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1301961.1
UNITED STATES DISTRICT COURT
SOUTHERN DISTRICT OF NEW YORK
IN RE MUNICIPAL DERIVATIVES
ANTITRUST LITIGATION
08 MDL No. 1950
Master Docket No. 08-2516 (VM) (GMG)
THIS DOCUMENT RELATES TO:
Fresno County Financing Authority v. AIG
Finan. Prods. Corp., et al., 09 Civ. 1199
SETTLEMENT AGREEMENT
1301961.1 2
This Settlement Agreement (“Agreement”) is made and entered into as of the date of the
last countersignature below (“Execution Date”), by the “Settling Parties”—i.e., (i) Plaintiff,
Fresno County Financing Authority (“Plaintiff”), and (ii) National Westminster Bank PLC
(“NatWest”). The purpose of this Agreement is to fully, finally, and forever resolve, discharge
and settle the Released Claims (as defined below) upon and subject to the terms and conditions
of this Agreement.
WHEREAS, Plaintiff has alleged that NatWest engaged in conduct that violated certain
state and federal laws, including Section 1 of the Sherman Antitrust Act, 15 U.S.C. § 1, the
California Cartwright Act, Cal. Bus. & Prof. Code § 16720, et seq., and the California Unfair
Competition Law, Cal. Bus. & Prof. Code § 17200, et seq., by conspiring to fix, raise, maintain
and stabilize prices, rig bids, allocate customers, and allocate markets for guaranteed investment
contracts and other financial instruments referred to in the Actions as “Municipal Derivatives,”
and by conspiring to submit false records or statements concerning Municipal Derivatives to the
State of California or political subdivisions within California to defraud, obtain payment, or
reduce an obligation to pay;
WHEREAS, NatWest denies and continues to deny: (1) each and all of the claims and
allegations of wrongdoing made by Plaintiff and furthermore maintain that it has meritorious
defenses to such claims and allegations; (2) all charges of wrongdoing or liability against
NatWest arising out of or relating to any of the conduct, statements, acts or omissions alleged, or
that could have been alleged, in the Actions (as defined herein), and NatWest vigorously
contends that the factual allegations in Plaintiff’s complaint relating to NatWest are materially
inaccurate; and (3) the allegations that Plaintiff was harmed by any conduct by NatWest alleged
in the Actions or otherwise;
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WHEREAS, the Settling Parties agree that neither this Agreement nor any statement
made in connection therewith shall be deemed or construed to be an admission or evidence of
any violation of any statute or law, any liability or wrongdoing by NatWest, or the truth of any of
the claims or allegations made against NatWest in the Actions;
WHEREAS, this Agreement is the result of arm’s-length settlement negotiations by the
respective counsel representing the Settling Parties, and includes all the terms of this settlement;
WHEREAS, NatWest, despite its belief that it is not liable for any claims or allegations
of wrongdoing made by Plaintiff, has decided to enter into this Agreement to avoid the expense,
inconvenience, and distraction of further litigation, and to put to rest completely and finally this
controversy with respect to NatWest, without acknowledging any wrongdoing; and
WHEREAS, Plaintiff has concluded, after due investigation and after carefully
considering the relevant circumstances, that it would be in Plaintiff’s best interests to enter into
this Agreement in order to avoid the uncertainties of litigation.
NOW, THEREFORE, THE SETTLING PARTIES DO HEREBY STIPULATE AND
AGREE, by and through their respective counsel, that Plaintiff’s Released Claims against
NatWest in connection with the Actions shall be finally and fully settled and resolved, as set
forth in this Agreement, below.
1. Definitions. As used in this Agreement, the following capitalized terms have the
meanings specified below:
(a) “Actions” means Fresno County Financing Authority v. AIG Finan. Prods. Corp.,
et al., 09 Civ. 1199 and any other action that is consolidated with or included as part of
the multi-district proceeding captioned In re Municipal Derivatives Antitrust Litigation,
MDL No. 1950, Master Docket No. 08-2516 (VM) (GWG).
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(b) “Affiliate” means an entity controlling, controlled by, or under common control
with another entity.
(c) “Court” means the United States District Court for the Southern District of New
York.
