Irving H. Picard v. Saul B. Katz et al

Filing 192

ORDER PURSUANT TO 11 U.S.C. § 105(a) AND FEDERAL RULE OF BANKRUPTCY PROCEDURE 9019(a) APPROVING THE SETTLEMENT AGREEMENT: granting 184 Motion for Settlement. The Motion is granted. The Settlement Agreement dated April 13, 2012, entered into by and among the Trustee and the Defendants, which is incorporated herein by reference as if reinstated herein in full, together with any and all schedules, exhibits and ancillary documents referred to in the Settlement Agreement, which are an integral part of the Settlement Agreement (collectively, the "Agreement"), a copy of which is attached to this Order as Exhibit A, is authorized and approved in its entirety. Upon the Effective Date of the Agreement, the Parties are authorized, without the need for further order of this Court, to execute, deliver, implement and fully perform any and all obligations, instruments, documents and papers and to take any and all actions reasonably necessary to consummate the Settlement Agreement. This Order shall be effective and enforceable immediately upon entry. This Court shall retain jurisdiction to hear and determine all matters arising from or related to the Settlement Agreement or this Order. (Signed by Judge Jed S. Rakoff on 5/31/2012) (jfe)

UNITED STATES DISTRICT COURT
SOUTHERN DISTRICT OF NEW YORK
In re:

BERNARD L. MADOFF INVESTMENT

SECURITIES LLC,

SIP A LIQUIDATION
(Substantively Consolidated)

Debtor.
IRVING H. PICARD, Trustee for the Liquidation of
Bernard L. Madoff Investment Securities LLC,
Adv. Pro. No. 1O-0S287 (BRL)
Plaintiff,
11-Civ.-0360S (JSR)(HBP)
v.
SAUL B. KATZ, et aI.,
Defendants.

ORDER PURSUANT TO 11 U.S.C. § 105(a) AND FEDERAL RULE OF BANKRUPTCY
PROCEDURE 9019(a) APPROVING THE SETTLEMENT AGREEMENT
Upon the motion and memorandum (the "Motion") ofIrving H. Picard (the "Trustee"), as
trustee for the liquidation of Bernard L. Madoff Investment Securities LLC under the Securities
Investor Protection Act, IS U.S.C. §§78aaa et seq., substantively consolidated with the
bankruptcy estate of Bernard L. Madoff, seeking entry of an order, pursuant to 11 U.S. C.
§ 1OS(a) and Rules 2002 and 90 I9(a) of the Federal Rules of Bankruptcy Procedure
("Bankruptcy Rules"), approving the settlement and compromise by and among the Trustee and
the Defendants; and it appearing that the relief requested by the Motion is necessary and in the
best interests of the customers ofBLMIS, the estate and all parties in interest; and it appearing
that due and sufficient notice has been given to all parties in interest as required by Bankruptcy
Rules 2002 and 9019, and no other or further notice is necessary; and the Court having
considered the supporting affidavit of the Trustee and the supporting Declaration of Mario M.
Cuomo; and the Court having found and determined that the legal and factual bases set forth in

the Motion establish just cause for the relief granted herein; and after due deliberation, it is
hereby ORDERED:
1.

The Motion is granted.

2.

The Settlement Agreement dated April 13,2012, entered into by and among the

Trustee and the Defendants, which is incorporated herein by reference as if reinstated herein in
full, together with any and all schedules, exhibits and ancillary documents referred to in the
Settlement Agreement, which are an integral part of the Settlement Agreement (collectively, the
"Agreement"), a copy of which is attached to this Order as Exhibit A, is authorized and approved
in its entirety.
3.

Upon the Effective Date of the Agreement, the Parties are authorized, without the

need for further order of this Court, to execute, deliver, implement and fully perform any and all
obligations, instruments, documents and papers and to take any and all actions reasonably
necessary to consummate the Settlement Agreement.
5.

This Order shall be effective and enforceable immediately upon entry.

6.

This Court shall retain jurisdiction to hear and determine all matters arising from

or related to the Settlement Agreement or this Order.
Date: New Yr~ New York
3 ,2012

?r

!

2

UNITED STATES DISTRICT COURT
SOUTHERN DISTRICT OF NEW YORK

------------------------- --------- x
IRVING H. PICARD,
Plaintiff,
II-CV-03605 (JSR)(HBP)

- againstSAUL B. KATZ, et al.,
Defendants.
----------------------------------- x

SETTLEMENT AGREEMENT AND RELEASE
This Settlement Agreement and Release (this "Agreement") is made and entered into as
of Apri113, 2012, by and among Irving H. Picard ("Trustee"), in his capacity as the trustee for
the liquidation proceedings under the Securities Investor Protection Act, 15 U.S.C. §§ 78aaa et

seq. ("SIP A"), of Bernard L. Madofflnvestment Securities LLC ("BLMIS") and the
substantively consolidated estate of Bernard L. Madoff ("Madoff'), and Saul B. Katz, Fred
Wilpon, Richard Wilpon, Michael Katz, Jeffrey Wilpon, David Katz, Gregory Katz, Arthur
Friedman, L. Thomas Osterman, Marvin B. Tepper, Estate of Leonard Schreier, Jason Bacher,
Mets Limited Partnership, Sterling Mets L.P., Mets II LLC, FS Company L.L.c., Bon Mick
Family Partners L.P., Charles Sterling Sub LLC, College Place Enterprises LLC, FFB Aviation
LLC, Iris J. and Saul B. Katz Family Foundation Inc., Judy and Fred Wilpon Family Foundation,
Inc., Red Valley Partners, Robbinsville Park LLC, SEE Holdco, LLC, Sterling 10 LLC, Sterling
15C L.L.C., Sterling 20 LLC, Sterling American Advisors II L.P., Sterling Brunswick Seven
L.L.c., Sterling DIST Properties LLC, Sterling Equities, Sterling Equities Associates, Sterling
Internal V LLC, Sterling Thirty Venture LLC, Sterling Tracing LLC, Sterling Twenty Five LLC,

Sterling VC IV LLC, Sterling VC V LLC, Saul B. Katz Family Trust, Fred Wilpon Family Trust,
Katz 2002 Descendants' Trust, Wilpon 2002 Descendants' Trust, Iris Katz, Judith Wilpon, Dayle
Katz, Debra Wilpon, Valerie Wilpon, Amy Beth Katz, Heather Katz Knopf, Howard Katz,
Natalie Katz O'Brien, Todd Katz, Bruce N. Wilpon, Daniel Wilpon, Jessica Wilpon, Robin
Wilpon Wachtler, Philip Wachtler, Scott Wilpon, Ruth Friedman, Phyllis Rebe1l Osterman, Elise
C. Tepper, Jacqueline G. Tepper, Edward M. Tepper, Devya Schreier Arthur, Sterling
Acquisitions LLC, and Sterling American Property V L.P. (collectively the "Remaining
Defendants"), and Sterling Mets Associates, Sterling Mets Associates II, Mets One LLC, Mets
Partners, Inc., C.D.S. Corp., Coney Island Baseball Holding Company L.L.C., Brooklyn
Baseball Company L.L.c., 157 lE.S. LLC, Air Sterling LLC, BAS Aircraft LLC, Bon-Mick,
Inc., Charles 15 Associates, Charles 15 LLC, Charles Sterling LLC, Ruskin Garden Apartments
LLC, SEE Holdings I, SEE Holdings II, Sterling Brunswick Corporation, Sterling Equities
Investors, Sterling Heritage L.L.c., Sterling Jet Ltd., Sterling Jet II Ltd., Sterling PathoGenesis
Company, Sterling Third Associates, Valley Harbor Associates, Kimberly Wachtler, Minor 1,
Minor 2, Michael Schreier, Realty Associates Madoff II, Sterling American Property III L.P.,
and Sterling American Property IV L.P. (collectively the "Dismissed Defendants" and, together
with the Remaining Defendants, the "Defendants"). Each of the Trustee and each of the
Defendants shall be referred to herein as a "Party" and together as the "Parties."

RECITALS
A.

BLMIS and its predecessor were registered broker-dealers with the United States
and members of the Securities

Securities and Exchange Commission (the
Investor Protection Corporation ("SIPC");
B.

On December 11, 2008, the Commission filed a complaint in the United States

District Court for the Southern District of New York (the "District Court") against BLMIS and
2

Madoff. On December 12, 200S, the District Court entered an order which, among other things,
appointed Lee S. Richards, Esq. as receiver (the

for the assets of BLMIS (No. 08­

CY -10791 (LSS));
c.

On December 15, 200S, pursuant to section 78eee(a)(4)(A) of SIPA, the

Commission consented to a combination of its own action with the application of SIPC.
Thereafter, SIPC filed an application in the District Court under section 7Seee(a)(3) of SIP A
alleging, inter alia, that BLMIS was not able to meet its obligations to securities customers as
they came due and, accordingly, its customers needed the protections afforded by SIPA. On
December 15, 200S, the District Court granted the SIPC application and entered an order under
SIPA, which, in pertinent part, appointed the Trustee as the trustee for the liquidation of the
business ofBLMIS under section 7Seee(b)(3) of SIPA, removed the Receiver as the receiver for
BLMIS, and removed the case to the United States Bankruptcy Court for the Southern District of
New York (the "Bankruptcy Court") under section 7Seee(b)(4) of SIPA, where it is currently
pending as Case No. OS-01789 (BRL);
D.

