COMPROMISE AND SETTLEMENT AGREEMENT AND RELEASE
This Compromise and Settlement Agreement and Release (the "Agreement")
is entered into by and between:
1. Guaranty Federal Bank, F.S.B., a federally chartered savings bank
with its principal place of business in Dallas, Texas ("GFB") and
2. Lone Star Technologies, Inc., a Delaware corporation with its
principal place of business in Dallas, Texas ("LST").
WHEREAS, GFB and LST are parties to that certain Stock Purchase
Agreement And Agreement And Plan Of Reorganization, dated as of February 16,
1993, as amended to date, and all agreements ancillary thereto, (collectively
referred to hereinafter as the "Stock Agreement"); and
WHEREAS pursuant to the Stock Agreement, in particular Sections 2.8 and
2.9 as amended, GFB, LST, and Bank One, Texas N.A. (The "Escrow Agent")
executed the Holdback Escrow Agreement as of November 12, 1993, to establish
a Holdback Escrow of funds to be available to satisfy GFB Claims for Sellers'
breaches of their representations and warranties and for certain
contingencies described in the Stock Agreement; and
WHEREAS the Escrow Agent continues to hold funds in the Holdback Escrow
(the "Escrow Funds"); and
WHEREAS pursuant to the Stock Agreement and the Holdback Escrow
Agreement, GFB has asserted certain claims against the Escrow Funds; and
WHEREAS LST has objected to the payment of GFB's claims against the
Escrow Funds, such claims and objections having created a controversy
concerning the Escrow Funds between GFB and LST; and
WHEREAS after extensive negotiation, the parties desire to resolve and
compromise the controversy over the Escrow Funds and all other matters
arising out of the Stock Agreement and all of the agreements ancillary
thereto;
NOW THEREFORE, the parties agree as follows:
1. All capitalized terms not specifically defined herein shall have
the definitions and meanings ascribed to them in the Stock Agreement and the
Holdback Escrow Agreement.
2. PAYMENT TO GFB. Upon execution of this Agreement, LST and GFB shall
execute
COMPROMISE AND SETTLEMENT AGREEMENT AND RELEASE - PAGE 1
a certificate substantially in the form attached as Exhibit A and
incorporated herein by reference, authorizing and directing the immediate
payment of Two Million Five Hundred Fifty Thousand and no/100 Dollars
($2,550,000) to GFB from the Escrow Funds. On the same date that LST executes
this Agreement, LST shall transmit this certificate to the Escrow Agent via
telecopier and the parties shall deliver to the Escrow Agent such further
assurances as the Escrow Agent may require to act immediately on the
authorization and instruction contained in the certificate.
3. RELEASE OF BALANCE OF HOLDBACK ESCROW TO LST. Upon execution of this
Agreement, LST and GFB shall execute a certificate substantially in the form
attached as Exhibit B and incorporated herein by reference, authorizing and
directing the immediate payment to LST of the balance of the Escrow Funds,
including interest earned on the Holdback Escrow and still remaining in the
account, after the payment of $2,550,000 to GFB. On the same date that GFB
executes this Agreement, GFB shall transmit this certificate to the Escrow
Agent via telecopier and the parties shall deliver to the Escrow Agent such
further assurances as the Escrow Agent may require to act immediately on the
authorization and instruction contained in the certificate.
4. TERMINATION OF THE HOLDBACK ESCROW AGREEMENT. The Holdback Escrow
Agreement shall terminate upon the transfer of funds to GFB and to LST
required by paragraphs 2 and 3 above. The Escrow Agent shall be released from
its duties and obligations as Escrow Agent upon such termination.
5. RELEASE. This paragraph 5 shall become effective on the later of (i)
the date and at the time the Escrow Agent has transferred $2,550,000 to GFB
and GFB has received the funds so transferred and (ii) the date and time the
Escrow Agent has transferred the balance of the Escrow Funds to LST and LST
has received such funds.
a. Notwithstanding anything to the contrary in this Release, THIS
RELEASE SHALL NOT DISCHARGE OR OTHERWISE AFFECT THE OBLIGATIONS OF THE
PARTIES TO PERFORM FULLY AND COMPLETELY ALL OBLIGATIONS UNDER THIS AGREEMENT.
b. GFB together with its assigns, sureties, nominees, subrogees,
successors-in-interest, and predecessors-in-interest does hereby compromise,
settle, and fully release and forever discharge LST and its employees,
agents, shareholders, officers, directors, assigns, sureties, nominees,
subrogees, successors-in-interest, and predecessors-in-interest whether named
herein or not, from any past, present, or future claims which it asserted or
could have asserted, which claims are arising from or related to the Stock
Agreement, the Holdback Escrow Agreement, or the Escrow Funds, whether such
claims are known or unknown, save and except any cause of action or claim
based on a party's breach of any term of this Agreement.
