EXHIBIT 6.22
EMPLOYMENT AGREEMENT
This EMPLOYMENT AGREEMENT ("Agreement"), which is dated May 2,
2001 (the "Effective Date"), is made by and between DIPPY FOODS, INC., a Nevada
corporation, and its wholly owned subsidiary, DIPPY FOODS, INC., a California
corporation, located at 00000 Xxxxxxxx Xxx Xxxx X, Xxxxxxx, Xxxxxxxxxx 00000 and
hereinafter collectively referred to as "Company", and XXXXXX X. XXXXX, whose
address is 00 Xxxxxxxx, Xxxxxx, Xxxxxxxxxx 00000, hereinafter referred to as
"Executive", based upon the following:
RECITALS
WHEREAS, Company wishes to retain the services of Executive,
and Executive wishes to render services to Company, as its Chief Financial
Officer;
WHEREAS, Company and Executive wish to set forth in this
Agreement the duties and responsibilities that Executive has agreed to undertake
on behalf of Company;
WHEREAS, Company and Executive intend that this Agreement will
supersede and replace any and all other employment agreements or arrangements
for employment entered into by and between Company and Executive, and that upon
execution of this Agreement, any such employment agreements or arrangements
shall have no further force or effect.
THEREFORE, in consideration of the foregoing and of the mutual
promises contained in this Agreement, Company and Executive (who are sometimes
individually referred to as a "party" and collectively referred to as the
"parties") agree as follows:
AGREEMENT
1. SPECIFIED PERIOD.
Company hereby employs Executive pursuant to the terms of this
Agreement and Executive hereby accepts employment with Company pursuant to the
terms of this Agreement for the period beginning on May 2, 2001 and ending on
May 1, 2005.
Subject to paragraphs 8 and 9, this Agreement will
automatically be renewed for successive periods of one year after May 1, 2005
unless either party gives notice to the other, at least sixty (60) days prior to
the expiration of the specified period, that the party desires to renegotiate
this Agreement. Thereafter, the terms and conditions of this Agreement shall
apply until the parties reach an agreement modifying them. If an agreement is
not reduced to writing and executed by the parties within sixty (60) days of the
end of the specified period, then this Agreement shall continue on a month to
month basis until terminated by written notice given by either party at least
thirty (30) days prior to the end of any monthly period.
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2. GENERAL DUTIES.
Executive shall report to Company's Board of Directors. In his
capacity as Chief Financial Officer, Executive shall be primarily responsible
for preparation of Company's financial planning and reporting. Executive shall
do and perform all services, acts, or things necessary or advisable to discharge
his duties under this Agreement and such other duties as are commonly performed
by an employee of his rank in a publicly traded corporation. Furthermore,
Executive agrees to cooperate with and work to the best of his ability with
Company's management team, which includes the Board of Directors and the
officers and other employees, to continually improve Company's reputation in its
industry for quality products and performance.
3. COMPENSATION.
(A) ANNUAL SALARY. During the term of this Agreement, Company
shall pay to Executive an annual base salary in the amount of thirty-six
thousand dollars ($36,000) (the "Annual Salary"). The Annual Salary shall be
subject to any tax withholdings and/or employee deductions that are applicable.
The Annual Salary shall be paid to Executive in equal installments in accordance
with the periodic payroll practices of Company for executive employees. If
Company is unable to pay a portion or all of the Annual Salary in cash, Company
may pay such portion or all of the Annual Salary using Company's common stock.
The number of shares of common stock to be issued to Executive shall be
determined on the last day of each fiscal quarter, and shall be calculated using
the average of the closing bid and ask prices of the common stock on that date.
If no shares of Company's common stock trade on that date, then Company shall
use the average of the closing bid and ask prices of the common stock on the
last day immediately prior to the last day of the fiscal quarter during which
the common stock was traded. If it is available, Company will use registered
stock to make this payment. If registered stock is not available, Company may
use restricted stock, subject to an appropriate discount in value negotiated in
good faith between Executive and Company.
