Document:

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THESE OPTIONS AND THE COMMON STOCK ISSUABLE UPON THE EXERCISE HEREOF HAVE NOT
BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED, OR ANY STATE
SECURITIES LAW. THESE OPTIONS AND THE COMMON STOCK ISSUABLE UPON THE EXERCISE
HEREOF MAY NOT BE SOLD, OFFERED FOR SALE, PLEDGED OR HYPOTHECATED IN THE ABSENCE
OF A REGISTRATION STATEMENT IN EFFECT UNDER SUCH ACT AND SUCH LAWS WITH RESPECT
TO THESE OPTIONS AND THE COMMON STOCK ISSUABLE UPON THE EXERCISE HEREOF, OR AN
OPINION OF COUNSEL SATISFACTORY TO THE COMPANY THAT SUCH REGISTRATION IS NOT
REQUIRED.

THE OPTIONS EVIDENCED BY THIS CERTIFICATE ARE NON-QUALIFIED STOCK OPTIONS AND
ARE NOT INTENDED TO COMPLY WITH THE REQUIREMENTS OF SECTION 422 OF THE INTERNAL
REVENUE CODE OF 1986, AS AMENDED.

OPTION CERTIFICATE                                  200,000 COMMON STOCK OPTIONS
NO. RB-22

                            RED BELL BREWING COMPANY

                              COMMON STOCK OPTIONS

                  (These Options will be void if not exercised
                    by the Termination Date specified below.)

                  1. Options. Subject to the terms and conditions hereof, this
certifies that JAMES R. BELL is the owner of 200,000 Options (the "Options") of
Red Bell Brewing Company, a Pennsylvania corporation (the "Company"). Each
Option entitles the holder to purchase from the Company at any time prior to the
Termination Date of such Options (as set forth in Section 3 hereof), one fully
paid and non-assessable share of the Company's Common Stock, without par value
(the "Common Stock"), subject to adjustment as provided in Section 7 hereof.

                  2. Option Price. The Options shall be exercised by delivery to
the Company (prior to the Termination Date for such Options as set forth in
Section 3 hereof) of the applicable option price for each share of Common Stock
being purchased hereunder (the "Option Price"), this Certificate, and the
completed Election To Purchase Form which is attached hereto. The Option Price
for the 200,000 shares of Common Stock underlying the Options evidenced by this
Certificate shall be $.10 per share of Common Stock. The Option Price shall be
subject to adjustment as provided in Section 7 hereof. The Option Price is
payable either in cash or by certified check or bank draft payable to the order
of the Company.

<PAGE>

                  3. Termination Date. All of the Options must be exercised in
accordance with the terms hereof prior to five years following vesting
("Termination Date"). On the Termination Date, any and all unexercised rights
hereunder relating to the Options shall become null and void and the Options
shall without any action on behalf of the Company become null and void.

                  4. Exercise. Upon the surrender of this Certificate and
payment of the Option Price as aforesaid, the Company shall issue and cause to
be delivered with all reasonable dispatch to or upon the written order of the
registered holder of this Option and in such name or names as the registered
holder may designate, a certificate or certificates for the number of full
shares of Common Stock so purchased upon the exercise of any Option. Such
certificate or certificates shall be deemed to have been issued and any person
so designated to be named therein shall be deemed to have become a holder of
record of such Common Stock on and as of the date of the delivery to the Company
of this Certificate and payment of the Option Price as aforesaid. If, however,
at the date of surrender of this Certificate and payment of such Option Price,
the transfer books for the Common Stock purchasable upon the exercise of any
Option shall be closed, the certificates for the Common Stock in respect to
which any such Option are then exercised shall be issued and the owner of such
Common Stock shall become a record owner of such Common Stock on and as of the
next date on which such books shall be opened, and until such date the Company
shall be under no duty to deliver any certificate for such Common Stock.

                  5. Partial Exercise. The rights of purchase represented by the
Options shall be exercisable, at the election of the registered holder hereof,
either as an entirety, or from time to time for any part of the Common Stock
specified herein and, in the event that the Options are exercised with respect
to less than all of the Common Stock specified herein at any time prior to the
Termination Date, a new Certificate will be issued to such registered holder for
the remaining number of Options not so exercised.

