EFTA00298481.pdf

CONFIDENTIAL SETTLEMENT AGREEMENT This Settlement Agreement (the "Settlement Agreement") is made and entered into and shall become effective the 1st day of August, 2011 (the "Effective Date") among: (i) Fortress VRF I LLC ("VRF I LLC") and Fortress Value Recovery Fund I LLC (the "Fund") (together, "Claimants"); (ii) Jeffrey Epstein, Jeepers, Inc. ("Jeepers") and Financial Trust Company, Inc. ("FTC") (collectively, the "Epstein Parties"); (iii) D.B. Zwim Partners, LLC, D.B. Zwim & Co., L.P., DBZ GP, LLC and Zwim Holdings, LLC (collectively, the "Zwim Entities") and Daniel Zwim (together with the Zwim Entities, the "Zwim Parties"); and (iv) (the parties identified in (i) — (iv) collectively, the "Parties," and, individually, each a "Party"). RECITALS WHEREAS, FTC made the following investments in the Fund: a $10,000,000 investment made on May 1, 2002; a $10,000,000 investment made on September 1, 2002; a $30,000,000 investment made on December 1, 2002; a $10,000,000 investment made on June 1, 2003; and a $20,000,000 investment made on January 1, 2005 (collectively, the "Investments"); WHEREAS, effective as of January 1, 2006, FTC transferred to Jeepers all of FTC's interests in the Investments and any gains, losses, rights and/or obligations associated with the Investments; WHEREAS, FTC and Jeepers made certain demands for the withdrawal of money from the Fund in 2006, 2007 and 2008 (collectively, the "Withdrawal Requests"); WHEREAS, the Zwim Entities and the Fund denied that the 2006 and 2007 demands were proper requests for withdrawal, and the Epstein Parties disagreed with that position; WHEREAS, withdrawals from the Fund were suspended, and, since February 2008, the Fund has been engaged in the process of winding up in accordance with Delaware law; WHEREAS, in April 2009, Jeepers and the Fund entered into a settlement agreement (the "Initial Settlement Agreement") for the purpose of resolving all disputes concerning the Withdrawal Requests but containing a provision that permitted Jeepers to terminate the Initial Settlement Agreement if it did not receive the withdrawal of two of the Investments valued as of certain agreed withdrawal dates at approximately $45 million (the "Initial Settlement Withdrawal") by a certain date; WHEREAS, the Fund subsequently was converted from a limited partnership to a limited liability company, D.B. Zwim & Co., L.P., one of the Zwim Entities, resigned as manager of the Fund, and VRF I LLC became the Fund's managing member; WHEREAS, Jeepers did not receive the Initial Settlement Withdrawal by the date designated in the Initial Settlement Agreement, elected to terminate the Initial Settlement Agreement on January 5, 2010 and subsequently made demands upon the Fund; EFTA00298481 CONFIDENTIAL WHEREAS, thereafter, Claimants filed a Demand for Arbitration dated May 5, 2010, to which FTC and Jeepers filed a Response and Statement of Counterclaim and Third-Party Claim dated May 21, 2010, to which the Zwirn Parties and Claimants each filed a separate Response dated June 25, 2010 in an arbitration proceeding before the Hon. Anthony J. Carpinello (Ret.) at the New York, New York office of JAMS, reference number 1425006537 (the "Arbitration"); WHEREAS, the Parties subsequently agreed to the terms of a settlement, which were incorporated into the record of the Arbitration on July 25, 2011, including the dismissal with prejudice of all claims, counter-claims and third party claims in the Arbitration, which settlement contemplated the execution of more formal settlement documents; WHEREAS, the Parties are now entering into this Settlement Agreement to set forth more fully and completely the terms of their settlement; and NOW, THEREFORE, in consideration of the premises set forth above, and the promises, covenants, warranties and representations set forth below, and intending to be legally bound, the Parties hereby agree as follows: I. DISMISSAL WITH PREJUDICE The Parties hereby agree to the dismissal with prejudice of the Arbitration, and all claims, counterclaims and third-party claims contained in it. The Parties agree to notify JAMS of the dismissal with prejudice of the Arbitration and submit any further materials that JAMS may request to effectuate the dismissal with prejudice. II. FINANCIAL ARRANGEMENTS A. Jeepers's Interests in the Fund I. The Fund hereby agrees that a withdrawal amount is payable to Jeepers totaling $70 million without interest (the "Epstein Withdrawal Amount"), which shall be paid proportionally with the same priority and on the same terms as the Fund makes withdrawal payments to the Fund's investors (the "Redeemers") who withdrew all, or any portion, of their interests in the Fund as of December 31, 2007 but have yet to be paid with respect to those withdrawals (the "Priority Claims"). 