(B) ANNUAL BONUS. Executive and the Board of Directors shall
meet immediately following execution of this Agreement and, thereafter, at the
end of each fiscal year to establish performance standards and goals to be met
by Executive during the next fiscal year, which standards and goals shall be
based upon earnings, cash flows, EBITDA and other objectives that are mutually
agreed to by Executive and the Board of Directors. Company shall pay to
Executive, no later than thirty (30) days after the completion of the fiscal
year, a cash bonus (the "Annual Bonus") in an amount to be recommended by the
Board of Directors, for each year in which the performance standards and goals
are met or exceeded by Executive. Nothing in this paragraph shall prevent
Executive and the Board of Directors from mutually agreeing to an alternative
computation of the Annual Bonus, which may be implemented and paid to Executive
in place of the Annual Bonus described herein. The Annual Bonus shall be subject
to any applicable tax withholdings and/or employee deductions.
(C) COST OF LIVING ADJUSTMENT. Commencing as of May 1, 2002,
and on each May 1st thereafter, the then effective Annual Salary shall be
increased (but not decreased) by an amount: (i) which shall reflect the
increase, if any, in the cost of living during the previous 12 months by adding
to the Annual Salary an amount computed by multiplying the Annual Salary by the
percentage by which the level of the Consumer Price Index for the ____________,
California
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Metropolitan Area, as reported on April 1st of the new year by the
Bureau of Labor Statistics of the United States Department of Labor has
increased over its level as of April 1st of the prior year; and (ii) which will
maintain Executive's compensation at a level consistent with the compensation
paid to executive officers holding similar positions in the food service
industry. Additionally, the Board shall periodically review Executive's Annual
Salary to determine whether to otherwise increase Executive's compensation,
without any obligation by the Board to authorize such increase.
(D) PARTICIPATION IN EMPLOYEE BENEFIT PLANS. Executive shall
have the same rights, privileges, benefits and opportunities to participate in
any of Company's employee benefit plans which may now or hereafter be in effect
on a general basis for executive officers or employees. Company may delete
benefits and otherwise amend and change the type and quantity of benefits it
provides in its sole discretion. In the event Executive receives payments from a
disability plan maintained by Company, Company shall have the right to offset
such payments against the Annual Salary otherwise payable to Executive during
the period for which payments are made by such disability plan. Within ninety
(90) days from the Effective Date, Company must purchase directors and officers
liability insurance and include Executive as an insured thereunder.
(E) OPTIONS TO PURCHASE STOCK. Subject to the vesting
conditions set forth below, Executive shall be granted an option to purchase
five hundred thousand (500,000) shares of the common stock of Dippy Foods, Inc.,
a Nevada corporation. Stock issued pursuant to the exercise of the option shall
be restricted stock, although Company reserves the right, in its discretion, to
register the stock and to thereafter issue registered stock. The exercise price
for each share of common stock covered by the option shall be fifteen cents
($0.15), the fair market value on the Effective Date. The right to exercise the
option shall vest in equal increments of one hundred thousand (100,000) shares,
beginning on the Effective Date and continuing for a period of four (4) years.
The option shall expire ten (10) years from the Effective Date.
(F) EQUITY CONSIDERATION. As an inducement to enter into this
Agreement, Company shall issue to Executive two hundred fifty thousand (250,000)
shares of its common stock.
(G) PAYMENT OF TAX RELATED TO THE RECEIPT OF NON-CASH
COMPENSATION. If Executive incurs income tax or any other tax, including payroll
tax, as a result of the receipt of non-cash compensation during any fiscal year,
Company shall pay to Executive an amount equal to any and all such tax.
4. REIMBURSEMENT OF BUSINESS EXPENSES.
Company shall promptly reimburse Executive for all reasonable
business expenses incurred by Executive in connection with the business of
Company. However, each such expenditure shall be reimbursable only if Executive
furnishes to Company adequate records and other documentary evidence required by
federal and state statutes and regulations issued by the appropriate taxing
authorities for the substantiation of each such expenditure as an income tax
deduction.
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5. ANNUAL VACATION.
Executive shall be entitled to four (4) weeks vacation time
each year without loss of compensation.
6. INDEMNIFICATION OF LOSSES.
So long as Executive's actions were taken in good faith and in
furtherance of Company's business and within the scope of Executive's duties and
authority, Company shall indemnify and hold Executive harmless to the full
extent of the law from any and all claims, losses and expenses sustained by
Executive as a result of any action taken by him to discharge his duties under
this Agreement, and Company shall defend Executive, at Company's expense, in
connection with any and all claims by stockholders or third parties which are
based upon actions taken by Executive to discharge his duties under this
Agreement.
