Settlement Agreement Potter v PotNetwork et al

EXHIBIT 10.8

CONFIDENTIAL RELEASE AND SETTLEMENT AGREEMENT

This Confidential Release and Settlement Agreement (“Agreement”) is entered into between and among the following Parties: Kathryn Potter (“Plaintiff”) and Diamond CBD, Inc. (“CBD”), First Capital Venture, Co. (“First Capital”), and Potnetwork Holdings, Inc. (“Potnetwork,” and together with CBD, and First Capital, the “Defendants” and together with the Plaintiff, collectively, the “Parties”), and it sets forth the binding agreement of Parties for the settlement of the following case: Potter v. Potnetwork Holdings, Inc., Diamond CBD, Inc., and First Capital Venture Co., CASE NO.: 19-24017-CV-SCOLA (the “Lawsuit”).

RECITALS

A. The Parties to this Agreement intend to settle all disputes, controversies, contentions, allegations, and claims relating to, arising from, or in any way connected with the Lawsuit.

B. The Parties to this Agreement agree that it is in its/his/her best interest to settle and resolve all disputes between or among the Parties hereto and to go their separate ways.

COVENANTS

1. Settlement Class. All current and former Diamond CBD customers for whom Defendant has email addresses who purchased a) Chill Gummies (Watermelon Slices) – 150 mg; b) Unflavored Diamond CBD Oil – 550 mg; or c) Diamond CBD Infused Gummy Worms – 75 mg (the “Class Products”) online at www.https://www.diamondcbd.com/ between the dates of January 1, 2015 and July 15, 2020 (each a “Settlement Class Member”).

2. Settlement Consideration.

1) $10,000.00 on or before August 15, 2020;

2) $5,000.00 on or before September 15, 2020;

3) $5,000.00 on or before October 15, 2020;

4) $5,000.00 on or before November 15, 2020;

5) $5,000.00 on or before December 15, 2020;

6) $5,000.00 on or before January 15, 2021;

7) $5,000.00 on or before February 15, 2021;

8) $5,000.00 on or before March 15, 2021;

9) $5,000.00 on or before April 15, 2021;

10) $5,000.00 on or before May 15, 2021;

11) $5,000.00 on or before June 15, 2021;

12) $5,000.00 on or before July 15, 2021;

13) $7,500.00 on or before August 15, 2021;

14) $7,500.00 on or before September 15, 2021;

15) $7,500.00 on or before October 15, 2021;

16) $7,500.00 on or before November 15, 2021;

17) $7,500.00 on or before December 15, 2021;

18) $7,500.00 on or before January 15, 2022;

19) $7,500.00 on or before February 15, 2022;

20) $7,500.00 on or before March 15, 2022;

21) $7,500.00 on or before April 15, 2022;

22) $7,500.00 on or before May 15, 2022;

23) $7,500.00 on or before June 15, 2022;

24) $7,500.00 on or before July 15, 2022;

25) $7,500.00 on or before August 15, 2022;

26) $7,500.00 on or before September 15, 2022;

27) $7,500.00 on or before October 15, 2022;

28) $7,500.00 on or before November 15, 2022;

29) $7,500.00 on or before December 15, 2022; and

30) $7,500.00 on or before January 15, 2023.

3. Reporting Requirements. Defendants shall provide calendar quarterly written reports (no more than 15 days following the end of each quarter) beginning with the calendar quarter ending September 30, 2020, and through the calendar quarter ending December 31, 2022, by email to Plaintiff’s Counsel at ***@***, who shall confirm receipt thereof, confirming how many vouchers were claimed and how many redeemed. Further, Defendants shall provide, upon reasonable request by Plaintiff’s Counsel, confirmation and supporting documentation that Defendants are manufacturing, selling and distributing the Class Products that contain the amounts of ingredients as found on the labels adhered to the products, within the parameters acceptable for the level of active ingredients in dietary supplements. Defendants shall have no obligation under this Agreement to continue selling the Class Products.

4. Dismissal of Lawsuit. Upon the execution of this Agreement by all Parties, the Parties shall dismiss the Lawsuit with prejudice; provided however that such dismissal shall be conditioned on Defendants’ compliance with this Agreement. The Court shall retain jurisdiction over this Settlement Agreement and the enforcement thereof.