                  6. Lost, Mutilated Certificate. In case this Common Stock
Option Certificate shall become mutilated, lost, stolen or destroyed, the
Company shall issue in exchange and substitution for and upon cancellation of
the mutilated certificate, or in lieu of and in substitution for the Certificate
lost, stolen, or destroyed, a new Certificate of like tenor and representing an
equivalent

                                        2

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right or interest, but only upon receipt of evidence satisfactory to the Company
of such loss, theft or destruction of such certificate and indemnity, if
requested, also satisfactory to the Company.

                  7. Adjustments. Subject and pursuant to the provisions of this
Section 7, the Option Price and number of shares of Common Stock subject to the
Options shall be subject to adjustment from time to time only as set forth
hereinafter:

                           a. In case the Company shall declare a Common Stock
dividend on the Common Stock, then the Option Price shall be proportionately
decreased as of the close of business on the date of record of said Common Stock
dividend in proportion to such increase of outstanding shares of Common Stock.

                           b. If the Company shall at any time subdivide its
outstanding Common Stock by recapitalization, reclassification or split-up
thereof, the Option Price immediately prior to such subdivision shall be
proportionately decreased, and, if the Company shall at any time combine the
outstanding shares of Common Stock by recapitalization, reclassification, or
combination thereof, the Option Price immediately prior to such combination
shall be proportionately increased. Any such adjustment to the Option Price
shall become effective at the close of business on the record date for such
subdivision or combination. The Option Price shall be proportionately increased
or decreased, as the case may be, in proportion to such increase or decrease, as
the case may be, of outstanding shares of Common Stock.

                           c. Upon any adjustment of the Option Price as
hereinabove provided, the number of shares of Common Stock issuable upon
exercise of the Options remaining unexercised immediately prior to any such
adjustment, shall be changed to the number of shares determined by dividing (i)
the appropriate Option Price payable for the purchase of all shares of Common
Stock issuable upon exercise of all of the Options remaining unexercised
immediately prior to such adjustment by (ii) the Option Price per share of
Common Stock in effect immediately after such adjustment. Pursuant to this
formula, the total sum payable to the Company upon the exercise of the Options
remaining unexercised immediately prior to such adjustment shall remain
constant.

                                        3

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                           d. (i) If any capital reorganization or
reclassification of the capital stock of the Company, or consolidation or merger
of the Company with another corporation, person, or entity, or the sale of all
or substantially all of its assets to another corporation, person, or entity,
shall be effected in such a way that holders of Common Stock shall be entitled
to receive stock, securities, cash, property, or assets with respect to or in
exchange for Common Stock, and provided no election is made by the Company
pursuant to subsection (ii) hereof, then, as a condition of such reorganization,
reclassification, consolidation, merger or sale, the Company or such successor
or purchasing corporation, person, or entity, as the case may be, shall agree
that the registered holder of the Options shall have the right thereafter and
until the Termination Date to exercise such Options for the kind and amount of
stock, securities, cash, property, or assets receivable upon such
reorganization, reclassification, consolidation, merger, or sale by a holder of
the number of shares of Common Stock for the purchase of which such Options
might have been exercised immediately prior to such reorganization,
reclassification, consolidation, merger or sale, subject to such subsequent
adjustments which shall be equivalent or nearly equivalent as may be practicable
to the adjustments provided for in this Section 7.

                              (ii) Notwithstanding subsection (i) hereof and in
lieu thereof, the Company may elect by written notice to the registered holder
hereof, to require such registered holder to exercise all of the Options
remaining unexercised prior to any such reorganization, reclassification,
consolidation, merger or sale. If the holder of this Option shall not exercise
all or any part of the Options remaining unexercised prior to such event, such
unexercised Options shall automatically become null and void upon the occurrence
of any such event, and of no further force and effect. The Common Stock issued
pursuant to any such exercise shall be deemed to be issued and outstanding
immediately prior to any such event, and shall be entitled to be treated as any
other issued and outstanding share of Common Stock in connection with such
event. If an election is not made by the Company pursuant to this subsection
(ii) in connection with any such event, then the provisions of subsection (i)
hereof shall apply to such event.

                           e. Whenever the Option Price and number of shares of
Common Stock subject to this Option is adjusted as herein provided, the Company
shall promptly mail to the registered holder of this Option a statement signed
by an officer of the Company

                                        4

<PAGE>

setting forth the adjusted Option Price and the number of shares of Common Stock
subject to this Option, determined as so provided.