On April 13,2009, an involuntary bankruptcy petition under chapter 7 oftitIe 11,

United States Code, 11 U.S.c. §§ 101 et seq. (the "Bankruptcy Code"), was filed against Madoff.
By Order dated June 2,2009, the Bankruptcy Court substantively consolidated Madoffs estate
into the BLMIS estate in the SIPA liquidation proceeding (the BLMIS estate consolidated with
Madoffs estate collectively are referred to herein as the "BLMIS Estate");
E.

On or about June IS, 2009, certain Defendants filed customer claims in the SIPA

liquidation proceeding in connection with their BLMIS accounts, including with respect to
accounts in which they had deposited more money than they had withdrawn. The Trustee often
refers to such accounts as "net loser" accounts.

3

F.

On March 1, 2010, the Bankruptcy Court issued an opinion affirming the

Trustee's calculation of customers' "net equity" claims as the difference between the amounts a
customer invested with BLMIS and the amounts that customer withdrew from BLMIS (the
Investment Method"). On March 8,2010, the Bankruptcy Court entered an order implementing
its decision and certifying it for immediate appeal to the United States Court of Appeals for the
Second Circuit, which on August 16,2011, upheld the Trustee's use of the Net Investment
Method as a proper basis for calculating "net equity" claims in In re Bernard L. lv/adolf Inv. Sec.

LLC, 654 F.3d 229 (2d Cir. 2011) ("Second Circuit Net Equity Order"), petition for cert. filed,
Sterling Equities Assoc. v. Picard, No. 11-968,2012 WL 396523 (Feb. 3,2012);
G.

On December 7, 2010, the Trustee filed an action in the Bankruptcy Court

captioned Picard v. Katz, et al., Adv. Pro. No. 10-5287 (BRL) (the "Action"), and on March 18,
2011, filed an amended complaint (the "Amended Complaint") in the Action, which asserted

claims under section 78fff-2(c)(3) of SIP A, sections 544(b), 547(b), 548(a), 550(a) and 551 of
the Bankruptcy Code, the New York Debtor and Creditor Law § 270 et seq., and other laws;
H.

The Trustee alleged in the Amended Complaint, among other claims, that certain

Defendants received avoidable transfers of "fictitious profits" during the six-year period
preceding December 11,2008 in the aggregate amount of One Hundred Sixty-Two Million
Seven Hundred Twenty-Six Thousand Seven Hundred Sixty-Eight United States Dollars
($162,726,768) (the "Alleged Six-Year Profits");
L

Prior to the filing of the Action, the Trustee undertook discovery concerning

Defendants and their investments with BLMIS pursuant to Rule 2004 of the Federal Rules of
Bankruptcy Procedure ("Rule 2004 Discovery"), during which Defendants, among others,
produced documents to the Trustee and provided deposition testimony;

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1.

On March 20, 2011, Defendants filed a motion in the Bankruptcy Court to dismiss

the Amended Complaint or, in the alternative, for summary judgment dismissing the Amended
Complaint (the "Motion to Dismiss");
K.

On May 26, 2011, Defendants filed a motion pursuant to 28 U .S.c. § 157(d) in

the District Court to withdraw the reference of the Action to the Bankruptcy Court;

L.

By Order dated July 1, 20 II and ruling on August 19, 2011, the District Court

withdrew for all purposes the reference of the Action to the Bankruptcy Court, which included
withdrawal of the Motion to Dismiss;
M.

By Order dated July 12, 2011 (the "Allocation Order"), the Bankruptcy Court

approved the Trustee's initial allocation of property to the customer property fund and authorized
the Trustee to make an interim distribution to customers holding allowed "net equity" claims.
Pursuant to that Order, on or about October 5,2011, the Trustee made a first interim distribution
to customers holding allowed "net equity" claims as of September 30, 2011, in the approximate
amount of 4.602% per dollar of their allowed "net equity" claims. No Defendant held an
allowed "net equity" claim as of that date, and, therefore, no Defendant received any portion pf
the distribution.
N.

On September 27,2011, the District Court issued an Opinion and Order (the

"Dismissal Order") denying in part and granting in part the Motion to Dismiss and dismissing all
counts of the Amended Complaint except Count 1, which alleged that Defendants received
intentional fraudulent transfers pursuant to section 548(a)(I)(A) of the Bankruptcy Code, and
Count 11, which sought to equitably subordinate Defendants' claims pursuant to section 51 O(c)
of the Bankruptcy Code;

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O.

On October 7, 2011, the Trustee filed a motion (the "Certification Motion")

seeking certification of the rulings in the Dismissal Order for interlocutory appeal under 28
U.S.C. § 1292(b), or to have the District Court enter final judgment with respect to the dismissed
claims under Rule 54(b) of the Federal Rules of Civil Procedure. On January 17,2012, the
District Court issued an Opinion and Order denying the Certification Motion and reinstating
Count 9 of the Complaint insofar as it sought to avoid transfers under section 550(a) of the
Bankruptcy Code in accordance with the Dismissal Order;
P.

Between August 12,2011 and January 13,2012, the Parties engaged in discovery

under Rules 26 through 34 of the Federal Rules of Civil Procedure, during which Defendants,
among others, produced documents to the Trustee and provided deposition testimony;
Q.

On January 26, 2012, Defendants filed a motion for summary judgment

dismissing all remaining counts of the Amended Complaint, and the Trustee filed a motion for
partial summary judgment as to Count 1 of the Amended Complaint insofar as his Count 1
claims sought to avoid an aggregate amount of Eighty Three Million Three Hundred Nine
Thousand One Hundred Sixty Two United States Dollars ($83,309,162) of transfers of "fictitious
profits" from BLMIS to Defendants during the two-year period preceding December 11, 2008;
R.

On March 5, 2012, the District Court issued an order setting forth the Court's

bottom line rulings denying Defendants' motion for summary judgment and granting the
Trustee's motion for partial summary judgment while leaving unresolved, although capped at the
$83,309,162 sought by the Trustee, the amount of "fictitious profits" received by Defendants that
were subject to avoidance;
S.

On March 16,2012, the Parties executed a legally binding Memorandum of

Understanding (the "MOU"), in which they agreed to a final, binding, and legally enforceable

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settlement of the Action (the "Settlement"). The Parties agreed to work expeditiously and in
good faith to enter into definitive documentation reflecting the terms of the MOU and other
terms customary for such agreements;
T.

Pursuant to the MOU, the Trustee announced that, upon review of the evidence,

he determined that he was no longer pursuing the willful blindness claims asserted against any
Defendant; and
U.

On March 19,2012, the District Court reviewed the MOU, which requires, among

other things, approval of the Settlement by the District Court and any necessary approval by
Defendants' lenders by no later than April 13, 2012.

NOW, THEREFORE, it is hereby AGREED by and among the Parties to the
Agreement, for the good and valuable consideration set forth herein, the adequacy and
sufficiency of which is recognized for all purposes, that:
I.

Definitions. In addition to the definitions of various terms set forth elsewhere in

this Agreement, the following terms shall have the following meanings as used in this
Agreement:
(a)

"Approval Order" means the order of the District Court approving the

terms of this Agreement pursuant to Rule 9019 of the Federal Rules of Bankruptcy Procedure.
(b)

"Defendant General Creditor Claim" means any claim, other than a

Defendant Net Equity Claim (defined below), asserted by any Defendant, with respect to
amounts claimed to be held on account for such Defendant at BLMIS at the time of its
bankruptcy, against (i) the BLMIS Estate or (ii) any forfeiture or other fund, established or yet to
be established, for the benefit of BLMIS customers. Defendants' rights and the Trustee's

7

obligations with respect to Defendant General Creditor Claims are set forth in paragraph 2(k)
below.
(c)

"Defendant Net Equity Claim" means the "net equity" claim of any

Defendant in BLMIS's SlPA liquidation proceeding, which the Trustee has determined in
accordance with the Net Investment Method and which will be allowed in the aggregate amount
of One Hundred Seventy-Seven Million Five Hundred Sixty-Three Thousand Thirty-Eight
United States Dollars and Eight Cents ($177,563,039.08), regardless of the source of payment in
respect of such Claim. A schedule of each Defendant Net Equity Claim reflecting the specific
account number, account holder's name, the net equity in each account, and the claim number
that identifies the claim filed by each account holder is attached as Schedule 1 to the Agreement.
The Parties acknowledge and agree that if the Net Investment Method for calculating the value
of "net equity" claims is found to be incorrect or is otherwise modified, the Trustee will
retroactively adjust the calculation of the value of each Defendant Net Equity Claim to reflect the
new methodology
(d)

"Effective Date" means the date on which the District Court enters the

Approval Order. The Parties acknowledge and agree that (i) prior to the Effective Date, the
following shall be delivered to the Trustee: (x) an executed Assignment, as defined below, of
each Defendant Net Equity Claim; and (y) an executed release (or executed acknowledgement of
release) of any lien, interest or encumbrance, held prior to the Assignment by any lender to the
Defendants or other third party, on or against any part, or all, of each Defendant Net Equity
Claim and/or Assigned Claim Recoveries (as defined below) up to the amount of the Settlement
Payment (as defined below) (such release or acknowledgement ofreJease a "Release of Lien"),
which shall remain in effect until the Settlement Payment is paid in full, and (ii) on the Effective

8

Date, the Trustee shall deliver to Defendants an executed stipulation of dismissal to be filed on,
or as soon as practicable following, the Effective Date.
2.

