EXHIBIT 6.16
SETTLEMENT AGREEMENT
A dispute is currently pending and exists between the parties to the Settlement
Agreement (hereafter "Agreement").
The undersigned parties desire to fully and finally settle their differences
with respect to the Litigation on the basis set forth herein. In view of the
foregoing and in consideration of the following, it is hereby agreed as follows:
I. DEFINITIONS.
It is hereby agreed among the undersigned that the following terms wherever so
employed hereafter shall be intended to mean and include as follows:
A. "Plaintiffs": DIPPY FOODS, INC., and its individual officers,
directors and shareholders. The signature of the President of the DIPPY FOODS,
Inc., if affixed hereto, shall constitute the express representation that the
President has full corporate authority to execute the agreement by and on behalf
of the Plaintiff, and each of its individual members.
B. "Defendant": ▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇
C. "Release": agreement of each of the parties to this Agreement
("releasers") to fully and forever release and discharge the other parties to
the Agreement for those claims identified in the release provisions of this
Agreement.
D. "Claims": any and all claims, demands, liens (both general and
charging), agreements, contracts, covenants, promises, suits, any and all manner
of action or actions, cause or causes of action, obligations, controversies,
debts, attorneys' fees and costs, expenses, damages, judgments, penalties,
fines, and liabilities of whatever kind or nature in law, equity or otherwise,
whether now known or unknown, suspected or unsuspected, fixed or contingent, and
whether or not concealed or hidden, which have existed or may have existed, or
which do exist, respecting any and all claims specified in this Agreement, and
notwithstanding Section 1542 of the California Civil Code.
which provides:
"A GENERAL RELEASE DOES NOT EXTEND TO THE CLAIMS WHICH A CREDITOR DOES NOT KNOW
OR SUSPECT TO EXIST IN HIS FAVOR AT THE TIME OF EXECUTING THE RELEASE, WHICH IF
KNOWN HIM MUST HAVE MATERIALLY AFFECTED HIS SETTLEMENT WITH THE DEBTOR..."
The term "claims" as hereinabove defined shall include all such claims as are
referred to in Civil Code Section 1542 and other comparable provisions or
principles of state or federal law, or the common law. Each releaser knowingly
and voluntarily waives the provisions of Section 1542 and any other comparable
provisions or principles of the state or federal law, or the common law, and
acknowledges and agrees that this waiver is an essential material term of this
Agreement and the release provisions contained herein, as well as the definition
of "claims," and that without such waiver this Agreement would not have been
entered into. Each releaser understands and acknowledges the significance and
consequence of the release of the "claims" as defined herein and the specific
waiver of Section 1542 and all other comparable provisions or principles of
state or federal law, or the common law.
E. "Indemnity Claims": any and all claims for contribution, indemnity,
contractual, or implied by law; equitable or legal, total or partial, as and to
the extent such Contribution and indemnity claims could have been asserted by
the releasers against the parties being released in connection with the dispute.
Such claims include any and all consequential damages or other requested relief,
including costs and attorneys' fees.
F. "Other Definitions":
"CORPORATE MATERIALS" shall include all items listed in Exhibit A to this
Agreement.
G. Authority: Each PARTY warrants that the individual executing the
Agreement has been duly authorized by the PARTY, with full corporate authority
where necessary.
THE LITIGATION
The Litigation is currently pending in the Los Angeles County Superior Court for
the State of California. The parties hereto covenant and agree not to commence
or maintain further litigation with respect to claims made, or which could have
been made, in the Litigation, except as specifically reserved in Section IV,
below.
III. RELEASE AGREEMENT
The parties hereto hereby and forever release all claims, including indemnity
claims, against each other and their agents, employees, attorneys, and
reinsures, including, but not limited to, any and all causes of action in law
and equity, claims, suits, debts, liens, indemnities, obligations, promises,
demands, liabilities, damages, losses, costs, or expenses of any kind
whatsoever, known or unknown, fixed or contingent, which the parties may have,
or may hereafter acquire, against each other, by reason of their alleged action
or inactions in connection with any claims or defenses made, or those that are
factually related and which could have been made, involving the
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subject matter of the Litigation.
IV. CONSIDERATION
In consideration of the foregoing, defendants agree to the following:
A. Return of the Corporate Materials not later than midnight February
1, 1999, as identified in Exhibit A hereto, and incorporated by this reference
as though fully set forth. In exchange, payment of the sum of $3940 as provided
below to Defendant by Plaintiff. Simultaneously, this agreement shall be signed
and notarized by Defendant, and Plaintiff shall have the signed original signed
and notarized, and an executed copy returned to Defendant, within 48 hours of
Defendant's signing.
