Case 4:11-cv-00023 Document 1 Filed 01/14/11 Page 1 of 14

IN THE UNITED STATES DISTRICT COURT

FOR THE EASTERN DISTRICT OF TEXAS
SHERMAN DIVISION

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 §
§
Plaintiffs, §
§
VS. § CAUSE NO. 4:11-CV-23
§
PAMELA F. JENKINS, Individually; and §
The Cupcakery LLC, a Nevada Limited §
Liability Company §
§
Defendant. §

PLAINTIFFS' ORIGINAL COMPLAINT AND APPLICATION FOR TEMPORARY

RESTRAING ORDER, PRELIMINARY INJUNCTION, PERMANENT INJUNCTION,
DECLARATORY JUDGMENT AND DAMAGES

RICKY B. PERRITT, individually, THE CUPPCAKERY, LLC, A TEXAS LIMITED LIABILITY

COMPANY; BUSTER BAKING, LLC, ATEXAS LIMITED LIABILITY COMPANY; and THE WOODLANDS

BAKING, LLC, A TEXAS LIMITED LIABILITY COMPANY, hereinafter called "Plaintiffs", complain

of PAMELA F. JENKINS, Individually, and THE CUPCAKERY LLC, ANEVADA LIMITED LIABILITY

COMPANY and respectfully show the Court as follows:

I. NATURE OF THE CASE

1.01. This is a suit by RICKY B. PERRITT, an individual resident of the Eastern District

of Texas and THE CUPPCAKERY, LLC, ATEXAS LIMITED LIABILITY COMPANY; BUSTER BAKING,

LLC, A TEXAS LIMITED LIABILITY COMPANY; and The Woodlands Baking, LLC, a Texas

Perritt, et af. v. Pamela F. Jenkins, et af. - Plaintiffs' Original Complaint Page 1 of14
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Limited Liability Company against PAMELA F. JENKINS, an individual resident of the State of

Nevada and THE CUPCAKERY LLC, ANEVADA LIMITED LIABILITY COMPANY.

1.02, In September 2009 PERRITT sued JENKINS concerning disputed ownership and

operation OF THE CUPCAKERY LLC, ANEVADA LIMITED LIABILITY COMPANY, THE CUPCAKERY

LLC, A TEXAS LIMITED LIABILITY COMPANY and BUSTER BAKING LLC, A TEXAS LIMITED

LIABILITY COMPANY. That case was resolved by a written settlement agreement and supporting

documents executed pursuant to such settlement agreement, a true copy of the settlement are

attached 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 of

each of the limited liability companies in question and the refusal of Jenkins to abide by valid

written contractual agreements.

II. PARTIES

2.01. RICKY B. PERRITT is an individual resident and citizen of the State of Texas and

resides in Denton County, Texas in the Eastern District of Texas.

2.02. THE CUPCAKERY LLC, , A TEXAS LIMITED LIABILITY COMPANY has its principal

place of business in Frisco, Collin County, Texas, within the Eastern District of Texas. Plaintiff

BUSTER BAKING LLC, ATEXAS LIMITED LIABILITY COMPANY, has its principal place of business

in Dallas County, Texas.

2,03 Plaintiff THE WOODLANDS BAKING, LLC, A TEXAS LIMITED LIABILITY COMPANY

has its principal place of business in Montgomery County, Texas.

2.04 All of the Plaintiff entities are owned and controlled by RICKY B. PERRITT.

2.05 Defendant PAMELA F. JENKINS is individual resident of the State of Nevada and

may be served with summons at 9680 South Eastern Avenue, Suite 100, Las Vegas, Nevada

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89123. Said Defendant is presently residing in Jack County, Texas, on a temporary basis, and

may be served with process at Rt 2, Jacksboro, Texas. Said Defendant may further be served

with process at her residence, 305 Rosemary Lane, Las Vegas, Nevada 89107.

2.06 Defendant THE CUPCAKERY, LLC, A NEVADA LIMITED LIABILITY COMPANY, is

owned and operated by Defendant JENKINS. Said Defendant may be served by serving process

on PAMELA F. JENKINS in her capacity as Managing Member of THE CUPCAKERY, LLC, A

NEVADA LIMITED LIABILITY COMPANY.

III. JURISDICTION AND VENUE

3.01. This is a suit for injunctive relief, including a temporary restraining order without

notice, 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 civil

matter 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. §1367

because 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 Eastern

District of Texas is a judicial district in which a substantial part of the events or omissions giving

rise to the claim occurred and in which a substantial patt of the property that is the subject of this

action is situated. Moreover, this case requires the Court to consltue and enforce a written

contractual agreement which is performable at least in part in the State of Texas and in the

Eastern District of the State of Texas.

3.05. Defendants have substantial and significant contacts within the State of Texas and

within the Eastern District of Texas, in that a substantial patt of the negotiations and agreements

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that the parties reached in settlement of the prior lawsuit, the enforcement of which is now in

dispute were negotiated by the individual Defendant while she was present in Texas and the

Eastern District, and such negotiations by said Defendant were on behalf of her company, the

other Defendant. Moreover, a great volume of telephonic, email and text communication

concerning 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. The

actions threatened to be taken will cause damage directly to said Defendants in the State of Texas

and the Eastern District.

IV, FACTS

4.01. The Defendant PAMELA JENKINS is the niece of Plaintiff RICKY PERRITT. In July

2005, PAMELA JENKINS along with LAURA SANTO PIETRO ("PIETRO") and DAWN KALMAN

("KALMAN") formed a Limited Liability Company in the State of Nevada known as THE

CUPCAKERY, LLC. JENKINS, PIETRO, and KALMAN each owned a one-third (Ih) interest in the

Business and each was named a Co-Manager of the Business.

4.02. Defendant PAMELA JENKINS did not have sufficient funds to pay any capital

contribution 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 later

executed a promissory note acknowledging the debt. The terms and provisions of paying back

the note have been renegotiated several times, but at present JENKINS owes approximately Sixty

Thousand Dollars ($60,000.00) on the note she executed, payable to PERRITT in Denton County,

Texas.

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4.03. In 2007, JENKINS became embroiled in a dispute with her pal1ners PIETRO and

KALMAN. She confided in PERRITT that she believed KALMAN was attempting to take control of

the 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, pat1icularly

in light of the fact that the initial loan that he had made to JENKINS had not been paid back and its

terms 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 conduct

of KALMAN. PERRITT agreed to advance JENKINS the funds to buyout the pat1ners conditioned

upon JENKINS agreement to immediately assign him a two-thirds e13) interest in the Company.

4.06. JENKINS agreed and on the 20 th day of April 2007 PERRITT attd JENKINS entered

into a one (I) page written Agreement which provided, among other things, that JENKINS would

purchase the membership interest of LAURA SANTO PIETRO and DAWN KALMAN in THE

CUPCAKERY, LLC; that PERRITT would pay to JENKINS or directly to KALMAN or PIETRO the sum

of that money necessary to purchase the interests of PIETRO and KALMAN; that JENKINS would

immediately transfer attd assign to PERRITT One Hundred percent (100%) of the interest acquired

from PIETRO and KALMAN "including but not limited to all voting, economic and management

rights of PIETRO and KALMAN in THE CUPCAKERY, LLC". The Agreement provided that JENKINS

and PERRITT would execute an Assignment and Assumption of Limited Liability Company

interest.

