C. Taylor Ashworth, No. 010143
Alan A. Meda, No. 009213
Warren Stapleton, No. 018646
OSBORN MALEDON, P.A.
2929 N. Central Avenue, Suite 2100
Phoenix, Arizona 85012-2794
Ph. (602) 640-9354
Fax (602) 664-2064
Email bkecf@omlaw.com
Attorneys for Chapter 11 Trustee
IN THE UNITED STATES BANKRUPTCY COURT
FOR THE DISTRICT OF ARIZONA
________________________________________________________________________________
In re: | In Proceedings Under Chapter 11
STEVENS FINANCIAL GROUP, INC., a | Case No. 01-03105 ECF-RTB
Missouri corporation, |
| ORDER APPROVING GLOBAL
| COMPROMISE WITH ADVERSARY
| DEFENDANTS
Debtor. |
______________________________________|_________________________________________
This matter having come before the Court pursuant to Vern Schweigert, the
Chapter 11 Trustee's ("Trustee") Motion to Approve the Global Compromise With
Adversary Defendants (the "Motion"); the Court having reviewed the Motion, the
objections, and the responses; the Court having heard the objections and the
arguments of counsel; and the Court having considered the evidence, the Court
makes the following findings of fact and conclusions of law:
1. The Court has jurisdiction to hear the Trustee's Motion under 28 U.S.C.
paragraphs 1334 and 157.
2. In October 2001, the Trustee brought claims against Greystone Securities
Corporation ("Greystone") and First Financial Consultants, Inc ("FFC"), at
Adv. No. 01-1113. Greystone was a securities brokerage firm that sold
almost 60% of all of SFG's fixed rate investment certificates.
3. In December 2001, the Trustee brought claims against Damian Sinclair
("Sinclair"), a former owner and officer of SFG, in connection with his
operation of SFG, at Adv. No. 01-1319. The Trustee subsequently amended
that lawsuit to include Patrick Robarge ("Robarge"), an officer of SFG;
Clarence Stevens ("Stevens") an owner and officer of SFG; Colonial Trust
Company ("Colonial") the company that monitored SFG's collateral; First
Financial Trust Company ("FFTC"), the company that guaranteed the fixed
rate investment certificates; Harnden & Hamilton ("H&H") SFG's accountants;
Sinclair Management Services ("SiMS") a company formerly owned by Sinclair
that serviced SFG's loan portfolio; Stevens Management Services ("StMS") a
company owned by Stevens that serviced SFG's loan portfolio; P.R. Edge
Financial Corporation ("PR Edge") a company owned by Robarge that did
business with SFG; Canadian Financial Ventures, Inc. ("CFV"), a company
owned by Robarge that did business with SFG; Eagle Acceptance Corporation
("Eagle") a company once partly owned by Doug Hamilton that did business
with SFG; and Spartan Finance Company ("Spartan") a company owned by
Robarge that did business with SFG.
4. By Order dated March 14, 2002, the Court confirmed the Trustee's Amended
Reorganization Plan (the "Plan").
5. In July 2002, the Trustee filed a lawsuit against FFTC's officers and
directors, at Adv. No. 02-774. Together Robarge, Stevens, Colonial, H&H,
FFTC, SiMS, StMS, P.R. Edge, CFV, Eagle, Spartan, Greystone, FFC, and
FFTC's officers and directors are the "Adversary Defendants."
6. Certain of the Adversary Defendants and the Trustee have reached a
compromise resolving the Adversary actions and providing for certain
releases. The compromise is contained in the Global Settlement and separate
side-agreements, all of which are attached to this Order and incorporated
by reference (referred to as "Global Settlement").
7. The Motion has been sent to all of SFG's Investors (including those who
voted not to accept SFG's reorganization plan), all of SFG's creditors, all
of SFG's brokers and dealers, BancInsure, and all of the persons on the
official service list. In addition, the debtor has run advertisements in
the Springfield Leader Newspaper to give notice of the hearing and the
motion. Copies of the Motion and the settlements have also been available
on websites maintained by the debtor and the Investors' Committee. This
Court finds that the above-notice constitutes adequate notice of all
parties impacted by the Global Settlement.
8. The Court has considered the following factors in reaching its decision to
approve the Global Compromise and related settlements:
a. The probability of success in the litigation;
b. The difficulties, if any, to be encountered in the matter of collection;
c. The complexity of the litigation involved, and the expense,
inconvenience and delay necessarily attending it;
d. The paramount interest of the creditors and a proper deference to their
reasonable views in the premises.
Woodson v. Fireman's Fund Ins. (In re Woodson), 839 F.2d 610 (9th Cir. 1988).
9. After due consideration, the Court finds and concludes that the Global
Settlement satisfies the Woodson factors and is in the best interest of the
estates, creditors and parties in interest.
