Iowa Trust vs City/Settlement Agree 930 f gv a c..
SETTLEMENT AGREEMENT, MUTUAL RELEASE
AND JOINT PROSECUTION AGREEMENT
This Settlement Agreement, Mutual Release and Joint Prosecution Agreement
("Agreement") is entered into by and between David J. Lyons, Insurance Commissioner of the
State of Iowa and Receiver for the Iowa Trust ("Iowa Trust") on behalf of the Iowa Trust, on the
one hand, and the City of La Quinta, a California municipality ("La Quinta"), on the other hand
(collectively, the "Parties").
SECTION ONE
RECITALS
1.1 This Agreement is made as a good faith compromise between the Parties for the
complete and final settlement of their claims, differences and causes of action as described in
paragraph 1.2 of this Agreement to which the Parties hereto acknowledge and agree that this
Agreement is not in any respect or for any purpose to be deemed or construed as an admission or
concession of any liability on the part of La Quinta, or any other person, firm, entity or
corporation.
1.2 On December 19, 1991, David J. Lyons was appointed receiver for the Iowa
Trust pursuant to an order of the Iowa District Court for Polk County (Exhibit A). On
February 5, 1992, Iowa Trust filed a complaint in the United States District Court for the Central
District of California entitled, David J. Lyons, Insurance Commissioner of the State of Iowa and
Receiver for the Iowa Trust vs City of La Quinta, a California Municipality Case
No. CV-92-1054-RJK. In that action, Iowa Trust alleges a securities "tracing" claim against La
Quinta. La Quinta disputes both the legal and factual basis upon which Iowa Trust asserts its
claim.
1.3 It is the Parties' desire and intention to avoid the risks and expenses attendant
upon litigation and to reach a full and final compromise and settlement of all matters, claims,
causes of action, and the like, as described herein.
1.4 It is the Parties' desire and intention that by resolving the action identified in
paragraph 1.2 of this Agreement, the Parties may each pursue those persons or entities who may
be liable to each of the Parties for actions or inactions which caused or contributed to the losses
suffered by La Quinta and the Iowa Trust and which arise out of, or relate to, La Quinta's and
the Iowa Trust's former retention of Denman & Company, Institutional Treasury Management,
Inc. and Steven D. Wymer as an investment adviser ("Victim Claims"). The Parties to this
Agreement believe that there is a mutuality of interest in a common approach and prosecution
against other persons or entities who may bear liability to the Parties and that said common
approach and prosecutions will be aided by the resolution of the action identified in paragraph 1.2
of this Agreement.
1.5 All claims resolved by this Agreement arise out of, or relate to, the activities of
the Iowa Trust. The Iowa Trust and David J. Lyons represent that David J. Lyons was
appointed by the Iowa District Court for Polk County to be receiver for the Iowa Trust and
currently possesses all the powers, duties and responsibilities of the trustees of the Iowa Trust as
well as those powers, duties and responsibilities provided receivers under Iowa law. It is the
uTc5866_113771B2588.28 2
Parties' intent that this Agreement bind Iowa Trust and the participants of the Iowa Trust to the
fullest extent permissible under the law.
SECTION TWO
TERMS OF SETTLEMENT
In consideration of the mutual covenants set forth herein, the Parties agree as follows:
2.1 Within fifteen (15) days of the date the Iowa District Court for Polk County
approves this Agreement and the terms of paragraph 2.18 of this Agreement are satisfied, La
Quinta agrees to pay Iowa Trust two million dollars ($2,000,000.00). Thereafter, the Parties
agree that Iowa Trust will be entitled to the first five hundred thousand dollars ($500,000.00) in
proceeds from any judgment, settlement or recovery ("Recovery Proceeds") obtained hereafter by
La Quinta in any action or claim asserted by La Quinta arising out of, or related to, its former
retention of Denman & Company, Institutional Treasury Management, Inc. and Steven D.
