SETTLEMENT AGREEMENT AND MUTUAL RELEASE This Settlement Agreement and Mutual Release ("Agreement") is entered into by and

between Plaintiffs State of California, California Department of Corrections and Rehabilitation, Department of Personnel Administration, and Department of Mental Health (collectively, the "State"), on the one hand, and Defendant California Correctional Peace Officers Association ("CCPOA"), on the other. For purposes of this Agreement, the "State" will constitute one "Party" and CCPOA will constitute the other "Party," with both being referred to as the "Parties." WHEREAS, from 2005 to May 17, 2011, CCPOA requested, and the State provided, Union Paid Leave ("UPL") for certain of its members to conduct union business, the cost for which CCPOA agreed to reimburse the State; WHEREAS, a dispute arose between the State and CCPOA with respect to the amount of reimbursement owed by CCPOA to the State for UPL that was provided to its members; WHEREAS, on April 14, 2010, the State filed a Verified Complaint for Damages against CCPOA entitled, The State of California, California Department of Corrections and Rehabilitation,
v,

Department

of Personnel

Administration,

and

Department of Mental Health

California Correctional Peace Officers Association,

Sacramento County Superior Court Case No. 34-2010-00075552, which was amended on September 23,2010, whereby the State claims that CCPOA failed to reimburse it for the UPL it provided to CCPOA's members from July 2005 to May 17, 2011, based upon which, the State alleges causes of action for breach of express contract, breach of implied-in-fact contract, breach of the covenant of good faith and fair dealing and unjust

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enrichment (the "UPL Action"); WHEREAS, on October 25,2010, CCPOA filed a Verified Cross-Petition to Compel Arbitration and Application to Stay Further Proceedings (the "CrossPetition"), which the Court denied by order filed on January 19,2011; WHEREAS, on February 16, 2011, CCPOA appealed the order denying CCPOA's Cross-Petition to the California Court of Appeal, Third Appellate District, Case No. C067482 ("CCPOA Appeal"); WHEREAS, CCPOA maintains that the State's claims for UPL are barred in whole or in part because such claims should have been arbitrated pursuant to the provisions of the 2001-2006 Memorandum of Understanding ("2001-2006 MOU") between the State and CCPOA; WHEREAS, CCPOA has presented the State with documentation that a nwnber of invoices were either issued in error or without adequate supporting documentation; NOW, THEREFORE, for full and valuable consideration, and based upon the foregoing recitals and the terms, covenants and conditions contained herein, the Parties voluntarily agree to settle the UPL Action as follows:
1.

Consideration. CCPOA will pay the State a total of Three Million

Five Hundred Thousand Dollars ($3,500,000) (the "Settlement Amount") pursuant to the following terms: a. Initial Payment. Within seven days of the execution of this

Agreement by the Parties, CCPOA shall provide the State with a check in the amount of Seven Hundred Fifty Thousand Dollars ($750,000) (the "Initial

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Payment"). b. First Period Payments. CepOA shall pay the State the sum

of Two Hundred Fifty Thousand Dollars ($250,000) on or before January 31, 2013, and another Two Hundred Fifty Thousand Dollars ($250,000) on or before January 31,2014 ("First Period Payments").
1.

Each First Period Payment may be satisfied by

CCPOA providing to the State either (1) a check in the full amount of the First Period Payment or (2) a combination of a check and a deduction of hours from the Release Time Bank ("RTB"), as that term was defined in Section 10.13 of the 2001-2006 MOU, the sum of which is equal to the full amount of the First Period Payment. ii. Any RTB used in these payments shall be drawn

from that RTB accrued by CCPOA pursuant to the 2001-2006 MOU and not from RTB accrued under the Memorandum of Understanding that became effective on May 17,2011 ("2011 MOU").
lll.

For purposes of this Agreement, one hour of RTB

shall equal the cash amount of Fifty-Five Dollars ($55). The Parties agree that CCPOA has Eight Thousand Nine Hundred Sixty-Three (8,963) hours ofRTB that can potentially be used to satisfy the First Period Payments.
IV.

In the event that the State's accounting shows that

CCPOA does not have sufficient RTB for a particular First Period Payment, CCPOA shall provide the State with an additional check for the amount of the deficiency within seven (7) days of the notice of such

- .J -

"

deficiency from the State. c. Second Period Payments. CCPOA shall pay the State the on or before January

sum of Three Hundred Fifty Thousand Dollars ($350,000)

31, 2015, and CCPOA shall pay the State another Three Hundred Fifty Thousand Dollars ($350,000) Period Payments"), satisfied. on or before January 31 st of each year thereafter until payment of the entire Settlement Amount ("Second has been

