SETTLEMENT AGREEMENT
Exhibit
10.1
This
Settlement Agreement (the "Agreement"), is made and entered into as of January
24, 2007 by and among HSA RESIDENTIAL MORTGAGE SERVICES OF TEXAS ("RMST")
and
STATE BANK OF LONG ISLAND ("State Bank"), collectively referred to herein
as
the
"Parties."
WHEREAS
on or about June 4, 2002, RMST and two co-plaintiffs, Household Commercial
Financial Services, Inc. ("HCFS") and Matrix Capital Bank ("Matrix"), commenced
an adversary proceeding in the United States Bankruptcy Court for the Eastern
District of New York against State Bank and others, captioned Household
Commercial Financial Services, Inc., Matrix Capital Bank, and HSA Residential
Mortgage Services of Texas v. Action Abstract, Inc., Island Mortgage Network,
Inc., Xxxxxxxxx.xxx, Inc., and State Bank of Long Island, Adv. Pro.
No.
0-00-00000 (the "Action") asserting the following claims as against State
Bank:
(i) aiding and abetting fraud; (ii) aiding and abetting breach of fiduciary
duty; and (iii) negligence;
WHEREAS
on May 17, 2004, State Bank filed a motion for summary judgment;
WHEREAS
on January 31, 2005 and May 23, 2005, the Bankruptcy Court issued a memorandum
decision and order, respectively, dismissing plaintiffs' causes of action
for
negligence and aiding and abetting breach of fiduciary duty, and denying
State
Bank summary judgment with respect to plaintiffs' cause of action for aiding
and
abetting fraud;
WHEREAS
on September 26, 2005, the U.S. District Court for the Eastern District of
New
York withdrew the reference to the Bankruptcy Court and the Action was
transferred to the Xxxxxxxxx Xxxxxx Xxxxxxx;
WHEREAS
in December 2005, after HCFS and Matrix settled their disputes with State
Bank,
the Court entered an order dismissing HCFS's and Matrix's claims against
State
Bank in the Action with prejudice;
WHEREAS
in January 2006, a trial took place with respect to RMST's claim against
State Bank for aiding and abetting fraud and, at the conclusion of the trial,
the jury returned a verdict in favor of RMST, awarding RMST $43,856,746.03
in
damages;
WHEREAS
on February 10, 2006, State Bank filed a motion for judgment as a matter
of law
or in the alternative for a new trial and, on September 25, 2006, the Court
denied State Bank's motion;
WHEREAS
RMST and State Bank each believes that it has meritorious positions on which
it
might ultimately prevail on appeal, with respect to issues of both liability
and
damages;
WHEREAS
on January 19, 2007, the Parties determined and agreed to fully, finally,
forever, and unconditionally compromise, discharge, and settle all disputes,
claims, and potential claims between them arising from, or in any way relating
to or concerning, the Action and all allegations and issues therein, and,
in
connection therewith, to forego any appeals, and to memorialize further that
agreement in this Agreement;
NOW,
THEREFORE, in consideration of the mutual obligations and promises contained
herein, the sufficiency of which is hereby acknowledged, the Parties agree
as
follows
I
.
Settlement
Agreement and Releases.
On
January 24, 2007, (A) both Parties, through counsel, shall exchange, via
facsimile, an executed copy of this Agreement, (B) RMST shall deliver
to
counsel for State Bank, via facsimile, an
executed copy of the notarized release, in the form attached hereto as Exhibit
A, and (C) State Bank shall deliver to counsel for RMST, via facsimile, an
executed copy of (i) the notarized release, in the form attached hereto as
Exhibit B, and (ii) the Stipulation of Dismissal, in the form attached hereto
as
Exhibit C. The release
executed
by RMST and faxed to counsel for State Bank shall be null and void unless
and
until RMST receives the Settlement Payment set forth in paragraph 2 of this
Agreement, below.
2.
Settlement
Payment.
On
January 24, 2007, following the execution of this Agreement and the releases
by
both Parties, and upon exchange of facsimile copies of this Agreement and
the
releases as specified in paragraph I of this Agreement, State Bank shall
pay to
RMST the sum of sixty-five million U.S. Dollars ($65,000,000.00) (the
"Settlement Payment"), by wire transfer to:
Bank
Name: JPMorgan
Chase Bank, N.A.
Bank
City
and
State:Houston,
TX
Bank
ABA
Number: 0000-0000-0
Further
Credit To: HSA
Residential Mortgage Services of Texas, Inc.
Account
Number: 00103196649
3.
Settlement
Execution and Stipulation of Dismissal.
On the
date on which RMST receives confirmation from its bank that it has received
the
Settlement Payment into the account specified in paragraph 2 of this Agreement,
the Parties shall exchange, via overnight mail:
a)
the
signed originals of this Agreement, and b) the signed, notarized originals
of
the releases. Within 1 (one) day of RMST receiving confirmation from its
bank
that it has received the Settlement Payment into the account specified in
paragraph 2 of this Agreement, RMST shall execute and electronically file
the
Stipulation of Dismissal with the Court.
4. No
Admission of Liability.