4.07. On the same day, April 20th , 2007, PERRITT and JENKINS executed the Assignment

and Assumption of Limited Liability Company interest. The effect of that Agreement was that

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PERRITT stepped into the shoes of KALMAN and PIETRO as a two-thirds CZh) owner of the

Company.

4.08. Under the terms of that document the Parties granted each other a preferential

right to purchase each other's interest. Effectively, each party got a right of first refusal where

they had the right but not the obligation to purchase the interest of the other under the same telms

and 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 Pal1ies

discussed 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 by

the Company would be a desirable and prudent thing to do.

4.10. JENKINS proposed that LAS VEGAS open a second (2 nd) store in that city. PERRITT

agreed to advance the funds to open that store and did so by advancing the sum of One Hundred

Eighty-Seven Thousand Five Hundred Dollars ($187,500.00) as a loan to LAS VEGAS. LAS

VEGAS 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 Thousand

Dollars (~$60,000.00). The note is payable to PERRITT in Denton County, Texas. That store

opened January 2008.

4.11. Thereafter, PERRITT, with the full knowledge and approval of JENKINS, and using

his own funds, opened a store in Frisco, Collin County, Texas called "THE CUPCAKERY." The

store used the same recipes, name, marks, and other intellectual property that had been

developed by the Nevada Limited Liability Company. JENKINS contributed no capital to the

Frisco, Texas store but did appear at the grand opening. The FRISCO location is organized as a

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 Case 4:11-cv-00023 Document 1 Filed 01/14/11 Page 7 of 14

separate Texas Limited Liability Company, "THE CUPCAKERY. A TEXAS LLC" is the name of

that company. That company is in good standing with the State of Texas and operated by

PERRITT as the sole member.

4.12. Subsequently, PERRITT, using his own funds, opened another store in Texas in the

City and County of Dallas. PERRITT has formed a separate Texas Limited Liability Company

known as BUSTER BAKAKING, LLC to own and operate the store in question and has entered into

a Lease Agreement in which he has personally guaranteed the sum of Three Hundred Thousand

Dollars ($300,000.00) future rentals.

4.13 In September 2009 the Parties had a dispute over who owned what. In order to

resolve this PERRITT filed suit against Jenkins in this Court seeking declaratory judgment and

other relief. Defendant Jenkins never answered that suit. However, she was represented by an

attomey named Kirk Kaplan in Las Vegas, Nevada. Mr. Kaplan prevailed on counsel for

Plaintiff to attempt to resolve the matter and after negotiations a settlement agreement was

reached. A true and correct copy of that settlement agreement and certain documents executed

pursuant thereto is attached hereto as Exhibit A, incorporated by reference and made pali hereof

for all purposes. The essence of the settlement agreement was that PERRITT received an

assignment from Jenkins and THE CUPCAKERY, LLC, a Nevada Limited Liability Company,

Defendants, herein, of an undivided 50% interest in all trademarks, tradenames, and intellectual

property 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 and

media inquires outside Nevada to PERRITT and all such inside Nevada to JENKINS. PERRITT

obtained the right to hire any national media firm and to design the web's landing page.

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4.15 Jenkins received 100% of the stores in Nevada and PERRITT received 100% of the

stores in Texas. The agreement provided that PERRITT and Jenkins individually would each own

an undivided 50% interest in all THE CUPCAKERyTM trademarks, tradenames and intellectual

propelty. Each Party had an obligation to conduct their respective businesses in such a manner

as to protect the names and marks. All inquiries about development opportunities were required

to 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 prominently

to direct all inquires about development opportunities outside Nevada to PERRITT. The

agreement fmther provided that the Patties agreed not to disparage each other in any way or to

take any action which might damage the trademarks, tradenames or intellectual property of THE

CUPCAKERyTM.

4.16 The Parties executed the settlement agreement and all suppOlting documents. The

parties 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 does

an 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: "THE

CUPCAKERyTM".

4.18 The Plaintiffs incorporate herein by reference as if copied fully at length verbatim

herein the AFFIDAVIT OF RICKY B. PERRITT in support of their Motion for Temporary Restraining

Order.

4.19 Jenkins has apparently become dissatisfied with the Agreement that she made and

has acted to breach same in several respects. Although she has an obligation to protect the

intellectual property, including the trademark and tradenames she has refused to pay her share of

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 Case 4:11-cv-00023 Document 1 Filed 01/14/11 Page 9 of 14

legal and other expenses to protect said tradenames and trademarks. Plaintiff PERRITT has had to

finance a lawsuit in California against a third party which was settled on favorable terms and

reserved THE CUPCAKERyTM for the parties to this case. PERRITT advanced considerable sum of

his own money. Jenkins has failed and refused and continues to fail and refuse to pay her share

of 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 to

protect THE CUPCAKERyTM intellectual property. She has further stated that she will give the

right 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 has

been unable to persuade Jenkins of her responsibilities under the agreement they reached.

4.21 The website "TheCupcakery.com" is hosted by a company called

BannerView.com located in Las Vegas, Nevada. Because the THE CUPCAKERY, LLC, a Nevada

Limited Liability Company had a previous 5 year contract with the company who hosted the

website, the Parties continued to have that company host the website. The Patties agreed on the

landing page and the format of the website and BannerView.com has hosted the same since the

Parties 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 the

Plaintiff PERRITT that he needs to create another website. PERRITT owns a 50% undivided

interest in all the intellectual property including the website and to switch websites from the one

website that gets the most hits when "Cupcakery" is entered on any search engine would cause

substantial and irreparable harm.

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 Case 4:11-cv-00023 Document 1 Filed 01/14/11 Page 10 of 14

4.23 On or about January 12, 2011 Jenkins sent PERRITT an email stating that she was

going to "pull down" of the website. PERRITT attempted to discuss this with her and although

she cursed and refused to discuss the matter rationally, it is PERRITT'S belief that she intends to

take the website "TheCupcakery,com" and use it has her own website, leaving PERRITT without a

website and causing irreparable hatm,

4.24 Plaintiff PERRITT'S Affidavit states in detail the reasons that such conduct by

JENKINS would cause immediate and irreparable harm to him and to his restaurants. PERRITT has

three restaurants in Texas and is on the verge of opening another. This website gets many hits

each 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 any

location outside the State of Nevada to him, PERRITT fi'equently receives inquiries and is

seriously considering business propositions to open stores in Massachusetts and Florida. Having

the website down for any length of time will cause PERRITT to be unable to communicate with

potential investors, franchisees, or licensees.

4.25 Jenkins' threat concerning the website was specific as to time. She said she

intends to take action on Monday, January 17, 20 II. There is insufficient time to notify Jenkins

or her attorney and hold a hearing prior to the time of her threatened action. As of the time of

filing 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 Temporary

Restraining 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 temporat·y restraining

order without notice, PERRITT and the Plaintiff companies will be reparably harmed and injured

without any adequate legal remedy.