10. In light of these circumstances, and based upon the Motion and the other
documents on file with the Court, the arguments of counsel, and the
evidence presented IT IS HEREBY ORDERED:
a. Approving in all respects the Global Settlement as attached hereto as
Exhibit 1. On November 11, 2002, the Trustee filed, "Trustee's Motion to
Approve Global Compromise with Adversary Defendants" which included,
among others, settlement agreements specific to Clarence Stevens and to
Patrick Robarge. Both of these settlement agreements included langauge,
found at paragraph 8.1.3 of each settlement, allowing Stevens and
Robarge to terminate their respective settlement if either was
criminally indicted by the State of Missouri or the Justice Department.
This language (all of paragraph 8.1.3) has been deleted from both the
Stevens Settlement and the Robarge Settlement. A criminal indictment of
Stevens and/or Robarge shall not be grounds for either or both of them
to terminate their respective settlement agreements.
b. The claims and causes of action by SFG's creditors, or any other
interested party, including without limitation the Non-Settling
Defendants and the Non-Settling Insurer, against any Settling Defendant,
relating to or in any way connected to SFG, are forever fully released
and discharged to the extent that such parties received notice and an
opportunity to object consistent with Due Process.
c. The releases contained in the Global Settlement are hereby effectuated
upon payment as contemplated under the terms of the Global Settlement
and related agreements.
d. Pursuant to the terms of the Global Settlement the parties are directed
to take all necessary steps to expeditiously complete their performance
under the settlements.
e. The Court retains jurisdiction to interpret and enforce the provisions
of the Global Settlement and related side-agreements.
DATED this ___ day of December 2002.
___________________________________
The Honorable Redfield T. Baum,
United States Bankruptcy Court Judge
GLOBAL SETTLEMENT AGREEMENT
This Agreement (the "Agreement") sets forth the terms and conditions of a
global settlement (the "Global Settlement") between and among the "Settling
Parties" (as more fully defined below):
Recitals:
a. WHEREAS, on March 19, 2001, Stevens Financial Group, Inc., a Missouri
corporation, ("SFG" as more fully defined below) filed a voluntary
petition for relief under Chapter 11 of the United States Bankruptcy
Code under the caption of In re Stevens Financial Group, Inc., Case No.
B-01-03105-ECF-RTB (the "Bankruptcy Case"), in the United States
Bankruptcy Court for the District of Arizona, Phoenix Division (the
"Bankruptcy Court");
b. WHEREAS, Vern Schweigert, the Chapter 11 Trustee ("Trustee") was
subsequently appointed in connection with SFG's Bankruptcy Case;
c. WHEREAS, claims or potential claims ("Claims or Potential Claims") have
been or could be asserted by the Trustee, the investors of SFG, or other
Settling Claimants against the Settling Defendants and/or the Settling
Insurers (each as more fully defined below);
d. WHEREAS, the Settling Defendants have denied liability in connection
with these Claims or Potential Claims, and the Settling Insurers have
either denied liability or reserved rights to deny liability in
connection with any insurance purported to cover these Claims or
Potential Claims;
e. WHEREAS, the litigation of these Claims or Potential Claims and of
insurance issues related to those Claims or Potential Claims would
involve numerous complex issues of fact or law, the outcome of which is
uncertain;
f. WHEREAS, the Settling Parties desire to settle these disputes in the
manner set forth herein to avoid the substantial costs, risks and
uncertainties of litigation;
g. WHEREAS, this Global Settlement affords substantial benefits to SFG's
bankruptcy estate and its creditors;
h. WHEREAS, the Settling Parties recognize that the Settlement Payment
contemplated by this Global Settlement (as more fully defined below) can
only be achieved through a settlement that affords total peace to the
Settling Defendants and the Settling Insurers for any and all claims
arising out of, relating to or in any way connected with the actions or
conduct of SFG and the Settling Defendants;
i. WHEREAS, the Settling Parties recognize that achieving total peace
further requires the complete release of any and all rights or
obligations arising out of, relating to or in any way connected with any
and all insurance policies issued by the Settling Insurers to the
Settling Defendants;
j. WHEREAS, the Settling Parties further recognize that the total peace
contemplated by this Global Settlement, and the benefits which SFG's
bankruptcy estate and its creditors derive from it, depends upon
coordinating this Global Settlement with the confirmed plan of
reorganization in SFG's Bankruptcy Case;
NOW, THEREFORE, in consideration of the mutual promises contained herein,
and for other good and valuable consideration, it is hereby stipulated and
agreed by and between the undersigned Settling Parties as follows:
1. The settling claimants. The "Settling Claimants" include: (i) SFG,
together with any of its current or former predecessors, successors,
parents, members, subsidiaries, or affiliates, including but not limited to
SFG's bankrupcy estate, Freedom Financial Group, Inc., Sinclair Financial
Group, and First Financial Credit Corporation (collectively "SFG"); (ii)
Vern Schweigert as the duly appointed Chapter 11 Trustee for SFG (the
"Trustee"); (iii) Osborn Maledon, P.A., the Trustee's counsel, and (iv)
SFG's investors who voted to accept SFG's Amended Reorganization Plan (the
"Amended Plan") and are defined as class 3A (FRI Investor Claims) or 3B
(Subordinated FRI Investor Claims) under the Amended Plan, and all those
who did not file a ballot but will receive their certificate and release in
accordance with the Amended Plan (hereinafter collectively referred to as
the "Investors"). The Trustee represents and warrants that it has provided
notice of the Amended Plan and the extension of the "Effective Date" of the
Amended Plan to all FRI Investors (as defined in the Amended Plan) that
Trustee is aware of, and that Trustee has used all reasonable efforts to
identify and notify all FRI Investors of the Amended Plan and the extension
of the "Effective Date" of the Amended Plan.