Payment Obligation, Claims, and Related Matters. On the terms and subject

to the conditions and limitations set forth in this Agreement, Defendants will payor cause to be
paid to the Trustee an aggregate amount of One Hundred Sixty-Two Million United States
Dollars ($162,000,000) (the "Settlement Payment"). The Settlement Payment will be satisfied
during the five, twelve-month periods following the Effective Date (the "Settlement Payment
Term"). The first of such twelve-month periods shall be referred to as the "First Period"; the
second twelve-month period shall run from the end of the First Period and be referred to as the
"Second Period"; and each successive twelve-month Period thereafter shall run from the end of
the prior Period through and including the "Fifth Period." The Settlement Payment shall be
satisfied by the following means:
(a)

Assignment of Defendant Net Equity Claims. Each Defendant

unconditionally and irrevocably agrees to assign to the Trustee by written assignment
(individually, the "Assignment," and collectively, the "Assignmerits"), the form of which is
attached hereto as Exhibit A, his, her or its Defendant Net Equity Claim (collectively, the
"Assigned Claims") solely for the purpose of satisfying the Settlement Payment. No assigned
Defendant Net Equity Claim (or recovery in respect of a Defendant Net Equity Claim in excess
of amounts necessary to satisfy the Settlement Payment) shall become property of the BLMIS
estate nor be used for any purpose other than to satisfy the Settlement Payment. The Trustee
shall not transfer or assign any Defendant Net Equity Claim, except as expressly contemplated
by this Agreement.

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(b)

Allowance of Defendant Net Equity Claims. The Trustee will allow the

Defendant Net Equity Claims, which will then be entitled to full recovery on the same basis as
"good faith" customers of BLMIS, except that Defendant Net Equity Claims will not be entitled
to receive an advance from SIPC, as provided for in 15 U.S.C. § 78fff-3.
(c)

Assigned Claim Recoveries. The Assigned Claims will be entitled to

100% of all distributions made by the Trustee from BLMIS customer property or any other
payment of allowed claims of "good faith" customers of BLMIS from any source (collectively,
"Assigned Claim Recoveries"), including, but not limited to, (i) from any forfeiture fund
established by the U.S. Department of Justice pursuant to 28 C.F.R. Part 9 and (ii) the 4.602%
"catch-up" distribution in the amount of Eight Million One Hundred Seventy-One Thousand
Four Hundred Fifty-One United States Dollars ($8,171,451) made pursuant to the Bankruptcy
Court's Allocation Order but not previously paid in connection with any Defendant Net Equity
Claim. The Trustee represents that, as of the Effective Date, there has been only one (I)
distribution from the fund of customer property to customers holding allowed "net equity"
claims, such distribution occurred on or about October 5, 20 II, pursuant to the Bankruptcy
Court's Allocation Order, and was in the amount of 4.602% of customers' allowed "net equity"
claims.
(d)

In connection with any distribution made in respect of the Assigned

Claims, any and all Assigned Claim Recoveries shall immediately and automatically be applied
to reduce Defendants' obligations in respect of the Settlement Payment on a dollar-for-dollar
basis. Promptly thereafter (but not later than seven (7) calendar days), the Trustee shall provide
written notice to Defendants (i) of any remaining balance of the Settlement Payment after

10

Assigned Claim Recoveries have been so applied and (ii) if/when the Settlement Payment is fully
satisfied.
(e)

During the First through the Third Periods of the Settlement Payment

Term, Defendants' payment obligations pursuant to this Agreement are limited solely to
Assigned Claim Recoveries, and, during such periods, no Defendant is obligated to make any
payment in excess of or in addition to Assigned Claim Recoveries. Upon full satisfaction of the
Settlement Payment at any time during the Settlement Payment Term, the Trustee shall promptly
(but not later than seven (7) calendar days) re-assign the Assigned Claims to Defendants by
executing and delivering an assignment to each of the Defendants or their designee(s), limited to
a maximum, potential recovery of the difference between the value of the aggregate amount of
the Defendant Net Equity Claims and the value of the Defendant Net Equity Claims previously
applied to reduce Defendants' obligations in respect of the Settlement Payment (such difference
being the "Tail Payment"). Upon full satisfaction of the Settlement Payment, Defendants shall
be entitled to receive in full any distributions in respect of Defendant Net Equity Claims on the
same basis as "good faith" customers of BLMIS, including any distribution made after the end of
the Fifth Period.

(f)

For the avoidance of doubt, unless and until the Settlement Payment is

fully satisfied, the Trustee shall have no obligation to re-assign the Assigned Claims to the
Defendants, and the Defendants shall not be entitled to receive all or any part of the Tail
Payment.
(g)

Defendants' Installment Payments. If the Settlement Payment is not fully

satisfied after applying all of the Assigned Claim Recoveries during the First through the Third
Periods of the Settlement Payment Term, the remaining unpaid amount of the Settlement

11

Payment (the "Remaining Amount") shall be divided into two equal annual installments to be
paid no later than the end of the Fourth and Fifth Periods of the Settlement Payment Term. Any
and all Assigned Claim Recoveries received during the Fourth and Fifth Periods shall
immediately and automatically be applied to the next due installment during the Fourth and Fifth
Periods of the Settlement Payment Term to reduce the payment in respect of the Remaining
Amount for that Period. If the installment payment for the Fourth Period is satisfied in full by
Assigned Claim Recoveries, any excess will be applied to the Fifth Period installment. The
annual installment payments shall be made by wire transfer of immediately available funds in
accordance with written instructions provided by the Trustee to Defendants no later than thirty
(30) days prior to the relevant payment date.
(h)

Each Defendant shall be responsible, on a several and not joint basis, for

his, her, or its proportionate (i.e., percentage) share of the Remaining Amount in proportion to
his, her, or its proportionate share of the Alleged Six-Year Profits. With respect to accounts held
jointly or as tenants in common, each Defendant shall be responsible, on a several and not joint
basis, for his, her, or its proportionate share of that account's proportionate share of the
Remaining Amount. A detailed schedule of the Alleged Six-Year Profits reflecting the relevant
BLMIS account number, the account holder's name, the Defendant or Defendants related to each
such BLMIS account, the amount of the Alleged Six-Year Profits by account, and each
Defendant's proportionate share of the Alleged Six-Year Profits is attached as Schedule 2 to this
Agreement.
0)

Fred Wilpon and Saul Katz Guarantees. Fred Wilpon and Saul Katz

("Guarantors"),jointly and severally, irrevocably and unconditionally, and regardless of which
Defendant fails to pay his, her, or its proportionate share of the Remaining Amount, hereby

12

guarantee payment of the Remaining Amount owed to the Trustee up to an aggregate amount of
Twenty-Nine Million United States Dollars ($29,000,000) (the "Guarantee"). The Trustee shall
not recover on the Guarantee unless a Defendant has not paid in full his, her, or its proportionate
share of the Remaining Amount at the end of the Fourth and/or Fifth Periods of the Settlement
Payment Term. In the event that a Defendant does not pay his, her, or its proportionate share of
the Remaining Amount when it is due, the Trustee shall, within three (3) business days, make a
written demand of the Guarantors, who shall promptly (but not later than three (3) business days
from the date of the Trustee's written demand) satisfy the demand. Under no circumstances shall
the aggregate amount of any payments made by the Guarantors in satisfaction of the Guarantee
exceed $29,000,000.
(j)

Following the Effective Date, the Parties shall agree to specific dates for

each of the First through the Fifth Periods of the Settlement Payment Term as follows:

END OF FIRST PERIOD: Twelve calendar months following the
Effecti ve Date, or [Month/Date/20 13]
END OF SECOND PERIOD: Twelve calendar months following the end
of the First Period, or [Month/Date12014]
END OF THIRD PERIOD: Twelye calendar months following the end of
the Second Period, or [Month/Date/20 15]
END OF FOURTH PERIOD: Twelve calendar months following the end
of the Third Period, or [MonthiDate/2016]
END OF FIFTH PERIOD: Twelve calendar months following the end of
the Fourth Period, or [Month/Date12017]

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(k)

The Trustee shall treat the Defendant General Creditor Claims on the same

basis as he treats the same types of claims asserted by "good faith" customers, including with
respect to any recoveries to which such claims will be entitled.

3.

