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WALLER LANSDEN DORTCH & DAVIS, LLP Blake D. Roth Ryan K. Cochran (admitted pro hac vice) 511 Union Street, Suite 2700 Nashville, Tennessee 37219 Telephone: 615.244.6380 Email: [email protected] [email protected]
Counsel for the Receiver
UNITED STATES DISTRICT COURT DISTRICT OF NEW JERSEY
SECURITIES AND EXCHANGE COMMISSION,
Plaintiff,
v. Case No. 2:17-cv-393-ES-SCM
DWAYNE EDWARDS; TODD BARKER; RECEIVER’S REQUEST FOR (I) SENIOR SOLUTIONS OF SOCIAL ENTRY OF PRELIMINARY CIRCLE, LLC; OXTON PLACE OF APPROVALS AND SCHEDULING DOUGLAS, LLC, d/b/a OXTON REAL ORDER, AND (II) MOTION FOR ESTATE OF DOUGLAS, LLC; ROME ENTRY OF ORDER APPROVING ALF, LLC; SAVANNAH ALF, LLC; PROPOSED SETTLEMENT, THE WATERFORD PLACE ALF, LLC; PROPOSED NOTICE OF MONTGOMERY ALF, LLC; SETTLEMENT, AND TO ENTER THE COLUMBUS ALF, LLC; and OPELIKA BAR ORDER AND FINAL ALF, LLC, JUDGMENT
Defendants, MOTION DAY: June 17, 2019 -and- OBJECTION DEADLINE: OXTON SENIOR LIVING, LLC; MANOR June 3, 2019 HOUSE SENIOR LIVING, LLC; SUSAN EDWARDS, a/k/a SUSAN ROGERS; SHARON NUNAMAKER, a/k/a SHARON HADDEN; and SDH DESIGN, LLC,
Relief Defendants.
Derek Pierce, as receiver (the “Receiver”), respectfully submits this motion (the
“Preliminary Approval Motion”) requesting the Court to preliminarily approve a compromise (the
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“Settlement”), memorialized in the Settlement and Release Agreement attached hereto as Exhibit
1 (the “Settlement Agreement”), between the Receiver, BOKF, N.A. (“Trustee BOKF”), U.S.
Bank, N.A. (“Trustee U.S. Bank”), and UMB Bank, N.A. (“Trustee UMB”, and together with
Trustee BOKF and Trustee U.S. Bank, collectively, the “Indenture Trustees”), Carr, Riggs &
Ingram, LLC (“CRI”), and two of its employees Wink Laney (“Laney”), and Russ Frederick
(“Frederick,” collectively with Laney and CRI, the “CRI Parties”).
The Receiver further requests, as more fully set out below, that the Court enter the
Scheduling Order attached hereto as Exhibit 2, approve the Notice attached hereto as Exhibit 3,
approve the Short Form Notice attached hereto as Exhibit 4, and following the Final Approval
Hearing (as defined below) enter the Bar Order and Judgment approving the Settlement attached hereto as Exhibit 5. The Receiver also requests that the Final Approval Hearing requested as part
of the Scheduling Order be set before an Article III United States District Court Judge having
jurisdiction over the receivership proceeding for a date at least ninety (90) days after the entry of
the Scheduling Order. In further support of the Preliminary Approval Motion, the Receiver states
the following:
SUMMARY OF REQUESTED RELIEF
1. On March 5, 2018, the Court entered its Order Granting Receiver’s Application
For Order: (A) Authorizing Receiver to Pursue Claims Against Third Parties; (B) Approving
Employment of Whiteford Taylor Preston, LLP as Special Counsel for Receiver to Pursue Claims
Against Third Parties; and (C) Approving Proposed Recovery-Distribution and Cost-Sharing
Methodology for Claims Against Third Parties (the “Claims Authorization Order”) (Dkt. No.
242).
2. As permitted by the Claims Authorization Order, the Receiver asserted claims
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against the CRI Parties. The Receiver has reached a Settlement, subject to court-approval,1 with
the CRI Parties. The Settlement provides for a payment to the Receiver of Ten Million Dollars
($10,000,000) (the “Settlement Amount”).
3. In exchange for the Settlement Amount, the CRI Parties seek total peace with
respect to all claims that have been or could be asserted against the CRI Parties and the CRI
Released Parties, and have conditioned the Settlement Agreement on the Court ordering such
relief.
4. The Receiver’s Preliminary Approval Motion seeks:
a. preliminary approval:
(i) of the Settlement;
(ii) of the Settlement Agreement;
(iii) of the Distribution Plan;2
(iv) of the professional fees and expenses of the Receiver’s general counsel, Waller, and special counsel, Whiteford Taylor;
(v) of the Bar Order and Judgment approving the Settlement and this Agreement and enjoining claims against the CRI Released Parties as provided in the Bar Order and Judgment attached hereto as Exhibit 5;
b. a finding that the form and content of the Notice and Short form Notice attached hereto as Exhibits 3 and 4, respectively, and the proposed method and manner of dissemination and publication of the same are proper, timely, and adequate to satisfy due process requirements;
1 Trustee U.S. Bank will commence a separate Trust Instruction Proceeding, pursuant to Minn. Stat. 501C.0201, et. seq. (a “TIP Proceeding”), in Ramsey County, Minnesota District Court (the “TIP Court”) seeking entry of an order (the “TIP Order”) authorizing Trustee U.S. Bank to, inter alia, consent to the Settlement and execute the Settlement Agreement. Trustee U.S. Bank’s consent to the Settlement and execution of the Settlement Agreement is subject to successfully obtaining entry by the TIP Court of the TIP Order. The Settlement itself is conditioned upon the TIP Order becoming Final before the conclusion of the Final Approval Hearing.
2 Capitalized terms not otherwise defined herein shall have the meaning given them in the Settlement Agreement attached hereto as Exhibit 1.
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c. a finding that the Indenture Trustees have met and fulfilled their respective duties to those Bondholders3 who or which currently own a Bond in connection with the proposed Settlement and that their conduct and the approval of the Settlement Agreement is prudent and consistent with the Indentures and with applicable laws;
d. a finding that the Indenture Trustees have the right and authority under the Indentures to assert and assign the Current Bondholders Claims on behalf of those Bondholders who or which currently own a Bond;
e. a finding that the Indenture Trustees have acted prudently, in good faith, with sound business judgment, and in the best interests of the respective Bondholders in assigning the Current Bondholder Claims (as defined below) to the Receiver and entering into the Settlement Agreement;
f. a finding that the Indenture Trustees and the Receiver have the authority to grant the releases provided for in the Settlement Agreement;
g. the entry of a preliminary stay and injunction against the Receiver, the Indenture Trustees, all previous, present and future Bondholders, the Claimants, all other Interested Parties, and all other non-governmental Persons from prosecuting or pursuing any Settled Claim against any of the CRI Released Parties until further order of the Court; and
h. the entry of the Scheduling Order to:
(i) provide for notice of the terms of the Settlement, including the proposed Distribution Plan, and Bar Order and Judgment,
(ii) set the deadline and the procedure for filing objections to the Settlement, the Distribution Plan, the Bar Order and Judgment, and the Receiver’s request for approval of the professional fees and expenses of its general counsel, Waller, and special counsel, Whiteford Taylor,
(iii) set the deadline for responding to any objection so filed,
(iv) set the deadline and the manner for the submission of claims by previous Bondholders for distributions from the Net Settlement Proceeds,
(v) set the date, time and location of the final approval hearing before an Article III United States District Court Judge having jurisdiction over the receivership proceeding regarding the Settlement, the Distribution Plan, the Bar Order and Judgment, and the Receiver’s request for approval of the professional fees and expenses of its general counsel, Waller, and special counsel, Whiteford Taylor (the “Final Approval Hearing”).
3 The Persons who or which currently own or previously owned a Bond are referred to collectively as the “Bondholders” and singularly as a “Bondholder.”
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RELEVANT FACTUAL BACKGROUND
5. The Claims Authorization Order gave the Receiver the power to pursue possible
claims against third parties arising out of actions and omissions relating to or in connection with
the Receivership Entities,4 including assigned claims, and provided that the Indenture Trustees had
the authority to pursue and assign claims against third parties to the Receiver to be pursued by its
general counsel and special counsel. (Dkt. No. 242, Claims Authorization Order at ¶¶ 2, 3, 8)
6. The Claims Authorization Order further provided that Whiteford Taylor and Waller
shall be compensated for their services on a contingency fee basis as provided in the Engagement
Letter, which is Exhibit 1 to the Declaration of William F. Ryan, Jr., filed in support of the
Application, without the necessity of filing a further fee application. (Dkt. No. 242, Claims
Authorization Order at ¶ 4).
7. The Borrowers at issue here, and their respective Bond Offerings are generally
described as follows:
Borrower/Offering Offering Date 1. Oxton Place of Douglas, LLC Aug. 28, 2014 2. Rome ALF, LLC Dec. 17, 2014 3. Savannah ALF, LLC Jan. 16, 2015 4. Gainesville ALF, LLC Mar. 25, 2015 5. Waterford Place ALF, LLC May 14, 2015 6. Montgomery ALF, LLC May 29, 2015
4 The Receivership Entities are: Oxton Village of Social Circle d/b/a Manor House of Social Circle, Senior Solutions of Social Circle, LLC, Oxton Senior Living, LLC, Oxton Village of Social Circle, LLC, Oxton Village Villas, LLC, Manor House Senior Living, LLC, Manor House of Social Circle LLC, Oxton Place of Montgomery d/b/a Manor House of Montgomery, Montgomery ALF, LLC, Oxton Place of Montgomery, LLC, Manor House of Montgomery, LLC, Oxton Place of Rome d/b/a Manor House of Rome, Rome ALF, LLC, Oxton Place of Rome, LLC, Manor House of Rome, LLC, Oxton of Savannah d/b/a Manor House of Savannah, Savannah ALF, LLC, Oxton Court of Savannah, LLC, Manor House of Savannah, LLC, Oxton Court at Waterford Place d/b/a Manor House of Waterford Place, Waterford Place ALF, LLC, Oxton Court at Waterford Place, LLC, Manor House at Waterford Place, LLC, Oxton Place of Columbus d/b/a Manor House of Columbus, Columbus ALF, LLC, Oxton Place of Green Island, LLC, Manor House of Columbus, LLC, Oxton Court of Opelika d/b/a Manor House Of Opelika, Opelika ALF, LLC, Oxton Court of Opelika, LLC, Manor House of Opelika, LLC, Oxton Place of Douglas d/b/a Manor House of Douglas, Oxton Place of Douglas, LLC d/b/a Oxton Real Estate of Douglas, LLC, Oxton Place of Douglas Operations, LLC, Manor House of Douglas, LLC, Oxton Place of Gainesville d/b/a Manor House of Gainesville, Gainesville ALF, LLC, Oxton Place of Gainesville, LLC, Manor House of Gainesville, LLC.
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7. Columbus ALF, LLC July 24, 2015 8. Opelika ALF, LLC Sept. 24, 2015
8. In conjunction with each separate Offering, CRI was engaged by each respective
Borrower to examine and issue an independent accountant’s report (the “Report”) on the respective
Borrower’s forecasted financial statements (the “Financial Forecasts”), that was included in the
official statement (the “Official Statement”)5 for each Offering. In addition to examining and
providing a Report with respect to each Borrower’s Financial Forecast, the CRI Parties provided
other accounting services to each Borrower, including audit, compilation and tax services (the
“Other Accounting Services”).
9. The Receiver identified claims that the Receiver believes: (i) the Borrowers have
against the CRI Parties for injuries the Receiver alleges were caused to the Borrowers with respect
to the Offerings and the CRI Parties’ Other Accounting Services (the “Receivership Borrower
Claims”); (ii) the Indenture Trustees, on behalf of those Bondholders who or which currently own
Bonds, have against the CRI Parties with respect to the Offerings and the CRI Parties’ Other
Accounting Services pursuant to the provisions of the respective indentures (the “Indentures”) by
which the Bonds were issued (the “Current Bondholder Claims”) and (iii) those Bondholders who
or which previously owned Bonds have against the CRI Parties with respect to the Offerings and
the CRI Parties’ other Accounting Services (the “Previous Bondholder Claims”). The Current
Bondholder Claims are claims of the type with respect to which the Indenture Trustees have the
right to pursue remedies and enforce rights on behalf of the Bondholders pursuant to each of the
Indentures. As authorized in the Claims Authorization Order, the Indenture Trustees assigned to
the Receiver the Current Bondholder Claims (the “Assigned Bondholder Claims,” and together
5 An “official statement” is a document prepared by, or on behalf of, a municipal issuer that provides information to investors about a specific bond being offered.
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with the Receivership Borrower Claims and Previous Bondholder Claims, the “Claims”). (Claims
Authorization Order, Dkt. No. 242 at ¶ 8).
10. On April 13, 2018, and May 3, 2018, respectively, the Receiver sent to the CRI
Parties a Demand Letter before Legal Action and a Supplement to Demand Letter before Legal
Action (together the “Demand Letter”) identifying, among other causes of action, negligence and
breach of contract claims against the CRI Parties on behalf of the Borrowers and the Bondholders
with respect to the Offerings and the CRI Parties Other Accounting Services. In the Demand
Letter, the Receiver also requested that CRI Parties engage in settlement negotiations and that, if
the Claims could not be settled through negotiation, try in good faith to resolve the Claims in
mediation before the Receiver initiated litigation (the “Dispute”).
11. In response to the Demand Letter, and in an effort to avoid spending significant
amounts of time and money litigating the complex and contentious Dispute, the Receiver and the
CRI Parties (collectively, the “Parties”) agreed to pursue a comprehensive resolution of the
Dispute through consensual, non-binding mediation (the “Mediation”) and retained Jed D.
Melnick, a panelist at JAMS in New York, New York, as the third-party mediator (the
“Mediator”).6
12. A Mediation session was held on November 8 - 9, 2018, and attended by the
Receiver, counsel for the Receiver, CRI, and counsel for the CRI Parties. Although the Parties
made progress, they were unable to resolve the Dispute during that Mediation session.
13. Following the Mediation session and after further, arm’s-length negotiations, the
Parties reached a Settlement to resolve the Dispute, which has been memorialized in the Settlement
6 Melnick has experience mediating, among others disputes, securities class actions.
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Agreement, which is contingent on court-approval.7 At its core, the Settlement provides that, in
exchange for “global peace,” CRI will pay the Receiver Ten Million Dollars ($10,000,000).
14. The principal terms of the Settlement Agreement for which the Receiver seeks
approval from this Court are as follows:
i) Settlement Amount: the CRI Parties will pay the Receiver Ten Million Dollars
($10,000,000) within five (5) business days of the Settlement Effective Date, which
amount will be deposited with the Receiver, and the Net Settlement Proceeds will,
in turn, be distributed in accordance with the Distribution Plan.
ii) Release of Claims By the CRI Releasing Parties: As of the Settlement Effective
Date, as more fully described in the Settlement Agreement, the CRI Releasing
Parties will fully release the Settled Claims against the Receiver Released Parties
and the Indenture Trustees Released Parties.
iii) Release of Claims by the Receiver Releasing Parties: As of the Settlement Effective
Date, as more fully described in the Settlement Agreement, the Receiver Releasing
Parties will release the Settled Claims against the CRI Released Parties.
iv) Release of Claims by Indenture Trustees: As of the Settlement Effective Date, as
more fully described in the Settlement Agreement, the Indenture Trustees
Releasing Parties will release the Settled Claims against the CRI Released Parties.
v) Global Peace: As a further condition of the foregoing terms, the Receiver and CRI
Parties will seek entry of a Bar Order and Judgment providing as follows:
The Court hereby permanently bars, restrains, and enjoins, the Receiver, the Receivership Entities, the Receivership Estates, the Borrowers, the Indenture Trustees, all previous, present and future Bondholders, the Claimants, the Issuers, all Interested Parties, and
7 U.S. Bank’s consent to the Settlement is also conditioned on entry of the TIP Order by the TIP Court, and the Settlement is conditioned upon the TIP Order becoming Final before the conclusion of the Final Approval Hearing.
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all non-governmental Persons, all and individually, from directly, indirectly, or through a third party, asserting, instituting, reinstituting, intervening in, initiating, commencing, maintaining, continuing, filing, encouraging, soliciting, supporting, participating in, collaborating in, or otherwise prosecuting or pursuing, against the CRI Parties and/or any of the CRI Released Parties, any demand, claim, investigation, action, lawsuit, cause of action, complaint, or proceeding of any nature in any Forum, including, without limitation, any court of first instance or any appellate court, whether individually, derivatively, on behalf of a class, as a member of a class, or in any other capacity whatsoever, that in any way relates to, is based upon, arises from, or is connected with this case, the subject matter of this case, the Receiver, the Receivership Entities, the Bonds, the Bondholders, the Indenture Trustees, and/or any Settled Claim. The foregoing specifically includes any claim by any Person, however denominated, seeking contribution, indemnity, damages, or any other remedy where the alleged injury to such Person, or the claim asserted by such Person, is based upon such Person’s liability to the Receiver, any Receivership Entity, any Bondholder, and Indenture Trustee, any Claimant, and/or any other Interested Party arising out of, relating to, or based in whole or in part upon money owed, demanded, requested, offered, paid, agreed to be paid, or required to be paid to the Receiver, a Receivership Entity, a Bondholder, an Indenture Trustee, a Claimant, and/or any other Interested Party whether pursuant to a demand, judgment, claim, agreement, settlement, or otherwise.
RELIEF REQUESTED
15. Pursuant to this Motion, the Claims Authorization Order and this Court’s broad
equitable powers, the Receiver seeks entry of (I) an order preliminarily approving the Settlement
as embodied in the Settlement Agreement, including entry of a preliminary stay and injunction
against the Receiver, the Indenture Trustees, all previous, present and future Bondholders, the
Claimants, all other Interested Parties, and all other non-governmental Persons from prosecuting
or pursuing any Settled Claim against the CRI Parties and/or any of the CRI Released Parties until
further order of the Court, and (II) entry of the Scheduling Order to (i) provide for notice of the
terms of the Settlement, including the proposed Distribution Plan and Bar Order and Judgment;
(ii) set the deadline and the procedure for filing objections to the Settlement, the Distribution Plan,
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the Bar Order and Judgment, and the Receiver’s request for approval of the professional fees and
expenses of the Receiver’s general counsel, Waller, and special counsel, Whiteford Taylor; (iii)
set the deadline for responding to any objection so filed; (iv) set the deadline and the manner for
the submission of claims by Bondholders who or which previously held a Bond for distributions
from the Net Settlement Proceeds; (v) set the date, time and location of the Final Approval Hearing
before this Court regarding the Settlement, the Distribution Plan, the Bar Order and Judgment, and
the Receiver’s request for approval of the professional fees and expenses of the Receiver’s general
counsel, Waller, and special counsel, Whiteford Taylor.
16. The Receiver seeks herein approval of a procedure similar to the procedure
approved in another SEC receivership case. In Ralph S. Janvey, in his capacity as court-appointed
receiver v. Proskauer Rose, LLP, et. al., Case No.: 3:13-CV-0477-N-BG, in the United States
District Court for the Northern District of Texas, as part of a settlement, the court approved and
entered a final judgment and bar order enjoining third parties from asserting any and all claims
against the settling defendant. In that case, the court first entered a scheduling order preliminarily
approving the settlement agreement and notice procedures, and set deadlines for objecting to the
settlement and bar order, and scheduled a final hearing to approve the settlement. The Scheduling
Order, and the Final Judgment and Bar Order are attached hereto as Exhibit 6.
ARGUMENT
17. The Court has the authority to approve the Settlement and grant the related relief.
18. An equitable receivership’s primary purpose is the marshaling of the estate’s assets
for the benefit of creditors. S.E.C. v. Parish, No. 2:07-cv-00919-DCN, 2010 WL 8347143, at *6
(D.S.C. Feb. 10, 2010) (citing S.E.C. v. Hardy, 803 F.2d 1034, 1038 (9th Cir. 1986)). Settlements
and compromises are a normal part of the process of a receivership. See, e.g., Protective Comm.
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for Indep, Stockholders of TMT Trailer Ferry, Inc. v. Anderson, 390 U.S. 414, 424 (1968) (quoting
Case v. Los Angeles Lumber Prods. Co., 308 U.S. 106, 130 (1939)); ReGen Capital III, Inc. v.
Official Committee of Unsecured Creditors, 282 B.R. 662, 668 (B.A.P. 8th Cir, 2002). A
settlement by a receiver in a federal receivership is within the receiver’s broad discretion and
should be approved if it is fair. Sterling v. Stewart, 158 F.3d 1199, 1202 (11th Cir. 1998); Gordon
v. Dadante, 336 Fed. Appx. 540 (6th Cir. 2009); Securities and Exchange Commission v. Credit
Bancorp, Ltd., No. 99 Civ. 11395, 2002 WL 1792053 at *4-5 (S.D.N.Y. August 2, 2002);
Securities and Exchange Commission v. Princeton Economic International, Inc., No. 99 Civ. 9667,
2002 WL 206990 at *1 (S.D.N.Y. February 8, 2002).
19. A district court’s determination of the fairness of a settlement by a receiver is subject
to the sound discretion of the court and will be overturned only on a clear showing of abuse of
discretion. Sterling v. Stewart, 158 F.3d at 1202 (quoting Bennett v. Behring, 737 F.2d 982, 986
(11th Cir. 1984)); Gordon v. Dadante, 336 Fed. Appx. at 545; Securities and Exchange Commission
v. Arkansas Loan and Thrift Corp., 427 F.2d 1171, 1172 (8th Cir. 1970). “[R]eceivers benefit from
the general presumption that district courts favor settlements.” Sterling, 158 F.3d at 1202 (citing
In re Chicken Antitrust Litigation, 669 F.2d 228, 238 (5th Cir. 1982). Indeed, settlement
agreements are generally encouraged and favored by the courts, and “[in] the absence of mistake
or fraud, a settlement agreement will not be lightly set aside.” Justine Realty Co, v. American Nat'l
Can Co., 976 F.2d 385, 391 (8th Cir. 1992).
20. No particular procedure applies to approval of a settlement under federal law in a
receivership. See, Gordon, 336 Fed. Appx. at *548-49. “[N]o federal rules prescribe a particular
standard for approving settlements in the context of an equity receivership; instead, a district court
has wide discretion to determine what relief is appropriate.” Gordon, 336 Fed. Appx. at *549. In
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deciding whether to approve a compromise proposed by a receiver, federal courts have looked to
the factors generally considered in determining whether a class action settlement is fair and
reasonable, including: “(1) the likelihood of success at trial; (2) the range of possible recovery; (3)
the point on or below the range of possible recovery at which a settlement is fair, adequate and
reasonable; (4) the complexity, expense and duration of litigation; (5) the substance and amount
of opposition to the settlement; and (6) the stage of proceedings at which the settlement was
achieved.” Bennett, 737 F.2d 982, 986 (11th Cir. 1984); see Sterling, 158 F.3d at 1202; Princeton
Economic, 2002 WL 206990 at *1 (quoting virtually identical test under Arkansas Loan and Thrift
Corp., 427 F.2d at 1172); cf. Anderson, 390 U.S. at 424-25.
21. Additionally, courts in receivership proceedings have looked to decisions in other
legal contexts, such as bankruptcy cases, for factors that may be weighed to reach an informed
decision that the proposed settlement is fair and reasonable. See Securities and Exchange
Commission v. Princeton Economic International, Inc., 2002 WL 206990 at *1. The standards for
approval of settlements in bankruptcy may also provide an appropriate analogy and list of factors
to consider in approving a settlement in a receivership as “fair,” and courts in class actions also
look to those factors in reviewing proposed settlements. See Newman v. Stein, 464 F.2d 689, 692,
n. 6 (2d Cir. 1972) (citing the standards set forth by the United States Supreme Court for approval
of settlements in bankruptcy in Anderson, supra).
22. As a general rule, as in federal receiverships, settlements are also favored in
bankruptcy. See, e.g., In re Martin, 91 F.3d 389, 393 (3d Cir. 1996) (“To minimize litigation and
expedite the administration of a bankruptcy estate, compromises are favored in bankruptcy.”). In
facing “potentially costly litigation, with no guarantee as to the outcome, the bankruptcy trustee
must tread cautiously-and an inquiring court must accord him wide latitude should he conclude
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that the game is not worth the candle.” Mathews at *4 (citation and quotation omitted).
23. Before pursuing litigation, a bankruptcy trustee must first determine “whether it
would be prudent to eliminate the inherent risks, delays and expense of prolonged litigation in an
uncertain cause” by entering into a settlement. Mathews at *2; In re Diplomat Const., Inc., 454
B.R. 917, 921 (Bankr. N.D. Ga. 2011). In evaluating a proposed settlement, “[t]he court is neither
to ‘rubber stamp’ the trustee’s proposals nor to substitute its judgment for the trustee’s, but rather
to canvass the issues and determine whether the settlement falls below the lowest point in the range
of reasonableness.” Matthews at *2; Diplomat at 920 (same). A trustee’s decision to enter into a
settlement agreement must be “evaluated within the context of [the] [t]rustee’s business judgment
. . . .” Mathews at *4; see In re W.T. Grant Co., 699 F.2d 599, 613 (2d Cir. 1983) (Bankruptcy
judges are not required “to determine whether the settlement was the best that could have been
obtained.”).
24. The Third Circuit Court of Appeals has established four factors a bankruptcy court
should consider in evaluating a proposed compromise:
(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; and (d) the paramount interest of the creditors. Will v. Northwestern Univ. (In re Nutraquest, Inc.), 434 F.3d 639, 644 (3d Cir. 2006). “Courts
consider these factors to determine the fairness, reasonableness and adequacy of a proposed
settlement agreement.” In re Matthews, No. 10-96519-MGD, 2014 WL 1277874, at *2 (Bankr.
N.D. Ga. Mar. 11, 2014).
25. In addressing the propriety of a class action settlement, the District Court for The
District of New Jersey in the case styled In re PAR Pharm. Secs. Litig., No. 06-3226, 2013 U.S.
Dist. LEXIS 106150, at *9–11 (D.N.J. July 29, 2013) stated as follows:
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Before giving final approval to a proposed class action settlement, the Court must determine that the settlement is "fair, adequate, and reasonable." Girsh v. Jepson, 521 F.2d 153, 157 (3d Cir. 1975). In Girsh, the Third Circuit identified nine factors that a district court should consider when determining whether a settlement is fair, adequate, and reasonable:
(1) the complexity, expense and likely duration of the litigation; (2) the reaction of the class to the settlement; (3) the stage of the proceedings and the amount of discovery completed; (4) the risks of establishing liability; (5) the risks of establishing damages; (6) the risks of maintaining the class action through the trial; (7) the ability of the defendants to withstand a greater judgment; (8) the range of reasonableness of the settlement fund in light of the best possible recovery; (9) the range of reasonableness of the settlement fund to a possible recovery in light of all the attendant risks of litigation. Id.
“These factors are a guide and the absence of one or more does not automatically render the settlement unfair. Rather, the court must look at all the circumstances of the case and determine whether the settlement is within the range of reasonableness under Girsh.” In re Am. Family Enters., 256 B.R. 377, 418 (D.N.J. 2000) (citing In re Orthopedic Bone Screw Prods. Liab. Litig., 176 F.R.D. 158, 184 (E.D. Pa. 1997)).
26. While courts look to both the factors considered in approving class action
settlements as well as settlements by a trustee in bankruptcy when considering whether to approve
a settlement sought by a federal receiver, the factors considered and deferential standard of review
applied by the federal court are substantially similar, if not identical, in each case.
27. Thus, the Court has the authority to approve the Settlement and the Settlement
should be approved under either set of factors.
I. This Settlement Satisfies the Factors for Evaluating Settlements in the Third Circuit.
28. The claims and defenses of the Receiver and the CRI Parties were fully developed
and explored in the course of their negotiations and the Mediation.
29. Generally, the Receiver alleged that the CRI Parties breached their obligations to
the Borrowers and the Bondholders with respect to the Financial Forecasts and made
misstatements by issuing in the CRI Reports “clean opinions” for each such Financial Forecast.
In this regard, the Receiver contended, among other things, that the CRI Parties: (i) lacked the
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independence required to perform their responsibilities as independent certified public accountants
in examining and preparing the Reports in connection with the Financial Forecasts; (ii) failed to
disclose significant assumptions underlying the Financial Forecasts, without issuing an adverse
opinion, including assumptions regarding the use of funds and planned renovations and/or
expansions of the Facilities; and (iii) failed properly to obtain support for and evaluate underlying
assumptions concerning anticipated revenues that would be generated by realizing certain
stabilized occupancy rates during and after renovation and/or expansion of a particular Facility.
The Receiver asserted claims against CRI under various theories of recovery, including
negligence, intentional tort, breach of contract, and breach of fiduciary duty.
30. For their part, the CRI Parties denied the Receiver’s allegations and raised other
defenses. The CRI Parties: (i) denied that they breached any obligations in connection with the
Financial Forecasts and/or made any misstatements in the Reports; (ii) denied that they lacked the
required independence; (iii) denied that they failed to disclose significant assumptions underlying
the Financial Forecasts, including assumptions regarding the use of funds and planned renovations
and/or expansions of the Facilities; and (iv) denied that they otherwise failed to obtain support for
or evaluate significant assumptions underlying the Financial Forecasts, including assumptions
concerning anticipated revenues that would be generated by realizing certain stabilized occupancy
rates during and after renovation and/or expansion of a particular Facility. To the contrary, the
CRI Parties asserted that, in carrying out the engagements concerning the Financial Forecasts, CRI
acted in conformity with AICPA guidance by performing such examination procedures as it
considered necessary in the exercise of its professional judgment in the circumstances and by
reasonably concluding, based on the preponderance of information, that management’s
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assumptions were suitably supported and provided a reasonable basis for management’s Financial
Forecasts.
31. The CRI Parties further contended, among other things: (i) that, if the allegations
of misconduct by Edwards and Barker were true, the claims of the Receivership Borrowers were
barred by the doctrine of in pari delicto; (ii) that all the Receivership Borrower Claims, the Current
Bondholder Claims, and Previous Bondholder Claims lacked merit because of the inability of any
to prove reasonable reliance on anything the CRI Parties did or said; and (iii) that the conduct and
statements of the CRI Parties were not the proximate cause of any loss that either the Borrowers
or the Bondholders might have sustained, such loss being caused instead by unforeseeable
subsequent events, including, among other things, an ownership break-up between Edwards and
Barker, unanticipated regulatory issues and the mismanagement and/or misconduct of other
parties. In short, the CRI Parties vigorously denied any wrongdoing on any theory of liability,
whether based on common law or statute and whether sounding in negligence, intentional tort,
breach of contract, breach of fiduciary duty, or otherwise.
A. The Probability of Success Weighs in Favor of the Settlement.
32. Although the Receiver believes that the Claims have substantial merit, there is
uncertainty as to whether prosecuting the Claims would ultimately produce a successful result for
the Receivership Estate. The CRI Parties have asserted numerous defenses on the issues of
causation, reliance and damages, among other issues.
33. This factor weighs in favor of the Settlement.
B. The Settlement Is Supported by the Complexity, Expense, Inconvenience, and Delay of Litigation.
34. The expense and delay of litigating the Dispute weigh heavily in favor of the
Settlement.
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35. Any causes of action pursued by the Receiver would involve extensive, lengthy,
complex, and costly litigation without any guarantee of success.
36. Additionally, litigating the Dispute would involve highly complex factual issues
involving a multitude of transactions among dozens of entities, including appraisers, bond counsel,
underwriters, accountants, the Borrowers, investment brokers, and Bondholders. This, in turn,
would require extensive discovery. Such an endeavor would be extremely time consuming and
generate substantial delay and uncertainty in the final administration of this Receivership, which
would constitute great inconvenience for Bondholders as they are forced to await final
distributions, if any, for years.
C. The Settlement Is in the Best Interests of Bondholders.
37. The Settlement is in the best interests of Bondholders. Counsel for the Receiver
has pursued the Claims under a contingency fee arrangement. The contingency fee arrangement
provides for a contingency fee of 20% if the Claims are resolved without the necessity of filing
suit, but that the contingency fee would increase to 40% once suit is filed. Approval of the
Settlement is in the best interests of the Bondholders because it reduces the need to increase any
potential recovery to account for the difference in the contingency fee payable from any potential
recovery. Further, the time value of money principle favors accepting the Settlement now.
38. The Settlement secures a substantial monetary recovery for the Bondholders,
without further delay, which in and of itself is in the best interest of all Bondholders. As this Court
is aware, the Receiver has already sold the Borrowers’ Facilities, which constituted substantially
all of the Borrowers’ assets and resulted in partial distributions to the Bondholders. The Settlement
allows for an additional recovery to be paid to the Bondholders.
D. The Settlement Is “fair, equitable, and reasonable.”
39. The Settlement Amount is material, the result of arms-length negotiations, and
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results in the collection of an amount certain for the Bondholders.
40. The Receiver has sufficient information to enter into and endorse the Settlement.
The Receiver retained a consulting expert witness to assist it in asserting the Claims. In deciding
to accept the Settlement the Receiver has received, considered, and relied upon the advice and
consultation of its consulting expert witness, its special counsel, and general counsel. Further, the
Settlement, if approved, would provide a recovery to: (i) current Bondholders, and (ii) previous
Bondholders who suffered a loss and timely and properly submitted a claim.
41. It is the Receiver’s business judgment that the Settlement is “fair, equitable, and
reasonable” and should be approved for all the foregoing reasons.
II. Additional Relief Requested
42. This Preliminary Approval Motion also seeks a preliminary finding from the Court
that (a) the Distribution Plan is fair and equitable, (b) the Settlement Amount may be distributed
as set forth herein, (c) the Notice and Short Form Notice of the Settlement, including the Indenture
Trustees’ posting notice of the same at EMMA (as defined below), is sufficient and effective in
satisfaction of federal and state due process requirements and other applicable law to put the parties
in interest, including the Bondholders, on notice of the Settlement, (d) the Indenture Trustees have
acted prudently, in good faith, and in the best interests of those Bondholders who or which
currently own Bonds in assigning the Current Bondholder Claims to the Receiver and in entering
into the Settlement, (e) the Receiver and the Indenture Trustees have the authority to grant the
releases provided for in the Settlement Agreement, and (f) the Bar Order and Judgment approving
the Settlement and this Agreement and enjoining claims against the CRI Released Parties as
provided in Exhibit 5 hereto should be entered. In addition, the Preliminary Approval Motion
seeks entry of a preliminary stay and injunction against the Receiver, the Indenture Trustees, all
previous, present and future Bondholders, the Claimants, all other Interested Parties, and all other
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non-governmental Persons from prosecuting or pursuing any Settled Claim against any of the CRI
Released Parties until further order of the Court.
A. The Distribution Plan is Fair and Equitable.
43. The Distribution Plan provides for the Net Settlement Proceeds to be fairly and
equitably divided between: (i) first, the Borrowers, and (ii) second, the respective Borrowers’
previous and current Bondholders.
44. The Claims Authorization Order provided that if proceeds were recovered by the
Receiver, and to the extent that any such recovery is not allocated on a claim-by-claim basis, the
distribution of proceeds to each Borrower for which a Claim was settled would be calculated as
follows:
a. First, the total damages caused to all Receivership Entities, collectively, will be
calculated as the deficiency on the bonds, after deducting the market value of
substantially all assets of each Receivership Entity;
b. Second, for each Receivership Entity, the percentage share of proceeds will be
calculated by dividing: (i) the deficiency on the bonds for such Receivership Entity;
by (ii) the total damages caused to the Receivership Entities (calculated in
accordance with the foregoing paragraph);
c. Third, the total distribution to be made to each Receivership Entity will be
calculated by multiplying: (i) each Receivership Entity’s percentage share of
proceeds (calculated in accordance with the foregoing paragraph); by (ii) the
(A) proceeds obtained by the Receiver less (B) the costs and expenses incurred by
the Receiver pursuing the Claims; and
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d. Fourth, the distribution made to each Receivership Entity will be distributed
amongst the respective Indenture Trustees based upon the damages incurred by the
bondholders.
(Claims Authorization Order, Dkt. No. 242 at ¶ 31).
45. Consistent with the allocation provided for in the Claims Authorization Order the
Net Settlement Proceeds will be allocated between the Borrowers as follows:
Settlement Amount: $10,000,000 Contingency Fee: ($2,000,000) Dispute Related Expenses: ($243,065) Net Settlement Proceeds: $ 7,756,935
Douglas Rome Savannah Gainesville Waterford Montgomery Columbus Opelika Total BOKF BOKF BOKF BOKF BOKF UMB BOKF U.S. Bank
Damages $1,663,882 $3,917,403 $4,102,600 $2,851,125 $6,095,832 $5,287,563 $4,630,220 $4,730,599 $33,279,224
% Share 5.0% 11.8% 12.3% 8.6% 18.3% 15.9% 13.9% 14.2% 100%
Borrower’s $387,847 $915,318 $954,103 $667,096 $1,419,519 $1,233,353 $1,078,214 $1,101,485 $7,756,935 Allocation of Net Settlement Proceeds
46. The allocation of the Net Settlement Proceeds between the Borrowers is: (i) being
equitably distributed among the Borrowers in a manner consistent with the Indentures and with
applicable law, (ii) calculated consistent with the allocation provided for in the Claims
Authorization Order, and (iii) based on the amount of damages the respective Borrowers claim to
have suffered as a result of the alleged Claims.
47. The Distribution Plan then provides for the Receiver to further allocate each
Borrower’s share of the Net Settlement Proceeds amongst the Borrower’s previous and current
Bondholders.
48. The Distribution Plan then allocates each Borrower’s allocation of the Net
Settlement Proceeds amongst that Borrower’s previous and current Bondholders as follows:
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Step-One: Determine Current Bondholder Loss of Principal and Interest for Each Borrower
Est. Current Bondholder Loss for each Borrower as listed in row (1) of the chart in paragraph 45 above
Step-Two: Determine the Previous Bondholder Loss for Each Borrower
i. (Price at Which Previous Individual Bondholder Bought Bonds - Price at Which Previous Individual Bondholder Sold Bonds) = (x%) (All Previous Bondholder Losses + All Current Bondholder Losses)
ii. (x%) * Net Settlement Proceeds Allocated to Borrower = Previous Individual Bondholder’s Recovery
iii. Only previous Bondholders who or which sold at a loss will be qualified to receive a distribution under the Distribution Plan. The only previous Bondholders who or which may receive a distribution under the Distribution Plan are those who or which both: (a) sold on or before 4:00 p.m. (Eastern), ninety (90) days from the date of the entry of the proposed Scheduling Order, and (b) submit a Claim Form in the form appended to the Notice attached as Exhibit “A” to the Settlement Agreement to the Receiver at the address set forth on the Claim Form and as described in the Notice, so that it is received by the Receiver on or before 4:00 p.m. (Eastern), ninety (90) days from the date of entry of the proposed Scheduling Order.
