SETTLEMENT AGREEMENT AND MUTUAL GENERAL RELEASE
This Settlement Agreement and Mutual General Release ("Agreement") is
entered into between (1) Hilite Industries, Inc. ("Hilite") and (2) Xxxxxxx X.
XxXxx, Xxxxxx X. Xxxxxxxxxx and Xxxxxx X. Xxxxxxx (collectively the
"Defendants").
WHEREAS, the parties hereto are parties to an action styled Hilite
Industries, Inc. x. XxXxx et al., Xx. 00 X 0000 (Xxxxxxxxxxx, X.) (Xxxxxx Xxxxxx
District Court for the Northern District of Illinois) (the "Suit");
WHEREAS, Hilite alleges in the Suit that, inter alia, the Defendants
breached certain representations and warranties in a Stock Purchase Agreement
entered into between Hilite and Defendants on or about July 21, 1995, pursuant
to which Defendants sold Hilite 100% of the stock of North American Spring &
Stamping Corp. ("NASS") (the "Stock Purchase Agreement");
WHEREAS, pursuant to the Stock Purchase Agreement and as partial payment
of the purchase price called for by the Stock Purchase Agreement, each Defendant
was issued a Subordinated Note ("Note") by Hilite, copies of which are attached
hereto as Group Exhibit A;
WHEREAS, pursuant to the Stock Purchase Agreement, each Defendant
entered into an Employment Agreement ("Employment Agreement") with NASS, which
include provisions for a salary to be paid to each Defendant for services
rendered as well as the payment of a non-competition fee, copies of which are
attached hereto as Group Exhibit B;
WHEREAS, the Defendants have filed a counterclaim in the Suit seeking
payment under each of their respective Notes;
WHEREAS, incident to execution of the Stock Purchase Agreement, the
parties entered into an agreement dealing with certain environmental matters
(the "Environmental Agreement"), a copy of which is attached hereto as Exhibit
C;
WHEREAS, the Defendants deny any and all allegations of wrongdoing and
liability raised by Hilite in the Suit, and Hilite denies any and all
allegations of wrongdoing and liability raised by Defendants in the Suit; and
WHEREAS, the parties, in order to avoid the costs of litigation and the
risks attendant upon trial, desire to settle their disputes and arrange for the
dismissal of all claims and counterclaims raised in the Suit with prejudice,
upon the terms set forth herein.
NOW, THEREFORE, in consideration of the promises and covenants set forth
below, the parties agree as follows:
1. The recitals set forth above are incorporated herein by
reference.
2. Upon execution of this Agreement by all parties:
(a) The Notes, including all principal and interest thereon (accrued
and unpaid), shall be cancelled, and Hilite shall be discharged and released
from any further obligations thereunder;
(b) Any remaining obligation of NASS to the Defendants under each
Defendant's Employment Agreement, including without limitation any remaining
payment obligation under paragraph 4 thereof, shall be cancelled and NASS shall
be discharged and released from any futher obligations thereunder;
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(c) The Defendants shall collectively pay Hilite by certified or
bank check or checks the total amount of $101,498.00;
(d) Any obligations that the Defendants may have pursuant to the
Environmental Agreement shall be cancelled, and Defendants shall be discharged
and released from any further obligations thereunder, except that the Defendants
shall pay the fees owed to their environmental consultant for work requested by
the Defendants and performed by such consultant up to the date of this
Agreement; and
(e) The parties shall execute a stipulation and agreed order of
dismissal, in the form attached hereto as Exhibit D, providing for the dismissal
of the Suit, including all claims and counterclaims, with prejudice, and further
providing that all parties shall bear their own costs and fees.
3. The parties agree that:
(a) The release of Hilite's obligations to make any further payment
under the Notes shall constitute a reduction of $1,785,184 to the purchase price
set forth in, and to be paid pursuant to, the Stock Purchase Agreement;
(b) The Defendants' payment of $101,498.00 shall be in partial
reimbursement of Hilite's legal fees incurred in the Suit;
(c) The release of NASS' obligations to make further salary payments
under the Employment Agreements for services to be rendered thereunder is in
exchange for the release of the Defendants' obligations, if any, to perform
further services thereunder; and
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(d) The release of NASS' obligation to make further payments of the
non- competition fee under the Employment Agreement shall constitute a reduction
in the consideration paid therefore. Notwitstanding the foregoing, the
Defendants shall remain bound by the terms of the confidentiality and
non-compete provisions set forth in their respective Employment Agreements,
including the provisions in paragraph 3 thereof.
