SETTLEMENT AGREEMENT AND GENERAL RELEASE

Exhibit 10.1

SETTLEMENT AGREEMENT

AND

GENERAL RELEASE

This settlement Agreement and general release (“Agreement”) is made and entered into effective the date of the last signature hereto, by and between World Wide Restaurant Concepts (“WRC”); Family Tree Produce (“FT”); Gold Coast Produce (referred collectively with its owners Macario Montiel, Robert Monteil, and Jaime Monteil and an affiliated entity, Ventura Veg, Inc. as “GC”); Employers Mutual Casualty Company (“EMC”); and Golden Eagle Insurance Corporation (“GEIC”); collectively referred to hereinafter as the “parties” and individually as “party.” WRC, FT and GC are collectively referred to herein as “the insureds.” EMC, and GEIC are collectively referred to herein as “the insurers.”

I.

RECITALS

In or before November 2003, GC, obtained products from other producers and then, in turn, provided certain produce, including pre-packaged lettuce (hereinafter, “product”), to FT. FT distributed that product and other produce products to WRC and other customers. Said customers, including WRC, thereafter served said products and other produce products to their customers. On or about November 4, 2003, certain Pat & Oscar’s customers, and certain other consumers not at Pat & Oscars, allegedly sustained injuries as a result of exposure to “E.coli” bacteria. Hereinafter, the delivery of allegedly contaminated product and other produce products as above described by either GC or FT, eventually resulting in alleged exposure of persons to E.coli, shall be referred to as the “occurrence”. Some of WRC’s customers and other consumers filed actions in various courts (“the underlying actions”), seeking damages from WRC, FT and/or GC. WRC, FT and/or GC filed cross complaints for equitable indemnity in certain such underlying actions. The underlying actions are identified as follows:

Bernard Storch and Mary Storch v. Worldwide Restaurant Concepts, Inc. dba Pat & Oscar’s, et al San Diego Superior Court Case No. GIC 822745

Rust v. Worldwide Restaurant Concepts, et al. San Diego Superior Court Case No. GIC 819350

Jeffrey Brenner v. Gold Coast Produce, et al. Orange County Superior Court Case No. 03CC13150

Christopher and Karie Galindo individually and as guardians ad litem for Kayce Galindo v. Gold Coast Produce, et al San Diego County Superior Court Case No. GIC819465

Matthew and Cortney Hauer, et al v. Gold Coast Produce, et al. San Diego County Superior Court Case No. GIC820558

Evers v. Worldwide Restaurant Concepts, Orange County Superior Court Case No. 04CC05151

Anderberg, et al. v. Worldwide Restaurant Concepts, Inc. San Diego County Superior Court Case No GIC 833899

Koby v. Worldwide Restaurant Concepts, Inc. San Diego County Superior Court Case No GIC 833900

Spector v. Worldwide Restaurant Concepts, Inc. San Diego County Superior Court Case No GIC 833901

Brown v. Worldwide Restaurant Concepts, Inc. San Diego County Superior Court Case No GIC 833902

Beria v. Worldwide Restaurant Concepts, Inc. San Diego County Superior Court Case No GIC 833905

WRC, FT and GC tendered the underlying actions for defense and/or indemnity to certain liability insurers. FT tendered defense as named insured, and WRC tendered defense as an additional insured to EMC under EMC primary liability policy number OD5-59-43-04 and commercial umbrella policy number OJ5-59-43-04. WRC subsequently tendered defense and indemnity to its own insurers, primary insurer Federal Insurance Company (“FEDERAL”) under policy number 7323-71-80 LAO, effective June 1, 2003 to June 1, 2004 and excess liability insurer National Union Fire Insurance Company of Pittsburgh, PA (“AIG”). WRC and GC tendered defense to GEIC under the GEIC policy issued to GC including but not limited to the policy number CBP9676204. EMC agreed to defend FT and WRC under its primary policy, under reservations of rights. GEIC agreed to defend GC, but denied coverage to WRC claiming it was not an insured or additional insured. FEDERAL agreed to exhaust its $650,000.00 policy limit, once WRC agreed to pay the $350,000.00 retention thereunder. AIG refused to participate in the defense or indemnity of WRC, contending it is excess to the EMC commercial umbrella policy.

EMC has filed an action against AIG for declaratory relief and contribution, EMC v. National Union, United States District Court, Southern District of California case number 04 CV 1760IEG (RBB) (“the EMC Action”).

