Enterprise; and (iv) amounts required to be paid by Manager on behalf of the Enterprise, for federal, state, local or other Taxes. For purposes of this Agreement, "Taxes" means any federal, state, local, or foreign income, gross receipts, license, payroll, employment, excise, severance, stamp, occupation, premium, windfall profits, environmental (including taxes under IRS Code Section 59A), customs duties, capital stock, franchise, profits, withholding, social security (or similar), unemployment, disability, real property, personal property, sales, use, transfer, registration, value added, alternative or add-on minimum, estimated, or other taxes, fees, duties, tariff, licenses or other similar charges of any kind whatsoever (whether or not specifically called a "tax"), including any interest, penalty, or addition thereto, whether disputed or not and including any obligations to indemnify or otherwise assume or succeed to the Tax liability of any other Person.
Article 8
Payment of Expenses
8.1 Costs Incurred in Good Faith. COPR shall not object to any costs incurred by Manager (including on behalf of the Enterprise) in good faith in the course of its management of the Enterprise or in settlement of any claim arising out of the operation of the Enterprise that is: (a) provided for or contemplated in the
applicable Annual Plan or Budget (subject to variances permitted pursuant to Sections 3.3 and 3.4 above); (b) or has been approved by COPR in writing; or (c) is otherwise expressly permitted or required hereunder.
Article 9
COPR's Obligation
COPR shall use its commercially reasonable efforts to respond promptly to all inquiries and requests for COPR's consent made by Manager pursuant to this Agreement.
Article 10
Manager's Liability
10.1 Indemnification of COPR. MANAGER SHALL INDEMNIFY, DEFEND AND HOLD HARMLESS COPR, AND ITS MANAGERS, MEMBERS, OFFICERS, EMPLOYEES, AND AGENTS (INDIVIDUALLY AND COLLECTIVELY THE "COPR INDEMNITEES"), FROM AND AGAINST ALL SUITS, PROCEEDINGS, CLAIMS, DAMAGES, LIABILITIES, COSTS AND EXPENSES (EACH A "CLAIM"), INCLUDING REASONABLE ATTORNEYS' FEES AND OTHER DEFENSE COSTS, TO THE EXTENT ARISING OUT OF THE GROSS NEGLIGENCE, WILLFUL MATERIAL MISCONDUCT OR FRAUD OF MANAGER OR ITS EMPLOYEES. NOTWITHSTANDING THE FOREGOING, MANAGER SHALL NOT BE LIABLE UNDER THIS SECTION 10.1 IN RESPECT OF ANY AMOUNTS PAID TO THIRD PARTIES BY ANY COPR INDEMNITEES OR ANY OF THEIR AFFILIATES PURSUANT TO ANY SETTLEMENT OR COMPROMISE MADE OR PAID BY ANY OF THEM WITHOUT THE PRIOR WRITTEN CONSENT OF MANAGER, UNLESS SUCH CONSENT SHALL HAVE BEEN UNREASONABLY WITHHELD, CONDITIONED OR DELAYED. THE PROVISIONS OF THIS SECTION 10.1 SHALL SURVIVE THE EXPIRATION OR EARLIER TERMINATION OF THIS AGREEMENT WITH RESPECT TO ANY MATTERS OCCURRING BEFORE SUCH EXPIRATION OR TERMINATION.