2. Claims or Potential Claims. "Claims" or "Potential Claims" as used
herein shall mean any and all claims, claims for contribution, indemnity
and subrogation, rights and causes of action of any kind, whether
liquidated or unliquidated, fixed or contingent, matured or unmatured,
known or unknown, foreseen or unforeseen, now existing or that may
hereafter arise, in law or equity, seeking damages, costs, fees, expenses,
punitive or treble damages, indemnification, contribution, subrogation,
injunctive, contractual, extra-contractual, declaratory or any other
relief, brought by way of demand, complaint, cross claim, counterclaim,
third-party claim or otherwise, which arise out of, relate to or are in any
way connected with any actions or conduct associated in any way with SFG
and any of its present or former parents, subsidiaries, affiliates,
predecessors, successors, assignors, assignees, and any of their directors,
officers, employees, agents, representatives and attorneys, including,
without limitation, the claims arising in the actions described in, or
claims described in, Exhibit A hereto, and any insurance policies issued in
connection therewith.
3. Settled Claims. "Settled Claims" include:
(a) All Claims or Potential Claims that have been or may be asserted
(whether those Claims or Potential Claims are known or unknown,
existing, contingent, or inchoate, seeking damages, contribution,
indemnity, subrogation, injunctive, contractual,
extracontractual, declaratory or other relief) that in any way,
in whole or in part, arise out of, or are related in any way to,
or involve conduct in connection with SFG, and that have named,
currently name or in the future could name as a defendant,
counterdefendant or cross-defendant (i) the Settling Defendants;
(ii) the Settling Insurers and/or any insured, including but not
limited to the Settling Defendants and anyone claiming to be an
insured under any policy issued by the Settling Insurers to the
Settling Defendants.
(b) The Trustee represents and warrants that Exhibit A, attached
hereto and incorporated herein in full by reference, constitutes
a complete list of all Settled Claims of which he is currently
aware.
4. Settling Defendants. The "Settling Defendants" include:
(a) Colonial Trust Company ("Colonial") and its respective officers,
directors, shareholders, employees, agents, representatives,
assigns and successors, and all persons or entities who are or
may be found to be Insureds under Progressive Casualty Insurance
Company Trust Errors and Omissions Insurance Policy No.
0422902-05 or any predecessor policy thereto, issued to Colonial;
(b) Harnden & Hamilton, P.C. ("H&H") and its respective officers,
directors, shareholders, employees, agents, representatives,
assigns and successors, including without limitation, Douglas A.
Hamilton and Mark M. Harnden, and their respective spouses, and
all persons or entities who are or may be found to be Insureds
under Preferred National Insurance Company Accountants
Professional Liability Insurance Policy No. 42607 or any
predecessor policy thereto ("Preferred Policy"), issued to H & H;
(c) First Financial Trust Company, Inc. ("FFTC");
(d) Clarence W. Stevens ("Stevens") and Patrick Robarge ("Robarge")
and their respective spouses, assigns and successors;
(e) Stevens and Robarge are collectively referred to as the "Insider
Defendants";
(f) The Robarge Companies as that term is defined in the separate
settlement between the Trustee and Patrick Robarge attached
hereto as Exh F.
(g) The Stolar Partnership law firm and its past, present, and future
partners, associates and employees, and their respective heirs,
executors, personal representatives, administrators, successors,
and assigns (collectively the "Stolar Firm").
(h) Greystone Securities Corporation, First Financial Consultants,
Inc., and their respective officers, directors, agents,
employees, and attorneys including Alan Suiter and John Gill
(collectively "First Financial").
(i) John Sandager, Doug McKinnon, John Moore, Terry White, John
Fidel, Mike Lutgen, J.R. Dotson, C.J. Sands, P. Sheldon Wright,
and James McKinnon, and their respective spouses, assigns and
successors, collectively referred to as the "FFTC Officers &
Directors."
The Trustee represents and warrants that Exhibit B, attached hereto and
incorporated herein by reference, constitutes a complete list of all
Settling Defendants of which he is currently aware.
5. Settling and Non-Settling Insurers. The "Settling Insurers" are
Progressive Casualty Insurance Company and Preferred National Insurance
Company ("Preferred") together with any of their current or former parents,
subsidiaries, affiliates, predecessors, successors, reinsurers, and any of
their directors, officers, employees, agents, attorneys and claims
managers. The "Non-Settling Insurer" is BancInsure, Inc., which has
extended insurance coverage to FFTC's Officers and Directors under the
BancInsure, Inc., Directors' and Officers' Liability Insurance Policy No.