(d) “Municipal Derivative Transactions” means any transaction or investment vehicle
that government, quasi-government, non-profit, private or other entities eligible to issue
tax-exempt debt now use or have used at any time since January 1, 1992 to the Execution
Date (i) invest the proceeds of tax-exempt debt offerings while waiting to spend them for
their given purposes or (ii) hedge or manage the interest rate risk associated with such
debt offerings. Those transactions or investment vehicles include, without limitation, the
following: (a) guaranteed investment contracts, or “GICs,” both collateralized and
uncollateralized; (b) forward purchase, forward supply, and forward delivery agreements;
(c) repurchase agreements; (d) swaps; (e) options; (f) “swaptions;” and (g) all of the types
of transactions described in or encompassed by Paragraphs 61-79 of the Joint Second
Amended Class Action Complaint filed in MDL Docket No. 1950 (dated December 15,
2009), and in Paragraphs 58 to 71 of the Corrected Third Consolidated Amended Class
Action Complaint filed in MDL No. 1950 (dated October 9, 2013).
(e) “Person(s)” means an individual, corporation, limited liability corporation,
professional corporation, limited liability partnership, partnership, limited partnership,
association, joint stock company, estate, legal representative, trust, unincorporated
association, government or any political subdivision or agency thereof, and any business
or legal entity and any spouses, heirs, predecessors, successors, representatives or
assignees of any of the foregoing.
1301961.1 5
(f) “Releasees” means NatWest and its predecessors, successors and assigns, each of
their respective current and former, direct and indirect, parents, subsidiaries, divisions,
groups, partnerships, and Affiliates, and each of the foregoing’s respective current and
former officers, directors, employees, managers, members, partners, shareholders (in
their capacity as shareholders), attorneys, agents, and legal representatives, as well as the
predecessors, successors, heirs, executors, administrators and assigns of each of the
foregoing.
(g) “Releasor” means the Plaintiff (i.e., Fresno County Financing Authority), and its
successors and assigns, as well as its divisions, Affiliates, agents, their respective current
and former officers, directors, employees, managers, members, and legal representatives,
including but not limited to any government entity that is entitled to assert any right or
claim on behalf of the Plaintiff, and the successors, heirs, executors, administrators and
assigns of each of the foregoing. Plaintiff represents that it does not have any
predecessor. Notwithstanding anything to the contrary herein, Releasor does not include
The California County Tobacco Securitization Agency.
2. Settlement Payment. Within ten (10) business days of the later of the Execution Date, or
the receipt by counsel for NatWest of written wiring instructions and a W-9 form
provided by counsel for Plaintiff, NatWest shall make a payment to Plaintiff by wire
transfer in the amount of $4,000.00 (Four Thousand Dollars) (the “Settlement Amount”)
to Lieff, Cabraser, Heimann & Bernstein, LLP for Plaintiff’s account. Other than this
one payment of the Settlement Amount, which NatWest shall make to Plaintiff as
provided herein, NatWest shall not be required to make any other payment to Plaintiff in
connection with the Actions. If payment of the Settlement Amount is not timely made,
1301961.1 6
Plaintiff shall be entitled to enforce this Agreement against NatW est, including under the
theory of specific performance, in the Court pursuant to Paragraphs 10 and 14 of this
Agreement.
3. Release & Covenant Not to Sue. In exchange for the consideration of Plaintiff’s receipt
of the full amount of the Settlement Amount provided for in Paragraph 2, above, the
Releasor hereby releases, relinquishes, settles, waives, and forever discharges, and
covenants not to sue (either on its own behalf, or as a representative of anyone else), or to
authorize anyone to sue, or to either support anyone financially or take administrative
action specifically for the purpose of suing, any of the Releasees with respect to, in
connection with, or relating to any and all past, present, or future claims, demands,
obligations, rights, suits, damages, levies, executions, judgments, debts, fees, costs, fines,
penalties, expenses, attorney fees, charges, actions, causes of action, or liabilities of any
nature whatsoever (including joint and several), at law or in equity, of whatever nature,
and whether known or unknown, suspected or unsuspected, asserted or unasserted,
contingent or non-contingent, based upon or arising from any federal, state, statutory, or
common laws, that were or could have been asserted against any of the Releasees in the
Actions, or that arise out of, are connected to, or are related in any way to, any facts or
conduct prior to the Execution Date and arising out of or related in any way to Municipal
Derivative Transactions in the United States or its Territories during the period from
January 1, 1992 to the Execution Date, or to any facts or conduct alleged in the Actions
or that could have been alleged by Plaintiff in the Actions, including but not limited to
any claims arising under Section 1 of the Sherman Antitrust Act, 15 U.S.C. § 1, the
California Cartwright Act, Cal. Bus. & Prof. Code § 16720, et seq., and/or the California
1301961.1 7
Unfair Competition Law, Cal. Bus. & Prof. Code § 17200, et seq., or any facts, conduct
or legal claims similar to those alleged in United States v. Rubin/Chambers, et al., 09 Cr.
