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Lumbermens-Renton-First Interstate/Settlement Agree 950 SETTLEMENT AGREEMENT AND MUTUAL RELEASE This Settlement Agreement and Mutual Release ("Agreement), effective as of March , 1995 (the "Effective Date"), is made between and among City of Big Bear Lake, Coachella Valley Joint Powers Insurance Authority, City of Indio, City of La Quinta, La Quinta Redevelopment Agency, City of Loma Linda, Loma Linda Redevelopment Agency, City of Orange, City of Palm Desert, Palm Desert Redevelopment Agency, City of Sanger, Sanger Redevelopment Agency, City of Torrance, Weld County, Colorado, and Lumbermens Mutual Casualty Company ("Lumbermen") (collectively "Public Entities"); Susan M. Renton ("Renton"); and Fast Interstate Bank of Denver, N.A. ("First Interstate") (individually a "Party" and collectively the "Parties"). WHEREAS, during 1992, Public Entities (except Lumbermen) filed complaints in the United States District Court for the Central District of California (the "Court") against Renton and/or First Interstate, and others, which actions are presently captioned: City of Big Bear Lake v. Refco Capital Corp., et al., No. CV-92-7633-RJK; Coachella Valley Joint Powers Insurance Authority v. Refco Group, Ltd., et al., No. CV-92-7630-RJK; City of Indio v. Refco Capital Corp., et al., No. CV-92-7632-RJK; City of La Quinta, et al. v. Refco Group Ltd., et al., No. CV-92-7626-RJK; City of Loma Linda, et al. v. Refco Group Ltd., et al., No. CV-93-0056-RJK; City of Orange v. Steen Ronlov, et al., No. CV-92-7627-RJK; City of Orange v. Steven D. Wymer, et al., No. CV-92-2141-SVW (GHKx); City of Palm Desert v. Refco Capital Corp., et al., No. CV-92-7631-RJK; City of Sanger, et al. v. Refco Group Ltd., et al., No. CV-92-7284- RJK; City of Torrance v. Refco. Inc.. et al., No. CV-92-7294-RTK; Francis M. Loustalet, et al. v. Refco. Inc.. et al., No. CV-92-7628-RJK; and Palm Desert Redevelopment Agency v. Refco Capital Corp., et al., No. CV-93-0057-RJK (collectively the "Actions"); WHEREREAS, in the Actions, Public Entities (except Lumbermens) have asserted claims against Renton, a former officer and employee of First Interstate, and/or First Interstate, and others arising out of and relating to the Parties' former relationships with Steven D. Wymer, Denman & Company, Capital Asset Management Corporation, Institutional Treasury Management, Inc., and SDW Asset Management Corporation; WHEREAS, Renton and First Interstate deny all material allegations of the claims asserted against them and maintain that their actions were at all times completely lawful and proper and deny any liability whatsoever to Public Entities; and WHEREAS, to resolve fully and finally the differences between the Parties with respect to the matters described in this Agreement, in a manner that will avoid the considerable burden and expense of further litigation, and without prejudice to any and all rights of the Parties relating to matters not addressed in the Agreement; -2- NOW, THEREFORE, in consideration of the foregoing and the terms and conditions set forth below, it is agreed by and between the Parties as follows: 1. Payment. In consideration of the agreement by Public Entities to perform the obligations required of them hereunder, Renton and First Interstate agree to pay the sum of five million four hundred thousand dollars ($5,400,000) to Public Entities. a. Payment shall be made within seven business days of receipt by Public Entities of a Waiver Notice (as described and defined in Section 3 below), or within seven business days of receipt by Renton and First Interstate of a copy of the Good Faith Settlement Order (as described and defined in Section 3 below), whichever applies. The Parties agree and acknowledge that, as set forth in Section 3, the obligation of Renton and First Interstate to deliver the payment is expressly contingent upon either Public Entities' receiving a Waiver Notice or the Court's entering a Good Faith Settlement Order. b. Payment shall be delivered via wire transfer pursuant to written instructions provided by Public Entities (stating the amounts to be delivered to each Public Entity, all of which collectively shall not exceed $5,400,000, and the wire transfer instructions for each Public Entity) and received by First Interstate and Renton two business days prior to the date of payment. Public Entities agree and acknowledge that timely delivery of payment to each Public Entity in conformity with the written -3- instructions shall constitute full compliance by Renton and First Interstate with their obligations under this Section. 