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 Case 4:11-cv-00023 Document 1 Filed 01/14/11 Page 11 of 14

V. FIRST CAUSE OF ACTION

APPLICATION FOR RESTRAINING ORDER AND PRELIMINARY INJUCTION

5.01 Plaintiffs move this Comt to grant a Temporary Restraining Order restraining and

enjoining the Defendants, their agents, servants, employees, contractors and attorneys and those

persons in active concert and patiicipation with them from interfering in any manner with the

CutTent 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 act

or omission calculated to cause any harm or damage to the intellectual property owned by

PERRITI in THE CUPCAKERy™ pending the hearing and disposition of the Plaintiffs' Motion for

Preliminary Injunction filed on January 14,2011 on the ground that immediate and irreparable

loss, damage and injmy will result to Plaintiffs as more fully appears from this verified

Complaint and the attached AFFIDAVIT OF RICKY B. PERRITI.

5.02 Plaintiffs further move that this Court, after proper notice and hearing, grant a

preliminary injunction granting the injunctive relief specified in the application for temporary

restraining order, such illjunctive relief to be effective until the conclusion of this lawsuit, or

until fmther ORDER of this Comt.

VI. SECOND CAUSE OF ACTION-DECLARATORY JUDGMENT

6.01. PLAINTIFFS sue for declaratory judgment and request the Court after construing all

the documentation in this case, along with the swom testimony, to enter a DeclaratOlY Judgment

determining the following:

a. That PERRITT owns an undivided 50% interest in the intellectual property

of THE CUPCAKERyTM, including but not limited to the trademarks and trade names.

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 Case 4:11-cv-00023 Document 1 Filed 01/14/11 Page 12 of 14

b. That JENKINS is obligated to pay 50% of the attorneys fees and costs

associated with protecting said intellectual property rights.

c. That JENKINS is not entitled to change or alter content or operation of the

website "The Cupcakery.com" or its Landing Page without the express consent and

permission of PERRITT.

d. That JENKINS owes a duty of loyalty to the brand name THE

CUPCAKERyTM.

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 a

breach of the duty ofloyalty to the Brand Name and to Plaintiff.

g. That the Defendant JENKINS' conduct as heretofore alleged constitutes a

breach of her fiduciary duties to the Brand Name and to Plaintiff.

h. That JENKINS is obligated to give PERRITT information about all inquiries

made, past or future, by third (3 fd ) 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 is

this declaratory judgment matter.

VII. THIRD CAUSE OF ACTION-BREACH OF THE DUTY OF LOYALTY

7.01. Defendant JENKINS' conduct as heretofore alleged constitutes a breach of the duty

of loyalty imposed by common law and specifically incorporated in the governing documents

peliaining to the Settlement.

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7.02. As a result Plaintiff has been damaged in an amount in excess of Seventy-Five

Thousand Dollars ($75,000.00).

VIII. FOURTH CAUSE OF ACTION-BREACH OF FIDUCIARY DUTY

8.01. Plaintiff alleges that Defendant owes him a fiduciary duty to act in a manner of

utmost 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-Five

Thousand Dollars ($75,000.00).

IX. FIFTH CAUSE OF ACTION-BREACH OF CONTRACT

9.01. 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 to

refuse to pay her share of the expenses of protecting same.

9.02. Such acts are a breach of the Settlement documents and have damaged Plaintiffs

in 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 FOR RELIEF

10.01. Plaintiff requests that summons issue requiring Defendant PAMELA JENKINS to

appear and answer this Complaint.

10.02. Plaintiff prays that the court issue a Temporary Restraining Order without notice

and asks that after appropriate notice a hearing be held on his request for Preliminmy Injunction

and that the Court enter a preliminary injunction restraining and enjoining Defendant as

heretofore specified. Plaintiff prays that such injunction be made permanent.

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10.03. Plaintiff prays that the Court enter a DeclaratOlY Judgment granting the relief

heretofore requested.

10.04. Plaintiff requests that he have and recover damages on account of Defendant's

breach of the duty of loyalty and breach of fiduciary duty and breach of contract in an amount in

excess 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 in

equity to which he may justly be entitled.

Respectfully submitted,

MICHAEL J. WHITTEN & ASSOCIATES, PC

218 North Elm Street
Denton, TX 76201
(940) 383-1618 or Metro (972) 434-3833
Fax: (94 ) 898-0 6

VERIFICATION

1 have read the above and foregoing Complaint. 1 have personal knowledge of the facts

alleged therein and they are true and COlTect.

RicKyB.

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SETTLEMENT AGREEMENT
Where~s RICKY B. PERRITT ("PERRITT") and PA~1BI,A JENKINS ("JENKINS") each own an
interest in THE CUPCAKERY, LLC, ANevada Limited LiabiHty Compalry; alld
Whereas PmuuTT has opened aM operates two (2) companies, TIll! CUPCAKERY LLC, A
Texas Limited Liability Company and BUSTER BAKING, LLC, A Texas Limited Liability
Company; and
Whereas the Parties ltave a disagreement over the operation, management, percentages of
ownership and future direction and development of the tr~delll~rks, trade nalues and intellectual
propel'ty; and
Whereas, PERRITT h~s filed suit ~g~inst JENKINS in the Unlted States Dlstdct Court for the
Eastern District of Texas, Sherman Division, in C~use No. 4:09 CV 00406, Styled Ricky Perrilt
1'. Pamela Jenkins, and

Whereas the Parties desire to resolve all disputes betwcen them and to divide and separate
the 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 p~y PERRITT at closing the sum of One Hundred Thousand Dollars
($100,000). At closing, THIl COPCAKERY, LLC, A Nevada Limited Liability Company and
Pamela Jenkins will transfer, assiilll and convey to RlCKY PIlRRlTT or a company he may
designate an undivided fifty percent (50%) interest in all trademarks, trade names and
intellectual Pl'Operty owned by them with respect to the cupcake business. Neither party
shall transfer his 01' her interest in said intelleetnal property to any entity which he 01' she
does not control, except he 01' she may sell his or her stores, as a group or individually and
the pmchaser shall have the l'ight to use and develop the trade nallle and trademarks. This
is subject to the provisions ofparagraphs 7 alld 13.

2. Perritt and Jenkins ~gree that any party opening a store shall be in charge of and have the
exclusive right to issue press releases and make media contacts for that storc. On any press
releases 01' media interview with national media the parties shall consult and agl'ee on the
content of any sUell prcss release 01' media statements. The Landing Page of the Website
shall direct all development and media inquiries outside Nevada to Pel'l'itt and all such
inquiries inside Nevada shall bc directed to Jenkins. Pen'itt shall have the right to hire any
national media finn and to design the webllage landing page. Penitt shall consult with
Jenkins and shall not ul1l'casonably refnse to incorporate her concepts into the Landing
Page.