2. The Epstein Withdrawal Amount shall be paid pro rata with the payments made to the Redeemers with respect to their Priority Claims (based on the ratio of the Epstein Withdrawal Amount to the aggregate amount payable to both Jeepers with respect to the Epstein Withdrawal Amount and the Redeemers with respect to the Redeemers' Priority Claims). Except as set forth in the prior sentence, neither the Fund nor any other Party makes any representation as to the timing of the payment of the Epstein Withdrawal Amount. 3. The manner of distribution to Jeepers of the Epstein Withdrawal Amount will also be subject to the Limited Liability Company Agreement of the Fund, dated June I, 2009, as amended from time to time (the "LLC Agreement"), and each of the Subscription Agreements FTC entered into in respect of each of the Investments, provided that the LW Agreement is also applied to 2 EFTA00298482 CONFIDENTIAL distributions to the Redeemers with respect to the Redeemers' Priority Claims (and such Redeemers are also subject to the terms of their Subscription Agreements). 4. For the avoidance of doubt, no interest has accumulated, will accumulate or will be paid with rewmt to the $70 million Epstein Withdrawal Amount. B. Interests in the Fund 1. The Parties acknowledge and agree that, provided that Jeepers and execute an Assignment of Economic Interest A eement substantially in the form attached as Exhibit A to this Settlement Agreement, shall, with the Fund's consent, transfer to Jeepers the right to distributions with respect to the interest in the Fund held by and acquired on February 1, 2005 in the name of in the subscription amount of $10,000,000, without interest (the "l= "). Jeepers will not be readmitted as a member of the Fund by virtue of this transfer; provided, however, that the Fund acknowledges that Jeepers will be treated as apartner of the Fund solely for U.S. federal income tax urposes with irf. ct to the . Liquidation payments in respect of the (the "j= Payments") will be paid out proportionally with the same priority and on the same terms as the Fund makes liquidation payments to the Fund's investors (the "Non-Redeemers") who did not withdraw all, or any portions of their interests in the Fund as of December 31, 2007 (the "Non- Priority Claims"). 2. The Payments shall be paid pro rata with the Payments made to the Non-Redeemers with respect to their Non-Priori Claims (based on the ratio of the to the aggregate amount payable to both with respect to the and the Non- Redeemers with respect to the Non-Redeemers' Non-Priority Claims). Except as set forth in the prior sentence, neither the Fund nor any other Party makes any representation as to the timing or amount of the Payments. 3. The manner of distribution of the Payments will also be subject to the LLC A ement and the Subscription Agreement entered into with respect to the provided that the LLC Agreement is also applied to distributions to the Non- Redeemers with respect to the Non-Redeemers' Non-Priority Claims (and such Non-Redeemers are also subject to the terms of their Subscription Agreements). 4. No interest has accumulated, will accumulate or will be paid with Ina to the Payments. C. Waiver of All Other Interests or Claims 1. The Epstein Parties acknowledge that they are no longer partners or members of the Fund. The Epstein Parties also acknowledge that, except as provided for in this Part H of the Settlement Agreement, they have no right to further payment of any amounts from the Fund or any of its affiliates, nor any other interest of any type in the Fund, and they hereby waive, to the fullest extent possible, any and all other such rights and interests. 