Exhibit 10.12
SETTLEMENT AGREEMENT BY AND BETWEEN
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FIRST INDIANA BANK, N.A. AND METABANK
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This Settlement Agreement (the "Agreement"), dated as of this 13th day
of March, 2006, is entered into by and between FIRST INDIANA BANK, N.A. ("FIB")
on the one hand, and METABANK f/k/a First Federal Savings Bank - Sioux Falls
("MetaBank") on the other hand.
RECITALS
WHEREAS, on October 1, 2004, FIB and MetaBank executed a Participation
Certificate and Agreement (the "Participation Agreement") whereby FIB agreed to
purchase a participation in a certain $20,000,000.00 revolving draw loan (the
"Loan"), made by MetaBank to South Dakota Acceptance Corporation (the
"Borrower");
WHEREAS, the Borrower filed its petition for Chapter 11 bankruptcy
relief in the United States Bankruptcy Court for the District of South Dakota on
June 20, 2005 (the "Bankruptcy"), which constituted an event of default under
the terms and conditions of the Loan;
WHEREAS, as of the Bankruptcy, the total Loan balance was
$16,926,225.84, and FIB's share of the Loan was $6,000,000.00, which share
constituted 35.45% of the total outstanding Loan balance;
WHEREAS, a dispute has arisen among the parties as to MetaBank's
liability to FIB for allowing FIB's share of the Loan to exceed 30 percent of
the Loan (the "Discrepancy"); and
WHEREAS, the parties agree that it is in their mutual best interests to
resolve fully and finally their disputes, claims and controversies.
NOW, THEREFORE, in consideration of the foregoing and for the mutual
promises contained herein, and for other good and valuable consideration, the
receipt and sufficiency of which is hereby acknowledged, the parties agree as
follows:
AGREEMENT
1. The above-stated Recitals are hereby incorporated and made a part of
this Agreement as if fully restated herein.
2. Contemporaneously with the execution and delivery of the Agreement
by all parties, MetaBank shall pay to FIB a lump sum payment of $461,000.00 (the
"Settlement Payment"), and FIB shall convey to MetaBank 2.724 percent (%) of the
Loan, so that FIB's undivided interest in the Loan shall equal 32.722 percent
(%) of the total Loan balance, or $5,539,000.00. MetaBank's interest in the Loan
will increase by $461,000.00.
3. Upon receipt of the Settlement Payment by FIB, FIB agrees for
itself, its respective successors, heirs, executors, estates, administrators,
representatives, attorneys, agents, and assigns, and hereby does release and
forever discharge MetaBank, and any of its past, present and future parents,
subsidiaries, and affiliates, and their respective officers, directors,
shareholders, agents, servants, employees, attorneys, representatives,
predecessors, successors, and assigns (the "MetaBank Release Group"), from any
and all claims, demands, damages, rights, duties, debts, obligations,
liabilities, actions or petitions of any kind, whether known or unknown,
foreseen or unforeseen, contingent, actual, liquidated, or unliquidated, from
the beginning of the world to the date of this Agreement, including without
limitation any of the foregoing arising out of or related to the Loan, the
Discrepancy, the Bankruptcy or the Participation Agreement, provided, however,
that in the event any
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person or entity in the MetaBank Release Group is subsequently charged with a
felony that involves or relates to the Loan, the Discrepancy or the
Participation Agreement and subsequently (i) enters a plea of no contest or
guilty, or (ii) is otherwise convicted of the crime or any lesser included
felony, the foregoing release shall be null and void and of no effect, but only
to the extent of the loss or damage caused to FIB by the conduct constituting
the felony.
4. Upon payment to MetaBank by FIB as set forth in paragraph 5 below,
MetaBank agrees for itself, its respective successors, heirs, executors,
estates, administrators, representatives, attorneys, agents, and assigns, and
hereby does, release, and forever discharge FIB, and any of its past, present
and future parents, subsidiaries, and affiliates, and their respective officers,
directors, shareholders, agents, servants, employees, attorneys,
representatives, predecessors, successors, and assigns (the "FIB Release
Group"), from any and all claims, demands, damages, rights, duties, debts,
obligations, liabilities, actions or petitions of any kind, whether known or
unknown, foreseen or unforeseen, contingent, actual, liquidated, or
unliquidated, from the beginning of the world to the date of this Agreement,
including without limitation any of the foregoing arising out of or related to
the Loan, the Discrepancy, the Bankruptcy, or the Participation Agreement,
provided, however, that in the event that any person or entity in the FIB
Release Group is subsequently charged with a felony that involves or relates to
the Loan, the Discrepancy or the Participation Agreement and subsequently (i)
enters a plea of no contest or guilty, or (ii) is otherwise convicted of the
crime or any lesser included felony, the foregoing release shall be null and
void and of no effect, but only to the extent of the loss or damage caused to
MetaBank by the conduct constituting the felony.