Mutual Releases.
(a)

Except with respect to any rights and obligations arising under this

Agreement (including rights and obligations relating to Defendant Net Equity Claims and
Defendant General Creditor Claims), the Trustee, for himself and on behalf of BLMIS, Madoff,
and the BLMIS Estate ("Trustee Releasors"), hereby fully, finally, and forever releases, remises,
relinquishes, and discharges Defendants and their professionals and agents from any and all past,
present, or future claims or causes of action (including any suit, petition, demand, or other claim
in law, equity or arbitration) and from any and all allegations of liability or damages (including
any allegation of duties, debts, reckonings, contracts, controversies, agreements, promises,
damages, responsibilities, covenants, or accounts) of whatever kind, nature or description, direct
or indirect, in law, equity or arbitration, absolute or contingent, in tort, contract, statutory liability
or otherwise, based on willful blindness, strict liability, negligence, gross negligence, fraud,
breach of fiduciary duty or otherwise (including attorneys' fees, costs or disbursements) known
or unknown, that are, have been, could have been, or might in the future be, asserted by the
Trustee against Defendants based on, arising out of, or relating in any way to Madoff, BLMIS,
their liquidation proceedings, the BLMIS Estate or any BLMIS account held in the name of any
Defendant (the "Trustee Released Claims").
(b)

Except with respect to any rights and obligations arising under this

Agreement (including rights and obligations relating to Defendant Net Equity Claims and
Defendant General Creditor Claims), each of the Defendants for himself, herself or itself, and in

14

the case of a corporate or partnership Defendant, its shareholders, members, officers and
directors, partners, their successors in interest and assigns ("Defendant Releasors"), hereby fully,
finally, and forever releases, remises, relinquishes, and discharges the Trustee, his professionals
and agents and the BLMIS Estate from any and all claims or causes of action (including any suit,
petition, demand, or other claim in law, equity or arbitration) and from any and all allegations of
liability or damages (including any allegation of duties, debts, reckonings, contracts,
controversies, agreements, promises, damages, responsibilities, covenants, or accounts) of
whatever kind, nature or description, direct or indirect, in law, equity or arbitration, absolute or
contingent, in tort, contract, statutory liability or otherwise, based on strict liability, negligence,
gross negligence, fraud, breach of fiduciary duty or otherwise (including attorneys' fees, costs or
disbursements) known or unknown, that are, have been, could have been, or might in the future
be, asserted by Defendant Releasors against the Trustee based on, arising out of, or relating in
any way to Madoff, BLMIS, their liquidation proceedings, the BLMIS Estate and any BLMIS
account held by any of the Defendants (the "Defendant Released Claims").
(c)

With respect to any and all Trustee Released Claims or Defendant

Released Claims, the Trustee and Defendant Releasors shall expressly waive or be deemed to
have waived the provisions, rights, and benefits of California Civil Code § 1542 (to the extent it
applies herein) and any provisions, rights, and benefits conferred by any law of any state or
territory of the United States or principle of common law that is similar, comparable, or
equivalent to California Civil Code § 1542, which provides:
A GENERAL RELEASE DOES NOT EXTEND TO CLAIMS
WHICH THE CREDITOR DOES NOT KNOW OR EXPECT TO
EXIST IN HIS OR HER FAVOR AT THE TIME OF
EXECUTING THE RELEASE, WHICH IF KNOWl\I BY HIM
OR HER MUST HA VE MA TERIALL Y AFFECTED HIS OR
HER SETTLEMENT WITH THE DEBTOR.

15

Except with respect to the rights and obligations arising under this Agreement, the Trustee and
Defendants each acknowledge that each may hereafter discover facts in addition to or different
from those that each now knows or believes to be true with respect to the subject matter of the
Trustee Released Claims or the Defendant Released Claims, respectively, but the Trustee and
Defendants each shall expressly have and shall be deemed to have fully, finally, and forever
settled, released, and discharged any and all Trustee Released Claims and Defendant Released
Claims, respectively, known or unknown, suspected or unsuspected, contingent or non­
contingent, whether or not concealed or hidden, which now exist or heretofore have existed,
upon any theory of law or equity now existing or coming into existence in the future, including
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 or such different or
additional facts.
4.

Termination of Litigation. On or as soon as practical after the Effective Date,

the Parties will file a stipulation of dismissal dismissing the Action with prejudice and without
cost to any Party. Within three (3) business days after the Effective Date, Defendants shall
withdraw their petition for a writ of certiorari filed with the United States Supreme Court from
the Second Circuit Net Equity Order. Defendants agree not to pursue or join any other litigation,
or to provide legal counsel to any other defendant involved in any litigation, involving the
Trustee or SIPC arising out of or relating to BLMIS, Madoff, their liquidation proceeding and
the BLMIS Estate, including filing any motion, memorandum or other court document, except
with respect to (i) any rights or obligations arising under this Agreement; (ii) the litigation
involving, among others, Eric Saretsky on behalf of the participants in the Sterling Equities
Employees Retirement Plan; and (iii) the litigation captioned Picard v. Estate ofMarjorie K.

16

Osterman, el al. The Parties agree not to make any disparaging statement with respect to each
other or the Settlement.
5.

Conditions. Notwithstanding any provision of this Agreement to the contrary,

the obligations of the Parties are subject to the receipt of (a) approval of the Settlement by the
District Court pursuant to Rule 9019 of the Federal Rules of Bankruptcy Procedure and entry of
the Approval Order, and (b) any required lender approvals, which shall be obtained by no later
than April 13,2012.

6.

Representations and Warranties.
(a)

The Trustee hereby represents and warrants to Defendants that, subject to

the Approval Order: (i) he has the full power, authority and legal right to execute and deliver this
Agreement and to perform his obligations hereunder; (ii) this Agreement has been duly executed
and delivered by the Trustee and constitutes the valid and binding agreement of the Trustee,
enforceable against the Trustee in accordance with its terms; and (iii) in executing this
Agreement, the Trustee has done so with the full knowledge of any and all rights that he may
have with respect to the controversies herein compromised, and the Trustee has received or has
had the opportunity to obtain independent legal advice from his counsel with regard to the facts
relating to said controversies and with respect to the rights arising out of said facts.
(b)

Each Defendant, solely with respect to himself, herself, or itself, hereby

represents and warrants to the Trustee that: (i) he, she, or it has the full power, authority, legal
right and capacity to execute and deliver this Agreement and to perform his, her, or its respective
obligations hereunder; (ii) he, she, or it has the full power, authority and legal right to execute
and deliver to the Trustee the Assignment of his, her, or its Defendant Net Equity Claim, which
has not previously been assigned, except pursuant to a lien that has been released as

17

contemplated in paragraph 1(d)(i)(y), in whole or in part; (iii) he, she, or it has taken such steps
and actions, as necessary, such that the holders of any obligations entitled to notice from such
Defendant have been given notice of this Agreement and Defendant's obligations to the Trustee
under this Agreement; (iv) he, she or it has obtained a Release of Lien, a copy of which shall be
provided to the Trustee prior to the Effective Date; (v) the Assigned Claim is free and clear of
any lien, claim, interest or encumbrance held by any third party; (vi) this Agreement has been
duly executed and delivered by such Defendant and constitutes the valid and binding agreement
of such Defendant, enforceable against such Defendant in accordance with its terms; and (vii) in
executing this Agreement, such Defendant has done so with the full knowledge of any and all
rights that such Defendant may have with respect to the controversies herein compromised, and
such Defendant has received or has had the opportunity to obtain independent legal advice from
his, her, or its attorneys with regard to the facts relating to said controversies and with respect to
the rights arising out of said facts.
(c)

Each of the representations and warranties set forth in this paragraph 6

shall survive in perpetuity.
7.

Further Assurances. Each Party shall execute and deliver any document or

instrument reasonably requested by the other Party after the date of this Agreement to effectuate
the intent of this Agreement.
8.

Return, Destruction, and Confidentiality of Documents.
(a)

Notwithstanding any other provision of this Agreement, and pursuant to

the October 30, 2011 protective order entered in the Action, the provisions of which are
incorporated herein by reference, any Party that received documents designated or identified as
"Confidential" or "Highly Confidential" by any other Party that produced the documents (the

18

"Producing Party") at any time in connection with the Action, including during Rule 2004
Discovery, the mediation relating to the Action, or in relation to this Agreement, shall, within
thirty (30) days of the final disposition of the Action, (a) return to the offices of the Producing
Party's counsel all such documents, including any copies thereof, or (b) ifthe Producing Party
does not require return of such documents, certify to counsel for the Producing Party that all such
documents, including any copies thereof, have been destroyed. For the avoidance of doubt, the
obligations under this paragraph to return documents to the Producing Party include documents
produced by the Trustee to the Defendants.
(b)

The Trustee agrees to maintain at all times the confidentiality of all

information provided by Defendants, on or before the date hereof, that Defendants designated
"Confidential" or "Highly Confidential."
9.

Entire Agreement. This Agreement (including all schedules and any exhibits

hereto) constitutes the entire agreement and understanding between the Parties pertaining to the
subject matter hereof and supersedes any and all prior or contemporaneous agreements,
including the MOU, representations and understandings of the Parties concerning the subject
matter hereof.
10.

Amendment; Waiver. This Agreement may not be terminated, amended or

modified in any way except by written instrument signed by all Parties hereto or their
successors-in-interest. No waiver of any provision of this Agreement shall be deemed to
constitute a waiver of any other provision hereof, whether or not similar, nor shall such waiver
constitute a continuing waiver.
11.

Assignment. This Agreement may not be assigned by any Party without the prior

written consent of the other Parties, provided that nothing herein shall prohibit any Defendant

19

that is a corporation, partnership, limited liability company, or other entity from pledging or
assigning its interest in this Agreement in connection with borrowings or the sale of all or
substantially all of such Defendant's assets. In the event of such a pledge or assignment, the
obligations of such Defendant shall remain in full force and effect and shall not be impaired.
Any such assignor shall provide to the Trustee written notice of the assignment of its interest in
this Agreement within ten (10) business days thereafter.
12.

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

each Party and his, her, or its respective successors, heirs, estates, and personal representatives.

13.

Construction. This Agreement has been fully negotiated by the Parties. Each

Party acknowledges and agrees that this Agreement has been drafted jointly, and the rule that
ambiguities in an agreement or contract may be construed against the drafter shall not apply in
the construction or interpretation of this Agreement. Words used herein, regardless of the
number and gender specifically used, shall be deemed and construed to include any other
number, singular or plural, and any other gender, masculine, feminine, or neuter, as the context
indicates is appropriate. Any reference in this Agreement to a paragraph is to a paragraph of this
Agreement. "Including" is not intended to be a limiting term.
14.

