Document:

ex_225314.htm

 

JUDGMENT SETTLEMENT AGREEMENT

 

This Judgment Settlement Agreement (this “Agreement”) is entered into as of November 20, 2020 (the “Effective Date”) by and among Iliad Research and Trading, L.P., a Utah limited partnership (“Lender”), GB Sciences, Inc., a Nevada corporation (“Borrower”), and solely with respect to Section 3 below, Wellcana Plus LLC, a Louisiana limited liability company (“Wellcana”). Capitalized terms used in this Agreement without definition shall have the meanings given to them in the Note (defined below). Each of Borrower and Lender is sometimes referred to herein individually as a “Party” and collectively as the “Parties.”

 

A.     Borrower previously sold and issued to Lender that certain 8% Convertible Promissory Note dated April 23, 2019 in the original principal amount of $2,765,000.00 (the “Note”) pursuant to that certain Note Purchase Agreement dated April 23, 2019 by and between Lender and Borrower (the “Purchase Agreement,” and together with the Note and all other documents entered into in conjunction therewith, the “Transaction Documents”).

 

B.     A number of events of defaults occurred under the Note and, as a result thereof, Lender filed a lawsuit against Borrower in the Third Judicial District Court of Salt Lake County, State of Utah, Case No. 200903437 (the “Lawsuit”).

 

C.     On July 14, 2020, Judge Keith Kelly entered a Default Judgment (the “Judgment”) against Borrower in the amount of $3,264,594.38 plus post-judgment interest at the rate of 15% per annum and all attorneys’ fees incurred by Lender to pursue and collect on the Judgment (the “Judgment Amount”).

 

D.     Lender and Borrower now desire to settle the Judgment on the terms and conditions set forth herein.

 

NOW, THEREFORE, for good and valuable consideration, the receipt and sufficiency of which are hereby acknowledged, the parties agree as follows:

 

1.     Recitals. Each of the parties hereto acknowledges and agrees that the recitals set forth above in this Agreement are true and accurate, are contractual in nature, and are hereby incorporated into and made a part of this Agreement.

 

2.     Settlement Amount. Notwithstanding the terms and conditions of any prior Agreement between Borrower and Lender, Borrower covenants and agrees to pay Lender $3,006,014.60 (the “Settlement Amount”) in accordance with the terms of this Agreement.

 

3.     Proceeds from Asset Sale. Wellcana and Borrower have reached agreement on the accelerated payment of proceeds from the sale of Borrower’s 50% membership interest in GB Science Louisiana LLC by Borrower to Wellcana (the “Asset Sale”). Borrower hereby directs Wellcana and Wellcana covenants and agrees to pay the Settlement Amount directly to Lender in accordance with the wire transfer instructions attached hereto as Exhibit A from the proceeds owed to Borrower at the closing of the Asset Sale. The amount paid by Wellcana will be recognized by Lender as a credit to the amount due from Borrower to Lender. Wellcana also covenants and agrees to provide Lender with a contact who will provide updates and answer questions regarding the

 

 

 

 

 

status of the Asset Sale to Lender. Borrower covenants and agrees that Wellcana’s payment of the Settlement Amount to Lender will be credited toward the purchase price of the Asset Sale.

 

4.     Final Settlement; Payment in Full. Final settlement of this Agreement (“Final Settlement”) (and thereby, the Judgment) shall occur once Lender receives the Settlement Amount from Wellcana. Upon Final Settlement, Borrower shall be deemed to have paid the entire Judgment Amount in full, Borrower shall have no further obligations under the Judgment, the Judgment shall be deemed to be satisfied, and Lender will file a satisfaction of judgment with the court that issued the Judgment. In the event Final Settlement does not occur on or prior to December 8, 2020, this Agreement will immediately and automatically terminate and be deemed to be void ab initio.