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, Six
Hundred Seven and Seventeen One Hundredths Dollars ($75,607.17) and the balance of the
loan PERRITT, acting through CUSTOM VERSION, INC" made to the Las Vegas THE
CUPCAKERY™ in the ~Illount of One Hundred Twenty One Thousand Two Hundred

EXHIBIT

I A
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Selllemelli Agreement
P(lge2of4

Seventeen and Sixty Eight One H\mdredths Dollars ($121,217.68). These payments will be
paid per the Notes which will be amended to reflect that all past due payments will bear
interest at (jighteen percent (18%) per alUlum. Neither revised Nole shall have any penalty
for prepayment.

4. Item 2 will be secured by a first lien on all JENKINS' right, title and intcrcst in THE
C\lPCAKERY, LLC [Nevadaland its assets. JENKINS and 'filB CUPCAKllRY, LLC [Nevada]
will exeel1te lln llpproprillte Seourlty Agreement pledging the intercst in thc Ncvada
Company and all real 01' personal prollerty it owns, and such Agreemenl, Flnano/ng
Sinlemeni or other appropriate evidence of this security interest shall be placed ofrecord in
Ciark County llnd the State ofNevllda. JENKINS will have the exclusive right In the State of
Nevada 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 Dallas
Store. PERRITT will have the exclusive right in the State of Texas to own and operate 'filE
CUPCAKERY™ Stores.

6. PERRITT shall have the eXclusive right to develop 'filE CUPCAKBRyTM in all stlltes exccpt
Nevlldll for 11 period of fOUl' (4) years from date of closing.

7. PllRRlTT and JllNKlNS, individually, will each own an 111ldivided fifty percent (50%) interest
in all THE CUPCAKBRy™ trademarks, trade names and intellectual property. Each Party
shall have the obligation to conduct their respective businesses in such 11 mlllmer as to
protect the names and marks. Any furtheJ' marks, names OJ' intellectual property that either
PERRITT or JENKINS develop in connection with the cupcake business will be owned
fifty/fifty (SO/50) and either may \Ise OJ' adapt the other's work in his or her territory. If
either Patty sells his or her interest to 11 Third Party, the other shall not be obligated nuther
to 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. Such
payments shall be made by the twentieth (201h) day of the month following the month in
which the sales were made. In connection with sueh payments each Party shall ful'nish the
other with a written statement verifYing the previous months' s~[es which stlltement shall
be llccomp~nicd by a check OJ' wire transfer payment. All past due payments shall bear
interest llt the rate of eighteen percent (18%) per rumum until paid, and if either Pllrly ~hall
have to suc to collect sueh payments he or she shall be entitled to recover his 01' her
reasonable attomey fees. Payments due from JENKINS to PERRITT shall be due and payable
in Denton County, Texas. Pllyments due and payable from PERRIIT to JIJNKINS shall be
due and payable in Clark County, Nevada. This obligation shall survive the sale of any
Pllrty'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 new
store in the future, sueh payment to be made on 01' before thit·ty (30) days from the date
such store sells the first cupcake. This obligation shall survive the sale of any Patty's
interest 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 22

8efllemen/ Agreement
Page3o[4

10. 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 has
not 0IJened a store in that state, 01' has not committed to do so, he shall evaluate the matter
and if it is in the best interest of THB CUPCAKBRy™ hc may, in his sole discretion, give
JBNKINS permission to go illtO that state. After the expiration of the fOUL' (4) ye~\I' IJeriod
each Party who has opened a store in a state shall have excl\lsiW rights to devclop the
b\lsiness in that state. Thereafter the first Party to open a store in a state shall have
exclusive rights in that state. Once a Paliy has established exclusivc rights in a state the
other Party may not enter that state without written permission from the other. This
obligation shall survive tile sale of any Party's interest and become an obligation of any
Third Party OW)ler.

11. Each Party shall execute global releases of the other for all past c()J\duct, and upon
execution 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 by
thc Parties. The website shall cleady and prominently direct all inquiries abo\lt
development opportunities outsidc Nevada to PBRRIIT.

13. Should either Party to this Agreement desire to sell any store or palt of a storc toa Third
(3 rd) Party, helshe must first offer the store to the other Party by presenting a true copy of a
written Sales Contract with the prospective purchaser spelling out all terms and conditions
of the Sale. The other Party shall have thiliy (30) days to match the offer and if he/she
does 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 with
a Third Patty in any state where the Party has exclusive rights. The right of first refusal
shall apply to all stores developed by PERRITT and JENKINS, oither individually 01' in
cooperation with a Third Party. If one Party enters into a contract to sell a store 01' stores to
a Third Party and the other Pmty elects not to exeroise his 01' her right of first refusal, the
new store shall neveliheless be obligatcd to pay the Five Tho\lSand Dollars ($5,000.00) fee
and pay the royalty of one and one-halfPercent (1.5%) of gross sales. This obligation shall
survive 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 it
may be disclosed to any bank 01' person who is finanoing the Sale, on the condition that the
financing Paliy agrees to honor the Confidentiality Agreement. Nothing herein shall
prohibit 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 who
agrees to be bound by the Cotifidenlia/ity Agreement. Nothing herein shall prohibit cithcr
Parly frollll'esponding to a lawful sub110ena from a court of oompetent jurisdiction whioh
demands production of this document. If a Patiy reoeives a subpoena he or she shall
TMMllDIATBLY inform the other by providing a truc copy of the subpoena. A Party who
reoeives such a subpoena shall request the issuing oourt to issue a protective ol'der to
pl'Clhibit dissemination ofthe document to those without a strict need to see the document in
connection with the litigation.
Case 4:11-cv-00023-MHS -ALM Document 1-2 Filed 01/14/11 Page 4 of 22

Selllellleill Agteelllellt
Page4of4

15. Each Party agrees not to disparage the othcr ill allY way or to take any action which might
damage the trademarks, trade names or intellectual property of THE CUPCAKERyTM.

16. Time is of the essence.

2009.

Pamela Jenkins
 Case 4:11-cv-00023-MHS -ALM Document 1-2 Filed 01/14/11 Page 5 of 22

Promissory Note

Date:

llorrower: Pamela Jenkins and The Cupcakery, LLC, a Nevada Limited Liability Company.

llon'ower's Mailing Address:

Pamela Jenkins
9680 S. Eastem Avenue
Las Vegas, Nevada 89123
Clark County

The Cupcakery, LLC

9680 S. Eastem Avenue
Las Vegas, Nevada 89123
Clark County

Lender: Custom Version Corporation, a Texas corporation.

Place for Payment:

P.O. Box 858

Denton, Denton County, Texas 76202,
or any other place that Lender may designate in writing.

Principal Amount: $121,217.68

Annual Interest Rate: Ten Percent (10.00%)

Matnrity Date: October 1,2012

Annual 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 of
THREE THOUSAND NINE HUNDRED ELEVEN AND 351100 DOLLARS ($3,911.35), on
the first day of each month, beginning November 1, 2009 and continuing until the unpaid principal
and acclUed, unpaid interest have been paid in full. Payments will be applied first to acclUed
interest and the remainder to reduction of the Principal Amount.

