SETTLEMENT AGREEMENT
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Exhibit
10.2
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This
Settlement Agreement ("AGREEMENT") is made and entered into this 22nd day of
May, 2009, by and among Peace Mountain Natural Beverages Corp. ("PEACE
MOUNTAIN"), a Massachusetts corporation with a business address of X.X. Xxx
0000, Xxxxxxxxxxx, Xxxxxxxxxxxxx 00000, Xxxx Xxxxx Xxxxx, an individual with an
address at 00 Xxxxxx Xxxxx, Xxxxxxxxxx, Xxxxxxxxxxxxx 00000, and Skinny
Nutritional Corporation ("SNC"), a Nevada Corporation with a principal place of
business at 0 Xxxx Xxxxx Xxxx, Xxxxx 000, Xxxx Xxxxxx, Xxxxxxxxxxxx 00000
(collectively, “the parties”).
WITNESSETH
WHEREAS,
PEACE MOUNTAIN and SNC have each developed proprietary and trade secret
information relating to the design, development, and manufacture of beverage
products sold under, among other designations, Skinny Water, Diet Water, Skinny
Tea, Skinny Juice, Skinny Shake, and the “Skinny” brand
(collectively, “SKINNY PRODUCTS”);
WHEREAS,
the parties entered into a Definitive License and Distribution Agreement on
August 1, 2004, which was amended on October 1, 2006 (collectively, the “DLD
AGREEMENT”), wherein PEACE MOUNTAIN granted SNC rights to manufacture,
distribute, and sell SKINNY PRODUCTS, on an exclusive basis for a defined
period, using the intellectual property assets associated with the SKINNY
PRODUCTS, including propriety and trade secret information, good-will,
copyrights, Internet domain names, trademarks, and trade names (collectively the
“IP ASSETS”);
WHEREAS,
SNC, pursuant to the DLD AGREEMENT, has spent money developing a brand in the
market for the SKINNY PRODUCTS, including the development of product line
extensions of SKINNY PRODUCTS, and has created marketing and distribution
channels for the SKINNY PRODUCTS and product line extensions;
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WHEREAS,
a dispute has arisen between the parties and such dispute is being arbitrated,
pursuant to Section 13.2 of the DLD AGREEMENT, according to the rules of the
American Arbitration Association under the caption “Peace Mountain
Natural Beverages Corp. v. Skinny Nutritional Corporation, AAA Case No.
11133E0067208” (“the pending arbitration”); and
WHEREAS,
the parties wish to settle the pending arbitration.
NOW,
THEREFORE, for and in consideration of the foregoing and of the mutual
representations, promises, terms, and conditions contained in this AGREEMENT,
the parties agree as follows:
1. Dismissal of the Pending
Arbitration. Within five (5) days of the Closing (as such term
is defined in the INTELLECTUAL PROPERTY ASSETS PURCHASE AGREEMENT), the parties
shall direct their respective counsel to execute and file with the American
Arbitration Association a Stipulated Order of Dismissal With Prejudice in the
form attached as Exhibit A. Each of the parties shall bear its own
costs and neither shall seek reimbursement from the other of any costs or
expenses incurred in connection with the pending arbitration.
2. Purchase of IP
ASSETS. Upon execution and delivery of this
AGREEMENT, the parties shall concurrently execute and deliver that
certain INTELLECTUAL PROPERTY ASSETS PURCHASE AGREEMENT, pursuant to which SNC
will purchase the IP ASSETS of PEACE MOUNTAIN under the terms set forth in the
INTELLECTUAL PROPERTY ASSETS PURCHASE AGREEMENT. The INTELLECTUAL
PROPERTY ASSETS PURCHASE AGREEMENT is attached as Exhibit B. Upon the
Closing of the transactions contemplated under the INTELLECTUAL PROPERTY ASSETS
PURCHASE AGREEMENT, the DLD AGREEMENT shall be terminated and shall be of no
further force or effect, and neither party shall have any further liability or
obligation to the other party thereunder, whether or not amounts for payment
thereunder have accrued and/or been paid.
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3. Consulting
Agreement. Upon execution and delivery of this AGREEMENT, SNC
and Xxxx Xxxxx Xxxxx shall concurrently execute and deliver a two-year
consulting agreement under the terms set forth in the CONSULTING AGREEMENT,
which is attached as Exhibit C. The CONSULTING AGREEMENT shall
commence on the first day of the month following the execution of this
AGREEMENT.
