Case 4:11-cv-00023 Document 1 Filed 01/14/11 Page 1 of 14IN THE UNITED STATES DISTRICT COURTFOR THE EASTERN DISTRICT OF TEXASSHERMAN DIVISIONPAMELA F. JENKINS, Individually; andThe Cupcakery LLC, a Nevada LimitedLiability CompanyCAUSE NO. 4:11-CV-23Plaintiffs,Defendant.RICKY B. PERRITT, Individually; The Cupcakery, LLC, a Texas Limited Liability Company; Buster Baking, LLC, a Texas Limited Liability Company; and the Woodlands Baking, LLC, a Texas Limited Liability Company VS.PLAINTIFFS' ORIGINAL COMPLAINT AND APPLICATION FOR TEMPORARYRESTRAING ORDER, PRELIMINARY INJUNCTION, PERMANENT INJUNCTION,DECLARATORY JUDGMENT AND DAMAGESRICKY B. PERRITT, individually, THE CUPPCAKERY, LLC, A TEXAS LIMITED LIABILITYCOMPANY; BUSTER BAKING, LLC, ATEXAS LIMITED LIABILITY COMPANY; and THE WOODLANDSBAKING, LLC, ATEXAS LIMITED LIABILITY COMPANY, hereinafter called "Plaintiffs", complainof PAMELA F. JENKINS, Individually, and THE CUPCAKERY LLC, ANEVADA LIMITED LIABILITYCOMPANY and respectfully showthe Court as follows:I. NATURE OF THE CASE1.01. This is a suit by RICKY B. PERRITT, an individual resident of the Eastern Districtof Texas and THE CUPPCAKERY, LLC, ATEXAS LIMITED LIABILITY COMPANY; BUSTER BAKING,LLC, A TEXAS LIMITED LIABILITY COMPANY; and The Woodlands Baking, LLC, a TexasPerritt, et af. v. Pamela F. Jenkins, et af. - Plaintiffs' Original Complaint Page 1 of14Case 4:11-cv-00023 Document 1 Filed 01/14/11 Page 2 of 14Limited Liability Company against PAMELA F. JENKINS, an individual resident of the State ofNevada and THE CUPCAKERY LLC, ANEVADA LIMITED LIABILITY COMPANY.1.02, In September 2009 PERRITT sued JENKINS concerning disputed ownership andoperation OF THE CUPCAKERY LLC, ANEVADA LIMITED LIABILITY COMPANY, THE CUPCAKERYLLC, A TEXAS LIMITED LIABILITY COMPANY and BUSTER BAKING LLC, A TEXAS LIMITEDLIABILITY COMPANY. That case was resolved by a written settlement agreement and supportingdocuments executed pursuant to such settlement agreement, a true copy of the settlement areattached hereto is Exhibit A and made part hereoffor all purposes.1.03. The previous lawsuit had at its core a dispute over the percentage of ownership ofeach of the limited liability companies in question and the refusal of Jenkins to abide by validwritten contractual agreements.II. PARTIES2.01. RICKY B. PERRITT is an individual resident and citizen of the State of Texas andresides in Denton County, Texas in the Eastern District of Texas.2.02. THE CUPCAKERY LLC, , ATEXAS LIMITED LIABILITY COMPANY has its principalplace of business in Frisco, Collin County, Texas, within the Eastern District of Texas. PlaintiffBUSTER BAKING LLC, ATEXAS LIMITED LIABILITY COMPANY, has its principal place of businessin Dallas County, Texas.2,03 Plaintiff THE WOODLANDS BAKING, LLC, A TEXAS LIMITED LIABILITY COMPANYhas its principal place of business in Montgomery County, Texas.2.04 All ofthe Plaintiff entities are owned and controlled by RICKY B. PERRITT.2.05 Defendant PAMELA F. JENKINS is individual resident of the State of Nevada andmay be served with summons at 9680 South Eastern Avenue, Suite 100, Las Vegas, NevadaPerritt, et al. y, Pamela F, Jenkins, et al. - Plaintiffs' Original Complaint Page 2 of 14Case 4:11-cv-00023 Document 1 Filed 01/14/11 Page 3 of 1489123. Said Defendant is presently residing in Jack County, Texas, on a temporary basis, andmay be served with process at Rt 2, Jacksboro, Texas. Said Defendant may further be servedwith process at her residence, 305 Rosemary Lane, Las Vegas, Nevada 89107.2.06 Defendant THE CUPCAKERY, LLC, ANEVADA LIMITED LIABILITY COMPANY, isowned and operated by Defendant JENKINS. Said Defendant may be served by serving processon PAMELA F. JENKINS in her capacity as Managing Member of THE CUPCAKERY, LLC, ANEVADA LIMITED LIABILITY COMPANY.III. JURISDICTION AND VENUE3.01. This is a suit for injunctive relief, including a temporary restraining order withoutnotice, a preliminary injunction for declaratory judgment, and for damages.3.02. Jurisdiction is proper in this case under 28 U.S.C. 1332 because this is a civilmatter where the amount in controversy exceeds the sum of Seventy-Five Thousand Dollars($75,000.00), exclusive of interest and costs, and is between citizens of different states.3.03. Plaintiffs also invoke the courts supplemental jurisdiction under 28 U.S.C. 1367because certain questions of state law may be involved.3.04. Venue is proper in this COUlt under 28 U.S.C. 1391 (a) (2) because the EasternDistrict of Texas is a judicial district in which a substantial part of the events or omissions givingrise to the claim occurred and in which a substantial patt of the property that is the subject of thisaction is