3 EFTA00298483 CONFIDENTIAL III. RELEASES For and in consideration of the promises and payments described in this Settlement Agreement: A. By Claimants Except as provided in Paragraph E of this Part III of the Settlement Agreement, Claimants, on behalf of themselves and, to the fullest extent permitted by law, each of their past, present and future parents, subsidiaries and affiliates, each of the predecessors, successors and assigns of those entities, and each of the above entities' past, present and future agents, employees, officers, directors, partners, members, managers, trustees, administrators, supervisors, liquidators, shareholders, representatives, attorneys, auditors, accountants and any and all other individuals or entities who have at any time acted, or purported to act on behalf of any of the foregoing (collectively, the "Claimants Releasors," except that, for purposes of the releases contained in this Section III of the Settlement Agreement, the Epstein Parties, the Zwim Parties, and , and any individuals or entities currently under their direct or indirect control, shall not be considered predecessors, members or affiliates of the Claimants) hereby forever, irrevocably and unconditionally release and discharge: (1) the Epstein Parties and each of their past, present and future parents, subsidiaries and other affiliates, each of the predecessors, successors, heirs and assigns of each of those entities or individuals, and each of the above entities' and individuals' past, present and future agents, employees, officers, directors, partners, members, managers, trustees, administrators, supervisors, liquidators, shareholders, representatives, attorneys, auditors, accountants, heirs and any and all other individuals or entities who have at any time acted, or purported to act on behalf of any of the foregoing (collectively, the "Epstein Released Parties") from, and covenant not to sue any of the Epstein Released Parties for or with respect to, any and all claims, causes of action, and demands of any nature, character or kind, whatsoever, whether known or unknown, whether at law or equity, and whether of a direct, indirect or derivative nature, which any of the Claimants Releasors had, now has or will ever have against any of the Epstein Released Parties, which constitute, concern or otherwise relate to: (a) any matter or thing from the beginning of time to the date of this Settlement Agreement; (b) any matter or thing asserted or at issue in or otherwise relating to, the Arbitration, including but not limited to: (i) all claims, counterclaims and cross-claims that were asserted, or that could have been asserted, in the Arbitration; (ii) all claims relating to the matters at issue in the Arbitration; and 4 EFTA00298484 CONFIDENTIAL (c) (iii) all claims relating to the litigation of the Arbitration, including but not limited to all such claims seeking the recovery of attorneys' fees, costs and other litigation expenses or seeking sanctions of any kind and on whatever grounds; and any fund or account the Zwim Parties now manage or formerly managed, and any fund or account now or formerly managed by Claimant Fortress VRF I LLC or its affiliates; and (2) the Zwirn Parties and each of their past, present and future parents, subsidiaries and other affiliates, each of the predecessors, successors, heirs and assigns of each of those entities or individuals, and each of the above entities' or individuals' past, present and future agents, employees, officers, directors, partners, members, managers, trustees, administrators, supervisors, liquidators, shareholders, representatives, attorneys, auditors, accountants, heirs and any and all other individuals or entities who have at any time acted, or purported to act on behalf of any of the foregoing (collectively, the "Zwim Released Parties") from, and covenant not to sue any of the Zwirn Released Parties for or with respect to, any and all claims, causes of action, and demands of any nature, character or kind, whatsoever, whether known or unknown, whether at law or equity, and whether of a direct, indirect or derivative nature, which any of the Claimants Releasors had, now has or will ever have against any of the Zwim Released Parties, which constitute, concern or otherwise relate to any matter or thing asserted or at issue in, or otherwise relating to, the Arbitration, including but not limited to: (a) all claims, counterclaims and cross-claims that were asserted, or that could have been asserted, in the Arbitration; (b) (c) all claims relating to the matters at issue in the Arbitration; and all claims relating to the litigation of the Arbitration, including but not limited to all such claims seeking the recovery of attorneys' fees, costs and other litigation expenses or seeking sanctions of any kind and on whatever grounds. EFTA00298485 CONFIDENTIAL B. By the Epstein Released Parties Except as provided in Paragraph E of this Part III of the Settlement Agreement, the Epstein