Headings. The headings in this Agreement are inserted only as a matter of

convenience and for reference and do not define, limit or describe the scope of this Agreement or
the scope or content of any of its provisions.
15.

Choice of Law. This Agreement and any claim related directly or indirectly to

this Agreement shall be governed by and construed in accordance with the laws of the State of
New York (without regard to the principle of conflicts of law thereof), the Bankruptcy Code, and
SIPA. Each Party hereby waives on behalf of itself and its successors and assigns any and all

20

right to argue that the choice of New York law provision is or has become unreasonable in any
legal proceeding.
16.

Choice of Forum. Any action arising out of this Agreement, or relating to the

performance or breach of the Parties hereunder or the interpretation hereof, shall be brought
exclusively in the District Court, and each of the Parties (a) consents to jurisdiction in such court,
(b) agrees that it will not bring any action relating to this Agreement, including the performance
or breach or interpretation of this Agreement, in any court other than the District Court, and (c)
agrees that any such action should, to the extent possible, be referred to Judge Jed S. Rakoff.
17.

WAIVER OF JURY TRIAL. THE PARTIES EXPRESSLY AND

IRREVOCABL Y WAIVE, TO THE FULLEST EXTENT PERMITTED BY APPLICABLE
LAW, ANY RIGHT TO TRIAL BY JURY FOR ANY CLAIM, COUNTERCLAIM, ACTION,
OR OTHER PROCEEDING ARISING UNDER OR RELATING TO THIS AGREEMENT,
ANY RIGHTS OR OBLIGATIONS HEREUNDER, THE PERFORMANCE OF SUCH
RIGHTS AND OBLIGATIONS OR THE RELATIONSHIP BETWEEN THE PARTIES, IN
EACH CASE WHETHER SUCH CLAIM, COUNTERCLAIM, ACTION, OR OTHER
PROCEEDING IS NOW EXISTING OR HEREAFTER ARISING, AND WHETHER
SOUNDING IN CONTRACT, TORT, OR OTHERWISE.
18.

Expenses. Each Party shall bear its respective expenses relating to or arising out

of this Agreement, including, but not limited to, fees for attorneys and other advisors.
19.

Notices. All notices, requests, demands, consents and communications necessary

or required under this Agreement shall be in writing and shall be delivered by hand or sent by
registered or certified mail (return receipt requested), by overnight courier (with confirmation),
by facsimile (receipt confirmed), or by electronic means (receipt confirmed), in each case

21

addressed and copied as set forth on the applicable signature page hereto. A Party may change
its address for receiving notice by giving notice of a new address in the manner provided herein.
All such notices, requests, demands, consents and other communications shall be deemed to have
been duly given or sent two (2) days following the date on which mailed, or on the date on which
delivered by courier or by hand or by facsimile or electronic transmission (receipt confirmed),
addressed as follows:
If to the Trustee:

If to any Defendant:

Irving H. Picard
c/o Baker & Hostetler LLP
45 Rockefeller Plaza
New York, New York 10111
Facsimile No.: [phone]

c/o Davis Polk & Wardwell LLP
450 Lexington Avenue
New York, New York 10017
Attention: Robert F. Wise, Jr.
Karen E. Wagner
Dana M. Seshens
Facsimile No.: [phone]

with copies to:
Baker & Hostetler LLP

45 Rockefeller Plaza

New York, New York 10111

Attention: David J. Sheehan

Fernando A. Bohorquez, Jr.

Facsimile No.: [phone]

20.

No Third-Party Beneficiaries. Nothing contained in this Agreement is intended

to confer any benefit upon any person or entity other than the Parties hereto and their respective
successors and permitted assigns.
21.

Counterparts. This Agreement may be executed and delivered in any number of

counterparts, each of which so executed and delivered shall be deemed to be an original and all
of which shall constitute one and the same document. Each Party may evidence its execution of
this Agreement by delivery to the other Party of scanned or faxed copies of its signature, with the
same effect as the delivery of an original signature.

22

Each Party has caused this Agreement to be duly executed and delivered as of the date set
forth above.

Irving H. Picard, the Trustee for the liquidation
proceedings of Bernard L. Madoff Investment
Securities LLC and the substantively
consolidated bankruptcy case of Bernard L.
Madoff

Michael Katz

Jeffrey

GREGORY KATZ

Gregory

L. THOMAS OSTERMAN
L. Thomas Osterman

MARVIN B. TEPPER

Marvin B. Tepper

ESTATE OF LEONARD SCHREIER

By: Fred Wilpon, Co-administrator
By: Jason Bacher, Co-administrator

Mets Limited Partnership

By: C.D.S. Corp., its general partner
By: Fred WiJpon, CEO

Sterling Mets, L.P.

By: Mets Partners, Inc .• its general partner
By: David P. Cohen. Executive Vice
President

ARTHUR FRIEDMAN

------~-~~-~~-~--,---

By: Ruth Friedman, attorney-in-fact

L. THOMfo.QSTE~AN
~i;;:~;:::--

,Y'>~~~--'-~- --<~."

L. Thomas Osterman

',>

MARVIN B. TEPPER
Marvin B. Tepper

inistrator

By:

By: Jason Bacher, Co-administrator

Mets Limited Partnership

By: C.D.\b.prp." ,its~ene, ral partner

, \\ \ -J J_t-­
By: Fred

~'--'--~

WilpO\CEd

----

Sterling Mets, L.P.

By: Mets Partners, Inc., its general partner

--

_

~o

By: David P. Cohen. Executive Vice
President

ARTHUR FRIEDMAN

By: Ruth Friedman,

L. THOMAS OSTERMAN

L. Thomas Osterman

_M_~_a:_V_IN---c-B_. _ _ _ _
T_~_P",+~_E_R

« _ «

Marvin B. Tepper

ESTATE OF LEONARD SCHREIER
By: Fred Wilpon, Co-administrator
By: Jason Bacher, Co-administrator

Mets Limited Partnership
By: C.D.S. Corp., its general partner
By: Fred

CEO

Sterling Mets, L.P.
By: Mets Partners, Inc., its general partner
By: David P.
President

Executive Vice

_ _

ARTHUR FRIEDMAN

By: Ruth Friedman, attorney-in-fact

L. THOMAS OSTERMAN
-

L. Thomas Osterman

MARVIN B. TEPPER
Marvin B. Tepper

Mets Limited Partnership
By: C

Sterling Mets, L.P.

By: Mets Partners, Inc., its general partner

By: David P. Cohen, Executive Vice
President

ARTHUR FRIEDMAN

By: Ruth Friedman, attorney-in-fact

L. THOMAS OSTERMAN
L. Thomas Osterman

MARVIN B. TEPPER
Marvin B. Tepper

ESTATE OF LEONARD SCHREIER
.....

-~~-

By; Fred Wilpon, Co-administrator
By: Jason Bacher, Co-administrator

Mets Limited Partnership
By: C.D.S. Corp., its general partner
By: Fred Wilpon, CEO

Sterling Mets, L.P.

~l;'art~ers,

By:

I

Inc., its general partner

.
/. '.J' '

II"

{1

i3y;' 'David t

President

Cohen, Executive Vice- - - --­

Mets II LLC
By: ~~SOciates II, its member
By: Michael Katz, Partner

FS COMPANY, L.L.C.

By:

SZ~Z4LC., its member

By: Michael Katz, Managing Member

CHARLES STERLING SUB LLC
By: Zles Sterling 15 LLC, its manager

I"~

By: Michael Katz, Manager

COL

CE ENTERPRISES LLC

FFB ~ Y"ATION LLC

j!lt~

By: Michael Katz, Manager

TZFAMILY

C.

By: David Katz, Partner=

RO[SVILLE PARK, LLC

4L

By: Miftael Katz, Manager

SEE HOLDCO, LLC
By:

SEE

.

ember

By: Michael Katz, Manager

ST~ING 15C L.L.C.

!1It~IuA
By: Michael Katz, Member

By: Michael Katz, Manager

STERLING AMERICAN ADVISORS II L.P.
By: Sterling

dvisors II Corp., a general partner

(

STEl.'.G BRUNSWICK SEVEN L.L.C.

~

By: Michael Katz, Manager

ST~'~ING EQUI1;IES

J11j~;;Z

By: Michael Katz, Senior Executive Vice
Preseident

STWING EQUITIES ASSOCIATES

U4~

By: Michael Katz, Partner

By: Michael Katz, Managing Member

ING THIRTY VENTURE LLC

~

STE~ING

TRACING LLC

IItJ~
By: Michael Katz, Manager

S~FIVELLC
By: Michael Katz, Manager

By: Michael Katz, Manager

ST:PNG VC V LLC

40~

By: Michael Katz, Manager

By: Michael Katz. Trustee

KAT

WILP0N(2 2 D.~ENDANTS' TRUST
~

IRIS KATZ
Iris Katz

JUDITH WILPON
Judith Wilpon

DAYLQATZ

./

i \.__ - ---£-\ \...­
- - ,+..,._..
Dayle Katz

DEBRA WILPON
_.

Debra Wilpon

-:=-::--,.