5. Release. Upon consummation of the terms of this Agreement, each Party hereto releases, discharges, and relinquishes any and all claims, demands, causes of action, choses in action, or other rights, whether known or unknown, arising from or any way related to the Lawsuit, or any other matter encompassed or related to this Agreement or this Agreement’s subject matter. The only exceptions to the Release provided for in this Paragraph 5, are: (a) claims based on events, acts, or omissions taking place after the effective date of this Agreement; (b) actions to enforce or challenge the terms of this Agreement; and (c) claims or rights that cannot be released by law.

6. Default. Time is of the essence for Defendants to perform all of their obligations under this Agreement. Should the payments set forth in paragraph 2 above not be received on the due date then Plaintiff’s Counsel shall provide written email notice to Defendants’ Counsel by email or fax of such non-receipt and Defendants shall have 3 days from its receipt of said written notice to provide proof of payment (the “Cure Period”). In the event Defendants default on its payment obligations more than 3 times, Defendants shall forfeit its right to the Cure Period and Kopelowitz Ostrow P.A. will have the discretion to immediately avail itself to the remedies set forth in paragraph 7 herein.

7. Security for Payment of Attorneys’ Fees. As an inducement to enter into this Agreement, and to ensure payment of the Fees, Defendants have executed and delivered to Kopelowitz Ostrow P.A. a promissory note (the “Promissory Note”) with regard to the amounts payable pursuant to paragraph 2 and reserving with its transfer agent a number of shares of common stock of Defendant Potnetwork Holdings equal to the amounts due under the Promissory Note (based on seven day average trading price of such shares immediately before execution of this Agreement). The Promissory Note is attached hereto as Exhibit A. Upon a payment default, and after any Cure Period, Kopelowitz Ostrow P.A. may request Potnetwork Holdings’ transfer agent to transfer that number of pledged shares sufficient to satisfy the default into the name of Kopelowitz Ostrow P.A. (or its designee). Kopelowitz Ostrow P.A. and its designees may, in accordance with and subject to the federal securities laws, thereafter freely trade such shares, at such price and at such volume as Kopelowitz Ostrow P.A. may determine. Kopelowitz Ostrow P.A. shall keep a written account of all such shares sold and the net amount to Kopelowitz Ostrow P.A. after commissions, taxes, costs and all other expenses (the result being the “Net Sales Proceeds”). The Net Sales Proceeds shall be applied to reduce the amount of Fees owed by Defendants. The Parties shall establish a separate written document on file with the transfer agent that will instruct them to transfer such number of reserved shares to Kopelowitz Ostrow P.A. (or its designee) upon its request after a Default and Cure Period.

8. Defendants’ Obligations are Joint and Several. Each Defendant shall be jointly and severally liable and responsible for performance of all the Defendants’ obligations under this Agreement.

9. Confidentiality of Agreement. Each party represents and agrees that, except as required by law or judicial process, it/he/she will keep the fact, terms, allegations, circumstances, and settlement amount of this Agreement completely confidential and will not disclose such confidential information to anyone except their attorneys, tax advisors, and other providing either professional, legal, or financial advice, all of whom will be bound by a confidentiality terms of this Agreement. If a third party or representative of a medium asks questions of any Party concerning the Lawsuit or this Agreement, the only permitted response is that the matter or issue has been resolved. In the event of a demand under color of law or judicial process for information protected by this confidentiality term, each Party agrees to notify counsel for the other Parties that demand in writing as soon as practicable so as to enable any Party to move for judicial protection of confidential information. Notwithstanding the foregoing, a Party is permitted by this Agreement to publish a press release or make such public filing as may be required by law indicating that the Lawsuit has been settled provided that such press release is approved by the other Parties hereto.

10. Mutual Non-Disparagement. No Party to this Agreement or any of their owners, officers, directors, or high-level employees shall directly or indirectly, publicly or privately, disparage any other Party to this Agreement.

11. Parties Bound. This Agreement is binding on and shall inure to the benefit of the Parties as well as to their heirs, successors, and assigns.

12. Agreement Voluntarily Made with Participation by Counsel. Each Party hereto acknowledges that this Agreement has been entered into voluntarily and with the assistance and advice of an attorney of each Party’s choice.