 

5.     Failure to Comply. Borrower understands that Lender’s agreement to settle the Judgment for the Settlement Amount, and all other obligations, restrictions, and limitations of or on Lender hereunder shall terminate immediately upon the occurrence of any breach of this Agreement. In any such case, Lender may seek all recourse available to it under the terms of the Judgment, this Agreement, or applicable law following any breach, including without limitation enforcing the Judgment for the full Judgment Amount.

 

6.     Judgment. Borrower represents, warrants and acknowledges that it was properly served the complaint and all other applicable documents related to the Lawsuit and that the Judgment was properly entered. Borrower further agrees that it will not challenge the Judgment or otherwise seek to have the Judgment set aside. In furtherance of the foregoing, Borrower acknowledges that the representations and warranties in the prior sentence are a material inducement to Lender to enter into this Agreement and that but for such representations and warranties from Borrower, Lender would not have entered into this Agreement or agreed to settle the Judgment for the Settlement Amount.

 

7.     Representations, Warranties and Agreements. In order to induce Lender to enter into this Agreement, Borrower, for itself, and for its affiliates, successors and assigns, hereby acknowledges, represents, warrants and agrees as follows:

 

7.1.     Authority. Borrower has full power and authority to enter into this Agreement and to incur and perform all obligations and covenants contained herein, all of which have been duly authorized by all proper and necessary action. No consent, approval, filing or registration with or notice to any governmental authority is required as a condition to the validity of this Agreement or the performance of any of the obligations of Borrower hereunder. Borrower asserts that any governmental filings that are required will be filed by Borrower as required by law.

 

7.2. No Waiver. Any Event of Default which may have occurred under the Note has not been, is not hereby, and shall not be deemed to be waived by Lender, expressly, impliedly, through course of conduct or otherwise except upon full satisfaction of Borrower’s obligations under this Agreement. The agreement of Lender to refrain and forbear from exercising any rights and remedies by reason of any existing default or any future default shall not constitute a waiver of, consent to, or condoning of, any other existing or future default.

 

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7.3.     Accurate Representations. All understandings, representations, warranties and recitals contained or expressed in this Agreement are true, accurate, complete, and correct in all respects; and no such understanding, representation, warranty, or recital fails or omits to state or otherwise disclose any material fact or information necessary to prevent such understanding, representation, warranty, or recital from being misleading. Borrower acknowledges and agrees that Lender has been induced in part to enter into this Agreement based upon Lender’s justifiable reliance on the truth, accuracy, and completeness of all understandings, representations, warranties, and recitals contained in this Agreement. There is no fact known to Borrower or which should be known to Borrower which Borrower has not disclosed to Lender on or prior to the date hereof which would or could materially and adversely affect the understandings of Lender expressed in this Agreement or any representation, warranty, or recital contained in this Agreement.

 

7.4. No Defenses. Borrower has no defenses, affirmative or otherwise, rights of setoff, rights of recoupment, claims, counterclaims, actions or causes of action of any kind or nature whatsoever against Lender, directly or indirectly, arising out of, based upon, or in any manner connected with, the transactions contemplated hereby, whether known or unknown, which occurred, existed, was taken, permitted, or begun prior to the execution of this Agreement and occurred, existed, was taken, permitted or begun in accordance with, pursuant to, or by virtue of any of the terms or conditions of the Transaction Documents. To the extent any such defenses, affirmative or otherwise, rights of setoff, rights of recoupment, claims, counterclaims, actions or causes of action exist or existed, such defenses, rights, claims, counterclaims, actions and causes of action are hereby waived, discharged and released. Borrower hereby acknowledges and agrees that the execution of this Agreement by Lender shall not constitute an acknowledgment of or admission by Lender of the existence of any claims or of liability for any matter or precedent upon which any claim or liability may be asserted.

