Exhibit 10.1
AGREEMENT AND
GENERAL RELEASE
     This Agreement and General Release (the “Agreement”), made as of the 28th
day of February 2006, by and between Sturm, Ruger & Co., Inc., a Delaware
corporation with an address at One Lacey Place, Southport, Connecticut 06890
(the “Company”), and William B. Ruger, Jr., an individual with a residence at 2
Croydon Brook Road, Newport, New Hampshire 03773 (“Employee”);
W I T N E S S E T H:
     WHEREAS, Employee is employed by the Company as its Chief Executive
Officer; and
     WHEREAS, the Company and Employee have agreed that Employee will
voluntarily resign from all offices and other positions he currently holds with
the Company;
     NOW THEREFORE, in consideration of the covenants and conditions set forth
herein, the parties, intending to be legally bound, agree as follows:
     1. Employment Status. Employee hereby voluntarily resigns, and the Company
hereby accepts his resignation, as Chief Executive Officer and an employee of
the Company, in each case effective as of February 28, 2006 (the “Separation
Date”).
     2. Separation Arrangements.
          (a) In consideration of the performance by Employee of the obligations
of Employee herein, the Company agrees to pay to Employee $729,020.80, less
applicable withholdings for federal, state and local taxes. Such amount, which
represents severance and the value of all of Employee’s accrued but unused
vacation time (plus interest at the rate of 4.75% per annum on the portion to be
paid on September 1, 2006), shall be paid by wire transfers to an account
designated in writing by Employee for such purpose in periodic installments as
follows: (i) on September 1, 2006 the Company will pay $262,354.13, less

 

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applicable withholdings for federal, state and local taxes, and (ii) on the
first business day of each month thereafter through November 1, 2007 the Company
will pay $33,333.33, less applicable withholdings for federal, state and local
taxes. In January 2007 the Company will issue to Employee a form W-2 reflecting
the payment of the amounts described in this Paragraph 3(a) in calendar year
2006 and in January 2008 the Company will issue to Employee a form W-2
reflecting the payment of the amounts described in this Paragraph 2(a) in
calendar year 2007.
          (b) Employee’s participation in the Company’s group health insurance
coverage shall continue after the Separation Date under the same terms and
conditions applicable to such coverage immediately prior to the Separation Date
and shall terminate as of November 30, 2007. At that time, Employee shall be
entitled to elect to continue to receive such group health insurance coverage,
at his own expense, by so electing in accordance with the Consolidated Omnibus
Budget Reconciliation Act of 1986.
          (c) (i) From and after the Separation Date, Employee shall be entitled
to receive his vested benefits as of the Separation Date under the Salaried
Employees’ Profit Sharing Plan of the Company and the Salaried Employees’
Retirement Income Plan of the Company (the “Qualified Plans”), in accordance
with and subject to the terms and conditions of the Qualified Plans.
               (ii) From and after the Separation Date, Employee shall be
entitled to receive his vested benefits as of the Separation Date under the
Supplemental Executive Profit Sharing Plan of the Company, in accordance with
and subject to the terms and conditions of such plan and such benefits shall be
paid before March 15, 2006. In addition, from and after September 1, 2006,
Employee shall be entitled to receive his vested benefits as of the Separation
Date under the Supplemental Executive Retirement Plan of the Company (the
“SERP,” and together with the Supplemental Executive Profit Sharing Plan of the
Company, the