30-DO00101-3, or any predecessor policy thereto
6. Settling Parties. The "Settling Parties" are the (i) Settling
Claimants; (ii) Settling Defendants, and (iii) Settling Insurers.
7. Settlement Payment. No later than five business days after the
Effective Date of this Global Settlement (as defined in paragraph 15
below), the Settling Insurers and/or Settling Defendants shall pay to the
Trustee (the "Settlement Payment") and/or deliver assets of value to the
Trustee equal to the sum of $ 8,832,487.54, according to the following
schedule.
a. Progressive Casualty Insurance Company: $1,300,000.
b. Colonial Trust Company: $100,000.
c. Preferred National Insurance Company: $650,000.
d. Clarence Stevens: Assets valued at $12,000 according to the terms
of the separate settlement agreement between the Trustee and
Clarence Stevens. A copy of that Settlement Agreement is attached
hereto as Exhibit E.
e. Patrick Robarge: Assets valued at $300,000 according to the terms
of the separate settlement agreement between the Trustee and
Patrick Robarge. A copy of that Settlement Agreement is attached
hereto as Exhibit F.
f. The Stolar Firm: $100,000, plus a waiver and release of the
Stolar Firm's outstanding claims for unpaid pre-petition fees and
expenses of $232,566.64, and unpaid post-petition fees and
expenses of $74,920.90 according to the terms of the separate
settlement agreement between the Trustee and the Stolar Firm. A
copy of that Settlement Agreement is attached hereto as Exhibit
G.
g. First Financial (only): $75,000 according to the terms of the
separate settlement agreement between the Trustee and First
Financial. A copy of that Settlement Agreement is attached hereto
as Exh. H. In addition, First Financial (specifically including
Greystone) releases any and all claims, including claims for
contribution, indemnity, and subrogation, against SFG's
bankruptcy estate and any of the other Settling Parties.
h. FFTC's Officers & Directors: Agree to assign all claims against
the Non-Settling Insurer, except their claims for attorneys'
fees. FFTC's Officers & Directors further agree to stipulate to a
judgment and negotiate in good faith the appropriate amount of
its liability caused by their negligence and breaches of their
responsibilities to SFG. The full agreement between the Settling
Claimants and FFTC's Officers & Directors is attached hereto as
Exhibit I (the "FFTC Settlement"). For purposes of this
settlement agreement the value of these claims are placed at
$6,000,000.
i. FFTC : The assignment of all of its claims against the
Non-Settling Insurer, except its claims for attorneys' fees. FFTC
further agrees to stipulate to a judgment as to the Trustee's
breach of guaranty claim in the amount of $68,000,000. The full
agreement between the Settling Claimants and FFTC is attached
hereto as the FFTC Settlement, Exh I.
It is expressly understood and agreed by each of the Settling Parties
that the Settlement Payment is intended to be, and shall act as, the
complete exhaustion and buy back of any and all rights or obligations
under any insurance policy, whether known or unknown, issued by the
Settling Insurers to the Settling Defendants.
8. Distribution. The Trustee shall distribute the Settlement Payment
pursuant to the terms of the Amended Plan.
9. Releases and Covenant Not to Execute With FFTC and FFTC's Officers
& Directors.
(a) This Global Settlement is designed to achieve total peace for the
Settling Claimants, Settling Defendants and the Settling
Insurers. Accordingly, in consideration of the Settlement Payment
to be made, on the Effective Date, this Global Settlement will
operate to provide complete, final and irrevocable releases
running from each of the Settling Parties to each of the other
Settling Parties (except that the Trustee shall not release FFTC
and FFTC's Officers & Directors) of any and all claims, including
claims for contribution, indemnity and subrogation, rights,
demands and obligations, including but not limited to the Settled
Claims listed on Exhibit A hereto. The releases given under this
Agreement shall be in addition to all other releases under the
Plan, and all documents or pleadings incorporated or otherwise
identified therein.
(b) Prior to the Effective Date of this Global Settlement, each of
the Settling Parties shall execute in favor of each of the
Settling Parties a General Release in a form substantially the
same as that annexed hereto as Exhibit C-1, except that the
Settling Claimants shall execute a General Release in a form
substantially the same as that annexed hereto as Exhibit C-2,
which latter form of release reflects that the Settling
Claimants' general release does not include a General Release to
FFTC or FFTC's Officers & Directors. It shall be the
responsibility of the Trustee to obtain the executed General
Releases from each of the Settling Parties. (The Trustee has
already obtained the releases of the claims from those Investors
who voted to accept the Amended Plan.)
(c) Each of the Settling Parties agrees and acknowledges that he,
she, or it may have sustained injury or loss that is presently
unknown and unsuspected, and that such injury or loss as each may
have sustained might give rise to additional claims, damages,
losses, fees, costs, or expenses in the future. Nevertheless,
having been advised by counsel, they have negotiated and agreed
upon this Global Settlement and hereby agree to expressly waive
any rights enumerated above that they may have under any
statutory or common law principles concerning the waiver of
unknown or unsuspected claims or unascertained injury or damage
(including, without limitation, any rights specified in
California Civil Code paragraph 1542 or any other similar
provision of state or federal law).