7. PERSONAL CONDUCT.
Executive agrees promptly and faithfully to comply with all
present and future policies, requirements, directions, requests and rules and
regulations of Company in connection with Company's business. Executive further
agrees that he will not at any time commit any act or become involved in any
situation or occurrence tending to bring Company into public scandal, ridicule
or which will reflect unfavorably on the reputation of Company.
8. TERMINATION BY COMPANY FOR CAUSE.
Company reserves the right to declare Executive in default of
this Agreement if Executive willfully breaches or habitually neglects the duties
which he is required to perform under the terms of this Agreement, or if
Executive commits such acts of dishonesty, fraud, misrepresentation, gross
negligence or willful misconduct as would prevent the effective performance of
his duties or which results in material harm to Company or its business. Company
may terminate this Agreement for cause by giving ten (10) days written notice of
termination to Executive. Except as otherwise set forth in this paragraph 8,
upon such termination the obligations of Executive and Company under this
Agreement shall immediately cease. Such termination shall be without prejudice
to any other remedy to which Company may be entitled either at law, in equity,
or under this Agreement. If Executive's employment is terminated pursuant to
this paragraph, Company shall pay to Executive (i) Executive's accrued but
unpaid Annual Salary and vacation pay through the effective date of the
termination; (ii) Executive's accrued but unpaid Annual Bonus, if any; and (iii)
business expenses incurred prior to the effective date of termination. Executive
shall not be entitled to continue to participate in any employee benefit plans
except to the extent provided in such plans for terminated participants, or as
may be required by applicable law.
9. TERMINATION BY COMPANY OR EXECUTIVE WITHOUT CAUSE.
(A) DEATH. EXECUTIVE'S EMPLOYMENT SHALL TERMINATE UPON THE
DEATH OF EXECUTIVE. Upon such termination, the obligations of Executive and
Company under this Agreement shall immediately cease. Except as otherwise set
forth in paragraph 10 below, upon such termination the obligations of Executive
and Company under this Agreement shall immediately cease.
(B) DISABILITY. Company reserves the right to terminate
Executive's employment upon ten (10) days written notice if, for a period of
sixty (60) days, Executive is prevented from discharging his duties under this
Agreement due to any physical or mental disability. Except as
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otherwise set forth in paragraph 10 below, upon such termination the obligations
of Executive and Company under this Agreement shall immediately cease.
(C) ELECTION BY EXECUTIVE. Executive's employment may be
terminated at any time by Executive upon not less than thirty (30) days written
notice by Executive to the Board. Except as otherwise set forth in this
sub-paragraph (c), upon such termination the obligations of Executive and
Company under this Agreement shall immediately cease. In the event of a
termination pursuant to this paragraph, Company shall pay to Executive (i)
Executive's accrued but unpaid Annual Salary and vacation pay through the
effective date of the termination; (ii) Executive's accrued but unpaid Annual
Bonus, if any; and (iii) business expenses incurred prior to the effective date
of termination. Executive shall not be entitled to continue to participate in
any employee benefit plans except to the extent provided in such plans for
terminated participants, or as may be required by applicable law.
(D) ELECTION BY COMPANY. Company may terminate Executive's
employment upon not less than ninety (90) days written notice by Company to
Executive. With the exception of the covenants included in paragraph 11 below,
upon such termination the obligations of Executive and Company under this
Agreement shall immediately cease.