Wymer as its investment adviser, including, but not limited to, claims which may be, or already
have been, asserted by La Quinta against La Quinta's former accountants; any applicable
insurance or bond coverage; Denman & Company, Institutional Treasury Management, Inc.,
Steven D. Wymer (including forfeited assets); other former clients of Denman & Company,
Institutional Treasury Management, Inc. and Steven D. Wymer; former employees, agents,
representatives, associates, aiders and abettors or co-conspirators of Denman & Company,
Institutional Treasury Management, Inc. and Steven D. Wymer; and those persons or entities
who are named defendants and who have not been dismissed, as of the date of the execution of
this Agreement, in the action entitled, City of La Quinta and La Quinta Redevelopment Agency
uT1:5W-113771 B2588.28 3
! `,
v. Refco Group. Ltd., et al., Case No. 92-7626-RJK, specifically Refco Group, Ltd.; Refco,
Inc.; Refco Securities, Inc.; Refco Capital Corporation; Kimberly Goodman; First Interstate Bank
of Denver, N.A.; BankAmerica National Trust Company (formerly Security Pacific National
Trust Company); and Steen Ronlov (collectively "Third Party Actions"). La Quinta represents
that it has not settled with and received settlement proceeds from any of the persons or entities
identified in this paragraph.
2.2 La Quinta agrees to pursue Third Party Actions in good faith. Iowa Trust agrees
that La Quinta is not obligated to pursue any action or claim, or to continue the pursuit of any
action or claim, which, in La Quinta's judgment, does not present, considering the cost and
expense of the pursuit of the claim or action, a reasonable likelihood of adequate net recovery, or
which may place La Quinta, or its attorneys, in violation of Rules or Statutes of the Courts of the
United States or any other Court, tribunal or administrative body which possesses jurisdiction
over any claim asserted by La Quinta. Iowa Trust further agrees that nothing herein shall
obligate La Quinta to pursue or prosecute any action or claim against past or present employees,
officers or public officials of La Quinta. Iowa Trust further agrees that La Quinta shall not bear
any liability to Iowa Trust in the event the Third Party Actions do not produce sufficient
recoveries to satisfy La Quinta's obligations under this Agreement, nor shall such a circumstance
be considered, interpreted or construed as evidence of a breach or violation of this Agreement.
Iowa Trust further agrees that La Quinta shall not bear any liability to Iowa Trust for any good
faith decision made by La Quinta in connection with La Quinta's prosecution or pursuit of the
Third Party Actions. Iowa Trust further agrees that all decisions regarding the pursuit or
prosecution of the Third Party Actions are to be made by La Quinta. This Agreement only
covers actions which are brought within four (4) years from the date of the execution of this
uT1:5866_113771 B2588.28 4
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Agreement except for re -opening of forfeiture proceedings in the event Steven D. Wymer is
discovered to have owned additional assets.
2.3 Iowa Trust represents that it has retained, and is represented by, legal counsel in
connection with its Victim Claims, as well as the action identified in paragraph 1.2 of this
Agreement. La Quinta agrees that Iowa Trust's legal counsel may monitor La Quinta's
prosecution and pursuit of the Third Party Actions and consult with legal counsel for La Quinta
regarding the same. La Quinta agrees to confer with Iowa Trust's legal counsel upon request,
respond to reasonable information requests and cooperate with Iowa Trust's legal counsel's
efforts to monitor the Third Party Actions. La Quinta further agrees that Iowa Trust will be
provided, upon request, reasonable access to relevant documents concerning the prosecution and
pursuit of the Third Party Actions, specifically limited to pleadings, discovery, deposition and
trial exhibits and non -privileged expert reports. Disclosure will be made by La Quinta to Iowa
Trust of any Third Party Actions which La Quinta specifically considers but elects not to pursue
under paragraph 2.2 above.
2.4 La Quinta and Iowa Trust agree that nothing in this Agreement, or any actions
taken pursuant thereto, waives any attorney -client privilege or work product privilege with
respect to information protected by each of the Parties' own attorney -client privilege or work
product privilege. The Parties further agree that nothing in this Agreement, or any actions taken
pursuant thereto, waives any attorney -client privilege or work product privilege with respect to
the communications and information exchanged, or to be exchanged, between legal counsel for
La Quinta and legal counsel for Iowa Trust. Iowa Trust and La Quinta expressly agree that all
communications and information exchanged between legal counsel for Iowa Trust and legal
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counsel for La Quinta regarding this Agreement, its terms and conditions, and the prosecution
and pursuit of Third Party Actions and Victim Claims, are privileged and constitute attorney
work product. Notwithstanding the above provisions of this paragraph, in the event there is a
dispute between La Quinta and Iowa Trust, nothing in this paragraph will be deemed to be a
determination or waiver of any attorney -client or work product privilege or an admission that any
communication or document is or is not privileged. It is the Parties' intent and understanding
that nothing in this paragraph determines or waives any rights with respect to the existence or
non-existence of any privilege that any party may have in any subsequent dispute between
La Quinta and Iowa Trust.
