Exhibit 4.16


    
      

      

    

    Exhibit
      4.16

    
 

    MUTUAL
      SETTLEMENT AGREEMENT AND RELEASE

    RE:
      CASE NO. 06CC03923 

    ORANGE
      COUNTY SUPERIOR COURT

    


    This
      Mutual Settlement Agreement and Release (the “Agreement”)
      is
      entered into by and between MARINKO VEKOVIC an individual (“Vekovic”) and
      COBALIS CORPORATION, a Nevada Corporation (“Cobalis”). This Agreement is made in
      settlement of existing litigation between the parties, Orange County Superior
      Court Case No. 06CC03923 (the “Litigation”).

    


    RECITALS

    
      


      	A.  	
              
                WHEREAS,
                  Vekovic filed the Litigation against Cobalis on March 9, 2006 in
                  Orange
                  County Superior Court; and 

              

            


       

    

    
      	B.  	
              WHEREAS,
                Cobalis has filed an answer denying all of the allegations in Vekovic’s
                complaint; and

            


    

     

    
      	C.  	
              WHEREAS,
                Cobalis filed a cross complaint against Vekovic, as to which Vekovic
                filed
                an answer denying all of the allegations, and which was subsequently
                dismissed by Cobalis, without prejudice;
                and

            


    

    


    
      	D.  	
              WHEREAS,
                the parties have reached a settlement of the Litigation settling
                all
                matters between them; and

            


    

    


    
      	E.  	
              WHEREAS,
                Cobalis is in the process of registering shares of Cobalis with an
                S-8
                filing and represents that it is using its best efforts to have said
                S-8
                Filing filed with the SEC by the beginning of April 2007;
                and

            


    

    


    
      	F.  	
              WHEREAS,
                the parties are entering into this agreement to effectuate the settlement
                between them which includes the issuance of
                50,000

            


    

    shares
      of
      the referenced S-8 filing to Vekovic and the issuance of 25,000 warrants of
      Cobalis common stock (at a price of $1.75 per share);

     

                                                      
      The foregoing recitals are hereinafter referred to as “Recitals.” 

     

    


    SETTLEMENT
      AGREEMENT

    


    Now,
      therefore, in consideration of the foregoing Recitals (which are incorporated
      by
      reference as if fully set forth herein) and the mutual agreements and covenants
      set forth herein, the parties hereto agree as follows:

    


    
      
        
          
          

        

        
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          1.    No
        Admission.
        By
        entering into this Agreement, no party to this Agreement is admitting to
        the
        sufficiency of the Litigation, or to any claims, allegations, assertions,
        contentions or positions of either party hereto, or to the sufficiency of
        any
        defenses to any such litigation claims, allegations, assertions, contentions
        or
        positions. This Agreement effects the settlement of claims in the Complaint
        and
        Cross-Complaint, which are denied and contested. The parties merely desire
        to
        resolve the Litigation. The parties have entered into this Agreement in good
        faith and with the desire to forever settle among them the issues involved
        in
        this Agreement as set forth below.

      


          2.    Settlement
        of Litigation.
        The
        parties agree as follows:

      


          2.1    Cobalis
        agrees to issue to Vekovic 50,000 shares of registered stock (S-8 shares)
        as
        soon as possible, on or before April 15, 2007 (the “S-8 Shares”). The Shares, to
        be registered in the name of Marinko Vekovic shall be delivered to Alan Merlin
        Reedy, Attorney for Vekovic, at 4590 MacArthur Blvd, Suite 370, Newport Beach,
        CA 92660 on the same business day as other shares of the Cobalis are first
        delivered to any other person or entity receiving similar shares and no later
        than 5:00 p.m. April 15, 2007. In the event the S-8 share certificate is
        not
        delivered to Mr. Reedy by 5:00 p.m. on April 15, 2007, Cobalis shall pay
        a
        $5,000 late fee made out to “Alan Merlin Reedy, Esq., on behalf of Marinko
        Vekovic,” as liquidated damages for the late issuance of the S-8 Shares.
        Furthermore, Cobalis shall pay an additional $5,000 liquidated damages amount
        if
        the S-8 Shares are not delivered by April 30, 2007, plus an additional
        liquidated damages $5,000 amount on the 15th
        and the
        last day of each following month, if any, until the S-8 shares are delivered.
        Upon delivery of the S-8 Shares, Vekovic agrees that he (or anyone acting
        on his
        behalf) will not sell more than 5,000 of the S-8 Shares on any one trading
        day
        (unless Vekovic receives prior written approval from Cobalis). In the event
        that
        Vekovic (or anyone acting on his behalf) sells more than 5,000 of the S-8
        Shares
        on any one trading day, Vekovic shall be liable to Cobalis for any and all
        damages proximately caused by such breach of this agreement, subject to proof,
        with a minimum liability of $5,000.00.

