Document:

ex10_1.htm

 

SETTLEMENT AGREEMENT

PARTIES TO THE AGREEMENT

This Settlement Agreement (“Agreement”) is entered into by and between Joseph C. Loomis (“Loomis” or “Plaintiff”) and SupportSave Solutions, Inc., a Nevada corporation (“SSVE” or “Defendant”). Plaintiff and Defendant shall hereinafter be referred to as “the Parties” and individually as a “Party.”

RECITALS

A. On or about January 7, 2011, Plaintiff commenced an adversary proceeding in the United States Bankruptcy Court in and for the District of Arizona (“the Bankruptcy Court”) entitled Loomis v. SupportSave Solutions, Inc., Case No. 2:11-ap-00051-RJH (the “action”). The complaint in the action alleges that on January 26, 2010, after the commencement of his bankruptcy case, the Debtor made a payment of $500,000 to Defendant without prior bankruptcy court approval and that the entire payment is subject to being ordered immediately returned to the bankruptcy estate. The payment was made pursuant to a written Stock Subscription Agreement executed by and between Loomis and Defendant on or about January 1, 2010 whereby Loomis agreed to purchase 833,333 shares of common stock in Defendant (“the stock sale”).

B. On or about January 20, 2011, the action was settled on the terms and conditions specified below.

SETTLEMENT TERMS

NOW, THEREFORE, in consideration of the covenants, releases, agreements and promises contained in this Agreement the Parties hereto agree as follows:

A. PAYMENT TERMS

	
1.  

	
Initial Payment

SSVE will pay to Loomis, by check made payable to “Joseph C. Loomis”, Debtor in Possession” the sum of $200,000 immediately and within 48 hours of entry of an order of the Bankruptcy Court approving this Agreement. Time is of the essence. In exchange for the above-referenced payment, Loomis will tender/return to SSVE 333,332 shares of SSVE common stock purchased as part of the stock sale.

	
2.  

	
Sale of Stock

Upon approval of this Agreement by the Bankruptcy Court and for a period of one hundred and eighty days thereafter, Loomis shall be permitted to

  

 

  

 

sell his remaining shares of stock acquired in the stock sale for a price of not less than 35¢ents per share.

	
3.  

	
Buyback of SSVE Stock

At the expiration of 180 days from the date of entry of an order by the Bankruptcy Court approving this Agreement, SSVE will buy back all of the remaining shares of stock sold by means of the stock sale for an amount such that Loomis is reimbursed in the total amount of $500,000 as a result of the transactions discussed herein. In exchange, Loomis will return to SSVE all remaining shares of SSVE in his possession acquired on account of the stock sale. By way of example only, if SSVE pays Loomis the $200,000 referenced in A.1. above and Loomis obtains $100,000 by means of stock sales permitted by A.2. above, then SSVE would pay Loomis $200,000 for his remaining stock from the stock sale at the conclusion of 180 days from the approval of the Bankruptcy Court of this Agreement so that Loomis receives a total of $500,000.

	
4.  

	
STIPULATION FOR ENTRY OF JUDGMENT

As further consideration for this Agreement, the Parties agree to enter into a stipulation for entry of judgment and judgment thereon in the form attached hereto as Exhibits “A” and “B” that will be held in trust by Loomis’s counsel pending a default by SSVE or satisfaction of the payment terms of this Agreement. If SSVE does not default on any payment term referenced herein, and if at the conclusion of the 180 days from the approval of this Agreement by the Bankruptcy Court, Loomis has in fact received a repayment in full of his initial investment of $500,000 by means of the transactions referenced above, then counsel for Loomis will return to SSVE the stipulation for entry of judgment and judgment thereon without ever filing either document with the Court and will further cause the action to be dismissed with prejudice forthwith. In the event, however, that SSVE defaults on any payment provision referenced above, Loomis after providing SSVE 48 hours notice of his intention to do so (by means of an email to any officer of SSVE) will be authorized to enter the remaining amount owed (i.e., the difference between $500,000 and the amount repaid to Loomis pursuant to A.1, A.2 and/or A.3 above) into the stipulation and judgment and to submit these document to the Court along with a request for attorneys fees in the amount of $5,000 which the parties hereby agree is the reasonable attorneys fees that Loomis will incur in preparing, filing and attending to the presentation of such documents to the Bankruptcy Court. By way of example only, if SSVE pays Loomis the sum of $200,000 pursuant to A.1 above and Loomis sells $100,000 of SSVE stock pursuant to A.2. above; and SSVE is unable to or fails to repay Loomis an additional $200,000 at the end of the 180 day term referenced herein in exchange for a return of his remaining stock in SSVE acquired by the stock sale as required by A.3. above, Loomis will be authorized to submit the stipulation for entry of judgment against SSVE in the amount of $205,000 and a proposed judgment in the amount of $205,000 to the Court. SSVE hereby waives any objection to the form or content of the stipulation for entry of judgment and judgment attached hereto as Exhibits “A” and “B”.