2.5 Iowa Trust and La Quinta agree that La Quinta will fund the attorneys' fees
incurred from the date of execution of this Agreement in connection with the pursuit or
prosecution of La Quinta's Third Party Actions up to three hundred thousand dollars
($300,000.00). After La Quinta has incurred three hundred thousand dollars ($300,000.00) in
attorneys' fees, and has provided Iowa Trust or its legal counsel reasonable substantiation of that
incurrence, La Quinta will be entitled to be reimbursed for its subsequent attorneys' fees and all
costs directly out of any Recovery Proceeds from the Third Party Actions. Thereafter, in the
event Third Party Actions are not exhausted or resolved, La Quinta will have a continuing right
to be reimbursed for its future attorneys' fees and costs directly out of Recovery Proceeds. La
Quinta's right to be reimbursed for its attorneys' fees in excess of three hundred thousand dollars
($300,000.00), and costs, does not vest until the first five hundred thousand dollars
($500,000.00) of Recovery Proceeds from the Third Party Actions is paid to Iowa Trust.
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2.6 Iowa Trust and La Quinta agree that after Iowa Trust has received the first five
hundred thousand dollars ($500,000.00) in Recovery Proceeds and La Quinta obtains
reimbursement for its attorneys' fees and costs pursuant to paragraph 2.5 above, the Parties will
thereafter split fifty/fifty (50/50) any Recovery Proceeds received by La Quinta until such time as
Iowa Trust receives from La Quinta, in the aggregate, five million, three hundred thousand
dollars ($5,300,000.00), subject to the terms of this Agreement. The two million dollar
($2,000,000.00) initial payment and first five hundred thousand dollars ($500,000.00) in
Recovery Proceeds are included in the aggregate five million, three hundred thousand dollars
($5,300,000.00), such that once Iowa Trust receives these funds, it will be entitled only to an
additional two million, eight hundred thousand dollars ($2,800,000.00) in funds from the
Recovery Proceeds. After Iowa Trust has received an aggregate five million, three hundred
thousand dollars ($5,300,000.00), La Quinta will retain all of its Recovery Proceeds. Payments
of any Recovery Proceeds by La Quinta to Iowa Trust shall be made within thirty (30) days of
the receipt by La Quinta or its legal counsel of Recovery Proceeds. Iowa Trust agrees that it is
not entitled to any payment of funds from La Quinta other than as expressly set forth in this
Agreement.
2.7 Iowa Trust agrees to pursue its own Victim Claims in good faith until such time as
it recovers its Aggregate Recoverable Losses, as that term is defined in paragraph 2.8.
La Quinta agrees that Iowa Trust is not obligated to pursue any action or claim, or to continue
the pursuit of any action or claim, which, in Iowa Trust's judgment, does not present,
considering the cost and expense of the pursuit of the claim or action, a reasonable likelihood of
adequate net recovery, or which may place Iowa Trust, or its attorneys, in violation of Rules or
Statutes of the Courts of the United States or any other Court, tribunal or administrative body
uTc5866_113771 B2588.28 7
which possesses jurisdiction over any claim asserted by Iowa Trust. La Quinta further agrees
that nothing herein shall obligate Iowa Trust to pursue or prosecute any action or claim against
past or present employees, officers or public officials of Iowa Trust. La Quinta further agrees
that Iowa Trust shall not bear any liability to La Quinta in the event Iowa Trust's Victim Claims
do not produce sufficient recoveries to satisfy Iowa Trust's losses, nor shall such a circumstance
be considered, interpreted or construed as evidence of a breach or violation of this Agreement.
La Quinta further agrees that Iowa Trust shall not bear any liability to La Quinta for any good
faith decision made by Iowa Trust in connection with Iowa Trust's prosecution or pursuit of its
Victim Claims. La Quinta further agrees that all decisions regarding the pursuit or prosecution
of Iowa Trust's Victim Claims are to be made by Iowa Trust. This Agreement only covers
actions which are brought within four (4) years from the date of the execution of this Agreement
except for re -opening of forfeiture proceedings in the event Steven D. Wymer is discovered to
have owned additional assets.