 

7.5. Voluntary Agreement. Borrower hereby acknowledges that it has freely and voluntarily entered into this Agreement after an adequate opportunity and sufficient period of time to review, analyze, and discuss (i) all terms and conditions of this Agreement, (ii) any and all other documents executed and delivered in connection with the transactions contemplated by this Agreement, and (iii) all factual and legal matters relevant to this Agreement and/or any and all such other documents, with counsel freely and independently selected by Borrower (or had the opportunity to be represented by counsel). Borrower further acknowledges and agrees that it has actively and with full understanding participated in the negotiation of this Agreement and all other documents executed and delivered in connection with this Agreement after consultation and review with its counsel (or had the opportunity to be represented by counsel), that all of the terms and conditions of this Agreement and the other documents executed and delivered in connection with this Agreement have been negotiated at arm’s-length, and that this Agreement and all such other documents have been negotiated, prepared, and executed without fraud, duress, undue influence, or coercion of any kind or nature whatsoever having been exerted by or imposed upon any party by any other party. No provision of this Agreement or such other documents shall be construed against or interpreted to the disadvantage of any party by any court or other governmental or judicial authority by reason of such party having or being deemed to have structured, dictated, or drafted such provision.

 

 

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7.6. No Proceedings. There are no proceedings or investigations pending or

threatened before any court or arbitrator or before or by, any governmental, administrative, or judicial authority or agency, or arbitrator, against Borrower.

 

7.7.     No Statutes. There is no statute, regulation, rule, order or judgment and no

provision of any mortgage, indenture, contract or other agreement binding on Borrower, which would prohibit or cause a default under or in any way prevent the execution, delivery, performance, compliance or observance of any of the terms and conditions of this Agreement and/or any of the other documents executed and delivered in connection with this Agreement.

 

7.8.     Solvent. Borrower is solvent as of the date of this Agreement, and none of

the terms or provisions of this Agreement shall have the effect of rendering Borrower insolvent. The terms and provisions of this Agreement and all other instruments and agreements entered into in connection herewith are being given for full and fair consideration and exchange of value.

 

4.     Certain Acknowledgments. Each of the parties acknowledges and agrees that no property or cash consideration of any kind whatsoever has been or shall be given by Lender to Borrower in connection with this Agreement.

 

5.     Miscellaneous.

 

9.1.     Further Assurances. At any time or from time to time after the Effective

Date, at the request of a Party, and without further consideration, each of the Parties shall execute and deliver, or shall cause its respective affiliate(s) to execute and deliver, such other agreements, instruments, certifications or other documents as may be necessary or desirable to effectuate the transactions and fulfill its obligations under this Agreement.

 

9.2. Arbitration. By its execution of this Agreement, each Party agrees to be bound by the Arbitration Provisions (as defined in the Purchase Agreement) set forth as an exhibit to the Purchase Agreement and the parties agree to submit all Claims (as defined in the Purchase Agreement) arising under this Agreement or any Transaction Document or other agreement between the parties and their affiliates to binding arbitration pursuant to the Arbitration Provisions.

 

9.3. Governing Law; Venue. This Agreement shall be governed by and interpreted in accordance with the laws of the State of Utah without regard to the principles of conflict of laws. Each Party consents to and expressly agrees that the exclusive venue for arbitration of any dispute arising out of or relating to this Agreement or any Transaction Document or the relationship of the Parties or their affiliates shall be in Salt Lake County, Utah. Without modifying the Parties obligations to resolve disputes hereunder or under any Transaction Document pursuant to the Arbitration Provisions, each Party hereto submits to the exclusive jurisdiction of any state or federal court sitting in Salt Lake County, Utah in any proceeding arising out of or relating to this Agreement and agrees that all Claims in respect of the proceeding may only be heard and determined in any such court and hereby expressly submits to the exclusive personal jurisdiction and venue of such court for the purposes hereof and expressly waives any claim of improper venue and any claim that such courts are an inconvenient forum. Each Party hereto hereby irrevocably consents to the service of process of any of the aforementioned courts

 

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in any such proceeding by the mailing of copies thereof by registered or certified mail, postage prepaid, to its address as set forth in the Purchase Agreement, such service to become effective ten (10) days after such mailing. BORROWER HEREBY IRREVOCABLY WAIVES ANY RIGHT IT MAY HAVE TO, AND AGREES NOT TO REQUEST, A JURY TRIAL FOR THE ADJUDICATION OF ANY DISPUTE HEREUNDER OR IN CONNECTION WITH OR ARISING OUT OF THIS AGREEMENT OR ANY TRANSACTION CONTEMPLATED HEREBY.