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“Nonqualified Plans”), in accordance with and subject to the terms and
conditions of the SERP. Notwithstanding the foregoing, to the extent that
Employee was otherwise entitled to receive any payments under the SERP during
the period from the Separation Date through August 31, 2006 (the “Waiting
Period”) in accordance with the terms of the SERP, Employee shall receive a lump
sum payment promptly after September 1, 2006 in an amount equal to the total
amount of payments that Employee otherwise would have received under the SERP
during the Waiting Period in accordance with the terms thereof.
          (d) In the same manner and to the same extent as immediately prior to
the Separation Date, and to the maximum extent permitted by applicable law, the
Company will indemnify and hold Employee harmless from and against all third
party claims, damages, fines, penalties, deficiencies, losses and expenses
(including, without limitation, interest, court costs, reasonable attorneys’
fees and reasonable experts’ fees) with respect to any threatened, pending or
completed action, suit, arbitration or other proceeding, whether civil,
criminal, administrative, investigative or otherwise, which arises out of or
relates to Employee’s performance of his duties and responsibilities as an
officer and/or director of the Company (“Third Party Claims”). If a Third Party
Claim is made against Employee, the Company will be entitled to participate in
the defense thereof and, if it chooses, to assume the defense thereof at its own
cost and expense with counsel selected by the Company. If the Company elects to
assume the defense of a Third Party Claim: (i) the Company will not be liable to
the Employee for any legal expenses subsequently incurred by him in connection
with the defense thereof; (ii) Employee shall cooperate in the defense thereof;
(iii) the Company shall not agree to any settlement, compromise or discharge of
such Third Party Claim without the prior written consent of Employee unless such
settlement, compromise or discharge provides solely for monetary relief to be
paid by the Company and the full and complete release of Employee is the result
thereof; and (iv) Employee shall not admit

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liability with respect to, or settle, compromise or discharge such Third Party
Claim without the Company’s prior written consent. Employee’s right to be
indemnified and held harmless hereunder will not be deemed exclusive of any
other rights or remedies to which he may be entitled as a matter of law, or of
any other rights of indemnity arising under any policy of insurance carried by
Employee, the Company or any other person or entity.
          (e) The Company will process and promptly pay all reasonable and
customary business expenses incurred by Employee through February 28, 2006 and
submitted by him for payment not later than March 14, 2006 in accordance with
the Company’s ordinary expense payment procedures.
          (f) Employee acknowledges and agrees that Employee is not entitled to
and will not be entitled to any compensation or benefits of any kind or
description from the Company or as a result of his employment by the Company
other than as set forth herein or as described herein in the case of the
benefits to be provided under each of the plans described in Section 2(c) above.
     3. Releases.
          (a) In consideration of the Company’s obligations herein, Employee, on
behalf of Employee and Employee’s heirs, successors, administrators and assigns
(in their capacities as such) (the “Employee Parties”), releases and forever
discharges the Company and any and all of its current and former directors,
officers, employees, agents, stockholders, administrators, representatives,
attorneys, insurers, fiduciaries, successors and assigns (in their capacities as
such) (the “Company Parties”) from any and all manner of actions and causes of
action, suits, debts, dues, accounts, bonds, covenants, contracts, agreements,
judgments, charges, claims, and demands whatsoever which the Employee Parties,
or any of them, have, or may hereafter have, against the Company Parties, or any
of them, arising out of or by reason of any

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cause, matter or thing whatsoever occurring up to the Separation Date,
including, without limitation, any and all matters relating to Employee’s
employment by the Company and the termination thereof, including, but not
limited to, any claims for employment discrimination on the basis of age, sex,
race, national origin, disability or any other protected class and any claims
for wages, salary, bonuses, severance pay or benefits of any kind or nature and
any and all matters arising under any federal, state or local statute, rule or
regulation or principle of contract law or common law, including, but not
limited to, claims arising under the Age Discrimination in Employment Act of
1967, as amended, the Employee Retirement Income Security Act of 1974, 29 U.S.C.
§ 1001 et seq., Title VII of the Civil Rights Act of 1964, 42 U.S.C. § 2000e et
seq., the Americans with Disabilities Act, 42 U.S.C. § 12101 et seq., the Family
and Medical Leave Act of 1993, 29 U.S.C. § 2601 et seq., and N.H.R.S.A. §354-A,
all as amended. If any applicable law, regulation or rule prohibits a waiver of
any such claim(s), Employee hereby represents and warrants that he has no such
valid claim(s). Notwithstanding the foregoing, nothing contained herein shall
constitute a release of (i) Employee’s benefits that are vested as of the
Separation Date pursuant to the Qualified Plans and the Nonqualified Plans,
(ii) claims arising under this Agreement or (iii) claims for indemnification or
contribution.
          (b) In consideration of Employee’s obligations herein, the Company on
behalf of the Company Parties releases and forever discharges the Employee
Parties from any and all manner of actions and causes of action, suits, debts,
dues, accounts, bonds, covenants, contracts, agreements, judgments, charges,
claims, and demands whatsoever which the Company Parties, or any of them, have,
or may hereafter have against the Employee Parties, or any of them, arising out
of or by reason of any cause, matter or thing whatsoever occurring up to the
Separation Date.