2.8 As set forth herein, Iowa Trust will be, or already has been, pursuing its own
Victim Claims in an effort to recover its losses, including interest on its losses. Iowa Trust
represents that because pursuit of its Victim Claims is ongoing, the final losses of Iowa Trust
cannot be determined at the time of execution of this Agreement; however, Iowa Trust estimates
its total recoverable losses, including lost principal and interest, attorneys' fees and costs, will be
eighty-seven million dollars ($87,000,000.00) ("Aggregate Recoverable Losses"). Iowa Trust
acknowledges, and La Quinta represents, that La Quinta has not had the opportunity to analyze,
investigate, verify, audit or confirm any of Iowa Trust's Aggregate Recoverable Losses as
represented herein. La Quinta reserves the right to dispute, pursuant to paragraphs 7.1, 7.2 and
7.3 of this Agreement, the actual amount of Iowa Trust's Aggregate Recoverable Losses at such
u77:5866_113771 B2588.28 8
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point in time when Iowa Trust recovers eighty-seven percent (87%) of eighty-seven million
dollars ($87,000,000.00). In the event the total aggregate recovery by Iowa Trust equals or
exceeds the amount of its Aggregate Recoverable Losses, as that term is defined herein or as that
term may be defined or determined pursuant to paragraphs 7.1, 7.2 or 7.3 of this Agreement, La
Quinta's obligations under this Agreement will be deemed satisfied. Under no circumstances
shall La Quinta be entitled to a refund or rebate of any payment made to Iowa Trust pursuant to
this Agreement; however, under no circumstances shall La Quinta be obligated to make any
payment to Iowa Trust once Iowa Trust's recoveries from its Victim Claims exceed Iowa Trust's
Aggregate Recoverable Losses, as that term is defined herein or as that term may be defined or
determined pursuant to paragraphs 7.1, 7.2 and 7.3 of this Agreement. The Parties agree that,
for purposes of this Agreement, the time of recovery of any sums to be paid to Iowa Trust in
connection with the settlement or resolution of any of its Victim Claims shall be deemed to be the
time of an execution of the agreement to resolve or settle such Victim Claims, irrespective of
whether such agreements or resolutions call for payments over a period of time.
2.9 Notwithstanding anything stated in paragraph 2.8 of this Agreement, this
Agreement is subordinate to the terms and conditions of Iowa Trust's prior settlement agreements
with Bankers Trust Company of Des Moines and Polk County, Iowa, in that La Quinta's
obligations under this Agreement shall not be deemed satisfied until: (a) the effects of Iowa
Trust's recoveries from its Victim Claims on its settlement agreements with Bankers Trust
Company of Des Moines and Polk County, Iowa, can reasonably be determined in good faith by
Iowa Trust; and, (b) the terms and conditions of the settlement agreements with Bankers Trust
Company of Des Moines and Polk County, Iowa, which relate to Iowa Trust's recoveries on its
Ln7:5866_113771 B2588.28 9
Victim Claims, can reasonably be effectuated; (c) La Quinta's payment obligations under this
Agreement may be calculated incorporating the effects of the Bankers Trust of Des Moines and
Polk County, Iowa, settlement agreements upon that calculation. Neither Iowa Trust nor La
Quinta shall execute any agreement which alters the terms of this Agreement.
2.10 Iowa Trust agrees to allow La Quinta's legal counsel, as described in
paragraph 3.5 herein, to monitor Iowa Trust's prosecution and pursuit of its Victim Claims and
consult with legal counsel for Iowa Trust regarding the same. Iowa Trust agrees to confer with
La Quinta's legal counsel upon request, respond to reasonable information requests and cooperate
with La Quinta's legal counsel's efforts to monitor Iowa Trust's pursuit and prosecution of its
Victim Claims. Iowa Trust further agrees that La Quints will be provided, upon request,
reasonable access to relevant documents concerning the prosecution and pursuit of Iowa Trust's
Victim Claims, specifically limited to pleadings, discovery, deposition and trial exhibits and non -
privileged expert reports. Disclosure will be made by Iowa Trust to La Quinta of any Victim
Claims which Iowa Trust specifically considers but elects not to pursue under paragraph 2.8
above.
2.11 Iowa Trust hereby releases, discharges and acquits La Quinta, its successors and
assigns, and any parent, subsidiary or affiliated entity, employee, citizen, representative, officer,
director and shareholder, past, present or future, from any and all claims, demands, costs,
contracts, liabilities, objections, actions and causes of action of every nature, whether in law or
in equity, or known or unknown, or suspected or unsuspected, which Iowa Trust ever had or
now has, or in the future may claim to have, against La Quinta of any type, nature or description
urc5866_11377 I B2588.28 10
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which in any way arise out of, are related to, or are connected with, the claims set forth in the
Action identified in paragraph 1.2 herein.
