SETTLEMENT AGREEMENT
This Settlement Agreement is made this day of November, 1995, by
and among Xxxxxxx Xxxxxxx ("Xxxxxxx"), Xxxx X. Xxxxxxxxxx, Xx. ("Xxxxxxxxxx"),
Xxxx Xxxxx ("Sable"), Xxxxx X. Xxxxx ("Xxxxx"), Rule Industries, Inc., a
Massachusetts corporation ("Rule"), and Greenfield Industries, Inc., a Delaware
corporation ("Greenfield").
RECITALS:
A. Rule has entered into an Agreement and Plan of Merger (the "Merger
Agreement"), dated as of August 11, 1995, with Greenfield and Rule Acquisition
Corp., a wholly-owned subsidiary of Greenfield ("RAC"), pursuant to which RAC
will be merged (the "Merger") with and into Rule and Greenfield will become the
sole stockholder of the surviving corporation.
B. The parties desire to address certain unresolved issues.
NOW, THEREFORE, in consideration of the mutual covenants and
agreements contained herein and for good and valid consideration and intending
to be legally bound hereby, the parties to this Agreement hereby agree as
follows:
1. On the effective date of the Merger (the "Effective Date"),
Xxxxxxx and Xxxxxxxxxx will enter into the Disclosure Agreement attached hereto
as Exhibit A.
2. On the date of execution of this Agreement, Rule's Board of
Directors will accelerate all of the currently unvested nonqualified stock
options held by Xxxxxxx. Xxxxxxx agrees to surrender to Rule for cancellation
all unexercised stock options prior to the Effective Date and will be deemed to
have exercised such options immediately prior to the Effective Date. As a
result, on the Effective Date Xxxxxxx will become entitled to a payment for each
option share equal to the difference between $15.30 per share and the exercise
price set forth in the relevant option and will be eligible to participate in
the liquidating trust that will be established on or prior to the Effective Date
on the basis of his ownership of the shares deemed issued upon exercise of such
options as well as all other shares of Rule owned by Xxxxxxx.
3. Xxxxxxx agrees to purchase, and Rule agrees to cause Rule
International, Inc. to sell to Xxxxxxx, immediately following the Effective
Date, the airplane owned by Rule International, Inc. for aggregate consideration
in cash or by certified check or $135,000 plus the outstanding amount owed as of
November 17, 1995 under the loan secured by a mortgage on such plane to United
Jersey Bank ($522,839 in principal as of November 17, 1995).
4. On the date of execution of this Agreement, Rule will transfer to
Xxxxxxx for no additional consideration all of its right, title and interest in
and to the two automobiles, being a Jaguar and a Corvette, currently used by
Xxxxxxx, free and clear of any encumbrances, obligations and liens.
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5. On the date of execution of this Agreement, Rule will enter into
the agreement with Telemarketing Services Center, Inc. ("TSC") attached hereto
as Exhibit B. In connection with the transition in telemarketing services
contemplated by such agreement, Xxxxxxx will, upon the request of Rule following
the Merger, act as coordinator to resolve any issues or disputes that may arise
during such transition.
6. On the date of execution of this Agreement, Xxxxxxxxxx, Sable and
Xxxxxxx Will enter into an amendment of the partnership agreement of RAGS III, a
Massachusetts general partnership ("RAGS III"), in the form attached hereto as
Exhibit C, in order to extend the term of the agreement to June 30,1996. In
addition, Anastos, Geishecker, Sable and Greenfield agree that they will take
all action necessary to permit the sale of all right, title and interest in and
to the real property held by RAGS III to Rule as soon after the Effective Date
as practicable at a price of $2,400,000 pursuant to a purchase and sale
agreement dated October 18, 1995. Xxxxxxx, Xxxxxxxxxx and Sable agree that
promptly following the consummation of the sale of such property, they will take
all action necessary to dissolve and liquidate RAGS III and will use their best
efforts to distribute the net assets of RAGS III to the partners within thirty
days after such sale.
7. Xxxxxxx will remain on fully paid leave of absence as the
president of Rule until the Effective Date, at which time Xxxxxxx will tender
his written resignation as the president and a director of Rule.
8. Xxxxxxx hereby represents that all the shares of Rule stock in
which he has any legal or beneficial interest are identified on Schedule I
attached hereto (the "Shares"). On the date of execution of this Agreement,
Xxxxxxx shall execute and deliver to Rule, as Greenfield's representative, the
proxy attached hereto as Exhibit l) (the "Proxy") and shall cause every other
person or entity who has legal title to any of the Shares to execute and deliver
on such date a proxy with respect to such Shares in substantially the same form
as the Proxy. Xxxxxxx will neither take nor permit any action that shall prevent
him or any other record holder of any of the Shares from holding good legal
title to such Shares, free and clear of all encumbrances, at all times from the
date of this Agreement until the Effective Date. In the event that the Merger
Agreement is terminated and/or this Agreement is terminated pursuant to
paragraph 20 hereof, Rule shall promptly return all proxies delivered pursuant
to this Paragraph to the persons or entities who executed them.