Security for Payment: This note is secured by a security interest created in a security
agreement that covers all of Borrower's membership interest in The Cupcakery, LLC, a Nevada
 Case 4:11-cv-00023-MHS -ALM Document 1-2 Filed 01/14/11 Page 6 of 22

Limited Liability Company, all assets, jncl ding int((1 c < 1 properties, belonging to The
CupcakelY, LLC and tbat is dated I' \\) ? r -- 2009 and executed by Pnmeln
Jenkins and The Cupcakery, LLC ns the debtors in fnvor ofLender as the secured pmty.

Other Security for Payment: None

Borrower promises to pny to the order of Lender the Plincipal Amount plus interest nt the
Annual Tnterest Rnte. This note is pnyable at the Place for Pnyment and nccording to the Terms of
Pnyment. All unpaid amounts nre due by the Maturity Date. After maMity, Borrower promises to
pny any unpaid principal balance plus interest at the Annunl Interest Rate on Matured, Unpaid
Amounts.

If Bon-ower defaults in the payment of this note or in the perfonnance of any obligation in
any instrument securing or collnteral to this note, Lender may declare the unpaid principal balance,
eamed interest, and any other amounts owed on the note immediately due. Notwithstaj](ling any
other provision of this note, in the event of a default, before exercising any of Lender's remedies
under this note or any security agreement securing it, Lender will first give Borrower written notice
of default and Bon'ower will have ten days after notice is given in which to cure the default. Tfthe
default is not cured ten days after notice, Borrower and each snrety, endorser, and guarantor waive
all demand for payment, presentation for payment, notice of intention to accelerate matUlity, notice
of acceleration ofmaturity, protest, and notice of protest, to the extent pennitted by law.

Borrower also promises to pay reasonable attomey's fees and court and other costs if this
note is placed in the hands of an attomey to collect or enforce the note. These expenses will bear
interest from the date of advance at the Annual Intetest Rate on Matured, Unpaid Amounts.
Borrower will pay Lender these expenses and interest on demand at the Place for Payment. These
expenses and interest will become part of the debt evidenced by the note and will be secured by any
security for payment.

Prepayment: Borrower may prepay this note in any amount at any time before the Maturity Date
without penalty or premium.

Application of Prepayment: Prepayments will be applied to installments on the last mnturing

principal, and interest on that prepaid principal will immediately cease to accrue.

Interest on the debt evidenced by this note will not exceed the maximum rate or amount of
nonusurious interest tluit may be contracted for, taken, reserved, charged, or received under law.
Any interest in excess of that maximum amount will be credited on the Principal Amount or, if the
Ptincipal Amount has been paid, refunded. On any acceleration or required or pelluitted
prepayment, any excess interest will be canceled automatically as of the acceleration or prepayment
or, if the excess interest has already been paid, credited on the Principal Amount or, if the Principal
Amount has been paid, refunded. This provision ovenides any conflicting provisions in this note
and all other instruments concerning the debt.
 Case 4:11-cv-00023-MHS -ALM Document 1-2 Filed 01/14/11 Page 7 of 22

Each Borrower is responsible for all obligations represented by this note.

When the context requires, singular nouns and pronouns include the plural.

If any ilJstallment becomes overdue for more than ten days, at Lender's option a late
paymelJt charge of 10% of the amount of the payment may be charged in order to defray the
expense of handling the delinquent payment.

A default exists under this note if (I) (a) Borrower or (b) any other person liable on any
part of this note or who grants a lien or security interest on property as security for any palt of this
note (an "Other Obligated Party") fails to timely payor perfonn any obligation or covenant in any
wlltten agreement between Lender and Borrower or any OtherObligated Party; (2) any walTanty,
covenant, or representation in this note or in any other written agreement between Lender and
Borrower or any Other Obligated Party is materially false when made; (3) a receiver is appointed
for Borrower, any Other Obligated Party, or any property on which a lien or secut1ty interest is
created as secUt1ty (the "Collateral Security") for any part of this note; (4) any Collateral Security is
assigned for the benefit of creditors; (5) a bankruptcy or insolvency proceeding is commenced by
Borrower, a pattnership of which Borrower is a general partner; or an Other Obligated Party; (6)
(a) a bankmptcy or insolvency proceeding is commenced against Borrower, a partnership of which
Borrower is a general partner, or an Other Obligated Party and (b) the proceeding continues
without dismissal for sixty days, the party against whom the proceeding is commenced admits the
mateIial allegations of the petition against it, or an order for relief is entered; (7) any of the
following parties is dissolved, begins to wind up its affairs, is authorized to dissolve or wind up its
affairs by its goveming body or persons, or any event occurs or condition exists that pennits the
dissolution or winding up of the affairs of any of the following patties: Borrower, a partnership of
which Borrower is a general partner, or an Other Obligated Patty; and (8) any Collateral Security is
impaired by loss, theft, damage, levy and execution, issuance of an official writ or order of seizure,
or destruction, unless it is promptly replaced with collateral secut1ty of like kind and quality or
restored to its fonner condition.

If any pl'Ovision of this note conflicts with any provision of a loan agreement, deed oftlUst,
or secut1ty agreement of the same transaction between Lender and Borrower, the provisions of the
note will govem to the extent ofthe conflict.

Tltis note will be constmed under the laws of the state of Texas, without regard to
choice-of-Iaw JUles ofany j1111sdiction.

Pamela Jenkins
Case 4:11-cv-00023-MHS -ALM Document 1-2 Filed 01/14/11 Page 8 of 22

The Cupcakery, LLC, a Nevada Limited Liability

~\
Pamela Jenkins, President
Case 4:11-cv-00023-MHS -ALM Document 1-2 Filed 01/14/11 Page 9 of 22

TRANSFER OF INTEREST IN LlMITED LIABILITY COMPANY

Pursuant to the settlement agreement of even date herewith, I, Rieky B. Perritt, ofthe

County ofDenton, State of Texas, for $10.00 and other good and valuable consideration, do

hereby transfer, assign and convey to Pamela Jenkins of Las Vegas, Nevada, all my right title

and interest in and to THE CUPCAKERY, LLC, A NEYADA LIMITED LIABILITY

COMPANY. I warrant that I own an \lI1divided two thirds (2/3) interest in said LLC and transfel'

all my interest, savc and except I hereby retain in and to myself an undivided one-halfinterest in

and to atI trademarks, trade names, and intellectualllroperty of any nature whatsoevel' owned by

said LLC pursuant to the Settlement Agreement l'efcrred to herein.. All the terms and provisions

ofthe Seulement Agreemcnt ofeven date herewith are hereby incorporated by reference herein

as if copied fully at length herein,

Signed the .2l:~y ofOotobe1", 2009,

-11£--
Ricky B. Perritt
 Case 4:11-cv-00023-MHS -ALM Document 1-2 Filed 01/14/11 Page 10 of 22

TRANSFER OF INTEREST IN INTELLECTUAL PROPERTY

Pursuant to the Settlement Agreement of even date herewith, TIlE CUPCAKERY, LLC,

ANEVADA LIMITED LIABILITY COMPANY, acting by and through its duly authorized

Managing Member, Pamela Jenkins ofLas Vegas, Nevada, for $10.00 and other good and

valuable consideration, do hereby transfer, assign and convey to Ricky B. Perritt, of the County

ofDenton, State of Texas a one-half undivided interest in and to all the trademarks, trade names

and other intellectual property of THE CUPCAKERY, LLC, A NEVADA LIMITED

LIABILITY COMPANY, all pursuant to the terms and provisions of the Settlement Agreement

of even date herewith which are hereby incorporated by reference herein as if copied fully at

length herein.