(d) In addition to the foregoing, and notwithstanding its exclusion
from the list of Settled Claims set forth on Exhibit A thereto,
it is expressly understood and agreed by the Settling Parties
that the Releases contemplated by this Global Settlement and
given in favor of the each of the Settling Parties shall include
any and all claims, including claims for contribution, indemnity,
and subrogation, causes of action, demands or obligations which
have been or could be asserted against any of the other Settling
Parties and/or their respective former, present, or future
parents, subsidiaries, affiliates, predecessors, successors,
assignors, assignees, insurers, reinsurers, claims managers,
directors, officers, partners, associates, employees, agents,
spouses, heirs, executors, personal representatives, or
administrators , whether by way of complaint, crossclaim,
counterclaim, third-party claim or otherwise.
(e) The releases contemplated above will not operate to release FFTC
or FFTC's Officers & Directors from liability to SFG, the
Trustee, or the Investors. The Trustee, FFTC, and FFTC's Officers
& Directors have agreed to settle pursuant to the terms of a
separate settlement, attached hereto as Exhibit I. Under the
terms of the FFTC Settlement, FFTC and FFTC's Officers &
Directors agree to stipulate to judgments in Adversary Case Nos.
01-1319 and 02-774.. In addition, FFTC and FFTC's Officers &
Directors have agreed to assign all of their claims, excepting
their claims for attorneys' fees, against the Non-Settling
Insurer to SFG's bankruptcy estate. In exchange the Trustee, on
behalf of the Settling Claimants, agrees to provide FFTC and
FFTC's Officers & Directors with a Covenant Not to Execute (the
"CNE") on the judgments obtained in the Bankruptcy Court.
(f) Each of the Settling Parties represents and warrants,
acknowledges and agrees that it has not assigned any claims being
released under this Agreement.
(g) The releases which are the subject of this Agreement shall
survive any discharge of any Settling Party in any bankruptcy
proceeding.
10. Withdrawals and Dismissals. Within five business days of the
Bankruptcy Court's entry of the Final Approval Order, the Settling
Claimants will withdraw and dismiss with prejudice and without costs to any
party or, if necessary, move to dismiss with prejudice and without costs to
any party, all of the Settled Claims. Thereafter the Settling Claimants
will refrain from filing any Settled Claims.
11. Stay. Upon executing this Global Settlement, the Settling Parties
will make all reasonable efforts and execute any appropriate or necessary
stipulations to effectuate a stay as to any Settling Defendant or Settling
Insurers of any pending Claim or Potential Claim, including the Settled
Claims listed on Exhibit A hereto, that would be settled by virtue of this
Global Settlement until such time as either the Effective Date of this
Global Settlement occurs, or 15 days after the occurrence of a "Termination
Date" for this Global Settlement (as defined below in paragraph 16),
whichever is earlier. This provision does not apply to the case between the
Settling Claimants and FFTC and FFTC's Officers & Directors (Adv. Nos.
01-1319 and 02-774).
12. Indemnity. The Settling Parties acknowledge and understand that
certain of SFG's investors rejected the Amended Plan (the "Other
Investors"). A list of the Other Investors, along with the amount of their
investment, is attached hereto as Exhibit D. In addition, there are other
parties, including without limitation the Non-Settling Insurer, Damian
Sinclair, Susan Sinclair, the Wolf Law Firm, Helen Davis Chaitman, and
FFTC's Officers & Directors (collectively the "Non-Settling Defendants")
that the Trustee has sued or may sue, that may bring claims, cross-claims,
contribution claims, or indemnity claims against the Settling Parties. In
light of the potential claims that could be brought against the Settling
Defendants or the Settling Insurers, SFG, the bankruptcy estate of SFG, and
Freedom Financial Group, Inc., the reorganized debtor, and any successor or
assignee of the foregoing including without limitation a future bankruptcy
estate of any of the foregoing (individually and collectively referred to
as the "Indemnitors"), each agree to indemnify the Settling Defendants and
the Settling Insurers as set forth below:
(a) The Indemnitors shall indemnify, defend and hold Settling
Defendants and Settling Insurers, and each of them, harmless for,
from, and against the following ("Indemnified Claims"): all
claims, costs, expenses, actions, suits, proceedings, losses,
damages, and liabilities of any kind whatsoever, including but
not limited to attorneys' fees and expenses, arising out of any
Claims or Potential Claims by any FRI Investor (as defined in the
Amended Plan) not included in the Settling Claimants, or any
other Claims or Potential Claim by any third-parties, including
without limitation the Non-Settling Defendants and the
Non-Settling Insurer, against Settling Defendants or Settling
Insurers or any of them arising out of any matter whatsoever
related to SFG; excluding, however, Settling Defendants and
Settling Insurers obligations under this Agreement. Indemnitors
agree to defend any action brought on the Indemnified Claims, and
to assert any claims of SFG and Trustee against any parties
bringing the Indemnified Claims (including without limitation,
preference claims). This indemnity provision shall commence on
the Effective Date and continue in full force and effect and
shall survive the performance of all of the Indemnitors' other
obligations under this Agreement. SFG and Trustee shall cause
Reorganized Debtor to ratify and affirm all obligations of SFG
and Trustee under this paragraph 13 on the first business day
following the Effective Date of the Amended Plan.