situated. Moreover, this case requires the Court to consltue and enforce a writtencontractual agreement which is performable at least in part in the State of Texas and in theEastern District of the State of Texas.3.05. Defendants have substantial and significant contacts within the State of Texas andwithin the Eastern District of Texas, in that a substantial patt of the negotiations and agreementsPerritt, et al. v. Pamela F. Jenkins, et al. - Plaintiffs' Original Complaint Page 3 of14Case 4:11-cv-00023 Document 1 Filed 01/14/11 Page 4 of 14that the parties reached in settlement of the prior lawsuit, the enforcement of which is now indispute were negotiated by the individual Defendant while she was present in Texas and theEastern District, and such negotiations by said Defendant were on behalf of her company, theother Defendant. Moreover, a great volume of telephonic, email and text communicationconcerning same have been had between the Defendants in Nevada and Plaintiff in Texas.Further, the threatened actions of the Defendant will directly damage these Texas Plaintiffs. Theactions threatened to be taken will cause damage directly to said Defendants in the State of Texasand the Eastern District.IV, FACTS4.01. The Defendant PAMELA JENKINS is the niece of Plaintiff RICKY PERRITT. In July2005, PAMELA JENKINS along with LAURA SANTO PIETRO ("PIETRO") and DAWN KALMAN("KALMAN") formed a Limited Liability Company in the State of Nevada known as THECUPCAKERY, LLC. JENKINS, PIETRO, and KALMAN each owned a one-third (Ih) interest in theBusiness and each was named a Co-Manager of the Business.4.02. Defendant PAMELA JENKINS did not have sufficient funds to pay any capitalcontribution when the Business was formed. In 2005 she requested the Plaintiff RICKY PERRITT,brother of her mother, to lend her the money. PERRITT agreed and advanced the sum of Ninety-Five Thousand Dollars ($95,000.00) to JENKINS as a loan to her personally. JENKINS laterexecuted a promissory note acknowledging the debt. The terms and provisions of paying backthe note have been renegotiated several times, but at present JENKINS owes approximately SixtyThousand Dollars ($60,000.00) on the note she executed, payable to PERRITT in Denton County,Texas.Perritt, et al. v. Pamela F. Jenkins, et a1. - Plaintiffs' Original Complaint Page 40f14Case 4:11-cv-00023 Document 1 Filed 01/14/11 Page 5 of 144.03. In 2007, JENKINS became embroiled in a dispute with her pal1ners PIETRO andKALMAN. She confided in PERRITT that she believed KALMAN was attempting to take control ofthe Business by purchasing PIETRO'S interest.4.04. JENKINS asked PERRITT to lend her the sum of Two Hundred Thousand Dollars($200,000.00) to buyout PIETRO and KALMAN. PERRITT refused to lend the money, pat1icularlyin light of the fact that the initial loan that he had made to JENKINS had not been paid back and itsterms of payment had been renegotiated and extended on several occasions.4.05. JENKINS implored PERRITT to act in order to save her from the oppressive conductof KALMAN. PERRITT agreed to advance JENKINS the funds to buyout the pat1ners conditionedupon JENKINS agreement to immediately assign him a two-thirds e13) interest in the Company.4.06. JENKINS agreed and on the 20thday of April 2007 PERRITT attd JENKINS enteredinto a one (I) page written Agreement which provided, among other things, that JENKINS wouldpurchase the membership interest of LAURA SANTO PIETRO and DAWN KALMAN in THECUPCAKERY, LLC; that PERRITT would pay to JENKINS or directly to KALMAN or PIETRO the sumof that money necessary to purchase the interests of PIETRO and KALMAN; that JENKINS wouldimmediately transfer attd assign to PERRITT One Hundred percent (100%) of the interest acquiredfrom PIETRO and KALMAN "including but not limited to all voting, economic and managementrights of PIETRO and KALMAN in THE CUPCAKERY, LLC". The Agreement provided that JENKINSand PERRITT would execute an Assignment and Assumption of Limited Liability Companyinterest.4.07. On the same day, April 20th, 2007, PERRITT and JENKINS executed the Assignmentand Assumption of Limited Liability Company interest. The effect of that Agreement was thatPerritt, el a1. v. Pamela F. Jenkins, el a1. - Plaintiffs' Original Complaint Page 5 of14Case 4:11-cv-00023 Document 1 Filed 01/14/11 Page 6 of 14PERRITT stepped into the shoes of KALMAN and PIETRO as a two-thirds CZh) owner of theCompany.4.08. Under the terms of that document the Parties granted each other a preferentialright to purchase each other's interest. Effectively, each party got a right of first refusal wherethey had the right but not the obligation to purchase the interest of the other under