Parties, on behalf of themselves and, to the fullest extent permitted by law, each of the Epstein Released Parties, hereby forever, irrevocably and unconditionally release and discharge: (1) Claimants and each of their past, present and future parents, subsidiaries and affiliates, and any funds or accounts Claimants or their affiliates now manage or formerly managed, each of the predecessors, successors and assigns of those entities, and each of the above entities' past, present and future agents, employees, officers, directors, partners, members, managers, trustees, administrators, supervisors, liquidators, shareholders, representatives, attorneys, auditors, accountants and any and all other individuals or entities who have at any time acted, or purported to act on behalf of any of the foregoing (collectively, the "Claimants Released Parties," exce t that, for the sake of clarity, the Epstein Parties, the Zwim Parties and and any individuals or entities under their direct or indirect control whose releases by the Epstein Parties shall be subject to the terms of Sections III.B.2 and 3 below, shall not be considered Claimants Released Parties) from, and covenant not to sue any of the Claimants Released Parties for or with respect to, any and all claims, causes of action, and demands of any nature, character or kind, whatsoever, whether known or unknown, whether at law or equity, and whether of a direct, indirect or derivative nature, which any of the Epstein Released Parties had, now has or will ever have against any of the Claimants Released Parties, which constitute, concern or otherwise relate to: (a) any matter or thing from the beginning of time to the date of this Settlement Agreement; any matter or thing asserted or at issue in or otherwise relating to, the Arbitration, including but not limited to: (b) (i) all claims, counterclaims and cross-claims that were asserted, or that could have been asserted, in the Arbitration; (ii) all claims relating to the matters at issue in the Arbitration; and (iii) all claims relating to the litigation of the Arbitration, including but not limited to all such claims seeking the recovery of attorneys' fees, costs and other litigation expenses or seeking sanctions of any kind and on whatever grounds; 6 EFTA00298486 CONFIDENTIAL (c) any fund or account the Zwim Parties now manage or formerly managed, and any fund or account now or formerly managed by Claimant Fortress VRF I LLC or its affiliates; and (d) any Additional Agreement, as defined in Section VI.C.2 below; (2) the Zwim Released Parties from, and covenant not to sue any of the Zwim Released Parties for or with respect to, any and all claims, causes of action, and demands of any nature, character or kind, whatsoever, whether known or unknown, whether at law or equity, and whether of a direct, indirect or derivative nature, which any of the Epstein Released Parties had, now has or will ever have against any of the Zwirn Released Parties, which constitute, concern or otherwise relate to: (a) (b) (c) any matter or thing from the beginning of time to the date of this Settlement Agreement; any matter or thing asserted or at issue in or otherwise relating to, the Arbitration, including but not limited to: (i) all claims, counterclaims and cross-claims that were asserted, or that could have been asserted, in the Arbitration; (ii) all claims relating to the matters at issue in the Arbitration; and (iii) all claims relating to the litigation of the Arbitration, including but not limited to all such claims seeking the recovery of attorneys' fees, costs and other litigation expenses or seeking sanctions of any kind and on whatever grounds; and any fund or account the Zwirn Parties now manage or formerly managed, and any fund or account now or formerly managed by Claimant Fortress VRF I LLC or its affiliates; and (3) Highbridge Capital Management, LLC, Highbridge Capital Corporation, JPMorgan Chase & Co. and JPMorgan Asset Management Holdings Inc., and each of their past, present and future parents, subsidiaries and other affiliates, each of the predecessors, successors, heirs and assigns of each of those entities or individuals, and each of the above entities' or individuals' past, present and future agents, employees, officers, directors, partners, members, managers, trustees, administrators, supervisors, liquidators, shareholders, representatives, attorneys, EFTA00298487 CONFIDENTIAL auditors, accountants, heirs and any and all other individuals or