10.2 Indemnity of Manager. COPR SHALL INDEMNIFY, DEFEND AND HOLD HARMLESS MANAGER AND ITS AFFILIATES, PARTNERS, MANAGERS, MEMBERS, OFFICERS, DIRECTORS, EMPLOYEES, SHAREHOLDERS AND AGENTS AND PARTNERS, MEMBERS, MANAGERS, OFFICERS, DIRECTORS, EMPLOYEES, SHAREHOLDERS, AND AGENTS OF SUCH AFFILIATES (INDIVIDUALLY AND COLLECTIVELY THE "MANAGER INDEMNITEES") FROM AND AGAINST ALL CLAIMS, INCLUDING REASONABLE ATTORNEYS' FEES AND OTHER DEFENSE COSTS, ARISING FROM OR IN CONNECTION WITH THIS AGREEMENT, THE ENTERPRISE OR MANAGER'S PROVISION OF SERVICES HEREUNDER, EXCEPT TO THE EXTENT THAT ANY SUCH CLAIM ARISES OUT OF THE GROSS NEGLIGENCE, MATERIAL WILLFUL MISCONDUCT OR FRAUD OF MANAGER. IT IS THE EXPRESS INTENT OF THE PARTIES THAT THE MANAGER INDEMNITEES BE INDEMNIFIED AGAINST THEIR OWN NEGLIGENCE (BUT NOT FOR THEIR GROSS NEGLIGENCE,
MATERIAL WILLFUL MISCONDUCT OR FRAUD). SUCH INDEMNITY FOR MANAGER INDEMNITEES' NEGLIGENCE SHALL BE LIMITED TO THE PROCEEDS OF THE INSURANCE COPR AND THE APPLICABLE SUBSIDIARY OR AFFILIATE MAINTAIN PURSUANT TO SECTION 5.1 (OR WHICH COPR AND THE APPLICABLE OR AFFILIATE SUBSIDIARY OR AFFILIATE SHOULD HAVE MAINTAINED PURSUANT TO SECTION 5.1 IF COPR AND THE APPLICABLE SUBSIDIARY OR AFFILIATE COMPLIED WITH SECTION 5.1). TO THE EXTENT COPR AND/OR A SUBSIDIARY OR AFFILIATE USES ANY DEDUCTIBLES TO REDUCE OR MITIGATE PREMIUM OR RISK COST, SUCH DEDUCTIBLES WILL BE WHOLLY FOR THE ACCOUNT OF COPR OR SUCH SUBSIDIARY OR AFFILIATE (i.e., ANY DEDUCTIBLES PAID BY COPR AND THE APPLICABLE SUBSIDIARY OR AFFILIATE SHALL BE TREATED AS THOUGH IT WERE FIRST DOLLAR INSURANCE (i.e., ANY AMOUNTS PAID BY COPR AND/OR A SUBSIDIARY OR AFFILIATE AS A DEDUCTIBLE IN CONNECTION WITH A CLAIM RESULTING FROM THE NEGLIGENCE OF MANAGER INDEMNITEE SHALL BE PAYABLE TO THE APPLICABLE MANAGER INDEMNITEE). COPR SHALL ASSUME ON BEHALF OF THE MANAGER INDEMNITEES THE DEFENSE OF ANY ACTION AT LAW OR IN EQUITY WHICH MAY BE BROUGHT AGAINST THE MANAGER INDEMNITEES BASED ON A CLAIM FOR WHICH INDEMNIFICATION IS PERMITTED HEREUNDER. NOTWITHSTANDING THE FOREGOING, COPR SHALL NOT BE LIABLE UNDER THIS SECTION 10.2 IN RESPECT OF ANY AMOUNTS PAID TO THIRD PARTIES BY ANY MANAGER INDEMNITEES PURSUANT TO ANY SETTLEMENT OR COMPROMISE MADE OR PAID BY ANY MANAGER INDEMNITEES WITHOUT THE PRIOR WRITTEN CONSENT OF COPR UNLESS SUCH CONSENT HAS BEEN UNREASONABLY WITHHELD, CONDITIONED OR DELAYED. THE PROVISIONS OF THIS SECTION 10.2 SHALL SURVIVE THE EXPIRATION OR EARLIER TERMINATION OF THIS AGREEMENT WITH RESPECT TO ANY MATTERS OCCURRING BEFORE SUCH EXPIRATION OR TERMINATION.
10.3 Defense of Claims. The COPR Indemnitees or the Manager Indemnitees (each, a "Protected Party"), as applicable, shall give prompt notice to any person who is obligated to provide indemnification hereunder (an "Indemnifying Party") of the commencement or assertion of any Claim. Any failure so to notify an Indemnifying Party shall not relieve such Indemnifying Party from any liability that it may have to such Protected Party under Section 10.1 or Section 10.2, as applicable, except to extent the failure to give such notice materially and adversely prejudices such Indemnifying Party. Subject to non-interference with any insurance defense being provided with respect thereto, the Indemnifying Party shall be entitled to defend, subject to consultation with the Protected Party, any Claim brought against the Protect Party arising out of or connected with any matters referred to in this Section 10.3, and each party shall provide the other with such assistance in relation to the defense of any such Claim as either party may reasonably request. The Indemnifying Party shall inform the Protected Party on a periodic basis of the status and progress of any Claims to which this Section 10.3 relates and shall have due regard to any views expressed by the Protected Party in relation thereto. The Protected Party shall cooperate with all reasonable requests made by the Indemnifying Party in defending such Claims. Neither party shall compromise or settle any Claim without the other party's consent (not to be unreasonably withheld, conditioned or delayed). If, pending the outcome of litigation, neither party has accepted indemnification responsibility with respect thereto, then and in such event,
subject at all times to non-interference with any insurance defense being provided and subject also to the obligation to cooperate with the other party as hereinabove set forth, each party shall be entitled to participate in the defense of any such Claim, initially at its own expense but with the benefit of subsequent indemnification pursuant to Section 10.1 (if the Protected Party is a COPR Indemnitee) or Section 10.2 (if the Protected Party is a Manager Indemnitee). Even if the Indemnifying Party has assumed the defense of any Claim and has acknowledged its indemnification obligations with respect thereto, the Protected Party nevertheless shall be entitled to participate in such defense on its own behalf and at its own expense, subject to non-interference with insurance defense and the duty to cooperate with the Indemnifying Party as hereinabove provided.