Each Second Period Payment shall be made in the form of a check in with the

the full amount of Three Hundred Fifty Thousand Dollars ($350,000), exception CCPOA's

of the last payment, which will be in an amount sufficient to make total payments equal to the full Settlement Amount, plus any accrued

interest, as provided in Section lee), below. d. this Agreement Early Satisfaction of the Settlement Amount. shall prevent CCPOA from satisfying its obligation Nothing in

to pay the

Settlement AmOlU1tat a faster rate than provided in this Agreement. e. Interest. The Settlement Amount shall not carry interest In

unless and until there is any default in the payment schedule set forth above.

the event ofa default of any payment, interest at the rate often percent (10%) per annum, simple interest ("Agreed Interest Rate"), shall begin to accrue on that payment only from the date of the delivery to CCPOA a notice from the State declaring a default of a particular payment, and will continue to accrue until that payment has been paid in full. f. Administration Payments to DP A. The Department of Personnel

shall serve as the payee on behalf of the State of California, the

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California Department of Corrections and Rehabilitation, and the Department of Mental Health for all payments by CCPOA to the State in satisfaction of the Settlement Amount. 2. Mutual Release of Claims in the UPL Action. With the exception

of the Parties' respective obligations under the terms of this Agreement, the Parties hereby release one another, their officers, administrators, employees, attorneys and agents, from any and all claims, including attorneys' fees, costs and expenses, arising out of the UPL Action. 3. Mutual Release of Unknown Claims. With the exception of the

Parties' respective obligations under the terms of this Agreement, the Parties acknowledge and agree that the release in this Agreement applies to all claims that the Parties may have against one another arising out of the UPL Action for damages or losses, whether they are known or unknown, foreseen or unforeseen. The Parties hereby waive application of Section 1542 of the Civil Code, which provides: A general release does not extend to claims which the creditor does not know or suspect to exist in his or her favor at the time of executing the release, which if known by him or her must have materially affected his or her settlement with the debtor. The Parties understand and acknowledge that the significance and consequence of this waiver of Section 1542 of the Civil Code is that if the Parties should eventually suffer additional damages arising out of the UPL Action, they will not be permitted to make any claim for those damages. Furthermore, the Parties acknowledge that they intend these consequences even as to claims for damages that may exist as of the date of this release but which the Parties do not know exist, and which, if known, would materially affect the Parties' decisions to execute this release, regardless of whether the Parties' lack of

-5-

knowledge is the result of ignorance, oversight, error, negligence, or any other cause. 4. CCP § 664.6 Motion. The parties agree that, when fully executed

as specified below, the Agreement shall be enforceable pursuant to Code of Civil Procedure section 664.6. Upon execution of this Agreement, CCPOA shall not oppose the State's moving ex parte, or otherwise, at any point in time, in the Sacramento County Superior Court pursuant to Code of Civil Procedure section 664.6. 5. Delinquent Payments. In the event that CCPOA does not provide

the State with the full amount of each payment specified in Paragraph 1 of this Agreement when due, the State shall be entitled to seek immediate enforcement in accordance with the provisions of Code of Civil Procedure section 664.6, but only to the full extent of the delinquent payment amount plus whatever interest has accrued on that payment at the Agreed Interest Rate. 6. Attorneys' Fees for Enforcement. CCPOA will be responsible for

payment of the State's reasonable attorneys' fees and costs in seeking enforcement as provided in the preceding paragraph. 7. Retention of Court Jurisdiction and Tolling. The Parties agree that

the Sacramento County Superior Court shall retain jurisdiction over this case, and over the Parties personally, until the obligation to pay the Settlement Amount is fully satisfied. This includes the tolling of any applicable statute of limitations, rule or court order affecting timely prosecution of this action, including the California five-year dismissal statutes, Code of Civil Procedure sections 583.310-583.360. 8. Dismissal of the Appeal. Within one week of the execution of this

Agreement, CCPOA shall dismiss with prejudice the CCPOA Appeal.

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9.

Agreement Not Part of Any MOV.

The Parties acknowledge and

agree that this Agreement is a stand-alone agreement that is unconnected with the 2011 MOU, or the former 2001-2006 MOU, or any other MOV between the State and CepOA. Accordingly, this Agreement is not governed by the provisions of any MOU.

In particular, the Parties acknowledge and agree that any dispute arising out of this Agreement, including the enforcement of this Agreement, shall not be subject to arbitration. 10. No Admission of Liability. This Agreement pertains to the release

of disputed claims arising out of the UPL Action and does not constitute an admission of liability for those claims. 11. Severability. The provisions of this Agreement are severable. If

any provision of this Agreement is declared invalid or unenforceable, the ruling will not affect the validity and enforceability of any other provision of this Agreement. 12. Entire Agreement and Modification. This Agreement sets forth the

entire agreement between the Parties and fully supersedes any and all prior agreements and understandings, written or oral, between the Parties pertaining to the subject matter of the UPL Action. This Agreement may be amended or modified only by a writing signed by the Parties. 13. Waiver and Non-Compliance. Any waiver of any provision of this