1058 (VM) (S.D.N.Y.), United States v. Carollo, et al., 10 Cr. 0654 (HB) (S.D.N.Y.)
and/or United States v. Ghavami, et al., 10 Cr. 1217 (KMW) (S.D.N.Y.) (collectively,
“Released Claims”). Released Claims shall only be released against Releasees as
provided in this Agreement, and all of Releasor’s claims against any Person other than
Releasees shall remain in the Actions, including all claims for damages or restitution
against non-settling defendants based on the sales and conduct of Releasees. This
Agreement does not settle or compromise any claims by Plaintiff asserted in the Actions
against any defendant or any potential defendant other than the Releasees. All rights of
Plaintiff against any other Person other than the Releasees are specifically reserved by
Plaintiff.
4. No Amendments to Assert Claims. This Agreement precludes Plaintiff from filing any
new complaint, or amending any current complaint in the Actions, to name any Releasee
as a defendant with respect to any of the Released Claims.
5. Additional Release. In addition, but subject to Paragraph 3, above, and Paragraph 8,
below, Releasor hereby expressly waives and releases, but only in favor of Releasees, any
and all provisions, rights, and/or benefits conferred by § 1542 of the California Civil
Code (to the extent it applies to the Actions), which reads:
Section 1542. General Release; extent. A general release does not
extend to claims which the creditor does not know or suspect to
exist in his or her favor at the time of executing the release, which
if known by him or her must have materially affected his or her
settlement with the debtor;
or by any law of any state or territory of the United States, or principle of common law,
which is substantially similar, comparable, or equivalent to § 1542 of the California Civil
1301961.1 8
Code. The foregoing provision shall not be deemed to turn a specific release into a
general release. Releasor may hereafter discover facts in addition to or different from
those that any of them now know or believe to be true with respect to the subject matter
of the Released Claims, but Releasor shall expressly have, upon the Execution Date,
fully, finally and forever settled and released any and all Released Claims, known or
unknown, suspected or unsuspected, contingent or non-contingent, whether or not
concealed or hidden, that now exist or heretofore have existed, upon any theory of law or
equity now existing or coming into existence in the future, including, but not limited to,
conduct that is negligent, reckless, intentional, with or without malice, or a breach of any
duty, law or rule, without regard to the subsequent discovery or existence of such
different or additional facts. Releasor acknowledges that the foregoing waiver was
separately bargained for and a key element of the Settlement of which this release is a
part.
6. Exclusion from NatWest Class Action Settlement. Plaintiff hereby represents that it
intends to exclude itself from the class entitled to recover under any settlement
agreement, between the class members and NatWest, in In re Municipal Derivatives
Antitrust Litigation, MDL No. 1950, Master Docket No. 08-2516. Counsel for Plaintiff is
hereby authorized by Plaintiff to take such action for and on behalf of Plaintiff to
effectuate such exclusion from such settlement.
7. Final and Complete Resolution. The Settling Parties intend this Agreement to be a final
and complete resolution of all disputes between them that relate in any way to the
Actions. Each party shall bear its own fees and costs.
1301961.1 9
8. Use of the Agreement as Evidence. Neither this Agreement, nor any statement made in
connection with this Agreement, constitutes an admission of, or evidence of, the validity
of any Released Claims, of any allegation made in the Actions, or of any wrongdoing or
liability of any Releasee. This Agreement may not be used in any proceeding other t han
for the purpose of enforcing the terms of the settlement herein, or establishing that the
settlement has occurred such as to support a defense or counterclaim based on principles
of res judicata, collateral estoppel, release, good faith settlement, judgment bar, or claim
reduction.