Step-Three: Determine Distribution to Current Bondholders of Each Borrower
Net Settlement Proceeds Allocated to Borrower - Total Previous Bondholders Recovery = Distribution to Indenture Trustee on Account of Current Bondholders’ Losses
49. Any previous Bondholder claiming entitlement to a distribution from the Net
Settlement Proceeds must submit a Claim Form in the form appended to the Notice attached as
Exhibit “A” to the Settlement Agreement to the Receiver at the address set forth on the Claim
Form and as described in the Notice, so that it is received by the Receiver on or before 4:00 p.m.
(Eastern), ninety (90) days from the date of entry of the proposed Scheduling Order. Any previous
Bondholder’s failure to timely and properly submit a Claim Form, duly providing the information
and documentation called for by the Claim Form, shall preclude such previous Bondholder from
receiving any distribution from the Net Settlement Proceeds. Current Bondholders are exempt
from the requirement of submitting a Claim Form. The Receiver will review and verify each
submitted Claim Form. The Receiver will then file with the Court a report outlining the Receiver’s
determination as to whether the Claim Form will be allowed or disallowed (the “Claims Report”).
Previous Bondholders who have submitted a Claim Form will have the opportunity to object to
the Claims Report by filing an objection to the Claims Report within fourteen (14) days after the
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filing of the Claims Report. If no objection is timely filed to the Claims Report, the Claims Report
shall be the final, binding determination on the allowance or disallowance of each Claim Form.
50. Under the foregoing Distribution Plan, the allocated Net Settlement Proceeds
among the Borrowers will be equitably distributed among the previous and current Bondholders
by the Receiver and the Indenture Trustees.
51. The Distribution Plan is designed to compensate the previous and current
Bondholders based on the damages each may have incurred. Thus, the Distribution Plan is fair and
reasonable and should be approved by the Court.
B. The Proposed Distribution Plan Should be Approved as Set Forth Herein.
52. The Claims Authorization Order provides that Whiteford Taylor and Waller shall
be compensated for their services on a contingency fee basis as provided in the Engagement Letter,
which is Exhibit 1 to the Declaration of William F. Ryan, Jr., filed in support of the Application,
without the necessity of filing a further fee application. (Claims Authorization Order, Dkt. No.
242 at ¶ 4).
53. The Engagement Letter provides for a twenty percent (20%) contingency fee on
any recovery resulting from a settlement obtained before a lawsuit is filed and that the contingency
fee would be split between Whiteford Taylor and Waller in accordance with an agreement between
Whiteford Taylor and Waller. (Ryan Decl., Dkt. 208). Whiteford Taylor and Waller have agreed
to divide the contingency fee as follows: $1,333,333 to Whiteford Taylor, and $666,667 to Waller.
Upon receipt of the Settlement Amount, the Receiver proposes to distribute these amounts to
Whiteford Taylor and Waller.
54. In addition to the contingency fee, the Engagement Letter also provides for the
payment of all expert consultant and witness fees, litigation costs and travel expenses. These costs
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and expenses are deducted from the Settlement Amount. The costs and expenses total
approximately $243,065. The cost to give the U.S. Mail and advertising notice provided for in the
Settlement is estimated to be $145,710. The Receiver’s costs and expenses total $63,676
(including Healthcare Management Partners, LLC’s (“Healthcare Management Partners”) costs
of $8,103, the Receiver’s consulting expert witness Fust Charles Chambers, LLP “Fust Charles”
$33,123, and the Mediator’s fees of $22,450). Whiteford Taylor’s costs and expenses total
$20,872. Waller’s costs and expenses total $12,807. Upon receipt of the Settlement Amount, the
Receiver proposes to distribute these amounts to Healthcare Management Partners, Fust Charles,
Whiteford Taylor, and Waller.
55. The distributions to counsel are consistent with the provisions of the Claims
Authorization Order and should be approved.
56. The Receiver will also calculate the allocable portion of previous and current
Bondholders’ pro rata share of each Borrower’s allocation.
57. The Receiver will then distribute funds from the Net Settlement Amount to
previous Bondholders, who timely and properly submit a Claim Form and qualify for a distribution
under the Distribution Plan, on account of all the alleged trading losses sustained by such
Bondholders with respect to such Bonds. Current Bondholders are exempt from the requirement
of submitting a Claim Form.
58. The Receiver will then distribute to the Indenture Trustees all remaining funds on
account of the current Bondholders’ losses of principal and interest on the Bonds. The Indenture
Trustees will then distribute such funds for the benefit of current Bondholders.
59. It is the Receiver’s business judgment that the funds should be distributed as set
forth herein.
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C. Notice of the Preliminary Approval Motion to Parties in Interest is Appropriate and Should Be Approved.
60. The Preliminary Approval Motion, and all of its exhibits have been served on or
posted with DTC and EMMA (as described below) : (a) all parties that have appeared and
requested notice in this case; (b) counsel to the Indenture Trustees; (c) the Underwriter for each
Offering; (d) counsel to the Underwriter, at the time of the Offering, for each Offering; (e) to the
Issuer for each Offering, (f) counsel to the Issuer, at the time of the Offering, for each Offering;
(g) Bond Counsel for each Offering; (h) DTC and EMMA (both as defined below); (i) the parties
set forth on the certificate of service for the Preliminary Approval Motion; (j) Bondholders who
have identified themselves to the Indenture Trustees; and (k) the original purchasers of the Bonds,
to the extent identified to the SEC by the Underwriters in the SEC’s investigation of the Defendants
in this case,.8 In addition, the Receiver has cause the Preliminary Approval Motion (including
exhibits thereto) to be posted on the Receiver’s website
(http://oxtonseniorlivingreceivership.com/).
61. Each series of Bonds was issued in book-entry only form and registered in “street
name” to Cede & Co., as nominee for the Depository Trust Company (“DTC”). DTC is the
8 As set out in paragraphs 61 and 62, the identity of the previous and current Bondholders is not known nor readily available to the Receiver or the Indenture Trustees. The SEC obtained a list of original purchasers of the Bonds from the underwriters in discovery. The Receiver is directly serving the individuals identified on the list provided to the SEC in discovery. The notice provided for in this case is reasonable given the difficulty and cost associated with individually identifying all the previous and current Bondholders. It would be cost prohibitive to attempt to provide direct notice to all previous and current Bondholders. To identify certain individual holders, the Receiver would have to order a Securities Position Report from DTC for each bond CUSIP as of a certain record date. The Securities Position Report would identify DTC’s direct participants who hold Bonds for the benefit of beneficial holders on that single record date. Once the direct participant were identified, the Receiver could engage a proxy service to work with the direct participants to identify the “non-objecting beneficial holders” of each DTC participant as of that record date. In addition to non-objecting beneficial holders, Bonds could also be held by “objecting beneficial holders.” Objecting beneficial holders are holders who object to providing their information to the proxy services. For the objecting beneficial holders the Receiver would have to rely on the brokers and advisors for the objecting beneficial holders to forward any notices. The Receiver estimates that the cost to identify the non-objecting beneficial holders for one issuance would be approximately $41,000 per record date. It is estimated that the Receiver could negotiate some cost savings, but it is reasonable to estimate that obtaining the list of non-objecting beneficial holders could cost as much as $320,000 (8 x $40,000). Given the cost, the Receiver believes the notice provided for herein is fair and reasonable.
4817-7864-8726.6 24 Case 2:17-cv-00393-SCM Document 327 Filed 05/24/19 Page 25 of 38 PageID: 14358
primary securities depository in the United States that holds and provides asset servicing for
securities deposited with it by its direct participants. DTC’s direct participants are broker-dealers,
banks, investment managers, and other financial firms. The direct participants (a) make purchases
and sales of securities under the DTC system, (b) process payments with respect to the securities,
and (c) forward notices to DTC’s indirect participants and to beneficial holders of the securities.
See e.g., Williams v. Gusky (In re President Casinos, Inc.), 502 B.R. 841, 844 (Bankr. E.D. Mo.
2013) (noting that DTC is a securities depository and clearing agency that engages in settling trades
in corporate and municipal securities on behalf of DTC participants, which are typically banks and
brokers); Mashburn v. Nat’l Healthcare, Inc., 684 F. Supp. 679, 685 (M.D. Ala. 1988) (noting that
DTC holds the securities in “street name,” and, for those holders who are not DTC participants,
the “street name” holders must forward documentation to the actual beneficial holders). The direct
participants perform these functions for their respective customers, who may be other broker-
dealers, banks, investment managers, and financial firms acting as custodians for other banks,
institutional investors, corporations and individuals, each of which may or may not be the actual
owner (i.e., beneficial holder) of the securities.
62. With regards to the Bonds, DTC’s records reflect only the identity of the direct
participants to whose accounts the Bonds are credited. In turn, the direct participants’ records
generally reflect only the names of custodians or indirect participants that hold the Bonds for other
parties who may or may not be the beneficial holders of the Bonds. Thus, neither the Indenture
Trustees nor the issuers of the Bonds know the identity of the beneficial holders, except to the
extent a Bondholder has expressly identified itself to an Indenture Trustee or issuer and provided
satisfactory proof of such Bondholders’ holdings. Thus, the Indenture Trustees provide
informational notices of material events to known beneficial holders who have requested notice
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by United States Mail postage prepaid, and unknown beneficial holders through DTC and to
EMMA (as hereafter defined).
63. In addition, the Preliminary Approval Motion is being made available to the
Bondholders by posting on the Municipal Securities Rulemaking Board’s Electronic Municipal
Market Access system (“EMMA”). EMMA is the publicly available, centralized repository for
bondholder information and is freely available to any person, including the Bondholders, via the
internet at http://emma.msrb.org/.
64. The Preliminary Approval Motion has been mailed directly to known Bondholders
who have requested notice and provided to DTC for dissemination to the direct participants. In
addition, at the same time the Preliminary Approval Motion was provided to DTC, the Indenture
Trustees have caused the Preliminary Approval Motion to be made available to the Bondholders
by posting on EMMA.
65. The notice provided of the relief sought in the Preliminary Approval Motion by
way of EMMA is standard in the tax-exempt bond marketplace and is reasonably calculated to
appraise Bondholders of the terms of the Settlement and Settlement Agreement, and provide notice
to Bondholders and other parties in interest of the relevant, proposed objection, claim submission
and other deadlines associated with the Preliminary Approval Motion and are in a form that
provide Bondholders with a reasonable and sufficient amount of time to present their objections
and claims, if any. Thus, the Bondholders have receive adequate notice of the Preliminary
Approval Motion.
66. The foregoing notice is also reasonably calculated to provide notice to parties in
interest of the relief sought in the Preliminary Approval Motion and the relevant, proposed
objection and other deadlines associated with the proposed Final Approval Hearing.
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D. Notice Provided For in The Proposed Scheduling Order to Parties in Interest is Appropriate.
67. Upon entry of the Scheduling Order and approval of the Notice, the Receiver
proposes to disseminate the Scheduling Order and Notice appended hereto as Exhibit 3 to: (a) all
parties that have appeared and requested notice in this case; (b) counsel to the Indenture Trustees,
(c) to the Underwriter for each Offering, (d) to counsel to the Underwriter, at the time of the
Offering, for each Offering, (e) to the Issuer for each Offering, (f) counsel to the Issuer, at the time
of the Offering, for each Offering, (g) to Bond Counsel for each Offering, (h) DTC and EMMA
(both as defined below), (i) the parties set forth on the certificate of service for the Motion, (j) to
Bondholders who have identified themselves to the Indenture Trustees and requested notice, and
(k) the original purchasers, to the extent identified to the SEC by the Underwriters in the SEC’s
investigation of the Defendants, of the Bonds. In addition, the Receiver shall cause the Notice and
Scheduling Order to be posted on the Receiver’s website
(http://oxtonseniorlivingreceivership.com/).
68. Further, the Notice provides parties in interest with the following: (a) the claims
asserted by the Receiver against the CRI Parties and the defenses asserted by the CRI Parties to
such claims; (b) the material terms of the Settlement Agreement; (c) the rights and obligations of
Interested Parties with regard to the Settlement, including the Distribution Plan; (d) the right of
Interested Parties to object to the Settlement, the Settlement Agreement, and the Bar Order and
Judgment; and (e) the manner and timing for which objections to the Settlement, Settlement
Agreement, and the Bar Order and Judgment must be made.
69. Further, upon entry of the Scheduling Order and approval of the Short Form Notice
attached hereto as Exhibit 4, the Receiver proposes to publish the Short Form Notice once a week
for three consecutive weeks in each of the following newspapers commencing no later than seven
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(7) calendar days after the date the Scheduling Order is entered: The Wall Street Journal and
U.S.A. Today.
70. The foregoing Notice and Short Form Notice is also reasonably calculated to
provide notice of the Settlement, notice of the terms of the Settlement, and notice to parties in
interest of the relevant objection, claim submission and other deadlines associated with the Final
Approval Hearing, and should be approved by the Court.
E. The Indenture Trustees Have Acted Prudently, in Good Faith, and in the Best Interests of those Bondholders who or which currently own Bonds in Assigning the Current Bondholder Claims to the Receiver and in Entering into the Settlement.
71. Subject to court approval of the Settlement, the Indenture Trustees have agreed to
release the CRI Parties, and the Indenture Trustees’ agreement to release the CRI Parties is both
necessary to obtaining the Settlement and increases the value of the Settlement Amount. The
communications and analysis relating to negotiations conducted before, during and after the
Mediation are privileged and confidential by law and pursuant to paragraphs 4 and 73 of the
Settlement Agreement, and, therefore, cannot be disclosed in detail; however, the Settlement set
forth in the Settlement Agreement was a product of intense, arm’s-length negotiations concluded
amongst sophisticated parties with differing and conflicting interests.
72. The Indenture Trustees considered the risks, costs, and benefits associated with
litigating the Dispute in the absence of a consensual resolution and, in consultation with both
Receiver’s special counsel, Receiver’s general counsel, and their own counsel, concluded in their
good faith judgment that the Settlement is reasonable, prudent, and in the best interests of those
Bondholders who or which currently own Bonds.
73. Subsequent to an Event of Default (as defined in the applicable indenture) that has
not been cured or waived, the applicable indenture requires that the Indenture Trustees must use
the same degree of care and skill in their exercise of the rights and powers vested in them by the
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indenture as a prudent man would exercise under the circumstances in the conduct of his own
affairs. The court in LNC Investments, Inc. v. First Fidelity Bank, N.A., 1997 WL 528283, No. 92
Civ. 7584 MBM (S.D.N.Y. August 27, 1997), stated that “[i]n determining whether a trustee has
acted with prudence, a court must: ‘look at the facts as they exist at the time of their occurrence,
not aided or enlightened by those which subsequently take place’; for it is an obvious truth that ‘a
wisdom developed after an event, and having it and its consequences as a source, is a standard no
man should be judged by’; and it is impossible to say that trustees are wanting in sound discretion
‘simply because their judgment turned out wrong.’” 1997 WL 528282 at *17 (citing In re Clark’s
Will, 177 N.E. 397 (1931)). The LNC Investments court further went on to say that “[a] trustee will
not be held liable for a mere error in judgment, . . . so long as the trustee’s decision was the result
‘of careful and informed deliberation,’” and that “a trustee will not be liable for choosing between
two prudent courses so long as ‘an overall and knowledgeable judgment was brought to bear’ and
the trustee’s conduct under all the circumstances was prudent.” Id.
74. The Receiver, after consultation with the Indenture Trustees, and the Receiver’s
special counsel and general counsel, asserts that the Settlement is “fair, equitable, and reasonable,”
in amount and in the manner in which the Net Settlement Proceeds are to be allocated and
distributed among the Indenture Trustees those bondholders who or which currently own Bonds
and those Bondholders who or which previously owned Bonds, and in the best interests of all
previous and current Bondholders. The Indenture Trustees have relied on their own business
judgment, as well as experienced counsel and consulted with the Receiver and his counsel in
analyzing the Claims and the reasonableness of the Settlement, which resulted from arm’s-length
negotiations between sophisticated parties with the assistance of a mediator.
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75. The United States Bankruptcy Court for the Southern District of New York has
found that similar evidence supports a finding that an indenture trustee has acted in good faith and
in the best interests of its constituents. In In re Residential Capital, LLC, 497 B.R. 720 (Bankr.
S.D.N.Y. 2013), the court noted that the trustee had acted reasonably, in good faith, and in the best
interests of its constituents in entering into a reasonable settlement that was the result of arm’s-
length negotiations among sophisticated parties. 497 B.R. at 742. Further, the Residential Capital
court noted that in evaluating and accepting the settlement the trustee sought and received the
advice of competent counsel they had retained to advise them in the case. Id.
76. Thus, the Indenture Trustees have acted prudently, in good faith, and in the best
interests of those Bondholders who or which currently own Bonds in entering into the Settlement
Agreement, which includes the Indenture Trustee Releases.
F. The Indenture Trustees have the Authority to Execute the Releases Provided for in the Settlement Agreement.
77. Each applicable Indenture expressly vests in the Indenture Trustee alone the right
to exercise the rights and remedies of those Bondholders who or which currently own Bonds in
the event of a default, including bringing suit to enforce those Bondholders’ rights and remedies,
subject only to the right of holders of a majority in principal amount of the Bonds then outstanding
to instruct the Indenture Trustee or when an applicable percentage in principal amount of Bonds
then outstanding shall have requested the Indenture Trustee to take specific remedial action and
the Indenture Trustee has failed to act after having been offered satisfactory indemnity. Neither
exception has occurred.9
9 The Bonds are conduit municipal bonds. In a conduit municipal bond offering, a municipal entity serves as the issuer, and issues the bonds on behalf of a “conduit” borrower. The conduit borrower then agrees to make payments to the bondholders. In this case, each conduit municipal issuer has assigned its interests in the assets of each Borrower to the applicable Indenture Trustee. Page 2-3 of the Waterford-BOKF Indenture provides that the issuer has “given, granted, assigned and pledged and does by these presents give, grant, assign and pledge to the Trustee” all “right, title
4817-7864-8726.6 30 Case 2:17-cv-00393-SCM Document 327 Filed 05/24/19 Page 31 of 38 PageID: 14364
78. Therefore, as a result of defaults by each of the Borrowers, the Indenture Trustees
have the power and authority to commence remedial procedures on behalf of those Bondholders
who or which currently own Bonds as regards to the Current Bondholder Claims, and negotiate
and agree upon settlements with respect to the Current Bondholder Claims. In the this case the
Indentures Trustees have exercised their power and authority to assign claims on behalf of those
Bondholders who or which currently own Bonds to the Receiver as provided for in the Claims
Authorization Order and paragraph 32 of the Settlement Agreement.
79. Thus, the Indenture Trustees, as the party authorized to represent and assert claims
on behalf of those Bondholders who or which currently own Bonds have the authority10 to enter
into the Settlement Agreement, including granting the releases. See In re Delta Air Lines, Inc., 370
B.R. 537, 548 (Bankr. S.D.N.Y. 2007) (“Implicit in the authority to commence proceedings to
remedy defaults is the power to negotiate and agree upon settlements, subject to the power to direct
in writing by [the requisite amount] of the Bondholders.”); In re Residential Capital, LLC, 497
B.R. at 748 (noting that the trustee is the party authorized to represent the beneficiaries of the trust
and has the authority to enter into settlement agreements).
and interest of the Issuer” in right to payment on the Bonds and its interests in the Borrower’s assets. Similar provisions exist in each of the other seven Indentures. See generally Columbus-BOKF Indenture at pgs. 2-3 (same); Rome-BOKF Indenture at pgs. 2-3 (same); Gainesville-BOKF Indenture at pgs. 2-3 (same); Savannah-BOKF Indenture at pgs. 2-3 (same); Douglas-BOKF Indenture at pgs. 2-3 (same); Opelika-U.S. Bank Indenture at pgs. 2-3 (same); Montgomery-UMB Indenture at pgs. 2-3 (same).Section 902 of the Waterford-BOKF Indenture provides that “[u]pon the occurrence of an event of default the Trustee shall have the power to proceed with any right or remedy granted by the Constitution and laws of the State, as it may deem best in its sole discretion, including any suit, action or special proceeding in equity or at law . . . for the enforcement of any proper legal or equitable remedy as the Trustee shall deem most effectual to protect the rights aforesaid . . . .” Section 909 of the Waterford-BOKF Indenture further provides that “[n]o holder of any Bond shall have any right to institute any suit, action or proceeding in equity or at law . . . unless . . . [certain conditions which have not occurred are met, including providing the Trustee with indemnity].” Similar provisions exist in each of the other seven Indentures. See generally Columbus-BOKF Indenture at §§ 902, 909 (same); Rome-BOKF Indenture at §§ 902, 909 (same); Gainesville-BOKF Indenture at §§ 902, 909 (same); Savannah-BOKF Indenture at §§ 902, 909 (same); Douglas-BOKF Indenture at §§ 902, 909 (same); Opelika- U.S. Bank Indenture at §§ 902, 909 (same); Montgomery-UMB Indenture at §§ 902, 909 (same).
10 Such authority exists absent objection by the requisite levels of Bondholders, a situation which has not occurred with respect to any related series of Bonds.
4817-7864-8726.6 31 Case 2:17-cv-00393-SCM Document 327 Filed 05/24/19 Page 32 of 38 PageID: 14365
G. An Order Permanently Barring and Restraining Proceedings Against Any of the CRI Parties by Non-parties to the Settlement Agreement is Necessary and Proper
80. The CRI Parties have represented to the Receiver that to the best of their
knowledge, information and belief, there is no other current pending litigation against the CRI
Parties that in any way relates to, is based upon, arises from, or is connected with any one or more
of the Offerings, the Official Statements, the Financial Forecasts, the Bonds, the Facilities, the
CRI Parties’ relationship with the Borrowers or Receivership Entities and any party to this case or
the subject matter of this case, or any of the Claims.
81. As a condition to the Settlement, CRI Parties have demanded “global peace” with
respect to all claims that have been, could have been, or could be asserted against any of the CRI
Parties and the CRI Released Parties by any Person arising out of or related to the events leading
to these proceedings.
82. Thus, in the Settlement Agreement, the Receiver has agreed to seek an Order from
the Court that enjoins all Persons, including previous, present, and future Bondholders, from
asserting claims against any CRI Party and any of the the CRI Released Parties arising out of or
related to the events leading to the Dispute, and with respect to all claims that have been, could
have been, or could be asserted against any CRI Party or any of CRI Released Parties by any non-
governmental Person, arising from or related to the Offerings, the Financial Forecasts, the Reports,
the Bonds, the Facilities, this receivership proceeding, and/or the CRI Parties’ relationship with
the Borrowers and Receivership Entities and any defendant in this case, all as more fully set forth
in paragraph 52 of the Settlement Agreement.
83. The Court has the power to issue an order enjoining new or existing litigation
against the CRI Parties and the CRI Released Parties as part of its approval of this Settlement.
84. The Fifth Circuit Court of Appeals in affirming a district court’s order approving a
4817-7864-8726.6 32 Case 2:17-cv-00393-SCM Document 327 Filed 05/24/19 Page 33 of 38 PageID: 14366
“bar order” stated that the district court’s powers include “the court’s ‘inherent equitable authority
to issue a variety of ‘ancillary relief’ measures in actions brought by the SEC to enforce the federal
securities laws.” See SEC v. Kaleta, 530 Fcd. Appx. 360, 362 (5th Cir. 2013) (quoting SEC v.
Wencke, 622 F.2d 1363, 1369 (9th Cir. 1980)). “Such ‘ancillary relief’ includes injunctions to stay
proceedings by non-parties to the receivership.” See Kaleta, 530 Fcd. Appx., at 362 (quoting SEC
v. Wencke, 622 F.2d 1363, 1369 (9th Cir. 1980)).
85. Bar orders of the type sought here have been used in other receivership cases to
achieve settlements. See, e.g., SEC v. DeYoung, 850 F.3d 1172, 1180-81 (10th Cir. 2017); Gordon,
336 F. App’x. at 549; SEC v. Parish, No.: 2:07-cv-000919, 2010 WL 8347143, at *4-7 (D.S.C.
Feb. 10, 2010); modified, 2010 WL 8347144 (D.S.C. Apr. 8, 2010); SEC v. Enterprise Trust Co.,
No. 1:08-cv-01260, slip op. at 2 (N.D. Ill. Jan. 29, 2009); SEC v. Standford Int’l Bank Ltd., 2017
WL 9989250 (N.D. Tex. 2017); Zacarias v. Willis Group Holdings Public Limited Company, 2017
WL 6442190 (N.D. Tex. 2017), appeal argued, 17-11127 (5th Cir. Dec. 3, 2018).
86. In Securities and Exchange Commission v. Stanford International Bank Ltd., 2017
WL 9989250 (N.D. Tex. 2017), the court approved a receivership settlement that included a stay
of proceedings against the settling defendants by nonparties to the receivership settlement. In that
case, the court overruled certain objections and determined that it could bar individual investor
claims as part of a settlement, that enjoining pending claims was not prohibited by the Anti-
Injunction Act, that enjoining pending claims did not violate the objectors’ constitutional rights,
and that the settlement agreement terms did not violate Rule 23 of the Federal Rules of Civil
Procedure. Id. at *4-5.
87. In Zacarias v. Willis Group Holdings Public Ltd. Co., 2017 WL 6442190 (Aug. 23,
2017), the court approved a settlement agreement entered into by the receiver for the Stanford
4817-7864-8726.6 33 Case 2:17-cv-00393-SCM Document 327 Filed 05/24/19 Page 34 of 38 PageID: 14367
Receivership Estate in SEC v. Stanford International Bank, Ltd., that included a bar and injunction
of any contribution or indemnity claims against the settling defendants. Id. at *3.
88. The case of SEC v. Parish, 2010 U.S. Dist. LEXIS 11786 (D.S.C. 2010), also
supports the approval of a settlement agreement conditioned upon the court’s entry of a “bar order”
enjoining the filing of and/or continued prosecution of claims by all Persons against the CRI
Parties and CRI Released Parties that in any way relates to is based upon, arises from, or is
connected with any one or more of the Offerings, the Official Statements, the Financial Forecasts,
the Bonds, the Facilities, the CRI Parties’ relationship with the Borrowers and the Receivership
Entities and any party to this case or the subject matter of this case, or any of the Claims. In
concluding that the court possesses the power to issue the bar order, the Parish the court stated
that:
By appointing a receiver in this matter, the court created a receivership estate over which it has in rem jurisdiction. That jurisdiction extends to all assets of the estate, including choses of action. Accordingly, this court has the power under the All Writs Act to issue [an] injunction in order to protect the estate’s choses of action against the Settling Parties (including any settlement reached in connection with those claims). . . . “The power conferred by the [All Writs Act] extends, under appropriate circumstances, to person[s] who, though not parties to the original action or engaged in wrongdoing, are in a position to frustrate the implementation of a court order or the proper administration of justice and encompasses even those who have not taken any affirmative action to hinder justice.” Parish, 2010 U.S. Dist. LEXIS 11786 at *17-18 (citing N.Y. Tel., 434 U.S. at 174).
89. The Parish court having determined the court had the power to issue a bar order
then turned to the propriety of issuing a bar. The Parish court considered the following: (i) whether
the proposed settlement was consistent with and furthers the purposes of the receivership, (ii) the
likelihood that an individual investor could obtain a more favorable settlement, and (iii) whether
another settlement could be obtained that would benefit as many aggrieved investors as stood to
be benefited under the settlement agreement. Parish, 2010 U.S. Dist. LEXIS 11786 at *19-20.
4817-7864-8726.6 34 Case 2:17-cv-00393-SCM Document 327 Filed 05/24/19 Page 35 of 38 PageID: 14368
90. The facts of this case are consistent with the factors considered in Parish. The
Settlement will generate a return to Bondholders on their investment which is consistent with the
receivership’s purpose. The ability of the Receiver to obtain a Settlement Amount on behalf of all
Bondholders, previous, present, and future, saves the time and expense of separate and protracted
litigation by individual Bondholders and avoids a “free for all” effort to obtain a recovery from the
CRI Parties. The ability of the Receiver to offer the CRI Parties “global peace” was necessary to
achieving the Settlement and has increased the amount of the CRI Parties are willing to pay to
compromise the Dispute. Finally, all aggrieved Bondholders stand to benefit if the Settlement is
approved.
91. For these reasons, the “bar order” made a condition of the Settlement by the CRI
Parties should be approved.
H. An Order Preliminarily Staying and Enjoining Prosecuting or Pursuing any Settled Claims Until Further Order of the Court is Necessary and Proper.
92. The Preliminary Approval Motion seeks entry of a preliminary stay and injunction
against the Receiver, the Indenture Trustees, all previous, present and future Bondholders, the
Claimants, all other Interested Parties, and all other non-governmental Persons from prosecuting
or pursuing any Settled Claim against the CRI Parties and/or any of the CRI Released Parties until
further order of the Court.
93. The Bar Order and Judgment are an essential component of the Settlement. The
entry of a preliminary stay and injunction while the Court considers the Settlement is necessary to
preserve the status quo pending the Court’s consideration of it, and, indeed, is necessary to
preserve the Settlement itself, as well as ato avoid the incurrence of further litigation costs for the
Parties.
4817-7864-8726.6 35 Case 2:17-cv-00393-SCM Document 327 Filed 05/24/19 Page 36 of 38 PageID: 14369
94. The entry of a preliminary stay and injunction while the Court considers the
Settlement is also consistent with provisions of the Receivership Order staying action of any nature
against any Receivership Property. (Dkt. No. 7, Receivership Order at ¶¶ 31-33).
CONCLUSION
95. The Settlement should be approved because it is a reasonable exercise of sound
business judgment, is prudent, is fair, adequate and reasonable and is in the best interests of the
Receivership Estate and Bondholders. Moreover, the contrast between the Settlement and
litigating the Dispute is stark. Litigating the Dispute would be lengthy, costly and uncertain and
could result in a lower recovery than the Settlement guarantees. In direct contrast, if the Settlement
were approved by this Court, it would provide immediate and concrete benefits to the Borrowers
and the Bondholders.
96. At its core, the Settlement would provide a substantial recovery to the Receivership
Estate while “eliminating the inherent risks, delays and expense of prolonged litigation in an
uncertain cause.” Diplomat at 920. For this reason, and all of the foregoing reasons discussed
herein, the Receiver submits that the Settlement falls well within the reasonable range of litigation
possibilities and is in the best interests of the Receivership Estate and the Bondholders; therefore,
the Settlement should be approved.
WHEREFORE, PREMISES CONSIDERED, the Receiver respectfully requests the
Court:
a. grant the relief requested in this Preliminary Approval Motion,
b. enter the proposed Scheduling Order as set forth in Exhibit 2 hereto, inter alia,
approving the content and method and manner of dissemination and publication of the Notices set
forth in Exhibits 3 and 4 hereto, and setting the Final Approval Hearing for a date at least ninety
(90) days after the entry of the Scheduling Order; and
4817-7864-8726.6 36 Case 2:17-cv-00393-SCM Document 327 Filed 05/24/19 Page 37 of 38 PageID: 14370
c. following the Final Approval Hearing, enter the Bar Order and Judgment set forth
in Exhibit 5 hereto, inter alia:
i. approving the Settlement;
ii. barring claims; and
iii. approving payment of the professional fees and expenses of its general
counsel, Waller, and special counsel, Whiteford Taylor; and
d. and grant such other and further relief as it deems just and proper.