the same telmsand conditions as a good faith purchaser of said interest.4.09. After PERRITT approximately paid Two Hundred Twenty-Five Thousand Dollars($225,000.00) to PIETRO and KALMAN to became the majority owner of the Company, the Pal1iesdiscussed and agreed that expanding the Company based upon the trademark, trade name,intellectual property and goodwill attached to that name and the excellent product produced bythe Company would be a desirable and prudent thing to do.4.10. JENKINS proposed that LAS VEGAS open a second (2nd) store in that city. PERRITTagreed to advance the funds to open that store and did so by advancing the sum of One HundredEighty-Seven Thousand Five Hundred Dollars ($187,500.00) as a loan to LAS VEGAS. LASVEGAS is repaying that loan, which is set up on a promissory note bearing interest at ten percent(10%) per annum. The note has a present unpaid balance of approximately Sixty ThousandDollars ( ~ $ 6 0 , 0 0 0 . 0 0 ) . The note is payable to PERRITT in Denton County, Texas. That storeopened January 2008.4.11. Thereafter, PERRITT, with the full knowledge and approval of JENKINS, and usinghis own funds, opened a store in Frisco, Collin County, Texas called "THE CUPCAKERY." Thestore used the same recipes, name, marks, and other intellectual property that had beendeveloped by the Nevada Limited Liability Company. JENKINS contributed no capital to theFrisco, Texas store but did appear at the grand opening. The FRISCO location is organized as aPerritt, el aJ. v. Pamela F. Jenkins, el aJ. - Plaintiffs' Original Complaint Page 6 of14Case 4:11-cv-00023 Document 1 Filed 01/14/11 Page 7 of 14separate Texas Limited Liability Company, "THE CUPCAKERY. A TEXAS LLC" is the name ofthat company. That company is in good standing with the State of Texas and operated byPERRITT as the sole member.4.12. Subsequently, PERRITT, using his own funds, opened another store in Texas in theCity and County of Dallas. PERRITT has formed a separate Texas Limited Liability Companyknown as BUSTER BAKAKING, LLC to own and operate the store in question and has entered intoa Lease Agreement in which he has personally guaranteed the sum of Three Hundred ThousandDollars ($300,000.00) future rentals.4.13 In September 2009 the Parties had a dispute over who owned what. In order toresolve this PERRITT filed suit against Jenkins in this Court seeking declaratory judgment andother relief. Defendant Jenkins never answered that suit. However, she was represented by anattomey named Kirk Kaplan in Las Vegas, Nevada. Mr. Kaplan prevailed on counsel forPlaintiff to attempt to resolve the matter and after negotiations a settlement agreement wasreached. A true and correct copy of that settlement agreement and certain documents executedpursuant thereto is attached hereto as Exhibit A, incorporated by reference and made pali hereoffor all purposes. The essence of the settlement agreement was that PERRITT received anassignment from Jenkins and THE CUPCAKERY, LLC, a Nevada Limited Liability Company,Defendants, herein, of an undivided 50% interest in all trademarks, tradenames, and intellectualproperty owned by them with respect to the cupcake business.4.14 The Parties fuliher agreed as to a portion of the intellectual property a website"TheCupcakery.com" that the landing page of the website would direct all developmental andmedia inquires outside Nevada to PERRITT and all such inside Nevada to JENKINS. PERRITTobtained the right to hire any national media firm and to design the web's landing page.Perritt, et aJ. v. Pamela F. Jenkins, et al. - Plaintiffs' Original Complaint Page 7 of14Case 4:11-cv-00023 Document 1 Filed 01/14/11 Page 8 of 144.15 Jenkins received 100% of the stores in Nevada and PERRITT received 100% of thestores in Texas. The agreement provided that PERRITT and Jenkins individually would each ownan undivided 50% interest in all THE CUPCAKERyTM trademarks, tradenames and intellectualpropelty. Each Party had an obligation to conduct their respective businesses in such a manneras to protect the names and marks. All inquiries about development opportunities were requiredto be directed by JENKINS to PERRITT The Parties were to maintain a joint Cupcakery website,the format to be agreed upon by the Patties and the website was required fairly and prominentlyto direct all inquires about development opportunities outside Nevada to PERRITT. Theagreement fmther provided that the Patties agreed not to disparage each other in any way or totake any action which might damage the trademarks, tradenames or intellectual property of THECUPCAKERyTM.4.16 The Parties executed the settlement agreement and all suppOlting documents. Theparties