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          (c) Each of the parties understands that it or he is releasing claims
that it or he may not know about, which is its or his knowing and voluntary
intent, even though it or he recognizes that someday it or he might learn that
some or all of the facts it or he currently believes to be true are untrue and
even though it or he might then regret having signed this Agreement.
Nevertheless, the parties each expressly assume that risk and agree that this
Agreement will remain effective in all respects in any such case. Each party
expressly waives all rights it or he might have under any law that is intended
to protect it or him from waiving unknown claims, and it or he understands the
significance of doing so. It is the express intent of the parties that this
Agreement resolves all outstanding issues and/or claims between them, except as
otherwise expressly provided herein.
          (d) The Company hereby advises Employee: (a) that he should consult an
attorney regarding the Agreement, (b) that he has twenty-one (21) days from the
date of his receipt of the Agreement to consider whether he wants to sign it and
that he may not sign the Agreement before the Separation Date and (c) if he does
sign the Agreement, he will have seven (7) days from the date he signs it to
revoke his acceptance of its terms. At the conclusion of that seven (7) day
period, the Agreement will become effective.
     4. No Claims. Employee represents and warrants that Employee has not filed
any charges, claims or complaints with any governmental agency or court against
the Company Parties. The Company represents and warrants that it has not filed
any charges, claims or complaints with any governmental agency or court against
Employee.
     5. Confidential Information. Employee acknowledges that during Employee’s
employment by the Company Employee has had access to and possession of
non-public and/or proprietary information and materials concerning the Company,
including, but not limited to, information concerning the Company’s operations,
systems, services, personnel,

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marketing, financial affairs, strategies and techniques, structure, products,
product development and technology (“Confidential Information and Materials”).
Confidential Information and Materials shall not include (i) information that is
publicly known as of the Separation Date or (ii) information that becomes
publicly known after the Separation Date without the fault of Employee. Employee
agrees that Confidential Information and Materials are the exclusive property of
the Company and that Employee will keep all Confidential Information and
Materials confidential and will not, without the prior written consent of the
President of the Company, disclose or otherwise make available any Confidential
Information and Materials to any third person other than as required by
applicable law or legal process or as may be necessary or appropriate in
connection with Employee’s carrying out his duties or enforcing his rights under
this Agreement. Except as provided in the preceding sentence, Employee further
agrees that Employee will not use any Confidential Information and Materials for
Employee’s personal benefit or for the benefit of any third person or entity
without the prior written consent of the President of the Company.
     6. Company Property. Not later than April 3, 2006 Employee shall have
(i) returned all Confidential Information and Materials and all property of the
Company in Employee’s possession or custody, including, but not limited to,
credit cards, security key cards, telephone cards, car service cards, Company
identification cards, cellular phones, computer equipment, firearms and all
original and copies of the Company’s records, correspondence, books, manuals and
handbooks, (ii) completed his review of the inventory of the firearms in the
possession or control of the estate of William B. Ruger, Sr., which is attached
as Exhibit A, to determine, in conjunction with the Company’s personnel, which
of such firearms are owned by the Company, and returned such Company firearms to
the Company and (iii) vacated all office space currently provided to him by the
Company and removed all of his personal property from