4. Mutual
Release. Effective as of the Closing of the transactions
contemplated under the INTELLECTUAL PROPERTY ASSETS PURCHASE AGREEMENT, each of
the parties, on behalf of itself and on behalf of its representatives, heirs,
executors, attorneys, agents, partners, officers, shareholders, directors,
employees, subsidiaries, affiliates, divisions, successors, and assigns, hereby
forever releases and discharges the other parties and the representatives,
heirs, executors, attorneys, agents, partners, officers, shareholders,
directors, employees, subsidiaries, affiliates, divisions, successors, and
assigns of the other parties, of and from any and all manner of action, claim,
or cause of action, in law or in equity, suits, debts, liens, contracts,
agreements, promises, liabilities, demands, losses, damages, costs or expenses
which they may have against each other as of the Closing of the transactions
contemplated under the INTELLECTUAL PROPERTY ASSETS PURCHASE AGREEMENT, and
which arise out of or relate directly to the DLD AGREEMENT or the pending
arbitration settled by this AGREEMENT.
5. Representation by
Counsel. Each of the parties acknowledges that it has been
represented by independent counsel of its own choice throughout all negotiations
which preceded the execution of this AGREEMENT.
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6. Representations as to
Authority and Enforceability. Each party represents and
warrants to the other parties that it has the full right, power, and authority
to execute, deliver, and perform this AGREEMENT, the INTELLECTUAL PROPERTY
ASSETS PURCHASE AGREEMENT, and the CONSULTING AGREEMENT, and that it has not
sold, assigned, transferred, conveyed, or otherwise disposed of any claim or
demand, or any portion of or interest in any claim or demand, relating to any
matter covered by this AGREEMENT. All actions on the part of each
party necessary to approve the transactions as contemplated by this AGREEMENT,
the INTELLECTUAL PROPERTY ASSETS PURCHASE AGREEMENT, and the CONSULTING
AGREEMENT have been duly taken as required by applicable law and any applicable
organizational documents and other agreements. This AGREEMENT, the
INTELLECTUAL PROPERTY ASSETS PURCHASE AGREEMENT, and the CONSULTING AGREEMENT
have been, and the other agreements, documents, and instruments required to be
delivered by any party in accordance with the provisions of this AGREEMENT, the
INTELLECTUAL PROPERTY ASSETS PURCHASE AGREEMENT, and the CONSULTING AGREEMENT
will be, duly executed and delivered by such party and will constitute, or will
constitute when delivered, the valid and binding agreement and obligations of
such party enforceable against such party in accordance with their respective
terms.
7. Successors and
Assigns. This AGREEMENT may not be assigned by any party
without the prior written consent of the other parties except to a successor of
substantially the entire business to which this Agreement
relates. Subject to the foregoing, this AGREEMENT shall extend to,
inure to the benefit of, and be binding upon the parties and their respective
directors, officers, partners, proprietors, attorneys, agents, servants,
employees, representatives, affiliates, subsidiaries, shareholders,
predecessors, successors, heirs and permitted assigns.
8. Interpretation.
a. Severability. In
the event that any provision of this AGREEMENT or the application of any
provision of this AGREEMENT is held by a tribunal of competent jurisdiction to
be contrary to law, the remaining provisions of this AGREEMENT shall remain in
full force and effect and this AGREEMENT shall be interpreted as if such invalid
provisions were omitted.
b. Headings. The
paragraph headings contained in this AGREEMENT are provided for convenience only
and shall not be considered in the interpretation and construction of this
AGREEMENT.
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9. Waiver. The
failure of any party at any time or times to demand strict performance by the
other party(ies) of any of the terms, covenants, or conditions set forth in this
AGREEMENT shall not be construed as a continuing waiver or relinquishment
thereof and each may at any time demand strict and complete performance by the
other of said terms, covenants, and conditions.
10. Confidentiality. Each
party shall maintain in confidence and not disclose the terms and conditions of
this AGREEMENT except: (a) as may be required by an order of a court of
competent jurisdiction; or (b) during the course of arbitration so long as the
disclosure of such terms and conditions are restricted in the same manner as the
confidential information of the arbitrating party.