Article 11
Compensation
11.1 Management Fee.
COPR shall pay to Manager, as remuneration for its services in accordance with the terms of this Agreement, a management fee (the "Management Fee") in the amount of Ten Thousand Dollars ($10,000) per month.
Permissible Activities of Manager
12.1 Permissible Activities of Manager: include but are not limited to (i) management of the Enterprise (ii) training, (iii) collections, (iv) cash management, (v) payment to itself of the Management Fees (and any other amounts due and owing to the Manager hereunder), (vi) payment to itself of other fees and amounts due and owing under any other agreements between Manager and COPR; and (vii) safety management and other roles as may be required by the COPR.
Article 12
Assignment
12.1 Assignment by Manager. Manager shall not transfer or assign this Agreement or any part thereof or any of its rights or obligations hereunder without the prior written consent of COPR, provided that COPR's consent shall not be required for an assignment to a corporation, partnership or other entity (a) owned or controlled by Manager or an Affiliate of Manager and (b) with sufficient net worth to perform the obligations of Manager hereunder. The consent of COPR to one or more assignments of this Agreement shall not be construed as, or result in, consent by COPR to any further or future assignment or assignments. Any assignment or attempted assignment not made strictly in accordance with the foregoing shall be void and shall be deemed to be a default of Manager's obligations hereunder.
12.2 Assignment by COPR. COPR may not transfer, in whole or in part without the prior written consent of Manager, its rights under this Agreement in connection with the transfer of the Enterprise to Affiliates of COPR. As a condition to COPR's assignment of its rights under this Agreement, the entity acquiring such Enterprise shall expressly assume in writing the
obligations of COPR hereunder accruing before, on and/or after such date of transfer. Upon an assignment in accordance with the requirements of this Section 13.2, COPR shall thereby be released from all obligations hereunder including those that arose before the assignment. Any assignment or attempted assignment not made strictly in accordance with the foregoing shall be void and shall be deemed to be a default of COPR's obligations hereunder.
Article 13
Legal Proceedings; Dispute Resolution
13.1 Notice of Claims.Should any claims, demands, suits or other legal proceedings be made or instituted by any person third party against COPR or a subsidiary or affiliate that arise out of any of the matters relating to this Agreement, Manager shall give COPR all pertinent information and reasonable assistance in the defense or other disposition thereof. The provisions of this Article 14 shall survive the expiration or termination of this Agreement.
13.2 Senior Officers. Each party shall designate a senior representative with authority to resolve any Dispute arising under this Agreement.
(a) All Disputes arising between the parties shall initially be referred to the parties' representatives designated herein. Unless otherwise mutually agreed, they shall meet and confer in good faith on each such Dispute within fourteen (14) business days after either party refers the Dispute to them.
(b) The parties shall (i) attempt to resolve all Disputes arising hereunder promptly, equitably and in a good faith manner; and (ii) provide each other with reasonable access during normal business hours to any and all non-privileged records, information and data reasonably material to any such Dispute.
13.3 Arbitration & Judicial Remedies. All Disputes that are not resolved pursuant to Section 14.1 above within thirty (30) days after a party's receipt of notice referring the Dispute to the Parties' designated senior representatives shall be submitted upon written request of either Party to binding arbitration under the Puerto Rico's Arbitration Act ("CAA") as the exclusive remedy for resolving any such Dispute ("Binding Arbitration"). The arbitration shall be conducted in San Juan, Puerto Rico, by JAMS under its then-prevailing rules, provided if JAMS shall not then exist then the arbitration shall be conducted by the American Arbitration Association ("AAA") under its then prevailing Commercial Arbitration Rules, including without limitation the AAA Optional Rules for Emergency Measures of Protection. The arbitration shall be decided by a single neutral arbitrator, except that Disputes involving specific performance or claims in excess of $500,000 shall be decided by a panel of three neutral arbitrators. Each arbitrator will be an attorney, and at least one arbitrator shall be knowledgeable in the areas of business law. COPR and Manager shall endeavor to agree on the appointment an arbitrator or arbitrators. Should COPR and Manager be unable to agree on an arbitrator or arbitrators, COPR and Manager shall each appoint an arbitrator, and the appointed arbitrators shall mutually agree on appointment of the sole arbitrator, or the third arbitrator in the event of a three arbitrator panel. The resolution of any Dispute as determined by the arbitrator(s) in Binding Arbitration shall be binding on all parties to
this Agreement. The obligation of the parties to resolve any Dispute by compulsory Binding Arbitration, any judicial relief to prevent irreparable harm pending completion of Binding Arbitration and issuance of an arbitration award, and any arbitration award issued in such Binding Arbitration (the parties' agreement to Binding Arbitration, equitable judicial relief to prevent irreparable harm pending completion of Binding Arbitration and issuance of an arbitration award, and any arbitration award issued under the CAA each shall be "Binding Arbitration Relief") shall be enforceable in accordance with the CAA in an action commenced and maintained in the U.S. District Court for the District of Puerto Rico ("Puerto Rico Federal District Court").