  

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B. MUTUAL RELEASES OF ALL CLAIMS

Except for the obligations created by this Agreement, the Parties, on behalf of themselves, and each of their agents, partners, employees, successors and assigns, insurers, stockholders and all business entities with which they have been affiliated, hereby release the other Party, and each of their agents, partners, employees, successors and assigns, insurers, stockholders and all business entities with which they have been affiliated, from any claims, actions, causes of action, agreements or damages of any nature whatsoever, known or unknown, fixed or contingent, which they may now have or may hereafter have by reason of any matter related to the stock sale. This release includes but is not limited to any claims that Loomis may have against any party (or person associated therewith as an officer, director or a shareholder) for fraud, securities fraud or any other form of wrongdoing arising out any purchase by Loomis of any stock in SSVE.

C. WAIVER OF CIVIL CODE SECTION 1542

In making this Agreement, the Parties acknowledge that they have reviewed California Civil Code Section 1542 which 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.”

Being aware of said code section, the Parties hereby expressly waive any rights they may have thereunder, as well as under any other statute or common law principles of similar effect.

D. CONFIDENTIALITY

It is further agreed that the settlement of the action will be kept confidential by the Parties and will not be disclosed by them to any third party or entity except as may be required in connection with 1) seeking approval by the Bankruptcy Court of this Agreement; 2) advice and services rendered by third party professionals such as accountants and attorneys; 3) the preparation and filing of income tax returns and other filings and notices required by federal or state law; 4) any audit, inquiry, or proceeding by the Internal Revenue Service or state tax authority; 5) as necessary to prosecute or defend any action or proceeding in which the Party making the disclosure has appeared or been named as a party; 6) in response to a court order, civil discovery request, subpoena, or other legal process; or 7) where otherwise required under legal compulsion.

E. FINALITY OF SETTLEMENT

The Parties, and each of them, represent and warrant that, after having an adequate opportunity to do so, each has been fully advised by his respective attorneys concerning the effect and finality of this Agreement. The Parties, and each of them, represent that each is authorized to compromise and settle any and all claims as set forth

  

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in the release language in this Agreement and understands that by execution of this Agreement, except as expressly provided for herein, no further claims against any Party to this Agreement arising from the released matters herein may ever be asserted.

F. NO ADMISSION OF LIABILITY

By entering into this Agreement, no Party is admitting the sufficiency of any claim, allegation, assertion, contention, or position of any other Party or the sufficiency of any defense to any such claim, allegation, assertion, contention or position.

G. EACH PARTY TO BEAR ITS OWN COSTS

Except as expressly provided for herein, each of the Parties hereto acknowledges and agrees that each is to bear his own costs, expenses and attorneys’ fees arising out of or connected with the matters released herein, including the drafting and execution of this Agreement.

H. FAXED SIGNATURES ACCEPTABLE

The Parties hereto deem this Agreement to be effective as of the date both signatures are obtained thereon. Facsimile signatures or signatures on documents transmitted by email shall be deemed to have the same force and effect as original signatures and this Agreement may be executed in counterparts.

I. INTEGRATION PROVISION

This Agreement contains the entire understanding between the Parties with regard to the matters set forth. There are no representations, warranties, agreements, arrangements, undertakings, oral or written, between or among the Parties hereto related to the subject matter of this Agreement that are not fully expressed in this Agreement. It is expressly understood that this Agreement may not be altered, amended, or otherwise changed in any respect or particular whatsoever, except by writing duly executed by an authorized representative of each Party hereto.