2.12 La Quinta hereby releases, discharges and acquits Iowa Trust, its receiver, and its
successors, employees, representatives, officers and directors, past, present and future, from any
and all claims, demands, costs, contracts, liabilities, objections, actions and causes of action of
every nature, whether in law or in equity, or known or unknown, or suspected or unsuspected,
which La Quinta ever had, or now has, or in the future may claim to have, against Iowa Trust of
any type, nature or description which in any way arise out of, are related to, or are connected
with, the claims set forth in the Action identified in paragraph 1.2 herein.
2.13 With respect to the matters herein stated as the subject of release, acquittal or
discharge, Iowa Trust and La Quinta, and each of them, do hereby mutually waive and relinquish
any and all rights which any of them may have under the provisions of Section 1542 of the Civil
Code of the State of California, which Section reads as follows:
"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."
2.14 Iowa Trust and La Quinta agree to cooperate with regard to the timing of any
public announcement of this Agreement.
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2.15 Iowa Trust hereby acknowledges that this Agreement was negotiated and executed
in good faith and that the terms and conditions of the Agreement are within the reasonable range
of La Quinta's potential liability to Iowa Trust, if any, considering the facts and circumstances of
the claims asserted by Iowa Trust in the Action identified in paragraph 1.2 of this Agreement.
The Parties represent that this Agreement does not arise out of collusion, fraud or other tortious
conduct on the part of the Parties in any manner whatsoever. Iowa Trust agrees that it will
cooperate with and assist La Quinta should La Quinta seek a judicial determination regarding the
good faith nature of this Agreement. This cooperation and assistance includes, but is not limited
to, providing La Quinta with declarations and/or other evidence supporting the good faith nature
of the Agreement.
2.16 This Agreement may be used by any one or more of the Parties as a full and
complete defense to, and the Parties hereby consent that it may be used as the basis for an
injunction against, any action, suit or other proceeding based on any claim released by this
Agreement.
2.17 Within seven (7) days of the Iowa District Court for Polk County's approval of
this Agreement, the Action identified in paragraph 1.2 of this Agreement shall be dismissed in its
entirety with prejudice by Iowa Trust.
2.18 The Parties agree that at the time this Agreement is presented to the Iowa District
Court for Polk County for approval, Iowa Trust will seek a ruling from the Iowa District Court
for Polk County that this Agreement legally concludes and resolves any and all claims possessed
by either the receiver for the Iowa Trust, David J. Lyons, or any participant, or group of
Lrrc5866_113771 B2588.28 12
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participants, in the Iowa Trust against La Quinta which arise out of, relate to, or are in
connection with the claims set forth in the action identified in paragraph 1.2 of this Agreement.
In the event the Iowa District Court for Polk County does not provide such a ruling, Iowa Trust
shall attempt to obtain releases of La Quinta from each and every participant in the Iowa Trust.
Should Iowa Trust be unable to obtain a release of La Quinta from each participant in the Iowa
Trust, the provisions of this Agreement shall be rendered null and void.
2.19 The Parties agree that no term or provision in this Agreement is to be interpreted
for or against any party because that party or its legal representative drafted such term or
provision, and this Agreement and each of its terms and provisions shall be deemed to have been
jointly drafted on behalf of the Parties hereto.
2.20 Any and all notices which the Parties may desire to send to each other from time
to time shall be addressed as follows:
TO: IOWA TRUST
c/o Iowa Attorney General's Office
Attention: Scott Galenbeck
Hoover State Office Building
Des Moines, Iowa 50319
TO: CITY OF LA QUINTA
c/o Stradling, Yocca, Carlson & Rauth
Attention: John Cannon
660 Newport Center Drive, Suite 1600
Newport Beach, California 92660
MI:5866_113771 B2588.28 13
SECTION THREE
WARRANTIES AND REPRESENTATIONS
3.1 The Parties represent and warrant that no promise or inducement has been offered
or made for this Agreement except as set forth in this Agreement. This Agreement contains the
entire agreement between the Parties with respect to the matters released and the issues, claims,
defenses and causes of action asserted in the action identified in paragraph 1.2 of this Agreement,
and supersedes all prior discussions or agreements between the Parties, whether oral or written,
or both, relating to the subjects addressed in this Agreement. The Parties are not bound by any
representations or inducements which are not set forth in this Agreement. There are no separate
agreements which relate in any way to the action identified in paragraph 1.2 of this Agreement or
the matters released in this Agreement, and the Parties intend this written instrument to serve as
the exclusive embodiment and final expression of their agreement, which may not be contradicted
or supplemented by evidence of any prior or contemporaneous agreements. The Parties further
intend that this Agreement constitutes the complete and exclusive statement of its terms and that
no extrinsic evidence whatsoever may be introduced in any judicial or arbitration proceeding, if
any, involving this Agreement.