2. Specific Releases and Covenants. a. Public Entities, for themselves and their respective present and former public officials, elected representatives, employees, agents, attorneys, successors, and assigns hereby forever release, remise, acquit, and discharge Renton, First Interstate and all of its past and present parent corporations (including but not limited to First Interstate Bancorp), subsidiaries, affiliates, wholly -owned corporations, successors, assigns, principals, and predecessors thereto, and all past and present officers, shareholders, agents, employees, directors, representatives, heirs, executors, administrators, personal representatives, or attorneys of any of these persons or entities, from any and all claims, rights, demands, losses, damages, costs, liabilities, obligations, actions, and causes of action of every kind, nature, or description, whether known or unknown, suspected or unsuspected, liquidated or unliquidated, including claims for contribution and indemnity, which Public Entities ever had, or now have, or in the future may claim to have that in any way relate to, arise from, are based upon, or are connected with, directly or indirectly, the Actions or Public Entities' investment of funds with or the conduct of Steven D. Wymer or any person or entity affiliated with him, including but not limited to Denman & Company, Institutional Treasury Management, Inc., Denman & Company of Colorado, Capital Asset Management Corporation, SDW Asset Management Corporation, and Fund Administration Services, Inc. -4- • b. Public Entities covenant that they will never again institute any of the claims released pursuant to Subsection 2.a above. In the event that any of the Public Entities breaches this covenant, Renton and/or First Interstate shall be entitled to such damages from the breaching Party as may be permitted by law, as well as attorneys' fees and litigation expenses. C. Renton and First Interstate, for themselves and their present and former respective parent corporations, subsidiaries, affiliates, wholly -owned corporations, officers, shareholders, agents, employees, directors, attorneys, representatives, heirs, executors, administrators, personal representatives, successors, assigns, principals, and predecessors thereto, hereby forever release, remise, acquit, and discharge Public Entities and their respective present and former public officials, elected representatives, employees, agents, attorneys, successors, and assigns from any and all claims, demands, losses, damages, costs, liabilities, obligations, actions, and causes of action of every kind, nature, or description, whether known or unknown, suspected or unsuspected, liquidated or unliquidated, including claims for contribution and indemnity, which Renton or First Interstate ever had, or now have, or in the future may claim to have that in any way relate to, arise from, are based upon, or are connected with, directly or indirectly, the Actions or Public Entities' investment of funds with or the conduct of Steven D. Wymer or any person or entity affiliated with him, including but not limited to Denman & Company, Institutional Treasury Management, Inc., Denman & Company of Colorado, Capital Asset Management Corporation, SDW Asset -5- n Management Corporation, and Fund Administration Services, Inc. It is understood and agreed that this release shall not extend to Steven D. Wymer or any person or entity affiliated with him, including but not limited to Denman & Company, Institutional Treasury Management, Inc., Demean & Company of Colorado, Capital Asset Management Corporation, SDW Asset Management Corporation, and Fund Administration Services, Inc. d. Renton and First Interstate covenant that they will never institute any of the claims released pursuant to Subsection 2.c above. In the event that Renton or First Interstate breaches this covenant, Public Entities shall be entitled to such damages from the breaching Party as may be permitted by law, as well as attorneys' fees and litigation expenses. e. Each of the Parties hereto acknowledges that it/she is fully familiar with the provisions of Section 1542 of the California Civil Code and expressly agrees that the releases set forth above constitute a waiver and release of any right or benefits that it/she may have thereunder. California Civil Code Section 1542 states: "A general release does not extend to claims which the creditor does not know or suspect to exist in his favor at the time of executing the release, which if known by him must have materially affected his settlement with the debtor." -6- • i Each of the Parties expressly acknowledges that the intention of this Agreement is to afford the broadest general release permissible under law with respect to the matters released, and that the effect and import of this provision has been explained fully by its/her own legal counsel and that this Agreement is entered into freely and voluntarily, without duress or undue influence. 