EXHIBIT 10.3
SETTLEMENT AGREEMENT AND MUTUAL
RELEASES
This Settlement Agreement and Mutual
Releases (the “Agreement”) is dated as of January 30,
2008, by and between CitiMortgage, Inc. (“CMI”), and
First Preference Mortgage Corporation (“FPMC”) and
David W. Mann (“Mann”).
Recitals
A. On
August 28, 2006, CMI commenced an action against FPMC, Citizens
Mortgage Corporation (“Citizens”), and Mann in the
United States District Court for the Eastern District of Missouri,
Eastern Division, styled CitiMortgage, Inc. v. First Preference
Mortgage Corporation, et al. , Cause No. 4:06CV01296 ERW (the
“Lawsuit”). On September 9, 2007, the court
dismissed Citizens as a defendant from the Lawsuit finding it did
not have personal jurisdiction over Citizens. On October 26,
2007, CMI filed its First Amended Complaint in which CMI has
asserted breach of contract claims (Counts I-III) and a fraudulent
transfer claim (Count IV).
B.
FPMC and Mann have denied all of the material allegations of
CMI’s First Amended Complaint, and have denied all liability
to CMI.
C.
CMI, FPMC, and Mann participated in a mediation on January 30,
2008, and at the conclusion of which all three signed a settlement
term sheet. Since then, the parties have resolved the open
items noted in that term sheet, and now wish to document their full
and final settlement agreement. The parties intend this
settlement to resolve any and all claims CMI and/or any predecessor
or affiliate of CMI mentioned in the Lawsuit may have against FPMC,
Mann, and/or any of their affiliates and related parties mentioned
in the Lawsuit, including, but not limited to, Citizens, Citizens
State Bank, RAM Security Holdings GP, Inc., RAM Security Holdings,
Ltd., Bluebonnet Investments, Ltd., JRPM Investments, Ltd., First
Financial Corp., and Security Bancshares, Inc., and all present and
former officers, directors, parents, subsidiaries, and affiliates
of these entities, arising out of or concerning the facts pleaded
in the Lawsuit, which claims include any and all potential or
actual disputes and differences existing between them related to
the claims asserted or facts alleged in the Lawsuit.
D. The
parties enter into this Agreement without admitting any liability
(and which liability they expressly deny), except as expressly set
forth in Paragraph 3, and the parties enter into this
Agreement solely to avoid the uncertainty and expense of further
litigation.
NOW, THEREFORE, in consideration of
the premises, mutual promises, covenants, and agreements contained
in this Agreement, and other good and valuable consideration, the
receipt and sufficiency of which the parties hereby acknowledge,
the parties covenant and agree as follows:
Page 1 of 7
1.
Recitals Incorporated . The parties incorporate
Recitals A through D above and make them a part of the
Agreement.
2.
No Assignment of Claims . Each party hereby represents
and warrants that the claims and causes of action it or he are
settling and releasing are ones for which it or he are the sole
owner, and that it or he has not transferred or assigned, and
(except as specifically contemplated in Paragraph 4, below) will
not transfer or assign, the claims or causes of action to any other
person or entity. In the event that claims are made against
any party by or on behalf of a transferee or assignee of a claim or
cause of action settled under this Agreement, then the party that
transferred or assigned any such claim or cause of action, whether
before or after the date of this Agreement, shall indemnify and
hold the non-breaching party harmless from any and all claims,
including, but not limited to, actual attorneys’ fees and
costs incurred in the defense of any such transferred or assigned
claim.
3.
Consent Judgment as to FPMC . FPMC shall consent to
the entry of judgment in favor of CMI in the amount of Two Million
Five Hundred Thousand Dollars and No Cents ($2,500,000), by filing
the consent pleading attached to this Agreement as Exhibit 1
immediately after all of the parties have signed this
Agreement.
CMI covenants and agrees that it will
not take any action to enforce or execute on the consent judgment
entered against FPMC, unless and until such time as there has
occurred a default in the payment obligations set forth in
Paragraph 9 or otherwise arising under this Agreement.
4.
Assignment of Consent Judgment to David W. Mann . Upon
the Court’s entry of the judgment against FPMC and
CMI’s receipt of the final payment for which paragraph 9
of this Agreement provides, whichever occurs later, and in exchange
for part of the consideration for which this Agreement provides,
CMI will assign the judgment against FPMC to David W. Mann by
executing the form of Assignment attached to this Agreement as
Exhibit 2, filing the Assignment with the Court in the
Lawsuit, and delivering the original executed Assignment to David
W. Mann, c/o Thomas Douglass, Thompson Coburn LLP, One US Bank
Plaza, St. Louis, Missouri 63101. David W. Mann’s
ability (or inability) to collect on all or any part of this
judgment shall have no effect on any obligation for which this
Agreement provides.
5.
Dismissal of the Lawsuit . CMI, FPMC and Mann shall
jointly move the Court to stay any further proceedings in the
Lawsuit until such time as the payments prescribed in Paragraph 9
of this Agreement have been made and the releases described in
Paragraphs 6, 7 and 8 below have become effective. This
joint motion shall be in the form attached to this Agreement as
Exhibit 3 and shall be filed immediately after all of the
parties have signed this Agreement. If and when the final
payment prescribed in Paragraph 9 has been made and the mutual
releases have become effective, CMI and Mann shall jointly move to
dismiss the Lawsuit, with prejudice, each side to bear its or his
own attorneys’ fees and costs.
Page 2 of 7
6.
Release of Claims by CMI . Subject to the satisfaction
of the conditions set forth in this paragraph, CMI releases
and forever discharges Mann and FPMC, and all of their parent
corporations, subsidiaries, affiliates and related entities,
including, but not limited to, Citizens, Citizens State Bank, RAM
Security Holdings GP, Inc., RAM Security Holdings, Ltd., Bluebonnet
Investments, Ltd., JRPM Investments, Ltd., First Financial Corp. or
Security Bancshares, Inc., and their respective present and former
insurers, representatives, officers, directors, shareholders,
partners, agents, employees, predecessors, heirs, successors, and
assigns, from any and all claims, damages, demands, actions, or
causes of action, whether known or unknown, at law or in equity,
whether arising under the common law or any statute of the United
States or any state, arising out of or related in any way to the
claims or allegations that CMI made or could have made in the
Lawsuit, including all claims for actual, incidental,
consequential, statutory, or punitive damages or attorneys’
fees of any kind.
This release will only be effective
ninety‑one (91) days after CMI has received the final payment
described in Paragraph 9. If during that ninety‑one
(91) day period, Mann, or any person or entity that has made some
or any portion of any payment (whether the initial or final
installment) files a bankruptcy petition or there is a bankruptcy
petition filed against him, her or it, and at the end of that
ninety‑one (91) day period the bankruptcy court has not
dismissed the petition with prejudice, then this release will not
take effect until such time as ther