entities who have ail time acted, or purported to act on behalf of any of the foregoing (the Released Parties," except that, for the sake of clarity, the Zwim Parties and any individuals or entities that are directly or indirectly controlled by one or more of the Zwim Parties, shall not be considered Released Parties) from, and covenant not to sue any of the Released Parties for or with respect to, any and all claims, causes of action, and demands of any nature, character or kind, whatsoever, whether known or unknown, whether at law or equity, and whether of a direct, indirect or derivative nature, which an of the Epstein Released Parties had, now has or will ever have against the Released Parties, which constitute, concern or otherwise relate to: (a) (b) (c) C. By the Zwirn Parties any matter or thing from the beginning of time to the date of this Settlement Agreement relating to any of the Investments or the Fund; any matter or thing asserted or at issue in or otherwise relating to, the Arbitration, including but not limited to: (i) all claims, counterclaims and cross-claims that were asserted, or that could have been asserted, in the Arbitration; (ii) all claims relating to the matters at issue in the Arbitration; and (iii) all claims relating to the litigation of the Arbitration, including but not limited to all such claims seeking the recovery of attorneys' fees, costs and other litigation expenses or seeking sanctions of any kind and on whatever grounds; and any fund or account the Zwim Parties now manage or formerly managed, and any fund or account now or formerly managed by Claimant Fortress VRF I LLC or its affiliates. Except as provided in Paragraph E of this Part III of the Settlement Agreement, the Zwim Parties, on behalf of themselves and, to the fullest extent permitted by law, each of their past, present and future parents, subsidiaries and affiliates, each of the predecessors, successors and assigns of those entities, and each of the above entities' past, present and future agents, employees, officers, directors, partners, members, managers, trustees, administrators, supervisors, liquidators, shareholders, representatives, attorneys, auditors, accountants and any and all other individuals or entities who have at any time acted, or purported to act on behalf of 8 EFTA00298488 CONFIDENTIAL any of the foregoing (collectively, the "Zwirn Releasors"), hereby forever, irrevocably and unconditionally release and discharge: (1) except with respect to any indemnification obligations Claimants may have to the Zwim Releasors for reasonable attorneys' fees and costs incurred in connection with the Arbitration, the Claimants Released Parties from, and covenant not to sue any of the Claimants Released Parties for or with respect to, any and all claims, causes of action, and demands of any nature, character or kind, whatsoever, whether known or unknown, whether at law or equity, and whether of a direct, indirect or derivative nature, which any of the Zwim Releasors ever had, now have, or ever may have against any of the Claimants Released Parties, which constitute, concern or otherwise relate to: (a) any matter or thing asserted or at issue in, or otherwise relating to, the Arbitration, including but not limited to: (i) all claims, counterclaims and cross-claims that were asserted, or that could have been asserted, in the Arbitration; (ii) all claims relating to the matters at issue in the Arbitration; (iii) all claims relating to the litigation of the Arbitration, including but not limited to all such claims seeking the recovery of attorneys' fees, costs and other litigation expenses or seeking sanctions of any kind and on whatever grounds, except, for the sake of clarity, with respect to any indemnification obligations Claimants may have to the Zwirn Releasors for reasonable attorneys' fees and costs incurred in connection with the Arbitration; and (b) any Additional Agreement, as defined in Section VI.C.2 below. D. By the Released Parties Except as provided in Paragraph E of this Part III of the Settlement Agreement, the Released Parties, on behalf of themselves and to the fullest extent permitted by law, hereby forever, irrevocably and unconditionally release and discharge: (1) the Claimants Released Parties from, and covenant not to sue any of the Claimants Released Parties for or with respect to, any and all claims, causes of action, and demands of any nature, character or kind, whatsoever, whether known or unknown, whether at