Signed the~ay of October, 2009.

TIlE CUPCAKERY, LLC, A NEVADA

LIMITED LIABILITY COMPANY

BY~
Pamela Jenkins, Its Managing Member
 Case 4:11-cv-00023-MHS -ALM Document 1-2 Filed 01/14/11 Page 11 of 22

TRANSFER OF INTEREST IN LIMITED LIABILITY COMPANY

Pursuant to the Settlement Agreement of even date herewith, I, Pamela Jenkins of Las

Vegas, Nevada, for $10.00 and other good and valuable consideration, do hereby transfer, assign

and convey to Ricky B. Pen'itt, ofthe County ofDeriton, State of Texas aU my right title and

interest in and to TIffi CUPCAKERY, LLC, A TEXAS LIMITED LIABILITY COMPANY and

BUSTER BAKING, LLC, A TEXAS LIMITED LIABILITY COMPANY. I further

acknowledge that Ricky B. Pen-itt owns an undivided one-half interest in and to aU the

trademarks, trade names and other inteUectual property ofTIffi CUPCAKERY, LLC, A

NEVADA LIMITED LIABILITY COMPANY, all pursuant to the terms and provisions of the

Settlement Agreement of even date herewith which are hereby incol}JOrated by reference herein

as if copied fuUy at length herein.

Signed the2~y of October, 2009.

Pamela Jenkins
Case 4:11-cv-00023-MHS -ALM Document 1-2 Filed 01/14/11 Page 12 of 22

RELEASE

This release is executed pursual\qo that certain ~E1(fl'EMENT AGREEMENT executed

by the parties hereto on thO 't-,day of OQ;\'Ew._sE?I ,2009,

PAMELA JENKINS, for good and adequate consideration, executes this document
individually and on behalf ofTRE CUPCAKERY, LLC, a Nevada Limited Liability
Company.

RICKY B, PERRITT, for good and adequate consideration, executes this document
individually and on behalf ofTRE CUPCAKERY, LLC, a Texas Limited Liability
Company and BUSTER BAKING, LLC, a Texas Limited Liability Company,

Ail of the persons and entities in the foregoing paragraphs are collectively referred to as
"Parties".

For adequate consideration, the receipt and sufficiency of which is acknowledged by the
Panies, and in consideration of the mutual agreements, conditions, representations,
wan'anties, recitals, covenants and statements ofintention contained in such
SETTLEMENT AGREEMENT, the Panies, in the capacities recited above, do hereby
mutually release one another from liability for any and all actual or potential claims,
suits, demands, causes of action, charges and grievances of any kind or character,
regardless of the nature or extent of the same arising between the Parties as of the date of
such SETTLEMENT AGREEMENT.

This mutual release is executed this ~day of ~l? Jf , 2009.

Pamela Jenk' s

Ricky B. Perritt
 Case 4:11-cv-00023-MHS -ALM Document 1-2 Filed 01/14/11 Page 13 of 22

SeClu'ity Agreement

Date: cr)~~(:)62009
Debtor: Pamela Jenkins; and The CupcakelY, LLC, a Nevada Limited Liability Company

Debtor's Mailing Address:

Pamela Jenkins
9680 S. Eastem Avenue
Las Vegas, Nevada 89123
Clark County

The Cupcakery, LLC

9680 S. Eastem Avenue

Las Vegas, Nevada 89123

Clark County

Secured Party: Ricky B. Penitt; and Custom Version COllJOration, a Texas corporation

Secured Party's Mailing Address:

Ricky B. Perritt
P.O. Box 858
Denton, Texas 76202
Denton County

Custom Version Corporation

P.O. Box 858
Denton, Texas 76202
Denton COl!nty

Oassification of Collateral: General intangibles

Collateral (including all accessions):

All ofDebtor's interest in the following personal property and all proceeds of that propeliy:

a. Debtor's undivided interest as a member in and to that celiainlimited

liability company named The Cupcakery, LLC (the "Company"), described in the
limited liability com anY,agr .ement nd se Ie nent agreement with Lender of the
Company dated C~\ by and between Debtor and
 Case 4:11-cv-00023-MHS -ALM Document 1-2 Filed 01/14/11 Page 14 of 22

other members of the Company, as amended or modified and in effect (the

"Company Agreement"), together with all of DebtOl's other rights, title, and interest
of every kind and character whatever in and to the Company and under the
Company Agreement; and

b. all of Debtor's share of profits, disttibutions, income and surplus

ft'om the Company and DebtOl's interest in specific propel1ies of the Company on
dissolution or otherwise.
c. all of The Cupeakery, LLC assets, including all intellectual
properties.

Obligation

Notes

Date: o <1l1)\uz,( d~, 2009

Original principal amount: $75,607.17

Borrower (Obligor): Pamela Jenkins,

Lender (Secured Party): Ricky B. Perritt

Maturity date: October 1,2014

Tenns ofPayment: As provided in the note.

Original principal amount: $121,217.68

Borrower (Obligor): Pamela Jenkins and The Cupcakery, LLC

Lender (Secured Party): Custom Version Corporation

Maturity date: October 1,2012

Tenns of Payment: As provided in the note.

Other debt/Future advances: The secmity interest also secures all other present and
future debts and liabilities ofDebtor and/or Obligor to.Secured Party, including future advances.
 Case 4:11-cv-00023-MHS -ALM Document 1-2 Filed 01/14/11 Page 15 of 22

Debtor's Representations Concerning Debtor and Locations:

Debtor's, Pame ~s, residence is tated at 9680 S. Eas e~lUe, Las Ve as

Nevada 89123.

D tor's, Pamela I nkins, federal t identifi7 number IS

Debtor's, The CupcakelY, LLC, place of business is located at 9680 S. Eastel1l Avenue
, Las Vegas Nevada.

Debtor's, The Cupcakery, LLC, state of organization is Nevada; Debtor's name, as shown
in its olganizational documents, as amended, is exactly as set forth above; and DebtOl's
organizational identification number is EOOI1312005-9.

tax identification number is

The Company's state of organization is Nevada, and the Company's name, as shown in its
organizational documents, as amended, is exactly as set forth above.

Debtor's records conceming the Collateral are located at 9680 S. Eastern Avenue, Las
Vegas Nevada.

Debtor grants to Secured Party a security interest in the Collateral and all its proceeds to
secure the Obligation and all renewals, modifications, and extensions of the Obligation. Debtor
authorizes Secured Party to file a financing statement describing the Collateral.