Neither
the execution of this Agreement nor the execution of any of the Exhibits
hereto,
nor any other signing or act referred to in this Agreement or taken pursuant
to
this Agreement, shall be used as, construed as, or deemed to be evidence
of any
admission or concession of liability, wrongdoing, damages, fact, or law on
the
part of the Parties.
5. Duty
to Cooperate.
The
Parties shall cooperate to the extent necessary to effectuate all terms and
conditions of this Agreement and its attached Exhibits.
6. Severability.
If any
provision of this Agreement is deemed invalid or unenforceable by a court
of
competent jurisdiction, such invalidity or unenforceability shall not affect
or
limit the validity or enforceability of any other provision hereof. Neither
Party shall assert at any time that any provision of this Agreement or any
of
its
attached
Exhibits is invalid or unenforceable.
7. Final
and Complete Agreement.
This
Agreement, including all of its Exhibits, is fully integrated and is intended
by
the Parties as a final and complete expression of their agreement. This
Agreement, including all of its Exhibits, supersedes any and all prior or
contemporaneous agreements or understandings, written or oral, between the
Parties regarding the subject matter described herein and may not be explained,
supplemented, or contradicted by evidence of additional terms not contained
in
this Agreement, including all of its Exhibits.
8. Amendments.
This
Agreement, including its Exhibits, may not be amended or modified except
by a
written instrument signed by the Parties hereto.
9. Notices.
All
notices, requests, and demands to or upon either Party under this Agreement
shall be in writing (which may be by fax), and, unless otherwise expressly
provided herein, shall be deemed to have been duly given or made when delivered,
or three business days after being deposited in the mail, postage prepaid,
or,
in the case of fax notice, when received, addressed as follows, or to such
other
address as may be hereafter notified by the respective parties
hereto:
If
to
RMST: Xxxxxx
Xxxxxx, Esq.
General
Counsel
American
General Finance, Inc.
000 XX 0x Xxxxxx Xxxxxxxxxx, XX 00000
Telephone: 000-000-0000
Fax: 000-000-0000
With copy to:
Xxxxx
X.
Xxxxxxx, Esq.
Shearman & Sterling LLP
000 Xxxxxxxxx Xxxxxx Xxx Xxxx, XX 00000-0000
Telephone: 000-000-0000
Fax: 000-000-0000
If
to
State Bank:
Xx.
Xxxxxx X. Xxxxxxxx, Xx.
Chief Executive Officer
State Bank of Long Island
000
Xxxxxxxx Xxxxxx
Xxx Xxxx Xxxx, XX 00000-0000
Telephone:
000-000-0000
Fax: 000-000-0000
With
copy
to:
Xxxxxx
X.
Xxxxxxxxx, Esq.
Fried,
Frank, Harris, Xxxxxxx & Xxxxxxxx LLP
Xxx
Xxx
Xxxx Xxxxx
Xxx Xxxx, XX 00000
Telephone: 000-000-0000
Fax:
000-000-0000
Either
Party may change its address for notices by notice in the manner provided
in
this
paragraph.
10. Successors
and Assigns.
This
Agreement and its Exhibits shall be binding on and inure to the benefit of
the
successors and assigns of the Parties.
11. Counterparts.
This
Agreement may be executed in one or more counterparts. All executed counterparts
together shall constitute and be deemed to be one and the same
instrument.
12. Governing
Law.
This
Agreement, including without limitation the Parties' Releases provided for
herein, shall in all respects be interpreted, enforced, and governed under
the
laws of the State of New York, without regard to the conflict of law principles
thereof
13. Binding
Effect.
This
Agreement, including its Exhibits, is binding upon, and shall inure to the
benefit of, the Parties hereto and their respective legal representatives,
predecessors, beneficiaries, successors, controlling persons, affiliates,
subsidiaries, parents, assigns, officers, directors, employees, and
agents.
14. Authorization
to Sign.
Each
person signing this Agreement and its Exhibits represents and warrants that
he
or she is authorized to the fullest extent of the law to sign and bind
in
the
capacity provided for herein.
15. Advice
of Counsel.
The
Parties acknowledge that they have been advised by counsel concerning the
contents and effect of this Agreement
and
its
Exhibits, that they understand all of its provisions, and that they are entering
into this Agreement and its Exhibits knowingly and voluntarily.
IN
WITNESS WHEREOF, the Parties hereto have caused this Agreement to
be
duly
executed as of the date first above written.
HSA
RESIDENTIAL MORTGAGE
SERVICES
OF TEXAS
By:
/s/
Xxxxxxxxx X. Xxxxxxxxxx
Name:
Xxxxxxxxx X. Xxxxxxxxxx
Title:
Chairman & CEO
STATE
BANK OF LONG ISLAND
By:
/s/
Xxxxxx X. Xxxxxxxx, Xx.
Name:
Xxxxxx X. Xxxxxxxx, Xx.