law or equity, and whether of a direct, indirect or derivative nature, which the Released Parties ever had, now have, or ever 9 EFTA00298489 CONFIDENTIAL may have against any of the Claimants Released Parties, which constitute, concern or otherwise relate to: (a) any of the Released Parties' interests in the Fund; (b) any matter or thing asserted or at issue in, or otherwise relating to, the Arbitration, including but not limited to: (c) (i) all claims, counterclaims and cross-claims that were asserted, or that could have been asserted, in the Arbitration; (ii) all claims relating to the matters at issue in the Arbitration; and (iii) all claims relating to the litigation of the Arbitration, including but not limited to all such claims seeking the recovery of attorneys' fees, costs and other litigation expenses or seeking sanctions of any kind and on whatever grounds; any fund or account the Zwirn Parties now manage or formerly managed, and any fund or account now or formerly managed by Claimant Fortress VRF I LLC or its affiliates; and (d) any Additional Agreement, as defined in Section VI.C.2 below; and (2) the Zwim Released Parties from, and covenant not to sue any of the Zwim Released Parties for or with respect to, any and all claims, causes of action, and demands of any nature, character or kind, whatsoever, whether known or unknown, whether at law or equity, and whether of a direct, indirect or derivative nature, which the Released Parties ever had, now have, or ever may have against any of the Zwirn Released Parties which constitute, concern or otherwise relate to: (a) any of the Released Parties' interests in the Fund; (b) any matter or thing asserted or at issue in, or otherwise relating to, the Arbitration, including but not limited to: (i) all claims, counterclaims and cross-claims that were asserted, or that could have been asserted, in the Arbitration; (ii) all claims relating to the matters at issue in the Arbitration; and 10 EFTA00298490 CONFIDENTIAL (c) (iii) all claims relating to the litigation of the Arbitration, including but not limited to all such claims (i) seeking the recovery of attorneys' fees, costs and other litigation expenses or (ii) seeking sanctions of any kind and on whatever grounds; and any fund or account the Zwim Parties now manage or formerly managed, and any fund or account now or formerly managed by Claimant Fortress VRF I LLC or its affiliates. E. Carve-Out From All Releases Notwithstanding any other provisions of this Part III, none of the Parties is agreeing in this Settlement Agreement to release any claims with respect to any breach of any obligation owed to it under this Settlement Agreement. IV. CONFIDENTIALITY A. Generally Except as described below or as required by law, the Parties agree that the Parties shall keep confidential the terms of this Settlement Agreement. The Parties shall take all reasonable measures to maintain the confidentiality of this Settlement Agreement and the terms hereof, and shall not disclose this Settlement Agreement or the terms hereof to any individual or entity other than their attorneys, accountants, tax accountants and/or tax return preparers, provided that such individuals and/or entities expressly agree to be bound by the terms of the confidentiality covenants in this Settlement Agreement. If a Party is served with a subpoena or other notice compelling the production of this Settlement Agreement, or disclosure of any of the terms of this Settlement Agreement, that Party shall notify the other Parties, in writing, of the subpoena or other notice in a timely manner so as to permit any notified Party to seek a protective order if it so desires, and will cooperate with any such effort. B. Claimants' Disclosure to Affiliates and Investors Notwithstanding the provisions of Paragraph IV.A above, Claimants are permitted to disclose information about this Settlement Agreement to their affiliates, investors, accountants, auditors, to any regulator or self-regulatory association that requests such information, and to the members, former members, former partners and creditors of the Fund, including, without limitation, in Claimants' audited financial statements. V. DISPUTE RESOLUTION A. Arbitration 1. In the event that any dispute arises with respect to the interpretation or performance of this Settlement Agreement (a "Settlement Agreement Dispute"), the Parties agree to resolve such Dispute through binding arbitration before Judge Carpinello, to be administered II EFTA00298491 CONFIDENTIAL by the JAMS office in New York, New York pursuant to the JAMS Comprehensive Arbitration Rules and Procedures. The prevailing party in any such arbitration shall be entitled to its reasonable attorneys' fees and costs. The arbitration hearings shall be conducted in New York, New York, and any judgment rendered by Judge Carpinello shall be final and may be entered in any court of competent jurisdiction. 