9. Rule, Greenfield, Geishecker, Sable and Xxxxx for themselves and
their respective parent corporations, divisions, subsidiaries, affiliates,
predecessors, heirs, successors, administrators, executors, assigns, officers,
directors, shareholders, employees, attorneys, agents and representatives,
hereby, release and forever discharge Xxxxxxx and his heirs, successors.
assigns, administrators, executors, attorneys, agents and representatives from
any and all causes of action, demands, covenants, contracts, agreements, sums of
money, damages, debts, accounts, liabilities, attorneys' fees, and claims of
every name and nature, known and unknown, arising or which may have existed from
the beginning of the world to this date, but excluding any claims arising
directly out of Xxxxxxx'x obligations under this Agreement and the use of funds
and assets of RAGS II, a Massachusetts partnership ("RAGS II") and RAGS III
unless
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directly related to the good faith operation, management and administration of
RAGS II and RAGS III.
10. Xxxxxxx for himself individually and for his heirs, successors,
administrators, executors, assigns, attorneys, agents and representatives,
hereby releases and forever discharges Rule, Greenfield, Geishecker, Sable and
Xxxxx and their respective parent corporations, divisions, subsidiaries,
affiliates, predecessors, heirs, successors, assigns, administrators, executors,
past, present and future officers, directors, shareholders, employees,
attorneys, agents and representatives from any and all causes of action,
demands, covenants, contracts, agreements, sums of money, damages, debts,
accounts, liabilities, attorneys' fees, and claims of every name and nature,
known and unknown, arising or which may have existed from the beginning of the
world to this date, but excluding any claims arising directly out of the
obligations of Rule, Greenfield, Xxxxxxxxxx and Sable under this Agreement, the
obligation of RAGS III under the S400,000 promissory note to Rule assigned by
Rule to Xxxxxxx and the use of funds and assets of RAGS II and RAGS III unless
directly related to the good faith operation, management and administration of
RAGS II and RAGS III.
11. This Agreement shall be effective as a full and final accord and
satisfaction of all matters released by paragraphs 9 and 10 hereof. Rule,
Greenfield, Geishecker, Sable, Xxxxxxx and Xxxxx acknowledge that they may
hereafter discover facts in addition to or different from those that they now
know or believe to be true with respect to the subject matter of this
Agreement, that it is their intention hereby fully, finally and forever to
settle and release all released matters and that, in furtherance of such
intention, the releases given herein shall be and remain in effect
notwithstanding the discovery or existence of any such additional or different
facts.
12. Should any provision of this Agreement be declared or determined
by any court to be illegal or invalid, the validity of the remaining parts,
terms or provisions shall not be affected thereby and said illegal or invalid
part, term or provision shall be deemed not to be a part of this Agreement.
13. This Agreement shall be binding upon, and inure to the benefit
of, the parties hereto and their respective successors and assigns and
paragraphs 9 and 10 hereof shall inure to the benefit of the persons and
entities referred to therein.
14. Neither this Agreement nor any provision or part hereof shall
constitute, or be construed as, an admission of liability by any party hereof.
15. This Agreement supersedes all prior agreements and
understandings, oral or written, between the parties hereto and constitutes the
entire agreement between them as to the subject matter hereof.
16. This Agreement shall be governed by, and construed and enforced
in accordance with, the laws of The Commonwealth of Massachusetts without
regard to its principles of conflicts of laws.
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17. This Agreement may not be modified or amended orally.
18. This Agreement may be executed in one or more counterparts, each
of which when so executed shall be deemed to be an original, and all such
counterparts shall constitute one and the same instrument.
19. The Liquidating Trust Agreement, the Indemnification Agreement and
the Disston Arbitration Agreement in the forms attached hereto as Exhibit E with
such changes as shall be made in good faith in response to written comments from
the Securities and Exchange Commission shall be executed by all parties thereto
immediately prior to the effective time of the Merger.
20. This Agreement shall be null and void if the Merger does not occur
on or before March 31, 1996.
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NOW, THEREFORE, the parties hereto have executed this Agreement under
seal effective as of the date first above written.
RULE INDUSTRIES, INC.
Witness: [Signature appears here]
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By: [Signature appears here]
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Date: 11/20/95 Title:
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GREENFIELD INDUSTRIES, INC.
Witness: [Signature appears here] By: /s/ Xxxx X. Xxxxx
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Date: 11/20/95 Title: PRESIDENT & CEO
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Witness: [Signature appears here] /s/ Xxxxxxx X. Xxxxxxx
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Date: 11/20/95 Xxxxxxx X. Xxxxxxx
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Witness: [Signature appears here] /s/ Xxxx X. Xxxxxxxxxx, Xx.
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Date: 11/20/95 Xxxx X. Xxxxxxxxxx, Xx.
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Witness: [Signature appears here] /s/ Xxxx Xxxxx
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Date: 11/20/95 Xxxx Xxxxx
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Witness: [Signature appears here] /s/ Xxxxx X. Xxxxx
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Date: 11/20/95 Xxxxx X. Xxxxx
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