4817-7864-8726.6 37 Case 2:17-cv-00393-SCM Document 327 Filed 05/24/19 Page 38 of 38 PageID: 14371
Dated: May 24, 2019 Respectfully submitted,
/s/ Blake D. Roth Blake D. Roth Ryan K. Cochran (admitted pro hac vice) Waller Lansden Dortch & Davis, LLP 511 Union Street, Suite 2700 Nashville, Tennessee 37219 Telephone: 615.244.6380 Email: [email protected] [email protected]
Counsel for the Receiver
4817-7864-8726.6 38 Case 2:17-cv-00393-SCM Document 327-1 Filed 05/24/19 Page 1 of 69 PageID: 14372
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Case 2:17-cv-00393-SCM Document 327-1 Filed 05/24/19 Page 9 of 69 PageID: 14380
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Case 2:17-cv-00393-SCM Document 327-1 Filed 05/24/19 Page 10 of 69 PageID: 14381
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Case 2:17-cv-00393-SCM Document 327-1 Filed 05/24/19 Page 12 of 69 PageID: 14383
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Case 2:17-cv-00393-SCM Document 327-1 Filed 05/24/19 Page 13 of 69 PageID: 14384
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Case 2:17-cv-00393-SCM Document 327-1 Filed 05/24/19 Page 15 of 69 PageID: 14386
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Case 2:17-cv-00393-SCM Document 327-1 Filed 05/24/19 Page 17 of 69 PageID: 14388
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Case 2:17-cv-00393-SCM Document 327-1 Filed 05/24/19 Page 19 of 69 PageID: 14390
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Case 2:17-cv-00393-SCM Document 327-1 Filed 05/24/19 Page 20 of 69 PageID: 14391
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Case 2:17-cv-00393-SCM Document 327-1 Filed 05/24/19 Page 21 of 69 PageID: 14392
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Case 2:17-cv-00393-SCM Document 327-1 Filed 05/24/19 Page 22 of 69 PageID: 14393
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Case 2:17-cv-00393-SCM Document 327-1 Filed 05/24/19 Page 23 of 69 PageID: 14394
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Case 2:17-cv-00393-SCM Document 327-1 Filed 05/24/19 Page 24 of 69 PageID: 14395
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Case 2:17-cv-00393-SCM Document 327-1 Filed 05/24/19 Page 25 of 69 PageID: 14396
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Case 2:17-cv-00393-SCM Document 327-1 Filed 05/24/19 Page 26 of 69 PageID: 14397
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Case 2:17-cv-00393-SCM Document 327-1 Filed 05/24/19 Page 27 of 69 PageID: 14398
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Case 2:17-cv-00393-SCM Document 327-1 Filed 05/24/19 Page 28 of 69 PageID: 14399
',$1(52%,1621 68$5(=)$0,/<75867 7+(:,6(&$59(5)$075867 32%2; '$9,/$&,5 60($'2:+,//6/223 :,&.(1%85*$= 78&621$= *5((19$//(<$=
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7+(:,//,$0. '(%5$* &+$5/(6-%85&=<. &/$5,66$-&/,1(75 (7+(5,'*( :'21*(6%$<5' (7+2036213($.3.:<81,7 :'(6(57*/(1'5 0(4821:, 6&2776'$/($= 681&,7<:(67$=
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Case 2:17-cv-00393-SCM Document 327-1 Filed 05/24/19 Page 29 of 69 PageID: 14400
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-$0(6*5$,) +2/0(6)$0,/<75867 =211,(.5$86( 60217(7(6252'5 /((6$9( 32%2; &27721:22'$= /21*%($&+&$ %8//+($'&,7<$=
('$/(+0$16$1'5$.5(,71(5 )%27+(*529(65(975 -26(3+9+8-%(5 $771(),.5(,71(5 :$9(18(/ '$<721$$9( %52$':$<67( /$1&$67(5&$ /$.(+$9$68&,7$= 1(:<25.1<
+(,1=: 3$75,&,$&+$(1,6&+ $/)5('6+8.5(92&$%/(/,9,1* :,//,$0/26$662 3,1(.12//6'5 :52%,1/1 (3$:1((75/ 6('21$$= 681&,7<:(67$= )25702+$9($=
'21$/'- 5,7$00$&.(</,9 +$//)$0,/<75867 (0,/,+5,* 75 :,1(*/$66'5 :)(7/2&.75/ %$6,//1 35(6&277$= 3(25,$$= 35(6&277$=
Case 2:17-cv-00393-SCM Document 327-1 Filed 05/24/19 Page 30 of 69 PageID: 14401
7+(67(9(13 0$5<.+$5%(&. '211$.$0(1 52%,10$57,1 1%8(1$9,6: $/<6680&7 3(/,&$1'5 '(:(<$= 5(1219 )5,6&27;
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-(11,)(5+$:(6 %(51$5'.(11('< 0,&+$(/30$77(5$77(( 65$*(1'5 &$7&/$:&7 102253$5.5'$37% <80$$= 68535,6($= 7+286$1'2$.6&$
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0$;* $/(7$/0&&$%(5(9 -2$1(+(6/23 $/9,1 6
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7+(*(5$/')0&1$//<$1' 7(55<(8*(1(1(:0$1 '$9,'3+,//,36 )5$1&(6 .,&.,1*+256('5 %8&.,1*+$03/ :$/.,1*',$021''5 /$.(+$9$68&,7$= 35(6&277$= 35(6&277$=
0,&+$(/' 0$5*$5(7$0(&&$ '$9,'12(+5,1* .$7+5<13+,//,36 :*8/)+,//6'5 :%(77<(/<6(/1 %8&.,1*+$03/ 681&,7<$= 3(25,$$= 35(6&277$=
Case 2:17-cv-00393-SCM Document 327-1 Filed 05/24/19 Page 31 of 69 PageID: 14402
52%(570(/$1* 5,&+$5''2%,7=6859,9256 7+(3+,//,36/,9,1*75867 :3$/0(5$6'5 *8/)+,//6&7 %8&.,1*+$03/ 681&,7<$= 681&,7<$= 35(6&277$=
*(2))5(<0(55,// +$55< 6+$5212))(50$1 :,//$35$=$.3$%67 17+'5 :'$/721&,5 32%2; 3(25,$$= 3$<621$= 681&,7<$=
67(3+(10(<(5 7+(3$%67)$0,/<75867 -(55<482/$6 (675(//$'5 :*5((1+8567'5 (3/$7($85,'*(5' 3$6&2:$ 681&,7<$= 35(6&2779/<$=
.(,7+0,//(5 *(25*(3$1.(5 *$5</((5$06(<77(( :3,11$&/(9,67$/1 1257+67 %5,'/(:$<81,7 :,770$11$= 6(48,0:$ <$.,0$:$
020(17(17(535,6(6/3 3$75,&,$3$1.(5 0,&+(//5$7< $&$&,$'5 1257+67 9(5'(6$17$)(3.:< 6('21$$= 6(48,0:$ &2519,//($=
(/0&+,/'5(1 675867 $11((//(13$77(1 '2527+<5($80( 6$552:+($'/1 :&$7&/$:&7 &$7+('5$/52&.'581,7 &27721:22'$= 68535,6($= 6('21$$=
7+(1(/66(1)$0,/<5(92&$%/( 7+(*/25,$03($./,9,1*75867 52*(552%,1621 (%(//5'$37 (/21*+251'5 1672&.721+,//5'67($ 3+2(1,;$= '(:(<$= .,1*0$1$=
686$152*(56 7+(5$/3+ $11$62%%$ 7+203621)$0,/<75867 1%5,//,$176.<:$< ((/52'(25' 32%2; 35(6&2779$//(<$= )25702+$9($= &+,129$//(<$=
Case 2:17-cv-00393-SCM Document 327-1 Filed 05/24/19 Page 32 of 69 PageID: 14403
.(11(7+52*(56 -2+1$67$5<77(( +7,33(77 1%5,//,$176.<:$< 32%2; 167$7(5287( 81,7 35(6&2779/<$= &$039(5'($= 35(6&277$=
527+67(,1)$05(975867 7+(5,&+$5'*/(1167(9(16 %28/(79$1'(:(*+(75867 15867<1$,/5' :(0(5$/'37 :6$1'75287&7 35(6&2779$//(<$= 681&,7<$= 68535,6($=
6$//<(/,=$%(7+67227+2)) *(5$/'-6+$<1(77(( 7+(9$1+251)$0,/<75867 /,9,1* *5$1,7(635,1*6'5 +,*+/$1'(5$9( .:$1$&7 35(6&277$= /$.(+$9$68&,7$= 35(6&277$=
67$16+(3+(5' 6$//<67227+2)) /$55<9(5+8/67 32%2; .:$1$&7 32%2; 3+2(1,;$= 35(6&277$= 35(6&2779$//(<$=
:,//,$0' 526$/,(:$*1(5 -8$1,7$6+27/,))75 7$16.<0$1$*(0(17&2//& 75867 &$67/(52&.'5 9,$/$7,1$ 6.$7+<5' 681&,7<:(67$= '(/0$5&$ )/$*67$))$=
521$/'&7((7(56 9,&.</ 7+(6,3()$0,/<75867 3$8/:$/7+(5 7((7(56 16,*1$/%877(&,5 1+,*+:$< 63$&( 1$5(1$'(//20$5' 681&,7<$= 3$5.(5$= &$039(5'($=
67$1/(<-6.,%$ 7+(6$5*(17&$67/(75867 5,&+$5':$60(5 72172'5 &28*$5'5 6%5$'6+$:'5 /.+$9$68&7<$= 6('21$$= 35(6&277$=
&/$5(60$///,9,1*75867 7+(/& -'7((76/,9,1*75867 52;$11(:$7.,16 $&$&,$'5 :6$/70,1(5' 17+'5 6('21$$= &$039(5'($= 3(25,$$=
Case 2:17-cv-00393-SCM Document 327-1 Filed 05/24/19 Page 33 of 69 PageID: 14404
'21$/'( 0$5<-260$///,9 *(25*,$7+20$6 +(57$$:(%(5 75867 6(0,12/('5 ('85+$05' 17+$9($37 %8//+($'&,7<$= '(:(<$= 3(25,$$=
7+(/2:(//0:,**,165(9/,9 (8*(1(<28* -$1$/21* 13/$=$'(/5,2%/9' 5$,1%2:'5 :+25,=219,(:'5 3(25,$$= /,9,1*67217; &/$5.'$/($=
7+(5(975672)7+20$6 7+(3$8/' &$52/<1-:,/&2; /,6$=<6. &+$5/(6 6-(520(9:6 :5,'*(9,(:5' 10(648,7('5 &2519,//($= 681&,7<$= 35(6&2779$//(<$=
&+$5/(1(7:,/62175 5$1'$//%$.(5 0217*20(5<)$0,/<75867 /(,685(&7 (.($76$9(81,7 32%2; 6('21$$= 0(6$$= 35(6&277$=
+$52/'/:,57+75867 +(/$,1(%(50$1 *(5$/',1(12:$. (86+,*+:$</27 7,0%(5/,1(5' /20$9,67$'5 *2/'&$1<21$= 35(6&277$= 35(6&277$=
7+(7+20$6-12:$. $1*(/$(:,7775867 '27621)$0,/<75867 *(5$/',1(' 02//<*,%621'5 $&20$'5 /20$9,67$'5 /.+$9$68&7<$= .,1*0$1$= 35(6&277$=
/(67(5:2/)) 67(9()(.(7( *25'21 1$1&<6+80$1 :3277(5'5 '(/5,2 (%522.+2//2:'5 3(25,$$= &27721:22'$= &27721:22'$=
(':,1:22' $//(1*,/621 )/260,7+ 30%32%2; )$,5:$<&,5 +,*+/$1'(53/ -())(562125 &2519,//($= 35(6&277$=
Case 2:17-cv-00393-SCM Document 327-1 Filed 05/24/19 Page 34 of 69 PageID: 14405
.$7(:22'58)) */(1+$'/2&. 7+(67$555(975867 )2;7$,//223: :,1',1*9: &2521$'275/ %,//,1*607 1(:%5$81)(/67; 6('21$$=
*5(*25<3+$5./(52$'/,9 /8&<-:<1.223/9,1* -$0(6 0$5&(//$67(3+(1621 75867 '$<721$$9( 186+:< 81,7 16+$'2:9$//(<5$1&+5' /.+$9$68&7<$= 35(6&277$= 35(6&277$=
$0(/,$<$7(6 521$/'+2//$021 6$08(/6<.(6 1$*8$)5,$'5 (+2//$02167 32%2; 35(6&2779$//(<$= &$039(5'($= 0(6$$=
7586/(575867 .(11(7+ *(5$/',1(&/((9(6 0$<(5+2)(5/,975867 $771(67$7(6(59,&(6 5(9 6/,77/(%,5'3/$&( 6287+:(673.:<%/'*1' ('81&$167 78&621$= )/225$867,17; 0(6$$=
*(25*,$$'$06 $6,<$1$'((077(( '(11,6&/(9(1*(5 (0$,163 2/')25(675'$37$ :75(1721:$< 0(6$$= /<1&+%85*9$ )/25(1&($=
67(9(1$/(;$1'(5 %52&. 6+$521$117$5$6 '(11,6&/(9(1*(5 (0$,167/27 (&/,))6:$//2:75/ :75(1721:$< 0(6$$= *5((19$//(<$= )/25(1&($=
5866(//(&$57(577(( %58&(%$.(5 $59,1&5$:)25')$0,/<75867 :5,9(55'81,7 :0,/.<:$< 6/(*(1''5 78&621$= &+$1'/(5$= *,/%(57$=
$/$1((895$5' +(50$1%$51(77 6+,5/(<&811,1*+$05(975867 &$55,$*(+,//:$< 6&$0,12'(/7(-21 167$9( 7+(9,//$*(6)/ *5((19$//(<$= */(1'$/($=
Case 2:17-cv-00393-SCM Document 327-1 Filed 05/24/19 Page 35 of 69 PageID: 14406
+,**,165(9/,9,1*75867 7+('(&/5(9/,9752) '$9,65(9/,975867 1:6$1'3,3(5'5 :,1'%522.(:$< (0217($9( :22'/$1':$ $/3+$5(77$*$ 0(6$$=
5$1'<:+85:,7=5(92&$%/( 0,&+$(/%/$&+87 /(67(55',(75,&+5(92&$%/( 75867 :$/1876712 :&$//(*$5&,$ 6800,75,'*('5 *5((1&29(635,)/ 78&621$= )$,52$.65$1&+7;
'$9,'/ .$7+(5,1(0%8516 %5,$1-2+1621 1,&+2/$6',0$ 5(9 5(38%/,&$9( 1,521:22'5(6(59(:$< (3/$&,7$'(/0(7$7( 2$.3$5.0, 78&621$= 78&621$=
7+(-2+1621)$05(975867 -2+1&$77($8 '52%,16.,)$0,/<5(92&$%/( 1602.(75((/1 :&2<27(75$,/'5 663221'5 3$5$',6(9$//(<$= *22'<($5$= 78&621$=
0$5*$5(7-/(1+$5775 7+(&+$''(5'21)$0,/< 0$5-25,((5,&.621 :(1,'$9( (&522.('75((75/ (%52:15' 0(6$$= 78&621$= 0(6$$=
(5,&.621)$05(975 '$/(+$55,6 -$0(6-.2&,/,9,1*75867 (6,/9(575(('5 1.,9$/1 681&,7<%/9' 78&621$= 3$5$',6(9/<$= 681&,7<$=
*/(11*,/%2'<'(&('(176 0,/'5('+$55,6 587+.8&(5$ 758671$ 1.,9$/1 (0$,11 15$1&+29,67262%/9' 6&2776'$/($= 0(6$$= 81,72529$//(<$=
$%%<*22'0$1 +2('(/)$0,/<75867 $50(/,1'$/$1'(526 :*(25*,$$9( ()/2:(55,'*('5 :1(%5$6.$67 */(1'$/($= 78&621$= 78&621$=
Case 2:17-cv-00393-SCM Document 327-1 Filed 05/24/19 Page 36 of 69 PageID: 14407
6.<(*22'0$1 -$63(5/,9,1*75867 7+(/$98)$0,/<5(975867 :*(25*,$$9( (0217526(&$1<21'5 (5,29(5'(9,67$'5 */(1'$/($= 2529$//(<$= 78&621$=
6(7+*22'0$1 -$0(6-(520( %(51$5'/(( (&2/7(567 (526(0217('5 1.,77$7,11<$9( 3+2(1,;$= 3+2(1,;$= 78&621$=
720$1'&,1'<*5((1)$0,/< '2/25(6.$5(&., .(11(7+0$&. 75867 :25$,%,'5 17+67 (6$%,12(67$7(6'5 3(25,$$= 3+2(1,;$= 78&621$=
5,&+$5'5*800,1*(55(9/,9 7+(.$8)0$11)$0,/< 5,&+$5''0$56+$// 75 10,//(55'$37 :5$)7(5&,5&/(67 63/$&,7$'(&(59(&$6 6&2776'$/($= 78&621$= 78&621$=
*(25*(0+$// $1$0+$// 0$5*$5(7.$8)0$11 7+(0&&$57,16859,9256 1'(/0$5 10,//(55'$37 65,%%21:22''5 0(6$$= 6&2776'$/($= 681/$.(6$=
0,&+$(/+$00(5$1' $/9,1.$< -2+10&.$< 17+67 66$,170$5<667 32%2;&$721)$505' 0(6$$= 6,28;&,7<,$ <25.9,//(,/
0,&+$(/+$11$ $5/(1(0.1,*+75(975867 /255$,1(025721 17+3/ (7+2036213($.3.:<81,7 1%$/%2$'5 6&2776'$/($= 6&2776'$/($= 681&,7<$=
52'(5,&.0800 7+(32:(56/,9,1*75867 7+(7+($521:(1'(//7$
Case 2:17-cv-00393-SCM Document 327-1 Filed 05/24/19 Page 37 of 69 PageID: 14408
0$5<087+ (/,=$%(7+5(,&+(1%(5*(5 9$/(17,17(325'(, 17+67 :*(25*,$$9( 6:$<1(67$37 0(6$$= */(1'$/($= $5/,1*7219$
9,'$)8785$+2/',1*6//3 '(&/$5$7,212)752)&/$5(1&( (0,/<5(,&+(1%(5*(5 $77152%(57%0<5,&.0*5 17+67 :*(25*,$$9( 75$',7,216'5 0(6$$= */(1'$/($= 35(6&277$=
7+(-2+15 1$1&<*1(:0$1 $'(/,1(5,(%(/ .,0926%85* :*2/)9,(:'5 17+3//$1( ::+,7(02817$,15' 78&621$= 68535,6($= 681&,7<$=
.$5(1:$&.(55(9/,9,1*75867 &$52/01,&+2/6215(975867 0$5<6+$))(5 1$ ('(6(576$1'6'5 (3,0$ :*(25*,$$9( 78&621$= 78&621$= */(1'$/($=
6+$52125%(&. (/0(56,/$*+, *(5$/':+((/(5 1$0%(5:22''5 :9,67$5,'*('5 ((/($1250$/'21$'23/ 68535,6($= *5((19$//(<$= 78&621$=
7+(('081' 6+(55<25%(&. %(77<6/,1.$5'087+ =$+1(5/,975 :3$9,//,21'5 (.($76$9(81,7 &$0$/2&+'5 681&,7<:(67$= 0(6$$= &$0$12,6/$1':$
$/,&(3$3$/,2/,26 .(11(7+635$*8( -$0(6%52:1 1&5$<&52)75' 17+3/ (+,*+/$1'$9(67( 78&621$= 0(6$$= 3+2(1,;$=
67(3+(13$5.(50'5(92&$%/( 7+('28*/$6567(3+(16 (50$ 7+(.(11(7+5&+,$52 '211$ (&$0,12/$&(%$',//$ (6+(55,'5 (%$.(567 78&621$= *,/%(57$= 78&621$=
Case 2:17-cv-00393-SCM Document 327-1 Filed 05/24/19 Page 38 of 69 PageID: 14409
7+(-$0(65 526(0&$57(5 7+(/(52<)67(51(5)$0,/< :,/0$.85
%211,(/<1( %5<&(:,/.(6 &+5,67,1(%2'(1 1&$/,&2'5 &+$1&(5</1 1'$9(1( 681&,7<$= 5$3,'&,7<6' %(//(98(:$
0,&+$(//<1( .$5(1:2/)( +$52/'%2/*(5 1&$/,&2'5 17+$9( (7+67 681&,7<$= */(1'$/($= &$63(5:<
*8<0&9(< -2+1$//(< 521$/'*%221(75 ( 7+3/81,7 6*5((16,'(3/ (+,''(1635,1*6'5 0(6$$= *5((19$//(<$= :$6+,1*72187
52%(5708//(16 5,&+$5'$//<1 125%(575%277&+(5 1)$,59,(:$9(81,7 :(/&$0,12'(/&(552 :$/,&($9(81,7 78&621$= 78&621$= */(1'$/($=
/$85$52&.0$1 '21$/'5$512/'77(( -$1,1(%81'< :&$0'(1$9( 167(5/,1*'5 32%2; 681&,7<$= 68535,6($= 0$<(5$=
0,&+$(/5866(// 5,&+$5'%(11(77 &$5$&$03%(// :3,1213,1(&7 67,0%(5/,1($9( (&$//((675(//$&/$5$ 78&621$= 78&621$= 78&621$=
-26(3+6+5$*(5 3(7(5(%,/277( &$53(17(5)$0,/<5(975867 62/67,&('5 6&5$<&52)7 6,/9(52$.6'5 35(6&277$= 78&621$= ('021'2.
Case 2:17-cv-00393-SCM Document 327-1 Filed 05/24/19 Page 39 of 69 PageID: 14410
',$1($1'-26(3+6+5$*(5 7+(%,771(5)$0,/<75867 -(55<&$53(17(5 75867 (%($53$:3/ $9('(/$'(0(5$/' 62/67,&('5 78&621$= 63$5.619 35(6&277$=
:(/6+)$0,/<5(975867 7+(%/$&.%85175867 &$53(17(5)$0,/<5(975867 63(21,(&,5 (%52$':$<5'/27 6,/9(52$.6'5 0(6$$= 0(6$$= ('021'2.
)5$1.:,(50$1 -$0(6+%2$.75 -(55<&$53(17(5 :+$7&+(55' 72:(563$5./$1( $9('(/$'(0(5$/' :$''(//$= 6$1$1721,27; 63$5.619
:$<1( -2<&(&+,/'6/,975867 7+(5(6$)5< &$52/-2+1621 13257/$1'$9( :/$:5(1&(/1 6+(/'(1'5 0$5$1$$= */(1'$/($= :,11(%$*2,/
7+('(,(5/,1*/,9,1*75867 )8/:,'(5)$0,/<75867 &$52/(-2+162177(( :&$&786)/2:(5'5 1 7+67 6+(/'(1'5 *22'<($5$= &$9(&5((.$= :,11(%$*2,/
&<17+,$',$1$ 7+(*$1*,)$0,/<75867 &$52/(-2+162177(( :%(7+$1<+20(5' 15':$< 6+(/'(1'5 3+2(1,;$= 3+2(1,;$= :,11(%$*2,/
(175867$=)%2*/25,$(',$1$ $5,(/*85,$1,55(92&$%/(75 -2+1621)$0,/<75867 :%(7+$1<+20(5' 17+'5 ('81%$5'5 3+2(1,;$= 3(25,$$= 7(03($=
(175867$=)%2*/25,$(',$1$ '21*85,$1 ,5$)%23$8/5./2)7 :%(7+$1<+20(5' 17+'5 :7523,&$1$&,5 3+2(1,;$= 3(25,$$= 681&,7<$=
Case 2:17-cv-00393-SCM Document 327-1 Filed 05/24/19 Page 40 of 69 PageID: 14411
7+('22/,77/()$0,/<75867 -867,1*85,$1,55(92&$%/(75 3$8/5./2)7 :%$-$'$5' 17+'5 :7523,&$1$&,5 3(25,$$= 3(25,$$= 681&,7<$=
/255$,1((63,12=$ *85,$1)$0,/<75867 587+./2)7 1.2/%5'$37 17+'5 :7523,&$1$&,5 78&621$= 3(25,$$= 681&,7<$=
52%(57(67(6 +$&.)$0,/<75867 ,5$)%2587+$11./2)7 32&212&7 16,/9(53$7+ :7523,&$1$&,5 63$5.619 68535,6($= 681&,7<$=
$%1(5)5((0$1)$0,/<75867 *(25*(0$1'0$5<$11-$&2%6 587+./2)7 32%2; :&257$5232,17'5 :7523,&$1$&,5 )257/$8'(5'$/()/ 68535,6($= 681&,7<$=
-0'527+//& 526(0$5<(/$,1(.26+0,'(5 $57+85)5((0$1 $771-$0(6',$1$: )$0,/< 32%2; %(7+$1<+20(5' (0$1/29( )257/$8'(5'$/()/ 3+2(1,;$= 78&621$=
&$52//,1'(1%(5* -2<1(/621/,9,1*75867 7+20$667$7= :$/'(5&7 (+,//(5<'5 6'(6(57681'5 :$6+28*$/:$ 6&2776'$/($= 78&621$=
67(9(1/,1'(1%(5* )5$1&(651,&+2/62147,375867 7+(67((/()$0,,/</,9,1*75867 :$/'(5&7 7+67 &$//(0,/8 :$6+28*$/:$ 08.,/7(2:$ 78&621$=
-$0(6/,6.$ 5,7$&35$:'=,.5(92&$%/( 7+(9(77(5)$0,/<75867 (&$3(+251'5 1:(//635,1*'5 %877(5&835' 78&621$= *5((19$//(<$= (/,=$%(7+&2
Case 2:17-cv-00393-SCM Document 327-1 Filed 05/24/19 Page 41 of 69 PageID: 14412
/,9,1*6721)$0,/<75867 /255$,1(5$1'/( '(%25$+9(77(5 1:+,7(7$1.9,6 :,50$/1 %877(5&835' 68535,6($= */(1'$/($= (/,=$%(7+&2
'(11,6//2<' 3$75,&,$5,6.,6&+0,7= 52%(57:$*1(5 1&+(55< :9(5'(/1 (5,1&219,(:'5,9( 0(6$$= *22'<($5$= 9$,/$=
/$1$/21*21, %5<11526( 0,&+$(/:(%67(5 :5,98/(7'5 7+67 9$/(5,(&,5 78&621$= 08.,/7(2:$ ($67)$/0287+0$
7+(/8*(5)$0,/</,9,1* +(5%6&+0,7= '21(77(:,//,$06 :*/(12$.6&,5 (7+$9( :0$*((5' 681&,7<$= $1&+25$*($. 78&621$=
*(25*(0$5; 0$5<6&+0,7= /$85(1&(*2',1* ::,1'625'5 1+(5,7$*(&/8%3/ :*5$1$'$'5 681&,7<$= 0$5$1$$= 681&,7<$=
)5$1.*02&1< '2/25(60 +$52/'06&+8// 52%(57.(/7,( 69,$'(/3,&$0$'(526 13/$&,7$6$1,6,'52 :+$:.5' *5((19$//(<$= 78&621$= 35(6&277$=
7+('25,602+575867 '(921025(< 1,1$.(17 19,$02172<$'5 13/$&,7$6$1,6,'52 135263(&725&,5 681&,7<:(67$= 78&621$= 3$<621$=
-2$11/(7&+:257+ 3$75,&,$:$56=$:6., -$&.(=5$7< :3277(5'5 17+$9( 9(5$/(1(:$<6: */(1'$/($= 681&,7<$= (9(5(77:$
Case 2:17-cv-00393-SCM Document 327-1 Filed 05/24/19 Page 42 of 69 PageID: 14413
6,5,3(5(5$ .$7+/((1:$7(56 /$85(1&(*2',1* 6.(5%<:$< 1.12//:22'&,5 :*5$1$'$'5 &+$1'/(5$= 78&621$= 681&,7<$=
0$85,1((5,&+$5'65(9/,9 ,5$)%2&+$5/(1((//,621 52%(57+25670$1 75867 1257+'$18%(&7 17+67 52%,1621/1 3+2(1,;$= 3+2(1,;$= %28/'(5&,7<19
:,//,$0&6+,)/(7 6+,5/(<+ */(1((//,621 &+$'/(5+25670$1 ::+,7025(+$///1 1'$18%(&7 17+3/ 68535,6($= 3+2(1,;$= 6&2776'$/($=
7+(60,7+)$075867 */(1((//,621 7+(+2:$5'5(9/,9,1*75867 0,112:3/ 1'$18%(&7 1'(/:(%%%/9' /$.(+$9$68&,7$= 3+2(1,;$= 681&,7<$=
6,67(3+(16 ,5$)%2*/(1((//,621 5$/3+-8/,$1(//( $0%$66$'25'5 1'$18%(&7 1(0(5$/'&29(:$< /$.(+$9$68&,7$= 3+2(1,;$= 68535,6($=
'20,1*27255(6,,,5(9/,9 6(3)%2*/(1((//,621 %58&(/(:,6 75867 1'$18%(&7 ::('*(:22''5 52%,1621/1 3+2(1,;$= 681&,7<$= %28/'(5&,7<19
&/,))25'72:(56 7+(*250$1)$0,/<75867 ($51(670&&/(//$1 %/8(&$1<215' 5,'*(5' :%(//5'/27 /$.(+$9$68&,7$= *52721&7 68535,6($=
5,&+$5':$*1(5 '21$/'(/$9,165 0$5-25,(- *(25*(0($16 6($02817'5 6(7+67 ($5%25$9( %5,1121:$ 3203$12%($&+)/ 0(6$$=
Case 2:17-cv-00393-SCM Document 327-1 Filed 05/24/19 Page 43 of 69 PageID: 14414
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Case 2:17-cv-00393-SCM Document 327-1 Filed 05/24/19 Page 46 of 69 PageID: 14417
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Case 2:17-cv-00393-SCM Document 327-1 Filed 05/24/19 Page 47 of 69 PageID: 14418
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Case 2:17-cv-00393-SCM Document 327-1 Filed 05/24/19 Page 48 of 69 PageID: 14419
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Case 2:17-cv-00393-SCM Document 327-1 Filed 05/24/19 Page 49 of 69 PageID: 14420
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Case 2:17-cv-00393-SCM Document 327-1 Filed 05/24/19 Page 50 of 69 PageID: 14421
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Case 2:17-cv-00393-SCM Document 327-1 Filed 05/24/19 Page 51 of 69 PageID: 14422
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Case 2:17-cv-00393-SCM Document 327-1 Filed 05/24/19 Page 53 of 69 PageID: 14424
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Case 2:17-cv-00393-SCM Document 327-1 Filed 05/24/19 Page 54 of 69 PageID: 14425
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7KH5HDOW\%XLOGLQJ 2QH%XFNKHDG3OD]D 7KH2PEHUJ+RXVH 'UD\WRQ6WUHHW6XLWH6DYDQQDK 3HDFKWUHH5RDG1: :HVWVW6WUHHW *$ 6XLWH 5RPH*HRUJLD $WODQWD*$ *DLQHVYLOOHDQG+DOO&RXQW\'HYHORSPHQW *DLQHVYLOOHDQG+DOO&RXQW\'HYHORSPHQW $XWKRULW\ &DSHOO +RZDUG3& $XWKRULW\ FR6WHZDUW0HOYLQ )URVW//3 32%R[ 6WHZDUW0HOYLQ )URVW//3 +XQW7RZHU6XLWH 2SHOLND$ODEDPD 32%R[ 0DLQ6WUHHW *DLQHVYLOOH*$ *DLQHVYLOOH*$ Case 2:17-cv-00393-SCM Document 327-1 Filed 05/24/19 Page 69 of 69 PageID: 14440 7KH0HGLFDO&OLQLF%RDUGRIWKH&LW\RI 3DJH6FUDQWRP6SURXVH7XFNHUDQG)RUG 'HYHORSPHQW$XWKRULW\RI&ROXPEXV*$ 2SHOLND$ODEDPD 6\QRYXV&HQWUH FR:LOOLDP/7XFNHU(VT FR-RKQ6FRWW3LHUFH(VT %D\$YHQXHUG)ORRU 3DJH6FUDQWRP6SURXVH7XFNHU )RUG &DSHOO +RZDUG3& &ROXPEXV*$ %D\$YHQXH7KLUG)ORRU 6RXWK3HUU\6WUHHW &ROXPEXV*HRUJLD 0RQWJRPHU\$ODEDPD 5DQGDOO&DOYHUW 1:*UDQG%OYG 2NODKRPD&LW\2. 'DWHG 0D\ /s/ Blake D. Roth %ODNH'5RWK 5\DQ.&RFKUDQ DGPLWWHGpro hac vice :DOOHU/DQVGHQ'RUWFK 'DYLV//3 8QLRQ6WUHHW6XLWH 1DVKYLOOH7HQQHVVHH 7HOHSKRQH (PDLO EODNHURWK#ZDOOHUODZFRP U\DQFRFKUDQ#ZDOOHUODZFRP Counsel for the Receiver Case 2:17-cv-00393-SCM Document 327-2 Filed 05/24/19 Page 1 of 204 PageID: 14441 EXHIBIT 1 Case 2:17-cv-00393-SCM Document 327-2 Filed 05/24/19 Page 2 of 204 PageID: 14442 SETTLEMENT AND RELEASE AGREEMENT This Settlement and Release Agreement (the “Agreement”) is entered into as of the ___ day of ______, 2019, by and between (i) Derek Pierce, in his capacity as the court- appointed receiver (the “Receiver”) in that certain civil action styled S.E.C. v. Edwards, et al., No. 17-393 (D.N.J. Jan. 20, 2017) (the “SEC Receivership Case”) and as assignee of certain claims (as described more fully below), (ii) Carr, Riggs & Ingram, LLC (“CRI”), (iii) Wink Laney (“Laney”), (iv) Russ Frederick (“Frederick” and, together with CRI and Laney, the “CRI Parties”), (v) BOKF, National Association d/b/a Bank of Oklahoma, in its capacity as Indenture Trustee for the certain Bonds (as described more fully below) (“Trustee BOKF”), (vi) UMB Bank, N.A., in its capacity as Indenture Trustee for the certain Bonds (as described more fully below) (“Trustee UMB”), and (vii) U.S. Bank, National Association, in its capacity as Indenture Trustee for the certain Bonds (as described more fully below) (“Trustee U.S. Bank” and, together with Trustee BOKF and Trustee UMB, the “Indenture Trustees”). Each of the foregoing is a “Party” to this Agreement, and together they are the “Parties” to this Agreement. RECITALS WHEREAS, on January 20, 2017, the Securities and Exchange Commission (the “SEC”) filed a Complaint against (i) each of Dwayne Edwards, Todd Barker, Senior Solutions of Social Circle, LLC, Oxton Place of Douglas, LLC d/b/a Oxton Real Estate of Douglas, LLC (“Douglas”), Rome ALF, LLC (“Rome”), Savannah ALF, LLC (“Savannah”), Gainesville ALF, LLC (“Gainesville”), Waterford Place ALF, LLC (“Waterford”), Montgomery ALF, LLC (“Montgomery”), Columbus ALF, LLC (“Columbus”) and Opelika ALF, LLC (“Opelika” and, together with Douglas, Rome, Savannah, Gainesville, Waterford, Montgomery and Columbus, the “Borrowers”) as “Defendants” and (ii) each of Oxton Senior Living, LLC, Manor House Senior Living, LLC, Susan Edwards a/k/a Susan Rogers, Sharon Nunamaker a/k/a Sharon 4818-9414-7974.19 Case 2:17-cv-00393-SCM Document 327-2 Filed 05/24/19 Page 3 of 204 PageID: 14443 Hadden, and SDH Design, LLC as “Relief Defendants,” thereby commencing the “SEC Receivership Case”; WHEREAS, the SEC Receivership Case was filed in the United States District Court for the District of New Jersey (the “Receivership Court”); WHEREAS, in the Complaint, the SEC sought the appointment of a receiver to administer a receivership estate consisting of all assets of, among others, Senior Solutions of Social Circle, LLC and the Borrowers (together, the “Receivership Entities”); WHEREAS, on January 23, 2017, the Receivership Court entered an Order Appointing Receiver (the “Receivership Order”), appointing Mr. Pierce as receiver over the Receivership Entities and their assets (singularly a “Receivership Estate” and, collectively, the “Receivership Estates”); WHEREAS, pursuant to the Receivership Order, the Receivership Court has exclusive jurisdiction over, and possession of, the assets of the Receivership Entities; WHEREAS, also pursuant to the Receivership Order, the Receiver is vested with all powers and authority of a receiver at equity, and all powers conferred upon a receiver by the provisions of 28 U.S.C. §§ 754, 959 and 1692, and Rule 66 of the Federal Rules of Civil Procedure; WHEREAS, also pursuant to the Receivership Order, the Receiver has the authority, power and duty to, among other things: (i) investigate causes of action and claims that are advisable or proper to recover for the benefit of the Receivership Estates; (ii) institute and pursue such causes of action and claims at law or equity as the Receiver deems necessary or appropriate for the benefit of the Receivership Estates; and (iii) take such other actions as approved by the Receivership Court and necessary to enforce the Receivership Order; 2 4818-9414-7974.19 Case 2:17-cv-00393-SCM Document 327-2 Filed 05/24/19 Page 4 of 204 PageID: 14444 WHEREAS, prior to the commencement of the SEC Receivership Case, each of the Borrowers, as either borrower or lessee, was a party to a municipal bond offering secured by one of the BOKF Indentures (as hereinafter defined), the Opelika-U.S. Bank Indenture (as hereinafter defined) or the Montgomery-UMB Indenture (as hereinafter defined) (each, an “Offering” and, collectively, the “Offerings”) for stated purposes, including acquiring and operating a certain senior living/care facility located in either Georgia or Alabama (each, a “Facility” and, collectively, the “Facilities”); WHEREAS, the Borrowers collectively raised from bondholders approximately $58.5 million through eight (8) separate Offerings over the period from August 2014 through September 2015; WHEREAS, the Offerings were conduit municipal bond offerings issued by the Douglas- Coffee County Industrial Authority, the Cave Springs Housing Development Corporation, the Savannah Economic Development Authority, the Gainesville and Hall County Development Authority, The Medical Clinic Board of the City of Montgomery - 1976 East (The Medical Clinic Board of the City of Montgomery - 1976 East issued both The Medical Clinic Board of the City of Montgomery - 1976 East (Montgomery ALF, LLC Project Bonds) and The Medical Clinic Board of the City of Montgomery - 1976 East (Waterford Place, LLC Project Bonds)), the Development Authority of Columbus, Georgia, and The Medical Clinic Board of the City of Opelika, Alabama (collectively the “Issuers”); WHEREAS, the bonds issued in connection with the Offerings are hereinafter referred to collectively as the “Bonds” and singularly as a “Bond” and the Persons (as defined below) who or which currently own or previously owned a Bond are referred to collectively as the “Bondholders” and singularly as a “Bondholder;” 3 4818-9414-7974.19 Case 2:17-cv-00393-SCM Document 327-2 Filed 05/24/19 Page 5 of 204 PageID: 14445 WHEREAS, in connection with six (6) of those Offerings, Trustee BOKF served, and continues to serve, as the indenture trustee under and pursuant to the following indenture agreements: (i) that certain Trust Indenture dated as of August 1, 2014, with the Douglas-Coffee County Industrial Authority as “Issuer” for the Series 2014A Bonds and the Series 2014B (Taxable) Bonds (the “Douglas–BOKF Indenture”); (ii) that certain Trust Indenture dated as of December 1, 2014, with the Cave Spring Housing Development Corporation as “Issuer” for the Series 2014A Bonds and the Series 2014B (Taxable) Bonds (the “Rome–BOKF Indenture”); (iii) that certain Trust Indenture dated as of January 1, 2015, with the Savannah Economic Development Authority as “Issuer” for the Series 2015A Bonds and the Series 2015B (Taxable) Bonds (the “Savannah–BOKF Indenture”); (iv) that certain Trust Indenture dated as of March 1, 2015, with the Gainesville and Hall County Development Authority as “Issuer” for the Series 2015A Bonds and the Series 2015B (Taxable) Bonds (the “Gainesville–BOKF Indenture”); (v) that certain Trust Indenture dated as of May 1, 2015, with The Medical Clinic Board of the City of Montgomery–1976 East as “Issuer” for the Series 2015A Bonds and the Series 2015B (Taxable) Bonds (the “Waterford–BOKF Indenture”); and (vi) that certain Trust Indenture dated as of July 1, 2015, with the Development Authority of Columbus, Georgia as “Issuer” for the Series 2015A Bonds and the Series 2015B (Taxable) Bonds (the “Columbus–BOKF Indenture” and, together with the Douglas-BOKF Indenture, Rome-BOKF Indenture, Savannah-BOKF Indenture, Gainesville-BOKF Indenture, and Waterford-BOKF Indenture, the “BOKF Indentures”); WHEREAS, the Receiver and Trustee BOKF represent and warrant that, pursuant to the BOKF Indentures, Trustee BOKF has the right, power and authority to pursue certain claims under the BOKF Indentures against third parties for injuries caused to those Bondholders who or 4 4818-9414-7974.19 Case 2:17-cv-00393-SCM Document 327-2 Filed 05/24/19 Page 6 of 204 PageID: 14446 which currently hold a Bond in connection with each of the Offerings associated with the respective BOKF Indentures (subject to an assignment of such claims to the Receiver, as discussed below); WHEREAS, in connection with one (1) of the Offerings, Trustee U.S. Bank served, and continues to serve, as the indenture trustee under and pursuant to that certain Trust Indenture dated as of May 1, 2015, with The Medical Clinic Board of the City of Opelika, Alabama as “Issuer” for the Series 2015A Bonds and the Series 2015B (Taxable) Bonds (the “Opelika–U.S. Bank Indenture”); WHEREAS, the Receiver and Trustee U.S. Bank represent and warrant that, pursuant to the Opelika–U.S. Bank Indenture, Trustee U.S. Bank has the right, power and authority to pursue certain claims under the Opelika-U.S. Bank Indenture against third parties for injuries caused to those Bondholders who or which currently own a Bond in connection with the Opelika Offering (subject to an assignment of such claims to the Receiver, as discussed below); WHEREAS, in connection with one (1) of the Offerings, Trustee UMB served, and continues to serve, as the indenture trustee under and pursuant to that certain Trust Indenture dated as of May 1, 2015, with The Medical Clinic Board of the City of Montgomery, as “Issuer” for the Series 2015A Bonds and the Series 2015B (Taxable) Bonds (the “Montgomery–UMB Indenture,” and together with the BOKF Indentures and the Opelika-U.S. Bank Indenture, the “Indentures”); WHEREAS, the Receiver and Trustee UMB represent and warrant that, pursuant to the Montgomery–UMB Indenture, Trustee UMB has the right, power and authority to pursue certain claims under the Montgomery-UMB Indenture against third parties for injuries caused to those 5 4818-9414-7974.19 Case 2:17-cv-00393-SCM Document 327-2 Filed 05/24/19 Page 7 of 204 PageID: 14447 Bondholders who or which currently own a Bond in connection with the Montgomery Offering (subject to an assignment of such claims to the Receiver, as discussed below); WHEREAS, in connection with each of the Offerings described above, and continuing through 2016, the CRI Parties performed various professional services for each of the Borrowers, each of which engaged CRI, among other things, to examine the Borrower’s forecasted financial statements (a “Financial Forecast”) and issue an independent accountant’s report (“Report”) thereon, which Financial Forecast and Report were included in the official statement prepared for each Offering (the “Official Statements”); WHEREAS, in addition to examining and providing a Report with respect to the Financial Forecast, the CRI Parties provided other accounting services to each Borrower, including audit, compilation and tax services (“Other Accounting Services”); WHEREAS, as part of the Receiver’s duties and obligations as the Receiver, the Receiver investigated whether claims existed against third parties and, based upon his investigation, the Receiver believes that each of the Borrowers holds certain causes of action and claims against the CRI Parties for alleged injuries caused to each Borrower arising out of, or in connection with, the Offerings and the CRI Parties’ professional services described above (the “Receivership Borrower Claims”); WHEREAS, based upon his investigation, the Receiver also believes that each of the Indenture Trustees holds certain causes of action and claims on behalf of those Bondholders who or which currently own a Bond against the CRI Parties for alleged injuries caused to such Bondholders arising out of, or in connection with, the Offerings and the CRI Parties’ professional services described above (the “Current Bondholder Claims”); 6 4818-9414-7974.19 Case 2:17-cv-00393-SCM Document 327-2 Filed 05/24/19 Page 8 of 204 PageID: 14448 WHEREAS, pursuant to an Assignments of Claims dated April 13, 2018 by and between the Receiver and the Indenture Trustees, and amended pursuant to an Amendment No. 1 to Assignments of Claims dated October 1, 2018, and further amended herein (as amended, the “Assignment Agreement”), each of the Indenture Trustees assigned its right, power and authority to pursue the Current Bondholder Claims to the Receiver (the “Assigned Bondholder Claims”); WHEREAS, the Receiver also believes that certain causes of action and claims exist on behalf of certain Bondholders who or which previously owned a Bond against the CRI Parties for alleged injuries caused to such Bondholders arising out of, or in conjunction with, the Offerings and the CRI Parties’ professional services described above (the “Previous Bondholder Claims,” and along with the Receivership Borrower Claims and the Assigned Bondholder Claims, the “Claims”); WHEREAS, in the Receiver’s judgment the resolution of the claims subject to the Bar Order and Judgment (as defined below) is in the best interests of the Receivership Estates and, thus, it is necessary and appropriate to provide for the resolution and disposition of the Receivership Borrower Claims, Current Bondholder Claims, and Previous Bondholder Claims as set forth more fully herein and to invoke the equitable powers of the Receivership Court in an effort to achieve that end; WHEREAS, on January 26, 2018, the Receiver filed with the Receivership Court an application to authorize the Receiver to pursue the Claims, and to retain special litigation counsel to assist the Receiver in pursuing such claims (the “Claims Authorization Motion”); WHEREAS, on March 6, 2018, the Receivership Court entered an Order Granting Receiver’s Application for Order: (A) Authorizing Receiver to Pursue Claims Against Third 7 4818-9414-7974.19 Case 2:17-cv-00393-SCM Document 327-2 Filed 05/24/19 Page 9 of 204 PageID: 14449 Parties; (B) Approving Employment of Whiteford Taylor Preston, LLP as Special Counsel for Receiver to Pursue Claims Against Third Parties; and (C) Approving Proposed Recovery- Distribution and Cost-Sharing Methodology for Claims Against Third Parties (the “Claims Authorization Order”), authorizing the Receiver to pursue the Claims; WHEREAS, pursuant to the Receivership Order and the Claims Authorization Order, the Receiver has pursed Claims on behalf and for the benefit of the Receivership Entities and their creditors, including previous and current Bondholders; WHEREAS, pursuant to the Claims Authorization Order, the Receiver, on April 13, 2018, and May 3, 2018, respectively, sent to the CRI Parties a Demand Letter before Legal Action and a Supplement to Demand Letter before Legal Action (together, the “Demand Letter”), asserting and seeking to resolve the Claims in advance of commencing a legal proceeding to pursue the Claims against the CRI Parties; WHEREAS, on or about July 12, 2018, the Receiver and the CRI Parties entered into a Tolling Agreement pursuant to which any statute-of-limitation period applicable to the Claims is tolled until sixty (60) calendar days after receipt of a writing from the CRI Parties that the Mediation is terminated (the “Tolling Agreement”); WHEREAS, in an effort to resolve the Claims prior to the Receiver commencing a legal proceeding, the CRI Parties and the Receiver commenced a mediation proceeding and conducted an in-person mediation before a JAMS mediator panelist over the period from November 8, 2018 through November 9, 2018 (the “Mediation”); WHEREAS, without admission or concession of liability, responsibility or fault, the Parties to this Agreement desire, and have agreed, subject to the court approvals provided for herein, to fully resolve and settle the Claims, and seek to provide the CRI Parties with certain 8 4818-9414-7974.19 Case 2:17-cv-00393-SCM Document 327-2 Filed 05/24/19 Page 10 of 204 PageID: 14450 other forms of relief described herein to afford the CRI Parties a full and final settlement of all claims that are the subject of the Bar Order and Judgment (as defined below); WHEREAS, the Parties have negotiated at arm’s length and reach this Agreement in good faith; NOW, THEREFORE, for and in consideration of the mutual promises, covenants and agreements set forth herein, and for other good and valuable consideration, the receipt, adequacy and sufficiency of which is hereby acknowledged, and intending to be legally bound, the Parties agree as follows: I. DEFINITIONS Capitalized terms in this Agreement have the meaning ascribed to them in the RECITALS set forth above, or, if not therein defined, the meaning ascribed to them in the definitions which follow in this Section I. or elsewhere in this Agreement. 1. “Agreement Date” means that date on which the TIP Order (as defined below) is entered and shall be the date inserted at the beginning of this Agreement. 2. “Execution Date” means the date on which the last of the signatures called for at the end of this Agreement is obtained. 3. “CRI Released Parties” means: (a) CRI and, each and all of its predecessors and successors, and each and all of their respective past, present and future parents, subsidiaries, affiliates, related entities and divisions, and each and all of their respective past, present and future shareholders, members, partners, principals, owners, directors, officers, managing members, management personnel, associates, employees, staff, servants, consultants, advisors, representatives, agents, accountants, attorneys, lenders, insurers, primary insurers, excess insurers, reinsurers, heirs, administrators, executors, predecessors, successors and assigns, known or unknown, in their representative and individual capacities; and (b) Laney and Frederick, and 9 4818-9414-7974.19 Case 2:17-cv-00393-SCM Document 327-2 Filed 05/24/19 Page 11 of 204 PageID: 14451 any past, present or future entity with which either of them has been or may be associated or affiliated, whether by way of ownership, employment or otherwise, including, without limitation, Laney, Boteler & Killinger and Excelpay Business Solutions, LLC, and each and all of their respective past, present and future shareholders, members, partners, principals, owners, directors, officers, managing members, management personnel, associates, employees, staff, servants, consultants, advisors, representatives, agents, accountants, attorneys, lenders, insurers, primary insurers, excess insurers, reinsurers, heirs, administrators, executors, predecessors, successors and assigns, known or unknown, in their representative and individual capacities. For avoidance of doubt, the CRI Released Parties does not include Sell & Melton, L.L.P. (“Sell Melton”), R. (Chix) Miller (“Miller”), Marrien Neilson (“Neilson”), Dwayne Edwards (“Edwards”), Todd Barker (“Barker”), any underwriter, including but not specifically limited to: Cantone Research, Inc. and Anthony Cantone and Christine Cantone (“Cantone”) and any agents, successors or assigns and any entity in which Cantone is the controlling member and/or has been granted sole authority upon which to act, Lawson Financial Corporation, Inc., William Price Revocable Trust, Robert Lawson, Pamela Lawson, and John T. Lynch (“Lawson”) and any agents, successors or assigns or any entity in which Lawson is the controlling member and/or has been granted sole authority upon which to act, or Christopher Brogdon, Connie Brogdon, Tygh Brogdon (“Brogdon”) individually and agents, successor or assigns or any entity in which Brogdon is the controlling member and/or has been granted sole authority upon which to act. 4. “Confidential Information” means the information obtained during the investigation and pursuit or defense of the Claims against the CRI Parties and the communications and discussions in connection with the negotiations and Mediation that led to the Settlement and this Agreement, including the existence and terms of the Settlement and this 10 4818-9414-7974.19 Case 2:17-cv-00393-SCM Document 327-2 Filed 05/24/19 Page 12 of 204 PageID: 14452 Agreement, as well as the work product of the Parties, including their counsel, consultants, experts, and those who worked with the Parties in their investigation and pursuit or defense of the Claims. The existence and terms of the Settlement and this Agreement shall cease to be Confidential Information when this Agreement and/or related documents are filed with the TIP Court or the Receivership Court. 