(E) TERMINATION BY EXECUTIVE FOR GOOD REASON. Executive may
terminate this Agreement immediately based on his reasonable determination that
one of the following events has occurred:
(i) Company intentionally and continually breaches or
wrongfully fails to fulfill or perform (A) its obligations, promises or
covenants under this Agreement; or (B) any warranties, obligations, promises or
covenants in any agreement (other than this Agreement) entered into between
Company and Executive, without cure, if any, as provided in such agreement;
(ii) Without the consent of Executive, Company: (A)
substantially alters or materially diminishes the position, nature, status,
prestige or responsibilities of Executive from those in effect by mutual
agreement of the parties from time-to-time; (B) assigns additional duties or
responsibilities to Executive which are wholly and clearly inconsistent with the
position, nature, status, prestige or responsibilities of Executive then in
effect; or (C) removes or fails to reappoint or re-elect Executive to
Executive's offices under this Agreement (as they may be changed or augmented
from time-to-time with the consent of Executive), unless Executive is deceased
or disabled, or such removal or failure is attributable to an event which would
constitute termination for cause;
(iii) Without the ratification of Executive, Company fails
to nominate or reappoint Executive to the Board (unless Executive is deceased or
disabled, or such removal or failure is attributable to an event which would
constitute termination for cause), or if Executive is so nominated, the
stockholders of the Company fail to re-elect Executive to the Board;
(iv) Company intentionally requires Executive to commit or
participate in any felony or other serious crime; and/or
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(v) Company engages in other conduct constituting legal
cause for termination.
With the exception of the covenants included in paragraph 11 below, upon such
termination the obligations of Executive and Company under this Agreement shall
immediately cease.
10. EFFECT OF TERMINATION ATTRIBUTABLE
TO DEATH OR DISABILITY.
In the event Executive's employment is terminated due to
Executive's death or disability, then:
(a) Company shall pay Executive's accrued but unpaid Annual
Salary and vacation time through the effective date of the termination,
provided, however, that Company shall also pay to Executive the amount of
Executive's then effective Annual Salary as set forth in paragraph 3(a);
(b) Company shall pay to the Executive an Annual Bonus which
shall be computed as the greater of the accrued but unpaid Annual Bonus, if any,
or an amount which equals the average of Executive's Annual Bonus earned during
the two (2) fiscal years prior to the termination date;
(c) Company shall reimburse Executive for any business
expenses incurred prior to the effective date of the termination;
(d) Executive (including Executive's heirs) shall be entitled
to continue to participate in any employee benefit plans except to the extent
provided in such plans for terminated participants, or as may be required by
applicable law.
11. EFFECT OF TERMINATION
ATTRIBUTABLE TO A CHANGE IN CONTROL,
A TERMINATION BY EXECUTIVE FOR GOOD REASON,
OR A TERMINATION BY COMPANY WITHOUT CAUSE.
If Executive's employment is terminated before the expiration
of the term, and such termination is attributable to (i) a Change in Control;
(ii) a termination by Executive for good reason; or (iii) Company's election to
terminate, then:
(a) Company shall pay to Executive, in a lump sum and without
discount to present value, an amount equal to the Annual Salary, as set forth in
paragraph 3(a), due to Executive for the balance of the term, but in no event
shall such payment total less than one hundred fifty thousand dollars
($150,000);
(b) Company shall pay to Executive, in a lump sum and without
discount to present value, Executive's declared but unpaid Annual Bonus, if such
Annual Bonus has been
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declared, but if not declared then Company shall pay to Executive an amount
which equals the average of Executive's Annual Bonus earned the two (2) fiscal
years prior to the termination date;
(c) At the election of Executive, Company shall (i) provide to
Executive and his spouse and dependents (if any), for a period of twelve (12)
months, medical benefits which shall be comparable to the benefits received by
Executive at the time of termination of his employment; or (ii) provide to
Executive additional compensation, payable on a monthly basis, which would
approximate the cost to Executive to obtain such comparable benefits;
(d) Company shall reimburse Executive for Executive's business
expenses incurred through the effective date of the termination;
(e) Irrespective of anything included in the agreements
memorializing them, the vesting conditions imposed on any stock options,
warrants or other rights subject to vesting shall be accelerated and shall vest
on the date of Executive's termination and Executive shall have a period of
twelve (12) months to exercise such stock options, warrants or other rights.
Executive shall not be required to mitigate the amount of any
payment made pursuant to this paragraph 11 by seeking other employment or
otherwise, and no such payment shall be offset or reduced by the amount of any
compensation or benefits provided to Executive in any subsequent employment. The
provisions of this paragraph 11 shall be in lieu of any remedy or damages to
which Executive may be entitled by reason of a breach of this Agreement by
Company, whether such remedy may be recovered at law or in equity.