4. With the exception of those obligations imposed upon each
Defendant under the terms of this Agreement and those obligations imposed upon
each Defendant by the confidentiality and non-compete provisions of each
Defendant's respective Employment Agreement, which are not released by this
Agreement and shall remain in force as written, Hilite, on behalf of itself and
its successors, assigns, employees, officers, directors, affiliates, parent
corporations and subsidiaries (including, without limitation, NASS), agrees,
promises, releases and forever discharges the Defendants and their respective
heirs, executors, administrators, successors and assigns from liability from any
and all claims, controversies, actions, causes of actions, demands, torts,
damages, costs, attorneys' fees, moneys due on account, contractual obligations,
obligations, warranties, representations, covenants, judgments or liabilities of
any kind whatsoever in law or equity, arising out of any agreement or alleged
breach of agreement or imposed by statute, common law or otherwise, including
but not limited to all claims that were or could have been raised by Hilite in
the Suit or pursuant to the Stock Purchase Agreement, from the beginning of time
to the date this Agreement is signed, whether or not known now, anticipated,
unanticipated, suspected or claimed, fixed or contingent, whether yet accrued or
not and whether damage has resulted from such or not. Without limiting the
foregoing, pursuant to
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the terms of this paragraph, any rights that Hilite has to ever again bring an
action for breach of the Stock Purchase Agreement, for indemnification under
Article 11 of the Stock Purchase Agreement or based upon alleged acts or
omissions in connection with the negotiation and execution of the Stock Purchase
Agreement are extinguished in full by this paragraph.
5. Hilite represents and warrants that it has not assigned any
claims or causes of action that it now has, or ever had, against any of the
Defendants to any third party.
6. With the exception of those obligations imposed upon Hilite
under the terms of this Agreement, the Defendants, on behalf of themselves and
their respective heirs, executors, administrators, successors and assigns,
agree, promise, release and forever discharge Hilite and its successors,
assigns, agents, employees, officers, directors, attorneys, representatives,
affiliates, parent corporations and subsidiaries (including without limitation
NASS), from liability from any and all claims, controversies, actions, causes of
actions, demands, torts, damages, costs, attorneys' fees, moneys due on account,
contractual obligations, obligations, warranties, representations, covenants,
judgments or liabilities of any kind whatsoever in law or equity, arising out of
any agreement or alleged breach of agreement, or imposed by statute, common law
or otherwise, including but not limited to claims for any payments under the
Defendants' respective Notes or Employment Agreements, from the beginning of
time to the date this Agreement is signed, whether or not known now,
anticipated, unanticipated, suspected or claimed, fixed or contingent, whether
yet accrued or not and whether damage has resulted from such or not. Without
limiting the foregoing, pursuant to the terms of this paragraph, any rights that
the Defendants have to ever bring an action for breach of the Stock Purchase
Agreement, for
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indemnification under Article 11 of the Stock Purchase Agreement or based upon
alleged acts or omissions in connection with the negotiation and execution of
the Stock Purchase Agreement are extinguished in full by this paragraph.
7. The Defendants represent and warrant that they have not assigned
any claims or causes of action that they now have, or ever had, against Hilite
to any third party.
8. Notwithstanding any other provision of this Agreement, any
rights that the Defendants currently have in NASS' Employee Pension Benefit
Plans, as identified in Schedule 4.21(a)(ii) of the Stock Purchase Agreement, or
any successor plans thereto, are not affected in any way by this Agreement, and
shall be preserved.
9. This Agreement may be executed in multiple counterparts, each of
which shall be deemed an original, but which together shall constitute a single
agreement.
10. This Agreement shall, in all respects, be governed by the laws
of the State of Illinois, without regard to Illinois conflicts of laws rules.
11. Each party represents that such party has been advised to seek
consultation with an attorney before signing this Agreement, that such party has
had the benefit of independent counsel of its own choosing and that such party
has carefully read this Agreement, has reviewed it with counsel and understands
each provision thereof.
12. This Agreement constitutes the entire agreement of the parties
with respect to the claims and counterclaims raised in the Suit. Each party
represents that no promises, obligations, representations, inducements, or
agreements of any kind not set forth in this Agreement have been made by any
party to this Agreement or their respective attorneys.
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Dated: February 13, 1998 HILITE INDUSTRIES, INC.
By: /s/ XXXXXX X. XXXXX
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Its: Chief Executive Officer
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Dated: February 13, 1998 /s/ XXXXXXX X. XxXXX
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XXXXXXX X. XxXXX
Dated: February 13, 1998 /s/ XXXXXX X. XXXXXXXXXX
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XXXXXX X. XXXXXXXXXX
Dated: February 13, 1998 /s/ XXXXXX X. XXXXXXX
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XXXXXX X. XXXXXXX
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