B. Enabling and assisting, insofar as possible, such additional steps
in furtherance of settlement of this matter, by Defendant's full cooperation and
assistance, in the merger of Dippy Foods, Inc. with any other entity deemed by
the Board of Directors to be appropriate, including any pending or contemplated
mergers. Defendant shall not engage in any conduct detrimental to the
Plaintiff's business ventures or efforts, and shall not discuss, without prior
consent of the Board of Directors of Plaintiff, in writing, the business of the
Plaintiff with any shareholder or officer or director.
C. Resignation by Defendant from any and all directorships in Dippy
Foods, Inc., in Dippy Foods, Inc., of Nevada, or any other corporate entity
related to Dippy Foods, Inc. Defendant
D. The parties agree that this is a confidential settlement and that
the terms and conditions of the settlement are not to be disclosed except as may
be ordered by a court of competent jurisdiction upon notice and an opportunity
to be heard. The parties expressly agree to instruct their representatives,
attorneys, agents, employees, or associates who may be informed of this
agreement or its terms for purposes of evaluating the agreement, that they are
bound by this confidentiality agreement. Because the parties are not able to
accurately assess the damage which the breach of this confidentiality agreement
may cause, the parties agree that liquidated damages, as damages and not as
penalty, shall be assessed for each breach of this confidentiality clause in the
sum of $25,000, and shall be assessed against the party breaching the agreement,
whether directly or through an agent.
Any assessment of liquidated damages against defendant for breach of
any provision herein shall be paid, at Plaintiff's sole discretion, either first
from any remaining unissued shares due Defendant under this agreement or from
any cash disbursements due Defendant under this agreement, and any remaining sum
owing thereafter shall be collected directly from Defendant.
E. Defendant agrees that former right, if any, to claim title to any
shares in
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Dippy Foods, Inc., a California Corporation, is relinquished and waived as part
of this agreement, Dippy Foods, Inc., a California Corporation, is directed by
Defendant to effect this waiver and to remove Defendant's name as a shareholder
in Dippy Foods, Inc., immediately.
F. Dippy Foods, Inc., of Nevada shall cause to be issued, upon
execution of this agreement, 400,000 shares of a class of shares in Dippy Foods,
Inc. Of Nevada, of a non-voting common stock, with par value equivalent to the
value of Dippy Foods, Inc. Of Nevada's common stock, to Defendant in his
individual name. If such class of shares does not presently exist, the parties
consent to create such a class of shares for the purpose of effecting this
agreement. The issuance of shares and delivery of same to Defendant shall be
performed annually on the anniversary date of this document, as follows:
100,000 shares upon signing of this agreement, or within such
reasonable time as required for issuance of said shares;
100,000 shares on each of the next three anniversaries of the signing
of this agreement, for a total of 400,000 shares.
The first 100,000 shares so issued shall not be tradable during the
first twelve months following the signing of this agreement by all parties.
Thereafter, the shares issued to Defendant shall be unrestricted for trading
purposes, except that Plaintiff shall have a right of first refusal for any
trading of such shares so issued to Defendant. The right of first refusal shall
be stated on the face of the shares so issued as follows: "Subject to Right of
First Refusal by Issuing Corporation" and notice of an intended transfer shall
be given in writing by Defendant to Plaintiff and shall remain in effect for the
entire next business day following issuance of the notice of first right of
refusal.
G. Plaintiff shall pay to defendant, as consideration for this
agreement, the sum of $96,000, as wages, less necessary amounts for Federal and
State withholding and related deductions, and shall issue to Defendant the
appropriate W-2 form or 1999 Form for tax years in which payments are or were
made to Defendant by Plaintiff. The total net sum to be paid to Defendant shall
be paid in twenty-four equal installments monthly, for two years, beginning with
the first day of the month after this document is signed by all parties. The
unpaid balance of the $96,000 payment shall accrue interest at the simple
interest rate of 5% per annum, which interest shall be added to the final (24th)
payment of installment payments. In the event any installment payment is not
paid within five (5) days after its due date, it shall be deemed "late" and a
five per cent late penalty will be added to the then due amount for that
payment. If payment of any two consecutive monthly payments is late, the
Defendant may elect to accelerate the remaining balance owing and render the
remaining payments all due and payable within thirty days.
H. Defendant agrees not to compete, or to engage in a business which
directly competes with or indirectly competes with, Dippy Foods, Inc., or Dippy
Foods, Inc. Of Nevada, for a period of four years from the date of this
agreement. Defendant waives the provisions of the Business and Professions Code
relating to covenants not to compete, and hereby acknowledges that this
agreement is in exchange for the transfer of all or substantially all of his
interest in Dippy Foods, Inc. Defendant further expressly acknowledges that any
and all
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information he obtained from his contact with Dippy Foods, Inc., is and at all
times was confidential trade secret information and the sole property of Dippy
Foods, Inc., and must be kept confidential and not used by the Defendant in any
manner except as authorized by Plaintiff in writing.