5. “Claimant” means any Person (as defined below) who has summited a Claim Form (as defined below). Where a Claimant has transferred to a third party his, her or its option to receive a portion of the Net Settlement Proceeds (as defined below) and the transfer has been acknowledged by the Receiver, and the transferee has submitted a Claim Form (as defined below), the transferee is a Claimant, and the transferor is not a Claimant. 6. “Claim Form” means the claim form appended to the Notice (as defined below) attached to this Agreement as Exhibit “A.” 7. “Distribution Plan” means the plan for the distribution of the Net Settlement Proceeds hereafter approved by the Bar Order and Judgment (as defined below) of the Receivership Court, after the Bar Order and Judgment has become Final (as defined below). 8. “Attorneys’ Fees” means those fees awarded by the Court to the Receiver’s general counsel and special counsel from the Settlement Amount (as defined below) pursuant to the terms of the applicable engagement agreement and prior and future orders of the Receivership Court. 9. “Settlement Amount” means Ten Million Dollars ($10,000,000.00) in United States currency. 10. “Net Settlement Proceeds” means the Settlement Amount net of Attorneys’ Fees and other costs and expenses that are awarded by the Receivership Court to the Receiver to be 11 4818-9414-7974.19 Case 2:17-cv-00393-SCM Document 327-2 Filed 05/24/19 Page 13 of 204 PageID: 14453 paid from the Settlement Amount, after such award by the Receivership Court has become Final (as defined below). 11. “Final” refers to orders of the TIP Court and the Receivership Court and means that such order remains unmodified: (a) with respect to the Bar Order and Judgment, after the expiration of 60 days from the entry of such order, and with respect to the TIP Order entered by the TIP Court, after the expiration of 60 days from the service of such order (the “Appeal Deadline”), if no notice of appeal, petition for extraordinary writ, or other request for appellate review is filed by the Appeal Deadline, provided that, before its expiration, the Appeal Deadline is not tolled or extended; (b) after the expiration of any extended deadline to file a notice of appeal (“Extended Appeal Deadline”), if, before its expiration, the Appeal Deadline is tolled or extended, and if no notice of appeal, petition for extraordinary writ, or other request for appellate review is filed by the Extended Appeal Deadline; (c) after the conclusion of all appellate proceedings, including but not limited to the disposition of any petition for extraordinary writ, petition for rehearing or reargument, and/or petition for writ of certiorari, if any notice of appeal, petition for extraordinary writ, or other request for appellate review is filed by (i) the Appeal Deadline (if, before its expiration, the Appeal Deadline is not tolled or extended) or (ii) the Extended Appeal Deadline (if, before its expiration, the Appeal Deadline is tolled or extended). Notwithstanding the foregoing, in the event that any request to extend the Appeal Deadline, or any applicable Extended Appeal Deadline, is filed and remains pending on the fifth (5th) business day after the Appeal Deadline, or any applicable Extended Appeal Deadline, then such order shall not be deemed Final until the expiration of (i) five (5) business days after such request to extend the Appeal Deadline, or any applicable Extended Appeal Deadline, is denied or (ii) five (5) business days after the conclusion of all appellate proceedings, including but not limited to 12 4818-9414-7974.19 Case 2:17-cv-00393-SCM Document 327-2 Filed 05/24/19 Page 14 of 204 PageID: 14454 the disposition of any petition for extraordinary writ, petition for rehearing or reargument, and/or petition for writ of certiorari, if such request to extend the Appeal Deadline, or any applicable Extended Appeal Deadline, is granted. The Bar Order and Judgment (as defined below) shall include findings under Federal Rule of Civil Procedures 54(b) and will become Final as set forth in this Paragraph as though such order were a judgment entered at the end of a case, and the continuing pendency of the SEC Receivership Case will not prevent the Bar Order and Judgment from becoming Final. 12. “Forum” means any court, adjudicative body, tribunal or jurisdiction, whether its nature is federal, state, local, domestic, foreign, administrative, regulatory, arbitral, or otherwise. 13. “Final Approval Hearing” means a formal proceeding on the record in open court before an Article III United States District Judge having jurisdiction over the SEC Receivership Case to address the Receiver’s requests in the Preliminary Approval Motion (as defined below), including his request for final approval of the Settlement and this Agreement and entry of the Bar Order and Judgment (as defined below). 14. “Interested Parties” means the Receiver, the Indenture Trustees, the previous, present and future Bondholders, the Claimants, and any and all Persons (as defined below) that have been or may be alleged by the Receiver, the Indenture Trustees, the Bondholders, or any other Person (as defined below) acting on behalf of the Receivership Estates (whether or not a proceeding has been initiated) to be liable with respect to the Settled Claims. 15. “Notice” means a communication in substantially the form attached hereto as Exhibit “A” describing: (a) the claims asserted by the Receiver against the CRI Parties and the defenses asserted by the CRI Parties to such claims; (b) the material terms of this Agreement; (c) the rights and obligations of Interested Parties and all other Persons with regard to the Settlement 13 4818-9414-7974.19 Case 2:17-cv-00393-SCM Document 327-2 Filed 05/24/19 Page 15 of 204 PageID: 14455 and this Agreement, including the Receiver’s proposed Distribution Plan; (d) the right of Interested Parties to object to the Settlement, this Agreement, and the Bar Order and Judgment (as defined below); (e) the manner in which objections to the Settlement, this Agreement, and the Bar Order and Judgment must be made, and the deadline for the filing of such objections; (f) the deadline and manner for the submission of claims by previous Bondholders for distribution from the Net Settlement Proceeds; and (g) the date, time, and location of the Final Approval Hearing before the Receivership Court to consider final approval of the Settlement and the Agreement and the entry of the Bar Order and Judgment. 16. “Short Form Notice” means a communication in substantially the form attached hereto as Exhibit “B” to be published in newspapers as provided for in Section IV. ¶ 47 below. 17. “Person” means any individual or entity of any nature or type, including without limitation, any individual, partnership, corporation, limited liability company, estate, trust, fiduciary, beneficiary of trust, proprietorship, organization, association or business or charitable enterprise, excluding any governmental authority, agency or quasi-governmental authority or agency. 18. “Receiver Released Parties” means the Receiver, the Receivership Entities, the Receivership Estates, and each and all of their predecessors and successors, and each and all of their respective past, present and future parents, subsidiaries, affiliates, related entities and divisions, and each and all of their respective past, present and future shareholders, members, partners, principals, owners, directors, officers, managing members, management personnel, associates, employees, staff, servants, consultants, advisors, representatives, agents, accountants, attorneys, lenders, insurers, primary insurers, excess insurers, reinsurers, heirs, administrators, executors, predecessors, successors and assigns, known or unknown, in their representative and 14 4818-9414-7974.19 Case 2:17-cv-00393-SCM Document 327-2 Filed 05/24/19 Page 16 of 204 PageID: 14456 individual capacities. For avoidance of doubt, the Receiver Released Parties does not include Sell & Melton, L.L.P. (“Sell Melton”), R. (Chix) Miller (“Miller”), Marrien Neilson (“Neilson”), Dwayne Edwards (“Edwards”), Todd Barker (“Barker”), any underwriter, including but not specifically limited to: Cantone Research, Inc. and Anthony Cantone and Christine Cantone (“Cantone”) and any agents, successors or assigns and any entity in which Cantone is the controlling member and/or has been granted sole authority upon which to act, Lawson Financial Corporation, Inc., William Price Revocable Trust, Robert Lawson, Pamela Lawson, and John T. Lynch (“Lawson”) and any agents, successors or assigns or any entity in which Lawson is the controlling member and/or has been granted sole authority upon which to act, or Christopher Brogdon, Connie Brogdon, Tygh Brogdon (“Brogdon”) individually and agents, successor or assigns or any entity in which Brogdon is the controlling member and/or has been granted sole authority upon which to act. 19. “Indenture Trustees Released Parties” means the Indenture Trustees, and each and all of their predecessors and successors, and each and all of their respective previous, present and future parents, subsidiaries, affiliates, related entities and divisions, and each and all of their respective previous, present and future shareholders, members, partners, principals, owners, directors, officers, management members, management personnel, associates, employees, staff, servants, consultants, advisors, representatives, agents, accountants, attorneys, lenders, insurers, excess insurers, reinsurers, heirs, administrators, executors, predecessors, successors and assigns, in their representative and individual capacities. For avoidance of doubt, the Indenture Trustees Released Parties does not include Sell & Melton, L.L.P. (“Sell Melton”), R. (Chix) Miller (“Miller”), Marrien Neilson (“Neilson”), Dwayne Edwards (“Edwards”), Todd Barker (“Barker”), any underwriter, including but not specifically limited to: Cantone Research, Inc. 15 4818-9414-7974.19 Case 2:17-cv-00393-SCM Document 327-2 Filed 05/24/19 Page 17 of 204 PageID: 14457 and Anthony Cantone and Christine Cantone (“Cantone”) and any agents, successors or assigns and any entity in which Cantone is the controlling member and/or has been granted sole authority upon which to act, Lawson Financial Corporation, Inc., William Price Revocable Trust, Robert Lawson, Pamela Lawson, and John T. Lynch (“Lawson”) and any agents, successors or assigns or any entity in which Lawson is the controlling member and/or has been granted sole authority upon which to act, or Christopher Brogdon, Connie Brogdon, Tygh Brogdon (“Brogdon”) individually and agents, successor or assigns or any entity in which Brogdon is the controlling member and/or has been granted sole authority upon which to act. 20. “Releasor” means any Person granting a release of any Settled Claim, and “Releasors” means all such Persons granting releases of Settled Claims. 21. “Settled Claims” means any and all demands, claims, obligations, liabilities, actions, causes of action, rights of action, rights of levy or attachment, injuries, losses and damages of any kind or nature whatsoever, whether or not currently asserted, known, suspected, existing or discoverable, whether liquidated or unliquidated, and whether based on or arising under federal law, state law, local law, foreign law, common law or otherwise, and whether based on contract, tort, statute, law, equity or otherwise, that a Releasor ever had, now has, or hereafter, can, shall or may have, directly, derivatively, or in any other capacity, for, based upon, arising from, relating to, in connection with, or by reason of any matter, cause, thing, act, omission, circumstance or transaction whatsoever, from the beginning of the world to the Settlement Effective Date (as defined below) that, in whole or in part, directly or indirectly, consists of, concerns, involves, relates to, is based upon, arises from, or is in any manner connected with any one or more of the following: the Receiver, the Receivership Entities, the Borrowers; the Offerings; the Official Statements; the Reports; the Financial Forecasts; the Other 16 4818-9414-7974.19 Case 2:17-cv-00393-SCM Document 327-2 Filed 05/24/19 Page 18 of 204 PageID: 14458 Accounting Services; the Bonds; the Bondholders; the Facilities; the CRI Parties’ relationship with the Borrowers and Receivership Entities; any Defendant or Relief Defendant in the SEC Receivership Case; the subject matter of the SEC Receivership Case; the Receivership Borrowers Claims; the Current Bondholder Claims; the Assigned Bondholder Claims; the Previous Bondholder Claims; and the Claims. By way of emphasis, the term Settled Claims includes, without limitation, any and all Claims (including the Receivership Borrowers Claims, the Current Bondholder Claims, the Assigned Bondholder Claims, and the Previous Bondholder Claims) and any claim that was asserted or could have been asserted by a Releasor against the CRI Released Parties in the SEC Receivership Case, the Demand Letter, or the Mediation, and/or any claims that could be asserted in any future litigation or proceeding brought in any Forum relating to the subjects set forth in the forgoing sentence. “Settled Claims” specifically includes, without limitation, all claims each Releasor does not know or suspect to exist in his, her or its favor at the time of release against a Releasor, which if known by that Person might have affected his, her or its decision with respect to this Agreement and Settlement (“Unknown Claims”). Each Releasor expressly waives, releases and relinquishes any and all provisions, rights and benefits conferred by any law or principle, in the United States or elsewhere, which governs or limits the release of unknown or unsuspected claims, including without limitation, California Civil Code § 1542 which provides: A GENERAL RELEASE DOES NOT EXTEND TO CLAIMS WHICH THE CREDITOR DOES NOT KNOW OR SUSPECT TO EXIST IN HIS OR HER FAVOR AT THE TIME OF EXECUTING THE RELEASE, WHICH IF KNOWN BY HIM OR HER MAY HAVE MATERIALLY AFFECTED HIS OR HER SETTLEMENT WITH THE DEBTOR. Each Releasor acknowledges that he, she, or it may hereafter discover facts different from, or in addition to, those which such Releasor now knows or believes to be true with respect to the 17 4818-9414-7974.19 Case 2:17-cv-00393-SCM Document 327-2 Filed 05/24/19 Page 19 of 204 PageID: 14459 Settled Claims, but nonetheless agrees that this Agreement, including the releases granted herein, will remain binding and effective in all respects notwithstanding such discovery. Unknown Claims includes contingent and non-contingent claims, whether or not concealed or hidden, without regard to the subsequent discovery or existence of different or additional facts. These provisions concerning unknown or unsuspected claims and the inclusion of Unknown Claims in the definition of Settled Claims were separately bargained for and are an essential element of this Agreement and the Settlement. 22. “Settlement” means the agreed resolution of the Settled Claims pursuant to this Agreement. 23. “TIP Proceeding” means the trust instruction proceeding to be instituted by Trustee U.S. Bank in Ramsey County, Minnesota District Court pursuant to Minn. Stat. 501C.0201, et. seq., as provided for in Section VI.¶ 37, below, seeking the entry of an order authorizing Trustee U.S. Bank to, inter alia, consent to the Settlement and execute the Settlement Agreement. 24. “TIP Court” means the court in which the TIP Proceeding is filed and from which the TIP Order will be sought by Trustee U.S. Bank. 25. “TIP Motion” means the motion which will be filed by Trustee U.S. Bank in the TIP Proceeding seeking entry of the TIP Order (as defined below). 26. “TIP Order” means an order acceptable to Trustee U.S. Bank to be obtained by Trustee U.S. Bank in the TIP Proceeding, approving the terms of this Agreement, without the TIP Court altering the Agreement, approving such other actions of Trustee U.S. Bank as it shall deem appropriate, and authorizing Trustee U.S. Bank to, inter alia, consent to the Settlement and execute the Settlement Agreement. 18 4818-9414-7974.19 Case 2:17-cv-00393-SCM Document 327-2 Filed 05/24/19 Page 20 of 204 PageID: 14460 27. “Preliminary Approval Motion” means the motion in substantially the form attached hereto as Exhibit “C” which will be filed in the Receivership Court by the Receiver seeking, inter alia, preliminary approval of the Settlement and this Agreement, the entry of the Scheduling Order, and, following the Final Approval Hearing, final approval of the Settlement and this Agreement, and the entry of the Bar Order and Judgment (as defined below). 28. “Scheduling Order” means the order in substantially the form attached hereto as Exhibit “D” entered by the Receivership Court: (a) preliminarily approving the Settlement; (b) preliminarily staying, barring, restraining, and enjoining the assertion, institution or continuation of Settled Claims against the CRI Released Parties during the pendency of the settlement approval process and pending further order of the Court; (c) approving the content and plan for dissemination of the Notice (including the Claim Form to accompany the Notice) and publication of Short Form Notice; (d) setting the date by which any objection to the Settlement or this Agreement must be filed; (e) setting the date by which any opposition to any filed objection must be filed; (f) setting the date by which any previous Bondholder claiming entitlement to a distribution of the Net Settlement Proceeds must submit a Claim Form (current Bondholders are exempt from the requirement to submit a Claim Form); and (g) scheduling the Final Approval Hearing no sooner than ninety (90) days after the entry of the Scheduling Order to consider final approval of the Settlement, this Agreement and the entry of the Bar Order and Judgment. 29. “Bar Order and Judgment” means the order entered by the Receivership Court which, inter alia, grants final approval of the Settlement and this Agreement and permanently bars, restrains, and enjoins the assertion and pursuit of claims against the CRI Released Parties, in substantially the form attached hereto as Exhibit “E.” 19 4818-9414-7974.19 Case 2:17-cv-00393-SCM Document 327-2 Filed 05/24/19 Page 21 of 204 PageID: 14461 30. “Settlement Effective Date” means the date on which the last of all of the following has occurred: (a) entry in the TIP Proceeding of the TIP Order; (b) entry in the SEC Receivership Case of the Bar Order and Judgment, including findings under Federal Rule of Civil Procedure 54(b), in substantially the form attached hereto as Exhibit “E” and; (c) the TIP Order and the Bar Order and Judgment have both become Final. 31. “Taxes” means any and all taxes, whether federal, state, local, or other taxes related to the Settlement, the Settlement Amount, and the Net Settlement Proceeds and distribution thereof, and costs incurred in connection with such taxes, including, without limitation, the fees, costs and expenses of tax attorneys and accountants. II. AMENDMENT TO ASSIGNMENT OF CLAIMS 32. The Receiver and Indenture Trustees agree that Amendment No. 1 to Assignment of Claims is hereby amended to provide that the duration of the assignment of the Assigned Bondholder Claims does and shall continue until terminated by any one of the Indenture Trustees, provided, however, that the Indenture Trustees shall not terminate the assignment of the Assigned Bondholder Claims on or after the Execution Date, unless and until this Agreement shall become null and void pursuant to the provisions of Section IV. ¶ ¶ 37-38 or Section V. ¶ 56-57. 20 4818-9414-7974.19 Case 2:17-cv-00393-SCM Document 327-2 Filed 05/24/19 Page 22 of 204 PageID: 14462 III. SETTLEMENT AMOUNT 33. Delivery of Settlement Amount. Within five (5) business days after the Settlement Effective Date, CRI shall deliver or cause to be delivered to the Receiver by wire transfer the Settlement Amount in accordance with wire transfer instructions to be provided by the Receiver for purposes of receiving the payment. 34. Management and Distribution of Settlement Amount. If and when the Settlement Amount is delivered to the Receiver pursuant to the terms of this Agreement, the Receiver shall receive and take custody of the Settlement Amount and shall maintain, manage, and distribute the Settlement Amount in accordance with the Distribution Plan and under the supervision and direction and with the approval of the Receivership Court. The Receiver shall be responsible for all Taxes, fees, and expenses that may be due with respect to the Settlement Amount and the management, use, administration, and distribution of the Settlement Amount. 35. No Liability. CRI and the CRI Released Parties shall have no liability, responsibility, or obligation whatsoever with respect to the investment, management, use, administration, or distribution of the Settlement Amount or any portion thereof, including, but not limited to, the costs and expenses of such investment, management, use, administration, or distribution of the Settlement Amount, and any Taxes arising therefrom or relating thereto. IV. COURT APPROVALS 36. Required Court Approvals. The effectiveness of this Agreement and the Settlement are conditioned upon the entry of the TIP Order by the TIP Court and the approval of the Settlement and this Agreement and the entry of the Bar Order and Judgment by the Receivership Court, and the TIP Order and the Bar Order and Judgment both becoming Final, as set forth more fully below. 21 4818-9414-7974.19 Case 2:17-cv-00393-SCM Document 327-2 Filed 05/24/19 Page 23 of 204 PageID: 14463 37. TIP Motion. Promptly after the Execution Date, Trustee U.S. Bank shall file with the TIP Court the TIP Motion requesting entry of the TIP Order approving the terms of this Agreement and approving the other actions of Trustee U.S. Bank. The entry of the TIP Order by the TIP Court in substantially the form required by Section I. ¶ 26 and its becoming Final prior to the conclusion of the Final Approval Hearing are conditions precedent to the effectiveness of this Agreement, the Settlement and the further steps to obtain the final approval of the Settlement and this Agreement and the entry of the Bar Order and Judgment by the Receivership Court as set forth below. If the TIP Court declines to enter the TIP Order in substantially the form required by Section I. ¶ 26 and in a form acceptable to Trustee U.S. Bank, or if such TIP Order does not become Final on or before the conclusion of the Final Approval Hearing in substantially the form required by Section I. ¶ 26, this Agreement shall be null and void ab initio and the Parties shall be returned to the status quo as it existed prior to any of them having executed this Agreement. Upon entry, a copy of the TIP Order shall be provided to the notice parties identified in Section IX. ¶ 77 below. 38. Preliminary Approval Motion. Promptly after the Execution Date, the Receiver shall file in the Receivership Court the Preliminary Approval Motion in substantially the form attached hereto as Exhibit “C,” requesting, inter alia, the entry of the Scheduling Order substantially in the form attached hereto as Exhibit “D,” granting, inter alia, the following relief: (a) preliminarily approving the Settlement and this Agreement; (b) approving the content and plan for dissemination of the Notice and publication of Short Form Notice; (c) setting the date by which any objection to the Settlement or this Agreement must be filed; (d) setting the date by which any opposition to any filed objection must be filed; and (e) scheduling a Final Approval Hearing to address final approval of the Settlement, this Agreement, the Receiver’s 22 4818-9414-7974.19 Case 2:17-cv-00393-SCM Document 327-2 Filed 05/24/19 Page 24 of 204 PageID: 14464 proposed Distribution Plan, the Receiver’s request for approval of the professional fees and expenses of the Receiver’s general counsel, Waller, and special counsel, Whiteford Taylor, and the entry of the Bar Order and Judgment. The form of the Preliminary Approval Motion and the form of Scheduling Order as exhibited hereto are approved for filing. The entry of the Bar Order and Judgment by the Receivership Court and its becoming Final are conditions precedent to the effectiveness of this Agreement and the Settlement. If the Receivership Court declines to enter the Bar Order and Judgment or if the Bar Order and Judgment does not become Final, this Agreement shall be null and void ab initio and the Parties shall be returned to the status quo as it existed prior to any of them having executed this Agreement. 39. Notice. In the Preliminary Approval Motion, the Receiver will propose approval of a Notice in substantially the form attached hereto as Exhibit “A.” 40. Dissemination of Notice. In the Preliminary Approval Motion, the Receiver will propose that Notice in substantially the form attached hereto as Exhibit “A” be sent via electronic mail, U.S. first class mail or international delivery service to: (a) all parties that appeared and requested notice in the SEC Receivership Case; (b) counsel to the CRI Parties; (c) counsel to the Indenture Trustees; (d) the Underwriter for each Offering; (e) counsel to the Underwriter, at the time of the Offering, for each Offering; (f) the Issuer for each Offering; (g) counsel to the Issuer, at the time of the Offering, for each Offering; (h) bond counsel for each Offering; (i) the Depository Trust Company (“DTC”); (j) the Municipal Securities Rulemaking Board’s Electronic Municipal Market Access System (“EMMA”); (k) to the extent they have identified themselves to the Indenture Trustees and have requested direct notice from the Indenture Trustees, previous Bondholders; and (l) the original purchasers of the Bonds as 23 4818-9414-7974.19 Case 2:17-cv-00393-SCM Document 327-2 Filed 05/24/19 Page 25 of 204 PageID: 14465 identified to the SEC by the Underwriters in the course of the SEC’s investigation of the Defendants. 41. Forwarding of Notice by DTC to Participants. In the Preliminary Approval Motion, the Receiver will propose that, with respect to the Notice sent to DTC, the Receiver will request that DTC forward the Notice to each participant of DTC who is reflected in DTC’s records as a holder of the Bonds. 42. Forwarding of Notice by Underwriters to Bondholders. In the Preliminary Approval Motion, the Receiver will propose that, with respect to Notice sent to the Underwriters of the Offerings, the Receiver will request that such Underwriters send the Notice to each previous or current beneficial owner of the Bonds to the extent such beneficial owners are identifiable by the Underwriters from their records through reasonable efforts. 43. Publication of Notice on EMMA. In the Preliminary Approval Motion, the Receiver shall propose that, with respect to the Notice sent to EMMA, the Receiver will request, or cause the Indenture Trustees to request, that EMMA publish the Notice, the Preliminary Approval Motion and all Exhibits thereto (including this Agreement) on its website under the CUSIP numbers for the respective Bonds issued in connection with each of the Offerings. 44. Publication of Notice on Receiver’s Website. In the Preliminary Approval Motion, the Receiver will propose that it shall cause the Notice, the Preliminary Approval Motion and all Exhibits thereto (including this Agreement), and the Scheduling Order, to be posted on the Receiver’s website (http://oxtonseniorlivingreceivership.com). 45. Notice to Original Purchasers. The Receiver shall cause the Notice to be served by United States mail postage prepaid on the original purchasers of the Bonds whose identity was provided to the SEC by the Underwriters in the SEC’s investigation of Defendants. 24 4818-9414-7974.19 Case 2:17-cv-00393-SCM Document 327-2 Filed 05/24/19 Page 26 of 204 PageID: 14466 46. Short Form Notice. In the Preliminary Approval Motion, the Receiver will propose approval of a Short Form Notice in substantially the form attached hereto as Exhibit “B.” 47. Publication of Short Form Notice. In the Preliminary Approval Motion, the Receiver will propose that the Short Form Notice in substantially the form attached hereto as Exhibit “B” be published once a week for three consecutive weeks in the legal notices section of each of the following newspapers commencing no later than seven (7) days after the date the Scheduling Order is entered by the Receivership Court: The Wall Street Journal and U.SA. Today. 48. Responsibility for Notice Preparation, Dissemination and Publication. The Receiver shall be responsible for the preparation, dissemination and publication of Notice and Short Form Notice pursuant to the terms of this Agreement and as ordered by the Receivership Court. No less than ten (10) calendar days before the Final Approval Hearing, the Receiver shall file an affidavit or declaration of compliance with the Receivership Court, certifying that the Receiver has complied with the Receivership Court’s order regarding Notice and Short Form Notice. 49. Indenture Trustee Communications. Nothing contained herein shall be construed so as to limit the ability of the Indenture Trustees to communicate with their respective Bondholders as required by the Indentures provided that the Indenture Trustees do not disclose Confidential Information, except as permitted by Section VII. ¶ 73. The right of the Indenture Trustees to communicate with their respective Bondholders shall specifically include the right to distribute directly to their respective Bondholders or to distribute through DTC or by means of 25 4818-9414-7974.19 Case 2:17-cv-00393-SCM Document 327-2 Filed 05/24/19 Page 27 of 204 PageID: 14467 EMMA reports to their respective Bondholders on the status of proceedings undertaken pursuant to the Indentures. 50. No Recourse Against CRI Released Parties. No Interested Party or any other Person shall have any recourse against CRI or the CRI Released Parties with respect to the Notice process or any claims that may arise from or relate to the Notice process. 51. Final Relief Sought by the Preliminary Approval Motion of the Receivership Court. In the Preliminary Approval Motion, and in addition to the relief described in Section IV. ¶ 38 above relating to the Scheduling Order, the Receiver shall request that, following the Final Approval Hearing, the Receivership Court enter the Bar Order and Judgment in substantially the form attached hereto as Exhibit “E,” providing, inter alia, the following relief: (a) granting final approval of the Settlement; (b) granting final approval of this Agreement; (c) finding that this Agreement and the releases set forth herein are final and binding on the Parties; and (d) barring, restraining, and enjoining Persons from asserting, pursuing or prosecuting claims against the CRI Released Parties as provided in the Bar Order and Judgment and in language described more fully in the following Paragraph. 52. Receiver to Seek Bar Order. In the Preliminary Approval Motion, the Receiver shall seek the Receivership Court’s approval of the following language which will be included in the proposed Bar Order and Judgment (Exhibit “E” hereto) attached to the Preliminary Approval Motion : The Court hereby permanently bars, restrains, and enjoins, the Receiver, the Receivership Entities, the Receivership Estates, the Borrowers, the Indenture Trustees, all previous, present and future Bondholders, the Claimants, the Issuers, all Interested Parties, and 26 4818-9414-7974.19 Case 2:17-cv-00393-SCM Document 327-2 Filed 05/24/19 Page 28 of 204 PageID: 14468 all non-governmental Persons, all and individually, from directly, indirectly, or through a third party, asserting, instituting, reinstituting, intervening in, initiating, commencing, maintaining, continuing, filing, encouraging, soliciting, supporting, participating in, collaborating in, or otherwise prosecuting or pursuing, against the CRI Parties and/or any of the CRI Released Parties, any demand, claim, investigation, action, lawsuit, cause of action, complaint, or proceeding of any nature in any Forum, including, without limitation, any court of first instance or any appellate court, whether individually, derivatively, on behalf of a class, as a member of a class, or in any other capacity whatsoever, that in any way relates to, is based upon, arises from, or is connected with this case, the subject matter of this case, the Receiver, the Receivership Entities, the Bonds, the Bondholders, the Indenture Trustees, and/or any Settled Claim. The foregoing specifically includes any claim by any Person, however denominated, seeking contribution, indemnity, damages, or any other remedy where the alleged injury to such Person, or the claim asserted by such Person, is based upon such Person’s liability to the Receiver, any Receivership Entity, any Bondholder, any Indenture Trustee, any Claimant, and/or any other Interested Party arising out of, relating to, or based in whole or in part upon money owed, demanded, requested, offered, paid, agreed to be paid, or required to be paid to the Receiver, a Receivership Entity, a Bondholder, an Indenture Trustee, a Claimant, and/or any other Interested Party whether pursuant to a demand, judgment, claim, agreement, settlement, or otherwise. 53. In furtherance of the provisions of the Bar Order and Judgment barring claims in the nature of contribution or indemnity, the Parties agree that in the event any of them intends to pursue Settled Claims against any person not a Party to this Agreement, each of them intending to pursue any such claim shall provide notice to the Parties as soon as reasonably practicable of such intent before commencing any action or proceeding in any Forum with respect to any such claim. Such notice shall be addressed and given in accordance with the provisions of Section IX. ¶ 77 below. 54. Parties to Advocate. The CRI Parties and Receiver shall take all reasonable steps to advocate for and encourage preliminary and final approval of the Settlement and this Agreement and entry of the Bar Order and Judgment. The Indenture Trustees shall take all 27 4818-9414-7974.19 Case 2:17-cv-00393-SCM Document 327-2 Filed 05/24/19 Page 29 of 204 PageID: 14469 reasonable steps to encourage preliminary and final approval of the Settlement and this Agreement and entry of the Bar Order and Judgment. 55. No Challenge. No Party shall challenge or oppose the approval of the Settlement or this Agreement or the entry of the TIP Order or the Bar Order and Judgment, and no Party shall encourage or assist any Person in challenging or opposing the approval of the Settlement or this Agreement or the entry of the TIP Order or the Bar Order and Judgment. No Party shall challenge or oppose the approval of the Settlement or this Agreement or the entry of the TIP Order or the Bar Order and Judgment, and no Party shall encourage or assist any Person in challenging or opposing the approval of the Settlement or this Agreement or the entry of the TIP Order or the Bar Order and Judgment. No Party shall challenge or oppose or assist any Person in challenging or opposing the enforceability of the Settlement or this Agreement or the entry of the TIP Order or the Bar Order and Judgment in any other proceeding of any nature in any Forum involving Settled Claims. This provision shall not prohibit a Party from disputing whether a non-Party who is not a Releasor is entitled to the releases, bars, restrains, and enjoins provided for herein. V. RESCISSION IF THE SETTLEMENT OR THE AGREEMENT IS NOT FINALLY APPROVED OR THE BAR ORDER AND JUDGMENT IS NOT ENTERED OR DOES NOT BECOME FINAL 56. Right to Withdraw. The Parties represent and acknowledge that the following were necessary to the Parties’ agreement to this Settlement, are each an essential term of the Settlement and this Agreement, and that the Settlement would not have been reached in the absence of these terms: (a) the entry by the TIP Court in the TIP Proceeding of the TIP Order in substantially the form required by Section I. ¶ 26; (b) the approval by the Receivership Court of the Settlement and this Agreement and the entry by the Receivership Court of the Bar Order and Judgment in the SEC Receivership Case without material amendment or revision from that 28 4818-9414-7974.19 Case 2:17-cv-00393-SCM Document 327-2 Filed 05/24/19 Page 30 of 204 PageID: 14470 attached hereto as Exhibit “E;” (c) that the TIP Order become Final prior to the conclusion of the Final Approval Hearing pursuant to the provisions of Section I. ¶ 11 and Section IV. ¶ 37; and (d) the Bar Order and Judgment become Final, pursuant to the provisions of Section I. ¶ 11 and Section IV. ¶ 38 of this Agreement. If the TIP Court refuses to enter the TIP Order described in (a) and/or the Receivership Court refuses to enter the Bar Order and Judgment described in (b) without material modification or limitation; or if the TIP Order described in (a) does not become Final prior to the conclusion of the Final Approval Hearing; or if the final result of any appeal from the orders described in (a) and (b) is that either of the orders is not affirmed, in its entirety and without material modification or limitation, then any CRI Party has the right to withdraw its agreement to the Settlement and to this Agreement by providing to all other Parties written notice of such withdrawal, within fourteen (14) days of the order, judicial determination or failure of finality giving rise to such right to withdraw. For purposes of this Section V., the Party making the election to withdraw has the sole and absolute discretion to determine whether a modification or limitation to the Orders described in (a) or (b) is material. ln addition, any of the CRI Parties, in their sole and absolute discretion, may, but are not required to, withdraw from this Agreement if the Bar Order and Judgment do not, require the dismissal of any suit or claim, whether by complaint, counterclaim, third-party claim or otherwise, involving any Settled Claim that is filed against any of the CRI Released Parties between the Execution Date and the Settlement Effective Date. Such withdrawal must be by written notice to all Parties within fourteen (14) days of the occurrence or failure of occurrence of the event giving rise to the right to withdraw. The Parties do not have the right to withdraw from, or otherwise terminate, this Agreement for any reason other than the reasons identified in this Section V. ¶ 56 or as provided for in Section IX. ¶ 84 below entitled “Severability.” If any CRI Party elects to exercise its right 29 4818-9414-7974.19 Case 2:17-cv-00393-SCM Document 327-2 Filed 05/24/19 Page 31 of 204 PageID: 14471 to withdraw from this Settlement Agreement after the Bar Order and Judgment is entered in the SEC Receivership Case but before the Bar Order and Judgment becomes Final, then the other Parties agree not to oppose any motion to vacate the Bar Order and Judgment filed by the withdrawing Party. 