11. Future Dispute
Resolution.
a. The
parties agree to cooperate to effectuate the letter and spirit of this
AGREEMENT, the INTELLECTUAL PROPERTY ASSETS PURCHASE AGREEMENT, and the
CONSULTING AGREEMENT. The parties agree that they shall attempt in
good faith to resolve any questions, issues, or disputes arising out of or
relating to this AGREEMENT, the INTELLECTUAL PROPERTY ASSETS PURCHASE AGREEMENT,
and the CONSULTING AGREEMENT, which may occur in the future, promptly by
negotiations.
b. Any
party may give the other party(ies) written notice of any controversy not
resolved in the normal course of business. Within twenty (20) days
after delivery of that notice, the parties shall meet at a mutually acceptable
time and place, and thereafter as often as they reasonably deem necessary, to
exchange relevant information and to attempt to resolve the
dispute. If the matter has not been resolved within sixty (60) days
of the disputing party’s notice, or if the parties fail to meet within twenty
(20) days, a party may initiate arbitration of the controversy as provided
below. If a negotiator intends to be accompanied at a meeting by an
attorney, the other negotiator(s) shall be given at least three working days’
notice of such intention and may also be accompanied by an
attorney. All negotiations pursuant to this clause are confidential
and shall be treated as compromise and settlement negotiations for purposes of
the Federal Rules of Evidence and state rules of evidence.
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c. If
the controversy has not been resolved by negotiation as provided above, the
parties shall settle the controversy by arbitration before the American
Arbitration Association in accordance with its Commercial Rules as then in
effect. If the parties cannot within fifteen (15) calendar days after such
initiation agree upon the selection of a single arbitrator, then they (PEACE
MOUNTAIN and XXXX XXXXX XXXXX on the one hand, and SNC on the other) shall each
select an arbitrator within thirty (30) days thereafter and the two arbitrators
so selected shall select a third arbitrator, and such arbitration shall be
resolved by a majority vote of the panel of those three arbitrators. The
decision of the arbitrator(s) shall be binding on the parties and may be entered
by any party in any court of competent jurisdiction. The prevailing party in the
arbitration shall be entitled to have its reasonable attorney's fees incurred in
connection with the arbitration included in the arbitrator(s)' award. The
determination of which party is the prevailing party in any arbitration shall be
at the discretion of the arbitrator(s).
d. Any
arbitration shall be venued in Springfield, Massachusetts.
12. Entire
Agreement. This AGREEMENT (including the agreements as shown
in the Exhibits) constitutes the entire agreement between the parties with
respect to the subject matter hereof and supersedes all prior negotiations and
agreements, whether written or oral, relating to such subject
matter. This AGREEMENT may not be altered, amended, modified, or
otherwise changed in any respect except by an instrument in writing duly
executed by authorized representatives of each of the parties.
13. Governing
Law. This AGREEMENT shall be governed by and construed in
accordance with the laws of the Commonwealth of Massachusetts (without regard to
its conflicts of laws principles).
IN
WITNESS WHEREOF, the parties duly execute and deliver this AGREEMENT as of the
date first written above.
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PEACE
MOUNTAIN NATURAL
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BEVERAGES
CORP.
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By:
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/s/ Xxxx Xxxxx Xxxxx
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Name:
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Xxxx Xxxxx Xxxxx
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Title:
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President
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XXXX
XXXXX XXXXX
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/s/ Xxxx Xxxxx Xxxxx
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SKINNY
NUTRITIONAL
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CORPORATION
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By:
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/s/ Xxxxxx X. Xxxxxx
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Name:
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Xxxxxx X. Xxxxxx
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Title:
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Pres. and
CEO
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EXHIBIT
A
DOCKET
NO. 11133E0067208
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PEACE
MOUNTAIN NATURAL
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American
Arbitration Association
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BEVERAGES
CORPORATION,
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Plaintiff,
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v.
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SKINNY
NUTRITIONAL
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CORPORATION
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Defendant.
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STIPULATED ORDER OF
DISMISSAL WITH PREJUDICE
BE IT REMEMBERED on the day written
below, came on to be considered the above entitled and numbered cause, and came
the parties, individually and by and through counsel of record, and announced to
the American Arbitration Association that all matters in controversy and dispute
had been compromised and settled, and that this case should be dismissed with
prejudice and the taxable costs be taxed against the party incurring
same.
ACCORDINGLY, IT IS ORDERED, ADJUDGED,
AND DECREED that this case be, and is hereby in its entirety, dismissed with
prejudice as to its re-filing and if any costs are outstanding, the same are
taxed against the party incurring same, for which let execution issue if not
timely paid.
All relief not specifically granted or
denied herein is denied.
SIGNED this _________ day of
_____________________, 2009.
_______________________________
PRESIDING ARBITRATOR
AGREED AS
TO FORM AND CONTENT:
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Dated: ____________________,
2009
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PEACE
MOUNTAIN NATURAL
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BEVERAGE
CORPORATION
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By:
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Title:
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Dated: ____________________,
2009
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SKINNY
NUTRITIONAL
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CORPORATION
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By:
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Title:
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EXHIBIT
B
Form
of IP Assets Purchase Agreement
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of 11
EXHIBIT
C
Form
of Consulting Agreement
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of 11