2. If Judge Carpinello is for any reason unavailable, the Parties agree to submit any Settlement Agreement Dispute to the State or Federal Courts located in New York County, New York, but agree to WAIVE ANY RIGHT TO JURY TRIAL. VI. GENERAL PROVISIONS A. Notices 1. All notices to Claimants with respect to this Settlement Agreement shall be sent to Claimants at and in care of: Fortress VRF I LLC Attention: Rick Noble 1345 Avenue of the Americas, 46th Floor New York, NY 10105 — and — Allan J. Arffa Paul, Weiss, Rifkind, Wharton & Garrison LLP 1285 Avenue of the Americas New York, NY 10019-6064 2. All notices to the Epstein Parties with respect to this Settlement Agreement shall be sent to the Epstein Parties at and in care of: Darren K. Indyke 301 East 66th Street, 10B New York, NY 10065 — and — Harry P. Susman Susman Godfrey LLP Suite 5100 1000 Louisiana Houston, TX 77002-5096 3. All notices to the Zwim Entities with respect to this Settlement Agreement shall be sent to the Zwirn Entities at and in care of: 12 EFTA00298492 CONFIDENTIAL William O'Brien Cooley LLP The Grace Building 1114 Avenue of the Americas New York, NY 10036-7798 4. All notices to Daniel Zwim with respect to this Settlement Agreement shall be sent to Daniel Zwim at and in care of: John S. Siffert Lankier Siffert & Wohl LLP 500 Fifth Ave, 33rd Floor New York, NY 10110 5. All notices to shall be sent to at and in care of: with respect to this Settlement Agreement James H.R. Windels Davis Polk & Wardwell LLP 450 Lexington Avenue New York, NY 10017 6. Notice under Paragraph VIA of this Settlement Agreement shall be sufficient if sent by any nationally recognized overnight courier service, by first class mail, or by certified mail with return receipt requested. B. Applicable Law This Settlement Agreement and the obligations of the Parties pursuant to it shall be governed by and construed in accordance with the laws of the State of New York without giving effect to the conflicts of laws principles thereof. C. Integration 1. Except as provided for in the following paragraph, this Settlement Agreement is intended by the Parties as a final and complete expression of their agreement and understanding with respect to the subject matter hereof. All prior discussion and negotiations between the Parties concerning the subject matter of this Settlement Agreement (including but not limited to the agreement placed into the record at the Arbitration) have been merged and integrated into, and are superseded by this Settlement Agreement. 2. Notwithstanding anything to the contrary contained in the previous Section VI.C.1 of this Settlement Agreement, all Parties acknowledge that additional agreements ma be executed by or among certain of the Epstein Parties, the Zwim Parties and/or (each an "Additional Agreement"). All Parties agree that any issues arising with respect to any Additional Agreement, including but not limited to any breach or alleged breach of any Additional Agreement, shall not affect the validity or enforceability of this Settlement 13 EFTA00298493 CONFIDENTIAL Agreement. In the event of any inconsistency or conflict between the terms of any such Additional Agreement and this Settlement Agreement, the terms of this Settlement Agreement shall prevail. 3. The Zwim Parties and acknowledge and agree that, notwithstanding anything to the contrary contained in this Settlement Agreement, Claimants shall not be liable, under any indemnification agreement or otherwise, for any costs, expenses or other losses the Zwim Parties or the Released Parties may incur in connection with any Additional Agreement. 4. The terms of this Settlement Agreement may not be changed, modified, altered or supplemented except by an agreement in writing signed by the Party against whom enforcement of the change is sought. D. Acknowledgements 1. Each Party acknowledges and agrees that it has reviewed this Settlement Agreement and its provisions with counsel of its choice and that it is entering into this Settlement Agreement on the basis of its independent evaluation of the risks and benefits of doing so. 2. Each Party understands and expressly agrees that it has freely and voluntarily entered into this Settlement Agreement. 