       

          2.2    In
        addition, Cobalis, contemporaneously with the execution of this agreement
        agrees
        that Vekovic shall immediately acquire the rights of
        warrants of Cobalis to purchase 25,000 (twenty-five thousand) restricted
        shares
        of the Cobalis’ common stock, $.0001 par value, (the “Common Stock”) at $1.75
        per share ,
        exercisable at any time up to 5:00 p.m. on December 31, 2009 (the “Warrants”).
        Within ten (10) business days of the execution of this Agreement, Cobalis
        shall
        issue a separate written document to Vekovic that memorializes Vekovic’s
        Warrants and his warrant rights and obligations. . The Warrants may be exercised
        by Vekovic at any time before the expiration date, regardless of whether
        the
        separate written document has been provided to Vekovic. Cobalis agrees to
        use
        its best efforts to register the Warrants and the underlying shares as a
“piggy
        back” to any SB2 registration of Cobalis warrants/shares in the future, subject
        to any objection by the “lead party” that no other registrants be included in
        such future SB2 registration. Cobalis has no obligation under this Agreement
        to
        commence an SB2 registration where Vekovic is the “lead party.” In other words,
        Cobalis agrees to include Vekovic’s Warrants in any future SB2 registration, if
        feasible (i.e., if the “lead party” does not object to the inclusion of other
        registrants or warrants). As noted above, this Agreement, by itself, grants
        Vekovic the right to exercise the Warrants at any time before the December
        31,
        2009 expiration date. The further written documentation of the actual Warrants,
        as referenced above, shall be delivered to Alan Merlin Reedy, Esq., at the
        earliest opportunity and, in no event, not later than ten (10) business days
        after the execution of this Agreement.

       

      
        
          
          

        

        
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          2.3    Based
        upon the agreement of Cobalis’ counsel, Andrew Callari, of Callari &
Summers, counsel for Vekovic has already filed a Conditional Notice of
        Settlement of the Litigation with the Orange County Superior Court, stating
        that
        the case will be dismissed by July 1, 2007, or soon as possible after the
        completion, of the terms and conditions of this Agreement have been carried
        out.

      


          2.4    Within
        two (2) business days of the execution of this Agreement, Cobalis will re-file
        its Request for Dismissal of the Cross-Complaint, which shall be dismissed
        with
        prejudice.

      


          3.    Mutual
        Releases.

          


          3.1    Vekovic
        does hereby fully and forever release, remise, acquit and discharge Cobalis
        and
        each of their present and former members, agents, servants, officers, directors,
        employees, shareholders, principals, predecessors, alter egos, partners,
        parents, subsidiaries, insurers, re-insurers, sureties, attorneys, heirs,
        executors, administrators, trustees, successors and assigns from any and
        all
        claims, demands, damages, rights, and cause or causes of action heretofore
        or
        hereafter, arising out of or directly or indirectly related to the Litigation
        and/or the matters set forth in the above Recitals.

      


          3.2    Cobalis
        does hereby
        fully and forever release, remise, acquit and discharge Vekovic and each
        of his,
        alter egos, partners, parents, subsidiaries, insurers, re-insurers, sureties,
        attorneys, heirs, executors, administrators, trustees, successors and assigns
        from any and all claims, demands, damages, rights, and cause or causes of
        action
        heretofore or hereafter, arising out of or directly or indirectly related
        to the
        Litigation and/or the matters set forth in the above Recitals.

      


          4.    Waiver
        of Civil Code Section 1542.
        As to
        the matters released in Paragraph 3, above, and in addition thereto, both
        Cobalis and Vekovic specifically waive the benefits and provisions of Section
        1542 of the Civil Code of the State of California, and of any comparable
        provision of law whether by statute or decision. California Civil Code Section
        1542 provides as follows:

      
        
          
            


            	  	
                    
                      
                        “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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          5.    Attorneys’
        Fees.
        Each
        party to this Agreement shall bear hers, his, or its own attorney’s fees, costs
        and expenses. 

      


          6.    Warranty
        of Authority to Settle.
        Cobalis
        represents, acknowledges, warrants and agrees that at the time of signing
        this
        Agreement, Cobalis has the sole and absolute authority to settle, dismiss
        or
        discharge the Dispute and that the person signing this Agreement on behalf
        of
        Cobalis has been authorized by the Cobalis Board of Directors or has been
        previously authorized by the Cobalis Board of Directors to enter into this
        Agreement.

      


          7.    General
        Representations and Warranties.
        Each of
        the parties to this Agreement represents, warrants and agrees as to it/him
        as
        follows:

      


          7.1.    Each
        party has received independent legal advice from its/his attorneys, with
        respect
        to the advisability of making the settlement provided for herein, with respect
        to the advisability of executing this Agreement, and with respect to the
        meaning
        of California Civil Code Section 1542.

      


          7.2.    Each
        party has read this Agreement and understands the contents hereof and has
        full
        authority to execute the agreement on whose behalf she/he so
        signed.

      


          7.3.    Each
        party has not heretofore assigned, transferred, or granted, or purported
        to
        assign, transfer, or grant, any of the claims, demands, and cause or causes
        of
        action disposed of by this Agreement.