------­

FRED WILPON FAMILY TRUST

By: Richard Wilpon, Trustee

KATZ 2002 DESCENDANTS' TRUST
By: Saul B. Katz, Trustee

WILPON 2002 DESCENDANTS' TRUST
By: Fred Wilpon, Trustee

IRIS

JUDITH WILPON

Judith Wilpon

DAYLE KATZ

DEBRA WILPON

Debra Wilpon

FRED WILPON FAMILY TRUST

By: Richard Wilpon, Trustee

KATZ 2002 DESCENDANTS' TRUST

By: Sau] B. Katz, Trustee

WILPON 2002 DESCENDANTS' TRUST

By: Fred Wilpon, Trustee

IRIS KATZ

Iris Katz

DAYLE KATZ

Katz

DEBRA WILPON

FRED WILPON FAMILY TRUST

By: Richard Wilpon. Trustee

KATZ 2002 DESCENDANTS' TRUST
.....••

_--_._-..-----_...._­

By: Saul B. Katz, Trustee

WILPON 2002 DESCENDANTS' TRUST
By: Fred Wilpon, Trustee

IRIS KATZ
Iris Katz

JUDITH WILPON
Judith Wilpon

DAYLE KATZ
Dayle Katz

VALERIE WILPON

dJ~u.L

Valerie Wilpon

AMY BETH KATZ

HEATHER KATZ KNOPF

Heather Katz Knopf

HOWARD KATZ
Howard Katz

NATALIE KATZ O'BRIEN
Katz O'Brien

TODD KATZ
Todd

BRUCE N. WILPON
Bruce N. Wilpon

VALERIE WILPON

Valerie Wilpon

HEATHER KATZ KNOPF

Heather Katz Knopf

HOWARD KATZ
Howard Katz

NATALIE KATZ O'BRIEN
Natalie Katz O'Brien

TODD KATZ
Todd Katz

BRUCE N. WILPON
Bruce N. Wilpon

VALERIE WILPON

Valerie Wilpon

AMY BETH KATZ
Amy Beth Katz

HEATHER KATZ KNOPF

~~~
Heather Katz Knopf

HOWARD KATZ
Howard Katz

N~
Natalie Katz O'Brien

TODD KATZ

BRUCE N. WILPON
_~~

_~

_ _ "V'" _ _

Bruce N. Wilpon

'-_"_"'_"_"_"~d

VALERIE WILPON

Valerie Wilpon

AMY BETH KATZ
Amy Beth Katz

HEATHER KATZ KNOPF

Heather Katz Knopf

NATALIE KATZ O'BRIEN

Natalie Katz O'Brien

TODD KATZ
Todd Katz

BRUCE N. WILPON
Bruce N. Wilpon

VALERIE WILPON

Valerie Wilpon

AMY BETH KATZ

HEATHER KATZ KNOPF

Heather Katz Knopf

HOWARD KATZ
--~------

Howard Katz

NATALIE KATZ O'BRIEN
Natalie Katz O'Brien

BRUCE N. WILPON
Bruce N, Wilpon

VALERIE WILPON

Valerie Wilpon

AMY BETH KATZ
Amy Beth Katz

HEATHER KATZ KNOPF

Heather Katz Knopf

HOWARD KATZ

Howard Katz

NATALIE KATZ O'BRIEN

Natalie Katz O'Brien

TODD KATZ

Todd Katz

JESSICA WILPON KAMEL

~~
RODIN WILPON WACHTLER
Robin Wilpon Wachtler

PHILIP WACHTLER
Philip Wachtler

SCOTT WILPON
Scott Wilpon

RUTH FRIEDMAN
Ruth Friedman

PHYLLIS REDELL OSTERMAN
Phyllis Rebell Osterman

DANIEL WILPON

Daniel Wilpon

JESSICA WILPON KAMEL

Jessica Wilpon Kamel

SCOTT WILPON

Scott Wilpon

RUTH FRIEDMAN
Ruth Friedman

PHYLLIS REB ELL OSTERMAN

Phyllis Rebell Osterman

DANIEL WILPON

Daniel Wilpon

JESSICA WILPON KAMEL
Jessica Wilpon Kamel

ROBIN WILPON WACHTLER
Robin Wilpon Wachtler

PHILIP WACHTLER
Philip Wachtler

RUTH FRIEDMAN

Ruth Friedman

PHYLLIS REBELL OSTERMAN
Phyllis Rebell Osterman

DANIEL WILPON

Daniel Wilpon

JESSICA WILPON KAMEL
"'---""-'-'"

~--------

Jessica Wilpon Kamel

ROBIN WILPON WACHTLER
Robin Wilpon Wachtler

PHILIP WACHTLER
Philip Wachtler

SCOTT WILPON
Scott Wilpon

PHYLLIS REBELL OSTERMAN
Phyllis Rebell Osterman

DANIEL WILPON

Daniel Wilpon

JESSICA WILPON KAMEL
Jessica Wilpon Kamel

ROBIN WILPON WACHTLER
Robin Wilpon Wachtler

PHILIP WACHTLER
Philip Wachtler

SCOTT WILPON
Scott Wilpon

RUTH FRIEDMAN
Ruth Friedman

PW9LLIS REB ELL OST~AN

~ j!,Utj v,~
Phyllis Rebell Osterman

ELISE C. TEPPER

2·'kDz ('

j q?/2 tA- - ­

Elise C. Tepper

JACQUELINE G. TEPPER
Jacqueline G. Tepper

EDWARD M. TEPPER
--------------"" -­
Edward M. Tepper

DEVYA SCHREIER ARTHUR
Devya Schreier Arthur

STERLING ACQUISITIONS LLC

By:

Katz, Member

ELISE C. TEPPER

Elise C. Tepper

JACQUELINE G. TEPPER

6'~~~

J cquelme G. Tepper
EDWARD M. TEPPER

Edward M. Tepper

DEVY A SCHREIER ARTHUR

Devya Schreier Arthur

STERLING ACQUISITIONS LLC

By: Michael Katz, Member

ELISE C. TEPPER

Elise C. Tepper

JACQUELINE G. TEPPER
Jacqueline G. Tepper

DEVYA SCHREIER ARTHUR
Devya Schreier Arthur

STERLING ACQUISITIONS LLC
By: Michael Katz, Member

ELISE C. TEPPER

Elise C. Tepper

JACQUELINE G. TEPPER
Jacqueline O. Tepper

EDWARD M. TEPPER

Edward M. Tepper

DEVYA SCHREIER ARTHUR

~

~t~G

STERLING ACQUISITIONS LLC

By: Michael Katz, Member

ELISE C. TEPPER

Elise C. Tepper

JACQUELINE G. TEPPER
Jacqueline G. Tepper

EDWARD M. TEPPER
--<.~----

Edward M. Tepper

DEVYA SCHREIER ARTHUR
Devya Schreier Arthur

ST~NG ACQUISITIONS LLC

~< _iJ:c~ _____ ~

By: Michael Katz, Member

STERLING AMERICAN PROPERTY V L.P.
By: Sterling American Advisors V LLC, its
general partner
By: Sterling Advisors V LLC, its managing
member
By: Sterling SAP V Equity Partners
L~. its managing member

t:(~~

By: Michael Katz, Co-CEO

STE1}ING METS ASSOCIATES

UI~~

By: Michael Katz, Partner

ST~ING METS

ASSOCIATES II

~~

By: Michael Katz, Partner

METSONELLC
By:

SteZ~iates. its member
By: Michael Katz, Partner

METS PARTNERS, INC.
By: David P. Cohen,

President

STERLING AMERICAN PROPERTY V L.P.
By: Sterling American Advisors V LLC, its
general partner
By: Sterling Advisors V LLC, its managing
member
By: Sterling SAP V Equity Partners
LLC, its managing member
By: Michael Katz, Co-CEO

STERLING METS ASSOCIATES
By: Michael Katz, Partner

STERLING METS ASSOCIATES II
By: Michael Katz, Partner

METSONE LLC
By: Sterling Mets Associates, its member
--------------------------

-

-

By: Michael Katz, Partner

M0~TNERS, INC.

, t;(

~M'-:i( ---- - - - , -President ­
--By:--David P. Cohen, Executive Vice

---

CONEY ISLAND BASEBALL HOLDING
COMPANY, L.L.C.
By: FS Company, L.L.c., its managing member
By:

BROOKL YN BASEBALL COMPANY L.L.c.
By: FS Company, L.L.C., its managing member

157Jt4~

By:

Michael Katz, Manager

By:

Michael Katz, Manager

BON·MICK FAMILY PARTNERS, L.P.
By:

Bo~rick,

Inc., its general partner

1IIt,~

By: Michael Katz, Vice President

CHARLES 15 ASSOCIATES
By: Charles 15 LLC, a general partner
By: C~~~5 LLC, its manager
By: Michael Katz, Manager

CHARLES15LLC
By: Ch~~ LLC, its manager
By: Michael Katz, Manager

CHARLES STERLING LLC

N APARTMENTS LLC
,

anaging Member

~o~~ .____~-------By:

Michael Katz; Vice President

SEE 1pLDINGS I

~~f

By: Michael Katz, Partner

SEE

STER

NG BRUNSWICK CORPORATION

~
By: Michael Katz, Manager

STER)JNG EQUITIES INVESTORS

~~

By: Michael Katz, Partner

STERLW9 HERITAGE, L.L.C.

/U~
By: Michael Katz, Managing Member

STE

STE
----,-----,.+--1------..- .

, President

STE~NG

PATHOGENESIS COMPANY

-~~~~.--~ -~

By: Michael Katz, Partner
.......

STE13JtING THIRD ASSOCIATES

d4~uI1

By: Michael Katz, Partner

VALL'~~L.y.uoOR ASSOCIATES