3. Each Party acknowledges and agrees that no promise, inducement or agreement that is not expressly set forth in this Settlement Agreement has been made in connection with this Settlement Agreement. Each Party understands and expressly agrees that no oral or written representations, inducements or promises of any kind, other than specifically set forth in this Settlement Agreement, have been made to induce them to enter into this Settlement Agreement. E. Authority Each Party represents and warrants that it has all requisite power and authority to enter into this Settlement Agreement and to implement the undertakings contemplated by this Settlement Agreement. Each person signing this Settlement Agreement as, or on behalf of, a Party represents and warrants that he or she has all requisite power and authority to bind that Party and to execute this Settlement Agreement and to implement the undertakings contemplated in this Settlement Agreement, and is duly authorized to execute all necessary documents on behalf of that Party. Each Party to this Settlement Agreement acknowledges and agrees that the individual executing this Settlement Agreement on its behalf is duly authorized to so bind such Party. F. No Assignment Each Party expressly represents and warrants that it has not assigned or transferred to any individual, firm, corporation, partnership, association, or other entity whatsoever any or all of the rights, duties, claims or obligations embodied or released in this Settlement Agreement. In addition, each Party acknowledges and agrees that none of the Parties 14 EFTA00298494 CONFIDENTIAL may assign any of its rights or obligations under this Settlement Agreement to any third party without the prior express written consent of the other Parties. Each Party, however, acknowledges that every Party's rights or obligations under this Settlement Agreement shall, without the prior express written consent of the other Parties, bind and inure to the benefit of their respective successors. G. Additional Documents The Parties agree to execute such additional documents as ma be necessary to effectuate the intentions and purposes of this Settlement Agreement. and the Epstein Parties also agree to provide such additional documents to Claimants that may be necessary to comply with applicable legal or regulatory requirements, including without limitation, any anti-money-laundering-related items and any tax-related items. H. Miscellaneous 1. The Parties agree that this Settlement Agreement may be executed in counterparts, subject to the exchange of signature pages. The Parties expressly agree that this Settlement Agreement shall not be enforceable until fully executed by all Parties. 2. This Settlement Agreement confers no rights upon any individual or entity that is not a signatory hereto, except as to any releasees referred to the releases contained in Section III of this Settlement Agreement. In addition, the Parties acknowledge and agree that Claimants are third-party beneficiaries of the releases described in Sections III.B.2, III.B.3 and III.D.2. 3. This Settlement Agreement is a product of negotiations between the Parties, with the advice of counsel, and therefore this Settlement Agreement shall not be construed for or against any of the Parties on the basis of the extent to which that Party participated in drafting it. L No Admission of Liability The Parties acknowledge that this Settlement Agreement is a good faith resolution of disputed issues of law and fact. By entering this Settlement Agreement, no Party admits any liability to any other Party or any fact other than as set forth in this Settlement Agreement. J. Effective Date This Settlement Agreement takes force and effect as of the Effective Date described above. 15 EFTA00298495 CONFIDENTIAL IN WITNESS WHEREOF, the Parties have entered into this Settlement Agreement as of the Effective Date. DATED: DATED: DATED: DATED: DATED: , 2011 FORTRESS VRF I LLC By: , 2011 FORTRESS VALUE RECOVERY FUND I LLC By: , 2011 JEEPERS, INC. By: , 2011 FINANCIAL TRUST COMPANY, INC. By: , 2011 JEFFREY EPSTEIN By: 16 EFTA00298496 CONFIDENTIAL DATED: , 2011 DANIEL B. ZWIRN By: DATED: DATED: DATED: DATED: , 2011 D.B. ZWIRN PARTNERS, LLC. By: , 2011 D.B. ZWIRN & CO., L.P. By: , 2011 DBZ GP, LLC By: , 2011 ZWIRN HOLDINGS, LLC DATED: , 2011 By: By: 17 EFTA00298497