agreed on the format for the website and the same was set up.4.17 The website "TheCupcakery.com" is the first website that appears when one doesan intemet search of the telm "cupcakery". Although there are other "Cupcakery's" such as"Sift, a cupcakery" no other person may use the tradename owned by these patties, to: "THECUPCAKERyTM".4.18 The Plaintiffs incorporate herein by reference as if copied fully at length verbatimherein the AFFIDAVIT OF RICKY B. PERRITT in support of their Motion for Temporary RestrainingOrder.4.19 Jenkins has apparently become dissatisfied with the Agreement that she made andhas acted to breach same in several respects. Although she has an obligation to protect theintellectual property, including the trademark and tradenames she has refused to pay her share ofPerritt, et al. v. Pamela F. Jenkins, et al. - Plaintiffs' Original Complaint Page 8 of14Case 4:11-cv-00023 Document 1 Filed 01/14/11 Page 9 of 14legal and other expenses to protect said tradenames and trademarks. Plaintiff PERRITT has had tofinance a lawsuit in California against a third party which was settled on favorable terms andreserved THE CUPCAKERyTM for the parties to this case. PERRITT advanced considerable sum ofhis own money. Jenkins has failed and refused and continues to fail and refuse to pay her shareof these legal expenses in the sum of approximately Eight Thousand Dollars ($8,000.00).JENKINS has further stated that she will not pay any monies or take any measures necessary toprotect THE CUPCAKERyTM intellectual property. She has further stated that she will give theright to use the name to third patties without consideration of any sort.4.20 PERRITT has attempted to discuss these differences in a rationale manner but hasbeen unable to persuade Jenkins ofher responsibilities under the agreement they reached.4.21 The website "TheCupcakery.com" is hosted by a company calledBannerView.com located in Las Vegas, Nevada. Because the THE CUPCAKERY, LLC, a NevadaLimited Liability Company had a previous 5 year contract with the company who hosted thewebsite, the Parties continued to have that company host the website. The Patties agreed on thelanding page and the format of the website and BannerView.com has hosted the same since theParties reached their settlement.4.22 Jenkins has recently said that she is gomg to "take down" the website"TheCupcakery.com" because it is "hers", and use it as a separate website and has told thePlaintiff PERRITT that he needs to create another website. PERRITT owns a 50% undividedinterest in all the intellectual property including the website and to switch websites from the onewebsite that gets the most hits when "Cupcakery" is entered on any search engine would causesubstantial and irreparable harm.Perritt, et al. v. Pamela F. Jenkins, et al. - Plaintiffs' Original Complaint Page 9 of14Case 4:11-cv-00023 Document 1 Filed 01/14/11 Page 10 of 144.23 On or about January 12, 2011 Jenkins sent PERRITT an email stating that she wasgoing to "pull down" of the website. PERRITT attempted to discuss this with her and althoughshe cursed and refused to discuss the matter rationally, it is PERRITT'S belief that she intends totake the website "TheCupcakery,com" and use it has her own website, leaving PERRITT without awebsite and causing irreparable hatm,4.24 Plaintiff PERRITT'S Affidavit states in detail the reasons that such conduct byJENKINS would cause immediate and irreparable harm to him and to his restaurants. PERRITT hasthree restaurants in Texas and is on the verge of opening another. This website gets many hitseach day from people inquiring about location, catering, and placing pick up orders. Moreover,the website directs all inquiries about investments, development, franchising and licensing in anylocation outside the State of Nevada to him, PERRITT fi'equently receives inquiries and isseriously considering business propositions to open stores in Massachusetts and Florida. Havingthe website down for any length of time will cause PERRITT to be unable to communicate withpotential investors, franchisees, or licensees.4.25 Jenkins' threat concerning the website was specific as to time. She said sheintends to take action on Monday, January 17, 20 II. There is insufficient time to notify Jenkinsor her attorney and hold a hearing prior to the time of her threatened action. As of the time offiling this suit, as stated in the Certificate of the undersigned attorney, JENKINS' Nevada attorney,Kirk Kaplan has been unable to confirm that his client will enter into an Agreed TemporaryRestraining Order or otherwise agree to conform to the terms and provisions ofthe agreement.4.26 Unless this Court