13. Interpretation. No Party shall be deemed the draftsperson of this Agreement. No ambiguity herein shall be construed against any Party hereto.

14. Entire Agreement. This Agreement constitutes a single integrated contract expressing the entire agreement of the Parties and supersedes all prior and contemporaneous oral and written agreements and discussions with respect to the subject matter, including that certain Term Sheet by and among the Parties dated July 21, 2020. There are no other agreements, written or oral, express or implied, between the Parties, concerning the subject matter of this Agreement.

15. Severability. If a court determines that any part of this Agreement is invalid or unlawful, that determination will not affect any other part of this Agreement that can be enforced by disregarding the invalid or unlawful part. The rest of this Agreement will continue in full force and effect.

16. Governing Law. This Agreement shall be construed in accordance with the laws of the State of Florida, without regard to its choice of law rules.

17. No Waiver. Failure by any Party to enforce any of its rights or remedies provided to it in this Agreement shall not be deemed a waiver of those rights.

18. No Admission. This Agreement is entered into solely for the purpose of settlement. Nothing herein may be cited or construed as, or may be used as, an admission by or against any Party of any fault, wrongdoing or liability of any kind whatsoever.

19. Amendment or Modification. This Agreement may only be amended or modified by a written instrument signed by all parties to this Agreement.

20. Execution in Counterparts. This Agreement may be executed in counterparts, each of which shall be deemed an original, but all of which together shall constitute one and the same instrument. Facsimile and pdf signatures shall be deemed originals.

21. Effective Date. The Parties deem that the Effective Date of this Agreement is the date of signing.

22. Notices. Any notice, other communication or payment required or permitted hereunder shall be in writing and shall be deemed to have been given upon delivery if personally delivered or three (3) business days after deposit if deposited in the United States mail for mailing by certified mail, postage prepaid or by electronic mail, if permitted by law, with read receipt received.

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CONFIDENTIAL RELEASE AND SETTLEMENT AGREEMENT

EXHIBIT A

(promissory note)

THE SECURITIES REPRESENTED BY THIS INSTRUMENT HAVE NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED (THE “1933 ACT”), OR UNDER THE PROVISIONS OF ANY APPLICABLE STATE SECURITIES LAWS, BUT HAVE BEEN ISSUED IN RELIANCE UPON EXEMPTIONS FROM THE REGISTRATION REQUIREMENTS OF SUCH ACTS. THE SECURITIES HAVE BEEN ACQUIRED FOR INVESTMENT ONLY AND MAY NOT BE SOLD, PLEDGED, TRANSFERRED OR ASSIGNED, EXCEPT (i) PURSUANT TO AN EFFECTIVE REGISTRATION STATEMENT UNDER THE 1933 ACT AND ANY APPLICABLE STATE SECURITIES ACTS; OR (ii) UPON THE ISSUANCE TO THE COMPANY OF AN OPINION OF COUNSEL, OR THE SUBMISSION TO THE COMPANY OF SUCH OTHER EVIDENCE, AS MAY BE SATISFACTORY TO THE COMPANY, THAT SUCH PROPOSED SALE, TRANSFER, PLEDGE OR OTHER DISPOSITION WILL NOT BE IN VIOLATION OF THE 1933 ACT AND ANY APPLICABLE STATE SECURITIES ACT.

CONVERTIBLE PROMISSORY NOTE

The Company and the Holder (as defined below) having entered into that Settlement Agreement by and among Kathryn Potter and the Company of even date herewith (the “Settlement Agreement”), agree as follows:

Potnetwork Holdings

3531 Griffin Road

Fort Lauderdale, FL 33312

Attn: Kevin Hagen ***@***

With a copy to (which shall not constitute notice)

Jonathan D. Leinwand, P.A.

18851 NE 29th Ave., Suite 1011

Aventura, FL 33180

Attn: Jonathan Leinwand < ***@***>

Kopelowitz Ostrow

Ferguson Weiselberg Gilbert

One West Las Olas Blvd., Suite 500

Fort Lauderdale, Florida 33301

Attn: Jeff Ostrow < ***@***>

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EXHIBIT A

(Transfer Agent Instruction Letter)