3.2 The Parties hereto represent and warrant that in executing this Agreement, they
are relying solely upon their own independent investigation, judgment, belief and knowledge and
have had the opportunity to seek the advice and recommendations of their own independent
attorneys concerning the nature, extent and duration of the terms of this Agreement and their
rights, duties and claims and the matters released. The Parties further represent and warrant that
in executing this Agreement, they have not relied upon, considered, or been influenced to any
uTc5866_113771B2588.28 14
extent whatsoever by, representations or statements made by or on behalf of any other party
hereto, or any person representing any other party hereto, except those set forth in this
Agreement. Each of the Parties represents and warrants that no other party, nor its agent,
attorney, employee, representative, independent contractor or consultant for another party, has
made any promise, representation or warranty whatsoever, whether express, implied or statutory,
which is not contained in this Agreement concerning this Agreement or the action identified in
paragraph 1.2 of this Agreement, the rights, duties and defenses asserted therein or the matters
released in this Agreement to induce the execution of this Agreement. Each of the Parties
represents and warrants that they have not executed, approved or entered into this Agreement in
reliance upon any promise, representation or warranty which is not contained in this written
Agreement but have done so solely upon their own independent investigation of any and all facts
which they in their sole and absolute discretion may deem appropriate.
3.3 The Parties warrant and represent that they will use their best efforts and good
faith in carrying out all the terms of this Agreement.
3.4 The Parties represent and warrant that they currently possess and have not
previously assigned any of the rights or claims being released hereunder.
3.5 La Quinta represents and Iowa Trust agrees and acknowledges that Stradling,
Yocca, Carlson & Rauth, La Quinta's attorneys, are retained by, and provide legal representation
to, La Quinta and do not represent, or provide legal representation to, Iowa Trust.
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3.6 Iowa Trust represents and La Quinta agrees and acknowledges that the Iowa
Attorney General's Office, Belin, Rawlings & Badal and previously Morrison & Forrester, are,
or were, retained by, and provide or provided legal representation to, Iowa Trust and do not
represent, and did not represent or provide legal representation to, La Quinta.
3.7 The Parties hereto represent and warrant that this Agreement is entered into freely
and voluntarily, without duress or undue influence, whether economic or otherwise.
3.8 The Parties hereto represent and warrant that they have carefully read and
scrutinized each and every term of this Agreement, have familiarized themselves thoroughly with
its contents and that they have signed it freely and voluntarily.
SECTION FOUR
CHANGE OF FACTS
4.1 It is understood by the Parties hereto that the facts pursuant to which this
Agreement is made may hereafter prove to be other than or different from the facts now known
by them to be true. Each of the Parties hereto expressly accepts and assumes the risk of the facts
proving to be different, and each of the Parties hereto agrees that all the terms of this Agreement
shall be in all respects effective and not subject to termination or rescission on account of any
such difference in facts.
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SECTION FIVE
EFFECT OF AGREEMENT
5.1 This Agreement shall be binding on and inure to the benefit of the Parties and
their respective representatives, assigns and successors.
SECTION SIX
6.1 The Parties hereto warrant and guarantee that each person whose signature
appears hereon has been duly authorized and has full authority to execute this Agreement on
behalf of the person, persons or entity appearing above each such signature. This Agreement is
subject to the approval of the Iowa District Court for Polk County.
6.2 This Agreement may be executed in one or more counterparts.
6.3 Each party hereto agrees to execute and deliver such further documents and
instruments as any other party hereto may reasonably request to better evidence or effectuate the
terms of this Agreement.
urc5866_113771B2588.28 17
SECTION SEVEN
CHOICE OF LAW, FORUM AND ARBITRATION
7.1 The validity, construction and performance of this Agreement shall be subject to
and controlled by the laws of the State of California. The Parties agree that this Agreement was
negotiated, executed and entered into in the State of California.