                           f. This form of Certificate need not be changed
because of any adjustment which is required pursuant to this Section 7. However,
the Company may at any time in its sole discretion (which shall be conclusive)
make any change in the form of this Certificate that the Company may deem
appropriate and that does not affect the substance hereof; and any Certificate
thereafter issued, whether in exchange or substitution for this Certificate or
otherwise, may be in the form as so changed.

                  8. Reservation. There has been reserved, and the Company shall
at all times keep reserved out of the authorized and unissued shares of Common
Stock, a number of shares of Common Stock sufficient to provide for the exercise
of the right of purchase represented by the Options. The Company agrees that all
shares of Common Stock issued upon exercise of the Options shall be, at the time
of delivery of the Certificates for such Common Stock, validly issued and
outstanding, fully paid and non-assessable.

                  9. Fractional Shares. The Company shall not issue any
fractional shares of Common Stock pursuant to any exercise of any Option and
shall pay cash to the holder of any Option in lieu of any such fractional
shares.

                  10. No Right. The holder of any Options shall not be entitled
to any of the rights of a shareholder of the Company prior to the date of
issuance of the Common Stock by the Company pursuant to an exercise of any
Option.

                  11. Securities Laws; Non-Qualified Option. As a condition to
the issuance of any Common Stock pursuant to the Options, the holder of such
Common Stock shall execute and deliver such representations, warranties, and
covenants, that may be required by applicable federal and state securities law,
or that the Company determines is reasonably necessary in connection with the
issuance of such Common Stock. In addition, the certificates representing the
Common Stock shall contain such legends, or restrictive legends, or stop
transfer instructions, as shall be required by applicable Federal or state
securities laws, or as shall be reasonably required by the Company. The Options
evidenced by this Option Certificate are non-qualified options and are not
intended to comply with the requirements of Section 422 of the Internal Revenue
Code of 1986, as amended.

                                        5

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                  12. Withholding. The granting of the Options hereunder and the
issuance of shares of Common Stock pursuant to the exercise hereof is
conditioned upon the Company's right to withhold in accordance with any
applicable law, from any compensation or other amounts payable to the holder by
the Company, any taxes required to be withheld under federal, state or local law
as a result of the grant or exercise of such Option. To the extent that the
compensation or other amounts, if any, payable to the holder is insufficient to
pay any taxes required to be so withheld, the Company may in its sole
discretion, require the holder, as a condition to the exercise of an Option, to
pay cash to the Company in an amount sufficient to cover such tax liability or
otherwise to make adequate provision for the Company's satisfaction of its
withholding obligations under federal, state and local law.

                  13. Applicable Law. The Options and this Certificate shall be
deemed to be a contract made under the laws of the Commonwealth of Pennsylvania
and for all purposes shall be construed in accordance with the laws thereof
regardless of its choice of law rules.

                  14. Vesting. Notwithstanding anything else set forth herein,
these options shall not become vested or exercisable unless and until either the
Company or the holder hereof receives written notice from C.D.B. Finance
Corporation that the Company is in default on the loan to the Company from
C.D.B. Finance Corporation made on April 27, 2001 in the original principal
amount of $218,500.

                  IN WITNESS WHEREOF, RED BELL BREWING COMPANY, has executed and
delivered this Certificate and caused its corporate seal to be affixed hereto.

                                              RED BELL BREWING COMPANY

Corporate Seal                       By: /s/ James R. Bell
                                        ----------------------------------
                                        James R. Bell,
                                        President

                                     Attest: /s/ Robert T. Huttick
                                            ------------------------------
                                             Robert T. Huttick,
                                             Chief Operating Officer

Dated: April 27, 2001

                                        6

<PAGE>

RED BELL BREWING COMPANY
3100 Jefferson Street
Philadelphia, PA 19121
Attn: James R. Bell,
          President

                                               ELECTION TO PURCHASE

                  The undersigned hereby irrevocably elects to exercise the
right of purchase represented by the attached Option Certificate No. ____ of the
Company. The undersigned desires to purchase ________ shares of Common Stock
provided for therein and tenders herewith full payment of the Option Price for
the shares of Common Stock being purchased, all in accordance with the
Certificate. The undersigned requests that a Certificate representing such
shares of Common Stock shall be issued to and registered in the name of the
undersigned, and delivered to the undersigned at the following address:
_________________________________________________________________________. If
said number of shares of Common Stock shall not be all the shares purchasable
under the Certificate, then a new Common Stock Option Certificate for the
balance remaining of the shares of Common Stock purchasable shall be issued to
and registered in the name of the undersigned, and delivered to the undersigned
at the address set forth above.

