MUTUAL SETTLEMENT AGREEMENT
AND RELEASE
RE: CASE NO.
06CC03923
ORANGE COUNTY SUPERIOR
COURT
This Mutual
Settlement Agreement and Release (the “ Agreement
”) is entered into by and between MARINKO VEKOVIC an
individual (“Vekovic”) and COBALIS CORPORATION, a
Nevada Corporation (“Cobalis”). This Agreement is made
in settlement of existing litigation between the parties, Orange
County Superior Court Case No. 06CC03923 (the
“Litigation”).
RECITALS
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A.
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WHEREAS,
Vekovic filed the Litigation against Cobalis on March 9, 2006 in
Orange County Superior Court; and
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B.
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WHEREAS,
Cobalis has filed an answer denying all of the allegations in
Vekovic’s complaint; and
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C.
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WHEREAS,
Cobalis filed a cross complaint against Vekovic, as to which
Vekovic filed an answer denying all of the allegations, and which
was subsequently dismissed by Cobalis, without prejudice;
and
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D.
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WHEREAS, the
parties have reached a settlement of the Litigation settling all
matters between them; and
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E.
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WHEREAS,
Cobalis is in the process of registering shares of Cobalis with an
S-8 filing and represents that it is using its best efforts to have
said S-8 Filing filed with the SEC by the beginning of April 2007;
and
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F.
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WHEREAS, the
parties are entering into this agreement to effectuate the
settlement between them which includes the issuance of
50,000
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shares of the
referenced S-8 filing to Vekovic and the issuance of 25,000
warrants of Cobalis common stock (at a price of $1.75 per
share);
The foregoing recitals are hereinafter referred to as
“Recitals.”
SETTLEMENT AGREEMENT
Now, therefore,
in consideration of the foregoing Recitals (which are incorporated
by reference as if fully set forth herein) and the mutual
agreements and covenants set forth herein, the parties hereto agree
as follows:
1.
No Admission
. By entering into this Agreement,
no party to this Agreement is admitting to the sufficiency of the
Litigation, or to any claims, allegations, assertions, contentions
or positions of either party hereto, or to the sufficiency of any
defenses to any such litigation claims, allegations, assertions,
contentions or positions. This Agreement effects the settlement of
claims in the Complaint and Cross-Complaint, which are denied and
contested. The parties merely desire to resolve the Litigation. The
parties have entered into this Agreement in good faith and with the
desire to forever settle among them the issues involved in this
Agreement as set forth below.
2.
Settlement of
Litigation. The parties
agree as follows:
2.1
Cobalis agrees to issue to Vekovic
50,000 shares of registered stock (S-8 shares) as soon as possible,
on or before April 15, 2007 (the “S-8 Shares”). The
Shares, to be registered in the name of Marinko Vekovic shall be
delivered to Alan Merlin Reedy, Attorney for Vekovic, at 4590
MacArthur Blvd, Suite 370, Newport Beach, CA 92660 on the same
business day as other shares of the Cobalis are first delivered to
any other person or entity receiving similar shares and no later
than 5:00 p.m. April 15, 2007. In the event the S-8 share
certificate is not delivered to Mr. Reedy by 5:00 p.m. on April 15,
2007, Cobalis shall pay a $5,000 late fee made out to “Alan
Merlin Reedy, Esq., on behalf of Marinko Vekovic,” as
liquidated damages for the late issuance of the S-8 Shares.
Furthermore, Cobalis shall pay an additional $5,000 liquidated
damages amount if the S-8 Shares are not delivered by April 30,
2007, plus an additional liquidated damages $5,000 amount on the 15
th and the last day of each following month, if any,
until the S-8 shares are delivered. Upon delivery of the S-8
Shares, Vekovic agrees that he (or anyone acting on his behalf)
will not sell more than 5,000 of the S-8 Shares on any one trading
day (unless Vekovic receives prior written approval from Cobalis).
In the event that Vekovic (or anyone acting on his behalf) sells
more than 5,000 of the S-8 Shares on any one trading day, Vekovic
shall be liable to Cobalis for any and all damages proximately
caused by such breach of this agreement, subject to proof, with a
minimum liability of $5,000.00.
2.2
In addition, Cobalis,
contemporaneously with the execution of this agreement agrees that
Vekovic shall immediately acquire the rights of warrants of Cobalis
to purchase 25,000 (twenty-five thousand) restricted shares of the
Cobalis’ common stock, $.0001 par value, (the “Common
Stock”) at $1.75 per share , exercisable at any time up to
5:00 p.m. on December 31, 2009 (the “Warrants”). Within
ten (10) business days of the execution of this Agreement, Cobalis
shall issue a separate written document to Vekovic that
memorializes Vekovic’s Warrants and his warrant rights and
obligations. . The Warrants may be exercised by Vekovic at any time
before the expiration date, regardless of whether the separate
written document has been provided to Vekovic. Cobalis agrees to
use its best efforts to register the Warrants and the underlying
shares as a “piggy back” to any SB2 registration of
Cobalis warrants/shares in the future, subject to any objection by
the “lead party” that no other registrants be included
in such future SB2 registration. Cobalis has no obligation under
this Agreement to commence an SB2 registration where Vekovic is the
“lead party.” In other words, Cobalis agrees to include
Vekovic’s Warrants in any future SB2 registration, if
feasible (i.e., if the “lead party” does not object to
the inclusion of other registrants or warrants). As noted above,
this Agreement, by itself, grants Vekovic the right to exercise the
Warrants at any tim