(b) If the Trustee or any Indemnitor, Investor, or Other Investor
brings or gives notice that he/she/it may bring any action,
proceeding or claim of any kind in any court or agency or before
any arbitral or other tribunal against a third-party (or
continues any existing action against a third-party), including
without limitation the Non-Settling Defendants and the
Non-Settling Insurer, that relates to or is in any way connected
with the actions or conduct of SFG, the Settling Defendants, or
the Settling Insurers and such third-party asserts any claim for
contribution, indemnity, subrogation, or any other cause of
action against any Settling Defendant or any Settling Insurer
with respect to such claim, the Indemnitors will indemnify,
defend and hold harmless such Settling Defendant or Settling
Insurer from any and all such claims and from any judgment or
liability in connection therewith, including without limitation
payment of attorneys' fees and costs. This indemnity provision
shall commence on the Effective Date and continue in full force
and effect and shall survive the performance of all of the
Indemnitors' other obligations under this Agreement.
(c) If the Indemnitors settle any claims from the Other Investors, or
from any other creditors of SFG or other individuals or entities
that may hold any Indemnified Claims, then the Indemnitors shall
make all reasonable efforts to secure releases of Settling
Defendants and Settling Insurers in connections with such
settlements.
13. Cooperation. Each of the undersigned Settling Parties hereby
agrees to cooperate in good faith with every other Settling Party to
satisfy the conditions to the Effective Date of this Global Settlement and
to effectuate this Global Settlement. Each respective Settling Party
specifically agrees not to take any action that would impede the goal of
providing total peace to each of the other respective Settling Parties. In
addition to the efforts described in paragraph 14 below for entry of the
Final Approval Order by the Bankruptcy Court, each Settling Party's
cooperation shall include, but not be limited to, assistance with respect
to obtaining requisite court orders and sharing of information reasonably
appropriate or necessary to obtaining such orders, and entry into
appropriate documentation to effectuate the Global Settlement, including,
but not limited to, the execution of the formal General Releases annexed
hereto as Exhibits C-1 and C-2, dismissal of pending lawsuits and avoidance
of the imposition of liability or additional unnecessary expense for
Settled Claims upon parties being released under this Global Settlement;
provided, however, that appropriate measures shall be taken to insure that
any privilege rights are not waived and that all such efforts and
information sharing, to the extent necessary, are governed by Federal Rule
of Evidence 408.
14. Bankruptcy Court Approval and Continued Jurisdiction.
(a) This Global Settlement shall be binding upon the undersigned
Settling Parties upon its execution, but its effectiveness is
expressly contingent upon the satisfaction of all conditions set
forth in paragraph 15 below, including entry by the by the
Bankruptcy Court of a "Final Approval Order." As used herein,
"Final Approval Order" shall mean the entry by the Bankruptcy
Court of an order approving this Global Settlement in full
pursuant to Sections 105(a), 363 and/or 1123(b)(3)(A) of the
Bankruptcy Code and Rules 9019 and 2002 of the Federal Rules of
Bankruptcy Procedure, after notice (such notice including the
final approval order) to all creditors of SFG and any other
interested parties, including without limitation the Investors'
Committee, the Non-Settling Defendants and the Non-Settling
Insurer, and any other third party any Settling Defendant
designates, and which order is no longer subject to any rights of
appeal or is finally affirmed on appeal. The Final Approval Order
shall also provide that any claims and causes of action by any
creditor of SFG or any other interested party, including without
limitation the Non-Settling Defendants and the Non-Settling
Insurer, against any Settling Defendant, relating to or in any
way connected to SFG, are forever fully released and discharged
(to the extent such release is consistent with constitutional Due
Process). The Final Approval Order shall also provide that the
Bankruptcy Court shall retain continuing jurisdiction over the
enforcement of this Global Settlement and the obligations
contained herein including without limitation, its releases and
indemnities, and over any Settled Claims that have been, or may
in the future be filed. Each Settling Party consents to the
jurisdiction of the Bankruptcy Court for these purposes and
agrees that the Bankruptcy Court has exclusive jurisdiction for
these purposes.
(b) The Settling Parties will cooperate in good faith with each other
in seeking to obtain the entry of the Final Approval Order, and
in prosecuting or defending any appeals related thereto.
15. Effective Date. The "Effective Date" of this Global Settlement
shall be the date upon which each and every one of the following conditions
is satisfied in full:
(a) Execution and delivery of the General Releases by each of the
Settling Parties as described in paragraph 10 above and in the
form annexed hereto as Exhibit C-1 or C-2.
(b) Entry by the Bankruptcy Court of the Final Approval Order
described in paragraph 14 above.
(c) Execution and filing of stipulations and/or orders of dismissal,
with prejudice and without costs to any party, of all Settled
Claims, including the Settled Claims listed on Exhibit A annexed
hereto.