grants appropriate relief in terms of a temporaty restrainingorder without notice, PERRITT and the Plaintiff companies will be reparably harmed and injuredwithout any adequate legal remedy.Perritt, et al. v. Pamela F. Jenkins, et al. - Plaintiffs' Original Complaint Page 10 of14Case 4:11-cv-00023 Document 1 Filed 01/14/11 Page 11 of 14V. FIRST CAUSE OF ACTIONAPPLICATION FOR RESTRAINING ORDER AND PRELIMINARY INJUCTION5.01 Plaintiffs move this Comt to grant a Temporary Restraining Order restraining andenjoining the Defendants, their agents, servants, employees, contractors and attorneys and thosepersons in active concert and patiicipation with them from interfering in any manner with theCutTent operation of the website "TheCupcakery.com" or from pulling down, modifying,amending, or otherwise changing any of the content of said website or fi'om committing any actor omission calculated to cause any harm or damage to the intellectual property owned byPERRITI in THE CUPCAKERy pending the hearing and disposition of the Plaintiffs' Motion forPreliminary Injunction filed on January 14,2011 on the ground that immediate and irreparableloss, damage and injmy will result to Plaintiffs as more fully appears from this verifiedComplaint and the attached AFFIDAVIT OF RICKY B. PERRITI.5.02 Plaintiffs further move that this Court, after proper notice and hearing, grant apreliminary injunction granting the injunctive relief specified in the application for temporaryrestraining order, such illjunctive relief to be effective until the conclusion of this lawsuit, oruntil fmther ORDER of this Comt.VI. SECOND CAUSE OF ACTION-DECLARATORY JUDGMENT6.01. PLAINTIFFS sue for declaratory judgment and request the Court after construing allthe documentation in this case, along with the swom testimony, to enter a DeclaratOlY Judgmentdetermining the following:a. That PERRITT owns an undivided 50% interest in the intellectual propertyof THE CUPCAKERyTM, including but not limited to the trademarks and trade names.Perritt, et a1. v. Pamela F. Jenkins, et a1. - Plaintiffs' Original Complaint Page 11 of 14Case 4:11-cv-00023 Document 1 Filed 01/14/11 Page 12 of 14b. That JENKINS is obligated to pay 50% of the attorneys fees and costsassociated with protecting said intellectual property rights.c. That JENKINS is not entitled to change or alter content or operation of thewebsite "The Cupcakery.com" or its Landing Page without the express consent andpermission ofPERRITT.d. That JENKINS owes a duty of loyalty to the brand name THECUPCAKERyTM.e. That JENKINS may not act to hann the other, or to damage good will,trademarks, trade names or business associated with THE CUPCAKERyTM.f. That the Defendant JENKINS' conduct as heretofore alleged constitutes abreach ofthe duty ofloyalty to the Brand Name and to Plaintiff.g. That the Defendant JENKINS' conduct as heretofore alleged constitutes abreach of her fiduciary duties to the Brand Name and to Plaintiff.h. That JENKINS is obligated to give PERRITT information about all inquiriesmade, past or future, by third (3fd) parties seeking to do business with the Company.i. That JENKINS has breached the settlement agreement.6.02. That Plaintiff is entitled to recover his reasonable and necessary attorney fees isthis declaratory judgment matter.VII. THIRD CAUSE OF ACTION-BREACH OF THE DUTY OF LOYALTY7.01. Defendant JENKINS' conduct as heretofore alleged constitutes a breach of the dutyof loyalty imposed by common law and specifically incorporated in the governing documentspeliaining to the Settlement.Perritt, et al. v. Pamela F. Jenkins, et al. - Plaintiffs' Original Complaint Page 12 of14Case 4:11-cv-00023 Document 1 Filed 01/14/11 Page 13 of 147.02. As a result Plaintiff has been damaged in an amount in excess of Seventy-FiveThousand Dollars ($75,000.00).VIII. FOURTH CAUSE OF ACTION-BREACH OF FIDUCIARY DUTY8.01. Plaintiff alleges that Defendant owes him a fiduciary duty to act in a manner ofutmost good faith and hust. Her conduct aforesaid constitutes a breach of that duty.8.02. As a result Plaintiff has been damaged in an amount in excess of Seventy-FiveThousand Dollars ($75,000.00).IX. FIFTH CAUSE OF ACTION-BREACH OF CONTRACT9.01. As alleged previously, Defendant has repeatedly made threats to hatm the name,mark, website and intellectual property of THE CUPCAKERyTM. She has refused and continues torefuse to pay her share of the expenses of protecting same.9.02. Such acts are a breach of the Settlement documents and have damaged Plaintiffsin excess of Seventy Five Thousand Dollars ($75,000.00).9.03. Plaintiff is entitled to recover this reasonable attorneys fees for such breach.X. PRAYER FORRELIEF10.01. Plaintiff