9. Voluntary Settlement; No Party Deemed Drafter. The Settling Parties agree that this
Agreement was negotiated in good faith by the Settling Parties, and that it reflects a
settlement that was reached voluntarily after consultation with legal counsel. No party
shall be deemed to be the drafter of this Agreement for purposes of its interpretation or in
connection with any law requiring that terms be construed against the drafter.
10. Binding Effect. This Agreement shall be binding upon, and inure to the benefit of, the
successors and assigns of the parties hereto.
11. Authorization to Enter Agreement. The undersigned representative for Plaintiff
represents and warrants that he has express authority to enter into this Agreement on
behalf of the Plaintiff, including but not limited to the releases and covenants not to sue
that are contained herein. Counsel for NatWest represents and warrants that it has
express authority to enter into this Agreement on behalf of NatWest, including but not
limited to the payment of the Settlement Amount to Plaintiff that is contained herein.
12. Confidentiality. The Settling Parties realize that this Agreement shall be subject to
public disclosure pursuant to, among others, the Ralph M. Brown Act, the California
1301961.1 10
Public Records Act, and all other applicable laws pertaining to disclosure by public
entities. In addition, for the avoidance of doubt, NatWest may disclose the Settlement
Agreement or its contents to its attorneys (and their support staff, including paralegals
and secretaries); its and its affiliates’ insurers, accountants, external or internal auditors
and regulators; and its and its affiliates’ officers, directors, board members, advisors,
managers and employees. NatWest may also disclose the Settlement Agreement in
response to an enforceable subpoena issued by a court or tribunal or pursuant to a court
order, or in response to an information request or subpoena from a government regulatory
agency or self-regulatory organization. The Settling Parties also agree, unless required
by law or court order, that all agreements and orders entered into during the course of the
Actions relating to the confidentiality of information shall survive this Agreement for the
term of such agreements or orders including, but not limited to, the Protective Order
Governing Confidential Information in the Actions, dated November 5, 2008.
13. No Conflict Intended. The headings used in this Agreement are intended for the
convenience of the reader only and shall not affect the meaning or interpretation of this
Agreement.
14. Choice of Law. This Agreement shall be construed and enforced in accordance with,
and governed by, the internal, substantive laws of the State of California without giving
effect to that State’s choice of law principles. The Court shall have exclusive jurisdiction
over any action, proceeding, or dispute arising out of or relating to this Agreement.
15. Amendment; Waiver. This Agreement shall not be modified in any respect except by a
writing executed by all the parties hereto, and the waiver of any rights conferred
hereunder shall be effective only if made by written instrument of the waiving party. The
1301961.1 11
waiver by any party of any breach of this Agreement shall not be deemed or construed as
a waiver of any other breach, whether prior, subsequent, or contemporaneous, of this
Agreement.
16. Execution in Counterparts. This Agreement may be executed in one or more
counterparts. All executed counterparts and each of them shall be deemed to be one and
the same instrument.
17. Integrated Agreement. This Agreement constitutes the entire agreement between the
Settling Parties and no representations, warranties or inducements have been made to any
party concerning this Agreement other than the representations, warranties and covenants
contained and memorialized herein.
[GO TO SIGNATURE PAGE]
IN WITNESS WHEREOF, the parties hereto, through their fully authorized representatives,
have entered into this Agreement as of the last date set forth below.
FOR PLAINTIFF FRESNO COUNTY
FINANCING AUTHORITY
Dated:
By:/•
Ernest Buddy Mendes,Chairperson
Approved as to Form By Counsel for
Plaintiff:
By:
Sylvia Sokol
Scott+Scott,Attorneys at Law,LLP
405 Lexington Avenue, 40th floor
New York,NY 10174
Tel: (646)571-0612
Fax:(212)223-6334
ssokol@scott-scott.com
By:
Eric B.Fastiff
Lieff,Cabraser,Heimann &Bernstein,LLP
275 Battery Street,30^^Floor
San Francisco,CA 94111-3339
Tel:(415)956-1000
Fax:(415)956-1008
1301961.1 12
FOR NATIONAL WESTMINSTER
BANK PLC.
Dated:
By:
Howard Schiffman
Michael E.Swartz
Schulte Roth &Zabel LLP
919 Third Avenue
New York,NY 10022
Tel:(212)756-2000
Fax:(212)593-5955
ATTEST:
BERNICE E.SEIDEL,Clerk
Board of Supervisors
Bv A.ifvfUO l3:agiKr^
Deputy ~