      


          7.4.    Each
        term
        of this Agreement is contractual and not merely a recital. 

      


          7.5.    The
        parties will execute all such further and additional documents as shall be
        reasonable, convenient, necessary or desirable to carry out the provisions
        of
        this Agreement. 

      


          7.6.    Each
        party warrants and represents that (i) this Agreement in its reduction to
        final
        written form is a result of extensive good faith negotiations between the
        parties through their respective counsel; (ii) said counsel have carefully
        reviewed and examined this Agreement for execution by said parties, or any
        of
        them; and (iii) any statute or rule of construction that ambiguities are
        to be
        resolved against the drafting party shall not be employed in the interpretation
        of this Agreement. 

      


          8.    Indemnity.
        

      


          8.1    Cobalis
        shall, save, defend, indemnify and keep harmless Vekovic
        and each of his present and former members, agents, servants, officers,
        directors, employees, shareholders, principals, predecessors, alter egos,
        partners, parents, subsidiaries, insurers, re-insurers, sureties, attorneys,
        heirs, executors, administrators, trustees, successors and assigns and each
        of
        them against any and all liability, claims, costs, attorneys’ fees, judgments,
        or demands, arising directly or indirectly from any breach by
        Cobalis.

       

      
        
          
          

        

        
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          8.2    Vekovic
        shall, save, defend, indemnify and keep harmless Cobalis and each of its
        present
        and former members, agents, servants, officers, directors, employees,
        shareholders, principals, predecessors, alter egos, partners, parents,
        subsidiaries, insurers, re-insurers, sureties, attorneys, heirs, executors,
        administrators, trustees, successors and assigns and each of them against
        any
        and all liability, claims, costs, attorneys’ fees, judgments, or demands,
        arising directly or indirectly from any breach by Vekovic.

      


          9.    Confidentiality.
        The
        Parties recognize that since Cobalis is a public company the terms of this
        Agreement cannot remain fully confidential. 

      


          10.   Miscellaneous.
        

      


          10.1    This
        Agreement shall be deemed to have been executed and delivered within the
        State
        of California, County of Orange, and the rights and obligations of the parties
        hereunder shall be construed and enforced in accordance with, and governed
        by,
        the laws of the State of California. Further, in the event of litigation
        or any
        other action or dispute resolution proceeding relating to or arising out
        of this
        Agreement, whether in contract or in tort (collectively “Proceeding”),
        the
        Proceeding shall be held in the County of Orange, State of
        California.

      


          10.2.    This
        Agreement is the entire agreement between the parties with respect to the
        subject matter hereof and supersedes all prior and contemporaneous oral and
        written discussions. This Agreement may only be amended by duly executed
        writing
        signed by all parties hereto.

      


          10.3.    This
        Agreement is binding upon and shall inure to the benefit of the parties hereto
        and their respective agents, attorneys, officers and directors, heirs,
        successors and assigns.

      


          10.4.    In
        the
        event of any Proceeding relating to or arising out of this Agreement, the
        prevailing party in such Proceeding (whether at trial or appeal) shall be
        awarded, in addition to such other relief as may be granted, its/his costs
        and
        expenses of participation in such Proceeding, including but not limited to
        its/his reasonable attorneys’ fees.

      


          10.5.    This
        Agreement may be executed in counterparts, by either original or facsimile
        signature, either of which shall constitute an “original”. When each party has
        signed and delivered at least one such counterpart, each counterpart shall
        be
        deemed an original and, when taken together with other signed counterparts,
        shall constitute one agreement which shall be binding upon and effective
        as to
        all parties. No counterparts shall be effective until all parties hereto
        have
        executed a counterpart hereof.

       

          10.6.    If
        a
        provision of this Agreement is held to be illegal or invalid by a court of
        competent jurisdiction, such provision shall be deemed to be severed and
        deleted. Such severance and deletion shall not affect the validity of the
        remaining provisions.

       

      
        
          
          

        

        
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      FOR
        AND ON BEHALF OF 

      COBALIS
        CORPORATION BY

       

      
        	 	 	 	 
	 	 	 	DATED
	
                

              	 	 	
                

              


      

      


      
         

        
          	 	 	 	 
	 	 	 	DATED
	
                  
MARINKO
                  VEKOVIC	 	 	
                  

                


        

      

       

       

      APPROVED
        AS TO FORM ONLY:

       

       

      
        	
                Law
                  Offices of Callari & Summers, a Law
                  Partnership

              	 	 	Alan Merlin
                Reedy, a
                Prof. Corp.
	 	 	 	 
	 	 	 	 
	By:
                /s/ 	 	 	By:
                /s/ 
	
                

                Andrew
                  Callari, Esq.,

                
                  Attorneys
                    for Cobalis Corporation 

                

              	 	 	
                
Alan
                Merlin Reedy, Esq.,
                Attorney
                  for Marinko Vekovic

              


      

       

    

     

     

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