For purposes of this Agreement, "Change of Control" shall
defined as any of the following transactions: (i) the sale or disposition by
Company of substantially all of its business or assets, or (ii) the acquisition
of Company's capital stock by a third party in connection with the transfer of a
controlling interest of Company's capital stock to such party, or (iii) the
merger or consolidation of Company with another corporation as part of a
transfer of a controlling interest of Company's capital stock to a third party.
A "controlling interest of Company's capital stock" shall be defined as a
transfer or acquisition by a third party of at least fifty percent (50%) of
Company's capital stock in one or a series of transactions. A "third party"
shall not include any employee benefit plan maintained by Company or any
corporation or entity in which Company holds fifty percent (50%) of more of the
voting securities.
12. MISCELLANEOUS.
(A) PREPARATION OF AGREEMENT. It is acknowledged by each party
that such party either had separate and independent advice of counsel or the
opportunity to avail itself or himself of same. In light of these facts it is
acknowledged that no party shall be construed to be solely responsible for the
drafting hereof, and therefore any ambiguity shall not be construed against any
party as the alleged draftsman of this Agreement.
(B) COOPERATION. Each party agrees, without further
consideration, to cooperate and diligently perform any further acts, deeds and
things and to execute and deliver any documents that may from time to time be
reasonably necessary or otherwise reasonably required to consummate,
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evidence, confirm and/or carry out the intent and provisions of this Agreement,
all without undue delay or expense.
(c) Interpretation.
(i) Entire Agreement/No Collateral Representations. Each
party expressly acknowledges and agrees that this Agreement, including all
exhibits attached hereto: (1) is the final, complete and exclusive statement of
the agreement of the parties with respect to the subject matter hereof; (2)
supersedes any prior or contemporaneous agreements, promises, assurances,
guarantees, representations, understandings, conduct, proposals, conditions,
commitments, acts, course of dealing, warranties, interpretations or terms of
any kind, oral or written (collectively and severally, the "Prior Agreements"),
and that any such prior agreements are of no force or effect except as expressly
set forth herein; and (3) may not be varied, supplemented or contradicted by
evidence of Prior Agreements, or by evidence of subsequent oral agreements. Any
agreement hereafter made shall be ineffective to modify, supplement or discharge
the terms of this Agreement, in whole or in part, unless such agreement is in
writing and signed by the party against whom enforcement of the modification or
supplement is sought.
(ii) Waiver. No breach of any agreement or provision
herein contained, or of any obligation under this Agreement, may be waived, nor
shall any extension of time for performance of any obligations or acts be deemed
an extension of time for performance of any other obligations or acts contained
herein, except by written instrument signed by the party to be charged or as
otherwise expressly authorized herein. No waiver of any breach of any agreement
or provision herein contained shall be deemed a waiver of any preceding or
succeeding breach thereof, or a waiver or relinquishment of any other agreement
or provision or right or power herein contained.
(iii) Remedies Cumulative. The remedies of each party
under this Agreement are cumulative and shall not exclude any other remedies to
which such party may be lawfully entitled.
(iv) Severability. If any term or provision of this
Agreement or the application thereof to any person or circumstance shall, to any
extent, be determined to be invalid, illegal or unenforceable under present or
future laws effective during the term of this Agreement, then and, in that
event: (A) the performance of the offending term or provision (but only to the
extent its application is invalid, illegal or unenforceable) shall be excused as
if it had never been incorporated into this Agreement, and, in lieu of such
excused provision, there shall be added a provision as similar in terms and
amount to such excused provision as may be possible and be legal, valid and
enforceable, and (B) the remaining part of this Agreement (including the
application of the offending term or provision to persons or circumstances other
than those as to which it is held invalid, illegal or unenforceable) shall not
be affected thereby and shall continue in full force and effect to the fullest
extent provided by law.
(v) No Third Party Beneficiary. Notwithstanding anything
else herein to the contrary, the parties specifically disavow any desire or
intention to create any third party beneficiary obligations, and specifically
declare that no person or entity, other than as set forth in this Agreement,
shall have any rights hereunder or any right of enforcement hereof.
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(vi) Headings; References; Incorporation; Gender. The
headings used in this Agreement are for convenience and reference purposes only,
and shall not be used in construing or interpreting the scope or intent of this
Agreement or any provision hereof. References to this Agreement shall include
all amendments or renewals thereof. Any exhibit referenced in this Agreement
shall be construed to be incorporated in this Agreement. As used in this
Agreement, each gender shall be deemed to include the other gender, including
neutral genders or genders appropriate for entities, if applicable, and the
singular shall be deemed to include the plural, and vice versa, as the context
requires.