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the Company’s premises. Prior to April 3, 2006, the President of the Company
will also review, in conjunction with Employee, whether any firearms in the
possession or control of the Company are owned by the estate of William B.
Ruger, Sr. or Employee and shall return to Employee any of such firearms that
the President of the Company reasonably determines are owned by the estate of
William B. Ruger, Sr. or by Employee. The Company shall provide Employee with
reasonable access to Company locations to permit Employee to identify and remove
his personal property (including, but not limited to, any firearms described in
the immediately preceding sentence). Anything to the contrary notwithstanding,
nothing in this Section 6 shall prevent Employee from retaining a home computer
and security system, papers and other materials of a personal nature, including
personal diaries, calendars and rolodexes, information relating to Employee’s
compensation or relating to reimbursement of expenses, information that Employee
reasonably believes may be needed for tax purposes or to enforce this Agreement
and copies of plans, programs and agreements relating to Employee’s employment.
Employee also represents and warrants that Employee has no debts to the Company.
     7. Non-Disparagement. Employee agrees that Employee will not intentionally
publish or communicate to any person or entity any Disparaging remarks, comments
or statements concerning the Company Parties. “Disparaging” remarks, comments or
statements are those that impugn the character, honesty, integrity or morality
or business acumen or abilities of the individual or entity being disparaged.
The Company agrees that neither it nor its directors and executive officers will
intentionally publish or communicate to any person or entity any Disparaging
remarks, comments or statements concerning Employee. Notwithstanding the
foregoing, nothing contained in this Paragraph 7 shall be deemed to prevent
Employee, on the one hand, or the directors and executive officers of the
Company, on the other hand, from providing truthful testimony in response to any
subpoena, court order or other

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process of a valid governmental authority or seeking to enforce the Company’s or
Employee’s rights under this Agreement.
     8. Tax Matters. The Company and Employee intend that this Agreement
complies with the provisions of Section 409A of the Internal Revenue Code of
1986, as amended, and the regulations and other guidance of general
applicability that are issued thereunder (“Section 409A”). The Company and
Employee agree to negotiate in good faith regarding any amendments to this
Agreement that may be necessary or desirable to comply with Section 409A.
     9. Cooperation in Legal Proceedings.
          (a) Employee agrees to make himself reasonably available at the
Company’s main offices or at such other locations as the Company and Employee
may reasonably agree, following reasonable prior notice from the Company, to
provide reasonable assistance to the General Counsel and external counsel of the
Company in the defense of the Company in connection with any actual or
threatened legal proceeding that relates to or arises from activities or events
that occurred during the period of Employee’s employment by the Company,
including, but not limited to, the litigation commenced by Richard Nelson
against the Company; provided that such assistance will be limited to matters
involving Employee’s personal knowledge of the underlying facts. The Company
agrees to reimburse Employee for any reasonable out-of-pocket expenses incurred
by him in providing such assistance.
          (b) Employee hereby waives the right voluntarily to assist, and will
not provide voluntary assistance to, individuals or entities with claims or
defenses adverse to the Company Parties. If Employee is compelled, pursuant to a
subpoena, court order or other process of a valid governmental authority, to
provide information or discovery to other individuals or entities who are
adverse to the Company Parties, he may do so only after giving

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the Company the best notice possible under all of the circumstances, and
preferably at least ten (10) days advance written notice, of (i) any proceeding
at which a court order regarding Employee’s testimony or assistance is sought,
(ii) any subpoena or process requiring or requesting Employee’s testimony or
assistance and (iii) the date on which the testimony or assistance is proposed
or ordered to be made. The purpose of this notice is to allow the Company
Parties to respond thereto and/or seek appropriate relief under this Paragraph.
This Paragraph will not prohibit Employee from assisting in an investigation or
proceeding conducted by an agency of the United States or any state government.
Employee nevertheless waives his right to seek or accept any damages or relief
in any proceeding relating to any act or omission covered by the release in
Paragraph 3 of this Agreement. The terms and conditions of this Paragraph are
procedural in nature, not substantive, and are not intended to and shall not
operate to limit Employee’s obligation to provide truthful testimony.
     10. Miscellaneous.
          (a) Employee acknowledges that the benefits from the Company set forth
in Paragraph 2(a) of this Agreement are benefits he would not be entitled to
receive in the absence of this Agreement.
          (b) Employee represents and warrants that Employee fully understands
the terms of this Agreement and that Employee knowingly and voluntarily, of
Employee’s own free will without any duress, being fully informed and after due
deliberation, accepts its terms and is executing and delivering this Agreement
as Employee’s own free act. Employee further represents and warrants that,
except as set forth herein, no promises or inducements for this Agreement have
been made, and Employee is entering into this Agreement without reliance upon
any statement or representation by any of the Company Parties or any other
person concerning any fact material hereto.