57. Effect of Withdrawal. In the event that any CRI Party withdraws its agreement to the Settlement or this Agreement as allowed in Section V. ¶ 56, this Agreement shall become null and void ab initio and of no further effect whatsoever, shall not be the subject or basis for any claims by any Party against any other Party, except to the extent that specified provisions expressly survive termination. If any CRI Party withdraws from this Agreement pursuant to the terms of Section V. ¶ 56 or Section IX. ¶ 84, then each Party shall be returned to such Party's respective position as it existed immediately prior to the execution of the Agreement by any of them, provided, however, the following Paragraphs of this Agreement shall survive termination of this Agreement: ¶ ¶ 32 (Amendment to Assignment of Claims), 69 (No Admission of Fault or Wrongdoing), 73 (Confidentiality), 74 (Other Representations and Warranties), 76 (Tolling), 77 (Notices), 79 (Jurisdiction), 80 (Attorneys’ Fees and Expenses). VI. DISTRIBUTION PLAN 58. Duties of Receiver with Respect to Distribution Plan. In the Preliminary Approval Motion, the Receiver shall propose a Distribution Plan, which provides for the distribution of the Net Settlement Proceeds by the Receiver to previous Bondholders, and to the Indenture Trustees of the Bonds of respective Borrowers. No previous Bondholder shall be entitled to any distribution from the Net Settlement Proceeds unless he, she or it: (i) timely submits a fully and properly completed Claim Form on or before the date for such submission specified in the Court’s Scheduling Order, duly providing the information and documents required by the Claim Form; and (ii) qualifies for a distribution under the Distribution Plan. 30 4818-9414-7974.19 Case 2:17-cv-00393-SCM Document 327-2 Filed 05/24/19 Page 32 of 204 PageID: 14472 Subject to review by the Receivership Court, the Receiver will review and verify each submitted Claim Form. The Receiver will then file with the Court a report outlining the Receiver’s determination as to whether the Claim Form will be allowed or disallowed (the “Claims Report”). Previous Bondholders who have submitted a Claim Form will have the opportunity to object to the Claims Report by filing an objection to the Claims Report within (14) days after the filing of the Claims Report. If no objection is timely filed to the Claims Report, the Claims Report shall be the final, binding determination on the allowance or disallowance of each Claim Form. Current Bondholders are exempt from the requirement of submitting a Claim Form. The Receiver, with the approval and guidance of the Court, shall be solely responsible for implementing the Distribution Plan including, without limitation, receiving, managing and disbursing the Settlement Amount. 59. Distribution by Check. The Receiver must include the following statement, without alteration, in the transmittal correspondence sent to Claimants pursuant to the Distribution Plan, above: BY ENDORSING THIS CHECK, I RELEASE ALL SETTLED CLAIMS, KNOWN OR NOT, AGAINST CARR, RIGGS & INGRAM, LLC, ITS MEMBERS, AND EMPLOYEES. 60. No Responsibility. The CRI Released Parties shall have no responsibility, obligation, or liability whatsoever with respect to the terms, interpretation, or implementation of the Distribution Plan; the administration of the Settlement; the management, investment, or distribution of the Settlement Amount, Net Settlement Proceeds, or any other funds paid or received in connection with the Settlement; the payment or withholding of Taxes that may be due or owing by the Receiver or any recipient of funds from the Settlement Amount or Net Settlement Proceeds; the determination, administration, calculation, review, or challenge of claims to the Settlement Amount or Net Settlement Proceeds, any portion of the Settlement 31 4818-9414-7974.19 Case 2:17-cv-00393-SCM Document 327-2 Filed 05/24/19 Page 33 of 204 PageID: 14473 Amount or Net Settlement Proceeds, or any other funds paid or received in connection with the Settlement or this Agreement; or any losses, attorneys' fees, expenses, vendor payments, expert payments, or other costs incurred in connection with any of the foregoing matters. As of the Settlement Effective Date, the Receiver, the Indenture Trustees, and all other Persons on whose behalf the Receiver and the Indenture Trustees are or have been empowered to act, fully, finally, and forever remise, release, relinquish, and discharge the CRI Released Parties from any and all such responsibility, obligation, and liability. VII. RELEASES AND COVENANTS-NOT-TO-SUE 61. Receiver’s Releases and Covenants-Not-To Sue in Favor of CRI Released Parties. As of the Settlement Effective Date, the Receiver, to the full extent of his legal authority, for and on behalf of himself in his representative capacities as the Receiver and as assignee of the Assigned Bondholder Claims, and for and on behalf of all Persons whom he represents, including the Receivership Entities, the Receivership Estates and those Bondholders who or which currently own Bonds, and each and all of their respective predecessors, successors, estates, heirs, administrators, executors and assigns, and each and all of their past, present and future parents, subsidiaries, affiliates, related entities, and divisions, and each and all of their respective past, present and future shareholders, members, partners, principals, owners, directors, officers, managing members, management personnel, associates, employees, staff, servants, consultants, advisors, representatives, agents, accountants, attorneys, lenders, insurers, primary insurers, excess insurers, reinsurers, heirs, administrators, executors, predecessors, successors and assigns, known or unknown, in their representative and individual capacities (collectively, and together with the Receiver, the “Receiver Releasing Parties”), hereby fully, finally, and forever remises, releases, relinquishes, discharges and waives, with prejudice, any and all Settled Claims against the CRI Released Parties (the “Receiver Released Claims”). The Receiver also 32 4818-9414-7974.19 Case 2:17-cv-00393-SCM Document 327-2 Filed 05/24/19 Page 34 of 204 PageID: 14474 covenants and agrees, to the full extent of the Receiver’s legal authority, that the Receiver Releasing Parties will not, now or in the future, directly or indirectly, or through a third party, assert, bring, file, institute, reinstitute, initiate, commence, maintain, continue, encourage, solicit, support, participate in, collaborate in, or otherwise prosecute or cause to be brought any action, proceeding, or dispute asserting the Receiver Released Claims against the CRI Released Parties, or any of them, in any court, venue, jurisdiction, or Forum, including in any arbitration. 62. Indenture Trustees’ Releases and Covenants-Not-to-Sue in Favor of CRI Released Parties. As of the Settlement Effective Date, each Indenture Trustee, to the full extent of its legal authority, for and on behalf of itself in its representative capacity as an Indenture Trustee, and for and on behalf of all Persons it represents under the Indentures, including those Bondholders who or which currently own Bonds, but only to the extent the Indenture Trustees are entitled to assert such claims under the Indenture (collectively, and together with the Indenture Trustees, the “Indenture Trustees Releasing Parties”), hereby fully, finally, and forever remises, releases, relinquishes, discharges and waives, with prejudice, any and all Settled Claims against the CRI Released Parties (the “Indenture Trustees Released Claims”). The Indenture Trustees also covenant and agree, to the full extent of their legal authority, that the Indenture Trustees Releasing Parties will not, now or in the future, directly or indirectly, or through a third party, assert, bring, file, institute, reinstitute, initiate, commence, maintain, continue, encourage, solicit, support, participate in, collaborate in, or otherwise prosecute or cause to be brought any action, proceeding, or dispute asserting the Indenture Trustees Released Claims against the CRI Released Parties, or any of them, in any court, venue, jurisdiction, or Forum, including in any arbitration. 33 4818-9414-7974.19 Case 2:17-cv-00393-SCM Document 327-2 Filed 05/24/19 Page 35 of 204 PageID: 14475 63. Final, Complete and Global Resolution. The Parties intend the Settlement and this Agreement to affect a final, complete, and global resolution of all Settled Claims by any Person, against the CRI Released Parties. This Agreement, including its Exhibits, shall be construed and interpreted to effectuate this mutual intention. 64. Receiver and Indenture Trustees’ Covenant-Not-to-Sue Non-Parties Regarding Settled Claims. In furtherance of the provisions of the Bar Order and Judgment barring claims in the nature of contribution and indemnity, the Receiver covenants and agrees that he will not, directly or indirectly, initiate or pursue Settled Claims against any person not a Party to this Agreement or assist or participate with another in the initiation or pursuit of such claims. In furtherance of the provisions of the Bar Order and Judgment barring claims in the nature of contribution and indemnity, the Indenture Trustees covenant and agree that they will not initiate or pursue Settled Claims, other than in the nature of a counterclaim or cross-claim, against any person not a Party to this Agreement or assist or participate with another in the initiation or pursuit of such claims, other than Sell & Melton, L.L.P. (“Sell Melton”), R. (Chix) Miller (“Miller”), Marrien Neilson (“Neilson”), Dwayne Edwards (“Edwards”), Todd Barker (“Barker”), any underwriter, including but not specifically limited to: Cantone Research, Inc. and Anthony Cantone and Christine Cantone (“Cantone”) and any agents, successors or assigns and any entity in which Cantone is the controlling member and/or has been granted sole authority upon which to act, Lawson Financial Corporation, Inc., William Price Revocable Trust, Robert Lawson, Pamela Lawson, and John T. Lynch (“Lawson”) and any agents, successors or assigns or any entity in which Lawson is the controlling member and/or has been granted sole authority upon which to act, or Christopher Brogdon, Connie Brogdon, Tygh Brogdon 34 4818-9414-7974.19 Case 2:17-cv-00393-SCM Document 327-2 Filed 05/24/19 Page 36 of 204 PageID: 14476 (“Brogdon”) individually and agents, successor or assigns or any entity in which Brogdon is the controlling member and/or has been granted sole authority upon which to act. 65. CRI Parties’ Releases and Covenants-Not-to-Sue in Favor of Receiver and the Indenture Trustees. As of the Settlement Effective Date, CRI, Laney, and Frederick to the full extent of their legal authority, for and on behalf of themselves, and each and all of their respective predecessors, successors, estates, heirs, administrators, executors and assigns, and each and all of their past, present and future parents, subsidiaries, affiliates, related entities, and divisions, and each and all of their respective past, present and future shareholders, members, partners, principals, owners, directors, officers, managing members, management personnel, associates, employees, staff, servants, consultants, advisors, representatives, agents, accountants, attorneys, lenders, insurers, primary insurers, excess insurers, reinsurers, heirs, administrators, executors, predecessors, successors and assigns, known or unknown, in their representative and individual capacities (collectively, the “CRI Releasing Parties”), hereby fully, finally, and forever remise, release, relinquish, discharge and waive, with prejudice, any and all Settled Claims against the Receiver Released Parties and the Indenture Trustee Released Parties (the “CRI Released Claims”). Each of CRI, Laney and Frederick also covenants and agrees, to the full extent of his or its legal capacity, that the CRI Releasing Parties will not, now or in the future, directly or indirectly, or through a third party, assert, bring, file, institute, reinstitute, initiate, commence, maintain, continue, encourage, solicit, support, participate in, collaborate in, or otherwise prosecute or cause to be brought any action, proceeding, or dispute asserting the CRI Released Claims against the Receiver Released Parties or the Indenture Trustees Released Parties, or any of them, in any court or venue, jurisdiction, or Forum, including in any arbitration. 35 4818-9414-7974.19 Case 2:17-cv-00393-SCM Document 327-2 Filed 05/24/19 Page 37 of 204 PageID: 14477 66. Release of Only Settled Claims. Notwithstanding any provision hereof to the contrary, the releases provided herein by the Receiver, the Indenture Trustees, the Receivership Entities and the Receivership Estates, on the one hand, and the CRI Parties, on the other hand, are limited to the Settled Claims between them as expressly included in this Agreement and are not releasing any other claims. By this Agreement, the Receiver and the Indenture Trustees are releasing only the CRI Released Parties and no one else, and the Receiver and the Indenture Trustees each reserve and preserve in full all claims and actions against all other Persons, including but not limited to any and all claims in any other action or proceeding. Likewise, the CRI Parties are releasing only the Receiver Released Parties and the Indenture Trustee Released Parties and no one else and the CRI Parties each reserve and preserve in full all claims and actions against all other Persons, including but not limited to any and all claims in any other action or proceeding. 67. No Release of Obligations Under Agreement. Notwithstanding anything to the contrary in this Agreement, the releases and covenants-not-to-sue contained in this Agreement do not release the Parties' rights and obligations under this Agreement or the Settlement, nor do they bar the Parties from enforcing or effectuating this Agreement or the Settlement. VIII. COVENANTS, REPRESENTATIONS AND WARRANTIES. 68. No Assignment, Encumbrance. or Transfer. Except with respect to the Indenture Trustees’ assignment of the Assigned Bondholder Claims to the Receiver, the Parties represent and warrant that they have not, in whole or in part, assigned, encumbered, sold, pledged as security, or in any manner transferred or compromised any of the Settled Claims that they are releasing under this Agreement. 69. No Admission of Fault or Wrongdoing. The Settlement, this Agreement, and the negotiation and mediation thereof shall in no way constitute, be construed as, or be evidence 36 4818-9414-7974.19 Case 2:17-cv-00393-SCM Document 327-2 Filed 05/24/19 Page 38 of 204 PageID: 14478 of any admission or concession of: (a) fault, wrongdoing, liability, or damages whatsoever; (b) any violation of any statute or other law; (c) any infirmity, deficiency, or lack of merit in the claims or defenses of the any of the Parties with regard to any of the claims, allegations, or defenses that were asserted, or that could have been asserted, in the negotiation and mediation of the Claims, in the SEC Receivership Case, or in any other proceeding in any Forum relating to any Settled Claim. The Settlement and this Agreement constitute a resolution of disputed claims in order to avoid the risk and very substantial burden and expense of protracted litigation. The Settlement, this Agreement, and evidence thereof shall not be used, directly or indirectly, in any way, in the SEC Receivership Case or in any other proceeding in any Forum, other than to obtain approval of and to implement and enforce the terms of the Settlement and this Agreement. 70. Receiver’s Agreement Not to Defame or Disparage the CRI Parties. The Receiver, including his counsel, shall not make, disseminate, or publish any statement outside of court, including a statement in the press, that would defame or disparage the CRI Parties. Nothing in this paragraph shall prevent the Receiver, including his counsel, from making any statement to the court regarding the CRI Parties, nor shall this Paragraph prevent the Receiver, including his counsel, from taking any step he believes is necessary to enforce the Settlement or this Agreement, nor shall this Paragraph prevent the Receiver, including his counsel, from taking any step he believes is necessary to provide the notices contemplated herein. Nothing in this Paragraph shall prevent the Receiver, including his counsel, from reporting his activities to, or responding to inquiries from, the Receivership Court, the SEC, or other governmental authorities, or from carrying out any of his duties under any order of the Receivership Court. 71. The CRI Parties’ Agreement Not to Defame or Disparage the Receiver or Bondholders. The CRI Parties, including their counsel, shall not make, disseminate, or publish 37 4818-9414-7974.19 Case 2:17-cv-00393-SCM Document 327-2 Filed 05/24/19 Page 39 of 204 PageID: 14479 any statement outside of court, including any statement in the press, which would defame or disparage the Receiver or Bondholders. Nothing in this Paragraph shall prevent the CRI Parties, including their counsel, from making any statement to the court regarding the Receiver’s notices contemplated herein, nor shall this Paragraph prevent the CRI Parties, including their counsel, from taking any step they believe is necessary to enforce the Settlement or this Agreement, or to address any continuing litigation involving the Receiver or the Indenture Trustees relating to the Receivership Entities, the Bonds or the Bondholders or any Settled Claims. 72. Intentionally Deleted. 73. Confidentiality. The Parties, including their counsel, consultants, experts, and those who worked with the Parties in their investigation and pursuit or defense of the Claims against the CRI Parties, will keep confidential and shall not publish, communicate, or otherwise disclose, directly or indirectly, in any manner whatsoever, Confidential Information to any Person except that the existence and terms of the Settlement and this Agreement may be filed with the TIP Court and the Receivership Court, after which, pursuant to Section I. ¶ 4, they shall cease to be Confidential Information. Notwithstanding the foregoing, Confidential Information may be disclosed: (i) as necessary to obtain Court approval of the Settlement and this Agreement; (ii) as required by order of the TIP Court or the Receivership Court; (iii) as required by the fiduciary duties of the Indenture Trustees, or federal securities laws, or to provide the Notices as required by this Agreement, or to enforce the terms of the Settlement and this Agreement; (iv) by any Party to its members, and present and potential insurers, on a confidential or attorney-client basis; and (v) to any Person if the Party has obtained prior written consent from all other Parties, which consent, notwithstanding any other provision of this Agreement to the contrary, may be transmitted by e-mail. 38 4818-9414-7974.19 Case 2:17-cv-00393-SCM Document 327-2 Filed 05/24/19 Page 40 of 204 PageID: 14480 74. Other Representations and Warranties. Each Party to this Agreement represents, warrants, and agrees as to itself as follows: (a) No Party has relied upon, and each Party affirmatively disclaims any reliance upon, any statement, representation, or promise of any other Party (or of any representative or attorney of or for any other Party) in executing this Agreement, or in making the Settlement. To the contrary, each Party affirmatively represents and acknowledges that such Party is relying solely on the express terms set forth in this Agreement and its own judgment, based on the advice of its own legal counsel in negotiating and entering into the Settlement and this Agreement. (b) Each Party to this Agreement has made such investigation of the facts pertaining to this Settlement and this Agreement and of all the matters pertaining thereto as it deems necessary. (c) Each Party has read this Agreement in its entirety and understands the contents hereof. Each Party has entered into this Agreement knowingly and voluntarily, without any duress, undue influence, or pressure imposed upon any of them by any other Party or any other Person. Each Party has entered into this Agreement as an act his or its own free will after having consulted with its own legal counsel and after having an opportunity to consult with any other Persons with whom he or it might choose to consult. (d) Each Party has the authority to enter into this Agreement and to make the representations, warranties, covenants, and agreements provided for herein. Each person executing this Agreement or any related documents on behalf of a Party has the full authority to do so. Each Party has the authority to take the action required or permitted to be taken pursuant to this Agreement to effectuate its terms. 39 4818-9414-7974.19 Case 2:17-cv-00393-SCM Document 327-2 Filed 05/24/19 Page 41 of 204 PageID: 14481 75. Incorporation of Recitals. The recitals and “WHEREAS” clauses of this Agreement are incorporated by reference in in this section of the Agreement and expressly made a part of this Agreement. 76. Tolling. Each Party acknowledges and agrees that any and all applicable statutes of limitation or other similar defenses continue to be tolled for the later of (i) sixty (60) days following entry of an Order by the Receivership Court denying the Preliminary Approval Motion , (ii) sixty (60) days following a Party’s withdrawal from this Agreement, and (iii) the expiration of the tolling period provided for in the Tolling Agreement. IX. MISCELLANEOUS. 77. Notices. Any notices, documents, or correspondence of any nature required to be sent pursuant to this Agreement shall be transmitted by both e-mail and overnight delivery to the following recipients, and will be deemed transmitted upon receipt by the overnight delivery service: If to the Receiver: Ryan K. Cochran, Esquire William F. Ryan, Jr., Esquire Waller Lansden Dortch & Davis, LLP Whiteford Taylor & Preston, LLP 511 Union Street, Suite 2700 7 St. Paul Street, 15th Floor Nashville, TN 37219 Baltimore, MD 21202 Phone: (615) 850-8778 Phone: (410) 347-8741 E-mail: [email protected] E-mail: [email protected] If to Trustee BOKF: Nora R. O’Neill, Esquire Frederic Dorwart, Lawyers PLLC Old City Hall 124 East Fourth Street Tulsa, OK 74103-5027 Phone: (918) 583-9922 E-mail: [email protected] 40 4818-9414-7974.19 Case 2:17-cv-00393-SCM Document 327-2 Filed 05/24/19 Page 42 of 204 PageID: 14482 If to Trustee U.S. Bank: George M. Taylor III, Esquire Burr & Forman, LLP 420 North 20th Street, Suite 3400 Birmingham, AL 35203 Phone: (205) 458-5254 E-mail: [email protected] If to Trustee UMB: Thomas Longino, Esquire Longino Public Finance LLC 2917 Central Avenue, Suite 205 Birmingham, AL 35209 Phone: (205) 490-2460 E-mail: [email protected] If to any of the CRI Parties: Thomas B.K. Ringe, III Anthony J. Costantini Patrick Matusky Duane Morris LLP 30 South 17th Street Philadelphia, PA 19103 Phone: (215) 979-1160 E-mail: [email protected] Lee H. Copeland Copeland, Franco, Screws & Gill, P.A. P.O. Box 347 Montgomery, AL 36101-0347 Phone: (334) 834-1180 E-mail: [email protected] Each Party may change the persons or addresses of the persons to receive notice on its behalf by the means set forth in this Paragraph. 41 4818-9414-7974.19 Case 2:17-cv-00393-SCM Document 327-2 Filed 05/24/19 Page 43 of 204 PageID: 14483 78. Reinstatement. This Agreement shall remain in full force and effect and continue to be effective following the termination of the Receivership Case, the discharge of the Receiver, should any petition or other proceeding be filed by or against any Party for liquidation or reorganization, should any Party become insolvent or make an assignment for the benefit of any creditor or creditors, or should an interim receiver, receiver, receiver and manager or trustee be appointed for all or any significant part of any Party’s assets, and shall continue to be effective or to be reinstated, as the case may be, if at any time payment and performance of the terms and obligations of this Agreement, or any part thereof, is, pursuant to applicable law, rescinded or reduced in amount, or must otherwise be restored or returned by any Party, whether as a fraudulent transfer or preference transaction or otherwise, all as though such payment or performance had not been made. In the event that any payment or transfer, or any part thereof, is rescinded, reduced, restored or returned, this Agreement shall not serve to extinguish, discharge, or release the Settled Claims, and the Settled Claims shall be resurrected and reinstated as if such payment or performance had not been made under this Agreement. 79. Jurisdiction. The Parties hereby agree that any legal action or proceeding with respect to this Agreement shall be brought solely in SEC Receivership Case and before the Receivership Court or, otherwise, in the United States District Court for the District of New Jersey, which shall retain exclusive jurisdiction with respect thereto. 80. Attorneys’ Fees and Expenses. Each Party shall bear its own legal fees, costs and expenses. 81. Construction. The terms, provisions, and conditions of this Agreement represent the results of negotiations among the Parties, each of which has been represented by legal counsel of his or its own choosing. Accordingly, the terms, provisions and conditions of this 42 4818-9414-7974.19 Case 2:17-cv-00393-SCM Document 327-2 Filed 05/24/19 Page 44 of 204 PageID: 14484 Agreement shall be interpreted and construed in accordance with their usual and customary meanings. Each Party, expressly, knowingly and voluntarily, waives the application, in connection with the interpretation and construction of this Agreement, of any rule of law or procedure to the effect that ambiguous or conflicting terms, conditions or provisions shall be interpreted or construed against the Party whose legal counsel prepared the executed version or any prior drafts of this Agreement. Whenever the words “include,” “includes,” or “including” are used in this Settlement Agreement, they shall be deemed to be followed by the words “without limitation.” 82. Headings. Descriptive headings are used in this Agreement for convenience only and shall not control, limit, amplify or otherwise modify or affect the terms and provisions of this Agreement or the meaning or construction of the terms and provisions of this Agreement. 83. No Strict Construction. The Parties have participated jointly in the negotiation and drafting of this Agreement. In the event an ambiguity or question of intent or interpretation arises, this Agreement shall be construed as drafted jointly by the Parties (because it has been) and no presumption or burden of proof shall arise favoring or disfavoring any Party by virtue of the authorship of any provisions of this Agreement. 84. Severability. Except as otherwise provided in Section V above with respect to the CRI Parties’ right of withdrawal, if any provision of this Agreement shall, for any reason or to any extent, be invalid or unenforceable, the remainder of this Agreement shall be enforced to the fullest extent permitted by law. 85. No Third Party Rights or Obligations. No person or entity not a Party to or expressly identified as a beneficiary under this Agreement shall have any third-party beneficiary or other rights under this Agreement. 43 4818-9414-7974.19 Case 2:17-cv-00393-SCM Document 327-2 Filed 05/24/19 Page 45 of 204 PageID: 14485 86. Further Assurances. In addition to the documents, instruments and acts described in this Agreement and which are to be executed, delivered or taken pursuant to this Agreement, each of the Parties agrees promptly to execute and deliver from time to time upon reasonable request by any other Party, such other documents, and instruments, and take such other action, as may reasonably be required to fully and completely evidence and carry out the transactions contemplated by this Agreement, so long as said execution of documents or acts are ministerial in nature and do not materially alter the substance of the Settlement or this Agreement. 87. Multiple Counterparts. This Agreement may be executed in any number of identical counterparts, each of which for all purposes is deemed an original, and all of which constitute collectively one agreement. The Parties intend that faxed signatures and electronically-imaged signatures such as PDF files shall constitute original signatures. An executed counterpart signature page delivered by facsimile or by electronic mail shall have the same binding effect as an original signature page. 88. Modification. Except as otherwise expressly provided herein with respect to the CRI Parties’ right to withdraw under Section IV, Paragraph 56, this Agreement shall not be altered, amended, modified or rescinded except by an instrument in writing signed by each of the Parties. 89. Entire Agreement. This written Agreement (including its Exhibits) represents the entire agreement and understanding between Parties with respect to the subject matter hereof, and this Agreement supersedes any and all prior understandings, pertaining to the subject matter set forth herein. 44 4818-9414-7974.19 Case 2:17-cv-00393-SCM Document 327-2 Filed 05/24/19 Page 46 of 204 PageID: 14486 90. Capacity. Each of the undersigned Indenture Trustees is executing this Agreement solely in its capacity as Indenture Trustee under the respective Indentures and shall have no corporate or personal liability with respect to the undertakings set forth herein. 91. THE PARTIES WAIVE ANY RIGHT TO A TRIAL BY JURY IN ANY ACTION OR PROCEEDING TO ENFORCE OR DEFEND ANY RIGHTS UNDER THIS AGREEMENT AND FURTHER AGREE THAT ANY SUCH ACTION OR PROCEEDING SHALL BE TRIED BEFORE A COURT AND NOT BEFORE A JURY. IN WITNESS WHEREOF, the Parties hereto have executed this Agreement, on the day, month and year set forth below: DEREK PIERCE, CARR, RIGGS & INGRAM, LLC solely in his capacity as Receiver for the Receivership Entities By: Dated: Dated: WINK LANEY RUSS FREDERICK Dated: Dated: 45 4818-9414-7974.19 Case 2:17-cv-00393-SCM Document 327-2 Filed 05/24/19 Page 47 of 204 PageID: 14487 BOKF, NATIONAL ASSOCIATION, UMB BANK, N.A., AS TRUSTEE d/b/a BANK OF OKLAHOMA, AS TRUSTEE By: By: Dated: Dated: U.S. BANK, NATIONAL ASSOCIATION, AS TRUSTEE By: Dated: 46 4818-9414-7974.19 Case 2:17-cv-00393-SCM Document 327-2 Filed 05/24/19 Page 48 of 204 PageID: 14488 EXHIBITS TO SETTLEMENT AGREEMENT Exh. A Notice Exh. B Short Form Notice Exh. C Preliminary Approval Motion Exh. D Scheduling Order Exh. E Bar Order and Judgment 47 4818-9414-7974.19 Case 2:17-cv-00393-SCM Document 327-2 Filed 05/24/19 Page 49 of 204 PageID: 14489 EXHIBIT A 4818‐9414‐7974.19 Case 2:17-cv-00393-SCM Document 327-2 Filed 05/24/19 Page 50 of 204 PageID: 14490 UNITED STATES DISTRICT COURT DISTRICT OF NEW JERSEY SECURITIES AND EXCHANGE COMMISSION, Plaintiff, v. Case No. 2:17-cv-393-ES-SCM DWAYNE EDWARDS; TODD BARKER; SENIOR SOLUTIONS OF SOCIAL CIRCLE, LLC; OXTON PLACE OF DOUGLAS, LLC, d/b/a OXTON REAL ESTATE OF DOUGLAS, LLC; ROME ALF, LLC; SAVANNAH ALF, LLC; WATERFORD PLACE ALF, LLC; MONTGOMERY ALF, LLC; COLUMBUS ALF, LLC; and OPELIKA ALF, LLC, Defendants, -and- OXTON SENIOR LIVING, LLC; MANOR HOUSE SENIOR LIVING, LLC; SUSAN EDWARDS, a/k/a SUSAN ROGERS; SHARON NUNAMAKER, a/k/a SHARON HADDEN; and SDH DESIGN, LLC, Relief Defendants. If you bought bonds listed on the attached Exhibit “A,” you could get a payment from a Settlement. A federal court authorized this notice. This is not a solicitation from a lawyer. A Settlement in the amount of $10,000,000 has been proposed to compensate investors who purchased certain Bonds issued by: Douglas-Coffee County Industrial Authority; Cave Spring Housing Development Corporation; Savannah Economic Development Authority; Gainesville and Hall County Development Authority; The Medical Clinic Board of the City of Montgomery-1976 East; the Development Authority of Columbus, Georgia; and The Medical Clinic Board of the City of Opelika, Alabama. The attached Exhibit “A” identifies the Bonds at issue. The Settlement1 resolves Claims made by the Receiver for the entities which were the ultimate beneficiaries of these issuances and for the Bondholders of such entities over whether Carr, Riggs & Ingram, LLC (“CRI”), an accounting firm which performed various professional services for those entities, caused injuries to them and to the Bondholders. The Settlement avoids costs and risks from commencing and continuing a lawsuit, pays money to qualifying investors, and releases and bars claims against CRI and related parties, including its members and employees. Court-appointed lawyers for the Receiver will ask the Court for up to $2,243,065, to be paid out of the $10,000,000 Settlement, as fees and expenses for investigating the facts, asserting the Claims, negotiating the Settlement, and 1 Capitalized terms not otherwise defined herein shall have the meaning given them in the Settlement Agreement, a copy of which is available at www.oxtonseniorlivingreceivership.com/ [settlement landing page]. 4824-7331-5732.11 1 Case 2:17-cv-00393-SCM Document 327-2 Filed 05/24/19 Page 51 of 204 PageID: 14491 providing notice of the Settlement. The two sides disagree on whether the Receiver could have prevailed at trial and, if he prevailed, on how much money, if any, the Receiver could have recovered. Your legal rights are affected whether you act, or don’t act. Read this notice carefully. The Court in charge of this case still has to decide whether to approve the Settlement. Payments will be made if the Court approves the Settlement and after any appeals are resolved. Please be patient. BASIC INFORMATION ………………………………….……………………..……………. PAGE 2 1. Why did I get this notice package? 2. What is this dispute about? 3. Why is this a receivership? 4. Why is there a Settlement? WHO IS IN THE SETTLEMENT……………………………………………………………… PAGE 4 5. How do I know if I am part of the Settlement? THE SETTLEMENT BENEFITS—WHAT YOU GET………………………..….…………… PAGE 4 6. What does the Settlement provide? 7. How much will my payment be? HOW YOU GET A PAYMENT—SUBMITTING A CLAIM FORM ……….……...... PAGE 5 8. How can I get a payment? 9. When would I get my payment? 10. What am I giving up to get a payment? 11. Can I get out of the Settlement? THE LAWYERS ….………………………….…………...... PAGE 6 12. Do I have a lawyer in the case? 13. How will the lawyers be paid? OBJECTING TO THE SETTLEMENT…………………...……………………………………. PAGE 6 14. How do I tell the Court that I don’t like the Settlement? THE COURT’S FINAL APPROVAL HEARING………………………………………..……………… PAGE 8 15. When and where will the Court decide whether to approve the Settlement? 16. Do I have to come to the hearing? 17. May I speak at the hearing? IF YOU DO NOTHING……………………………….………………………………………. PAGE 8 18. What happens if I do nothing at all? GETTING MORE INFORMATION…………………………………………………………… PAGE 8 19. Are there more details about the Settlement? 20. How do I get more information? 4824-7331-5732.11 2 Case 2:17-cv-00393-SCM Document 327-2 Filed 05/24/19 Page 52 of 204 PageID: 14492 BASIC INFORMATION 1. Why did I get this notice package? You, someone in your family, or someone for whom you act may have purchased certain Bonds issued by the following entities: Douglas-Coffee County Industrial Authority; Cave Spring Housing Development Corporation; Savannah Economic Development Authority; Gainesville and Hall County Development Authority; The Medical Clinic Board of the City of Montgomery-1976 East; the Development Authority of Columbus, Georgia; and The Medical Clinic Board of the City of Opelika, Alabama. A list of the specific Bond issuances in question is included in Exhibit “A” to this notice. The Court caused this notice to be sent to you because you have a right to know about a proposed Settlement, and about all of your options, before the Court decides whether to approve the Settlement. This notice explains the Claims, the Settlement, your legal rights, what benefits are available, who is eligible for them, and how to get them. The Court in charge of the case is the United States District Court for the District of New Jersey, and the case is known as Securities and Exchange Commission v. Dwayne Edwards, et al., Case No. 2:17-cv-393-ES-SCM. This case was filed by the United States Securities and Exchange Commission (“SEC”), which is called the plaintiff, against, among others, Dwayne Edwards (“Edwards”), Todd Barker (“Barker”), and several of their companies which benefitted from the issuance of the Bonds, Oxton Place of Douglas, LLC d/b/a Oxton Real Estate of Douglas, LLC, Rome ALF, LLC, Savannah ALF, LLC, Gainesville ALF, LLC, Waterford Place ALF, LLC, Montgomery ALF, LLC, Columbus ALF, LLC, and Opelika ALF, LLC (collectively, the “Entities”), all of whom are called defendants. To marshal, preserve and administer the assets of the Entities, the Court appointed Derek Pierce as Receiver. 2. What is this dispute about? This Settlement is of a dispute raised by the Receiver concerning services provided by CRI and several of its members and employees. The Entities are limited liability companies formed by Barker and Edwards for the purpose of acquiring and operating assisted living and/or memory care facilities. After obtaining conduit municipal bond financing, each Entity acquired and operated such an assisted living and/or memory care facility. CRI is a public accounting firm. In connection with each of the municipal bond offerings identified in Exhibit “A,” and continuing through 2016, each of the Entities engaged CRI, among other things, to examine forecasted financial statements for each offering prepared by the Entity’s management and to issue an independent accountant’s report with respect to each such forecast. In each such report, CRI opined that management’s related forecast was presented in conformity with guidelines for presentation of a forecast established by the American Institute of Certified Public Accountants and that the underlying assumptions provided a reasonable basis for management’s forecast. In addition to examining and providing a report with respect to management’s forecast, CRI provided other accounting services to each Entity, including audit, compilation and tax services. During 2016, each of the Entities defaulted on its obligations with respect to the bond offerings resulting in various bankruptcy and receivership proceedings, including, ultimately, the action brought by the SEC. As a result of such defaults, many of the current and former Bondholders sustained damages by reason of their investments in the Bonds. Generally, the Receiver claimed that CRI and its members and employees breached their obligations to the Entities and the Bondholders with respect to the Financial Forecasts and made false and misleading statements by issuing in the reports “clean opinions” for each such Financial Forecast. In this regard, the Receiver contended, among other things, that CRI: (i) lacked the independence required to perform their responsibilities as independent certified public accountants in examining and preparing reports in connection with the Financial Forecasts; (ii) failed to disclose significant assumptions underlying the Financial Forecasts, without issuing an adverse opinion; and (iii) failed properly to obtain support for and evaluate certain underlying assumptions. The Receiver asserted Claims against CRI sounding in negligence, intentional tort, breach of contract, and breach of fiduciary duty. For its part, CRI vigorously denied any wrongdoing and contended, among other things: (i) that, if the allegations of misconduct by Edwards and Barker were true, the Claims of the Entities were barred by the doctrine of in pari delicto; (ii) that any 4824-7331-5732.11 3 Case 2:17-cv-00393-SCM Document 327-2 Filed 05/24/19 Page 53 of 204 PageID: 14493 Claims lacked merit because of the inability of the party allegedly injured to prove reasonable reliance on anything CRI did or said; and (iii) that the conduct and statements of CRI were not the proximate cause of any loss sustained, such loss being caused instead by unforeseeable subsequent events, including, among other things, an ownership break-up between Edwards and Barker, unanticipated regulatory issues and the mismanagement and/or misconduct of other parties. 