KIMBERLY WACHTLER
IGmberly Wachtler

MINORl
By: Jeffrey Wilpon

MINOR 2

By: Jeffrey Wilpon

MICHAEL SCHREIER

Michael Schreier

STERLING PATHOGENESIS COMPANY

By: Michael Katz, Partner

STERLING THIRD ASSOCIATES

By: Michael Katz, Partner

VALLEY HARBOR ASSOCIATES

By: Saul B. Katz, Partner

MINORl

By: Jeffrey Wilpon

MINOR 2

MICHAEL SCHREIER

Michael Schreier

STERLING PATHOGENESIS COMPANY

By: Mkhael Katz, Partner

STERLING THIRD ASSOCIATES
By. Michael Katz, Partner

V ALLEY HARBOR ASSOCIATES

-

"

By: Saul B. Katz, Partner

KIMBERLY WACHTLER
Kllnberly Wachtler

MINOR J
By' Jeffrey Wilpon

MINOR 2
By: Jeffrey Wilpon

REAL TY ASSOCIATES MADOFF II

STERLING AMERICAN PROPERTY In
L.P.
By: Sterling American Advisors III LLC, a
general partner
By: Sterling Advisors III LLC, a managing
men;~r

/tti~~

By: Michael Katz, Executive Vice
President

STERLING AMERICAN PROPERTY IV
L.P.
By: Sterling American Advisors IV LLC, a
general partner
By: Sterling Advisors IV LLC, a managing
member

____j-"d-~A __~~_

By: Michael Katz, Senior Executive Vice
President

SAIJL~
Saul B. Katz. III his capacity as Guarantor
as defined herein

FRED WI PO~

il~Y as Guarantor

Fred Wilpo .
as dclincd herein

Schedule 1
Summary of Allowed Net Equity Claims Against the BLMIS Estate
April 13, 2012

~

'BON MICK FAMILY PARTNERS L P

.lKW019

iMICHAEL KAT2

$306,936.04 009932

'1KW061

•ElISE C TEPPER

$1,779,065.42 009937

W076
W

IGREGORY KAT2

W013

i1KW108
·1KW109
1KWllO

Line 2

Une1

Line 3

:

__ ..j..~ \,~LERIE

,

$380,435.00 009930

$3,104,689.36 009939

WILPON JT

11KW206

ITHE WILPON FAMILY 1997

iDESCENDANT'S TRUST

[1KW209

IDANIEl WILPON

$34,073.00 009949

iSAUL B KAT2 FAMILY TRUST
IFOUNDATION INC

jFRED WILPON FAMILYTRUST

1KW263

,MARVIN B TEPPER

lKW275

-

. THOMAS OSTERMAN 1999 TRUST

1KW276

PATRICIA THACKRAY 1999 TRUST

lKW302

RUTH FRIEDMAN

1 KW303

ELISE TEPPER AS CUSTODIAN

FOR GRANDCHILDREN

lKW305

VALERIE AND JEFFREY S WILPON

FOUNDATION

DAN KNOPF

HEATHER KNOPF JT TEN
TR

2-KW309

I

$282,659.14 ,009910
$4,875,617.50 009913

& MICHAEL KAT2

iDAYLE H

C/O STERLING EQUITIES

I

$220,000.00 1009909

iRICHARD A WILPON AS CUSTODIAN

11KW242
1KW260

I

$48,1

,
,

MICHAEL KATZ AS CUSTODIAN

1KW248

1

$178,937.89 009947

MICHAEL KAT2 AS CUSTODIAN

HOWARD KAT2
'TODD KAT2

Claim
Number

$32,040.00 009928

----_.

DAYLE KAT2

iJEFFREY S WILPON

Net Equity

$617,000.00 1009916
$678,485.79 009920

I

$440,800.00 009921
$15,720.00 009923
$21,220.00 009924
$72,444.27 009902

ilKW313

STERLING THIRTY VENTURE LLC

11KW319

THE DEBRA

$70,050.00 009905
C/O STERLING EQUITIES

THETEPPER FAMILY FOUNDATION

ilKW320

$144,365.50 009903

11KW321

& RICHARD A WILPON
THE PHYLLIS & THOMAS OSTERMAN
THE RUTH AND ARTHUR FRIEDMAN

$8,068,675.34 009897

-~--------

$30,895.00 1009894

FAMILY FOUNDATION

ilKW330

$198,000.00 009898

FAMILY FOUNDATION

lKW346
lKW367

ROBIN WACHTLER

$92,500.00 ~
$65,000.00

FS COMPANY LLC

1 KW374

$18,550.00 009887

ROBBINSVILLE PARK LLC

lKW347

FOUNDATION

METS IILLC

$239,000.00 009893
$5,627,711.66 009886

& PHILIP WACHTLER JT/WROS

$667,000.00 009883
$3,556,888.64 009881

1KW384

1 THOMAS OSTERMAN
L

AND JILL PUPKE TIC

1KW389

•SCOTT WILPON 2000 TRUST

RICHARD WILPON TRUSTEE

$257,818.37 009878

11KW390

:JESSICA WILPON 2000 TRUST

IRICHARD _~ILPON TRUSTEE

$245,711.87 009877

11KW391

!KATZ 2002 DESCENDANTS TRUST

i

$136,

--.~~.------'-.----

I

f--­

$70,500.00 009876

i1KW396

DEYVAARTHUR

1KW402

STERLING 10 LLC

STERLING EQUITIES

1KW403

RICHARD A WILPON

ANITA M TAPPYT.I.C

1KW413

CHARLES STERLING SUB LLC

(PRIMARY)

$10,957,335.92 009871

1KW414

CHARLES STERLING SUB LLC

(INTEREST)

·1KW420

STERLING BRUNSWICK SEVEN LLC

$5.302,466.42 009869
<;R ?'l,d, nnn nn 009868

.. _
...

$306,000.00 009875

_­
..
i

$27,728.27 009870

,
C/O STERLING EQUITIES

HOWARD S KAT2

~

..,K':I,UK ' A KAT2

1

STERLING INTERNAL V LLC

11

WILPON 2002 DESCENDANT'S TRUST

11KW446

THE THOMAS OSTERMAN FAMILY

$18,034,620.00 1009863

STERLING ADVISORS IV LLC

11

$415,057.00 009866

C/O STERLING EQUITIES

·IKW424

1KW447
11KW455

& AMY BETH KAT2 JT/WROS

$320,000.00 009865
I

STERLING TRACING LLC

$96,572.45 009860

INATALIE ~AT2 O'BRIEN

$36,728,168.21 009859
ISTE~lING EQUITIES

IARTHUR FRIEDMAN

$24,523,164.00 009857

JACQUELINE TEPPER

lKW458

I1 KW460
11KW463
1 KW464

1 KW467
11W0141

$260,747.02 009856
__~.~BRE!'!.~_~_9'B~~.:r WROS

I

--------­

C/O STERLING EQUITIES

,

$570,000.00 009855

iBRADOO-MOOMOO LLC

!

ISTERLING VC IV LLC

IS~~.~Il~~QU ITIES ._________. ___

jSTERlING VC V LLC

'STERLING EQUITIES

ATTN: ARTHUR FRIEDMAN

STERLING EQUITIES

ATTN: ARTHUR FRIEDMAN

$1,657,361.00 009851

C/O STERLING EQUITIES

$2,960,000.00 009850
$7,316,980.00 009849

1ST PROPERTIES LLC

!lKW465
i1KW466

$4,731,932.76 009862
$462,500.00 009861

2006 GRANTOR TRUST

STERLING TWENTY FIVE LLC

lKW457

$7,153,758.31 009872

ICOlLEGE PLACE ENTERPRISES LLC
RV-RJW LLC
JEFFREY S WILPON

I

i

lCIO STERLING EQUITIES
---­ 1& VALERIE WILPON JT!WROS
.1

IATTN: ARTHUR FRIEDMAN

!

$189,252.84 009854

i
I

$1,933,625.00 009853
$11,803,944.00 009852

$1,000,000.00 009847

or.l

I

Schedule 2
Summary of Six-Year Transfers from BLMIS to Defendants in Excess of Principal
April 13, 2012
Column 1

Column 2

Column 3

Column 4

Column 5

Column 6

Total by
A"""unt

Proportionate
Share

Share - JUnC

Proportionate
BLMIS

Defendant(s)

Acct#

BLMIS
Account Name

IArthur Friedman

ARTHUR FRIEDMAl' & RlJTH fRIEDMAN JiT

~

IKW004
IKWOl4

Familv Foundation Inc.
Judv and fred Wllnon Famil • Foundation Inc
Davie Katz

~tennan
Fred Wilpon
Judith Wilpon
Debra WilDon
Richard Wilpon

Iris 1. Katz and Saul B. Katz Family Foundation, Inc.

IKWOl6
I KW020
I KW024
I KW044
I KW067
IKwon
IKW081

$
$

IES
JUDY &
ALL KATZ & DA YLE KATZ 1/1' WROS

$

IRIS KATZ & SAUL KATZ F AMIL Y FOUNDATION

College Place Enterprises LLC

lKW084

ludv and Fred WilDon Familv Foundation Tnc
Philip Wachtler
Robin Wilpon Wachtler
Bruce N. Wilpon

I KW086

IKWI18

COLLEGE PLACE ENTERPRISES PROFIT
SHARING
JUDY WILPON & fRED WILPOK FAM FDN INC
PHILIP H WACHTLER AND ROBIN WILPON
WACHTLER liT WROS
BRUCE WILPON

IKWI21

MICHAEL KATZ & SAUL B KATZ TIC

IKWI54
IKW155
IKWI56

IRIS J KATZ CIO STERLING EQUITES
JUDITH A WILPON ClO STERLING EQUlTlES
STERUNG IS(' LLC