Dated:              , 20                    Signature:
       -------------    --                            --------------------

                                        7<PAGE>

                                    AGREEMENT

         This Agreement (the "Agreement") is made and entered into by and among
Foothill Capital Corporation ("Foothill"), Red Bell Brewing Company ("Red
Bell"), James R. Bell ("James Bell"), and Red Bell Brewery and Pub, State
College, Inc. on this 24th day of May 2001.

        Whereas Foothill commenced an action against Red Bell and James Bell 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 Bell and James
Bell 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 Bell's account no. 100008549 at Pennsylvania Business Bank and Red Bell's
account nos. 0310025770, 036066789, and 0615015716 at Commerce Bank;

         Whereas by Court Order dated May 9, 2001, Red Bell and James Bell were
enjoined from transferring any funds held in any account located at Hudson Bank
or Hudson Savings Bank in the name of Red Bell;

         Whereas by Stipulation dated May 18, 2001, $45,000 was transferred from
Red bell's Pennsylvania Business Bank account no. 100008549 as follows:
(a)$30,000 to Foothill(the "$30,000 Payment") and (b)$15,000 to Red Bell;

         Whereas Red Bell has requested that Foothill cause the Writs to be
dissolved; and

         Whereas Red Bell 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 Bell, James Bell, and Red
Bell Brewery and Pub, State College, Inc. Agree as follows:

         1. Payment to Foothill

        On or before the execution of this Agreement, Red Bell shall cause
Pennsylvania Business Bank to wire the sum of FORTY-FIVE THOUSAND
DOLLARS($45,000)(the "45,000 Payment") from Red Bell's 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 Bell Term Loan Division Account
                  Attention: Henry Jordan

                                       1
<PAGE>

Red Bell 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 Bell's account to Red Bell and
to otherwise dissolve the Writs, and (b) with Red Bell, submit a stipulation to
the Court to remove the restraints on access to Red bell's Hudson Bank account
that were imposed by Order dated May 9, 2001.

         3. Issuance of Red Bell Shares

         (a) Within 10 days of the date hereof, Red Bell 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 Bell, and James Bell agree to credit the amount of $100,000 toward
reduction of the Judgment Balance. Red Bell warrants that (1) the Shares are
duly authorized, newly issued shares when issued to Foothill of the capital
stock of Red bell; (2) the issuance of the Shares has been duly authorized by
all necessary corporate action of Red Bell; (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 Bell; 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 Bell's Articles of Incorporation or Bylaws, or any
instrument or agreement binding upon Red Bell or any of its properties.

         (b) Within 60 days of the date hereof, Red Bell 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 Bell 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
Bell 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 bell 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.

                                       2
<PAGE>

         (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 Bell.

         (e) Red Bell 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 Bell 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 Bell 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 Bell 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 Bell or James Bell, all of which are expressly
preserved.

                                       3
<PAGE>

         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 Bell at Pennsylvania Business Bank and Commerce Bank; James
Bell, Red Bell, and Red Bell 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 Bell 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
Bell 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 Bell Releasors, all of which are
expressly preserved hereby.

         Red Bell further agrees to dismiss with prejudice all actions against
Foothill, including the action Red Bell 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 bell 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 Bell represents and warrants that the execution and delivery of
this Agreement and consummation of the actions contemplated hereby to be taken
by Red Bell have been duly authorized and that this Agreement is a valid and
binding agreement enforceable in accordance with its terms.

         Red Bell 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 Bell 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.

         James Bell represents and warrants that this Agreement is valid and
binding agreement enforceable in accordance with its terms.

                                       4
<PAGE>

         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 BELL BREWING COMPANY

                                     By: /s/ James R. Bell, President
                                         ------------------------------------
                                         James R. Bell

                                     Title: President

                                     By: /s/ James R. Bell, Individually
                                         ------------------------------------
                                              JAMES R. BELL

                                     RED BELL BREWERY AND PUB,
                                     STATE COLLEGE, INC.

                                     By: /s/ James R. Bell, President
                                         ------------------------------------
                                              James R. Bell

                                     Title: President

                                     FOOTHILL CAPITAL CORPORATION

                                     By: /s/
                                        -------------------------------------

                                     Title: Vice President

                                       5

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