3. Good Faith Settlement. It is an essential condition of this Agreement that one of the following occur: either (i) the Court enters an Order (the "Good Faith Settlement Order") determining that this Agreement constitutes a good faith settlement under the principles set forth in Franklin v. Kavnro Corp., 884 F.2d 1222 (9th Cir. 1989), cert. denied, 498 U.S. 890 (1990), and Sections 877 and 877.6 of the California Code of Civil Procedure; or (ii) Renton and First Interstate provide written notice ("the Waiver Notice") to Public Entities of their agreement to waive the condition requiring entry of a Good Faith Settlement Order. a. The Parties hereby acknowledge that this Agreement was negotiated in good faith and that the terms of the Agreement, including but not limited to those set forth in Section 1, in the view of the Parties and their respective legal counsel, are within the reasonable range of Renton/First Interstate's proportional share of comparative liability, if any, of the damages claimed in the Actions, taking into account all information presently available and the factors set forth in Franklin v. Kaypro Corp., 884 F.2d 1222 (9th Cir. 1989), cert. denied, 498 U.S. 890 (1990), and -7- E Tech -Built. Inc. v. Woodward -Clyde Associates, 38 Cal. 3d 488, 698 P.2d 159, 213 Cal. Rptr. 256 (1985). b. Renton and First Interstate may waive the condition requiring a Good Faith Settlement Order by delivering a Waiver Notice to at least one counsel of record for each of the Public Entities (except Lumbermen). A Waiver Notice shall be effective upon receipt by at least one counsel of record for each of the Public Entities (except Lumbermen). C. Within ten days of the date on which this Agreement is fully - executed by all Parties, unless Public Entities have first received a Waiver Notice pursuant to Subparagraph 3.b above, the Parties shall jointly file a motion (or motions) with the Court seeking a Good Faith Settlement Order, and the Parties shall use their best efforts to obtain entry of such an Order by the Court. Best efforts shall include, but not be limited to, providing truthful declarations and/or other evidence supporting the good faith nature of the Agreement, including the facts acknowledged in Subsection 3.a above. d. If Public Entities receive a Waiver Notice, or the Court enters a Good Faith Settlement Order, this Agreement shall become final and binding on the Parties. In that event: (1) Within seven days of receipt of the Waiver Notice by Public Entities or receipt of the Good Faith Settlement Order by Renton and First ZZ 1i E Interstate, the Parties shall jointly file a motion to dismiss the claims asserted in the Actions against Renton and First Interstate with prejudice and without costs; and (2) Renton and First Interstate shall make the payment described in Section 1 above in the manner and within the time period set out in that Section. e. If Public Entities do not receive a Waiver Notice and the Court does not enter a Good Faith Settlement Order, this Agreement shall become null and void in its entirety except for the provisions of Sections 4 and 7 below, which shall remain in force. f. If Public Entities receive a Waiver Notice and the Agreement becomes final and binding as set forth in Subsection 3.d above, any Party or Parties subsequently may file a motion with the Court seeking a Good Faith Settlement Order. In that event, the other Parties shall use their best efforts, as defined in Subsection 3.c above, to support the motion and obtain entry of such an Order by the Court. 4. No Use As Evidence. This Agreement shall be deemed to fall within the protection afforded compromises and offers to compromise by Rule 408 of the Federal Rules of Evidence and parallel state law provisions. The existence of this Agreement, the terms thereof, and any acts or omissions related thereto, shall not be used by way of discovery, evidence, offer of proof, or otherwise except (i) in any action to enforce or defend the terms of the Agreement or involving insurance coverage -9- relating to the Agreement; (ii) to make sworn statements as to the fact of the settlement and releases provided herein; (iii) to pursue entry by the Court of the Good Faith Settlement Order; or (iv) to defend against a claim for contribution or indemnification asserted against a Party or Parties. 