3. Why is this a receivership? By order dated January 23, 2017, the Court granted the SEC’s motion to appoint a receiver. Under that order, the Receiver is empowered to marshal, preserve, and administer the assets and estates of the Entities. In addition, under authority granted by the Court’s order dated March 6, 2018, the Receiver is pursuing the Claims of the Bondholders against CRI assigned to the Receiver by the Indenture Trustees on the Bonds. 4. Why is there a Settlement? The Court did not decide in favor of the Receiver or CRI. There was no trial. Instead, both sides agreed to a Settlement. That way, they avoid the cost of a trial, and the people affected will have a right to compensation. The Receiver and his attorneys think the Settlement is best for all current and previous Bondholders. WHO IS IN THE SETTLEMENT 5. How do I know if I am part of the Settlement? All current and previous Bondholders are entitled to participate in the Settlement. Current Bondholders do not need to do anything to participate in the Settlement. Previous Bondholders must timely and properly submit a valid Claim Form to participate in the Settlement. The Claim Form is due [Month 00], 2019. The Claim Form can be found at www.oxtonseniorlivingreceivership.com and is also attached to this notice. THE SETTLEMENT BENEFITS—WHAT YOU GET 6. What does the Settlement provide? The Settlement provides a recovery to current Bondholders. The Settlement also provides a recovery to previous Bondholders who sustained loss on the Bonds and who timely and properly submit a Claim Form. The only previous Bondholders who or which may receive a distribution under the Distribution Plan are those who or which both: (a) sold at a loss on or before 4:00 p.m. (Eastern), ninety (90) days from the date of the entry of the Scheduling Order, and (b) submit a Claim Form to the Receiver at the address set forth on the Claim Form, so that it is received by the Receiver on or before 4:00 p.m. (Eastern), ninety (90) days from the date of entry of the Scheduling Order. The Claim Form is due by 4:00 p.m. (Eastern) [Month 00], 2019. The Claim Form can be found at www.oxtonseniorlivingreceivership.com and is also attached to this notice. In addition, the Settlement provides for the entry of a Bar Order that will prevent the Receiver, the Indenture Trustees, all previous, present and future Bondholders, the Claimants, the Issuers, all Interested Parties, and all non-governmental Persons from prosecuting or pursuing any claims against CRI and related parties, including its members and employees relating to the Bonds. 7. How much will my payment be? Until the Settlement is fully administered, it is not possible to determine what individual Bondholders will receive. The Settlement Amount will be allocated between the Borrowers as follows: Settlement Amount: $10,000,000 Contingency Fee: ($2,000,000) Dispute Related Expenses: ($243,065) Net Settlement Proceeds: $ 7,756,935 4824-7331-5732.11 4 Case 2:17-cv-00393-SCM Document 327-2 Filed 05/24/19 Page 54 of 204 PageID: 14494 Douglas Rome Savannah Gainesville Waterford Montgomery Columbus Opelika Total BOKF BOKF BOKF BOKF BOKF UMB BOKF U.S. Bank (1) Est. Current $1,663,882 $3,917,403 $4,102,600 $2,851,125 $6,095,832 $5,287,563 $4,630,220 $4,730,599 $33,279,224 Bondholder Loss (2) % Share 5.0% 11.8% 12.3% 8.6% 18.3% 15.9% 13.9% 14.2% 100% (3) Borrower’s $387,847 $915,318 $954,103 $667,096 $1,419,519 $1,233,353 $1,078,214 $1,101,485 $7,756,935 Allocation of Net Settlement Proceeds The Settlement then allocates each Borrower’s allocation of the Net Settlement Proceeds amongst that Borrower’s previous and current Bondholders as follows: Step-One: Determine Current Bondholders Losses for Each Borrower Estimated Current Bondholder Loss for each Borrower as listed in row (1) of the above chart. Step-Two: Determine the Previous Bondholder Loss for Each Borrower i. (Price at Which Previous Individual Bondholder Bought Bonds - Price at Which Previous Bondholder Sold Bonds) = (x%) (All Previous Bondholder Losses + All Current Bondholder Losses) ii. (x%) * Net Settlement Proceeds Allocated to Borrower = Previous Individual Bondholder’s Recovery iii. Only previous Bondholders who or which sold at a loss will be qualified to receive a distribution under the Distribution Plan. The only previous Bondholders who or which may receive a distribution under the Distribution Plan are those who or which both: (a) sold on or before 4:00 p.m. (Eastern), ninety (90) days from the date of the entry of the Scheduling Order, and (b) submit a Claim Form to the Receiver at the address set forth on the Claim Form, so that it is received by the Receiver on or before 4:00 p.m. (Eastern), ninety (90) days from the date of entry of the Scheduling Order. Step-Three: Determine Distribution to Current Bondholders of Each Borrower Net Settlement Proceeds Allocated to Borrower - Total Previous Bondholders Recovery = Distribution to Indenture Trustee on Account of Current Bondholders’ Losses HOW YOU GET A PAYMENT—SUBMITTING A CLAIM FORM 8. How can I get a payment? Any previous Bondholder claiming entitlement to a distribution from the Net Settlement Proceeds must submit a Claim Form in the form appended to this notice to the Receiver at the address set forth on the Claim Form, so that it is received by the Receiver on or before 4:00 p.m. (Eastern), ninety (90) days from the date of entry of the Scheduling Order, that is, by 4:00 p.m. (Eastern) [Month 00], 2019. Any previous Bondholder’s failure to timely and properly submit a Claim Form, duly providing the information and documentation called for by the Claim Form, shall preclude such previous Bondholder from receiving any distribution from the Net Settlement Proceeds. The Receiver will review and verify each submitted Claim Form. The Receiver will then file with the Court a report outlining the Receiver’s determination as to whether the Claim Form will be allowed or disallowed (the “Claims Report”). Previous Bondholders who have submitted a Claim Form will have the opportunity to object to the Claims Report by filing an objection to the Claims Report within (14) days after the filing of the Claims Report. Objections to the Claims Report will be determined by the Court. If no objection is timely filed to the Claims Report, the Claims Report shall be the final, binding determination on the allowance or disallowance of each Claim Form. CURRENT BONDHOLDERS ARE EXEMPT FROM THE REQUIREMENT OF SUBMITTING A CLAIM FORM. THE SETTLEMENT PROCEEDS DUE CURRENT BONDHOLDERS WILL BE DISTRIBUTED TO 4824-7331-5732.11 5 Case 2:17-cv-00393-SCM Document 327-2 Filed 05/24/19 Page 55 of 204 PageID: 14495 THE INDENTURE TRUSTEES WHO WILL DISTRIBUTE THE FUNDS TO THE CURRENT BONDHOLDERS. 9. When would I get my payment? If the Settlement is approved, we do not know when current and previous Bondholders will get their payments. The Court will hold a hearing on [Month 00], 2019, to decide whether to approve the Settlement. If the Court approves the Settlement after that, there may be appeals. It’s always uncertain whether these appeals can be resolved, and resolving them can take time, perhaps more than a year. Everyone who sends in a Claim Form will be informed of the progress of the Settlement. Please be patient. 10. What am I giving up to get a payment? You cannot exclude yourself from the Settlement, and that means that you can’t sue, continue to sue, or be part of any other lawsuit against CRI, its members or employees about the legal or factual issues in this case. It also means that all of the Court’s orders will apply to you and legally bind you. This is true whether or not you submit a Claim Form. 11. Can I get out of the Settlement? No. You cannot exclude yourself from this Settlement. If the Court approves this Settlement, you will be subject to what is called a “Bar Order.” That Bar Order will prevent the Receiver, the Indenture Trustees, all previous, present and future Bondholders, the Claimants, the Issuers, all other Interested Parties, and all other non-governmental Persons from prosecuting or pursuing any claims against CRI and related parties, including its members and employees relating to the Bonds. This Bar Order will only be entered if the Court approves the Settlement. THE LAWYERS 12. Do I have a lawyer in the case? No. The Receiver is represented by the law firms of Waller Lansden Dortch & Davis, LLP in Nashville, TN, and Whiteford Taylor & Preston, LLP in Baltimore, MD. If you want to be represented by your own lawyer, you may hire one at your own expense. 13. How will the lawyers be paid? The Receiver’s attorneys will ask the Court to approve payment of attorneys’ fees and costs of up to $2,243,065, comprised of a fee award of $2 million and costs of $243,065. The fees awarded would pay the Receiver’s counsel for investigating the facts, asserting and pursuing the Claims against CRI, negotiating and obtaining approval of the Settlement, and providing the notice called for by the Settlement. The costs awarded would reimburse the Receiver and his attorneys for out-of-pocket costs incurred by them in asserting and pursuing the Claims and the Settlement. The fee amount of $2 million is based on a contingent fee of 20% agreed upon between the Receiver and his counsel previously approved by the Court. These amounts will be deducted from the Settlement amount of $10,000,000. CRI has agreed not to oppose these fees and expenses. OBJECTING TO THE SETTLEMENT 14. How do I tell the Court that I don’t like the Settlement? You can tell the Court that you don’t agree with the Settlement or some part of it. You can object to the Settlement if you don’t like any part of it. You can give reasons why you think the Court should not approve it. To object, you must mail your written objection to the Clerk of the United States District Court for the District of New Jersey, United States Courthouse, Martin Luther King Building, 50 Walnut Street, P.O. Box 999, Newark, New Jersey 07101, so that it is received no later than [Month 00], 2019. All objections filed with the Court must: a. contain the name, address, telephone number, and (if applicable) an email address of the Person filing the objection; 4824-7331-5732.11 6 Case 2:17-cv-00393-SCM Document 327-2 Filed 05/24/19 Page 56 of 204 PageID: 14496 b. contain the name, address, telephone number, and email address of any attorney representing the Person filing the objection; c. be signed by the Person filing the objection, or his or her attorney; d. state, in detail, the basis for any objection; e. attach any document the Court should consider in ruling on the Settlement, the Bar Order and Judgment, or the Receiver’s request for approval of Receiver’s attorneys’ fees and costs; and f. if the Person filing the objection wishes to appear and be heard at the Final Approval Hearing, make a request to do so. No Person will be permitted to appear and be heard at the final approval hearing without filing a written objection and request to appear and be heard at the final approval hearing. Your written objection must be mailed to all of the following different places: COURT RECEIVER’S COUNSEL CRI’S COUNSEL Clerk of the Court Waller Lansden Duane Morris LLP United States District Court for the Dortch & Davis, LLP Thomas B.K. Ringe District of New Jersey Blake D. Roth 30 S. 17th Street Martin Luther King Building & U.S. 511 Union Street, Suite Philadelphia, PA 191903 Courthouse 2700 50 Walnut Street Room 4015 Nashville, Tennessee Newark, NJ 07101 37219 and Whiteford Taylor & Preston, LLP William F. Ryan, Jr. 7 St. Paul Street, 15th Floor, Baltimore, MD 21202 INDENTURE TRUSTEES’ COUNSEL Bank of Oklahoma U.S. Bank UMB Bank, N.A. Nora R. O’Neill George M. Taylor III Thomas Longino Frederic Dorwart, Lawyers PLLC Burr & Forman, LLP Longino Public Finance LLC Old City Hall 420 North 20th Street 2917 Central Avenue 124 East Fourth Street Suite 3400 Suite 205 Tulsa, OK 74103-5027 Birmingham, AL 35203 Birmingham, AL 35209 4824-7331-5732.11 7 Case 2:17-cv-00393-SCM Document 327-2 Filed 05/24/19 Page 57 of 204 PageID: 14497 THE COURT'S FINAL APPROVAL HEARING 15. When and where will the Court decide whether to approve the Settlement? The Court will hold a Final Approval Hearing at [0:00 _M] on [Month 00], 2019, at the United States District Court for the District of New Jersey, Martin Luther King Building & U.S. Courthouse 50 Walnut Street Room 4015, Newark, NJ 07101, in Courtroom [__]. At the Final Approval Hearing the Court will consider whether the Settlement is fair, reasonable, and adequate. The Court may also decide how much to pay to the Receiver’s counsel. If there are objections, the Court will consider them. At or after the Final Approval Hearing, the Court will decide whether to approve the Settlement. We do not know how long the decision will take. 16. Do I have to come to the hearing? No. The Receiver’s counsel will answer questions the Court may have. But, you are welcome to come at your own expense. If you send an objection, you don’t have to come to Court to talk about it. As long as your written objection is received on time, the Court will consider it. You may also pay your own lawyer to attend, but it’s not necessary. 17. May I speak at the hearing? You may ask the Court for permission to speak at the fairness hearing. To do so, you must send a letter objecting to the Settlement as provided for in answer to Question 14 above. You must also send a separate letter saying that it is your “Notice of Intention to Appear and be Heard in SEC v. Edwards.” Be sure to include your name, address, telephone number, and your signature. Your Notice of Intention to Appear and be Heard must be received no later than [Month 00], 2019, by the Clerk of the Court, the Receiver’s Counsel, Defense Counsel, and Counsel to the Indenture Trustees at the addresses in answer to Question 14. IF YOU DO NOTHING 18. What happens if I do nothing at all? If you are a current Bondholder and do nothing, you’ll get money from this Settlement. If you are a previous Bondholder and do nothing, you’ll get no money from this Settlement. In either event, if the Court approves the Settlement, your Claims against CRI covered by the Settlement will be barred. GETTING MORE INFORMATION 19. Are there more details about the Settlement? Yes. You can read the pleadings relevant to the Settlement that have been filed in the case. You can get a copy of these pleadings by visiting www.oxtonseniorlivingreceivership.com/ [settlement landing page]. 20. How do I get more information? This notice summarizes the proposed Settlement. More details are in a Settlement Agreement. You can get a copy of the Settlement Agreement and other pleadings related to the Settlement by visiting www.oxtonseniorlivingreceivership.com/ [settlement landing page]. DATE: [MONTH 00], 2019. 4824-7331-5732.11 8 Case 2:17-cv-00393-SCM Document 327-2 Filed 05/24/19 Page 58 of 204 PageID: 14498 EXHIBIT A ISSUER CUSIP OPELIKA ALA MED CLINIC BRD HEALTHCARE FAC REV 683507AA5 OPELIKA ALF LLC PROJ (AL) 683507AB3 683507AC1 683507AD9 683507AE7 MONTGOMERY ALA MED CLINIC BRD 1976 EAST REV FIRST 613061AG5 MTG-WATERFORD PL ALF LLC (AL) 613061AH3 SAVANNAH GA ECONOMIC DEV AUTH REV FIRST MTG- 80483CLN9 SAVANNAH ALF LLC (GA) 80483CLP4 CAVE SPRING HOUSING DEVELOPMENT CORPORATION 149596CF3 FIRST MORTGAGE REVENUE BONDS (ROME ALF, LLC 149596CG1 PROJECT (GA) MONTGOMERY ALA MED CLINIC BRD 1976 EAST REV FIRST 613061AJ9 MTG-MONTGOMERY ALF LLC (AL) 613061AK6 GAINESVILLE AND HALL CNTY GA DEV AUTH FIRST MTG- 362754GT4 GAINESVILLE ALF, LLC (GA) 362754GU1 362754GV9 362754GW7 DOUGLAS-COFFEE CNTY GA INDL AUTH FIRST MTG REV 258873AA6 OXTON PL DOUGLAS LLC PROJ-SER (GA) 258873AB4 COLUMBUS GA DEV AUTH REV FIRST MTG-COLUMBUS ALF 19912HFH7 LLC (GA) 19912HFJ3 19912HFK0 4824-7331-5732.11 Case 2:17-cv-00393-SCM Document 327-2 Filed 05/24/19 Page 59 of 204 PageID: 14499 CLAIM FORM UNITED STATES DISTRICT COURT FOR THE DISTRICT OF NEW JERSEY PREVIOUS BONDHOLDER CLAIM FORM Securities and Exchange Commission v. Edwards et al. Case No. 2:17-cv- 393-ES-SCM Name of Person/Entity Making Claim: Received Name and address where notices should be sent: Check this box if this claim amends a previously filed claim. Telephone Number: Email: Claim # ______ Name and address where payment should be sent (if different from above): Check this box if you are aware that anyone else has filed a proof of claim relating to this claim Telephone Number: Email: and attach a copy of such claim. Amount Lost: $______ Issuance(s) (attach additional pages if additional space is needed): Issuer(s): ______ CUSIP No(s). ______ Loss Calculation (attach additional pages if additional space is needed): CUSIP No(s): ______ No. of Bonds Purchased: ______Date(s) Purchased: ______Purchase Price(s): ______ No. of Bonds Sold: ______Date(s) Sold: ______Sale Price(s): ______ Supporting Documentation. You must attach copies of any documents that support your claim (including the basis for calculating your loss(es)), such as account statements, trade histories, purchase and sale directions/orders, itemized statements of accounts, other contracts, etc. DO NOT SEND ORIGINAL DOCUMENTS. ATTACHED DOCUMENTS MAY BE DESTROYED. If the documents are not available, please explain: ______ 5. Signature. I declare under penalty of perjury that the information provided in this claim is true and correct to the best of my knowledge, information and reasonable belief. Print Name: ______ Title: ______ Company: ______(Signature) (Date) Mail Claim Form to: Waller Lansden Dortch & Davis, LLP, 511 Union Street, Suite 2700, Nashville, TN 37219, Attn: CRI Settlement 4824-7331-5732.11 Case 2:17-cv-00393-SCM Document 327-2 Filed 05/24/19 Page 60 of 204 PageID: 14500 EXHIBIT B 4818‐9414‐7974.19 Case 2:17-cv-00393-SCM Document 327-2 Filed 05/24/19 Page 61 of 204 PageID: 14501 LEGAL NOTICE If you bought bonds listed on the attached Exhibit “A,” you could get a payment from a Settlement. A Settlement in the amount of $10 million has been Subject to Court approval, a $10 million fund will be proposed to compensate investors who purchased certain created to compensate the purchasers of the Bonds, and Bonds issued by: Douglas-Coffee County Industrial to pay administration expenses and attorneys’ fees and Authority; Cave Spring Housing Development costs incurred by the Receiver. The fund will be allocated Corporation; Savannah Economic Development by the Receiver, in accordance with the proposed Authority; Gainesville and Hall County Development Distribution Plan. Complete details are found at Authority; The Medical Clinic Board of the City of www.oxtonseniorlivingreceivership.com. Montgomery-1976 East; the Development Authority How can I receive benefits? of Columbus, Georgia; and The Medical Clinic Board Current Bondholders do not need to take any action to of the City of Opelika, Alabama (a full list of the receive compensation from the Settlement. Previous Bonds at issue is attached as Exhibit A). Bondholders must timely and properly submit a Claim What’s this about? Form to receive compensation from the Settlement. The Claim Form is due ____, 2019. The Claim Form The Settlement resolves Claims made by the Receiver can be found at for the entities which were the ultimate beneficiaries www.oxtonseniorlivingreceivership.com. of the Bond issuances and for the Bondholders of such entities over whether Carr, Riggs & Ingram, What are my rights? LLC (“CRI”), an accounting firm which performed You cannot exclude yourself from the Settlement. various professional services for those entities, You may submit written objection to the Settlement caused injuries to them and to the Bondholders. CRI by ______, 2019. Whether you object or not, you denies it did anything wrong. The Court did not will be bound by the Court’s decision. If the Court decide which side was right. But both sides agreed to approves the Settlement, your claims against CRI and the Settlement to resolve the Claims and get benefits related parties covered by the Settlement will be to Bondholders. The two sides disagree on how much barred. That means you can’t sue, continue to sue, or money, if any, could have been won if the Receiver be part of any other lawsuit against CRI and related had won at a trial. parties, including its members or employees about the legal or factual issues in this case. Who’s Included? The Court will hold a hearing on _____, 2019 at ___ The Settlement includes anyone who currently or p.m. EST, to consider whether to approve the previously owned Bonds identified in Exhibit A. Settlement and a request for attorneys’ fees, plus You can get more information, including a detailed reimbursement of costs and expenses. You or your own notice, at www.oxtonseniorlivingreceivership.com. lawyer may appear at the hearing at your own expense. This is only a summary, so please visit the website for complete information. What does the Settlement provide? For more information or a Claim Form: www.oxtonseniorlivingreceivership.com 4824-2921-0260.9 Case 2:17-cv-00393-SCM Document 327-2 Filed 05/24/19 Page 62 of 204 PageID: 14502 Exhibit “A” The proposed Settlement impacts all persons who currently own or previously owned any of the Bonds identified in the list below. CUSIP 683507AA5 683507AB3 683507AC1 683507AD9 683507AE7 613061AG5 613061AH3 80483CLN9 80483CLP4 149596CF3 149596CG1 613061AJ9 613061AK6 362754GT4 362754GU1 362754GV9 362754GW7 258873AA6 258873AB4 19912HFH7 19912HFJ3 19912HFK0 4824-2921-0260.9 Case 2:17-cv-00393-SCM Document 327-2 Filed 05/24/19 Page 63 of 204 PageID: 14503 EXHIBIT C 4818‐9414‐7974.19 Case 2:17-cv-00393-SCM Document 327-2 Filed 05/24/19 Page 64 of 204 PageID: 14504 WALLER LANSDEN DORTCH & DAVIS, LLP Blake D. Roth Ryan K. Cochran (admitted pro hac vice) 511 Union Street, Suite 2700 Nashville, Tennessee 37219 Telephone: 615.244.6380 Email: [email protected] [email protected] Counsel for the Receiver UNITED STATES DISTRICT COURT DISTRICT OF NEW JERSEY SECURITIES AND EXCHANGE COMMISSION, Plaintiff, v. Case No. 2:17-cv-393-ES-SCM DWAYNE EDWARDS; TODD BARKER; RECEIVER’S REQUEST FOR (I) SENIOR SOLUTIONS OF SOCIAL ENTRY OF PRELIMINARY CIRCLE, LLC; OXTON PLACE OF APPROVALS AND SCHEDULING DOUGLAS, LLC, d/b/a OXTON REAL ORDER, AND (II) MOTION FOR ESTATE OF DOUGLAS, LLC; ROME ENTRY OF ORDER APPROVING ALF, LLC; SAVANNAH ALF, LLC; PROPOSED SETTLEMENT, THE WATERFORD PLACE ALF, LLC; PROPOSED NOTICE OF MONTGOMERY ALF, LLC; SETTLEMENT, AND TO ENTER THE COLUMBUS ALF, LLC; and OPELIKA BAR ORDER AND FINAL ALF, LLC, JUDGMENT Defendants, MOTION DAY: June 17, 2019 -and- OBJECTION DEADLINE: OXTON SENIOR LIVING, LLC; MANOR June 3, 2019 HOUSE SENIOR LIVING, LLC; SUSAN EDWARDS, a/k/a SUSAN ROGERS; SHARON NUNAMAKER, a/k/a SHARON HADDEN; and SDH DESIGN, LLC, Relief Defendants. Derek Pierce, as receiver (the “Receiver”), respectfully submits this motion (the “Preliminary Approval Motion”) requesting the Court to preliminarily approve a compromise (the 4817-7864-8726.6 Case 2:17-cv-00393-SCM Document 327-2 Filed 05/24/19 Page 65 of 204 PageID: 14505 “Settlement”), memorialized in the Settlement and Release Agreement attached hereto as Exhibit 1 (the “Settlement Agreement”), between the Receiver, BOKF, N.A. (“Trustee BOKF”), U.S. Bank, N.A. (“Trustee U.S. Bank”), and UMB Bank, N.A. (“Trustee UMB”, and together with Trustee BOKF and Trustee U.S. Bank, collectively, the “Indenture Trustees”), Carr, Riggs & Ingram, LLC (“CRI”), and two of its employees Wink Laney (“Laney”), and Russ Frederick (“Frederick,” collectively with Laney and CRI, the “CRI Parties”). The Receiver further requests, as more fully set out below, that the Court enter the Scheduling Order attached hereto as Exhibit 2, approve the Notice attached hereto as Exhibit 3, approve the Short Form Notice attached hereto as Exhibit 4, and following the Final Approval Hearing (as defined below) enter the Bar Order and Judgment approving the Settlement attached hereto as Exhibit 5. The Receiver also requests that the Final Approval Hearing requested as part of the Scheduling Order be set before an Article III United States District Court Judge having jurisdiction over the receivership proceeding for a date at least ninety (90) days after the entry of the Scheduling Order. In further support of the Preliminary Approval Motion, the Receiver states the following: SUMMARY OF REQUESTED RELIEF 1. On March 5, 2018, the Court entered its Order Granting Receiver’s Application For Order: (A) Authorizing Receiver to Pursue Claims Against Third Parties; (B) Approving Employment of Whiteford Taylor Preston, LLP as Special Counsel for Receiver to Pursue Claims Against Third Parties; and (C) Approving Proposed Recovery-Distribution and Cost-Sharing Methodology for Claims Against Third Parties (the “Claims Authorization Order”) (Dkt. No. 242). 2. As permitted by the Claims Authorization Order, the Receiver asserted claims 4817-7864-8726.6 2 Case 2:17-cv-00393-SCM Document 327-2 Filed 05/24/19 Page 66 of 204 PageID: 14506 against the CRI Parties. The Receiver has reached a Settlement, subject to court-approval,1 with the CRI Parties. The Settlement provides for a payment to the Receiver of Ten Million Dollars ($10,000,000) (the “Settlement Amount”). 3. In exchange for the Settlement Amount, the CRI Parties seek total peace with respect to all claims that have been or could be asserted against the CRI Parties and the CRI Released Parties, and have conditioned the Settlement Agreement on the Court ordering such relief. 4. The Receiver’s Preliminary Approval Motion seeks: a. preliminary approval: (i) of the Settlement; (ii) of the Settlement Agreement; (iii) of the Distribution Plan;2 (iv) of the professional fees and expenses of the Receiver’s general counsel, Waller, and special counsel, Whiteford Taylor; (v) of the Bar Order and Judgment approving the Settlement and this Agreement and enjoining claims against the CRI Released Parties as provided in the Bar Order and Judgment attached hereto as Exhibit 5; b. a finding that the form and content of the Notice and Short form Notice attached hereto as Exhibits 3 and 4, respectively, and the proposed method and manner of dissemination and publication of the same are proper, timely, and adequate to satisfy due process requirements; 1 Trustee U.S. Bank will commence a separate Trust Instruction Proceeding, pursuant to Minn. Stat. 501C.0201, et. seq. (a “TIP Proceeding”), in Ramsey County, Minnesota District Court (the “TIP Court”) seeking entry of an order (the “TIP Order”) authorizing Trustee U.S. Bank to, inter alia, consent to the Settlement and execute the Settlement Agreement. Trustee U.S. Bank’s consent to the Settlement and execution of the Settlement Agreement is subject to successfully obtaining entry by the TIP Court of the TIP Order. The Settlement itself is conditioned upon the TIP Order becoming Final before the conclusion of the Final Approval Hearing. 2 Capitalized terms not otherwise defined herein shall have the meaning given them in the Settlement Agreement attached hereto as Exhibit 1. 4817-7864-8726.6 3 Case 2:17-cv-00393-SCM Document 327-2 Filed 05/24/19 Page 67 of 204 PageID: 14507 c. a finding that the Indenture Trustees have met and fulfilled their respective duties to those Bondholders3 who or which currently own a Bond in connection with the proposed Settlement and that their conduct and the approval of the Settlement Agreement is prudent and consistent with the Indentures and with applicable laws; d. a finding that the Indenture Trustees have the right and authority under the Indentures to assert and assign the Current Bondholders Claims on behalf of those Bondholders who or which currently own a Bond; e. a finding that the Indenture Trustees have acted prudently, in good faith, with sound business judgment, and in the best interests of the respective Bondholders in assigning the Current Bondholder Claims (as defined below) to the Receiver and entering into the Settlement Agreement; f. a finding that the Indenture Trustees and the Receiver have the authority to grant the releases provided for in the Settlement Agreement; g. the entry of a preliminary stay and injunction against the Receiver, the Indenture Trustees, all previous, present and future Bondholders, the Claimants, all other Interested Parties, and all other non-governmental Persons from prosecuting or pursuing any Settled Claim against any of the CRI Released Parties until further order of the Court; and h. the entry of the Scheduling Order to: (i) provide for notice of the terms of the Settlement, including the proposed Distribution Plan, and Bar Order and Judgment, (ii) set the deadline and the procedure for filing objections to the Settlement, the Distribution Plan, the Bar Order and Judgment, and the Receiver’s request for approval of the professional fees and expenses of its general counsel, Waller, and special counsel, Whiteford Taylor, (iii) set the deadline for responding to any objection so filed, (iv) set the deadline and the manner for the submission of claims by previous Bondholders for distributions from the Net Settlement Proceeds, (v) set the date, time and location of the final approval hearing before an Article III United States District Court Judge having jurisdiction over the receivership proceeding regarding the Settlement, the Distribution Plan, the Bar Order and Judgment, and the Receiver’s request for approval of the professional fees and expenses of its general counsel, Waller, and special counsel, Whiteford Taylor (the “Final Approval Hearing”). 3 The Persons who or which currently own or previously owned a Bond are referred to collectively as the “Bondholders” and singularly as a “Bondholder.” 4817-7864-8726.6 4 Case 2:17-cv-00393-SCM Document 327-2 Filed 05/24/19 Page 68 of 204 PageID: 14508 RELEVANT FACTUAL BACKGROUND 5. The Claims Authorization Order gave the Receiver the power to pursue possible claims against third parties arising out of actions and omissions relating to or in connection with the Receivership Entities,4 including assigned claims, and provided that the Indenture Trustees had the authority to pursue and assign claims against third parties to the Receiver to be pursued by its general counsel and special counsel. (Dkt. No. 242, Claims Authorization Order at ¶¶ 2, 3, 8) 6. The Claims Authorization Order further provided that Whiteford Taylor and Waller shall be compensated for their services on a contingency fee basis as provided in the Engagement Letter, which is Exhibit 1 to the Declaration of William F. Ryan, Jr., filed in support of the Application, without the necessity of filing a further fee application. (Dkt. No. 242, Claims Authorization Order at ¶ 4). 7. The Borrowers at issue here, and their respective Bond Offerings are generally described as follows: Borrower/Offering Offering Date 1. Oxton Place of Douglas, LLC Aug. 28, 2014 2. Rome ALF, LLC Dec. 17, 2014 3. Savannah ALF, LLC Jan. 16, 2015 4. Gainesville ALF, LLC Mar. 25, 2015 5. Waterford Place ALF, LLC May 14, 2015 6. Montgomery ALF, LLC May 29, 2015 4 The Receivership Entities are: Oxton Village of Social Circle d/b/a Manor House of Social Circle, Senior Solutions of Social Circle, LLC, Oxton Senior Living, LLC, Oxton Village of Social Circle, LLC, Oxton Village Villas, LLC, Manor House Senior Living, LLC, Manor House of Social Circle LLC, Oxton Place of Montgomery d/b/a Manor House of Montgomery, Montgomery ALF, LLC, Oxton Place of Montgomery, LLC, Manor House of Montgomery, LLC, Oxton Place of Rome d/b/a Manor House of Rome, Rome ALF, LLC, Oxton Place of Rome, LLC, Manor House of Rome, LLC, Oxton of Savannah d/b/a Manor House of Savannah, Savannah ALF, LLC, Oxton Court of Savannah, LLC, Manor House of Savannah, LLC, Oxton Court at Waterford Place d/b/a Manor House of Waterford Place, Waterford Place ALF, LLC, Oxton Court at Waterford Place, LLC, Manor House at Waterford Place, LLC, Oxton Place of Columbus d/b/a Manor House of Columbus, Columbus ALF, LLC, Oxton Place of Green Island, LLC, Manor House of Columbus, LLC, Oxton Court of Opelika d/b/a Manor House Of Opelika, Opelika ALF, LLC, Oxton Court of Opelika, LLC, Manor House of Opelika, LLC, Oxton Place of Douglas d/b/a Manor House of Douglas, Oxton Place of Douglas, LLC d/b/a Oxton Real Estate of Douglas, LLC, Oxton Place of Douglas Operations, LLC, Manor House of Douglas, LLC, Oxton Place of Gainesville d/b/a Manor House of Gainesville, Gainesville ALF, LLC, Oxton Place of Gainesville, LLC, Manor House of Gainesville, LLC. 4817-7864-8726.6 5 Case 2:17-cv-00393-SCM Document 327-2 Filed 05/24/19 Page 69 of 204 PageID: 14509 7. Columbus ALF, LLC July 24, 2015 8. Opelika ALF, LLC Sept. 24, 2015 8. In conjunction with each separate Offering, CRI was engaged by each respective Borrower to examine and issue an independent accountant’s report (the “Report”) on the respective Borrower’s forecasted financial statements (the “Financial Forecasts”), that was included in the official statement (the “Official Statement”)5 for each Offering. In addition to examining and providing a Report with respect to each Borrower’s Financial Forecast, the CRI Parties provided other accounting services to each Borrower, including audit, compilation and tax services (the “Other Accounting Services”). 9. The Receiver identified claims that the Receiver believes: (i) the Borrowers have against the CRI Parties for injuries the Receiver alleges were caused to the Borrowers with respect to the Offerings and the CRI Parties’ Other Accounting Services (the “Receivership Borrower Claims”); (ii) the Indenture Trustees, on behalf of those Bondholders who or which currently own Bonds, have against the CRI Parties with respect to the Offerings and the CRI Parties’ Other Accounting Services pursuant to the provisions of the respective indentures (the “Indentures”) by which the Bonds were issued (the “Current Bondholder Claims”) and (iii) those Bondholders who or which previously owned Bonds have against the CRI Parties with respect to the Offerings and the CRI Parties’ other Accounting Services (the “Previous Bondholder Claims”). The Current Bondholder Claims are claims of the type with respect to which the Indenture Trustees have the right to pursue remedies and enforce rights on behalf of the Bondholders pursuant to each of the Indentures. As authorized in the Claims Authorization Order, the Indenture Trustees assigned to the Receiver the Current Bondholder Claims (the “Assigned Bondholder Claims,” and together 5 An “official statement” is a document prepared by, or on behalf of, a municipal issuer that provides information to investors about a specific bond being offered. 4817-7864-8726.6 6 Case 2:17-cv-00393-SCM Document 327-2 Filed 05/24/19 Page 70 of 204 PageID: 14510 with the Receivership Borrower Claims and Previous Bondholder Claims, the “Claims”). (Claims Authorization Order, Dkt. No. 242 at ¶ 8). 10. On April 13, 2018, and May 3, 2018, respectively, the Receiver sent to the CRI Parties a Demand Letter before Legal Action and a Supplement to Demand Letter before Legal Action (together the “Demand Letter”) identifying, among other causes of action, negligence and breach of contract claims against the CRI Parties on behalf of the Borrowers and the Bondholders with respect to the Offerings and the CRI Parties Other Accounting Services. In the Demand Letter, the Receiver also requested that CRI Parties engage in settlement negotiations and that, if the Claims could not be settled through negotiation, try in good faith to resolve the Claims in mediation before the Receiver initiated litigation (the “Dispute”). 11. In response to the Demand Letter, and in an effort to avoid spending significant amounts of time and money litigating the complex and contentious Dispute, the Receiver and the CRI Parties (collectively, the “Parties”) agreed to pursue a comprehensive resolution of the Dispute through consensual, non-binding mediation (the “Mediation”) and retained Jed D. Melnick, a panelist at JAMS in New York, New York, as the third-party mediator (the “Mediator”).6 12. A Mediation session was held on November 8 - 9, 2018, and attended by the Receiver, counsel for the Receiver, CRI, and counsel for the CRI Parties. Although the Parties made progress, they were unable to resolve the Dispute during that Mediation session. 13. Following the Mediation session and after further, arm’s-length negotiations, the Parties reached a Settlement to resolve the Dispute, which has been memorialized in the Settlement 6 Melnick has experience mediating, among others disputes, securities class actions. 4817-7864-8726.6 7 Case 2:17-cv-00393-SCM Document 327-2 Filed 05/24/19 Page 71 of 204 PageID: 14511 Agreement, which is contingent on court-approval.7 At its core, the Settlement provides that, in exchange for “global peace,” CRI will pay the Receiver Ten Million Dollars ($10,000,000). 14. The principal terms of the Settlement Agreement for which the Receiver seeks approval from this Court are as follows: i) Settlement Amount: the CRI Parties will pay the Receiver Ten Million Dollars ($10,000,000) within five (5) business days of the Settlement Effective Date, which amount will be deposited with the Receiver, and the Net Settlement Proceeds will, in turn, be distributed in accordance with the Distribution Plan. ii) Release of Claims By the CRI Releasing Parties: As of the Settlement Effective Date, as more fully described in the Settlement Agreement, the CRI Releasing Parties will fully release the Settled Claims against the Receiver Released Parties and the Indenture Trustees Released Parties. iii) Release of Claims by the Receiver Releasing Parties: As of the Settlement Effective Date, as more fully described in the Settlement Agreement, the Receiver Releasing Parties will release the Settled Claims against the CRI Released Parties. iv) Release of Claims by Indenture Trustees: As of the Settlement Effective Date, as more fully described in the Settlement Agreement, the Indenture Trustees Releasing Parties will release the Settled Claims against the CRI Released Parties. v) Global Peace: As a further condition of the foregoing terms, the Receiver and CRI Parties will seek entry of a Bar Order and Judgment providing as follows: The Court hereby permanently bars, restrains, and enjoins, the Receiver, the Receivership Entities, the Receivership Estates, the Borrowers, the Indenture Trustees, all previous, present and future Bondholders, the Claimants, the Issuers, all Interested Parties, and 7 U.S. Bank’s consent to the Settlement is also conditioned on entry of the TIP Order by the TIP Court, and the Settlement is conditioned upon the TIP Order becoming Final before the conclusion of the Final Approval Hearing. 