Page 1 

SETTLEMENT AGREEMENT AND MUTUAL RELEASES 

. . or 'f'J..

This Settlement Agreement and Mutual Releases (''Agreement") ts made this I> day .I.\ 

of May, 2012 by, between and among the follo\\ting undersigned Parties: the Plaintiff, Federal 

Deposit Insurance Corporation, in its capacity as receiver for AmTrust Bank C'FDIC-R''); and 

the Defendant SI Mortgage Company ("SI Mortgage"); both of whom are parties in a case 

captioned FDIC. as Receiver for AmTrust Bank v. Pankaj Malik, et al., Case No: 09-cv-4805 

(E.D.N.Y.) ("The Litigation"). 

WHEREAS. fn November~ 2009~ AmTrust Bank initiated The Litigation against its 

closing attorney Pankaj Malik, various mortgage brokers, and other individuals and entities 

alleged to be involved in the origination of mortgages using improper flip transactions and straw 

buyers, including claims against SI Mortgage for breach of contract related to one such 

mortgage; 

WHEREAS, on December 4, 2009, AmTrust was closed by the Office of Thrift 

Supervision and, pursuant to 12 U.S.C. § 1821(c)~ the Federal Deposit Insurance Corporation 

was appointed receiver. In accordance \\lith 12 U.S.C. § 182l(d), the FDIC~R succeeded to all 

rights, titles, powers, and privileges ofthe Bank, including those v.'ith respect to its assets and all 

of the Bank's claims, demands, and causes of action, including those claims asserted in The 

Litigation; and 

WHEREAS, SI Mortgage has denied the allegations asserted against it for breach of 

contract; 

-1­
Page 2 

VlHEREAS, SI Mortgage has provided the FDIC-R with a sw1:>in affidavit and other 

financial materials to demonstrate that it has limited means from which to pay a judgment; 

VlHEREAS, the FDIC·R has relied upon the accuracy of the information provided by SI 

Mortgage regarding its financial condition as a material condition for entering this Settlement 

Agreement; and 

WHERF.AS, ""ithout any admission of liability by any of the undersigned Parties, the 

Parties deem it to be in their respective best interests to end their disputes arising out of and 

related to The Litigation, and avoid further costs and risks associated with The Litigation and 

enter into this Agreement. 

NOW, THEREFORE, in consideration ofthe promises, undertakings and releases stated 

herein, the sufficiency of which consideration is hereby acknowledged, the undersigned Parties 

agree, each \\ith each other, as follows: 

Section L Payment to the FDIC-R. 

A. As an essential covenant and condition to this Agreement, SI Mortgage has 

agreed to pay the FDIC-R the sum ofTwo Hundred Thousand Dollars ($200~000 00) (the 

"Settlement Funds"). 

B. Following the execution of'the Agreement, SI Mortgage shall deliver the payment 

of the Settlement Funds to the FDIC-R by direct wire transfer into an account de..'iiguated by 

FDIC-R oc by certified or cashier's check drawn upon a depository institution acceptable to 

FDIC-R ac-cording to the schedule in Section L C., infra, below. 

C. Beginning on October 1, 2012, on the ftrst day of each quarter thereafter (January 

1, Aprill, July 1 and October l), Sl Mortgage shall make installment payments ofTwelve 

2 

Page 3 

Thousand Five Hundred Dollars ($12,500.00) ofthe Settlement Funds to the FDIC·R by direct 

wire transfer into an account designated by FDIC-R or by certified or cashjer's check drawn 

upon a depository institution acceptable to FDIC-R. provided, however, that as long as a 

pa:vment ofat least $5,000 is made during a quarter, and further provided that as long as at the 

end ofeach successive one..year period ending on October 1, S.L Mortgage has made payments 

of at least $50,000 per yearfor four successive years, SJ. Mortgage shall not be in default ofits 

payment obligations pursuant to this Agreement. SI Mortgage shall make payments ofnot less 

than $50,000 annually, paid over four years, uritil the entire Settlement Funds have been paid. 

Section 2. Confession ofJudgment. 

A. As an additional essential covenant and condition to 1his Agreement, SI Mortgage 

has agreed to execute and deliver to the FDJC-R an Affidavit ofConfession ofJudgment, in the 

fonn ofthe Cognovit Note attached, confessingjudgment in theFDIC-R's favor for t11e sum of 

Five Hundred Ten Thousand Dollars ($51 0,000.00). 

B. In the event that SI Mortgage fails to make any ofthe payments described in 

Section 1 above by the applicable deadlines, SI Mortgage shall be in default oftllis Agreement 

and the FDIC-R shall have the right to obtain a Confession ofJudgment against Sl Mortgage in 

order to recover the amount ofFive Hundred Ten Thousand Doliars, less any Settlement Funds 

already paid to the FDIC-R. 

C. lf1he Settlement Funds, or any portion thereof, are not received by the FDIC-R 

within the deadlines stated in Section 1 ofthe Agreement, interest upon any unpaid portion ofthe 

Settlement Funds will accrue at a rate of 6% per annum commencing on the 31st day after the 

funds were due. 

3 
Page 4 

D. Without waiving any other rights that the FDIC-R may have, in the event that the 

Settlement Funds, including all accrued interest as may be applicable, are not received bythe 

dates specified in Section 1 ofthis Agreement, then the FDIC-R shall have the right, in its sole 

discretion, to enforce this Agreement, and SI Mortgage shall be responsible for the sllm ofFive 

Hundred Ten Thousand Dollars ($510,000), and all fees, inclucHng attorney fees~ incurred by the 

FDIC-R in enforcing the Agreement. The Parties further acknowledge and consent to the 

jurisdiction ofMagistrate Judge Azrack for enforcement ofthis Agreement in connection with 

her continuing role overseeing settlement negotiations related to The Litigation. 

Section 3. Stipulations and Dismissals. 

Upon execution ofthis Agreement by each ofthe undersigned Parties, the FDJC..R shall · 

dismiss with prejudice an ofits claims in the Litigation against SI Mortgage. The FDIC~R shall 

prepare and execute a stipulation of dismissal with prejudice as to these claims withjn 30 days 

after receipt ofthe initial payment ofthe Settlement Funds by Sl Mortgage. 

Section 4. Mutual Releases. 

A. Rel~ase ofSI Mortgage by the FDIC-R. 

Effective upon receipt of the initial payUlent of Settlement Funds specified in Section 1 

above, the FDIC-R hereby releases and discharges SI Mortgage, its insurers, representatives, 

successors, assigns and attorneys, from any and all claims, demands, obligations, damages, 

actions, causes of action, direct or indirect, in law or in equity. belonging to the FDIC~R that 

arise from or relate to The l.itigation. 

4 
Page 5 

B. Release of1he FDIC-R by SI Mortgage. 

Effective simultaneously with the release in Section SA above, SI Mortgage, on its own 

behalf, and on behalf of its insurers. representatives, successors, assigns, and attorneys hereby 

releases and discharges the FDIC-R from any and all aims~ demands, obligations, damages) 

actions, causes of action, direct or indirect, .in law or .in equity, that arise from or relate to the 

Litigation. 

C. Express Reservation ofReleases By The FDIC-R. 

1. Notwithstanding any other provision: by this Agreement, 1he FDJC-R does not 

release and expressly preserves fully and to the .same extent as if the Agreement had. not been 

executed, any rights, claims or causes of action: 

i. Against any other party in the Litigation not expressly released by this 

Agreement; and 

n. Which are not expressly released in Section 5A, above. 

2. Notwithstanding any other provision of this Agreement, nothing herein limits, 

waives, releases, diminishes or compromises the jurisdiction and authority of the Federal Deposit 

Insurance Corporation in the exercise ofits supervisory or regulatory authority to institute 

administrative enforcement or other proceedings seeking removal. prohibition, civil penaitie.s, 

restitutiDn or other relief it is authorized to seek pursuant to its supervisory or regulatory 

authority against any perso or which may arise by operation of law~ rule, or regulation. 

3. Notwithstanding any other provision of thls Agreement, this Agreement does not 

waive any claims which could be brought by the United States through the Department of Justice 

or the United States Attorney's Office for any federal judicial district In addition, t. e FDIC-R 

5 

Page 6 

specifically reserves the right to seek court ordered restitution pursuant to the relevant provisions 

ofthe Victim and Witness Protection Act. 18 U.S.C. § 3663, et. seq., ifappropriate. 

SectionS. Representations and Acknowledgments 

A. No Admission of Liability. The tmde.rsig.ned Parties each acknowledge and agree 

that the matters set forth in this Agreement constitute a settlement and compromise of disputed 

claims and that this Agreement is not an admission or evidence of any liability of any of them 

regarding any claim. 

B. Execution in Counterparts. This Agreement may be executed in counterparts by 

one or more of the Parties named herein and all such counterparts when so executed shall 

together constirute the final Agreement, as if one document had been signed by aU Parties hereto; 

and each such counterpart~ upon execution and delivery, shall be deemed a complete original} 

binding the Party or Parties subscribed thereto upon the execution by all Parties to this 

Agreement. 

C. Binding Effect. Each of the Wtdetsigned persons represents and warrants that 

they are a Party hereto or are authorized to sign this Agreement on behalf of a Party~ and that 

they have the full power and authority to bind such Party to each and every provision of this 

Agreement. This Agreement shall be binding upon and inure to the benefit of the undersigned 

Parties and their respective heirs, executors, administrators, representatives, successors, assigns 

and attorneys. 

D. Specific Representatio11~, Wmanties and Disclaimer. SI Mortgage 

acknowledges that in determining to settle the claims released herein, the FDIC-R reasonably 

and justifiably relied upon the accuracy offinancial information provided by SI Mortgage. If Sl 

Mortgage failed to disclose) or misrepresented the nature or amoWlt of. any interest, legal, 

6 

Page 7 

equitable~ or beneficial, in any asset. Sl Mortgage agrees to cooperate fully with the FDIC-R to 

transfer its interest in the asset to the FDIC-R and to sign any and all documents necessary to 

transfer its interest in the asset to the FDIC~R. Moroover~ ifSI Mortgage has inientionally failed 

to disclose or materially misstated any interest, legal, equitable, or beneficial, in any asset, the 

FDIC-R in its sole discretion, may exercise one or more or all of the following remedies: (a) the 

FDIC~ may declare the release granted to Sl Mortgage as null and void; (b) the FDIC-R may 

sue SI Mortgage for damages, an injunction, and specific performance for the breach of this 

Agreement; and (c) the FDIC-R may seek to vacate any dismissal order and reinstate the FDICR's claims against SI Mortgage. SI Mortgage agrees that ifit has intentionally failed to disclose, 

or materially misrepresented the nature or amount of, any interest, legal, equitable: or beneficial, 

in any asset, SI Mortgage consents to the reinstatement of FDIC~R's claims and waives any 

statute oflimitations defense that would bar any of the FDIC-Ks claims against it. 

E. Choice of Law. nus Agreement shall be interpreted, construed and enforced 

according to applicable federal law, or in its absence, the laws ofthe State ofNew York. 

F. Entire Agreement and Amendments. This Agreement along with the Affidavit of 

Confession ofJudgment described in Section 2 constitute the entire agreement and understanding 

between and among the undersigned Parties concerning the matters set forth herein. This 

Agreement may no-t be amended or modified except by another written instrument signed by the 

parties to be boWld thereby, or by their respective authorized attorneys or other representatives. 

G. Advice of Counsel. Each Party hereby acknowledges that it has consulted with 

and obtained the advice of counsel prior to executing this Agreement, and that this Agreement 

has been. explained to that Party by his or her counsel. 

7 

Page 8 

IN WITNESS 'WHEREOF, the Parties hereto have caused this Agreement to be executed 

by each ofthem or their duty authorized representative on the dates hereinafter subscribed. 

Federal Deposit Insurance Corporation, as 

Receiver for AmTrust..)3~ 

(b)(6) 

Date· ~_r~· -> J. /)::::::::. . . I 

SI Mortgage Company. 

(b)(6) 

·························· 

8 

Page 9 

COGNOVIT NOTE 

SI Mortgage Company C'SI Mortgage"), the undersigned, of 51650 Oro Road, Shelby 

Township, Michigan, 48315, hereby promises to pay to the order ofthe Federal Deposit 

Insurance Corporation in its capacity as receiver for AmTrust Bank (

11FDIC-R"), the sum ofFive 

Hundred Ten Thousand Dollars ($510,000.00) as provided by the Settlement Agreement and 

Mutual Releases ("Settlement Agreement") executed by SI Mortgage and FDIC-R and dated 

June1. o, 2012. 

In the event that SI Mortgage fails to make auy payment as required by the Settlement 

Agreement, SI Mortgage hereby authorizes any attorney at law to appear in any court ofrecord 

in the United States, to waive the issuing and sen-ice ofprocess, and to confess a judgment 

against SI Mortgage for Five Hundred Ten Thousand Dollars ($510,000.00), less any amount 

that SI Mortgage has already paid to FDIC-R pursuant to the Settlement Agreement, plus costs 

and attorney fees. SI Mortgage hereby gives its attorney full power and authority to perform 

every act necessary to exercise this power and to secure the entry ofjudgment against SI 

Mortgage. SI Mortgage acknowledges that, by signing this Cognovit Note, it is giving up its 

right to notice and a court trial prior to the entry of a court judgment against it on this obligation. 

SI MORTGAGE COMPANY 

(b)(6) ··············~· .. f. r> Jet. v G N o~L 

(b)(6) sy:······.·.·.·.·.·.·.·.·.·.·.·.·.·.·.·..·.·..·.·..·.·.··.·.·.·.·.·:·:·:·:·:·:·:.........................................~-::-::-~.-

Title: I e'{ u i. cJ-.... V"'- 'tPage 1 of I