9.4.     Severability. If any part of this Agreement is construed to be in violation of

any law, such part shall be modified to achieve the objective of the Parties to the fullest extent permitted and the balance of this Agreement shall remain in full force and effect.

 

9.5.     Successors. This Agreement shall be binding upon and inure to the benefit

of the Parties and their respective successors and assigns. This Agreement or any of the severable rights and obligations inuring to the benefit of or to be performed by Lender hereunder may be assigned by Lender to a third party, including its financing sources, in whole or in part. Borrower may not assign this Agreement or any of its obligations herein without the prior written consent of Lender.

 

9.6.     Entire Agreement. This Agreement, together with all other documents

referred to herein, supersedes all other prior oral or written agreements between Borrower, Lender, its affiliates and persons acting on its behalf with respect to the matters discussed herein, and this Agreement and the instruments referenced herein contain the entire understanding of the Parties with respect to the matters covered herein and therein and, except as specifically set forth herein or therein, neither Lender nor Borrower makes any representation, warranty, covenant or undertaking with respect to such matters.

 

9.7. Amendments; Waiver. This Agreement may be amended, modified, or

supplemented only by written agreement of the Parties. No provision of this Agreement may be waived except in writing signed by the Party against whom such waiver is sought to be enforced.

 

9.8.     Attorneys’ Fees. In the event of any action at law or in equity to enforce or

interpret the terms of this Agreement, the Parties agree that the Party who is awarded the most money (without regard to any fines, penalties, or charges imposed by any governmental or regulatory authority) shall be deemed the prevailing Party for all purposes and shall therefore be entitled to an additional award of the full amount of the attorneys’ fees and expenses paid by such prevailing Party in connection with the dispute without reduction or apportionment based upon the individual claims or defenses giving rise to the fees and expenses. Nothing herein shall restrict or impair an arbitrator’s or a court’s power to award fees and expenses for frivolous or bad faith pleading.

 

9.9. Counterparts. This Agreement may be executed in any number of counterparts with the same effect as if all signing parties had signed the same document. All counterparts shall be construed together and constitute the same instrument. The exchange of copies of this Agreement and of signature pages by facsimile transmission or other electronic transmission (including email) shall constitute effective execution and delivery of this Agreement as to the Parties and may be used in lieu of the original Agreement for all purposes. Signatures of

 

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the Parties transmitted by facsimile transmission or other electronic transmission (including email) shall be deemed to be their original signatures for all purposes.

 

9.10. Acknowledgement. By executing this Agreement, each of the Parties evidences that it carefully read and fully understands all of the provisions of this Agreement.

 

9.11. No Reliance. Borrower acknowledges and agrees that neither Lender nor any of its officers, directors, members, managers, representatives or agents has made any representations or warranties to Borrower or any of its agents, representatives, officers, directors, stockholders, or employees except as expressly set forth in this Agreement and, in making its decision to enter into the transactions contemplated by this Agreement, Borrower is not relying on any representation, warranty, covenant or promise of Lender or its officers, directors, members, managers, agents or representatives other than as set forth in this Agreement.

 

9.12. Time is of the Essence. Time is expressly made of the essence with respect to each and every provision of this Agreement.

 

9.13. Notices. Unless otherwise specifically provided for herein, all notices,

demands or requests required or permitted under this Agreement to be given to Borrower or Lender shall be given as set forth in the “Notices” section of the Purchase Agreement.

 

[Remainder of page intentionally left blank]

 

 

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IN WITNESS WHEREOF, the undersigned have executed this Agreement to be effective as of the Effective Date.

 

	
			 

				
			ILIIAD RESEARCH AND TRADING, L.P.