Agreement shall not constitute a waiver of any other provision of this Agreement unless expressly so indicated. Failure to insist on compliance with any provision contained in this Agreement shall not be deemed a waiver of that provision. 14. Governing Law, This Agreement is made pursuant to the laws of

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the State of California, and it shall in all respects be interpreted, pursuant to those laws without giving effect to any conflicts-of-laws 15. Costs and Attorneys' Fees ofUPL Action. fees in connection

enforced and governed principles. The Parties agree to

bear their own costs and attorneys'

with the UPL Action and the

CCPOA Appeal, and their resolution pursuant to this Agreement. 16. counterparts, Counterparts. This Agreement may be executed in one or more

each of which shall have the efficacy of a second original, all of which Photographic or facsimile copies The

together shall constitute one and the same instrument. of any such signed counterparts

may be used in lieu of the original for any purpose.

Parties agree that a copy of this Agreement is binding and valid just as the signed original would be binding and valid.

Dated: _\_".....,._...:.\ C\____;____;- \-,--~

__

THE STATE OF CALIFORNIA AND DEPARTMENT OF PERSONNEL ADMINISTRATION

By: Ronald Yank, Director Department of Personnel A

Dated:

_

THE CALIFORNIA DEPARTMENT OF CORRECTIONS AND REHABILITATION

By: Matthew Cate, Secretary California Department of Corrections and Rehabilitation

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the State of California,

and it shall in all respects be interpreted, enforced and governed principles. The Parties agree to

pursuant to those laws without giving effect to any conflicts-of-laws 15. Costs and Attorneys' Fees ofUPL Action. fees in connection

bear their own costs and attorneys'

with the UPL Action and the

CCPOA Appeal, and their resolution pursuant to this Agreement. 16. counterparts, Counterparts. This Agreement may be executed in one or more

each of which shall have the efficacy of a second original, all of which Photographic or facsimile copies The

together shall constitute one and the same instrument. of any such signed counterparts

may be used in lieu of the original for any purpose.

Parties agree that a copy of this Agreement is binding and valid just as the signed original would be binding and valid.

Dated:

_

THE STATE OF CALIFORNIA AND DEPARTMENT OF PERSONNEL ADMINISTRA lION

By: Ronald Yank, Director Department of Personnel Administration

Dated: __

'+/_1_8,--1_1 L

_

THE CALIFORNIA DEPARTMENT OF CORRECTIONS AND REHABILIT A nON

7!fIaJJ1_ -LC jz_

By: Matthew Cate, Secretary California Department of Corrections and Rehabilitation

-8 -

THE DEPARTMENT OF MENTAL HEALTH

By: Candace Murch, Chief of Labor Relations, Department of Mental Health

Dated:

_

CALIFORNIA CORRECTIONAL OFFICERS ASSOCIATION

PEACE

Mike Jimenez, President California Correctional Peace Officers Assn.

Approved As To Form And Content: Dated: _

Richard H. Rahm LITTLER MENDELSON, P.C. Attorneys for Plaintiffs State of California, California Department of Corrections and Rehabilitation, Department of Personnel Administration and Department of Mental Health

Dmed:

_ Gregg McLean Adam CARROLL, BURDICK & MCDONOUGH LLP Attorneys for Defendant California Correctional Peace Officers Association

Firmwide:105279551.l

052714.1011

- 9-

Dated:

_

THE DEPARTMENT OF MENTAL HEALTH

By: Candace Murch, Chief of Labor Relations, Department of Mental Health

Dated:

_

CALIFORNIA CORRECTIONAL OFFICERS ASSOCIATION

PEACE

Mike Jimenez, President California Correctional Peace Officers Assn.

Approved As To Form And Content: Dated:

J~

21, eIJrL

Richard H. Rahm ~~ LITTLER MENDELSON, P.C. Attorneys for Plaintiffs State of California, California Department of Corrections and Rehabilitation, Department of Personnel Administration and Department of Mental Health

Dated:

_ Gregg Mel.can Adam CARROLL, BURDICK & MCDONOUGH LLP Attorneys for Defendant California Correctional Peace Officers Association

Firmwide:I05279551.l

052714.1011

-9-

Dated:

_

THE DEPARTMENT OF MENTAL HEALTH

By: Candace Murch, Chief of Labor Relations, Department of Mental Health

Dated:

_I_..-_;;_'--'--I_-_/_;}-

_

CALIFORNIA CORRECTIONAL PEACE OFFICERS ASSOCIATION

4~v~
Approved As To Form And Content: Dated: _

Mike Jimenez, President California Correctional Peace Officers Assn.

Richard H. Rahm LITTLER MENDELSON, P.C. Attorneys for Plaintiffs State of California, California Department of Corrections and Rehabilitation, Department of Personnel Administration and Department of Mental Health

Dated:

{. ZS- / z:

_ egg McLean Adam CARROLL, BURDICK & MCDONOUGH LLP Attorneys for Defendant California Correctional Peace Officers Association

Finnwide: 105279551.1

052714.1011

-9-

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