J. CHOICE OF LAW/CHOICE OF FORUM

This Agreement shall be interpreted in accordance with and governed in all aspects by the laws of the State of California. If any provision, or any part thereof, of this Agreement shall for any reason be held invalid, unenforceable, or contrary to public policy or any law, then the remainder of this Agreement shall not be affected thereby.

K. MUTUALLY DRAFTED

The Parties agree that they have mutually participated in the drafting of this Agreement and, in any event, no interpretation of any provision of this Agreement will be made against any other Party on the basis of the fact that they were the draftor thereof.

  

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L. AUTHORITY TO EXECUTE AGREEMENT

Each of the signatories hereto warrants and represents that he or she is competent and authorized to enter into this Agreement on behalf of each Party for whom he or she purports to sign.

M. HEADINGS

The headings of this Agreement are for convenience only. No significance is intended by the headings nor are they intended to alter or amend any provisions stated under such heading or elsewhere in this Agreement.

N. ATTORNEYS’ FEES

In the event a legal action or proceeding is hereinafter brought with regard to this Agreement or any of its terms, the prevailing party in such action shall be awarded its reasonable attorneys’ fees and costs of litigation.

O. DISMISSAL OF THE ACTION

Upon satisfaction of all of the provisions of this Agreement related to payment, Plaintiff will request the dismissal of the Action “with prejudice”.

I HAVE READ THE FOREGOING SETTLEMENT AGREEMENT AND I ACCEPT AND AGREE TO THE PROVISIONS CONTAINED THEREIN AND HEREBY EXECUTE IT VOLUNTARILY AFTER HAVING HAD THE OPPORTUNITY TO DISCUSS THE SAME WITH COUNSEL AND WITH FULL UNDERSTADING OF ITS CONSEQUENCES.

DATED:

SUPPORTSAVE SOLUTIONS, INC.

By: /s/ Chris Johns

Chris Johns

Chairman and Chief Executive Officer

DATED:

By: /s/ Joseph Loomis

Joseph Loomis

Plaintiff and Debtor-in-Possessionexhibit10_1.htm

Exhibit 10.1

 

SECOND AMENDMENT TO CREDIT AND SECURITY AGREEMENT

 

 

THIS SECOND AMENDMENT TO CREDIT AND SECURITY AGREEMENT (the “Amendment”), dated as of February 28, 2011, is entered into by and among PHYSICIANS FORMULA, INC., a New York corporation (“Company”), and WELLS FARGO BANK, NATIONAL ASSOCIATION (“Wells Fargo”), acting through its Wells Fargo Business Credit operating division.

 

RECITALS

 

A.           Company and Wells Fargo are parties to a Credit and Security Agreement dated November 6, 2009 (as amended by the First Amendment to Credit and Security Agreement dated June 29, 2010, and the letter agreement dated December 21, 2010, and as further amended, restated or modified from time to time, the “Credit Agreement”).  Capitalized terms used in this Amendment have the meanings given to them in the Credit Agreement unless otherwise specified in this Amendment.

 

B.           Company has requested that the Credit Agreement be further amended, and Wells Fargo is willing to agree to such amendment pursuant to the terms and conditions set forth herein.

 

NOW, THEREFORE, in consideration of the premises and of the mutual covenants and agreements herein contained, it is agreed as follows:

 

1. Amendment to Credit Agreement.  Section 5.2 of the Credit Agreement is amended to read in its entirety as follows:

 

“(a)           “Minimum Book Net Worth.  Company shall maintain its Book Net Worth during each period set forth below in an amount not less than the amount set forth below:

 

	
Month Ending

	
Minimum Book Net Worth

	December 31, 2010	$46,500,000
	 January 31, 2011	 $46,500,000
	February 28, 2011	 $46,500,000
	March 31, 2011 	 $48,000,000
	April 30, 2011	 $47,500,000
	 May 31, 2011	  $47,500,000
	 June 30, 2011	  $47,500,000
	 July 31, 2011	  $47,000,000
	 August 31, 2011	  $47,000,000
	 September 30, 2011	  $47,000,000
	 October 31, 2011	  $47,250,000
	 November 30, 2011	  $46,750,000
	 December 31, 2011	  $48,000,000
	 January 31, 2012	  $48,000,000
	 February 29, 2012	  $48,000,000

 

  

  

  

 

(b)           Minimum Adjusted EBITDA.