requests that summons issue requiring Defendant PAMELA JENKINS toappear and answer this Complaint.10.02. Plaintiff prays that the court issue a Temporary Restraining Order without noticeand asks that after appropriate notice a hearing be held on his request for Preliminmy Injunctionand that the Court enter a preliminary injunction restraining and enjoining Defendant asheretofore specified. Plaintiff prays that such injunction be made permanent.Perritt, et al. v. Pamela F. Jenkins, et al. - Plaintiffs' Original Complaint Page 13 ofl4Case 4:11-cv-00023 Document 1 Filed 01/14/11 Page 14 of 1410.03. Plaintiff prays that the Court enter a DeclaratOlY Judgment granting the reliefheretofore requested.10.04. Plaintiff requests that he have and recover damages on account of Defendant'sbreach of the duty of loyalty and breach of fiduciary duty and breach of contract in an amount inexcess of Seventy-Five Thousand Dollars ($75,000.00) for each violation..05. Plaintiff prays that he recover his reasonable attorney fees, expenses of litigation,costs of court, and that he have such other and further relief, general and special, in law or inequity to which he may justly be entitled.Respectfully submitted,MICHAEL J. WHITTEN & ASSOCIATES, PC218 North Elm StreetDenton, TX 76201(940) 383-1618 or Metro (972) 434-3833Fax: (94 ) 898-0 6VERIFICATION1 have read the above and foregoing Complaint. 1 have personal knowledge of the factsalleged therein and they are true and COlTect.RicKyB.Perritt, et al. v. Pamela F. Jenkins, et al. - Plaintiffs' Original Complaint Page 14 of14Case 4:11-cv-00023-MHS -ALM Document 1-2 Filed 01/14/11 Page 1 of 22SETTLEMENTAGREEMENT RICKY B. PERRITT ("PERRITT") and JENKINS ("JENKINS") each own aninterest in THE CUPCAKERY, LLC, ANevada Limited LiabiHty Compalry; alldWhereas PmuuTT has opened aM operates two (2) companies, TIll! CUPCAKERY LLC, ATexas Limited Liability Company and BUSTER BAKING, LLC, A Texas Limited LiabilityCompany; andWhereas the Parties ltave a disagreement over the operation, management, percentages ofownership and future direction and development of the trade nalues and intellectualpropel'ty; andWhereas, PERRITT filed suit JENKINS in the Unlted States Dlstdct Court for theEastern District of Texas, Sherman Division, in No. 4:09 CV 00406, Styled Ricky Perrilt1'. Pamela Jenkins, andWhereas the Parties desire to resolve all disputes betwcen them and to divide and separatethe ownership and operation of the respective stores and future development.NOW, TIlEREFORE, THE PARTIES AGREE AS FOLLOWS:I. PERRITT will sell JENKINS all his interest in the Las Vegas TIlIl CUPCAKIlRy stores.JIlNKINS will PERRITT at closing the sum of One Hundred Thousand Dollars($100,000). At closing, THIl COPCAKERY, LLC, ANevada Limited Liability Company andPamela Jenkins will transfer, assiilll and convey to RlCKY PIlRRlTT or a company he maydesignate an undivided fifty percent (50%) interest in all trademarks, trade names andintellectual Pl'Operty owned by them with respect to the cupcake business. Neither partyshall transfer his 01' her interest in said intelleetnal property to any entity which he 01' shedoes not control, except he 01' she may sell his or her stores, as a group or individually andthe pmchaser shall have the l'ight to use and develop the trade nallle and trademarks. Thisis subject to the provisions ofparagraphs 7alld 13.2. Perritt and Jenkins that any party opening a store shall be in charge of and have theexclusive right to issue press releases and make media contacts for that storc. On any pressreleases 01' media interview with national media the parties shall consult and agl'ee on thecontent of any sUell prcss release 01' media statements. The Landing Page of the Websiteshall direct all development and media inquiries outside Nevada to Pel'l'itt and all suchinquiries inside Nevada shall bc directed to Jenkins. Pen'itt shall have the right to hire anynational media finn and to design the webllage landing page. Penitt shall consult withJenkins and shall not ul1l'casonably refnse to incorporate her concepts into the LandingPage.3. JENKINS will pay PERRin the balance of the original Ninety Five Thousand Dollars($95,000) personal loan he made to her in the alllount of Seventy Five Thousand, SixHundred Seven and Seventeen One Hundredths Dollars ($75,607.17) and the balance of theloan PERRITT, acting through CUSTOM VERSION, INC" made to the Las Vegas THECUPCAKERY in the of One Hundred Twenty One Thousand Two HundredEXHIBITI ACase 4:11-cv-00023-MHS -ALM Document 1-2 Filed 01/14/11 Page 2 of 22Selllemelli AgreementP(lge2of4Seventeen and Sixty Eight One H\mdredths Dollars ($121,217.68). These payments