A. Debtor represents and warrants the following:

I. No financing statement covering the Collateral is filed in any public office.

2. Debtor owns the Collateral and has the authoIity to grant this secuIity interest, fi'ee
from any setoff, claim, restriction, secuIity interest, or encumbrance except liens for taxes not yet
due.

3. All infol1l1ation about Debtor's fmancial condition is or will be accurate when

provided to Secured PlIlty.

4. An accurate copy of the Company Agreement has been delivered to Secured Party.
There are no changes to the Company Agreement not reflected in the copy delivered to Secured
Party.
 Case 4:11-cv-00023-MHS -ALM Document 1-2 Filed 01/14/11 Page 16 of 22

5. Debtor has obtained the written consent of all persons required under the Company
Agreement or othetwise to authOllze the security interest created by this agreement and Secured
Party's exercise of its rights hereunder. On request of Secured Party, Debtor will deliver to
Secured Party an executed original of that conSent.

B. Debtor agrees to-

1. Defend the Collateral against all claims adverse to Secllred Party's interest; pay all
taxes imposed on the Collateral; keep the Collateral free from liens, except for liens in favor of
Secured Patty or for taxes not yet due; keep the Collateral in Debtol's possession and ownership
except as othelwise provided in this agreement; maintain the Collateral in good condition; and
protect the Collateral against waste, except for ordinaly wear and tear.

2. Pay all Secured Party's expenses, including reasonable attorney's fees, incurred to
obtain, preserve, perfect, defend, and enforce this agreement or the Collateral and to collect or
enforce the Obligation. These expenses will bear interest from the date of advance at the rate stated
in the Note for matured, unpaid amounts and are payable on demand at the place where the
Obligation is payable. These expenses and interest are paIt ofthe Obligation and
are secured by this agreement.

3. Sign and deliver to Secured Party any documents or instruments that Secured Party
considers necessalY to obtain, maintain, and perfect this secuJity interest in the Collateral.

4. Notit'y Secured Party immediately of any event of default and of any mateJial
change (a) in the Collateral, (b) in Debtor's Mailing Address, (c) in the location of any Collateral,
(d) in any other representation or warranty in this agreement, and (e) that may affect this security
interest, and of any change (t) in Debtor's name and (g) of any location set fOlth above to another
state.

5. Use the Collateral pJimaJily according to the stated classification.

6. Maintain accurate records of the Collateral at the address set forth above, fiJrnish
Secured PaIty any reqnested information related to the Collateral; and pemlit Secured Party to
inspect and copy all records relating to the Collateral.

7. Pelf01111 all obligations to be petfOmled by Debtor under the Company Agreement.

8. Notify Secured Party of any default known to Debtor of any other person under the
Company Agreement and of any notice ofdefault given under the Company Agreement.

9. Enforce the obligations of other persons under the Company Agreement and at
 Case 4:11-cv-00023-MHS -ALM Document 1-2 Filed 01/14/11 Page 17 of 22

Secured Patty's request, at Debtor's expense, take action requested by Secured Party to enforce the
obligations of other persons and exercise the lights of Debtor under the Company Agreement.

c. Debtor agrees 1I0t to·

1. Sell, transfer, or encumber any of the Collateral.

2. Change its name or jurisdiction of organization, merge or consolidate with any

person, or convert to a different entity without notifying Secured Party in advance and taking action
to continue the perfected status ofthe secutity interest in the Collateral.

3. Change DebtOl'S name or state of residence without notifying Secured Party in

advance and taking action to continue the perfected status ofthe secUlity interest in the Collateral.

4. Consent to or approve any modification of the Company Agreement.

5. Compromise or reduce any payment or distribution to be made to Debtor on the

Collateral.

D. Secured Party Not Liable

Debtor remains liable under the Company Agreement for all its obligations thereunder.
Secured Party has no liability thereunder because of this agreement. Secured Pat1y is not liable,
because of this agreement, for any obligation of Debtor under the Company Agreement.

E. Default and Remedies

1. A default exists if -

a. Debtor, Obligor, or any secondary obligor fails to timely payor

pelf01111 any obligation or covenant in any written agreement between Secured Patty
and any ofDebtol~ Obligor, or secondary obligor;

b. any WatTanty, covenant, or representation in this agreement or in any

other written agreement between Secured Party and any of Debtor, Obligor, or
secondaly obligo!' is materially false when made;

c. a receiver is appointed for Debtor, Obligor, any secondary obligor,

or any Collateral;

d. any Collateral is assigned for the benefit of creditors;

e. a bankruptcy or insolvency proceeding is commenced by Debtor, the

Case 4:11-cv-00023-MHS -ALM Document 1-2 Filed 01/14/11 Page 18 of 22

Company, a partnership in which Debtor is a general partner, Obligor, or any

secondary obligor;

f. a banklUptcy or insolvency proceeding is commenced against

Debtor, the Company, a partnership in which Debtor is a general partner, Obligor,
or any secondary obligor, and the proceeding continues without dismissal for sixty
days, the party against whom the proceeding is commenced admits the matelial
allegations ofthe petition against it, or an order for relief is entered;

g. any of the following parties is dissolved, begins to wind up its

affairs, is authorized to dissolve or wind up its affairs by its goveming body or
persons, or any event occurs or condition exists that permits the dissolution or
winding up of the affairs of any of the following parties: Debtor; the Company; a
partnership of which Debtor is a general patiner; Obligor; or any secondmy obligor;
or

h. any Collateral is impaired by loss, theft, damage, levy and execution,

issuance of an official writ or order of seizure, or destmction unless it is promptly
replaced with collateral of like kind and quality or restored to its fonner condition.

2. If a default exists, Secured Party may -

a. demand, collect, convert, redeem, settle, compromise, receipt for,

realize on, sue for, and adjust the Collateral either in Secured Party's or Debtor's
name, as Secured Patty desires, or take control of any proceeds of the Collateral and
apply the proceeds against the Obligation;

b. take possession of any Collateral not already in Secured Party's

possession, without demand or legal process, and for that purpose Debtor grants
Secured Party the light to enter any premises where the Collateral may be located;

c. without taking possession, sell, lease, or otherwise dispose of the

Collateral at any public or private sale in accordance with law;

d. exercise any rights and remedies granted by law or this agreement;

e. notifY obligors on the Collateral to pay Secured Party directly;

f. as Debtor's agent, make any endorsements in Debtor's name and on

Debtor's behalf of any proceeds of the Collateral; and

g. exercise and enforce all rights, including voting rights, available to

an Owner of the Collateral.
 Case 4:11-cv-00023-MHS -ALM Document 1-2 Filed 01/14/11 Page 19 of 22

3. Foreclosure of this SeC\lrity interest by suit does not limit Secured Party's remedies,
including the right to sell the Collateral under the terms of this agreement. Secured Party may
exercise all remedies at the same or different times, and no remedy is a defense to any other.
Secured Party's rights and remedies include all those granted by law and those specified in this
agreement.

. 4. Secured Party's delay in exercising, partial exercise of, or fallure to exercise any of
its remedies or rights does not waive Secured Party's tights to subsequently exercise those
remedies or tights. Secured Party's waiver of any default does not waive any other default by
Debtor. Secured Party's waiver of any right in this agreement or of any default is binding only if it
is in writing. SeC\lred Party may remedy any default without Waiving it.