5. Representations and Warranties. a. Public Entities represent and warrant that, as of the Effective Date, none of them has assigned, conveyed, or otherwise transferred to any person or entity any claim or right of action of any kind against Renton, First Interstate, or other persons or entities released pursuant to Subsection 2.a of this Agreement, except as expressly noted in this Subsection. The City of Big Bear Lake has entered into an agreement with Lumbermens providing for a sharing of certain expenses and recoveries in connection with the activities of Steven D. Wymer. By execution of this Agreement, Lumbermens agrees to be, and is, bound by the terms hereof. b. Each Party represents and warrants that it/she has full legal authority to execute this Agreement and to bind itself/herself to the Agreement by execution thereof, that each Party has obtained all necessary legal approvals to enter into this Agreement, and that the execution and delivery of this Agreement will not violate any agreement, court order, order of any governmental or regulatory entity, or any law or regulation. Each Party (except Renton) shall, concurrently with its execution of this Agreement, submit to the other Parties a resolution or other satisfactory -10- documentation indicating that the signatory for that Party is vested with authority to bind the Party for purposes of this Agreement. 6. Continuation of Agreement. This Agreement is binding upon and shall inure to the benefit of Public Entities, Renton, First Interstate, and their respective successors and assigns. 7. No Admission. By entering into this Agreement, the Parties do not intend to make, nor shall they be deemed to have made, any admission of any kind. The Parties agree that they are entering into this Agreement for the purposes of settling certain disputes between them and to avoid the considerable burden and expense of further litigation with respect to those disputes. This Agreement is the product of informed negotiations and compromises of previously -stated legal positions. Except as specifically set forth in this Agreement, each Party reserves all rights, claims, and defenses it had at the time of the execution of the Agreement. Neither this Agreement, nor any acts or omissions related thereto, shall constitute an admission of liability of any kind. 8. Effectuation of Agreement. Each Party agrees that, without additional consideration, it/she will execute or cause to be executed any other documents, and/or take or cause to be taken any other actions, as may be necessary to effect the implementation of the provisions of this Agreement, including but not limited - 11 - to the motions for Good Faith Settlement Order and dismissal referred to in Subsections 3.c, 3.d.(1), and If above. 9. Applicable Law. This Agreement shall be governed by the laws of the State of California. 10. Authorship. This Agreement reflects the joint drafting efforts of the Parties in consultation with their respective legal counsel. In the event of any dispute, disagreement, or controversy regarding the Agreement, the Parties shall be considered joint authors and no provision shall be interpreted against any Party because of putative authorship. The Parties agree that the canon of contract interpretation set forth in Section 1654 of the California Civil Code shall not be applied in the construction or application of this Agreement. 11. Entire Agreement. This Agreement constitutes the entire Agreement between the Parties regarding the matters addressed herein. Except as explicitly set forth in this Agreement, there are no representations, warranties, or inducements whether oral, written, express, or implied that in any way affect or condition the validity of this Agreement or any of its conditions or terms. All prior negotiations, oral or written, are merged into this Agreement. 12. Execution. This Agreement may be executed in separate counterparts, each of which shall be deemed an original, but all of which together shall constitute one and the same instrument. -12- 13. Amendment. This Agreement may not be amended or modified except by a written instrument signed by each of the Parties or their duly authorized representatives. 14. Headings. The headings of sections are designed to facilitate ready reference to subject matter and shall be disregarded when resolving any dispute concerning the meaning or interpretation of any language contained in this Agreement. IN WITNESS WHEREOF, the Parties or their duly authorized representatives have executed this Agreement. By: Its: By: Its: CITY OF BIG BEAR LAKE COACHELLA VALLEY JOINT POWERS INSURANCE AUTHORITY -13- By: Its: By: Its: By: Its: By: Its: By: Its: CITY OF INDIO CITY OF LA QUINTA LA QUINTA REDEVELOPMENT AGENCY CITY OF LOMA LINDA LOMA LINDA REDEVELOPMENT AGENCY -14- rI By: Its: By: Its: By: Its: By: Its. By: Its: CITY OF ORANGE CITY OF PALM DESERT PALM DESERT REDEVELOPMENT AGENCY CITY OF SANGER SANGER REDEVELOPMENT AGENCY -15- By: Its: By: Its: By: Its: By: Its: CITY OF TORRANCE WELD COUNTY, COLORADO LUMBERMENS MUTUAL CASUALTY COMPANY FIRST INTERSTATE BANK OF DENVER, N.A. SUSAN M.RENTON - 16 -