Title:
Chairman & CEO
EXHIBIT
A
RMST
RELEASE
For
good
and valuable consideration, the receipt and sufficiency of which are hereby
acknowledged, HSA RESIDENTIAL MORTGAGE SERVICES OF TEXAS, and
each of its
past,
present and future successors, assigns, affiliates, stockholders, officers,
directors, employees and agents hereby release, acquit, and forever discharge
STATE BANK OF LONG ISLAND, and each of its past, present and future successors,
assigns, affiliates, stockholders, officers, directors, employees and agents,
jointly and severally, from any and all claims, actions, causes of action,
debts, contracts, controversies, agreements, promises and demands whatsoever
arising directly or indirectly between these parties that relate to Island
Mortgage Network and any of its subsidiaries and any of its affiliates,
including the claims asserted against State Bank of Long Island in the
matter
of HSA Residential Mortgage Services of Texas v. State Bank of Long Island,
U.S.
District Court for the Eastern District of New York, 2:05-cv-03185
(JS).
IN
WITNESS WHEREOF, the Undersigned has duly executed this Release this
24th
day of
January, 2007.
HSA
RESIDENTIAL MORTGAGE SERVICES OF TEXAS
By:
___________________________
Name:
Title:
STATE
OF
INDIANA )
)
ss:
COUNTY
OF
VANDERBURGH )
On
the
24th
day
of
January, 2007, before me, the undersigned, a Notary Public in and for said
state, personally appeared ___________________________________,
on
behalf of HSA Residential Mortgage Services of Texas, personally known to
me or
proved to me on the basis of satisfactory evidence to be the individual whose
name is subscribed to the within instrument and acknowledged to me that he
executed the same in his capacity,
and that by his
signature
on the instrument, the individual, or the person upon behalf of which the
individual acted, executed the instrument, and that such individual made
such
appearance before the undersigned in Indiana.
___________________________________
Notary
Public
EXHIBIT
B
STATE
BANK RELEASE
For
good
and valuable consideration, the receipt and sufficiency of which are hereby
acknowledged, STATE BANK OF LONG ISLAND, and each of its past, present and
future successors, assigns, affiliates, stockholders, officers, directors,
employees and agents hereby release, acquit, and forever discharge HSA
RESIDENTIAL MORTGAGE SERVICES OF TEXAS, and each of its past, present and
future
successors, assigns, affiliates, stockholders, officers, directors, employees
and agents, jointly and severally, from any and all claims, actions, causes
of
action, debts, contracts, controversies, agreements, promises and demands
whatsoever arising directly or indirectly between these parties that relate
to
Island Mortgage Network and any of its subsidiaries and any of its affiliates,
including the claims asserted in the matter of HSA Residential
Mortgage Services of Texas v. State Bank of Long Island, U.S.
District Court for the Eastern District of New York, 2:05-cv-03185
(JS).
IN
WITNESS WHEREOF, the Undersigned has duly executed this Release this
24{h
day of
January, 2007.
STATE
BANK OF LONG ISLAND
By:
Name:
Title:
STATE
OF
NEW YORK )
)
ss:
COUNTY
OF
NASSAU )
On
the
24`h
day of
January, 2007, before me, the undersigned, a Notary Public in and for said
state, personally
appeared
,
on
behalf of State Bank of Long Island, personally known to me or proved to
me on
the basis of satisfactory evidence to be the individual whose name is subscribed
to the within instrument and acknowledged to me that he executed the same
in his
capacity, and that by his signature on the instrument, the individual, or
the
person upon behalf of which the individual acted, executed the instrument,
and
that such individual made such appearance before the undersigned in New
York.
__________________________
Notary
Public
EXHIBIT
C
UNITED
STATES DISTRICT COURT
EASTERN
DISTRICT OF NEW YORK
------------------------------------------------------------------------------x
HSA
RESIDENTIAL MORTGAGE
SERVICES
OF TEXAS,
Plaintiff,
No.
2:05-cv-3185-X X
X.
STATE
BANK OF LONG ISLAND,
Defendant.
-------------------------------------------------------------------------------x
STIPULATION
OF DISMISSAL
IT
IS
HEREBY STIPULATED AND AGREED by and between Plaintiff HSA Residential Mortgage
Services of Texas and Defendant State Bank of Long Island that the above-captioned
action be and hereby is DISMISSED WITH PREJUDICE and WITHOUT COSTS
to
any party.
Dated:
New York, New York
January
24, 2007
SHEARMAN
& STERLING
LLP
FRIED, FRANK, HARRIS, XXXXXXXX
&
XXXXXXXX LLP
By:
___________________________
By: __________________________________
Xxxxx
X.
Xxxxxxx
(BP-4723)
Xxxxxx X. Xxxxxxxxx (HG-6136)
000
Xxxxxxxxx
Xxxxxx Xxx
Xxx Xxxx Plaza
New
York,
New York
10022
Xxx Xxxx, Xxx Xxxx 00000
(000)
000-0000
(000) 000-0000
Attorneys
for
Plaintiff
Attorneys for Defendant
HSA
Residential Mortgage
State Bank of Long Island
Services
of Texas
Dated:
January _,
2007
SO ORDERED:
___________________________
Xxxxxxxxx Xxxxxx Xxxxxxx
United States District Judge