5. Secured Party has no obligation to clean or otherwise prepare the Collateral for sale.

6. Secured Patty has no obligation to collect any of the Collateral and is not liable for
fallure to collect any of the Collateral, for failure to preserve any right pertaining to the Collateral,
or for any act or omission on the part of Secured Palty or Secured Party's officers, agents, or
employees, except willful misconduct.

7. Secured Party has no obligation to satisl» the Obligation by attempting to collect the
Obligation from any other person liable for it. Secured Party may release, modify, or waive any
collateral provided by any other person to secure any of the Obligation. If Secured Patty attempts
to collect the Obligation from allY other person liable for it or releases, modifies, or waives any
collateral provided by any other person, that will not affect Secured Party's rights against Debtor.
Debtor waives any right Debtor may have to require Secured Party to pursue any third person for
any of the Obligation.

8. If Secured Party must comply with any applicable state or federal law requirements
in connection with a disposition of the Collateral, such compliance will not be considered to
adversely affect the commercial reasonableness of a sale of the Collateral.

9. Secured Party may sell the Collateral without giving any warranties as to the
Collateral. Secured Party may specifically disclaim any wananties of title or the like. This
procedure will not be considered to adversely affect the commercial reasonableness of a sale of the
Collateral.

10. If Secured Party sells any of the Collateral on credit, Debtor will be credited only
with payments actually made by the purchaser and receive<i by Secured Party for application to the
indebtedness of the purchaser. If the purchaser fails to pay for the Collateral, Secured Palty may
resell the Collateral and Debtor will be credited with the proceeds ofthe sale.

11. If Secured Party purchases any ofthe Collateral being sold, Secured Party may pay
 Case 4:11-cv-00023-MHS -ALM Document 1-2 Filed 01/14/11 Page 20 of 22

for the Collateral by crediting the pln'chase pJice against the Obligation.

12. Secured Parly has no obligation to marshal any assets in favor of Debtor or against
or in payment of the Note, any of the Other Obligation, or any other obligation owed to Secured
Party by Debtor or any other person.

13. If the Collateral is sold after default, l'ecitals in the bill of sale or transfer will be
plima facie evidence of their tlUth and all prerequisites to the sale specified by this agreement and
by law will be presumed satisfied.

F. Genet'al

I. Notice is reasonable if it is mailed, postage prepaid, to Debtor at Debtor's Mailing

Address at least ten days before any public sale or ten days before the time when the Collateral may
be othelwise disposed of without further notice to Debtor.

2. This secuJity interest will neither affect nor be affected by any other secuJity for any
of the Obligation. Neither extensions of any of the Obligation nor releases of any of the Collateral
will affect the pJiority or validity of this secmity interest.

3. This agreement binds, benefits, and may be enforced by the successors in interest of
Secured Party and will bind all persons who become bOljnd as debtors to this agreement.
Assignment of any part of the Obligation and Secured Parly's delivery of any part of the Collateral
wHi fully discharge Secured Party from responsibility for that part of the Collateral. If such an
assignment is made, Debtor wHi render perfonnance under this agreement to the assignee. Debtor
waives and wHi not assert against any assigllee any claims, defenses, or setoffs that Debtor could
assert against Secured Party except defenses that cannot be waived. All representations,
wananties, and obligations are joint and several as to each Debtor.

4. This agreement may be amended only by an instnnnent in wJiting signed by

Secured Party and Debtor.

5. The unenforceability of any proVISIOn of this agreement wHi not affect the
enforceability or validity ofany other provision.

6. This agreement will be constlUed according to Texas law, without regard to choice-
of-law rules in any jmisdiction. This agreement is to be perfonned in, and has been signed by
Debtor in, the county of Secured Party's Mailing Address.

7. Interest on the Obligation secured by this agreement wHi not exceed the maximulll
amount of nonusmious interest that may be contracted for, taken, reserved, charged, or received
under law. Any interest in excess of that maximum amount will be credited on the pJincipal of the
Obligation or, if that has been paid, refimded. On any acceleration or required or pennitted
 Case 4:11-cv-00023-MHS -ALM Document 1-2 Filed 01/14/11 Page 21 of 22

prepayment, any such excess will be canceled automatically as ofthe acceleration or prepayment or,
if already paid, credited on the prinCipal of the Obligation or, if the pIinCipal of the Obligation has
been paid, refunded. This provision overrides any conflicting provisions in this and all other
insttUments concel1ling the Obligation.

8. In no event may this agreement secure payment of any debt subject to title IV of the
Texas Finance Code or create a lien otherwise prohibited by law.

9. When the context requires, singular nouns and pronouns include the plural.

10. Any teOl1 defined in sections 1.101 to 11.108 of the Texas Business and Commerce
Code and not defined in this agreement has the meaning given to the term in the Code.

Pamela Jenkins

The Cupcakery, LLC, a Nevada Limited Liability

Company,

Pan ela Jenkins, President

r' .........•.
i STATE OF NEVADA

r~;UNr.Y~F~~~.~ . 'j
I
....... i
This insttUment was acknowledged before me on
Pamela Jenkins.
dCrJD'oC\ Z «, 2009, by

,gfS"""~='=-=---'%
NOTARY PUBLIO
STATE OF NEVADA
Coonly of ctark
"~"''''''' ALISSA BARNARD
t.. o i n t = = Ma 1.2012
 Case 4:11-cv-00023-MHS -ALM Document 1-2 Filed 01/14/11 Page 22 of 22

Notary Public, State of Nevada

My commission expires: 5·- \-- \'L

IsTATEOFNEVADA .. -T) · · · · · - - · - - - · · · - - - - < · 1

1 ... «"'« •.. <~,«..
<0 " , ' ,<.<.'. • • < . ' . r«~"· . ..-<' ••, « . • '. .. ..«.,
f- ... -~. ."'.'" -I _. ...~.-,.' ""'. I
!c;()1!J::l.YX(?J!C:;LARI<:« ~. __ . I) _<<<_~. I
Before me, ":>5 0, l\ \\ nCt 1[-( .\ Bo. (. , on this day personally
appeared Pamela Jenkins, known to me to be the person whose name is subscribed to the
foregoing instrument and acknowledged to me that Pamela Jenkins executed the same as the act of
The CupcakelY, LLC, a Nevada Limited Liability Company, as its President, for the purposes and
consideration therein expressed.

Given under my hand and seal ofoffice this Z f)'\ i'day of ():::,[-ot,e (-,2009.

NOTARY PUBLIO
STATE OF NEVADA
County of Ciark
O{1/0Q.... cb(Anf\,\c,-.0
NotalY Public, State of Nevada
"... ALISSA BARNARD
~~~oIi»:n:.;;:,m~ltOs M. 1 2012 My commission expires: s-· \- \")...

AFTER RECORDING RETURN TO:

Ricky B. PelTitt
P.O. Box 858
Dentoll, Texas 76202