c. LST, together with its assigns, sureties, nominees, subrogees,
successors-in-interest, and predecessors-in-interest does hereby compromise,
settle, and fully release and forever discharge GFB and its subsidiaries,
parents, affiliates, and their respective employees,
COMPROMISE AND SETTLEMENT AGREEMENT AND RELEASE - PAGE 2
agents, shareholders, officers, directors, assigns, sureties, nominees,
subrogees, successors-in-interest, and predecessors-in-interest whether named
herein or not, from any past, present, or future claims which it asserted or
could have asserted, which claims are arising from or related to the Stock
Agreement, the Holdback Escrow Agreement, or the Escrow Funds, whether known
or unknown, save and except any cause of action or claim based on a party's
breach of any term of this Agreement.
d. Notwithstanding anything to the contrary contained in this
Release, nothing in this Release shall extend any statute of limitations.
e. Each of the parties expressly warrants and represents that (i)
this Agreement is a valid and legally binding agreement, (ii) such party is
the owner of all claims to be released and settled by this Agreement,
(iii) such party is legally competent to execute this Agreement, (iv) any and
all approvals necessary for the execution of this Agreement have been
obtained by the party executing this Agreement, and (v) such party has not
assigned, pledged, or otherwise in any manner whatsoever sold or transferred,
either by instrument in writing or otherwise, any right, title, or interest
in any claim being released hereby.
f. It is expressly agreed that as part of the consideration for
this Agreement, each party shall be responsible for and shall pay for its own
legal, professional, and ancillary costs and expenses incurred as result of
the claims being settled herein.
g. Each of the parties understands and agrees that this Agreement
and performance hereunder are in compromise of disputed claims. Each of the
parties hereto acknowledges and agrees that this Agreement is not evidence
of, nor an admission of, any liability or wrongdoing whatsoever on the part
of any of the parties being released.
6. TAX LIABILITIES. GFB shall be responsible for and shall pay all
taxes, penalties and interest of any nature which may become due arising from
the $2,550,000 payment to GFB from the funds in the Holdback Escrow. LST
shall be responsible for and shall pay all taxes, penalties and interest of
any nature which may become due arising from, related to, attributable to, or
in connection with the payment to LST of funds from the Holdback Escrow.
7. GOVERNING LAW. This Agreement shall be governed by and construed
according to the laws of the State of Texas.
8. MULTIPLE COUNTERPARTS. This Agreement shall be executed in multiple
counterparts, each of which shall be deemed an original for all purposes.
9. BINDING EFFECT. This Agreement shall be binding upon and inure to
the benefit of the parties hereto and their respective representatives,
successors, assigns, agents, partners, attorneys, officers, directors, equity
owners and employees.
COMPROMISE AND SETTLEMENT AGREEMENT AND RELEASE - PAGE 3
10. ENTIRE AGREEMENT; AMENDMENTS. This Agreement and the Exhibits
hereto contain the entire agreement between the parties with respect to the
subject matter hereof, and supersede all other agreements, written or oral,
between or among the parties with respect to such subject matter. There are
no agreements, promises, representations or warranties made by any party
other than those set forth in this Agreement and the exhibits attached
hereto. The terms of the Agreement shall not be waived, changed, modified,
extended, discharged or amended except by written instrument, specifying that
it amends this Agreement, and signed by GFB and LST.
11. NON-FRUSTRATION. All parties shall execute all such documents and
take all such actions as may be necessary to effect the consummation of the
settlement and transactions contemplated by this Agreement. Each party agrees
to take no action to hinder, delay, frustrate or avoid the consummation of
the settlement and transactions contemplated by this Agreement.
12. NOTICES. All notices required or permitted to be given pursuant to
the terms of this Agreement shall be given a) by certified mail, return
receipt requested, or b) by courier delivery, or c) by telecopier
transmission accompanied by U.S. mail postage prepaid, to the following at
the addresses set forth below or at such other address as any party may
designate in writing:
If to GFB:
Guaranty Federal Bank, F.S.B.
▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇
▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇▇
Attention: ▇▇. ▇▇▇▇▇▇ ▇. ▇▇▇▇▇
Telecopier No. ▇▇▇-▇▇▇-▇▇▇▇
with a copy to:
Guaranty Federal Bank, F.S.B.
▇▇▇▇ ▇▇▇▇▇▇▇, ▇▇▇ ▇▇▇▇▇
▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇▇
Attention: Mr. J. ▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇, Esq.
Telecopier No. ▇▇▇-▇▇▇-▇▇▇▇
If to LST:
Lone Star Technologies, Inc.
▇▇▇▇ ▇▇▇ ▇▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇
▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇▇
Attention: ▇▇. ▇▇▇▇ ▇. ▇▇▇▇▇▇
COMPROMISE AND SETTLEMENT AGREEMENT AND RELEASE - PAGE 4
Telecopier No. ▇▇▇-▇▇▇-▇▇▇▇
with a copy to:
Lone Star Technologies, Inc.
▇▇▇▇ ▇▇▇ ▇▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇
▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇▇
Attention: ▇▇. ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇, Esq.
Telecopier No. ▇▇▇-▇▇▇-▇▇▇▇
13. Each of the signatories to this Agreement acknowledges that he or
it has read this Agreement in its entirety, makes the release provided for
voluntarily and of his or its own free will, and has had the opportunity to
consult with counsel.
IN WITNESS WHEREOF, the parties have signed this Agreement on the date
set forth beside their respective names.
DATE: July 31, 1997 GUARANTY FEDERAL BANK, F.S.B.
----------------
By: /s/ ▇▇▇▇▇▇ ▇. ▇▇▇▇▇
----------------------------------
▇▇▇▇▇▇ ▇. ▇▇▇▇▇
Chief Financial Office
DATE: July 31, 1997 LONE STAR TECHNOLOGIES, INC.
----------------
By: /s/ ▇▇▇▇ ▇. ▇▇▇▇▇▇
----------------------------------
▇▇▇▇ ▇. ▇▇▇▇▇▇, Chairman and Chief
Executive Officer
COMPROMISE AND SETTLEMENT AGREEMENT AND RELEASE - PAGE 5
EXHIBIT A TO
COMPROMISE AND SETTLEMENT AGREEMENT AND RELEASE
CERTIFICATE
TO: Bank One, Texas, NA, as Escrow Agent
RE: Holdback Escrow Agreement (the "Escrow Agreement") dated as of
November 12, 1993, by and among Lone Star Technologies, Inc.
("Seller"), Guaranty Federal Bank, F.S.B. ("Buyer"), and Bank One,
Texas, NA, as Escrow Agent (the "Escrow Agent")
STATE OF TEXAS )
)
COUNTY OF DALLAS )
After being duly sworn, the undersigned, the Chief Financial Officer and
Assistant Secretary, respectively, of Buyer, and the Chairman and Chief
Executive Officer, and Secretary, respectively, of Seller, hereby certify as
follows:
a. A charge against the Holdback Escrow Account in the total amount of
$2,550,000 has been agreed to by Buyer and Seller pursuant to that
Compromise and Settlement Agreement and Release of even date herewith,
a copy of which is attached as Exhibit 1 (the "Settlement Agreement");
b. The quantitative limitations and other requirements applicable to such
charge set forth in the Acquisition Agreement have been duly observed
and complied with, and the amount of such charge has been calculated
in accordance with the terms and conditions of the Acquisition
Agreement; and
c. Pursuant to the Settlement Agreement and Section 4(c) of the Escrow
Agreement, Buyer is therefore entitled to receive $2,550,000 out of
Holdback Escrow Account immediately upon the Escrow Agent's receipt of
this certificate.
Capitalized terms used and not otherwise defined herein shall have the
respective meanings ascribed to such terms in the Escrow Agreement.
CERTIFICATE - PAGE 1
IN WITNESS WHEREOF, we have hereunto set our hands as of the ____ day of
__________________, 1997.
GUARANTY FEDERAL BANK, F.S.B.
By:
----------------------------------
▇▇▇▇▇▇ ▇. ▇▇▇▇▇
Chief Financial Officer
STATE OF TEXAS )
COUNTY OF DALLAS )
SUBSCRIBED AND SWORN TO BEFORE ME, the undersigned Notary Public, by ▇▇▇▇▇▇
▇. ▇▇▇▇▇, Chief Financial Officer of Guaranty Federal Bank, F.S.B. this_____day
of________________, 1997.
[Seal]
-----------------------------------
Notary Public, State of Texas
By:
--------------------------
▇▇▇▇▇ ▇. ▇▇▇▇
Assistant Secretary
STATE OF TEXAS )
COUNTY OF DALLAS )
SUBSCRIBED AND SWORN TO BEFORE ME, the undersigned Notary Public,
by Scoff ▇. ▇▇▇▇, Assistant Secretary of Guaranty Federal Bank, F.S.B. this
___ day of ______________________, 1997.
[Seal]
-----------------------------------
Notary Public, State of Texas
CERTIFICATE - PAGE 2
LONE STAR TECHNOLOGIES, INC.
By:
-------------------------------
▇▇▇▇ ▇. ▇▇▇▇▇▇, Chairman and
Chief Executive Officer
STATE OF TEXAS )
COUNTY OF DALLAS )
SUBSCRIBED AND SWORN TO BEFORE ME, the undersigned Notary Public, by
▇▇▇▇ ▇. ▇▇▇▇▇▇, Chairman and Chief Executive Officer of Lone Star
Technologies, Inc. this ____ day of__________________,1997.
[Seal]
---------------------------------------
Notary Public, State of Texas
By:
------------------------------
▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇
Secretary
STATE OF TEXAS )
COUNTY OF DALLAS )
SUBSCRIBED AND SWORN TO BEFORE ME, the undersigned Notary Public, by
▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇, Secretary of Lone Star Technologies, Inc. this ____ day
of__________, 1997.
[Seal]
---------------------------------------
Notary Public, State of Texas
CERTIFICATE - PAGE 3
EXHIBIT B TO
COMPROMISE AND SETTLEMENT AGREEMENT AND RELEASE
CERTIFICATE
TO: Bank One, Texas, NA, as Escrow Agent
RE: Holdback Escrow Agreement (the "Escrow Agreement") dated as of
November 12, 1993, by and among Lone Star Technologies, Inc.
("Seller"), Guaranty Federal Bank, F.S.B. ("Buyer"), and Bank One,
Texas, NA, as Escrow Agent (the "Escrow Agent")
STATE OF TEXAS )
)
COUNTY OF DALLAS )
After being duly sworn, the undersigned, the Chief Financial Officer and
Assistant Secretary, respectively, of Buyer, and the Chairman and Chief
Executive Officer, and Secretary, respectively, of Seller, hereby certify as
follows:
a. All claims of Buyer against the funds held in Holdback Escrow Account
Tranche One, Tranche Two, Tranche Three, Tranche Four, and Tranche
Five (the "Holdback Escrow Accounts") after the date otherwise
specified as the release date for such funds have been resolved
pursuant to that Compromise and Settlement Agreement and Release of
even date herewith, a copy of which is attached as Exhibit 1 (the
"Settlement Agreement") in such a manner that the sum of
(i) all amounts in the Holdback Escrow Accounts
(ii) less $2,550,000
is the sum which is no longer needed to satisfy Buyer's claims; and
b. Pursuant to the Settlement Agreement and Section 4(j) of the Escrow
Agreement, Seller is thus entitled to receive the sum of
(i) all amounts in the Holdback Escrow Accounts
(ii) less $2,550,000,
which sum is to come out of the Holdback Escrow Accounts immediately
upon the Escrow Agent's receipt of this certificate.
CERTIFICATE - PAGE 1
Capitalized terms used and not otherwise defined herein shall have the
respective meanings ascribed to such terms in the Escrow Agreement.
IN WITNESS WHEREOF, we have hereunto set our hands as of the ____ day of
_______________________, 1997.
GUARANTY FEDERAL BANK, F.S.B.
By:
----------------------------------
▇▇▇▇▇▇ ▇. ▇▇▇▇▇,
Chief Financial Officer
STATE OF TEXAS )
COUNTY OF DALLAS )
SUBSCRIBED AND SWORN TO BEFORE ME, the undersigned Notary Public, by
▇▇▇▇▇▇ ▇. ▇▇▇▇▇ Chief Financial Officer of Guaranty Federal Bank, F.S.B.
this_____day of __________ 1997.
[Seal]
--------------------------------------------
Notary Public, State of Texas
By:
-----------------------------------
▇▇▇▇▇ ▇. ▇▇▇▇
Assistant Secretary
STATE OF TEXAS )
COUNTY OF DALLAS )
SUBSCRIBED AND SWORN TO BEFORE ME, the undersigned Notary Public, by
▇▇▇▇▇ ▇. ▇▇▇▇, Assistant Secretary of Guaranty Federal Bank, F.S.B.
this_____day of __________ 1997.
[Seal]
--------------------------------------------
Notary Public, State of Texas
CERTIFICATE - PAGE 2
LONE STAR TECHNOLOGIES, INC.
By:
----------------------------------------
▇▇▇▇ ▇. ▇▇▇▇▇▇, Chairman and
Chief Executive Officer
STATE OF TEXAS )
COUNTY OF DALLAS )
SUBSCRIBED AND SWORN TO BEFORE ME, the undersigned Notary Public, by
▇▇▇▇ ▇. ▇▇▇▇▇▇, Chairman and Chief Executive Officer of Lone Star
Technologies, Inc. this ____ day of ______________, 1997.
[Seal]
---------------------------------------
Notary Public, State of Texas
By:
------------------------------
▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇
Secretary
STATE OF TEXAS )
COUNTY OF DALLAS )
SUBSCRIBED AND SWORN TO BEFORE ME, the undersigned Notary Public, by
▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇, Secretary of Lone Star Technologies, Inc. this ____ day
of__________,1997.
[Seal]
---------------------------------------
Notary Public, State of Texas
CERTIFICATE - PAGE 3
