SETTLEMENT AGREEMENT
This Settlement Agreement is made this 20th 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 of $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.
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 1
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 D (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
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of RAGS II, a Massachusetts partnership ("RAGS II") and RAGS III unless
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 $400,000
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.
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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.
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: /s/ Xxxxx Xxxxxxx
------------------ By: /s/ Xxxx X. Xxxxxxxxxx, Xx.
Date: 11/20/95 ---------------------------
--------------------- Title: Vice President
GREENFIELD INDUSTRIES, INC.
Witness: /s/ Xxxxxx Xxx Xxxxxxx By: /s/ Xxxx X. Xxxxx
----------------------- ---------------------------
Date: 11/20/95 Title: President & CEO
-------------------------
Witness: /s/ K.P. Light /s/ Xxxxxxx X. Xxxxxxx
---------------------- -------------------------------
Date: 11/20/95 Xxxxxxx X. Xxxxxxx
-------------------------
Witness: /s/ Xxxxx Xxxxxxx By: /s/ Xxxx X. Xxxxxxxxxx, Xx.
---------------------- ---------------------------
Date: 11/20/95 Xxxx X. Xxxxxxxxxx, Xx.
-------------------------
Witness: /s/ Xxxxx Xxxxxxx By: /s/ Xxxx Xxxxx
---------------------- ---------------------------
Date: 11/20/95 Xxxx Xxxxx
-------------------------
Witness: /s/ Xxx X. Xxxxxxx By: /s/ Xxxxx X. Xxxxx
----------------------- ---------------------------
Date: 11/20/95 Xxxxx X. Xxxxx
--------------------------
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