Exhibit 10.7
CORRECTED AND AMENDED
SETTLEMENT AND RELEASE AGREEMENT
THIS CORRECTED AND AMENDED SETTLEMENT AND RELEASE AGREEMENT (the
"AGREEMENT") is made and entered into effective as of the 16th day of October,
2002, by and among REDLINE PERFORMANCE PRODUCTS, INC., a Minnesota corporation
having its principal place of business in Vista, California ("REDLINE"), Xxxx
Xxxxxx, a resident of the State of California ("SAVAGE") and The Savage Family
1995 Trust, a trust organized under the laws of the State of California (the
"TRUST").
RECITALS
WHEREAS, the parties to this agreement previously entered into a
Settlement and Release Agreement effective as of the effective date of this
Agreement, such prior agreement included errors and the parties hereby seek to
correct such errors;
WHEREAS, Redline and Savage are parties to an Employment Agreement
dated July 31, 2000 (the "EMPLOYMENT AGREEMENT") pursuant to which Savage is
owed accrued but unpaid wages through August 1, 2002;
WHEREAS, Redline, Savage and the Trust are parties to a Lease of
Equipment dated April 3, 2000 (the "EQUIPMENT LEASE") pursuant to which Redline
owes Savage and the Trust rent and other sums as of October 16, 2002;
WHEREAS, Redline, Savage and the Trust are parties to a Lease of Real
Property for premises located at 0000 Xxxxxxx Xxx, Xxxxx XX dated July 31, 2000
(the "PROPERTY LEASE") pursuant to which Redline owes Savage and the Trust
accrued but unpaid rent as of October 16, 2002;
WHEREAS, the parties hereto are parties to a Settlement Agreement dated
August 2, 2002 and any amendments or extensions thereto (the "PRIOR AGREEMENT"),
which agreement shall be superceded and replaced in its entirety by this
Agreement; and
WHEREAS, the parties desire to fully and finally settle and resolve
their disagreements regarding the matters set forth herein, without admission of
liability on the part of any party and to release each party from all
liabilities, whether past, present or future, that may have arisen, or might
arise in the future, regarding the matters set forth herein.
NOW, THEREFORE, in consideration of the foregoing and for good and
valuable consideration, including the covenants and promises in this Agreement,
the receipt, adequacy and sufficiency of which are acknowledged, the parties
hereby agree as follows:
AGREEMENT
1. Incorporation of Recital. The foregoing preambles and
recitations are incorporated into and made a part of this Agreement.
2. Termination of Prior Agreement. The parties hereto hereby
terminate the Prior Agreement, which shall hereafter be of no further force and
effect.
3. Authority. Each party to this Agreement represents and
warrants that it has full authority to execute and enter into this Agreement,
and further represents and warrants that it has not assigned or transferred to
any third party any claim or right of set-off that might be covered by the
provisions of this Agreement.
4. Payment by Redline. Immediately upon execution of this
Agreement, Redline shall pay to Savage $53,000, of which $50,000 will be in the
form of a check. Savage and the Trust acknowledge prior receipt of $3,000, which
amount is represented by the value of a Snap-On Tool Box and TIG Welder.
5. Payment by Xxxx Xxxxx. Xxxxxx and the Trust previously agreed
to sell to Xxxx Xxxxx and Xxxxx Xxxxxxxx a total of 750,000 shares (250,000
shares after giving effect to Redline's 1-for-3 reverse stock split effected
July 12, 2002) of Redline common stock owned by Savage and the Trust. Savage and
the Trust also acknowledge receipt of $47,000 from Xxxx Xxxxx or Xxxxx Xxxxxxxx
in payment for such shares, which amount was received prior to the date of this
Agreement and pursuant to the Prior Agreement. Redline, Xxxxx Xxxxxxxx and Xxxx
Xxxxx represent and warrant that the 750,000 pre-split (250,000 post-split)
shares acquired by Xxxx Xxxxx and Xxxxx Xxxxxxxx shall be cancelled immediately
upon transfer to comply with the requirement of GunnAllen Financial, Inc. in a
Letter of Intent dated July 12, 2002 that the founders of Redline collectively
cancel 1,100,000 shares of pre-split Redline common stock.
6. Termination of Accrued Wages. Immediately upon execution of
this Agreement, all amounts owed to Savage in the form of accrued, but unpaid
salary through August 1, 2002 shall terminate. Redline shall pay Savage the
compensation due under the Employment Agreement from August 2, 2002 for the
duration of the Employment Agreement.
7. Amendment to Employment Agreement. Immediately upon execution
of this Agreement, Redline and Savage shall execute and deliver Amendment #1 to
the Employment Agreement, in the form attached hereto as ATTACHMENT A and
incorporated herein by reference.
8. Termination of Equipment Lease. Redline and the Trust hereby
terminate the Equipment Lease. Savage and the Trust hereby release Redline, its
directors, officers, employees and agents from any liability related to the
Equipment Lease, including but not limited to unpaid rents and other obligations
under the Equipment Lease.
9. Termination of Property Lease. The Trust and Redline hereby
terminate the Property Lease. Savage and the Trust hereby release Redline, its
directors, officers, employees and agents from any liability related to the
Property Lease, including but not limited to unpaid rents and other obligations
under the Property Lease.
10. Transfer of Shares of Redline Stock.
(a) The Trust shall sell and transfer to Xxxx
Xxxxx and Xxxxx Xxxxxxxx, an aggregate total of 750,000 shares
of Redline common stock (which equates to 250,000 shares after
giving effect on July 12, 2002 to the 1-for-3
2.
reverse stock split) owned by the Trust. Immediately upon
execution of this Agreement the Trust shall execute and
deliver the attached Assignment Agreement and Stock Power
incorporated herein by reference as ATTACHMENT B.
(b) The Trust shall transfer to Redline, an
aggregate total of 43,958 shares of Redline common stock
(which equates to 14,653 shares after giving effect on July
12, 2002 to the 1-for-3 reverse stock split) owned by the
Trust to carry out prior obligations of Savage and the Trust
to transfer founders' shares to certain investors in Redline's
bridge financing which commenced in September 2001.
Immediately upon execution of this Agreement the Trust shall
execute and deliver the attached Assignment Agreement and
Stock Power incorporated herein by reference as ATTACHMENT
B-1. Savage and the Trust shall have no future obligation to
transfer shares in connection with the founders' transfer of
shares in such bridge financing.
(c) The Trust and Savage represent and warrant
that they have obtained all information about Redline as they
believe relevant to the decision to sell the shares. The Trust
and Savage have also had the opportunity to ask questions of,
and to receive answers from, Redline or an agent or a
representative of Redline concerning the terms and conditions
of the sale of the shares and the business and affairs of
Redline and to obtain any additional information necessary to
verify such information, and they have received such
information concerning Redline as they consider necessary or
advisable in order to form a decision concerning a sale of
shares to Redline.
11. Lockup Agreement. Immediately upon execution of this
Agreement, Savage and the Trust shall execute and deliver a lockup agreement, in
the form attached hereto as ATTACHMENT C and incorporated herein by reference,
which requirement relates to Redline's proposed future financing, which is on
the same terms as required to be executed by each Redline security holder.
12. Dilution. Redline shall not take any action specifically
designed to dilute Savage's and/or the Trust's beneficial ownership interest in
Redline, provided that (a) Savage and the Trust acknowledge and agree that
Redline will likely issue additional securities to purchasers in the future for
financing, acquisition and other purposes, all of which transactions will result
in dilution to the beneficial holdings of Savage and/or the Trust, and (b) this
Section 12 does not provide, and shall not be interpreted to provide, Savage or
the Trust with any preemptive or similar right.
13. Release by Redline. Subject to the completion of all acts and
undertakings required by this Agreement, Redline and each of its officers,
directors, shareholders, agents and employees, and their respective executors,
heirs, administrators, personal representatives, successors, and assigns, for
good and valuable consideration do hereby remise, release and forever discharge
Savage and the Trust, and each of their trustees, beneficiaries, agents,
employees and other affiliates, and their respective executors, heirs,
administrators, personal representatives, successors and assigns, from any and
all claims, debts, liabilities, demands, liens (whether actual or asserted),
obligations, costs, expenses, attorneys' fees, actions, and causes of
3.
action arising out of: (a) the failure of Savage to provide services to Redline
under the Employment Agreement through August 1, 2002; (b) the Equipment Lease;
(c) the Property Lease; (d) the transfer of Redline Stock referenced in Section
10 hereof; and (e) the Prior Agreement.