5. FIB and MetaBank acknowledge that, pursuant to the terms of the
participation agreement concerning the ---------------------- Obligation (the
"Obligation"), FIB shall pay to MetaBank the sum of $2,423,049.87, representing
MetaBank's full and entire interest in the Obligation, by wire transfer within
three (3) calendar days following the execution of this Agreement by MetaBank
and its delivery to FIB.
6. FIB acknowledges that, in exchange for receiving from MetaBank the
Settlement Payment representing 2.724 percent of the Loan, FIB hereby conveys
and assigns to MetaBank: (a) all accompanying rights formerly held by FIB in
connection with that Loan percentage, including but not limited to (i) the right
to pursue other parties for losses, and (ii) the right to all proceeds and
associated recoveries, no matter when received or by who, including but not
limited to proceeds from the sale of contracts, insurance recoveries, and any
and all other payments or recoveries that would be receivable by the holder of
the 2.724 percent of the Loan, except for any interest payments that may have
been received by FIB from the Borrower on account of this 2.724 percent of the
Loan prior to the Borrower's bankruptcy filing on June 20, 2005; (b) any and all
claims against the Borrower or relating to transactions with the Borrower; and
(c) any and all rights it has against any other participant banks, including but
not limited to ---------------------------------.
7. (a) The parties agree that they will keep confidential the terms of
this Agreement, will not disclose the terms of the same, and will cause their
respective officers, directors, employees, representatives, agents, attorneys
and advisors not to disclose and to keep confidential the terms and conditions
of this Agreement except to the extent required by (i) law, including
requirements arising under the Securities Exchange Act of 1934, as amended, or
(ii) by Court process, order, subpoena or enforcement proceedings ("Court
Documents").
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(b) In the event either party is served ("Served Party") with
Court Documents (as defined in 7(a)(ii) above) requesting information relating
to the Agreement, the Served Party shall immediately forward a copy of the Court
Documents to the other party ("Non-Served Party") by Federal Express. In the
event the Non-Served Party intends to object to disclosure of this Agreement or
its terms pursuant to the Court Documents, the Non-Served Party shall
immediately (1) advise the Served Party of same; and (2) timely bring a motion,
action or other appropriate proceeding ("Motion") relating to the objection, at
its sole cost and expense (including attorneys' fees.) In the event the
Non-Served Party fails to advise on a timely basis the Served Party that it
wishes to object to compliance with the Court Documents, and/or fails to timely
bring on a Motion, then in that event the Served Party may comply with the Court
Documents.
(c) In the event the Agreement and/or its terms are disclosed
pursuant to 6(a) or (b), the parties shall have no further obligations to
maintain the confidentiality of the Agreement.
8. The parties acknowledge and represent they are independently
represented by counsel and have had the opportunity to consult with counsel of
their choice prior to entering into this Agreement. This Agreement has been
negotiated by the parties hereto at arms length and shall not be construed
against either party as the drafter. Each of the parties hereto acknowledges and
represents that it is entering into this Agreement freely and voluntarily and
with the advice and consent of legal counsel.
9. This Agreement is being entered into for the express purpose of
making and entering into a full and final compromise, adjustment and settlement
by and between MetaBank and FIB with regard to the subject matter hereof without
regard to the subsequent discovery or existence of different or additional facts
or events.
10. This Agreement does not in any manner constitute an admission of
liability or fault whatsoever by either party. The parties have entered into
this Agreement in order to avoid further expense, inconvenience, and delay and
to dispose of potentially expensive burdensome and protracted litigation.
11. This Agreement embodies the entire understanding between the
parties with respect to the subject matter hereof and may be varied only by
subsequent written agreement signed by the parties. No representation, promise,
inducement, or statement of intentions has been made by the parties hereto,
which is not embodied in this Agreement.
12. In the event of future litigation relating to this Agreement or any
provision of this Agreement, the prevailing party shall be entitled to recover
its costs, expenses and reasonable attorney's fees (including in-house
attorneys' fees) incurred in the enforcement of this Agreement, including
enforcing the Agreement as a defense.
13. This Agreement shall be construed and interpreted in accordance
with and governed by the laws of the State of Indiana without giving effect to
the provisions, policies or principals thereof relating to choice of law or
conflict of law.
14. Each party signing this Agreement represents and warrants to each
of the parties that he or she is duly and fully authorized and empowered to
enter into and execute this Agreement, and that this Agreement and all of its
terms are binding commitments of the party on whose behalf he or she purports to
act.
15. This Agreement may be executed in counterparts, each of which shall
be deemed to be an original, and all such counterparts together shall constitute
one of the same Agreement. A telecopy or facsimile signature shall be equivalent
to and binding as one original signature.
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AGREED AS OF THE DATE SET FORTH ABOVE.
FIRST INDIANA BANK, N.A.
Dated: March 13, 2006 By: /s/ Julie Fallon Hughes
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First Vice President
METABANK
Dated: March 13, 2006 By: /s/ J. Tyler Haahr
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President and
Chief Executive Officer
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