7.2 The Parties agree that if there is any dispute, difference or claim arising out of
any interpretation, construction, application or enforcement of this Agreement, its terms or
conditions, the Parties shall initially attempt to resolve such a dispute through good faith
negotiations with the goal of reaching an understanding of the Parties' mutual interests and a just
and equitable solution satisfactory to all Parties. Should the negotiations not succeed within thirty
(30) days of their commencement, then the Parties expressly agree to submit the dispute,
difference or claim to arbitration pursuant to the American Arbitration Association Rules for
Commercial Arbitration.
7.3 In the event any dispute, difference or claim is submitted to arbitration, the Parties
agree to submit said dispute, difference or claim to, and accept the jurisdiction and venue of, the
American Arbitration Association ["AAA"] in Orange County, California, and agree that any
awards or orders rendered by the AAA shall be final, conclusive and binding, and shall not be
challenged in any court or tribunal, and that absolutely no appeal shall be taken thereof. The
Parties agree that the arbitration shall be conducted by a panel of three (3) arbitrators, one to be
appointed by La Quinta and one to be appointed by Iowa Trust, within five (5) days of a Parry's
demand for arbitration, and the third to be appointed by the first two arbitrators; or, in the event
GT1:5866_113771 B2588.28 18
the two arbitrators fail to agree within five (5) days, by the AAA within ten (10) days. The
arbitrators shall be attorneys familiar with securities litigation in United States District Court.
IN WITNESS WHEREOF, this Agreement has been executed by the undersigned on the
dates below indicated.
Dated: June 1993
IOWA TRUST
David J. Lyons, Insur a Cor
State of Iowa and Rec ver for
Trust
of the
Dated: June, 1993
Scott Galenbeck, Assistant Attorney General,
Attorney for David J. Lyons, Insurance
Commissioner of the State of Iowa and Receiver
for Iowa Trust
CITY OF LA QUINTA
L
Dated: Junela, 1993 — (i., �,, -
John J. Pena, MayorVCi4 of La Quinta
Dated: JuneX 1993�
Dawn C. Honeywell, of Stra ling, Yocca,
Carlson & Rauth, Attorneys for the City of
La Quinta
uT1:5866_1 1 377 1 B2588.28 19
IN THE IOWA DISTRICT COURT FOR POLK COUNTY
CITY OF DUBUQUE, IOWA,
an Iowa Municipal Corporation,
Plaintiff,
vs.
IOWA TRUST; ELAINE GDNDAM=p
MARY MALONEY, ROBERT CARRY
and RICHARD HEIDLOFF, as
Trustees of the Iowa Trust,
Defendants.
Equity No. CE 38-22335
• rn
ORDER FOR APPOIETDLBET
OF RECZIV=
This matter comes before the Court on plaintiff City of
Dubuque's petition for appointment of a receiver for the Iowa
Trust. A hearing was held on Thursday, December,19, 1991 at which
_ arguments were heard from counsel far the original plaintiff, for
intervenor plaintiffs Scott and Clinton Counties, for the Iowa
Trust and for defendant tustee Diary Maloney. Counsel for the
state of Iaws also appeared. Although the petition for
appointment of a receiver had not been formally scheduled for an
evidentiary hearing on this data, the Court is persuaded that
exigent circumstances exist justifying the appointment of a
• receiver without further delay) that due to proceedings involving
the Trsst's iawetment adviser, assets of the Trust may ba lost or
materially impaired if prompt action is not takant and that the
appointment of a receiver will prejudice neither the parties to
EXHIBIT A
/3
this action nor other participants in the Trust who have yet to
u
intervane.
IT IS THMMFORE ORDERED as follows:
1. David J. Lyons, Insurance Commissioner of the State of
Iowa, is appointed as receiver for the Iowa Trust. The powers and
duties of the defendant trustees are suspended during the
receivership, and the receiver shall exorcise all such powers and
duties of the trustees as provided in the Indanture of Trust (or
as otherwise residing in the Board of Trustees by law), as wall as
any other powers and duties of a receiver appointed pursuant to
Iowa Code Chapter Sao.
2. This receivership is intended to be temporary and shall
continue until such time as a further evidentiary hearing can be
hold regarding whether the defendant trustees should be removed
from office. However, the court by this order does not intend to
suggest any conclusion regarding the allegations of the petition
against the trustees or that the defendant trustees have otherwise
been guilty, of any wrongful'"conduet.