)vIets Limited Parmership

$

0.02472%
0.02472%

16%

0.21754%

5S3,4S3

0.34013%

0.10877%
0.10877%
0.17007%
0.17007%

436845%
081237%
1.03272%
7 1950~o

$
$
$
$

FREDWILPOK
JUDITH A WILPON C/O STERLING E DIlES
RICHARD A WILPON & DEBRA WILPON 1'T
WROS

Accounts

0.04943%

22.

$

WI LPON FAMIL Y FDl" INC TIC

IKW083

80,437

0.34766170

1,

0.34766%

591.,738

O.36425~/O

$

S,491,l7S

3.37515~%

$

1011180

1.23592%

$

18,031

001108%

$

236,770

0.14550%

$

!I!I,OOO

0.06084%

$
1$

258080

lKWI92

MEl'S LIMITED PTR SPECIAL ATTN LEl' LABlTA $

24,550,000

Red Valley Partners
Dayid Katz
Saul B. Katz
)vIets Limited Parmershio

lKWI98
IKW201
IK\V238
IKW247

RED VALLEY PARTNERS
DAVID M KATZ
SAUL B KATZ - PM
METS UMlTED PTR #2 A1J',I LEN LABlTA

Ins J Katz and Saul B. Katz Family Foundation, Inc.

IKW252

IRIS AND SAUL KATZ FAMILY FOU;\IDA TION

IKW254

STERLING METS LP-FUNDING ACCT PL YRS DEF
SLRY OBL
PHYLLIS REBELL OSTERtv!Al\
SAUL B KATZ JI
STERLING BRUNSWICK CORP
STERLING HERITAGE LLC
FRED WILPOl\ FA';UL Y TRLST TR
SAUL B KATZ TR
STERLING EQUITIES
DEBRA WILPON

~Katz

Katz
Iris Katz
Judith Wilpon
Sterling 15C LtC

LP
II Ostennan
wick Cornoration
on Family Trust
atz Familv Trust
uities Associates
.loon
Edward M. Tepoer
Ehse C. Teoper
JaCQuehne G. Tepper
Sterling Thirtv Venture LLC
Sterling Thinv Venture LLC
Marvin B. Tepper
Brooklyn Baseball COffipany LLC
BAS Aircraft LLC
Fred Wilpon
Saul B. Katz
Edward M. Tepper
Saul B. Katz
Amy Beth Katz
Gregorv Katz
Michael Katz
57 lE.S. LLC
Baseball Holding Company LLC
Michael Katz
Sterling 20 LLC

I KW096

lKW269
lKW278
1KW179
lKW287
lKW298
1KW299
1KW300
lKW307
I KW308

0.00554%
0.00554%
0.03042%
0.03042%

O~15860%

0.68213%
10.64914%
1508664%
0.14318%
0.35975%
0.92335%
12.45653%

$

1,437,m

$

1,670,711

~

EDWARD TEPPER JACQUELINE TEPPER ELISE

0.88357%
1.02670%

0.06575%
0.13032%
0.00186%
0.01495%
071089"10
0.25918%
0.49162%

O.O4~

$

75600

$

363,170

2.05765%
0.12982%
0.23833%
0.20240%
0.00302%

0.223

007439%
IKW314
lKW315
IKW322
IKW323
lKW325

STERLll\G THIRTY VENTURE LLC B
STERLING THIRTY VENTURE, LLC
MARVIN B TEPPER DEFINED BENEFIT PLAN
BROOKLYN BASEBALL COMPAN)
BAS AIRCRAFT LLC

$

$

3,348,; 51
211 9
387 00
329 54
4 19

IKW329

FRED WILPON SAUL B KATZ TIC TAX ESCROW

$

970,109

0.59616%

IKW332
IKW336

EDW ARD TEPPER
SAUL B KATZ BRIAN HAHN JR TIC

$
$

206,346

60.000

0.12681%
0.03687%

IKW345

GREG KATZ AMY KATZ JT TEN MICHAEL KATZ
TIC

$

86,700

0.05328%

$
$
$
$

38!1682
29,416

0.23947%
0.01808%

'~I
lSI 013

00"""4

$

3S,4!1!1

$

59061

IKW348
IKW349
lKW354
lKW358

Sterling Equities

IKW359

Saul B. Katz
L Thomas Ostennan
"-1arvin B. Tepver

lKW363
IKW365
IKW366

Estate of Leonard Schreier

$

-

Saul B. Katz
Sterling Mets LP
Arthur Friedman
Fred Wilpon

IKW388
IKW392

Saul B. Katz Family Trust

I KW407

157 1.E.S LLC
CONEY ISLAND BASEBALL HOLDING CO LU
MICHAEL KA.TZ-SEF
STERLING 20 LLC
ERLING EQUITIES (GREENWOOD) C/O
TTHEW BERl'STEIN MS# NYC034091
L B KATZ PA WLING REFINANCINC
OSTERMAN TRACING
TEPPER TRACll'G
OF LEONARD J SCHREIER CIO SCHULTE
ZABEL KIM BAPTISTE ESO
CHULTZ SAUL B KATZ TIC
G "IETS{INSt:RA~CE FUND'
ARTHUR FRIEDMA~ ET AL TIC
FRED WILPON - APT TRACING
SAUL B KATZ FAMIL Y TRUST 2 C/O STERLING
EOUITIES

Page lof2

$

$
$

0.29808%
0.29808%
0.03687%
0.01243%
0.01243%
0.02842%

1

S

12.,301.

$

27007

0.00756%
0.01660%

S

1.63,836

016213%

$
$
$
$

3so.000

$

~m~

45..153
10.495
33,000

Schedule 2
Summary of Six-Year Transfers from BLMIS to Defendants in Excess of Principal
April 13, 2012
Column I

Oefendant(s)

IFred Wilpon Family Trust

Column 3

Column 2

BLMlS
Acct#
lKW408

Column 4

Column 5

BLI~tlS

Total by

Account Name

Account

Proportionate
Share

FRED WILPO~ FAMILY TReST 2 CIO STERLING
EOl'!TlES

$

159,778

~

Proportionate
Share - JTfflC
Account~

0.09819%

IArthur Friedman
iDavid Katz
iEstate of Leonard Schreier
ifred WilDon
Fred Wilpon Familv Trust

ISaul B. Katz Family Trust
:Vlilpon 2002 Descendant,,' Trust
·Mets Limited Partnership
Arthur Friedman
David Katz
Elise C. Tenper
Estate of Leonard Schreier
Fred WilDon
Fred \llilpon Familv Trust
IGregorv Katz
Ilris 1 Katz and Saul B. Katz Family FoundatiolL Inc.
iJeffrev Wilpon
L. Thomas Ostennan
Marvin B. Tepper
Michael Katz
Red Valley Partners
Richard WilDon
Saul B. Katz
Saul B. Katz Familv Trust
FFB Aviation LLC
Sterling American Advisors II LP
SEE Holdco LLC
Gregol)' Katz

Column 6

IKW412

DAVlD KATZ ET AL TIC

$

13,244,256

8. I 3895"lo

1KW423

METS LIMITED PARTNERSHIP SHEA STADIUM

$

9101,837

0.03988%
0.10011%
0.15627%
1.43815%
1.73197%
0.48834%
0.24335%
0.16929%
0.33207%
0.23359%
0.31172%
0.97423%
1.59523%
0.32474%

5.59333~-o

I KW427

SAUL B KA T2 ET AL TIC

$

5,690,849

3.49718%

IKW434
lKW436
lKW449
IKW453

FFB A VIA TlON LLC CiO STERLING E lJITIE~
STERL~G AMERICAN ADVISORS II LF
SEE HOLDCO LLC
GREG KATZ TR ClO STERLING EQUITIES

$
$
$
$

112.975

0.06943%

177.·US
60000
2.398

0.03687%
000147%

$

162,726,768

100.00000%

0.03487%
0.24047%
0.03973(%
0.04997%
0.38640%
0.79480%
0.02941%
0.22256%
0.07358%
0.04942%
0.16930%
0.10135%
0.04371%
0.16636%

~
o.

Page 2 of2

O.lO903,}~

ASSIGNMENT OF DEFENDANT NET EQUITY CLAIMS
The undersigned, _ _ _ _ _ (the "Assignor"), a party to the Settlement
Agreement and Release (the "Settlement Agreement") approved by the District
Court for the Southern District of New York on May _,2012, which resolved

Picard v. Katz, et al., ll-CV-03605 (JSR) and which became effective on May _
2012, for good and valuable consideration, the receipt and sufficiency of which
are hereby acknowledged, does hereby absolutely, unconditionally and
irrevocably transfer and assign, to Irving H. Picard, as trustee (the "Trustee") for
the liquidation proceedings under the Securities Investor Protection Act, 15 U.s.C.

§§ 78aaa et seq., of Bernard L. MadoffInvestment Securities LLC ("BLMIS"), all
right, title and interest in and to the Assignor's Defendant Net Equity Claim[s] (as
such term is defined in the Settlement Agreement); provided that the Trustee's
rights with respect to the Assignor's Defendant Net Equity Claims assigned
hereby are set forth in the Settlement Agreement, the terms of which are
incorporated herein by reference as if restated herein in full.

IN WITNESS WHEREOF, dated the _ day of April, 2012.
Assignor:

Trustee: