AGREEMENT
This Agreement (the "Agreement") is made and entered into by and among
Foothill Capital Corporation ("Foothill"), Red Xxxx Brewing Company ("Red
Xxxx"), Xxxxx X. Xxxx ("Xxxxx Xxxx"), and Red Xxxx Brewery and Pub, State
College, Inc. on this 24th day of May 2001.
Whereas Foothill commenced an action against Red Xxxx and Xxxxx Xxxx in
the United States District Court for the Eastern District of Pennsylvania, Case
No. 00-CV-4873 for breach of a promissory note and personal guarantee;
Whereas Judgment (the"Judgment") was entered against Red Xxxx and Xxxxx
Xxxx jointly and severally in favor of Foothill in the amount of
$741,194.69(together with interest, charges, costs, and fees the "Judgment
Balance");
Whereas Foothill caused Writs of Execution (the "Writs") to be served
on Red Xxxx'x account no. 100008549 at Pennsylvania Business Bank and Red Xxxx'x
account nos. 0310025770, 036066789, and 0615015716 at Commerce Bank;
Whereas by Court Order dated May 9, 2001, Red Xxxx and Xxxxx Xxxx were
enjoined from transferring any funds held in any account located at Xxxxxx Bank
or Xxxxxx Savings Bank in the name of Red Xxxx;
Whereas by Stipulation dated May 18, 2001, $45,000 was transferred from
Red xxxx'x Pennsylvania Business Bank account no. 100008549 as follows:
(a)$30,000 to Foothill(the "$30,000 Payment") and (b)$15,000 to Red Xxxx;
Whereas Red Xxxx has requested that Foothill cause the Writs to be
dissolved; and
Whereas Red Xxxx filed an action against Foothill in the Philadelphia
Court of Common Pleas, May Term, No. 001402, which was removed to the United
States District Court for the Eastern District of Pennsylvania, no. 01-CV-2426:
Now, therefore, in consideration, of the recitals set forth above and
the mutual covenants contained herein, Foothill, Red Xxxx, Xxxxx Xxxx, and Red
Xxxx Brewery and Pub, State College, Inc. Agree as follows:
1. Payment to Foothill
On or before the execution of this Agreement, Red Xxxx shall cause
Pennsylvania Business Bank to wire the sum of FORTY-FIVE THOUSAND
DOLLARS($45,000)(the "45,000 Payment") from Red Xxxx'x account no. 100008549 to
Foothill as follows:
The Chase Manhattan Bank
New York, New York
ABA# 021 000 021
Credit to: Foothill Capital Corporation
Account #: 323-266193
Re: Red Xxxx Term Loan Division Account
Attention: Xxxxx Xxxxxx
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Red Xxxx hereby represents that the balance in its account no. 100008549 as of
May 23, 2001 was approximately $81,000. Upon receipt by Foothill of the $45,000
Payment, Foothill shall credit $45,000 toward the reduction of the Judgment
Balance. The $30,000 Payment shall also be credited toward reduction of the
Judgment Balance.
2. Dissolution of the Writs
Upon confirmation by Foothill that the $45,000 Payment has been
received, Foothill will (a) notify Pennsylvania Business Bank and Commerce Bank
that each may release the remaining funds in Red Xxxx'x account to Red Xxxx and
to otherwise dissolve the Writs, and (b) with Red Xxxx, submit a stipulation to
the Court to remove the restraints on access to Red xxxx'x Xxxxxx Bank account
that were imposed by Order dated May 9, 2001.
3. Issuance of Red Xxxx Shares
(a) Within 10 days of the date hereof, Red Xxxx shall issue and deliver
to Foothill a certificate representing an aggregate of 400,000 shares of its
common stock, no par value (the"Shares"). Upon receipt of the Shares and
provided that the conditions contained herein in this Section 3 are satisfied,
Foothill, Red Xxxx, and Xxxxx Xxxx agree to credit the amount of $100,000 toward
reduction of the Judgment Balance. Red Xxxx warrants that (1) the Shares are
duly authorized, newly issued shares when issued to Foothill of the capital
stock of Red xxxx; (2) the issuance of the Shares has been duly authorized by
all necessary corporate action of Red Xxxx; (3) when issued in accordance with
this Agreement, (i) the Shares will be fully paid and non-assessable, and (ii)
the Shares will constitute approximately 12% of the then issued and outstanding
common stock of Red Xxxx; and (iii) the issuance of the Shares to Foothill in
accordance with this Agreement does not and will not conflict with or violate,
or with or without the passage of time or the giving of notice or both,
constitute a default under, or give to any third party any rights or remedies
under, any provision of Red Xxxx'x Articles of Incorporation or Bylaws, or any
instrument or agreement binding upon Red Xxxx or any of its properties.
(b) Within 60 days of the date hereof, Red Xxxx shall (i) prepare and
file with the United States Securities and Exchange Commission("SEC") a
registration statement (the "Registration Statement") under the Securities Act
of 1933, as amended)the "Securities Act") on Form SB-2 or such other form as is
sufficient to permit the public sale by Foothill of the Shares at the time(s)
and in the manner contemplated hereby, and (ii) cause such Registration
Statement to become effective as soon as possible but in any event within 150
days after the date hereof and thereafter to remain effective for a period of at
least 730 days.
(c) Red Xxxx shall (i) comply with all applicable rules and relations
of the Securities and Exchange Commission in connection therewith, (ii)
thereafter, for such period of time as shall be required in connection with the
transactions contemplated hereby and permitted by applicable rules, regulations
and administrative practice (but not for more than 730 days following the
effective date of such Registration Statement), file such post-effective
amendments and supplements thereto as shall be necessary so that neither such
Registration Statement nor any related prospectus, prospectus supplement or
amendment shall contain any material misstatement or omission relative to Red
Xxxx or any of its assets or its business or affairs and so that such
Registration Statement and prospectus, prospectus supplement or amendment will
otherwise comply with all applicable legal requirements, (iii) furnish to
Foothill such number of copies of such Registration Statement and any related
preliminary prospectus, prospectus, post-effective amendment, supplement or
similar document forming a part thereof as Foothill may request) and (iv) take
all action which may be necessary under the securities or Blue Sky laws of any
state (except that Red xxxx shall not be required to qualify generally to do
business as a foreign corporation in any jurisdiction wherein it is not so
qualified, to subject itself to taxation in any such jurisdiction or to consent
to general service of process in any such jurisdiction), and as may be requested
by Foothill to permit the public offering and sale of the Shares held by
Foothill.
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(d) All costs incurred in connection with the preparation, filing and
maintenance of the Registration Statement contemplated hereby, including without
limitation, all attorney's fees, accountant's fees, printing expenses and filing
fees, except for any fees and charges of any underwriter engaged by Foothill,
shall be borne and paid by Red Xxxx.
(e) Red Xxxx shall indemnify, and agree to contribution in favor of,
Foothill, its directors, officers and affiliates, for any losses caused by any
untrue statement or alleged untrue statement of a material fact or any omission
or alleged omission of a material fact required to be stated in such
Registration Statement or prospectus or any preliminary prospectus or any
amendment or supplement thereto or necessary to make the statements therein not
misleading, except to the extent that such untrue statement or alleged untrue
statement is contained in information specifically furnished in writing by
Foothill expressly for use therein.
(f) At any time as any shares of Red Xxxx Common Stock are listed on a
national securities exchange or designated as a national market system security
by the National Association of Securities Dealers, Inc. ("NASD"), or otherwise
listed on the NASD automated quotation system, and a Registration Statement
covering the Shares has been declared effective, Red Xxxx will promptly obtain
and maintain the approval for listing of each such exchange or system, as the
case may be, of the Shares included in such Registration Statement.
(g) Any Shares shall cease to be entitled to the benefits of the
provisions of this Section 3 when (i) a Registration Statement covering such
Shares has been declared effective and they have been sold pursuant to such
effective Registration Statement, (ii) they are distributed to the public
pursuant to Rule 144 or Rule 144A under the Securities Act, or (iii) they have
been otherwise transferred by Foothill.
4. Satisfaction of Judgment Balance
Provided that (a) Foothill has received (i) the $30,000 Payment, (ii)
the $45,000 Payment, and (iii) a net sum equal to or in excess of $400,000 from
the sale of the Shares within 9 months of the date hereof, (b) Foothill has
received conformation to its satisfaction that the (i) $30,000 Payment, (ii)
$45,000 Payment, and (iii) net sum from the sale of Shares will not be subject
to avoidance through a bankruptcy preference or otherwise, and (c)at least
ninety days have expired from the date Foothill receives the proceeds from the
last sale of any Shares that compromise the net sum equal to or in excess of
$400,000, Foothill shall cause the Judgment Balance to be marked satisfied. As
owner of the Shares, Foothill has complete and sole discretion regarding the
timing and manner of the sale of the Shares.
5. Execution on the Judgment
Provided that (a) Foothill received the $45,000 Payment in accordance
with Section 1, (b) Red Xxxx complies fully with Section 3 hereunder, including
each of its subsections, and (c) the Shares are freely saleable in the public
market by the Registration statement effective date but in any event within 150
days hereof, Foothill agrees to refrain from initiating new execution
proceedings on the Judgment Balance for the next 150 days commencing from the
date hereof. Except as expressly provided herein in this Section and in Section
4 above, nothing contained herein shall waive any right, claim, or privilege of
Foothill, including but not limited to, its right to enforce and collect on its
Judgment Balance against Red Xxxx or Xxxxx Xxxx, all of which are expressly
preserved.
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6. Waiver and General Release
In consideration of good and valuable consideration, including without
limitation the release of the Writs that Foothill caused to be placed on the
bank accounts of Red Xxxx at Pennsylvania Business Bank and Commerce Bank; Xxxxx
Xxxx, Red Xxxx, and Red Xxxx Brewery and Pub, State College, Inc., individually
and on behalf of any and all of their respective agents, employees,
shareholders, officers, directors, subsidiaries, parent and sister corporations,
predecessors, successors, assigns, affiliates, heirs, executers, attorneys, and
administrators (the "Red Xxxx Releasers") do hereby:
(i) release and forever discharge Foothill and all of its
predecessors, successors, assigns, heirs, affiliates, subsidiaries, parent
companies, principals, directors, officers, attorneys, employees, shareholders,
and agents(the "Foothill Releasees") of and from all actions, causes of actions,
suits, debts, disputes, damages, claims, obligations, liabilities, costs,
expenses and demands of any kind whatsoever, at law or in equity, whether
matured or unmatured, liquidated or unliquidated, vested or contingent, known or
unknown, including but not limited to any actions or claims arising out of
Foothill's collection actions or any settlement discussions relating thereto,
from the beginning of time through and including the date hereof, that the Red
Xxxx Releasors have or may have against the Foothill Releasees; and
(ii) acknowledge and agree that except as expressly provided
herein, Foothill has not released any right, claim or privilege with respect to
its outstanding claims against the Red Xxxx Releasors, all of which are
expressly preserved hereby.
Red Xxxx further agrees to dismiss with prejudice all actions against
Foothill, including the action Red Xxxx filed against Foothill in the
Philadelphia Court of Common Pleas, May term, No. 001402, which was removed to
the United States District Court for the Easter District of Pennsylvania, no.
01-CV-2426.
7. Remedies
In the event that Red xxxx fails to comply with any of its obligations
under this Agreement or makes any misrepresentations under this Agreement, in
addition to all remedies it has at law or equity, Foothill shall have no
obligation to stay execution on the Judgment Balance or accept satisfaction of
the Judgment Balance for an amount less than the then outstanding Judgment
Balance.
8. Warranty of Capacity to Execute Agreement
Red Xxxx represents and warrants that the execution and delivery of
this Agreement and consummation of the actions contemplated hereby to be taken
by Red Xxxx have been duly authorized and that this Agreement is a valid and
binding agreement enforceable in accordance with its terms.
Red Xxxx Brewery and Pub, State College, Inc. represents and warrants
that the execution and delivery of this Agreement and consummation of the
actions contemplated hereby to be taken by Red Xxxx Brewery and Pub, State
College, Inc. have been duly authorized and that this Agreement is valid and
binding agreement enforceable in accordance with its terms.
Xxxxx Xxxx represents and warrants that this Agreement is valid and
binding agreement enforceable in accordance with its terms.
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9. Freely Negotiated Agreement
The parties to this Agreement have freely negotiated this Agreement and
have had the opportunity to consult with counsel. It is agreed that no provision
in this Agreement shall be construed presumptively against any party hereto.
10. Contractual in Nature
The terms of this Agreement are contractual and not mere recital. The
parties hereto agree that time is of the essence with respect to this Agreement.
11. Entire Agreement
This Settlement Agreement is the entire agreement among the parties
with respect to the subject matter hereof and supersedes all prior and
contemporaneous oral and written agreements and discussions other than the
Stipulation of Judgment and the loan documents referenced in the Complaint filed
by Foothill in the United States District Court for the Eastern District of
Pennsylvania, Case No. 00-CV-4873. This Agreement may be amended only by an
agreement in writing signed by the parties.
12. Choice of Law
This Agreement is to construed under the law of the Commonwealth of
Pennsylvania, without regard to principles of conflict of laws.
13. Execution in Counterparts
This Agreement may be executed in one or more counterparts, including
by facsimile, each of which shall be deemed an original, but all of which
together shall constitute one and the same instrument.
In witness whereof and intending to be legally bound, the parties
hereto have signed and executed this effective as of the day and year first
written above.
RED XXXX BREWING COMPANY
By: /s/ Xxxxx X. Xxxx, President
------------------------------------
Xxxxx X. Xxxx
Title: President
By: /s/ Xxxxx X. Xxxx, Individually
------------------------------------
XXXXX X. XXXX
RED XXXX BREWERY AND PUB,
STATE COLLEGE, INC.
By: /s/ Xxxxx X. Xxxx, President
------------------------------------
Xxxxx X. Xxxx
Title: President
FOOTHILL CAPITAL CORPORATION
By: /s/
-------------------------------------
Title: Vice President
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