I. Plaintiff shall pay corporate expenses incurred by Defendant through
December 3, 1999. The total amount of said expenses is claimed by Defendant to
be $3,940.000, and includes the telephone ▇▇▇▇ for the corporation and other
unpaid corporate expenses. Defendant shall submit suitable proof of such
expenses, in the form of invoices, receipts, or bills, to support this charge.
J. Defendant shall execute all necessary documents to effect a change
of corporate address from the present PO Box to such new address as may be
selected by Plaintiff, and shall transfer the corporate telephone number into
the corporation's name.
The implementation of such additional steps in furtherance of this
settlement shall be confidential, and shall be deemed to be communications in
furtherance of settlement, and shall not be used as or admissible as evidence in
any proceeding for any purpose, and shall be kept in confidence by all parties
and their members, except as required by law or as ordered by a court of
competent jurisdiction after ten days' written notice and an opportunity to be
heard.
K. Time is of the essence in this agreement, and this agreement shall
be effective only if the delivery of corporate materials contemplated by EXHIBIT
A hereto, and the execution of this agreement, occurs on or before midnight on
February 1, 1999.
4. Defendant and plaintiffs further agree as follows:
A. Plaintiffs shall dismiss the complaint filed in the currently
pending litigation, Dippy Foods, Inc., A California Corporation, ▇. ▇▇▇▇▇▇▇▇▇
Diamond, et al, CASE NUMBER: NC 024781 with prejudice, upon receipt of the
executed settlement agreement.
B. Liquidated damages: The parties agree that damages for breach of
this agreement, and its confidentiality provisions, would be difficult to
assess, and on that basis stipulate that any breach of this agreement shall
result in liquidated damages in the sum of $25,000 for each breach by each party
or member of a party.
Any and all claims or controversy that may be attributed to the
agreement, including breach of agreement, will be settled by arbitration
according with established rules utilizing the American Arbitration Association,
and then judgment may be entered into a court of law.
V. OTHER PROVISIONS
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A. In the event that litigation becomes necessary to enforce all or any
part of this agreement, or in the event of breach of any portion of this
agreement, the prevailing parties shall be entitled to recover their attorneys'
fees, expenses, and costs of suit actually incurred. According to its fair
meaning and not strictly for or against any party.
B. Each of the parties hereto denies, and nothing herein shall be
deemed or construed to be an admission or concession of, any liability or fault
in respect to any of the allegations made, or which could have been made by or
against any of the parties to this dispute for any purposes. Accordingly,
nothing contained in this Agreement or the obligations hereunder shall be used
or be admissible in any pending or subsequent actions between or among the
parties.
C. This Agreement shall be governed by the laws of the State of
California.
D. Each of the parties hereto shall bear their own attorneys' fees,
costs, and expenses, except as otherwise provided in this Agreement.
E. Each party hereto agrees to execute such further papers or documents
as shall be necessary or proper in order to fulfill the terms and conditions of
the Agreement.
F. Each of the parties to the Agreement warrants that it has carefully
read and understood the terms and conditions of this Agreement, and that it has
not relied upon the representations or advice of any other party, or any
attorney not its own. This Agreement, and the terms and conditions thereof, were
determined in arms-length negotiations by the parties to this Agreement and
their counsel. It has been jointly negotiated and drafted. The language shall be
construed as a whole according to its fair meaning and not strictly for or
against any party.
G. In the event any portion of this agreement is deemed to be
unenforceable, the remainder of the agreement shall be read and shall remain
fully in force as though the unenforceable portion did not exist, and the
remaining portions shall survive and remain in full force and effect.
DATED: February 1, 1999
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PRESIDENT, Dippy Foods, Inc., ▇▇▇▇ ▇▇▇▇▇▇▇▇▇
a California Corporation ------------------------------
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Long Beach 90815
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EXHIBIT A TO SETTLEMENT AGREEMENT
THE FOLLOWING MATERIALS ARE TO BE PICKED UP ON OR BEFORE Midnight February 1,
1999, BY THE DESIGNATED REPRESENTATIVE OF DIPPY FOODS, INC., at ▇▇▇▇ ▇▇▇▇ ▇▇▇▇▇
▇▇▇▇▇▇, ▇▇▇▇ ▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇.
1. Two "Chippy" and two "Sassy" characters costumes;
2. KD Containers/▇▇▇▇ and Blue, collapsible;
3. Posters-Nachos & Cherry/Banners and show materials;
4. Marketing materials: a box of purple flyers and boxes of book
markers;
5. Client sale history list;
6. All business documents relating to Dippy Foods, Inc./invoices,
correspondence, records, files, etc.. Approximately 3 file boxes:
7. Disk (Provided by Plaintiff) Copy of all files related to Dippy
Foods, Inc.
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