will bepaid per the Notes which will be amended to reflect that all past due payments will bearinterest at (jighteen percent (18%) per alUlum. Neither revised Nole shall have any penaltyfor prepayment.4. Item 2 will be secured by a first lien on all JENKINS' right, title and intcrcst in THEC\lPCAKERY, LLC [Nevadaland its assets. JENKINS and 'filB CUPCAKllRY, LLC [Nevada]will exeel1te lln llpproprillte Seourlty Agreement pledging the intercst in thc NcvadaCompany and all real 01' personal prollerty it owns, and such Agreemenl, Flnano/ngSinlemeni or other appropriate evidence of this security interest shall be placed ofrecord inCiark County llnd the State ofNevllda. JENKINS will have the exclusive right In the State ofNevada to OWII and operate THIl CUPCAKllRy stores.5. JENKINS will assign to PERRITT aU her right, title alld interest, if any, itl THE CUPCAKBRY,LLC [Texas], the Frisco store and BUSTER BAKERY, LLC rrexas], the proposed DallasStore. PERRITT will have the exclusive right in the State of Texas to own and operate 'filECUPCAKERY Stores.6. PERRITT shall have the eXclusive right to develop 'filE CUPCAKBRyTMin all stlltes exccptNevlldll for 11 period of fOUl' (4) years from date of closing.7. PllRRlTT and JllNKlNS, individually, will each own an 111ldivided fifty percent (50%) interestin all THE CUPCAKBRy trademarks, trade names and intellectual property. Each Partyshall have the obligation to conduct their respective businesses in such 11 mlllmer as toprotect the names and marks. Any furtheJ' marks, names OJ' intellectual property that eitherPERRITT or JENKINS develop in connection with the cupcake business will be ownedfifty/fifty (SO/50) and either may \Ise OJ' adapt the other's work in his or her territory. Ifeither Patty sells his or her interest to 11 Third Party, the other shall not be obligated nutherto sharc his or her work with the Third Patty.8. Each Party shall receive one and onc-half percent (1.5%) of gross receipts from the othel'Party's stores to begin the first full month following the closing of this Agreement. Suchpayments shall be made by the twentieth (201h) day of the month following the month inwhich the sales were made. In connection with sueh payments each Party shall ful'nish theother with a written statement verifYing the previous months' which stlltement shallbe by a check OJ' wire transfer payment. All past due payments shall bearinterest llt the rate of eighteen percent (18%) per rumum until paid, and ifeither Pllrly have to suc to collect sueh payments he or she shall be entitled to recover his 01' herreasonable attomey fees. Payments due from JENKINS to PERRITT shall be due and payablein Denton County, Texas. Pllyments due and payable from PERRIIT to JIJNKINS shall bedue and payable in Clark County, Nevada. This obligation shall survive the sale of anyPllrty's interest and become lln obligation of llny Third Patty oWMr.9. Each Party shall receive Five Thousand Dollars ($5,000.00) when the other opens a newstore in the future, sueh payment to be made on 01' before thitty (30) days from the datesuch store sells the first cupcake. This obligation shall survive the sale of any Patty'sinterest and beeome an obligation ofllny Third Pmty owner.Case 4:11-cv-00023-MHS -ALM Document 1-2 Filed 01/14/11 Page 3 of 228efllemen/ AgreementPage3o[410. If, during a fOllr (4) yeal' period JENKINS has all opportunity to open a storc in a state Othel'thall Nevada, she shall bring the matter to PERRlTT'S inul1ediate allention. If PERRITI hasnot 0IJened a store in that state, 01' has not committed to do so, he shall evaluate the matterand if it is in the best interest of THB CUPCAKBRy hc may, in his sole discretion, giveJBNKINS permission to go illtO that state. After the expiration of the fOUL' (4) y e ~ \ I ' IJeriodeach Party who has opened a store in a state shall have excl\lsiW rights to devclop theb\lsiness in that state. Thereafter the first Party to open a store in a state shall haveexclusive rights in that state. Once a Paliy has established exclusivc rights in a state theother Party may not enter that state without written permission from the other. Thisobligation shall survive tile sale of any Party's interest and become an obligation of anyThird Party OW)ler.11. Each Party shall execute global releases of the other for all past c()J\duct, and uponexecution of the agreement PERRlIT wlil dismiss the lawsuit wlth prejudice.12. All inquiries about development opportunities shall be directed by JBNKINS to PBRRlIT.The Parties shall maintain a joint CUPCAKBRY website which format shall be agreed to bythc Parties. The website shall cleady and prominently direct all inquiries