(D) ENFORCEMENT.
(i) Applicable Law. This Agreement and the rights and
remedies of each party arising out of or relating to this Agreement (including,
without limitation, equitable remedies) shall be solely governed by, interpreted
under, and construed and enforced in accordance with the laws (without regard to
the conflicts of law principles thereof) of the State of California, as if this
agreement were made, and as if its obligations are to be performed, wholly
within the State of California.
(ii) Consent to Jurisdiction; Service of Process. Any
action or proceeding arising out of or relating to this Agreement shall be filed
in and heard and litigated solely before the state courts of California located
within the County of Los Angeles.
(E) NO ASSIGNMENT OF RIGHTS OR DELEGATION OF DUTIES BY
EXECUTIVE. Executive's rights and benefits under this Agreement are personal to
him and therefore (i) no such right or benefit shall be subject to voluntary or
involuntary alienation, assignment or transfer; and (ii) Executive may not
delegate his duties or obligations hereunder.
(F) NOTICES. Unless otherwise specifically provided in this
Agreement, all notices, demands, requests, consents, approvals or other
communications (collectively and severally called "Notices") required or
permitted to be given hereunder, or which are given with respect to this
Agreement, shall be in writing, and shall be given by: (A) personal delivery
(which form of Notice shall be deemed to have been given upon delivery), (B) by
telegraph or by private airborne/overnight delivery service (which forms of
Notice shall be deemed to have been given upon confirmed delivery by the
delivery agency), (C) by electronic or facsimile or telephonic transmission,
provided the receiving party has a compatible device or confirms receipt thereof
(which forms of Notice shall be deemed delivered upon confirmed transmission or
confirmation of receipt), or (D) by mailing in the United States mail by
registered or certified mail, return receipt requested, postage prepaid (which
forms of Notice shall be deemed to have been given upon the fifth {5th} business
day following the date mailed). Each party, and their respective counsel, hereby
agree that if Notice is to be given hereunder by such party's counsel, such
counsel may communicate directly with all principals, as required to comply with
the foregoing notice provisions. Notices shall be addressed to the address
hereinabove set forth in the introductory paragraph of this Agreement, or to
such other address as the receiving party shall have specified most recently by
like Notice, with a copy to the other parties hereto. Any Notice given to the
estate of a party shall be sufficient if addressed to the party as provided in
this subparagraph.
(G) COUNTERPARTS. This Agreement may be executed in
counterparts, each of which shall be deemed an original, and all of which
together shall constitute one and the same instrument, binding on all parties
hereto. Any signature page of this Agreement may be detached from any
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counterpart of this Agreement and reattached to any other counterpart of this
Agreement identical in form hereto by having attached to it one or more
additional signature pages.
(H) EXECUTION BY ALL PARTIES REQUIRED TO BE BINDING;
ELECTRONICALLY TRANSMITTED DOCUMENTS. This Agreement shall not be construed to
be an offer and shall have no force and effect until this Agreement is fully
executed by all parties hereto. If a copy or counterpart of this Agreement is
originally executed and such copy or counterpart is thereafter transmitted
electronically by facsimile or similar device, such facsimile document shall for
all purposes be treated as if manually signed by the party whose facsimile
signature appears.
IN WITNESS WHEREOF, the parties have executed this Agreement.
COMPANY:
Dippy Foods, Inc.
a Nevada corporation
By: /s/ Xxx Xxxxxxxxx
----------------------------------
Dippy Foods, Inc.
a California corporation
By: /s/ Xxxx Xxxxxxxxx
----------------------------------
EXECUTIVE:
/s/ Xxxxxx X. Xxxxx
--------------------------------------
Xxxxxx X. Xxxxx
Approved as to content by the Board of Directors of Dippy Foods, Inc.
a Nevada corporation.
/s/ Xxx Xxxxxxxxx
--------------------------------------
Approved as to content by the Board of Directors of Dippy Foods, Inc.
a California corporation.
/s/ Xxxx Xxxxxxxxx
--------------------------------------
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