The parties acknowledge that there may be certain customers, including minors who were not customers of Pat & Oscars, who have allegedly sustained injuries as a result of the occurrence which are unknown or which have not presented a claim to any of the parties, or which are not a party to any of the underlying actions. The parties also acknowledge that there may be other defendants or cross defendants in one or more of the underlying actions, or insurers of said defendants or cross-defendants or other potentially responsible parties, which have or do claim that they are entitled to indemnity, subrogation, contribution, or any other similar theory against the parties hereto or any of them relative to the occurrence. The parties acknowledge that AIG may claim a right to indemnity, subrogation, contribution, or any other similar theory against the parties hereto or any of them relative to the occurrence, relative to payments which they have made, or may in the future make, relative to the occurrence. WRC and FT have each demanded that EMC pay this settlement as a demand within EMC’s policy limits. GC has demanded that GEIC pay this settlement as a demand within GEIC’s policy limits.

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II.

SETTLEMENT

Whereas the parties desire to settle and resolve all disputes between them with respect to the underlying actions and the occurrence, and all coverage disputes between any of them arising therefrom with respect thereto, in consideration of the recitals and mutual covenants and Agreements set forth herein, the adequacy of which is hereby acknowledged, the parties hereby agree to the following:

2. EMC will exhaust its $4 million occurrence/aggregate limit of its commercial umbrella policy by check payable to the client trust account of Gordon & Holmes. It is agreed that said payment shall be considered as credited $2,000,000.00 each to FT and WRC. The parties agree that said payment (hereinafter “EMC umbrella exhaustion”) shall extinguish any further obligations under the EMC policy with respect to the occurrence, except as required under paragraph F(2) of this Agreement.

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2. EMC’s and GEIC’s assignments of their indemnity rights against all persons or entities not party to this Agreement are made in exchange for return of twenty percent (20%) of any gross recovery by WRC on the assignments. EMC and GEIC shall be paid their respective recoveries of said twenty percent (20%) in the same proportion their respective assignments bear to the total amount assigned, i.e., seventy-five percent (75%) to EMC and twenty-five percent (25%) to GEIC. If WRC decides not to pursue those claims it shall give notice to EMC and GEIC no later than ninety (90) days prior to the expiration of any statue of limitations; or if WRC contemplates dismissal of any action asserting those rights prior to settlement or judgment it shall obtain the written permission of EMC and GEIC before doing so, and if it does not receive that permission, shall execute whatever assignment(s) or other documents may be necessary to allow EMC and/or GEIC to assume prosecution of said action, whether jointly or separately, on their own behalf. In the event WRC either opts not to pursue the assigned rights, or seeks to dismiss any action asserting those rights prior to settlement or judgment, all assigned rights shall revert back to EMC and/or GEIC, and both EMC and/or GEIC shall seek recovery at their individual discretion and expense. WRC shall not release, assign or otherwise compromise EMC’s or GEIC’s rights under this paragraph without EMC’s or GEIC’s written authorization. EMC and/or GEIC shall not be obligated to pay attorneys fees and costs incurred by WRC relative to any expenses to pursue recovery on assignment. EMC and GEIC shall be entitled to status reports and an accounting upon reasonable request. EMC does not assign or otherwise release its rights for contribution against AIG in the EMC Action. Any recovery by EMC pursuant to this paragraph will replenish the aggregate limit of the EMC Umbrella Policy, and if said aggregate is fully replenished, the aggregate limit of the primary policy. Any recovery by GEIC pursuant to this paragraph will replenish the aggregate limit of the GIEC policy. Any such recovery pursuant to this subparagraph shall not relieve WRC of its obligations under F(1) below.