(d) the "Effective Date" of, and as defined in, the Amended Plan
shall have occurred.
16. Waiver. To the extent that they are not otherwise required by law,
any or all of the conditions specified in paragraph 15 above for making
this Global Settlement effective may be waived in a writing signed by all
of the affected Settling Parties. Any decision by any of the Settling
Parties to waive any condition or to waive a condition in any particular
instance shall not be construed as an agreement to waive any other
condition or to waive a condition in any other instance.
17. Termination Date. The obligations of the Settling Parties under
this Global Settlement shall terminate in the event of: (i) a determination
by the Bankruptcy Court that the Final Approval Order will not be granted
without modification; (ii) the failure of any other condition set forth
herein to be satisfied or waived within any time period applicable thereto;
and (iii) the failure of the Effective Date to come within 180 days from
the date this Global Settlement is executed by the undersigned Settling
Parties; provided that the 180-day period may be extended to any date
mutually agreeable to the undersigned Settling Parties (the "Termination
Date"). In the event this Global Settlement is terminated as provided
above, the Settling Parties shall be restored to the same position which
they were in immediately prior to the execution of this Global Settlement,
without waiver of any rights, claims or defenses. Notwithstanding anything
herein to the contrary, the failure of one of the Settling Parties to
fulfill its obligations under this Global Settlement shall not be
attributable to any other Settling Party, shall not terminate this
Global Settlement, shall not affect the Settling Parties' respective
obligations under the Global Settlement, and shall not affect the
respective rights of the non-breaching Settling Parties under the Global
Settling, including without limitation, their contractual remedies with
respect to the enforcement of it pursuant to paragraph 29 below.
18. Notice. SFG and Trustee shall provide notice of the motion to
approve this Agreement, the proposed Final Approval Order and the date and
time for the hearing on the motion to all FRI Investors and all other
creditors of SFG, all individuals or entities with Claims or Potential
Claims against Settling Defendants, and all other interested parties
(collectively, "Creditors"), in a manner generally consistent with the
notice provided for notice of the Amended Plan, and specifically through
the following: (1) mailing a copy of the motion, the proposed Final
Approval Order, this Agreement and such hearing information to the last
known address of such Creditor; (2) posting a notice of the motion, the
proposed Final Approval Order and this Agreement and hearing information on
SFG's website; (3) publishing a notice in the Springfield News Leader; and
(4) providing any other notice required by the Bankruptcy Court. Such
notice shall constitute notice as is appropriate in the particular
circumstances, and such opportunity for a hearing as is appropriate in the
particular circumstances for all Creditors.
19. Reaffirmation by Reorganized Debtor. Trustee represents and
warrants to Settling Defendants and Settling Insurers that Reorganized
Debtor shall be subject to the terms of this Agreement, and that Trustee
shall cause Reorganized Debtor to agree to assume the obligations of SFG
under this Agreement and/or reaffirm that the obligations of SFG under this
Agreement are the obligations of Reorganized Debtor on and after the
"Effective Date" of the Amended Plan.
20. No Admission of Liability. Except as provided above with respect
to FFTC and FFTC's Officers & Directors, the entry into this Global
Settlement and the various documentation and discussions in connection with
its negotiation and execution shall not constitute an admission by any
Settling Party of liability to any other Settling Party for any purpose,
any and all such liability being expressly denied. The documents drafted
and executed in connection with this Global Settlement shall not be used as
evidence in any action or proceeding except as part of their approval or
enforcement.
21. Confidentiality. The Settling Parties will maintain as
confidential all information that is not needed to obtain the entry of the
Final Approval Order, except as may be required to be disclosed by any
applicable law.
22. Choice of Law. This Global Settlement is to be interpreted in
accordance with the law of the State of Arizona, except to the extent that
it may be governed by federal bankruptcy law.
23. Execution in Counterparts. This Global Settlement may be signed in
any number of counterparts, all of which when taken together shall
constitute one and the same agreement.
24. Amendment. This Agreement setting forth the Global Settlement is
the complete and entire agreement of the Settling Parties and may not be
modified, changed, contradicted, edited or altered in any way by any prior
or subsequent written or oral communications, unless contained in a writing
signed by all of the affected Settling Parties; provided, however, that
nothing in this Agreement shall affect the enforceability of any separate
writing executed by both Colonial and Progressive addressing, solely as
between those parties, the scope of the releases exchanged by and between
Colonial and Progressive.
25. Representations and Warranties. All representations, warranties,
promises, inducements, or statements of intention made by the Settling
Parties concerning the subject matter of the Global Settlement are embodied
in this Agreement. None of the Settling Parties shall be bound by, or
liable for, any alleged representation, warranty, inducement, or statement
of intention concerning the subject matter of the Global Settlement that is
not expressly embodied in this Agreement.
26. Construction. This Agreement is the product of informed
negotiation between the Settling Parties, involving the compromise of
disputed claims and rights. Each of the Settling Parties has participated
in the drafting of this Agreement after consulting with his, her, or its
own legal counsel, or has agreed to the terms of this Agreement after
consulting with his, her, or its own legal counsel. In the event an
ambiguity exists in any provision of this Agreement, such ambiguity is not
to be construed by any reference to any doctrine calling for any
ambiguities to be resolved against the drafter of the document or any party
hereto.