 

(i)           Company shall achieve Adjusted EBITDA each fiscal quarter, for the twelve-month period then ended, of not less than the amount set forth below for each such period:   

 

	
12-Month Period Ending

	
Minimum Adjusted EBITDA

	December 31, 2010	$8,950,000
	March 31, 2011 	 $4,854,000
	 June 30, 2011	  $2,340,000
	 September 30, 2011	  $1,971,000
	 December 31, 2011	  $5,979,000

 

(ii)           In addition to the immediately preceding clause (i), Company shall achieve Adjusted EBITDA exceeding $1.00 for each two consecutive calendar quarter period, commencing with the quarter ending March 31, 2011, and continuing to be tested as of the end of each calendar quarter thereafter.

 

(c)           Capital Expenditures.  Company shall not incur or contract to incur Capital Expenditures of more than $4,500,000 for the fiscal year ending December 31, 2011.

 

(d)           Future Financial Covenants.  With respect to future periods not covered by the foregoing Sections 5.2(a), (b), and (c), Company and Wells Fargo agree to negotiate in good faith to establish, no later than April 30, 2012, minimum Book Net Worth, minimum Adjusted EBITDA, and maximum Capital Expenditures requirements for such future periods through the Maturity Date.”

 

2. No Other Changes.  Except as explicitly amended by this Amendment or the other Loan Documents delivered in connection with this Amendment, all of the terms and conditions of the Credit Agreement and the other Loan Documents shall remain in full force and effect and shall apply to any advance or letter of credit thereunder.  This Amendment shall be deemed to be a “Loan Document” (as defined in the Credit Agreement).

 

3. Accommodation Fee.  [Intentionally Omitted].

 

  

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4. Conditions Precedent.  This Amendment shall be effective when Wells Fargo shall have received a duly executed original hereof, together with each of the following, each in substance and form acceptable to Wells Fargo in its sole discretion and duly executed by all relevant parties:

 

4.1 An Acknowledgment and Agreement of Guarantors and Pledgors set forth at the end of this Amendment;

 

4.2 An Acknowledgment from Mill Road Capital, L.P. and Company; and

 

4.3 Such other matters as Wells Fargo may require.

 

5. Representations and Warranties.  Company hereby represents and warrants to Wells Fargo as follows:

 

5.1 Company has all requisite power and authority to execute this Amendment and any other agreements or instruments required hereunder and to perform all of its obligations hereunder, and this Amendment and all such other agreements and instruments have been duly executed and delivered by Company and constitute the legal, valid and binding obligation of Company, enforceable in accordance with their respective terms, except as enforceability may be limited by applicable bankruptcy, insolvency, reorganization, moratorium or similar laws affecting the enforcement of creditors’ rights generally and general equitable principles (whether enforcement is sought by proceedings in equity or at law).

 

5.2 The execution, delivery and performance by Company of this Amendment and any other agreements or instruments required hereunder have been duly authorized by all necessary corporate action and do not (i) require any authorization, consent or approval by any governmental department, commission, board, bureau, agency or instrumentality, domestic or foreign, (ii) violate any provision of any law, rule or regulation or of any order, writ, injunction or decree presently in effect, having applicability to Company, or the articles of incorporation or by-laws of Company, or (iii) result in a breach of or constitute a default under any indenture or loan or credit agreement or any other material agreement, lease or instrument to which Company is a party or by which Company or its properties may be bound or affected.  Without limiting the generality of the foregoing, the Company represents and warrants that (a) the Consent in Lieu of a Special Meeting of the Board of Directors, dated November 6, 2009, adopted by the Company’s board of directors and certified to Wells Fargo pursuant to the Officer’s Certificate, dated November 6, 2009 (as supplemented by the Supplemental Secretary’s Certificate, dated November 16, 2009, the “Officer’s Certificate”), continues in full force and effect, (b) the certificate of incorporation and bylaws of Company, which were certified and delivered to Wells Fargo pursuant to the Officer’s Certificate, continue in full force and effect and have not been amended or otherwise modified, and (c) the officers and agents of Company who were certified to Wells Fargo pursuant to the Officer’s Certificate as being authorized to sign and to act on behalf of Company continue to be so authorized.

 

5.3 Except as set forth on the schedules attached as Annex A hereto, all of the representations and warranties contained in Section 4 and Exhibit D of the Credit Agreement are true and correct in all material respects on and as of the date hereof as though made on and as of such date, except to the extent that such representations and warranties relate solely to an earlier date (in which case such representations and warranties continue to be true and correct as of such earlier date).

 

  

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6. References.  All references in the Credit Agreement to “this Agreement” shall be deemed to refer to the Credit Agreement as amended hereby; and any and all references in the other Loan Documents to the Credit Agreement shall be deemed to refer to the Credit Agreement as amended hereby.

 

7. No Waiver.  The execution of this Amendment and the acceptance of all other agreements and instruments related hereto shall not be deemed to be a waiver of any Default or Event of Default under the Credit Agreement or a waiver of any breach, default or event of default under any Security Document or other document held by Wells Fargo, whether or not known to Wells Fargo and whether or not existing on the date of this Amendment.

 

8. Release.  Company and each of the Persons signing the Acknowledgement and Agreement of Guarantors and Pledgors (such Persons, the “Guarantors”) set forth below hereby absolutely and unconditionally release and forever discharge Wells Fargo, and any and all participants, parent corporations, subsidiary corporations, affiliated corporations, insurers, indemnitors, successors and assigns thereof, together with all of the present and former directors, officers, agents and employees of any of the foregoing, from any and all claims, demands or causes of action of any kind, nature or description relating to the Credit Agreement, other Loan Documents, or related transactions, whether arising in law or equity or upon contract or tort or under any state or federal law or otherwise, which Company or any Guarantor has had, now has or has made claim to have against any such person for or by reason of any act, omission, matter, cause or thing whatsoever arising from the beginning of time to and including the date of this Amendment, whether such claims, demands and causes of action are matured or unmatured or known or unknown.  It is the intention of the Company and the Guarantors in executing this release that the same shall be effective as a bar to each and every claim, demand and cause of action specified and in furtherance of this intention Company and each Guarantor waives and relinquishes all rights and benefits under Section 1542 of the Civil Code of the State of California, which provides:

 

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

 

The parties acknowledge that each may hereafter discover facts different from or in addition to those now known or believed to be true with respect to such claims, demands, or causes of action and agree that this instrument shall be and remain effective in all respects notwithstanding any such differences or additional facts.

 

  

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9. Costs and Expenses.  Company agrees to pay all reasonable fees and disbursements of counsel to Wells Fargo for the services performed by such counsel in connection with the preparation of this Amendment and the documents and instruments incidental hereto.  Company hereby agrees that Wells Fargo may, at any time or from time to time in its sole discretion and without further authorization by Company, make a loan to Company under the Credit Agreement, or apply the proceeds of any loan, for the purpose of paying any such reasonable fees and disbursements.

 

10. Miscellaneous.  This Amendment may be executed in any number of counterparts, each of which when so executed and delivered shall be deemed an original and all of which counterparts, taken together, shall constitute one and the same instrument.  Transmission by facsimile or “pdf” file of an executed counterpart of this Amendment shall be deemed to constitute due and sufficient delivery of such counterpart.  Any party hereto may request an original counterpart of any party delivering such electronic counterpart.  This Amendment and the rights and obligations of the parties hereto shall be construed in accordance with, and governed by, the laws of the State of California.  In the event of any conflict between this Amendment and the Credit Agreement, the terms of this Amendment shall govern.

 

[Signature Page Follows]

 

  

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IN WITNESS WHEREOF, the parties hereto have caused this Amendment to be duly executed as of the date first above written.

 

	 	
WELLS FARGO BANK,

NATIONAL ASSOCIATION

	 
	 	 	 	 
	 	By: 	/s/ Gary Whitaker 	 
	 	Name: 	Gary Whitaker 	 
	 	Title 	Authorized Signatory 	 
	 	 	 	 
	 	 	 	 
	 	
PHYSICIANS FORMULA, INC.

	 
	 	 	 	 
	 	By: 	/s/ Jeff Rogers 	 
	 	Name: 	Jeff Rogers 	 
	 	Title: 	President 	 

 

  

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