14. Release by Savage and the Trust. Subject to the completion of
all acts and undertakings required by this Agreement, Savage and the Trust, and
each of their trustees, beneficiaries, agents, employees, and other affiliates,
and their respective executors, heirs, administrators, personal representatives,
successors, and assigns, for good and valuable consideration do hereby remise,
release and forever discharge Redline and each of its officers, directors,
shareholders, agents, employees, and other affiliates, and their respective
executors, heirs, administrators, personal representatives, successors and
assigns, from any and all claims, debts, liabilities, demands, liens (whether
actual or asserted), obligations, costs, expenses, attorneys' fees, actions, and
causes of action arising out of: (a) Redline's failure to pay salary, wages or
other compensation owed to Savage under the Employment Agreement through August
1, 2002; (b) the Equipment Lease; (c) the Property Lease; KH BMS CR
15. Miscellaneous Provisions.
(a) The failure to enforce or to require the performance
at any time of any of the provisions of this Agreement shall in no way
be construed to be a waiver of such provisions and shall not affect the
validity of this Agreement or any part hereof or the right of any party
thereafter to enforce each and every provision in accordance with the
terms of this Agreement.
(b) This Agreement constitutes and contains the entire
Agreement between the parties concerning the subject matter of this
Agreement, and supersedes any and all prior negotiations, proposed
agreements or understandings, if any, between the parties concerning
the subject matter or any of the terms of this Agreement.
(c) This Agreement shall in no way affect any of the
remaining shares of Redline common stock currently owned by Savage
and/or the Trust. All remaining shares of Redline common stock owned by
Savage or the Trust not already in the possession of Savage or the
Trust shall be delivered to Savage promptly after execution of this
Agreement pursuant to the documents related to such shares.
(d) No amendment, interpretation, waiver or termination
of any of the provisions of this Agreement shall be effective unless
made in writing and signed by the parties to this Agreement.
(e) Each of the parties agree that this Agreement shall
be binding on each of the parties and signatories hereto, as well as on
any other related party or person identified in Sections 13 and 14
herein. The rights and obligations provided for in this Agreement shall
continue to inure to the benefit of, or be imposed upon, any successor,
heir, or assign of any party.
4.
(f) This Agreement shall be governed and construed in
accordance with the laws of the State of Minnesota, without regard to
such state's choice or conflict of laws provisions.
(g) This Agreement may be executed in counterparts, each
of which shall be deemed an original, all of which together shall be
deemed one Agreement. Facsimile signatures shall be deemed accepted and
enforceable as originals.
(h) Any provision of this Agreement which is prohibited
or unenforceable shall be ineffective to the extent of such prohibition
or unenforceability without invalidating the remaining provisions of
this Agreement.
(i) Each party to this Agreement represents and warrants
that each has had the advice of counsel of its own choosing in the
preparation of this Agreement, that each has read this Agreement, that
each has had this Agreement fully explained by counsel of its own
choosing, that each has had necessary disclosure of relevant facts and
issues concerning the execution of this Agreement, that the signatory
for each is competent and authorized to sign this Agreement, and that
each is fully aware of the contents and legal effect of this Agreement
and the execution of this Agreement by the party.
(j) REDLINE SHALL DELIVER TO XXXX XXXXXX ALL THE
STOCK CERTIFICATES REPRESENTING THE BALANCE OF SHARES OWNED IN
THE NAME OF XXXX XXXXXX OR THE SAVAGE FAMILY TRUST ON OR
BEFORE FRIDAY DECEMBER 20, 2002, OR THIS AGREEMENT WILL BECOME
NULL AND VOID.
BMS KH CR
5.
IN WITNESS WHEREOF, the parties hereto have executed this Settlement
and Release Agreement effective as of the date first written above.
REDLINE PERFORMANCE PRODUCTS, INC. XXXX XXXXXX,
a Minnesota corporation a California resident
By: /s/ Xxxx Xxxxx /s/ Xxxx X. Xxxxxx
-------------------------- -----------------------------------
Its: CEO Xxxx Xxxxxx, An Individual
XXXX XXXXX (as to Section 5) XXXXX XXXXXXXX (as to Section 5)
a California resident a California resident
/s/ Xxxx Xxxxx /s/ Xxxxx Xxxxxxxx
------------------------------ -----------------------------------
Xxxx Xxxxx, An Individual Xxxxx Xxxxxxxx, An Individual
THE SAVAGE FAMILY 1995 TRUST,
a trust organized under the laws of the State of California
/s/ Xxxxxxx X. Xxxxxx
------------------------------
Xxxxxxx X. Xxxxxx, Trustee
______________________________
Xxxxxx X. Xxxxxx, Trustee
6.