27. Incorporation of Recitals. The Recitals to this Agreement are
hereby deemed to be a substantive part of this Agreement.
28. Validity. This Agreement setting forth the Global Settlement
constitutes a valid, binding, and legally enforceable agreement among the
Settling Parties in accordance with its terms.
29. Specific Performance. The Settling Parties agree that irreparable
damage would result from any Party's breach of this Agreement, and further
agree that a non-breaching Settling Party would have no adequate remedy at
law to redress such breach. Therefore, the Settling Parties agree that, in
the event of a breach of this Agreement, specific performance and/or
injunctive relief is appropriate to remedy any such breach of this
Agreement. In the event any Settling Party is required, due to the failure
of another Settling Party to perform under this Agreement, to request an
order enforcing this Agreement from the Bankruptcy Court, then the
successful Settling Party shall be entitled to an award of reasonable
attorneys' fees and costs from the unsuccessful Settling Party.
Notwithstanding the foregoing, nothing contained in this Paragraph shall be
deemed a waiver by any non-breaching Party of any other remedies available
at law or equity to redress any other Settling Party's breach of this
Agreement.
30. Waiver of Jury Trial. Each of the Settling Parties hereby waives
all rights to a trial by jury in any action or proceeding commenced to
resolve any disputes between and among the parties hereto arising out of or
relating to the interpretation and/or enforcement of this Agreement.
31. Successors and Assigns. This Agreement shall inure to the benefit
of the Settling Parties hereto and their respective successors and assigns.
32. Authority. Except for any Bankruptcy Court approval which may be
required, each of the signatories for the undersigned Settling Parties
represents and warrants that he, she, it has full power and authority to
execute this Agreement and to bind the respective Settling Party hereto.
33. Headings. Any headings used in this Agreement are for convenience
of reference only and shall not affect the construction or interpretation
of this Agreement.
IN WITNESS WHEREOF, and intending to be legally bound hereby, the
undersigned Settling Parties and their duly authorized attorneys, have
executed this Agreement as of the ____day of ________________, 2002.
SFG and SFG's BANKRUPTCY ESTATE FREEDOM FINANCIAL GROUP, INC.
By: ________________________ By: ________________________
Its: ________________________ Its: ________________________
VERN SCHWEIGERT COLONIAL TRUST COMPANY
____________________________
Vern Schweigert By: ________________________
Its: ________________________
HARNDEN & HAMILTON FIRST FINANCIAL TRUST COMPANY
By: ________________________ By: ________________________
Its: ________________________ Its: ________________________
PROGRESSIVE CASUALTY INSURANCE COMPANY PREFERRED NATIONAL INSURANCE COMPANY
By: ________________________ By: ________________________
Its: ________________________ Its: ________________________
FIRST FINANCIAL CONSULTANTS, INC. GREYSTONE SECURITIES CORPORATION
By: ________________________ By: ________________________
Its: ________________________ Its: ________________________
THE STOLAR PARTNERSHIP COLONIAL TRUST COMPANY
By: Harvey A. Harris By: ________________________
Its: Managing Partner Its: ________________________
ALAN K. SUITER JOHN GILL
_______________________________ _______________________________
Alan K. Suiter John Gill
PATRICK ROBARGE CLARENCE STEVENS
_______________________________ _______________________________
Patrick Robarge Clarence Stevens
JOHN SANDAGER JOHN MOORE
_______________________________ _______________________________
John Sandager John Moore
JAMES McKINNON DOUG McKINNON
_______________________________ _______________________________
James McKinnon Doug McKinnon
C.J. SANDS J.R. DOTSON
_______________________________ _______________________________
C.J. Sands J.R. DOTSON
JOHN FIDEL SHELDON WRIGHT
_______________________________ _______________________________
John Fidel Sheldon Wright
MICHAEL LUTGEN, JR. TERRY WHITE
_______________________________ _______________________________
Michael Lutgen, Jr. Terry White
DAMIAN SINCLAIR SUSAN WINTERMUTE SINCLAIR
_______________________________ _______________________________
Damian Sinclair Susan Wintermute Sinclair
UNITED STATES BANKRUPTCY COURT
DISTRICT OF ARIZONA
NOTICE THAT EITHER EXHIBITS TO THIS ELECTRONICALLY FILED DOCUMENT ARE NOT
ATTACHED OR ALL PAGES OF THIS DOCUMENT ARE NOT ATTACHED
There were either one or more exhibits and/or attachments filed with this
pleading or the document filed consisted of pages too numerous for the
clerk to scan and electronically file as part of the pleading. Paper copies
of the exhibits or the entire document are maintained at the Office of the
Clerk. They may be reviewed at that office 9:00 a.m. to 4:00 p.m., Monday
to Friday, at 2929 North Central Avenue, Ninth Floor, Phoenix, Arizona, or
you may arrange to obtain copies from the filing attorney.
CLERK OF COURT