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          (c) Employee confirms Employee’s understanding that as a result of
entering into this Agreement Employee will not have the right to assert that the
Company unlawfully terminated Employee’s employment or violated any rights in
connection with Employee’s employment, including Employee’s right to assert any
claim of unlawful discrimination.
          (d) If the Company or Employee brings a lawsuit or files any claim in
violation of this Agreement, Employee or the Company, as the case may be, may
sue for breach of contract and any other appropriate cause of action and, if
successful, will be entitled to recover costs and attorneys’ fees incurred in
connection with the defense of any such proceeding.
     11. Remedies. Employee acknowledges that a breach by Employee of Paragraphs
6, 7 or 9 of this Agreement would be material, and would cause irreparable
injury and agrees that the rights and remedies of the Company hereunder may be
enforced both at law and in equity, by injunction or otherwise, without the
requirement that the Company post any bond or security. The Company acknowledges
that a breach by the Company of Paragraphs 6 or 7 of this Agreement would be
material, and would cause irreparable injury and agrees that the rights and
remedies of Employee hereunder may be enforced both at law and in equity, by
injunction or otherwise, without the requirement that Employee post any bond or
security.
     12. Notices. All notices or other communications pursuant to this Agreement
shall be in writing and shall be deemed valid and sufficient if delivered by
personal service or overnight courier or dispatched by registered mail, postage
prepaid, in any post office to the parties at the addresses set forth above. A
party hereto may change its address by notice to the other in the manner set
forth above. Notice and other communications rendered as herein provided shall
be deemed to have been given on the day on which personally served or, if sent
by

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overnight courier or registered mail, on the second day after being posted, or
in either case the date of actual receipt, whichever date is the earlier.
     13. Entire Agreement. This Agreement constitutes the entire agreement
between Employee and the Company with respect to the subject matter hereof and
supersedes any and all prior agreements or understandings between Employee and
the Company arising out of or relating to Employee’s employment and the
cessation thereof. This Agreement may only be changed by written agreement
executed by Employee and the Company. To be effective, any waiver of any
provision of this Agreement must be in writing and signed by the party against
whom enforcement is sought.
     14. Governing Law. This Agreement shall be governed by, construed and
enforced in accordance with the laws of the State of New York, without giving
effect to the principles of conflicts of law thereof.
     15. Counterparts. This Agreement may be executed in one or more
counterparts, each of which shall be deemed an original but all of which shall
constitute one and the same instrument.
     16. Headings. The headings in this Agreement are included for convenience
of reference only and shall not affect the interpretation of this Agreement.
     17. Reformation and Severability. It is the intent of Employee and the
Company that the provisions of this Agreement be enforced to the fullest extent
permitted by law. In case any provision of this Agreement shall be declared by a
court of competent jurisdiction to be invalid, illegal or unenforceable as
written, Employee and the Company agree that the court shall modify and reform
such provision to permit enforcement to the greatest extent permitted by law. In
addition, if any provision of this Agreement shall be declared

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invalid, illegal or unenforceable, the validity, legality and enforceability of
the remaining provisions of this Agreement shall in no way be affected or
impaired thereby.
          [Remainder of Page Intentionally Left Blank]

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               IN WITNESS WHEREOF, the parties hereto have executed and
delivered this Agreement as of the day and year first above written.

              STURM, RUGER & CO., INC.
 
       
          /s/William B. Ruger, Jr.
  By:             /s/Stephen L. Sanetti
 
       
               William B. Ruger, Jr.
      Name: Stephen L. Sanetti
 
      Title: President & COO

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