13.4 Mediation. Prior to the commencement of the dispositive arbitration hearing, either party may request a mediation to be administered in San Juan, Puerto Rico, by JAMS under its then-prevailing rules. The party's mediation request is non-binding on the other parties. If the parties mutually agree to pursue mediation, the costs of the mediation shall be divided equally by the parties.
Article 14
Notices; Authorized Representatives
14.1 Notices. All notices and other communications given pursuant to this Agreement shall be in writing (unless expressly provided otherwise herein) and shall be (a) mailed by first class, United States Mail, postage prepaid, certified, with return receipt requested or deposited with a nationally-recognized overnight courier and addressed to the parties hereto at the address specified below, (b) hand delivered to the intended address, or (c) sent by facsimile transmission followed by a confirmatory letter by one of the foregoing means. All notices shall be effective upon receipt or refusal at the address of the addressee. Any notice executed and delivered by COPR's legal counsel (or any other authorized agent of COPR) shall be fully effective as if the same had been executed and delivered by COPR. The addresses of the parties are as follows:
If to COPR:
[________________________]
[________________________]
Attention: [_______________}
Telephone Number: [___________]
Fax Number: [_______________]
Email: [____________________]
If to Manager:
STWC Holdings, Inc.
Attn: Erin Phillips, President and CEO
1350 Independence Street, Suite 300
Lakewood, CO 80215
The parties hereto may change their addresses by giving notice thereof to the other in conformity with this provision.
Article 15
Miscellaneous
15.1 Signs. Manager shall be allowed to place signs on the Facility or Facilities indicating that it is the manager of the Enterprise.
15.2 Pronouns. The pronouns used in this Agreement referring to Manager, COPR, or a subsidiary or affiliate shall be understood and construed to apply whether Manager, COPR, or a subsidiary or affiliate is an individual, partnership, corporation or an individual or individuals doing business under a firm or trade name, and the masculine and neuter pronouns shall each include the other and may be used interchangeably with the same meaning.
15.3 Amendments. Any and all amendments to this Agreement shall be null and void unless approved by the Manger and COPR in writing.
15.4 Headings. All headings herein are inserted only for convenience and ease of reference and are not to be considered in the construction or interpretation of any provision of this Agreement.
15.5 Succession. This Agreement shall be binding upon and inure to the benefit of COPR, its successors and assigns, and shall be binding upon and inure to the benefit of Manager, its successors and permitted assigns.
15.6 Counterparts. This Agreement may be executed in any number of counterparts, each of which shall be deemed to be an original and all of which together shall comprise but a single instrument.
15.7 Entire Agreement. This Agreement hereto constitutes the entire Agreement between COPR and Manager with respect to the subject matter hereof, and any and all previous agreements (written or oral) entered into between the parties hereto relating to the Enterprise and/or the management, use, maintenance and operation thereof shall be deemed merged herewith.
15.8 Severability. If any provisions of this Agreement shall be found to be invalid or unenforceable to any extent by a court of competent jurisdiction or by an arbitrator, as the case may be, the remainder of this Agreement shall not be affected thereby and this Agreement shall be enforced to the greatest extent permitted by law.
15.9 Governing Law. This Agreement shall be governed by the laws of the State of California, without regard to conflict of laws principles.
15.10 No Recording. Neither this Agreement nor any amendment hereto, nor any memorandum or short form thereof, shall be recorded or filed. Notwithstanding anything to the contrary contained in this Agreement, this Agreement shall not be a covenant running with any asset.
REMAINDER OF PAGE INTENTIONALLY BLANK.
SIGNATURE PAGE(S) FOLLOWS.
IN WITNESS WHEREOF, COPR and Manager have executed this Agreement as of the Effective Date.
STWC HOLDINGS, INC.
STWC Holdings, Inc.
a Colorado corporation
By: ___________________________________
Name: Erin Phillips
Title: President and CEO
COPR:
COPR ENTERPRISES, LLC