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directors, shareholders, partners, joint venturers, members, attorneys and employees (hereinafter collectively referred to as “FT” and “GC” respectively) from any and all claims, including cross claims, claims of gross negligence, or claims of sole negligence, known and unknown, which arise, may arise, or have arisen out of any claim of E.coli contamination, exposure or ingestion which may be a result of the same occurrence which gave rise to the claims being settled herein, regardless of how or where said contamination is alleged to have occurred. WRC shall defend and indemnify FT and/or GC for such claims, regardless of their source [excluding administrative or governmental] and regardless of the damages claimed to have been sustained or to be sustained [i.e., bodily injury, financial loss, loss of consortium, etc.]. The duty to defend FT and/or GC on the part of WRC shall arise upon any allegation against FT and/or GC for damages arising from the occurrence, regardless of whether that allegation is based upon the sole or gross negligence of FT and/or GC; and WRC shall retain competent defense counsel, immediately upon notice from FT and/or GC that a claim has been tendered, regardless of whether or not said claim is legal, administrative or governmental. It is expressly recognized by and between WRC, FT and GC, that by this Agreement, FT and GC are authorizing the exhaustion of their insurance coverage for this occurrence; and as such, FT and GC have been notified by their respective insurers that, in the event of future claims being made as a result of this occurrence, their carriers will not indemnify or defend such claims. Therefore, the parties expressly and unequivocally agree that but for WRC’s Agreement to defend, indemnify and hold harmless FT and GC from any and all claims arising from this occurrence, including defense and indemnity for any claims in which the sole negligence or gross negligence of FT and/or GC is alleged, FT and GC would not enter into this Agreement. In this regard, WRC expressly waives the provisions of California Civil Code section 3275. In the event that any provision of this Agreement is determined to be void or voidable at Law or in Equity by a court of competent jurisdiction, or any other tribunal having jurisdiction over the validity of this Agreement, WRC shall nevertheless defend FT and/or GC from any and all claims as set forth hereinabove. Should there be any such void or voidable determination regarding any indemnity provision herein, the result of which may require FT and/or GC to cross claim against WRC, FT and/or GC shall be relieved of their obligations to cooperate with WRC under this Agreement. Such relief shall not relieve WRC of its duty to defend FT and/or GC by competent counsel, the identity of which will be either Gordon & Holmes or The Klinedinst Law Firm. If neither Gordon & Holmes nor the Klinedinst Law Firm is retained by WRC to act as defense counsel for FT and/or GC, then FT and/or GC agree to retention of any counsel on their named insurer’s (EMC and GEIC, respectively) list of approved panel attorneys. These counsel selection provisions are subject to paragraph K hereto. It is the intention of the parties that an allegation or finding of sole negligence or gross negligence shall not invalidate or vitiate the duty to defend or indemnify by WRC in favor of FT and/or GC under this Agreement.

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2. In the event EMC recovers any settlement or judgment in the EMC Action, said recovery will replenish to the extent of the recovery (exclusive of interest and costs) the aggregate limit of the EMC umbrella policy. In the event that as a consequence of such recovery, AIG files an action for subrogation or indemnity against FT or GC, WRC shall be relieved of its obligations under paragraph F(1) above with respect to that action only as against FT. However, WRC will still be obligated to defend and indemnify GC in accordance with the provisions of paragraph F(1), including any action for subrogation or indemnity. EMC shall be obligated to defend and indemnify FT against any action for subrogation or indemnity by AIG, arising out of a recovery by EMC from AIG in the EMC Action.

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have the authority and authorization to pursue the defense and indemnification of WRC, FT and GC as it best sees fit. WRC, FT and GC are currently operating under the belief that no actual conflicts of interest currently exist and no potential conflicts of interest will arise. In connection with the defense of the above referenced matters, WRC, FT and GC agree to cooperate with counsel as if counsel was originally retained by each party individually and solely on its behalf.

This provision or joint representation shall be null and void should WRC challenge its obligation to FT to defend and/or indemnify under paragraph F(1) above; in which case WRC shall immediately select independent counsel on behalf of FT, the approval of which by FT shall be required prior to actual retention. The retention of said independent counsel shall be at the sole expense of WRC. This provision shall not effect the obligation of WRC to indemnify FT pursuant to the remaining terms of this Agreement. This paragraph shall not effect the rights of EMC under paragraph E(2) above; or its rights and obligations to the extent they may arise, under paragraph F(2) above.

III.

GENERAL RELEASE

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do exist, or which hereafter can, shall, or may exist, arising out of the matters asserted in, relative to or arising from the occurrence and/or the underlying actions; excepting only the specific obligations assumed by the insurers in this Agreement. The release as to Federal is limited to the WRC policy identified in paragraph I hereto.

A GENERAL RELEASE DOES NOT EXTEND TO CLAIMS WHICH THE CREDITOR DOES NOT KNOW OR SUSPECT TO EXIST IN HIS FAVOR AT THE TIME OF EXECUTING THE RELEASE, WHICH IF KNOWN BY HIM MUST HAVE MATERIALLY AFFECTED HIS SETTLEMENT WITH THE DEBTOR.

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Each party to this Agreement acknowledges that a material part of this Agreement is the deliberate extinguishing of any of its claims which currently are unknown, so that there is no possibility of future claims by either party hereto relating or arising from the occurrence and/or the underlying actions. This section applies only to claims arising from the occurrence, and does not apply to any claim for benefits by FT under the EMC policies for coverage relative to any separate occurrence otherwise covered by any EMC policy. This section applies only to claims arising from the occurrence, and does not apply to any claim for benefits by GC under the GEIC policies for coverage relative to any separate occurrence otherwise covered by any GEIC policy. The release as to Federal is limited to the WRC policy identified in paragraph I hereto.

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has considered the opinions, representations, conclusions, recommendations and estimates expressed by other parties and/or their experts and their attorneys, it has not been induced to enter into this Agreement by reliance on such considerations.

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IN WITNESS WHEREOF, the parties to this Agreement sign their names below demonstrating their agreement to these terms and conditions.

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APPROVED AS TO FORM AND CONTENT:

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