4817-7864-8726.6 8 Case 2:17-cv-00393-SCM Document 327-2 Filed 05/24/19 Page 72 of 204 PageID: 14512 all non-governmental Persons, all and individually, from directly, indirectly, or through a third party, asserting, instituting, reinstituting, intervening in, initiating, commencing, maintaining, continuing, filing, encouraging, soliciting, supporting, participating in, collaborating in, or otherwise prosecuting or pursuing, against the CRI Parties and/or any of the CRI Released Parties, any demand, claim, investigation, action, lawsuit, cause of action, complaint, or proceeding of any nature in any Forum, including, without limitation, any court of first instance or any appellate court, whether individually, derivatively, on behalf of a class, as a member of a class, or in any other capacity whatsoever, that in any way relates to, is based upon, arises from, or is connected with this case, the subject matter of this case, the Receiver, the Receivership Entities, the Bonds, the Bondholders, the Indenture Trustees, and/or any Settled Claim. The foregoing specifically includes any claim by any Person, however denominated, seeking contribution, indemnity, damages, or any other remedy where the alleged injury to such Person, or the claim asserted by such Person, is based upon such Person’s liability to the Receiver, any Receivership Entity, any Bondholder, and Indenture Trustee, any Claimant, and/or any other Interested Party arising out of, relating to, or based in whole or in part upon money owed, demanded, requested, offered, paid, agreed to be paid, or required to be paid to the Receiver, a Receivership Entity, a Bondholder, an Indenture Trustee, a Claimant, and/or any other Interested Party whether pursuant to a demand, judgment, claim, agreement, settlement, or otherwise. RELIEF REQUESTED 15. Pursuant to this Motion, the Claims Authorization Order and this Court’s broad equitable powers, the Receiver seeks entry of (I) an order preliminarily approving the Settlement as embodied in the Settlement Agreement, including entry of a preliminary stay and injunction against the Receiver, the Indenture Trustees, all previous, present and future Bondholders, the Claimants, all other Interested Parties, and all other non-governmental Persons from prosecuting or pursuing any Settled Claim against the CRI Parties and/or any of the CRI Released Parties until further order of the Court, and (II) entry of the Scheduling Order to (i) provide for notice of the terms of the Settlement, including the proposed Distribution Plan and Bar Order and Judgment; (ii) set the deadline and the procedure for filing objections to the Settlement, the Distribution Plan, 4817-7864-8726.6 9 Case 2:17-cv-00393-SCM Document 327-2 Filed 05/24/19 Page 73 of 204 PageID: 14513 the Bar Order and Judgment, and the Receiver’s request for approval of the professional fees and expenses of the Receiver’s general counsel, Waller, and special counsel, Whiteford Taylor; (iii) set the deadline for responding to any objection so filed; (iv) set the deadline and the manner for the submission of claims by Bondholders who or which previously held a Bond for distributions from the Net Settlement Proceeds; (v) set the date, time and location of the Final Approval Hearing before this Court regarding the Settlement, the Distribution Plan, the Bar Order and Judgment, and the Receiver’s request for approval of the professional fees and expenses of the Receiver’s general counsel, Waller, and special counsel, Whiteford Taylor. 16. The Receiver seeks herein approval of a procedure similar to the procedure approved in another SEC receivership case. In Ralph S. Janvey, in his capacity as court-appointed receiver v. Proskauer Rose, LLP, et. al., Case No.: 3:13-CV-0477-N-BG, in the United States District Court for the Northern District of Texas, as part of a settlement, the court approved and entered a final judgment and bar order enjoining third parties from asserting any and all claims against the settling defendant. In that case, the court first entered a scheduling order preliminarily approving the settlement agreement and notice procedures, and set deadlines for objecting to the settlement and bar order, and scheduled a final hearing to approve the settlement. The Scheduling Order, and the Final Judgment and Bar Order are attached hereto as Exhibit 6. ARGUMENT 17. The Court has the authority to approve the Settlement and grant the related relief. 18. An equitable receivership’s primary purpose is the marshaling of the estate’s assets for the benefit of creditors. S.E.C. v. Parish, No. 2:07-cv-00919-DCN, 2010 WL 8347143, at *6 (D.S.C. Feb. 10, 2010) (citing S.E.C. v. Hardy, 803 F.2d 1034, 1038 (9th Cir. 1986)). Settlements and compromises are a normal part of the process of a receivership. See, e.g., Protective Comm. 4817-7864-8726.6 10 Case 2:17-cv-00393-SCM Document 327-2 Filed 05/24/19 Page 74 of 204 PageID: 14514 for Indep, Stockholders of TMT Trailer Ferry, Inc. v. Anderson, 390 U.S. 414, 424 (1968) (quoting Case v. Los Angeles Lumber Prods. Co., 308 U.S. 106, 130 (1939)); ReGen Capital III, Inc. v. Official Committee of Unsecured Creditors, 282 B.R. 662, 668 (B.A.P. 8th Cir, 2002). A settlement by a receiver in a federal receivership is within the receiver’s broad discretion and should be approved if it is fair. Sterling v. Stewart, 158 F.3d 1199, 1202 (11th Cir. 1998); Gordon v. Dadante, 336 Fed. Appx. 540 (6th Cir. 2009); Securities and Exchange Commission v. Credit Bancorp, Ltd., No. 99 Civ. 11395, 2002 WL 1792053 at *4-5 (S.D.N.Y. August 2, 2002); Securities and Exchange Commission v. Princeton Economic International, Inc., No. 99 Civ. 9667, 2002 WL 206990 at *1 (S.D.N.Y. February 8, 2002). 19. A district court’s determination of the fairness of a settlement by a receiver is subject to the sound discretion of the court and will be overturned only on a clear showing of abuse of discretion. Sterling v. Stewart, 158 F.3d at 1202 (quoting Bennett v. Behring, 737 F.2d 982, 986 (11th Cir. 1984)); Gordon v. Dadante, 336 Fed. Appx. at 545; Securities and Exchange Commission v. Arkansas Loan and Thrift Corp., 427 F.2d 1171, 1172 (8th Cir. 1970). “[R]eceivers benefit from the general presumption that district courts favor settlements.” Sterling, 158 F.3d at 1202 (citing In re Chicken Antitrust Litigation, 669 F.2d 228, 238 (5th Cir. 1982). Indeed, settlement agreements are generally encouraged and favored by the courts, and “[in] the absence of mistake or fraud, a settlement agreement will not be lightly set aside.” Justine Realty Co, v. American Nat'l Can Co., 976 F.2d 385, 391 (8th Cir. 1992). 20. No particular procedure applies to approval of a settlement under federal law in a receivership. See, Gordon, 336 Fed. Appx. at *548-49. “[N]o federal rules prescribe a particular standard for approving settlements in the context of an equity receivership; instead, a district court has wide discretion to determine what relief is appropriate.” Gordon, 336 Fed. Appx. at *549. In 4817-7864-8726.6 11 Case 2:17-cv-00393-SCM Document 327-2 Filed 05/24/19 Page 75 of 204 PageID: 14515 deciding whether to approve a compromise proposed by a receiver, federal courts have looked to the factors generally considered in determining whether a class action settlement is fair and reasonable, including: “(1) the likelihood of success at trial; (2) the range of possible recovery; (3) the point on or below the range of possible recovery at which a settlement is fair, adequate and reasonable; (4) the complexity, expense and duration of litigation; (5) the substance and amount of opposition to the settlement; and (6) the stage of proceedings at which the settlement was achieved.” Bennett, 737 F.2d 982, 986 (11th Cir. 1984); see Sterling, 158 F.3d at 1202; Princeton Economic, 2002 WL 206990 at *1 (quoting virtually identical test under Arkansas Loan and Thrift Corp., 427 F.2d at 1172); cf. Anderson, 390 U.S. at 424-25. 21. Additionally, courts in receivership proceedings have looked to decisions in other legal contexts, such as bankruptcy cases, for factors that may be weighed to reach an informed decision that the proposed settlement is fair and reasonable. See Securities and Exchange Commission v. Princeton Economic International, Inc., 2002 WL 206990 at *1. The standards for approval of settlements in bankruptcy may also provide an appropriate analogy and list of factors to consider in approving a settlement in a receivership as “fair,” and courts in class actions also look to those factors in reviewing proposed settlements. See Newman v. Stein, 464 F.2d 689, 692, n. 6 (2d Cir. 1972) (citing the standards set forth by the United States Supreme Court for approval of settlements in bankruptcy in Anderson, supra). 22. As a general rule, as in federal receiverships, settlements are also favored in bankruptcy. See, e.g., In re Martin, 91 F.3d 389, 393 (3d Cir. 1996) (“To minimize litigation and expedite the administration of a bankruptcy estate, compromises are favored in bankruptcy.”). In facing “potentially costly litigation, with no guarantee as to the outcome, the bankruptcy trustee must tread cautiously-and an inquiring court must accord him wide latitude should he conclude 4817-7864-8726.6 12 Case 2:17-cv-00393-SCM Document 327-2 Filed 05/24/19 Page 76 of 204 PageID: 14516 that the game is not worth the candle.” Mathews at *4 (citation and quotation omitted). 23. Before pursuing litigation, a bankruptcy trustee must first determine “whether it would be prudent to eliminate the inherent risks, delays and expense of prolonged litigation in an uncertain cause” by entering into a settlement. Mathews at *2; In re Diplomat Const., Inc., 454 B.R. 917, 921 (Bankr. N.D. Ga. 2011). In evaluating a proposed settlement, “[t]he court is neither to ‘rubber stamp’ the trustee’s proposals nor to substitute its judgment for the trustee’s, but rather to canvass the issues and determine whether the settlement falls below the lowest point in the range of reasonableness.” Matthews at *2; Diplomat at 920 (same). A trustee’s decision to enter into a settlement agreement must be “evaluated within the context of [the] [t]rustee’s business judgment . . . .” Mathews at *4; see In re W.T. Grant Co., 699 F.2d 599, 613 (2d Cir. 1983) (Bankruptcy judges are not required “to determine whether the settlement was the best that could have been obtained.”). 24. The Third Circuit Court of Appeals has established four factors a bankruptcy court should consider in evaluating a proposed compromise: (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; and (d) the paramount interest of the creditors. Will v. Northwestern Univ. (In re Nutraquest, Inc.), 434 F.3d 639, 644 (3d Cir. 2006). “Courts consider these factors to determine the fairness, reasonableness and adequacy of a proposed settlement agreement.” In re Matthews, No. 10-96519-MGD, 2014 WL 1277874, at *2 (Bankr. N.D. Ga. Mar. 11, 2014). 25. In addressing the propriety of a class action settlement, the District Court for The District of New Jersey in the case styled In re PAR Pharm. Secs. Litig., No. 06-3226, 2013 U.S. Dist. LEXIS 106150, at *9–11 (D.N.J. July 29, 2013) stated as follows: 4817-7864-8726.6 13 Case 2:17-cv-00393-SCM Document 327-2 Filed 05/24/19 Page 77 of 204 PageID: 14517 Before giving final approval to a proposed class action settlement, the Court must determine that the settlement is "fair, adequate, and reasonable." Girsh v. Jepson, 521 F.2d 153, 157 (3d Cir. 1975). In Girsh, the Third Circuit identified nine factors that a district court should consider when determining whether a settlement is fair, adequate, and reasonable: (1) the complexity, expense and likely duration of the litigation; (2) the reaction of the class to the settlement; (3) the stage of the proceedings and the amount of discovery completed; (4) the risks of establishing liability; (5) the risks of establishing damages; (6) the risks of maintaining the class action through the trial; (7) the ability of the defendants to withstand a greater judgment; (8) the range of reasonableness of the settlement fund in light of the best possible recovery; (9) the range of reasonableness of the settlement fund to a possible recovery in light of all the attendant risks of litigation. Id. “These factors are a guide and the absence of one or more does not automatically render the settlement unfair. Rather, the court must look at all the circumstances of the case and determine whether the settlement is within the range of reasonableness under Girsh.” In re Am. Family Enters., 256 B.R. 377, 418 (D.N.J. 2000) (citing In re Orthopedic Bone Screw Prods. Liab. Litig., 176 F.R.D. 158, 184 (E.D. Pa. 1997)). 26. While courts look to both the factors considered in approving class action settlements as well as settlements by a trustee in bankruptcy when considering whether to approve a settlement sought by a federal receiver, the factors considered and deferential standard of review applied by the federal court are substantially similar, if not identical, in each case. 27. Thus, the Court has the authority to approve the Settlement and the Settlement should be approved under either set of factors. I. This Settlement Satisfies the Factors for Evaluating Settlements in the Third Circuit. 28. The claims and defenses of the Receiver and the CRI Parties were fully developed and explored in the course of their negotiations and the Mediation. 29. Generally, the Receiver alleged that the CRI Parties breached their obligations to the Borrowers and the Bondholders with respect to the Financial Forecasts and made misstatements by issuing in the CRI Reports “clean opinions” for each such Financial Forecast. In this regard, the Receiver contended, among other things, that the CRI Parties: (i) lacked the 4817-7864-8726.6 14 Case 2:17-cv-00393-SCM Document 327-2 Filed 05/24/19 Page 78 of 204 PageID: 14518 independence required to perform their responsibilities as independent certified public accountants in examining and preparing the Reports in connection with the Financial Forecasts; (ii) failed to disclose significant assumptions underlying the Financial Forecasts, without issuing an adverse opinion, including assumptions regarding the use of funds and planned renovations and/or expansions of the Facilities; and (iii) failed properly to obtain support for and evaluate underlying assumptions concerning anticipated revenues that would be generated by realizing certain stabilized occupancy rates during and after renovation and/or expansion of a particular Facility. The Receiver asserted claims against CRI under various theories of recovery, including negligence, intentional tort, breach of contract, and breach of fiduciary duty. 30. For their part, the CRI Parties denied the Receiver’s allegations and raised other defenses. The CRI Parties: (i) denied that they breached any obligations in connection with the Financial Forecasts and/or made any misstatements in the Reports; (ii) denied that they lacked the required independence; (iii) denied that they failed to disclose significant assumptions underlying the Financial Forecasts, including assumptions regarding the use of funds and planned renovations and/or expansions of the Facilities; and (iv) denied that they otherwise failed to obtain support for or evaluate significant assumptions underlying the Financial Forecasts, including assumptions concerning anticipated revenues that would be generated by realizing certain stabilized occupancy rates during and after renovation and/or expansion of a particular Facility. To the contrary, the CRI Parties asserted that, in carrying out the engagements concerning the Financial Forecasts, CRI acted in conformity with AICPA guidance by performing such examination procedures as it considered necessary in the exercise of its professional judgment in the circumstances and by reasonably concluding, based on the preponderance of information, that management’s 4817-7864-8726.6 15 Case 2:17-cv-00393-SCM Document 327-2 Filed 05/24/19 Page 79 of 204 PageID: 14519 assumptions were suitably supported and provided a reasonable basis for management’s Financial Forecasts. 31. The CRI Parties further contended, among other things: (i) that, if the allegations of misconduct by Edwards and Barker were true, the claims of the Receivership Borrowers were barred by the doctrine of in pari delicto; (ii) that all the Receivership Borrower Claims, the Current Bondholder Claims, and Previous Bondholder Claims lacked merit because of the inability of any to prove reasonable reliance on anything the CRI Parties did or said; and (iii) that the conduct and statements of the CRI Parties were not the proximate cause of any loss that either the Borrowers or the Bondholders might have sustained, such loss being caused instead by unforeseeable subsequent events, including, among other things, an ownership break-up between Edwards and Barker, unanticipated regulatory issues and the mismanagement and/or misconduct of other parties. In short, the CRI Parties vigorously denied any wrongdoing on any theory of liability, whether based on common law or statute and whether sounding in negligence, intentional tort, breach of contract, breach of fiduciary duty, or otherwise. A. The Probability of Success Weighs in Favor of the Settlement. 32. Although the Receiver believes that the Claims have substantial merit, there is uncertainty as to whether prosecuting the Claims would ultimately produce a successful result for the Receivership Estate. The CRI Parties have asserted numerous defenses on the issues of causation, reliance and damages, among other issues. 33. This factor weighs in favor of the Settlement. B. The Settlement Is Supported by the Complexity, Expense, Inconvenience, and Delay of Litigation. 34. The expense and delay of litigating the Dispute weigh heavily in favor of the Settlement. 4817-7864-8726.6 16 Case 2:17-cv-00393-SCM Document 327-2 Filed 05/24/19 Page 80 of 204 PageID: 14520 35. Any causes of action pursued by the Receiver would involve extensive, lengthy, complex, and costly litigation without any guarantee of success. 36. Additionally, litigating the Dispute would involve highly complex factual issues involving a multitude of transactions among dozens of entities, including appraisers, bond counsel, underwriters, accountants, the Borrowers, investment brokers, and Bondholders. This, in turn, would require extensive discovery. Such an endeavor would be extremely time consuming and generate substantial delay and uncertainty in the final administration of this Receivership, which would constitute great inconvenience for Bondholders as they are forced to await final distributions, if any, for years. C. The Settlement Is in the Best Interests of Bondholders. 37. The Settlement is in the best interests of Bondholders. Counsel for the Receiver has pursued the Claims under a contingency fee arrangement. The contingency fee arrangement provides for a contingency fee of 20% if the Claims are resolved without the necessity of filing suit, but that the contingency fee would increase to 40% once suit is filed. Approval of the Settlement is in the best interests of the Bondholders because it reduces the need to increase any potential recovery to account for the difference in the contingency fee payable from any potential recovery. Further, the time value of money principle favors accepting the Settlement now. 38. The Settlement secures a substantial monetary recovery for the Bondholders, without further delay, which in and of itself is in the best interest of all Bondholders. As this Court is aware, the Receiver has already sold the Borrowers’ Facilities, which constituted substantially all of the Borrowers’ assets and resulted in partial distributions to the Bondholders. The Settlement allows for an additional recovery to be paid to the Bondholders. D. The Settlement Is “fair, equitable, and reasonable.” 39. The Settlement Amount is material, the result of arms-length negotiations, and 4817-7864-8726.6 17 Case 2:17-cv-00393-SCM Document 327-2 Filed 05/24/19 Page 81 of 204 PageID: 14521 results in the collection of an amount certain for the Bondholders. 40. The Receiver has sufficient information to enter into and endorse the Settlement. The Receiver retained a consulting expert witness to assist it in asserting the Claims. In deciding to accept the Settlement the Receiver has received, considered, and relied upon the advice and consultation of its consulting expert witness, its special counsel, and general counsel. Further, the Settlement, if approved, would provide a recovery to: (i) current Bondholders, and (ii) previous Bondholders who suffered a loss and timely and properly submitted a claim. 41. It is the Receiver’s business judgment that the Settlement is “fair, equitable, and reasonable” and should be approved for all the foregoing reasons. II. Additional Relief Requested 42. This Preliminary Approval Motion also seeks a preliminary finding from the Court that (a) the Distribution Plan is fair and equitable, (b) the Settlement Amount may be distributed as set forth herein, (c) the Notice and Short Form Notice of the Settlement, including the Indenture Trustees’ posting notice of the same at EMMA (as defined below), is sufficient and effective in satisfaction of federal and state due process requirements and other applicable law to put the parties in interest, including the Bondholders, on notice of the Settlement, (d) the Indenture Trustees have acted prudently, in good faith, and in the best interests of those Bondholders who or which currently own Bonds in assigning the Current Bondholder Claims to the Receiver and in entering into the Settlement, (e) the Receiver and the Indenture Trustees have the authority to grant the releases provided for in the Settlement Agreement, and (f) the Bar Order and Judgment approving the Settlement and this Agreement and enjoining claims against the CRI Released Parties as provided in Exhibit 5 hereto should be entered. In addition, the Preliminary Approval Motion seeks entry of a preliminary stay and injunction against the Receiver, the Indenture Trustees, all previous, present and future Bondholders, the Claimants, all other Interested Parties, and all other 4817-7864-8726.6 18 Case 2:17-cv-00393-SCM Document 327-2 Filed 05/24/19 Page 82 of 204 PageID: 14522 non-governmental Persons from prosecuting or pursuing any Settled Claim against any of the CRI Released Parties until further order of the Court. A. The Distribution Plan is Fair and Equitable. 43. The Distribution Plan provides for the Net Settlement Proceeds to be fairly and equitably divided between: (i) first, the Borrowers, and (ii) second, the respective Borrowers’ previous and current Bondholders. 44. The Claims Authorization Order provided that if proceeds were recovered by the Receiver, and to the extent that any such recovery is not allocated on a claim-by-claim basis, the distribution of proceeds to each Borrower for which a Claim was settled would be calculated as follows: a. First, the total damages caused to all Receivership Entities, collectively, will be calculated as the deficiency on the bonds, after deducting the market value of substantially all assets of each Receivership Entity; b. Second, for each Receivership Entity, the percentage share of proceeds will be calculated by dividing: (i) the deficiency on the bonds for such Receivership Entity; by (ii) the total damages caused to the Receivership Entities (calculated in accordance with the foregoing paragraph); c. Third, the total distribution to be made to each Receivership Entity will be calculated by multiplying: (i) each Receivership Entity’s percentage share of proceeds (calculated in accordance with the foregoing paragraph); by (ii) the (A) proceeds obtained by the Receiver less (B) the costs and expenses incurred by the Receiver pursuing the Claims; and 4817-7864-8726.6 19 Case 2:17-cv-00393-SCM Document 327-2 Filed 05/24/19 Page 83 of 204 PageID: 14523 d. Fourth, the distribution made to each Receivership Entity will be distributed amongst the respective Indenture Trustees based upon the damages incurred by the bondholders. (Claims Authorization Order, Dkt. No. 242 at ¶ 31). 45. Consistent with the allocation provided for in the Claims Authorization Order the Net Settlement Proceeds will be allocated between the Borrowers as follows: Settlement Amount: $10,000,000 Contingency Fee: ($2,000,000) Dispute Related Expenses: ($243,065) Net Settlement Proceeds: $ 7,756,935 Douglas Rome Savannah Gainesville Waterford Montgomery Columbus Opelika Total BOKF BOKF BOKF BOKF BOKF UMB BOKF U.S. Bank Damages $1,663,882 $3,917,403 $4,102,600 $2,851,125 $6,095,832 $5,287,563 $4,630,220 $4,730,599 $33,279,224 % Share 5.0% 11.8% 12.3% 8.6% 18.3% 15.9% 13.9% 14.2% 100% Borrower’s $387,847 $915,318 $954,103 $667,096 $1,419,519 $1,233,353 $1,078,214 $1,101,485 $7,756,935 Allocation of Net Settlement Proceeds 46. The allocation of the Net Settlement Proceeds between the Borrowers is: (i) being equitably distributed among the Borrowers in a manner consistent with the Indentures and with applicable law, (ii) calculated consistent with the allocation provided for in the Claims Authorization Order, and (iii) based on the amount of damages the respective Borrowers claim to have suffered as a result of the alleged Claims. 47. The Distribution Plan then provides for the Receiver to further allocate each Borrower’s share of the Net Settlement Proceeds amongst the Borrower’s previous and current Bondholders. 48. The Distribution Plan then allocates each Borrower’s allocation of the Net Settlement Proceeds amongst that Borrower’s previous and current Bondholders as follows: 4817-7864-8726.6 20 Case 2:17-cv-00393-SCM Document 327-2 Filed 05/24/19 Page 84 of 204 PageID: 14524 Step-One: Determine Current Bondholder Loss of Principal and Interest for Each Borrower Est. Current Bondholder Loss for each Borrower as listed in row (1) of the chart in paragraph 45 above Step-Two: Determine the Previous Bondholder Loss for Each Borrower i. (Price at Which Previous Individual Bondholder Bought Bonds - Price at Which Previous Individual Bondholder Sold Bonds) = (x%) (All Previous Bondholder Losses + All Current Bondholder Losses) ii. (x%) * Net Settlement Proceeds Allocated to Borrower = Previous Individual Bondholder’s Recovery iii. Only previous Bondholders who or which sold at a loss will be qualified to receive a distribution under the Distribution Plan. The only previous Bondholders who or which may receive a distribution under the Distribution Plan are those who or which both: (a) sold on or before 4:00 p.m. (Eastern), ninety (90) days from the date of the entry of the proposed Scheduling Order, and (b) submit a Claim Form in the form appended to the Notice attached as Exhibit “A” to the Settlement Agreement to the Receiver at the address set forth on the Claim Form and as described in the Notice, so that it is received by the Receiver on or before 4:00 p.m. (Eastern), ninety (90) days from the date of entry of the proposed Scheduling Order. Step-Three: Determine Distribution to Current Bondholders of Each Borrower Net Settlement Proceeds Allocated to Borrower - Total Previous Bondholders Recovery = Distribution to Indenture Trustee on Account of Current Bondholders’ Losses 49. Any previous Bondholder claiming entitlement to a distribution from the Net Settlement Proceeds must submit a Claim Form in the form appended to the Notice attached as Exhibit “A” to the Settlement Agreement to the Receiver at the address set forth on the Claim Form and as described in the Notice, so that it is received by the Receiver on or before 4:00 p.m. (Eastern), ninety (90) days from the date of entry of the proposed Scheduling Order. Any previous Bondholder’s failure to timely and properly submit a Claim Form, duly providing the information and documentation called for by the Claim Form, shall preclude such previous Bondholder from receiving any distribution from the Net Settlement Proceeds. Current Bondholders are exempt from the requirement of submitting a Claim Form. The Receiver will review and verify each submitted Claim Form. The Receiver will then file with the Court a report outlining the Receiver’s determination as to whether the Claim Form will be allowed or disallowed (the “Claims Report”). Previous Bondholders who have submitted a Claim Form will have the opportunity to object to the Claims Report by filing an objection to the Claims Report within fourteen (14) days after the 4817-7864-8726.6 21 Case 2:17-cv-00393-SCM Document 327-2 Filed 05/24/19 Page 85 of 204 PageID: 14525 filing of the Claims Report. If no objection is timely filed to the Claims Report, the Claims Report shall be the final, binding determination on the allowance or disallowance of each Claim Form. 50. Under the foregoing Distribution Plan, the allocated Net Settlement Proceeds among the Borrowers will be equitably distributed among the previous and current Bondholders by the Receiver and the Indenture Trustees. 51. The Distribution Plan is designed to compensate the previous and current Bondholders based on the damages each may have incurred. Thus, the Distribution Plan is fair and reasonable and should be approved by the Court. B. The Proposed Distribution Plan Should be Approved as Set Forth Herein. 52. The Claims Authorization Order provides that Whiteford Taylor and Waller shall be compensated for their services on a contingency fee basis as provided in the Engagement Letter, which is Exhibit 1 to the Declaration of William F. Ryan, Jr., filed in support of the Application, without the necessity of filing a further fee application. (Claims Authorization Order, Dkt. No. 242 at ¶ 4). 53. The Engagement Letter provides for a twenty percent (20%) contingency fee on any recovery resulting from a settlement obtained before a lawsuit is filed and that the contingency fee would be split between Whiteford Taylor and Waller in accordance with an agreement between Whiteford Taylor and Waller. (Ryan Decl., Dkt. 208). Whiteford Taylor and Waller have agreed to divide the contingency fee as follows: $1,333,333 to Whiteford Taylor, and $666,667 to Waller. Upon receipt of the Settlement Amount, the Receiver proposes to distribute these amounts to Whiteford Taylor and Waller. 54. In addition to the contingency fee, the Engagement Letter also provides for the payment of all expert consultant and witness fees, litigation costs and travel expenses. These costs 4817-7864-8726.6 22 Case 2:17-cv-00393-SCM Document 327-2 Filed 05/24/19 Page 86 of 204 PageID: 14526 and expenses are deducted from the Settlement Amount. The costs and expenses total approximately $243,065. The cost to give the U.S. Mail and advertising notice provided for in the Settlement is estimated to be $145,710. The Receiver’s costs and expenses total $63,676 (including Healthcare Management Partners, LLC’s (“Healthcare Management Partners”) costs of $8,103, the Receiver’s consulting expert witness Fust Charles Chambers, LLP “Fust Charles” $33,123, and the Mediator’s fees of $22,450). Whiteford Taylor’s costs and expenses total $20,872. Waller’s costs and expenses total $12,807. Upon receipt of the Settlement Amount, the Receiver proposes to distribute these amounts to Healthcare Management Partners, Fust Charles, Whiteford Taylor, and Waller. 55. The distributions to counsel are consistent with the provisions of the Claims Authorization Order and should be approved. 56. The Receiver will also calculate the allocable portion of previous and current Bondholders’ pro rata share of each Borrower’s allocation. 57. The Receiver will then distribute funds from the Net Settlement Amount to previous Bondholders, who timely and properly submit a Claim Form and qualify for a distribution under the Distribution Plan, on account of all the alleged trading losses sustained by such Bondholders with respect to such Bonds. Current Bondholders are exempt from the requirement of submitting a Claim Form. 58. The Receiver will then distribute to the Indenture Trustees all remaining funds on account of the current Bondholders’ losses of principal and interest on the Bonds. The Indenture Trustees will then distribute such funds for the benefit of current Bondholders. 59. It is the Receiver’s business judgment that the funds should be distributed as set forth herein. 4817-7864-8726.6 23 Case 2:17-cv-00393-SCM Document 327-2 Filed 05/24/19 Page 87 of 204 PageID: 14527 C. Notice of the Preliminary Approval Motion to Parties in Interest is Appropriate and Should Be Approved. 60. The Preliminary Approval Motion, and all of its exhibits have been served on or posted with DTC and EMMA (as described below) : (a) all parties that have appeared and requested notice in this case; (b) counsel to the Indenture Trustees; (c) the Underwriter for each Offering; (d) counsel to the Underwriter, at the time of the Offering, for each Offering; (e) to the Issuer for each Offering, (f) counsel to the Issuer, at the time of the Offering, for each Offering; (g) Bond Counsel for each Offering; (h) DTC and EMMA (both as defined below); (i) the parties set forth on the certificate of service for the Preliminary Approval Motion; (j) Bondholders who have identified themselves to the Indenture Trustees; and (k) the original purchasers of the Bonds, to the extent identified to the SEC by the Underwriters in the SEC’s investigation of the Defendants in this case,.8 In addition, the Receiver has cause the Preliminary Approval Motion (including exhibits thereto) to be posted on the Receiver’s website (http://oxtonseniorlivingreceivership.com/). 61. Each series of Bonds was issued in book-entry only form and registered in “street name” to Cede & Co., as nominee for the Depository Trust Company (“DTC”). DTC is the 8 As set out in paragraphs 61 and 62, the identity of the previous and current Bondholders is not known nor readily available to the Receiver or the Indenture Trustees. The SEC obtained a list of original purchasers of the Bonds from the underwriters in discovery. The Receiver is directly serving the individuals identified on the list provided to the SEC in discovery. The notice provided for in this case is reasonable given the difficulty and cost associated with individually identifying all the previous and current Bondholders. It would be cost prohibitive to attempt to provide direct notice to all previous and current Bondholders. To identify certain individual holders, the Receiver would have to order a Securities Position Report from DTC for each bond CUSIP as of a certain record date. The Securities Position Report would identify DTC’s direct participants who hold Bonds for the benefit of beneficial holders on that single record date. Once the direct participant were identified, the Receiver could engage a proxy service to work with the direct participants to identify the “non-objecting beneficial holders” of each DTC participant as of that record date. In addition to non-objecting beneficial holders, Bonds could also be held by “objecting beneficial holders.” Objecting beneficial holders are holders who object to providing their information to the proxy services. For the objecting beneficial holders the Receiver would have to rely on the brokers and advisors for the objecting beneficial holders to forward any notices. The Receiver estimates that the cost to identify the non-objecting beneficial holders for one issuance would be approximately $41,000 per record date. It is estimated that the Receiver could negotiate some cost savings, but it is reasonable to estimate that obtaining the list of non-objecting beneficial holders could cost as much as $320,000 (8 x $40,000). Given the cost, the Receiver believes the notice provided for herein is fair and reasonable. 4817-7864-8726.6 24 Case 2:17-cv-00393-SCM Document 327-2 Filed 05/24/19 Page 88 of 204 PageID: 14528 primary securities depository in the United States that holds and provides asset servicing for securities deposited with it by its direct participants. DTC’s direct participants are broker-dealers, banks, investment managers, and other financial firms. The direct participants (a) make purchases and sales of securities under the DTC system, (b) process payments with respect to the securities, and (c) forward notices to DTC’s indirect participants and to beneficial holders of the securities. See e.g., Williams v. Gusky (In re President Casinos, Inc.), 502 B.R. 841, 844 (Bankr. E.D. Mo. 2013) (noting that DTC is a securities depository and clearing agency that engages in settling trades in corporate and municipal securities on behalf of DTC participants, which are typically banks and brokers); Mashburn v. Nat’l Healthcare, Inc., 684 F. Supp. 679, 685 (M.D. Ala. 1988) (noting that DTC holds the securities in “street name,” and, for those holders who are not DTC participants, the “street name” holders must forward documentation to the actual beneficial holders). The direct participants perform these functions for their respective customers, who may be other broker- dealers, banks, investment managers, and financial firms acting as custodians for other banks, institutional investors, corporations and individuals, each of which may or may not be the actual owner (i.e., beneficial holder) of the securities. 62. With regards to the Bonds, DTC’s records reflect only the identity of the direct participants to whose accounts the Bonds are credited. In turn, the direct participants’ records generally reflect only the names of custodians or indirect participants that hold the Bonds for other parties who may or may not be the beneficial holders of the Bonds. Thus, neither the Indenture Trustees nor the issuers of the Bonds know the identity of the beneficial holders, except to the extent a Bondholder has expressly identified itself to an Indenture Trustee or issuer and provided satisfactory proof of such Bondholders’ holdings. Thus, the Indenture Trustees provide informational notices of material events to known beneficial holders who have requested notice 4817-7864-8726.6 25 Case 2:17-cv-00393-SCM Document 327-2 Filed 05/24/19 Page 89 of 204 PageID: 14529 by United States Mail postage prepaid, and unknown beneficial holders through DTC and to EMMA (as hereafter defined). 63. In addition, the Preliminary Approval Motion is being made available to the Bondholders by posting on the Municipal Securities Rulemaking Board’s Electronic Municipal Market Access system (“EMMA”). EMMA is the publicly available, centralized repository for bondholder information and is freely available to any person, including the Bondholders, via the internet at http://emma.msrb.org/. 64. The Preliminary Approval Motion has been mailed directly to known Bondholders who have requested notice and provided to DTC for dissemination to the direct participants. In addition, at the same time the Preliminary Approval Motion was provided to DTC, the Indenture Trustees have caused the Preliminary Approval Motion to be made available to the Bondholders by posting on EMMA. 65. The notice provided of the relief sought in the Preliminary Approval Motion by way of EMMA is standard in the tax-exempt bond marketplace and is reasonably calculated to appraise Bondholders of the terms of the Settlement and Settlement Agreement, and provide notice to Bondholders and other parties in interest of the relevant, proposed objection, claim submission and other deadlines associated with the Preliminary Approval Motion and are in a form that provide Bondholders with a reasonable and sufficient amount of time to present their objections and claims, if any. Thus, the Bondholders have receive adequate notice of the Preliminary Approval Motion. 66. The foregoing notice is also reasonably calculated to provide notice to parties in interest of the relief sought in the Preliminary Approval Motion and the relevant, proposed objection and other deadlines associated with the proposed Final Approval Hearing. 