				
			 

			
	 	By:	Iliad Management, LLC, its General Partner	 
	 	By:	Fife Trading, Inc., its Manager	 
	
			 

				
			 

				
			 

				
			 

			
	
			 

				
			By: 

				
			/s/ John Fife

				
			 

			
	
			 

				
			 

				
			John M. Fife, President

				
			 

			
	
			 

				
			 

				
			 

				
			 

			

 

 

	
			 

				
			GB SCIENCES, INC.

				
			 

			
	
			 

				
			 

				
			 

				
			 

			
	
			 

				
			By: 

				
			/s/ John C Poss

				
			 

			
	
			 

				
			 

				
			Name: John C Poss

				
			 

			
	
			 

				
			 

				
			Title: CEO

				
			 

			
	
			 

				
			 

				
			 

				
			 

			

 

 

 

Solely with Respect to Section 3:

 

	
			 

				
			WELLCANA PLUS LLC

				
			 

			
	
			 

				
			 

				
			 

				
			 

			
	
			 

				
			By: 

				
			/s/ Charles Hohorst

				
			 

			
	
			 

				
			 

				
			Name: Charles Hohorst

				
			 

			
	
			 

				
			 

				
			Title: Managing Member K2LOGIC

				
			 

			
	
			 

				
			 

				
			 

				
			 

			

 

 

 

/s/ Charles Rush

 

Title: On behalf of K2 Logic, LLC Managing Member of

Wellcana Plus LLC.

 

 

[Signature Page to Judgment Settlement Agreement]

 

 

 

 

 

 

 

EXHIBIT A

 

WIRE TRANSFER INSTRUCTIONDocument

Exhibit 10.29

AMENDMENT 2020-1  

MERCURY GENERAL CORPORATION                                                                                         PROFIT SHARING PLAN

WHEREAS, Mercury General Corporation (the “Company”) maintains the Mercury General Corporation Profit Sharing Plan (the “Plan”); 

WHEREAS, pursuant to Section 9.1 of the Plan, the Company is authorized to amend the Plan; and

WHEREAS, the Company desires to amend the Plan to incorporate certain provisions of the Setting Every Community Up for Retirement Enhancement Act of 2019 and the Coronavirus Aid, Relief, and Economic Security Act of 2020.

NOW, THEREFORE, the Plan is amended, effective as of the dates set forth below, as follows:
1.         Effective as of April 1, 2020, Section 1.2 of the Plan is amended by adding the following new definition of “COVID-19 Qualified Participant” immediately after the definition of “Compensation Deferral Account” thereunder, to read as follows:

“‘COVID-19 Qualified Participant,’ for purposes of Section 7.2A, is an individual:

            (a)        Who is diagnosed with the virus SARS-CoV-2 or the coronavirus disease 2019 (COVID-19) by a test approved by the Centers for Disease Control and Prevention; or

            (b)       Whose spouse or dependent (as defined in Section 152 of the Code) is so diagnosed by such a test; or

            (c)        Who experiences adverse financial consequences due to certain coronavirus-related events, including quarantine, being furloughed or laid off or having work hours reduced, being unable to work due to lack of child care, closing or reducing hours of a business owned or operated by the individual; or 

            (d)       other factors as determined by the Secretary of the Treasury (or the Secretary’s delegate).

In determining whether a Participant is a ‘COVID-19 Qualified Participant,’ the Committee may rely on the Participant’s certification that the individual satisfies the foregoing conditions.”

2.         Effective as of March 27, 2020, a new Section 7.2A is added to the Plan, immediately after Section 7.2 thereunder, to read as follows:

“7.2A  Distributions to COVID-19 Qualified Participants.

During the period commencing March 27, 2020 and ending December 31, 2020, a COVID-19 Qualified Participant may elect to receive a distribution from the vested portion of his 

Accounts, not to exceed $100,000 in the aggregate from all plans maintained by the Company or a Related Company.  Such a distribution shall not be treated as ‘eligible rollover distribution’ pursuant to Section 7.7.  However, such COVID-19 Qualified Participant may, at any time during the three (3)-year period commencing on the day after the date such distribution is received, make one (1) or more contributions to the Plan in an aggregate amount not to exceed the amount of such distribution.  Any such contributions shall be treated as Rollover Contributions under Section 3.4.”