abo\ltdevelopment opportunities outsidcNevada to PBRRIIT.13. Should either Party to this Agreement desire to sell any store or palt of a storc toa Third(3rd) Party, helshe must first offer the store to the other Party by presenting a true copy of awritten Sales Contract with the prospective purchaser spelling out all terms and conditionsof the Sale. The other Party shall have thiliy (30) days to match the offer and if he/shedoes not, the Selling Pm'!)' shall be free to consununata the Sale to the Third Parly.Nothing herein shaH impair the right of either Party to open a new store in cOlUlectioll witha Third Patty in any state where the Party has exclusive rights. The right of first refusalshall apply to all stores developed by PERRITT and JENKINS, oither individually 01' incooperation with a Third Party. If one Party enters into a contract to sell a store 01' stores toa Third Party and the other Pmty elects not to exeroise his 01' her right of first refusal, thenew store shall neveliheless be obligatcd to pay the Five Tho\lSand Dollars ($5,000.00) feeand pay the royalty of one and one-halfPercent (1.5%) of gross sales. This obligation shallsurvive the sale of any Party's interest and become an obligation of any Third Party owner.14. Each Party shall keep confidential all the terms and provisions ofthis Agreement exoept itmay be disclosed to any bank 01' person who is finanoing the Sale, on the condition that thefinancing Paliy agrees to honor the Confidentiality Agreement. Nothing herein shallprohibit either Party fi'om disolosing the terms of this Agreement to their attorney, CPA,financial advisor, other professional 01' prospeotive p\lrchaser or business parllier whoagrees to be bound by the Cotifidenlia/ity Agreement. Nothing herein shall prohibit cithcrParly frollll'esponding to a lawful sub110ena from a court of oompetent jurisdiction whiohdemands production of this document. If a Patiy reoeives a subpoena he or she shallTMMllDIATBLY inform the other by providing a truc copy of the subpoena. A Party whoreoeives such a subpoena shall request the issuing oourt to issue a protective ol'der topl'Clhibit dissemination ofthe document to those without a strict need to see the document inconnection with the litigation.Case 4:11-cv-00023-MHS -ALM Document 1-2 Filed 01/14/11 Page 4 of 22Selllellleill AgteelllelltPage4of415. Each Party agrees not to disparage the othcr ill allY way or to take any action which mightdamage the trademarks, trade names or intellectual property of THE CUPCAKERyTM.16. Time is of the essence.Pamela Jenkins2009.Case 4:11-cv-00023-MHS -ALM Document 1-2 Filed 01/14/11 Page 5 of 22Promissory NoteDate:llorrower: Pamela Jenkins and The Cupcakery, LLC, a Nevada Limited Liability Company.llon'ower's Mailing Address:Pamela Jenkins9680 S. Eastem AvenueLas Vegas, Nevada 89123Clark CountyThe Cupcakery, LLC9680 S. Eastem AvenueLas Vegas, Nevada 89123Clark CountyLender: Custom Version Corporation, a Texas corporation.Place for Payment:P.O. Box 858Denton, Denton County, Texas 76202,or any other place that Lender may designate in writing.Principal Amount: $121,217.68Annual Interest Rate: Ten Percent (10.00%)Matnrity Date: October 1,2012Annual Interest Rate on Matured, Unpaid Amounts: Eighteen Percent (18%)Terms of Payment (principal and interest):The Principal Amount and interest are due and payable in equal monthly installments ofTHREE THOUSAND NINE HUNDRED ELEVEN AND 351100 DOLLARS ($3,911.35), onthe first day of each month, beginning November 1, 2009 and continuing until the unpaid principaland acclUed, unpaid interest have been paid in full. Payments will be applied first to acclUedinterest and the remainder to reduction of the Principal Amount.Security for Payment: This note is secured by a security interest created in a securityagreement that covers all of Borrower's membership interest in The Cupcakery, LLC, a NevadaCase 4:11-cv-00023-MHS -ALM Document 1-2 Filed 01/14/11 Page 6 of 22Limited Liability Company, all assets, jncl ding int((1 c 5 0, Bo. (. nCt 1[-( .\ , on this day personallyappeared Pamela Jenkins, known to me to be the person whose name is subscribed to theforegoing instrument and acknowledged to me that Pamela Jenkins executed the same as the act ofThe CupcakelY, LLC, a Nevada Limited Liability Company, as its President, for the purposes andconsideration therein expressed.Given under my hand and seal ofoffice this Zf)'\ i'day of ():::,[-ot,e (-,2009.NOTARY PUBLIOSTATE OF NEVADACounty of Ciark"... ALISSA BARNARD M. 1 2012AFTER RECORDINGRETURN TO:Ricky B. PelTittP.O. Box 858Dentoll, Texas 76202O{1/0Q.... cb(Anf\,\c,-.0NotalYPublic, State of NevadaMy commission expires: s- \- \")...