<PAGE>
Exhibit 2.6
SETTLEMENT AGREEMENT AND MUTUAL GENERAL RELEASE
CYRK, INC.
14224 167th Avenue SE
Monroe, WA 98272-2810
January 31, 2006
Simon Worldwide, Inc.
5200 West Century Boulevard
Los Angeles, CA 90045
Ladies and Gentlemen:
The
undersigned ("CYRK") has issued to you ("SIMON") a Subordinated
Promissory Note dated as of February 15, 2001 in the original
principal amount
of $2,300,000 (the "OLD SUBORDINATED NOTE").
Simon also previously arranged for its lender, City National Bank,
to issue
a standby letter of credit (the "L/C") in favor of Winthrop
Resources
Corporation ("WINTHROP"). Cyrk arranged for its lender to issue a
so-called
"back-stop" letter of credit (the "BACK-STOP L/C") of up to
$500,000 in favor of
City National Bank.
Winthrop was permitted to draw on the L/C in the event that Cyrk
defaulted
under the lease agreement dated as of November 20, 2001 between
Cyrk and
Winthrop. During November 2005, Winthrop drew $2,145,000 under the
L/C and,
subsequent to that date, City National Bank drew $500,000 under the
Back-Stop
L/C.
Since 2001, there have been several disputes between Cyrk and
Simon
relating to, among other things, the Old Subordinated Note, the L/C
and the
Back-Stop L/C. Cyrk and Simon desire to resolve such disputes on
the following
terms and subject to the following conditions:
1.
Payments to Simon, Etc.
(a) Concurrently herewith:
(i) Cyrk is causing Simon to be paid $235,000 in cash, the
receipt of which is hereby acknowledged by Simon; and
(ii) Cyrk is issuing to Simon a Subordinated Promissory Note
dated as of the date of this letter in the original principal
amount of
$1,410,000 (the "NEW SUBORDINATED NOTE").
(b) Concurrently herewith, Cyrk Holdings, LLC, the holder of all
the
outstanding capital stock of Cyrk, and Simon are entering into a
subordination
agreement.
<PAGE>
2.
Confession of Judgment. Concurrently herewith, Cyrk is executing
a
Confession of Judgment and a related Statement in support thereof
(together, the
"CONFESSION") for (the following is referred to as the "STIPULATED
AMOUNT"): (a)
$1,410,000 which represents the amount owed by Cyrk to Simon under
the New
Subordinated Note; (b) $2,300,000, which represents the amount owed
by Cyrk to
Simon under the Old Subordinated Note; and (c) $25,000 for the
reasonable
attorneys' fees and expenses and other out-of-pocket costs incurred
by Simon to
draft and enforce the Confession. Simon shall hold the Confession
as security
for the performance by Cyrk of its obligation to make payments
under the New
Subordinated Note. In the event of a default of any such
obligation, Cyrk shall
have 10 business days within which to cure same after its receipt
of written
notice thereof from Simon. In the event Cyrk fails to cure such
default within
10 business days after receipt of such notice, Simon may proceed to
enter the
Confession and obtain a judgment for the Stipulated Amount. Except
as set forth
in the prior sentence, Simon may not enter the Confession at any
time for any
reason. If Simon elects to enter the Confession, it shall
simultaneously enter a
partial satisfaction of judgment in the amount of any amounts paid
to Simon
under the New Subordinated Note.
3.
Mutual General Release.
3.1 Release by Simon. For the payment of the amount referred to
in
Section 1(a), the issuance of the New Subordinated Note pursuant to
Section 1(b)
and other good and valuable consideration, the receipt and legal
sufficiency of
which is acknowledged by Simon, Simon, on its own behalf and on
behalf of its
direct and indirect subsidiaries, knowingly and voluntarily
releases and forever
discharges Cyrk and its direct and indirect affiliates and their
respective
officers, directors, employees, agents and representatives and the
successors
and assigns of all of the foregoing (collectively, the "CYRK
RELEASED PARTIES")
from any and all claims, controversies, actions, causes of action,
cross-claims,
counter-claims, rights, demands, debts, compensatory damages,
liquidated
damages, punitive or exemplary damages, other damages, claims for
costs and
attorneys' fees, or liabilities of any nature whatsoever in law and
in equity,
both past and present (through the date of this agreement) and
whether known or
unknown, suspected, or claimed against any of the Cyrk Released
Parties that
Simon or any of its direct or indirect subsidiaries or any of their
respective
successors or assigns may have, relating in any way to or in
connection with any
matter or thing from the beginning of the world to the date hereof,
including,
without limitation, all obligations of Cyrk to Simon under the Old
Subordinated
Note or in connection with the L/C and all other obligations of any
Cyrk
Released Party to Simon or any of its direct or indirect
subsidiaries
(collectively, "SIMON CLAIMS"); provided that the foregoing shall
not release,
alter or amend the obligations of Cyrk under (i) this agreement,
(ii) the New
Subordinated Note or (iii) the Confession (it is understood and
agreed that Cyrk
shall have obligations with respect to the Confession only in the
event that
Simon is permitted to enter the same pursuant to Section 2
above).