3.         Effective as of January 1, 2020, Section 7.6(b) of the Plan is amended by revising the second and third sentences thereunder, to read as follows:

“Accordingly, unless otherwise permitted by law, the entire interest of each Participant who is a five percent (5%) owner with respect to the Plan Year in which the Participant attains age 70-1/2 (or age 72, in the case of a Participant who has not attained age 70-1/2 prior to January 1, 2020) shall commence to be distributed by April 1 of the calendar year following the calendar year in which the Participant reaches age 70-1/2 (or age 72, in the case of a Participant who has not attained age 70-1/2 prior to January 1, 2020).  Any Participant not described in the preceding sentence who remains in Employment and has not commenced receipt of distributions as of January 1, 1997, shall not be required to commence distribution of his interest until he separates from service, but shall be permitted to commence receipt of distribution of his benefit as of the April 1 following the date he attains age 70-1/2 (or age 72, in the case of a Participant who has not attained age 70-1/2 prior to January 1, 2020).”

4.         Effective as of March 27, 2020, Section 7.8(g) of the Plan is amended to read as follows:

“(g)      Loan repayments will be suspended under this Plan as permitted under Section 414(u)(4) of the Code.  In addition, with respect to any loan repayment with a due date during the period beginning March 27, 2020 and ending December 31, 2020, such due date shall be delayed for one (1) year, and any subsequent repayments with respect to such loan shall be reamortized to reflect the delay in payment and interest accruing during such delay.  Such one (1) year delay in repayment shall be disregarded in determining the term of the loan under Section 7.8(c).”

5.         Effective as of January 1, 2020, Section 11.2(a) of the Plan is amended by adding the following at the end thereof:

“In addition, notwithstanding the foregoing or any other provisions of this Article XI, in accordance with the Coronavirus Aid, Relief, and Economic Security Act of 2020, minimum distributions that would otherwise be paid to a Participant or Beneficiary under this Article XI shall not be paid for the 2020 Plan Year.  Such required minimum distributions under this Article XI shall again become effective for the 2021 Plan Year commencing on January 1, 2021.  For avoidance of doubt, required minimum distributions for the 2019 Plan Year for which the required beginning date was April 1, 2020 shall not be paid.”

6.         Effective as of January 1, 2020, Section 11.2(b)(i) of the Plan is amended to read as follows:

“(i)      If the participant’s surviving spouse is the participant’s sole designated beneficiary, then, except as provided elsewhere in this Article XI, distributions to the surviving spouse will begin by December 31 of the calendar year immediately following the calendar year in which the participant died, or by December 31 of the calendar year in which the participant would have attained age 70-1/2 (or age 72 for a Participant who did not or would not have attained age 70-1/2 prior to January 1, 2020), if later.”

7.         Effective as of January 1, 2020, Section 11.5(e) of the Plan is amended to read as follows:

“(e)      Required Beginning Date.  The Required Beginning Date means April 1 of the calendar year following the later of (a) the calendar year in which the Participant attains age 70-1/2 (or age 72 if the Participant does not attain age 70-1/2 prior to January 1, 2020), or (b) the calendar year in which the employee retires.  In the case of a Participant who is a five percent (5%) owner (as defined in Section 416 of the Code) with respect to the Plan ending in the calendar year in which the Participant turns age 70-1/2 (or age 72 if the Participant does not attain age 70-1/2 prior to January 1, 2020), the Required Beginning Date shall be April 1 of the calendar year following the calendar year in which the Participant turns age 70-1/2 (or age 72 if the Participant does not attain age 70-1/2 prior to January 1, 2020).”

IN WITNESS WHEREOF, the Company has caused its duly authorized officer to execute this Amendment 2020-1 to the Plan this 15th day of December, 2020.

                                                            MERCURY GENERAL CORPORATION

By: /s/ Theodore R. Stalick

Its: SVP-CFO

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