7. Insofar as the receiver is a state official acting at
the behest and with the approval of the state, and insofar as none
of the parties have requested imposition of a bond, no bond shall
be required of the receiver as a condition of his service. The
receiver shall, however, sign and submit to the Court the written
form of oath attached hereto.
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EXHIBIT A
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4. The receiver shall report in writing to the court on a
monthly basis (and such other times as may be directed by the
Court) setting forth the status of the accounts of all
participants, the actions of the receiver in marshalling assets,
the expenses incurred by the receiver expected to be reimbursed by
the trust, and the status of any claims or suits brought by or
against the receiver.
S. The Court shall retain jurisdiction to address any
matters which may be brought to its attention by the receiver or
by the parties regarding, the management of the Trust during the
existence of the receivership. This Order and the powers of the
receiver shall take effect immediately upon signature by the
Court.
Dated this 19th day of December, 1991 at P.M.
M C$AEL J. eTAEIit D str et Judge
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EXHIBIT A
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�. IN THE IOWA DISTRICT' COURT FOR POLL{ COUNTY
CITY OF DUBUpUE, IOWA, )
an Iowa municipal Corporation, ) Equity No. CZ 18-22398
Plaintiff,
vs..
IOWA TRUST: LLAINE GUNDACRER,
HARY MALONEY, ROBERT CARR,
and RICHARD HEIDLOFF, as
T_astaes of the Iowa Trust,
Defendants. )
STATE OF IOWA )
) ss'.
COUNTY OF POLR )
CATS OF A?YOXNTZO AECIII7mt
I. David X..Lyons , swear to discharge the dutiew and trust
invested in as as receiver for the Iowa Trust faithfully and to
the best of my ability.
qz
Ineuranca co:issi ar of
the. Stata•
8ubsc4bod mad woof to before a& this 94.ftY ce
December,,. ]99L.• ; o
addle
NotaryPublic
MEN GEORGE
. , Wr Evsa
V
O
EXH1L•,
Aa
MUTUAL RELEASE
For good and valuable consideration, the receipt and adequacy of which is hereby
acknowledged, the undersigned parties, the City of La Quinta, California ("La Quinta"), and
Bankers Trust Company of Des Moines, Iowa ("Bankers Trust"), enter into the following mutual
release agreement:
I. La-Quinta releases, acquits and forever discharges Bankers Trust, its successors
and assigns, and any parent, subsidiary or affiliated entity, employee, representative, officer,
director and shareholder, past, present or future, from any and all claims, demands, costs,
contracts, liabilities, actions, and causes of action, of every nature, whether in law or in equity,
known or unknown, suspected or unsuspected, which La Quinta had, or now has, or in the future
may have, against Bankers Trust which arise out of, or are related to, the conduct of Steven D.
Wymer, Denman & Company, Institutional Treasury Management, Inc., Fund Administration
Services, Inc., and their employees, agents, representatives and associates.
2. Bankers Trust hereby releases, discharges and acquits La Quinta, its successors
and assigns, and any parent, subsidiary or affiliated entity, employee, citizen, representative or
officer, past, present or future, from any and all claims, demands, costs, contracts, liabilities,
objections, actions, and causes of action, of every nature, whether in law or in equity, known or
unknown, suspected or unsuspected, which Bankers Trust ever had, now has, or in the future
may claim to have, against La Quinta which arise out of, are related to, or are connected with,
the activities of Steven D. Wymer, Denman & Company, Institutional Treasury
Management, Inc., Fund Administration Services, Inc., and their former employees, agents,
representatives, and associates.
LiTi:6226 1 13771 B2588.28
3. With respect to the matters herein stated as the subject of release, acquittal or
discharge, Bankers Trust and La Quinta, and each of them, do hereby mutually waive and
relinquish any and all rights which any of them may have under the provisions of Section 1542 of
the Civil Code of the State of California, which Section reads as follows:
"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."
Dated: June_, 1993
Dated: June_, 1993
BANKERS TRUST COMPANY
OF DES MOINES, IOWA
J. Michael Earley, President and CEO of Bankers
Trust Company of Des Moines, Iowa
Roger Stetson of Belin, Harris, Lamson &
McCormick, Attorneys for Bankers Trust Company
of Des Moines, Iowa
CITY OF LA QUINTA
Dated: June, 1993 1 AWAI pa�
John J. P61aayor, itiof La Quinta
Dated: June, 1993
Dawn C. Honeywell, of St dry ling, Yocca,
Carlson & Rauth, Attorneys for the City of
La Quinta
un:6226 113771B2588.28 2