3.2 Release by Cyrk. For Simon's agreement to enter into this
agreement and other good and valuable consideration, the receipt
and legal
sufficiency of which is acknowledged by Cyrk, Cyrk, on its own
behalf and on
behalf of its direct and indirect subsidiaries, knowingly and
voluntarily
releases and forever discharges Simon and its direct and indirect
affiliates and
their respective officers, directors, employees, agents and
representatives
-2-
<PAGE>
and the successors and assigns of all of the foregoing
(collectively, the "SIMON
RELEASED PARTIES" and, together with the Cyrk Released Parties, the
"RELEASED
PARTIES") from any and all claims, controversies, actions, causes
of action,
cross-claims, counter-claims, rights, demands, debts, compensatory
damages,
liquidated damages, punitive or exemplary damages, other damages,
claims for
costs and attorneys' fees, or liabilities of any nature whatsoever
in law and in
equity, both past and present (through the date of this agreement)
and whether
known or unknown, suspected, or claimed against any of the Simon
Released
Parties that Cyrk or any of its direct or indirect subsidiaries or
any of their
respective successors or assigns may have, relating in any way to
or in
connection with any matter or thing from the beginning of the world
to the date
hereof, including, without limitation, all obligations of any Simon
Released
Party to Cyrk or any of its direct or indirect subsidiaries
(collectively, "CYRK
CLAIMS" and, together with the Simon Claims, the "CLAIMS");
provided that the
foregoing shall not release, alter or amend the obligations of
Simon under this
(i) agreement, (ii) the New Subordinated Note or (iii) the
Confession.
3.3 No Assignment of Claims. Each party represents to the other
that
neither it nor any of its direct or indirect subsidiaries has made
any
assignment or transfer of any of the Claims herein above mentioned
or implied.
3.4 Bar to Claims, Etc. In signing this agreement, Simon and
Cyrk
(each, a "RELEASOR"), on their own behalf and on behalf of their
respective
direct and indirect subsidiaries, acknowledge and intend that this
agreement it
shall be effective as a bar to each and every one of the Simon
Claims (in the
case of Simon) or the Cyrk Claims (in the case of Cyrk) herein
above mentioned
or implied. Each Releasor expressly consents that this Section 3
shall be given
full force and effect according to each and all of its express
terms and
provisions, including those relating to unknown and unsuspected
Claims
(notwithstanding any state statute that expressly limits the
effectiveness of a
general release of unknown, unsuspected or unanticipated Claims),
if any, as
well as those relating to any other Claims herein above mentioned
or implied.
Each Releasor further agrees on its own behalf and on behalf of its
direct and
indirect subsidiaries that in the event it or any of its direct or
indirect
subsidiaries should assert any Claim seeking damages or other
relief against any
of the Cyrk Released Parties (in the case of Simon) or any of the
Simon Released
Parties (in the case of Cyrk), this Section 3 shall serve as a
complete defense
to any such Claim. Each Releasor on its own behalf and on behalf of
its direct
and indirect subsidiaries further agrees that there does not exist
any Claim of
the type described in or implied by Section 3.1 or 3.2 (as the case
may be)
hereof and it is not aware of any pending or threatened Claims of
the type
described in or implied by Section 3.1 or 3.2 (as the case may be)
hereof.
3.5 No Admission of Improper or Unlawful Conduct. Each Releasor on
its
own behalf and on behalf of its direct and indirect subsidiaries
agrees that
this Section 3 shall not be deemed or construed at any time to be
an admission
by any Released Party or either Releasor (or any direct or indirect
subsidiaries
of either Releasor) of any improper or unlawful conduct.
3.6 Certain Costs. Each Releasor also agrees that if it or any of
its
direct or indirect subsidiaries violates this Section 3 by suing
any Released
Parties (either any of the Cyrk Released Parties, in the case of
Simon, or any
of the Simon Released Parties, in the case of
-3-
<PAGE>
Cyrk), such Releasor will pay all costs and expenses of defending
against the
suit incurred by such Released Parties, including reasonable
attorneys' fees.
3.7 Discovery of
Different Facts. Each Releasor on its own behalf and
on behalf of its direct and indirect subsidiaries acknowledges and
agrees that
such Releasor (or its direct or indirect affiliates) may hereafter
discover
facts different from or in addition to those now known, or believed
to be true,
regarding the subject matter of this Section 3 and further
acknowledges and
agrees that this Section 3 shall remain in full force and
effect,
notwithstanding the existence of any different or additional
facts.
3.8 Section 1542 of the California Civil Code. It is the in