4817-7864-8726.6 26 Case 2:17-cv-00393-SCM Document 327-2 Filed 05/24/19 Page 90 of 204 PageID: 14530 D. Notice Provided For in The Proposed Scheduling Order to Parties in Interest is Appropriate. 67. Upon entry of the Scheduling Order and approval of the Notice, the Receiver proposes to disseminate the Scheduling Order and Notice appended hereto as Exhibit 3 to: (a) all parties that have appeared and requested notice in this case; (b) counsel to the Indenture Trustees, (c) to the Underwriter for each Offering, (d) to counsel to the Underwriter, at the time of the Offering, for each Offering, (e) to the Issuer for each Offering, (f) counsel to the Issuer, at the time of the Offering, for each Offering, (g) to Bond Counsel for each Offering, (h) DTC and EMMA (both as defined below), (i) the parties set forth on the certificate of service for the Motion, (j) to Bondholders who have identified themselves to the Indenture Trustees and requested notice, and (k) the original purchasers, to the extent identified to the SEC by the Underwriters in the SEC’s investigation of the Defendants, of the Bonds. In addition, the Receiver shall cause the Notice and Scheduling Order to be posted on the Receiver’s website (http://oxtonseniorlivingreceivership.com/). 68. Further, the Notice provides parties in interest with the following: (a) the claims asserted by the Receiver against the CRI Parties and the defenses asserted by the CRI Parties to such claims; (b) the material terms of the Settlement Agreement; (c) the rights and obligations of Interested Parties with regard to the Settlement, including the Distribution Plan; (d) the right of Interested Parties to object to the Settlement, the Settlement Agreement, and the Bar Order and Judgment; and (e) the manner and timing for which objections to the Settlement, Settlement Agreement, and the Bar Order and Judgment must be made. 69. Further, upon entry of the Scheduling Order and approval of the Short Form Notice attached hereto as Exhibit 4, the Receiver proposes to publish the Short Form Notice once a week for three consecutive weeks in each of the following newspapers commencing no later than seven 4817-7864-8726.6 27 Case 2:17-cv-00393-SCM Document 327-2 Filed 05/24/19 Page 91 of 204 PageID: 14531 (7) calendar days after the date the Scheduling Order is entered: The Wall Street Journal and U.S.A. Today. 70. The foregoing Notice and Short Form Notice is also reasonably calculated to provide notice of the Settlement, notice of the terms of the Settlement, and notice to parties in interest of the relevant objection, claim submission and other deadlines associated with the Final Approval Hearing, and should be approved by the Court. E. The Indenture Trustees Have Acted Prudently, in Good Faith, and in the Best Interests of those Bondholders who or which currently own Bonds in Assigning the Current Bondholder Claims to the Receiver and in Entering into the Settlement. 71. Subject to court approval of the Settlement, the Indenture Trustees have agreed to release the CRI Parties, and the Indenture Trustees’ agreement to release the CRI Parties is both necessary to obtaining the Settlement and increases the value of the Settlement Amount. The communications and analysis relating to negotiations conducted before, during and after the Mediation are privileged and confidential by law and pursuant to paragraphs 4 and 73 of the Settlement Agreement, and, therefore, cannot be disclosed in detail; however, the Settlement set forth in the Settlement Agreement was a product of intense, arm’s-length negotiations concluded amongst sophisticated parties with differing and conflicting interests. 72. The Indenture Trustees considered the risks, costs, and benefits associated with litigating the Dispute in the absence of a consensual resolution and, in consultation with both Receiver’s special counsel, Receiver’s general counsel, and their own counsel, concluded in their good faith judgment that the Settlement is reasonable, prudent, and in the best interests of those Bondholders who or which currently own Bonds. 73. Subsequent to an Event of Default (as defined in the applicable indenture) that has not been cured or waived, the applicable indenture requires that the Indenture Trustees must use the same degree of care and skill in their exercise of the rights and powers vested in them by the 4817-7864-8726.6 28 Case 2:17-cv-00393-SCM Document 327-2 Filed 05/24/19 Page 92 of 204 PageID: 14532 indenture as a prudent man would exercise under the circumstances in the conduct of his own affairs. The court in LNC Investments, Inc. v. First Fidelity Bank, N.A., 1997 WL 528283, No. 92 Civ. 7584 MBM (S.D.N.Y. August 27, 1997), stated that “[i]n determining whether a trustee has acted with prudence, a court must: ‘look at the facts as they exist at the time of their occurrence, not aided or enlightened by those which subsequently take place’; for it is an obvious truth that ‘a wisdom developed after an event, and having it and its consequences as a source, is a standard no man should be judged by’; and it is impossible to say that trustees are wanting in sound discretion ‘simply because their judgment turned out wrong.’” 1997 WL 528282 at *17 (citing In re Clark’s Will, 177 N.E. 397 (1931)). The LNC Investments court further went on to say that “[a] trustee will not be held liable for a mere error in judgment, . . . so long as the trustee’s decision was the result ‘of careful and informed deliberation,’” and that “a trustee will not be liable for choosing between two prudent courses so long as ‘an overall and knowledgeable judgment was brought to bear’ and the trustee’s conduct under all the circumstances was prudent.” Id. 74. The Receiver, after consultation with the Indenture Trustees, and the Receiver’s special counsel and general counsel, asserts that the Settlement is “fair, equitable, and reasonable,” in amount and in the manner in which the Net Settlement Proceeds are to be allocated and distributed among the Indenture Trustees those bondholders who or which currently own Bonds and those Bondholders who or which previously owned Bonds, and in the best interests of all previous and current Bondholders. The Indenture Trustees have relied on their own business judgment, as well as experienced counsel and consulted with the Receiver and his counsel in analyzing the Claims and the reasonableness of the Settlement, which resulted from arm’s-length negotiations between sophisticated parties with the assistance of a mediator. 4817-7864-8726.6 29 Case 2:17-cv-00393-SCM Document 327-2 Filed 05/24/19 Page 93 of 204 PageID: 14533 75. The United States Bankruptcy Court for the Southern District of New York has found that similar evidence supports a finding that an indenture trustee has acted in good faith and in the best interests of its constituents. In In re Residential Capital, LLC, 497 B.R. 720 (Bankr. S.D.N.Y. 2013), the court noted that the trustee had acted reasonably, in good faith, and in the best interests of its constituents in entering into a reasonable settlement that was the result of arm’s- length negotiations among sophisticated parties. 497 B.R. at 742. Further, the Residential Capital court noted that in evaluating and accepting the settlement the trustee sought and received the advice of competent counsel they had retained to advise them in the case. Id. 76. Thus, the Indenture Trustees have acted prudently, in good faith, and in the best interests of those Bondholders who or which currently own Bonds in entering into the Settlement Agreement, which includes the Indenture Trustee Releases. F. The Indenture Trustees have the Authority to Execute the Releases Provided for in the Settlement Agreement. 77. Each applicable Indenture expressly vests in the Indenture Trustee alone the right to exercise the rights and remedies of those Bondholders who or which currently own Bonds in the event of a default, including bringing suit to enforce those Bondholders’ rights and remedies, subject only to the right of holders of a majority in principal amount of the Bonds then outstanding to instruct the Indenture Trustee or when an applicable percentage in principal amount of Bonds then outstanding shall have requested the Indenture Trustee to take specific remedial action and the Indenture Trustee has failed to act after having been offered satisfactory indemnity. Neither exception has occurred.9 9 The Bonds are conduit municipal bonds. In a conduit municipal bond offering, a municipal entity serves as the issuer, and issues the bonds on behalf of a “conduit” borrower. The conduit borrower then agrees to make payments to the bondholders. In this case, each conduit municipal issuer has assigned its interests in the assets of each Borrower to the applicable Indenture Trustee. Page 2-3 of the Waterford-BOKF Indenture provides that the issuer has “given, granted, assigned and pledged and does by these presents give, grant, assign and pledge to the Trustee” all “right, title 4817-7864-8726.6 30 Case 2:17-cv-00393-SCM Document 327-2 Filed 05/24/19 Page 94 of 204 PageID: 14534 78. Therefore, as a result of defaults by each of the Borrowers, the Indenture Trustees have the power and authority to commence remedial procedures on behalf of those Bondholders who or which currently own Bonds as regards to the Current Bondholder Claims, and negotiate and agree upon settlements with respect to the Current Bondholder Claims. In the this case the Indentures Trustees have exercised their power and authority to assign claims on behalf of those Bondholders who or which currently own Bonds to the Receiver as provided for in the Claims Authorization Order and paragraph 32 of the Settlement Agreement. 79. Thus, the Indenture Trustees, as the party authorized to represent and assert claims on behalf of those Bondholders who or which currently own Bonds have the authority10 to enter into the Settlement Agreement, including granting the releases. See In re Delta Air Lines, Inc., 370 B.R. 537, 548 (Bankr. S.D.N.Y. 2007) (“Implicit in the authority to commence proceedings to remedy defaults is the power to negotiate and agree upon settlements, subject to the power to direct in writing by [the requisite amount] of the Bondholders.”); In re Residential Capital, LLC, 497 B.R. at 748 (noting that the trustee is the party authorized to represent the beneficiaries of the trust and has the authority to enter into settlement agreements). and interest of the Issuer” in right to payment on the Bonds and its interests in the Borrower’s assets. Similar provisions exist in each of the other seven Indentures. See generally Columbus-BOKF Indenture at pgs. 2-3 (same); Rome-BOKF Indenture at pgs. 2-3 (same); Gainesville-BOKF Indenture at pgs. 2-3 (same); Savannah-BOKF Indenture at pgs. 2-3 (same); Douglas-BOKF Indenture at pgs. 2-3 (same); Opelika-U.S. Bank Indenture at pgs. 2-3 (same); Montgomery-UMB Indenture at pgs. 2-3 (same).Section 902 of the Waterford-BOKF Indenture provides that “[u]pon the occurrence of an event of default the Trustee shall have the power to proceed with any right or remedy granted by the Constitution and laws of the State, as it may deem best in its sole discretion, including any suit, action or special proceeding in equity or at law . . . for the enforcement of any proper legal or equitable remedy as the Trustee shall deem most effectual to protect the rights aforesaid . . . .” Section 909 of the Waterford-BOKF Indenture further provides that “[n]o holder of any Bond shall have any right to institute any suit, action or proceeding in equity or at law . . . unless . . . [certain conditions which have not occurred are met, including providing the Trustee with indemnity].” Similar provisions exist in each of the other seven Indentures. See generally Columbus-BOKF Indenture at §§ 902, 909 (same); Rome-BOKF Indenture at §§ 902, 909 (same); Gainesville-BOKF Indenture at §§ 902, 909 (same); Savannah-BOKF Indenture at §§ 902, 909 (same); Douglas-BOKF Indenture at §§ 902, 909 (same); Opelika- U.S. Bank Indenture at §§ 902, 909 (same); Montgomery-UMB Indenture at §§ 902, 909 (same). 10 Such authority exists absent objection by the requisite levels of Bondholders, a situation which has not occurred with respect to any related series of Bonds. 4817-7864-8726.6 31 Case 2:17-cv-00393-SCM Document 327-2 Filed 05/24/19 Page 95 of 204 PageID: 14535 G. An Order Permanently Barring and Restraining Proceedings Against Any of the CRI Parties by Non-parties to the Settlement Agreement is Necessary and Proper 80. The CRI Parties have represented to the Receiver that to the best of their knowledge, information and belief, there is no other current pending litigation against the CRI Parties that in any way relates to, is based upon, arises from, or is connected with any one or more of the Offerings, the Official Statements, the Financial Forecasts, the Bonds, the Facilities, the CRI Parties’ relationship with the Borrowers or Receivership Entities and any party to this case or the subject matter of this case, or any of the Claims. 81. As a condition to the Settlement, CRI Parties have demanded “global peace” with respect to all claims that have been, could have been, or could be asserted against any of the CRI Parties and the CRI Released Parties by any Person arising out of or related to the events leading to these proceedings. 82. Thus, in the Settlement Agreement, the Receiver has agreed to seek an Order from the Court that enjoins all Persons, including previous, present, and future Bondholders, from asserting claims against any CRI Party and any of the the CRI Released Parties arising out of or related to the events leading to the Dispute, and with respect to all claims that have been, could have been, or could be asserted against any CRI Party or any of CRI Released Parties by any non- governmental Person, arising from or related to the Offerings, the Financial Forecasts, the Reports, the Bonds, the Facilities, this receivership proceeding, and/or the CRI Parties’ relationship with the Borrowers and Receivership Entities and any defendant in this case, all as more fully set forth in paragraph 52 of the Settlement Agreement. 83. The Court has the power to issue an order enjoining new or existing litigation against the CRI Parties and the CRI Released Parties as part of its approval of this Settlement. 84. The Fifth Circuit Court of Appeals in affirming a district court’s order approving a 4817-7864-8726.6 32 Case 2:17-cv-00393-SCM Document 327-2 Filed 05/24/19 Page 96 of 204 PageID: 14536 “bar order” stated that the district court’s powers include “the court’s ‘inherent equitable authority to issue a variety of ‘ancillary relief’ measures in actions brought by the SEC to enforce the federal securities laws.” See SEC v. Kaleta, 530 Fcd. Appx. 360, 362 (5th Cir. 2013) (quoting SEC v. Wencke, 622 F.2d 1363, 1369 (9th Cir. 1980)). “Such ‘ancillary relief’ includes injunctions to stay proceedings by non-parties to the receivership.” See Kaleta, 530 Fcd. Appx., at 362 (quoting SEC v. Wencke, 622 F.2d 1363, 1369 (9th Cir. 1980)). 85. Bar orders of the type sought here have been used in other receivership cases to achieve settlements. See, e.g., SEC v. DeYoung, 850 F.3d 1172, 1180-81 (10th Cir. 2017); Gordon, 336 F. App’x. at 549; SEC v. Parish, No.: 2:07-cv-000919, 2010 WL 8347143, at *4-7 (D.S.C. Feb. 10, 2010); modified, 2010 WL 8347144 (D.S.C. Apr. 8, 2010); SEC v. Enterprise Trust Co., No. 1:08-cv-01260, slip op. at 2 (N.D. Ill. Jan. 29, 2009); SEC v. Standford Int’l Bank Ltd., 2017 WL 9989250 (N.D. Tex. 2017); Zacarias v. Willis Group Holdings Public Limited Company, 2017 WL 6442190 (N.D. Tex. 2017), appeal argued, 17-11127 (5th Cir. Dec. 3, 2018). 86. In Securities and Exchange Commission v. Stanford International Bank Ltd., 2017 WL 9989250 (N.D. Tex. 2017), the court approved a receivership settlement that included a stay of proceedings against the settling defendants by nonparties to the receivership settlement. In that case, the court overruled certain objections and determined that it could bar individual investor claims as part of a settlement, that enjoining pending claims was not prohibited by the Anti- Injunction Act, that enjoining pending claims did not violate the objectors’ constitutional rights, and that the settlement agreement terms did not violate Rule 23 of the Federal Rules of Civil Procedure. Id. at *4-5. 87. In Zacarias v. Willis Group Holdings Public Ltd. Co., 2017 WL 6442190 (Aug. 23, 2017), the court approved a settlement agreement entered into by the receiver for the Stanford 4817-7864-8726.6 33 Case 2:17-cv-00393-SCM Document 327-2 Filed 05/24/19 Page 97 of 204 PageID: 14537 Receivership Estate in SEC v. Stanford International Bank, Ltd., that included a bar and injunction of any contribution or indemnity claims against the settling defendants. Id. at *3. 88. The case of SEC v. Parish, 2010 U.S. Dist. LEXIS 11786 (D.S.C. 2010), also supports the approval of a settlement agreement conditioned upon the court’s entry of a “bar order” enjoining the filing of and/or continued prosecution of claims by all Persons against the CRI Parties and CRI Released Parties that in any way relates to is based upon, arises from, or is connected with any one or more of the Offerings, the Official Statements, the Financial Forecasts, the Bonds, the Facilities, the CRI Parties’ relationship with the Borrowers and the Receivership Entities and any party to this case or the subject matter of this case, or any of the Claims. In concluding that the court possesses the power to issue the bar order, the Parish the court stated that: By appointing a receiver in this matter, the court created a receivership estate over which it has in rem jurisdiction. That jurisdiction extends to all assets of the estate, including choses of action. Accordingly, this court has the power under the All Writs Act to issue [an] injunction in order to protect the estate’s choses of action against the Settling Parties (including any settlement reached in connection with those claims). . . . “The power conferred by the [All Writs Act] extends, under appropriate circumstances, to person[s] who, though not parties to the original action or engaged in wrongdoing, are in a position to frustrate the implementation of a court order or the proper administration of justice and encompasses even those who have not taken any affirmative action to hinder justice.” Parish, 2010 U.S. Dist. LEXIS 11786 at *17-18 (citing N.Y. Tel., 434 U.S. at 174). 89. The Parish court having determined the court had the power to issue a bar order then turned to the propriety of issuing a bar. The Parish court considered the following: (i) whether the proposed settlement was consistent with and furthers the purposes of the receivership, (ii) the likelihood that an individual investor could obtain a more favorable settlement, and (iii) whether another settlement could be obtained that would benefit as many aggrieved investors as stood to be benefited under the settlement agreement. Parish, 2010 U.S. Dist. LEXIS 11786 at *19-20. 4817-7864-8726.6 34 Case 2:17-cv-00393-SCM Document 327-2 Filed 05/24/19 Page 98 of 204 PageID: 14538 90. The facts of this case are consistent with the factors considered in Parish. The Settlement will generate a return to Bondholders on their investment which is consistent with the receivership’s purpose. The ability of the Receiver to obtain a Settlement Amount on behalf of all Bondholders, previous, present, and future, saves the time and expense of separate and protracted litigation by individual Bondholders and avoids a “free for all” effort to obtain a recovery from the CRI Parties. The ability of the Receiver to offer the CRI Parties “global peace” was necessary to achieving the Settlement and has increased the amount of the CRI Parties are willing to pay to compromise the Dispute. Finally, all aggrieved Bondholders stand to benefit if the Settlement is approved. 91. For these reasons, the “bar order” made a condition of the Settlement by the CRI Parties should be approved. H. An Order Preliminarily Staying and Enjoining Prosecuting or Pursuing any Settled Claims Until Further Order of the Court is Necessary and Proper. 92. The Preliminary Approval Motion seeks entry of a preliminary stay and injunction against the Receiver, the Indenture Trustees, all previous, present and future Bondholders, the Claimants, all other Interested Parties, and all other non-governmental Persons from prosecuting or pursuing any Settled Claim against the CRI Parties and/or any of the CRI Released Parties until further order of the Court. 93. The Bar Order and Judgment are an essential component of the Settlement. The entry of a preliminary stay and injunction while the Court considers the Settlement is necessary to preserve the status quo pending the Court’s consideration of it, and, indeed, is necessary to preserve the Settlement itself, as well as ato avoid the incurrence of further litigation costs for the Parties. 4817-7864-8726.6 35 Case 2:17-cv-00393-SCM Document 327-2 Filed 05/24/19 Page 99 of 204 PageID: 14539 94. The entry of a preliminary stay and injunction while the Court considers the Settlement is also consistent with provisions of the Receivership Order staying action of any nature against any Receivership Property. (Dkt. No. 7, Receivership Order at ¶¶ 31-33). CONCLUSION 95. The Settlement should be approved because it is a reasonable exercise of sound business judgment, is prudent, is fair, adequate and reasonable and is in the best interests of the Receivership Estate and Bondholders. Moreover, the contrast between the Settlement and litigating the Dispute is stark. Litigating the Dispute would be lengthy, costly and uncertain and could result in a lower recovery than the Settlement guarantees. In direct contrast, if the Settlement were approved by this Court, it would provide immediate and concrete benefits to the Borrowers and the Bondholders. 96. At its core, the Settlement would provide a substantial recovery to the Receivership Estate while “eliminating the inherent risks, delays and expense of prolonged litigation in an uncertain cause.” Diplomat at 920. For this reason, and all of the foregoing reasons discussed herein, the Receiver submits that the Settlement falls well within the reasonable range of litigation possibilities and is in the best interests of the Receivership Estate and the Bondholders; therefore, the Settlement should be approved. WHEREFORE, PREMISES CONSIDERED, the Receiver respectfully requests the Court: a. grant the relief requested in this Preliminary Approval Motion, b. enter the proposed Scheduling Order as set forth in Exhibit 2 hereto, inter alia, approving the content and method and manner of dissemination and publication of the Notices set forth in Exhibits 3 and 4 hereto, and setting the Final Approval Hearing for a date at least ninety (90) days after the entry of the Scheduling Order; and 4817-7864-8726.6 36 Case 2:17-cv-00393-SCM Document 327-2 Filed 05/24/19 Page 100 of 204 PageID: 14540 c. following the Final Approval Hearing, enter the Bar Order and Judgment set forth in Exhibit 5 hereto, inter alia: i. approving the Settlement; ii. barring claims; and iii. approving payment of the professional fees and expenses of its general counsel, Waller, and special counsel, Whiteford Taylor; and d. and grant such other and further relief as it deems just and proper. 4817-7864-8726.6 37 Case 2:17-cv-00393-SCM Document 327-2 Filed 05/24/19 Page 101 of 204 PageID: 14541 Dated: May 24, 2019 Respectfully submitted, /s/ Blake D. Roth Blake D. Roth Ryan K. Cochran (admitted pro hac vice) Waller Lansden Dortch & Davis, LLP 511 Union Street, Suite 2700 Nashville, Tennessee 37219 Telephone: 615.244.6380 Email: [email protected] [email protected] Counsel for the Receiver 4817-7864-8726.6 38 Case 2:17-cv-00393-SCM Document 327-2 Filed 05/24/19 Page 102 of 204 PageID: 14542 UNITED STATES DISTRICT COURT DISTRICT OF NEW JERSEY SECURITIES AND EXCHANGE COMMISSION, Plaintiff, v. Case No. 2:17-cv-393-ES-SCM DWAYNE EDWARDS; TODD BARKER; DECLARATION OF SERVICE SENIOR SOLUTIONS OF SOCIAL CIRCLE, LLC; OXTON PLACE OF DOUGLAS, LLC, d/b/a OXTON REAL ESTATE OF DOUGLAS, LLC; ROME ALF, LLC; SAVANNAH ALF, LLC; WATERFORD PLACE ALF, LLC; MONTGOMERY ALF, LLC; COLUMBUS ALF, LLC; and OPELIKA ALF, LLC, Defendants, -and- OXTON SENIOR LIVING, LLC; MANOR HOUSE SENIOR LIVING, LLC; SUSAN EDWARDS, a/k/a SUSAN ROGERS; SHARON NUNAMAKER, a/k/a SHARON HADDEN; and SDH DESIGN, LLC, Relief Defendants. I, the undersigned, declare that on the date set forth below, I caused a true and correct copy of the following documents to be filed with this court’s CM/ECF system, and this court’s CM/ECF system electronically served all parties entitled to receive notice of the following documents: 1. Receiver’s Request for (I) Entry of Preliminary Approvals and Scheduling Order, and (II) Motion for Entry of Order Approving Proposed Settlement, The Proposed Notice of Settlement, and to Enter the Bar Order and Final Judgment; and 2. This Declaration of Service. In addition, I caused true and correct copies of the foregoing to be served by regular United States mail, postage prepaid, and electronic mail on the following parties: 4817-7864-8726.5 Case 2:17-cv-00393-SCM Document 327-2 Filed 05/24/19 Page 103 of 204 PageID: 14543 EDNA LOUISE BAKKER PAUL JOHN WILLIAM ROBEY 510 E KELLER ST 101 WINDSOR WAY 206 N FLORENCE AVE MECHANICSBURG PA 170556528 LEWISBURG PA 178378079 LITCHFIELD PK AZ 853404427 BATINA FAMILY TRUST MARYLN KING SHARON A SOMERS TR 6202 N 16TH AVE 3237 LONGRIDGE AVE 5129 LAKEWOOD DR PHOENIX AZ 850152008 SHERMAN OAKS CA 914234909 ROSCOMMON MI 486538745 IRA FBO MICHAEL DANIEL MARGARET CELENTANO-BROWN TURECEK 4865 W SUMTER 3352 E CAMELBACK RD 422 W SUMMER HAVEN LN TUCSON AZ 857428401 PHOENIX AZ 850182312 LAKESIDE AZ 859296640 THE DALTON FAMILY TRUST IRA FBO BARBARA G LEONARD FBO THE WALTERS FAMILY TRUST 230 LILLE LN APT 108 6991 E JAGGED CANYON PL 1701 W EVA ST NEWPORT BEACH CA 926632664 TUCSON AZ 857506196 PHOENIX AZ 850212963 ESHAM LIVING TRUST THE LEONARD TRUST ANYA WOODY 1060 S ROCKCREST AVE 6991 E JAGGED CANYON PL 8651 E ROYAL PALM # 233 TUCSON AZ 857483534 TUCSON AZ 857506196 SCOTTSDALE AZ 852584304 FRANK X GAENGER TTEE LYNDA J FUHR LORD ANYA WOODY 2505 E VILLA MARIA RD APT 214 2138 E PRIMROSE PATH 8651 E ROYAL PALM # 233 BRYAN TX 778022078 PHOENIX AZ 850867715 SCOTTSDALE AZ 852584304 KEITH GOTTLIEB THE JOHN C LUNDY IRREV TR RUDOLPH ANGERMEIER STATE ROAD 124 MILE MARKER 14 25 W 3RD ST STE 504 3052 S COUNTRY CLUB DR CUBERO NM 87014 WILLIAMSPORT PA 177016529 AVON PARK FL 338258381 DEWANE GRAHAM RALPH NAGLER SHARON BAILIFF 1964 W MISTY HOLLOW LN 14969 W WOODBURY LN 5614 36TH AVE N TUCSON AZ 857040953 SURPRISE AZ 853748615 ST PETERSBURG FL 337101914 WESLEY HOLST CHARLES B O'BOSKY & JULIA E SARAH BALDWIN REV TRUST 1908 BUTTERFLY MAIDEN TRL NE 675 W ALLUVIAL AVE APT 238 2612 REAGAN TRL ALBUQUERQUE NM 871123704 CLOVIS CA 936114402 LAKE MARY FL 327461811 4817-7864-8726.5 Case 2:17-cv-00393-SCM Document 327-2 Filed 05/24/19 Page 104 of 204 PageID: 14544 THE FLOYD & TOMMIE HOWERTON DONALD R PLETZ & MARIO BARRIOS 502 SIERRA VISTA DR 64382 E CORONADO COURT TUCSON 4829 SW 25TH CT WICKENBURG AZ 853903253 AZ 85739-1014 CAPE CORAL FL 339146612 GLADYS BARRIOS SHERMAN CUNNINGHAM THE PAUL H GILJE LIVING 4829 SW 25TH CT 3519 51ST AVE W 1255 PASADENA AVE S APT 915 CAPE CORAL FL 339146612 BRADENTON FL 342103271 S PASADENA FL 337076213 CARL W BJORK TRUST NANCY DAWSON MELVIN GLATFELTER 3487 51ST AVENUE CIR W 8502 BRIDGEWATER DR 275 FISHER RD BRADENTON FL 342103226 ROWLETT TX 750886600 AIRVILLE PA 173029317 LYNN BLOOMINGDALE THE DIALS FAMILY TR CURTIS GLATFELTER 5003 21ST AVE W 2297 QUINCY CT 480 MACEDONIA DR BRADENTON FL 342095719 THE VILLAGES FL 321622416 PUNTA GORDA FL 339508004 THE CLAIRE ANN BRODIE TRUST ROBERT R DYER REVOCABLE TRUST MARJORIE KLASS 1296 SUNFLOWER ST 2804 VALLEY DR 1910 CORAL TREE CT THE VILLAGES FL 321627780 ALEXANDRIA VA 223022426 BRANDON FL 335118375 THE JOHN S BRODIE TRUST CHARLES ERBE ALEXANDRA LALLO 1296 SUN FLOWER ST 3780 STATE RD 2109 ZARAGOZA PL THE VILLAGES FL 321627780 FORT GRATIOT MI 480594063 LADY LAKE FL 321599460 ROBERT & CAROL BUCKLE REV DAVID EVANGELIST QUINTEN LINK TRUST 7201 49TH AVE E 9886 GRACKLE LOOP 7205 49TH AVE EAST BRADENTON FL 342037934 LAKELAND FL 338102315 BRADENTON FL 342037934 RUTLAND BUSSEY CAROL FAGER LIVING TRUST SHERWIN LITTLE 34421 TRANQUIVIEW LN 443 ARCHAIC DR 9127 LOOKOUT LN DADE CITY FL 335237561 WINTER HAVEN FL 338801677 BENT MOUNTAIN VA 240592339 4817-7864-8726.6 3 Case 2:17-cv-00393-SCM Document 327-2 Filed 05/24/19 Page 105 of 204 PageID: 14545 CAROL BUTTS DARRELL G FAGER LIVING TRUST XIAOLI LU 322 BEAR WOODS DR 443 ARCHAIC DR 465 BRICKELL AVE APT 5003 POWELL OH 430657759 WINTER HAVEN FL 338801677 MIAMI FL 331314023 WILLIAM E CRAFTS TRUST FALIGIANI FAMILY REV TRUST MARKOWSKI TRUST 13694 SE 89TH AVE 5109 34TH STREET CT W 4587 S 124TH ST SUMMERFIELD FL 344919600 BRADENTON FL 342103249 NEW BERLIN WI 531519603 JAMES F CULLEN & RICHARD GEISS THE NORMA H MARTIN REV LIV 1217 KELLS CT 4330 PINIEBROOK CIR #2 3188 KEARNS CORNER LAKELAND FL 338131265 BRADENTON FL 342098011 THE VILLAGES FL 321627443 THE ODIS L MARTIN REVOCABLE RONALD PSONAK ROBERT B TRASK TRUST 3188 KEARNS COR 4829 SAWGRASS LAKE CIR 602 MAYBANK LOOP THE VILLAGES FL 321627443 LEESBURG FL 347482207 THE VILLAGES FL 321628781 THE LEWIS & DORRIT RIGGLES CLARK MCCURDY LUCY TRIMARCO TRUST TRUST 2804 VALLEY DR 809 18TH AVE N 300 HOLLIDAY OVERLOOK ALEXANDRIA VA 223022426 SAINT PETERSBUR FL 337044241 VILLA RICA GA 301807351 MERLYN J MILLER TRUST LEWIS RIGGLES ALLEN VANOVER 306 GOLF CREST LN 291 HOLLIDAY OVERLOOK 3609 CONSERVATION TRAIL DAVENPORT FL 338379612 VILLA RICA GA 301807328 THE VILLAGES FL 32163 LORRAINE E MURRAY TTEE HANS SCHUSCHEL LIVING HUGO WAYNOR 3623 MERIDALE RD 1733 OAK FOREST DR 3357 ATWELL AVE SARASOTA FL 342382543 THE VILLAGES FL 321627596 THE VILLAGES FL 321627420 LORRAINE E MURRAY TTEE VILYA SCHUSCHEL LIVING TRUST REV TRUST OF HUGO A WAYNOR 3623 MERIDALE RD 1733 OAKFOREST DR 3357 ATWELL AVE SARASOTA FL 342382543 THE VILLAGES FL 321627596 THE VILLAGES FL 321627420 4817-7864-8726.6 4 Case 2:17-cv-00393-SCM Document 327-2 Filed 05/24/19 Page 106 of 204 PageID: 14546 ROBERT MYERS HERBERT SCHUTT LAURENCE WEDEMAN 3310 GLENWOOD CIR 3537 51ST AVE W 2116 TIMBER LANE HOLIDAY FL 346912544 BRADENTON FL 342103271 SEBRING FL 338724065 NORMA NEILAND KATHLEEN STARKEY RICHARD WINDER 2454 AUSTRALIA WAY E APT 14 13581 W STATE ROUTE 163 529 MEANDERING WAY CLEARWATER FL 337633816 OAK HARBOR OH 434499451 POLK CITY FL 338685149 MARY F WINKLE REVOCABLE ANNA PACKER FLORENCE A SUZANSKI TR TRUST 17025 OTTO LN 16750 GULF BLVD APT 414 4307 65TH TER E HUDSON FL 346674910 N REDNGTN BCH FL 337081586 SARASOTA FL 342437944 LAWRENCE L & BETTY PRICE REV TODD SUZANSKI CHARLES WISNER 353 W ARDICE AVE APT 80 465 BRICKELL AVE APT 5003 11474 LIBBY RD EUSTIS FL 327266264 MIAMI FL 331314023 SPRING HILL FL 346092223 KENNETH PRYNE RAY M AND L JANE TATE LIV TRUST HOWARD R WISNER TRUST 5785 DAOUST RD 4427 BURLINGTON DR 191 ASTAIRE LN APT 342 TOMAHAWK WI 54487 WINTER HAVEN FL 338801107 SPRING HILL FL 346095825 ROBERT E WOLFF REV TRUST CHANG CHEN AND COONRADT REV TRUST 4528 FALCON RIDGE DR 15069 W COOPERSTOWN WAY 1402 LIGHTHOUSE PL SARASOTA FL 342331716 SURPRISE AZ 853744605 SIOUX FALLS SD 571033300 FRANK WONG THE ALBERT & JANET CHEN TRUST CAROLYN COSTA 1036 EPPINGER DR 3509 S SOBOBA ST 265 S COLUMBIA DR PORT CHARLOTTE FL 339532421 GILBERT AZ 852974941 WOODBURN OR 970714417 LESLIE ALMEIDA BEATRICE CHEN KEN COUNTRYMAN 1639 PERDIDO BAY 9939 OLIVE CT 188 MAPLE RIDGE LN THE VILLAGES FL 321622224 TEMPLE CITY CA 917803200 MONTGOMERY IL 605381437 4817-7864-8726.6 5 Case 2:17-cv-00393-SCM Document 327-2 Filed 05/24/19 Page 107 of 204 PageID: 14547 MARYLU ARBOGAST TTEE STEVE CHEN KENNETH S COUNTRYMAN & 11686 IRVING AVE 425 S LAGUNA DR 188 MAPLE RIDGE LN SEMINOLE FL 337727002 GILBERT AZ 852336713 MONTGOMERY IL 605381437 THE FORREST & MARY E PAUL J CROWDER& EVELYN M JAMES CLAYCOMB ARMSTRONG CROWDER 12948 SE 90TH COURT RD 851 MAPLE CT UNIT 207 6110 E CAMBRIDGE AVE SUMMERFIELD FL 344919769 DUNEDIN FL 346986717 SCOTTSDALE AZ 852571024 LARRY R BARROW REV LIV TRUST JAMES CLAYCOMB RUTH DEGROW 5279 CORNER CT 12948 SE 90TH COURT RD 8580 WOODWAY DR APT 3307 WAUNAKEE WI 535979038 SUMMERFIELD FL 344919769 HOUSTON TX 770632481 DEBORAH BIGA HAROLD COGSWELL LEHAO N. DOMINH TRUST 7709 E HARVARD ST 8341 US HIGHWAY 20 1754 GLEN ABBY LN SCOTTSDALE AZ 852571611 MONTPELIER OH 435439702 WINTER HAVEN FL 338818780 IRA FBO DEBORAH K BIGA COLLEEN COGSWELL THAP DOMINH TRUST 7709 E HARVARD ST 8341 US HIGHWAY 20 1754 GLEN ABBY LN SCOTTSDALE AZ 852571611 MONTPELIER OH 435439702 WINTER HAVEN FL 338818780 THE ROBERT W AND KATHLEEN EDITH H COLLINS GLENNIE DOSTER BORDER 146 ECHO DR 4829 SAWGRASS LAKE CIR 940 MCGRATH LN ELIZABETHTON TN 376436165 LEESBURG FL 347482207 AVON PARK FL 338258428 THE BREEN FAM LIV TR JOE COLLINS MARIE T DOUGAN REV 7955 E CHAPARRAL RD UNIT 103 1200 HURON DR 17710 BRIDLEWOOD CT SCOTTSDALE AZ 852507232 ELIZABETHTON TN 376432424 PARRISH FL 342196003 FRANCIS DUBBS MERRILEE K FOERSTER TTEE ALVIN & MARY LOU GOODFRIEND 2830 N VERNON RD 1690 CHAPLENE CT 13215 W PALMWOOD DR AVON PARK FL 338259188 DUNEDIN FL 346982329 SUN CITY WEST AZ 853754945 4817-7864-8726.6 6 Case 2:17-cv-00393-SCM Document 327-2 Filed 05/24/19 Page 108 of 204 PageID: 14548 FRANCIS E DUBBS REVOCABLE NANCY FORMAN PETER JEROME GRAHAM TRUST 36 FORMAN DR 3809 NE LAKE SEBRING DR 2830 N VERNON RD COLCHESTER VT 054466016 SEBRING FL 338708450 AVON PARK FL 338259188 ROBERT P &DOREEN J LORRAYNE J DUBBS REV TRUST JAMES HILLMAN FRANKENHAUSER 2830 N VERNON RD 6476 81ST AVE N 284 MARIANNA DR AVON PARK FL 338259188 PINELLAS PARK FL 337812131 AUBURNDALE FL 338235502 LORRAYNE DUBBS J GARY FROMM JOHN HORNICK JR REVOCABLE 2830 N VERNON RD 2915 S HILL RD 3509 3RD STREET A AVON PARK FL 338259188 OTIS OR 973689606 EAST MOLINE IL 612443312 ROBERT EDWARDS GENEVIEVE FULMER JOHN HORNICK JR REVOCABLE 9279 SE 142ND PL 12481 SE 90TH TERR 3509 3RD STREET A SUMMERFIELD FL 344913568 SUMMERFIELD FL 344919422 EAST MOLINE IL 612443312 SANDRA ESHBACH WILLIAM FULMER THE KUO-HSIUNG HSU REV LIV TR 667 SOUTH CT 12481 SE 90TH TERRACE 17286 SE 85TH WILLOWICK CIR POTTSTOWN PA 194642634 SUMMERFIELD FL 344919422 THE VILLAGES FL 321622822 DENNIS G FINKE LIVING TRUST JOHN T FULTON & JIMMY HULS 1630 S SOUTHEASTERN AVE 1601 KELSEY ST 304 SALUDA WATERS PT SIOUX FALLS SD 571033226 WASHINGTON IL 615719292 LEESVILLE SC 290707234 THE GALL FAMILY REV LIVING DAYLE P FINKE LIVING TRUST HARRY D HUMPHREY TR TRUST 1630 S SOUTHEASTERN AVE 17300 N 88TH AVE APT 132 7031 SE 173RD ARLINGTON LOOP SIOUX FALLS SD 571033226 PEORIA AZ 853823502 THE VILLAGES FL 321625326 THE ANN ELIZABETH FISCHER ROY GARRISON CLAUDIA INZERILLE TRUST 506 HALYARD CIR 515 PHOENIX AVE 2873 REMINGTON RD EDGEWATER FL 321415955 DAYTONA BEACH FL 321184748 THE VILLAGES FL 321623310 4817-7864-8726.6 7 Case 2:17-cv-00393-SCM Document 327-2 Filed 05/24/19 Page 109 of 204 PageID: 14549 RITA FLIGIEL ROBERT GIGLIO THE JACOBS FAMILY TRUST 4701 6TH AVE. E. 2085 PIAVE LANE 17149 SE 84TH KNIGHT AVE BRADENTON FL 342085853 VENICE FL 34292 THE VILLAGES FL 321625864 WILLIAM G JILBERT & LYNN L JAMES H LIGGETT TRUST MARYLIN MAZZA 10346 E BUCKSKIN TRAIL 34639 LILY LN 13 OVERLOOK BLF SCOTTSDALE AZ 852558407 ZEPHYRHILLS FL 335412433 MARLBORO NY 125426403 JOHN JULIANO REV TRUST LUCAS LLAMAS DOUGLAS MCINTYRE LANDMARK OAKS 3050 LANDMARK 60386 E LOOSE REINS PL PO BOX 26 BLVD APT 1002 PALM HARBOR FL TUCSON AZ 857395903 WEBSTER FL 335970026 346845011 VIRGINIA M KING TR LDL TRUST KATHIE J MCWILLIAMS & 2423 MERIDA CIR 14111 W DUSTY TRAIL BLVD 2780 N JACS PL THE VILLAGES FL 321620160 SUN CITY WEST AZ 853752289 TUCSON AZ 857499269 RICHARD KNESPER RICHARD R MAHLKUCH REV TRUST KEN METZ 950 E WILMETTE RD UNIT 211 862 MARGAUX TRL 7209 COVENTRY CT PALATINE IL 600746481 THE VILLAGES FL 321624535 NORTH RICHLAND TX 761826051 RICHARD J & ROSEMARIE KNESPER THE JUDITH J. MAHLKUCH LORETTA METZ 950 E WILMETTE RD UNIT 211 862 MARGAUX TRAIL 16910 SE 93RD CUTHBERT CIR PALATINE IL 600746481 THE VILLAGES FL 321624535 THE VILLAGES FL 321621886 RONALD KOSANOVICH NANCY A MARINI TRUST JAMES MONACELL 3119 WILTSHIRE AVE 5003 28TH CT EAST 1064 HESS DR SPRING HILL FL 346084162 BRADENTON FL 342033806 AVONDALE ESTATE GA 300021605 THE WENDELL E & ELLA JANE NOREEN KRALICK JAMES MONACELL MARTIN 17710 BRIDLEWOOD CT 1064 HESS DR 1760 CESSNA BAY PARRISH FL 342196003 AVONDALE ESTATE GA 300021605 LK HAVASU CTY AZ 864042411 4817-7864-8726.6 8 Case 2:17-cv-00393-SCM Document 327-2 Filed 05/24/19 Page 110 of 204 PageID: 14550 REVOCABLE LIV TRUST OF BILLY MATTHEWS JULIA MOORE HOWARD A 451 E CASCADA RD 6470 MOURNING DOVE DR APT 102 5509 RIVERWAY DR LITCHFIELD PK AZ 853404821 BRADENTON FL 342104303 SEBRING FL 338759671 ANGELINE P LEWIS REV LIV TRUST EMIL MATTSON IRA FBO RUTH MOORE 1550 EL CAMINO REAL APT 134 63066 E HARMONY DR 7709 E HARVARD ST THE VILLAGES FL 321591004 TUCSON AZ 857391852 SCOTTSDALE AZ 852571611 THE LEWIS FAMILY REV TRUST JOHN MAZZA MICHAEL MORRISON 1550 EL CAMINO REAL APT 134 13 OVERLOOK BLF 2738 WALES CT THE VILLAGES FL 321591004 MARLBORO NY 125426403 THOMPSONS STN TN 371795297 MUTCHNIK LIQUIDITY LLC THE IRENE REVENTAS TRUST THE SOWARDS FAMILY 7211 HERITAGE GRAND PL 5334 LEGEND HILLS LN 1337 ALBERT AVE BRADENTON FL 342123267 SPRING HILL FL 346090369 EAST LANSING MI 488234603 A.T. NEUMANN CO-TTEE THE LARRY WAYNE RINEHART ALICE V STEWART TTEE 10330 E WILLIS BARNUM LANE 421 BEMEN DR 10007 W CUMBERLAND DR TUCSON AZ 857475912 LADY LAKE FL 321593205 SUN CITY AZ 853514555 ALFRED NEUMANN HAROLD V ROBINSON REVOCABLE DARRELL R STEWART TTEE 10330 E WILLIS BARNUM LANE 858 LE CARPE LN 10007 W CUMBERLAND DR TUCSON AZ 857475912 THE VILLAGES FL 321621446 SUN CITY AZ 853514555 RICHARD J NISHMAN WINIFRED G ROBINSON TRUSTEE ROSALIE SULLIVAN 116 FOREST HILLS DR 7771 PINE TRACE DR 1758 WASHINGTON BLVD NW SAINT PETERSBUR FL 337084217 SARASOTA FL 342433740 LAKE PLACID FL 338524006 CHARLES E. &RUTH P. NORDMAN LEIGHTON E SATTLER REV ANTON TAUSCHECK TRST 17710 BRIDLEWOOD CT 1852 US HIGHWAY 27 S LOT A16 312 52ND AVE W PARRISH FL 342196003 AVON PARK FL 338258373 BRADENTON FL 342072915 4817-7864-8726.6 9 Case 2:17-cv-00393-SCM Document 327-2 Filed 05/24/19 Page 111 of 204 PageID: 14551 CECILE NYSTROM SEMINOLE COMPLEX ROBERT THOMSON 861 BARRYMOORE LOOP 11686 IRVING AVE 4680 BELLWETHER LN APT 327 THE VILLAGES FL 321623362 SEMINOLE FL 337727002 OXFORD FL 344842975 PETERSON FAMILY REV TRUST ANGELA SERNI SUSAN THOMSON 5406 SW 3RD AVE 7524 HATTERAS DR 4680 BELLWETHER LN APT 327 CAPE CORAL FL 339147189 HUDSON FL 346673958 OXFORD FL 344842975 DAVID POULIN BOBBY SMITH JOHN TODD 1132 45TH AVE NE 23530 SIERRA RD 5628 GULF STREAM ST ST PETERSBURG FL 337035248 LAND O LAKES FL 346396110 TAVARES FL 327789240 GLORIA POWLEY SAM SMITH SANDRA TODD 84 VENTURE CT 10418 LEAR ST 5628 GULF STREAM ST BRASELTON GA 305171888 SPRING HILL FL 346084151 TAVARES FL 327789240 THE LORETTA M QUIRING LIVING JANICE SONJARA TRUST THE VAADI TRUST 350 FIELD AVE APT 5 5806 BEAURIVAGE AVE 4629 GLENBROOKE TER CANON CITY CO 812122684 SARASOTA FL 342432690 SARASOTA FL 342434324 RICHARD VILASI HELEN YIN KENT CAMPBELL 709 RIVIERA DR 16717 W IBARRA CT 3559 CLUSTER CT SUN CITY CENTER FL 335735536 SURPRISE AZ 853878268 THE VILLAGES FL 321632791 THE GLORIA JANE WAGNER ZHAO ZENG MARK CANNON REVOCABLE 18067 W CAMINO REAL DR 4490 CINDY RD 17787 SE 108TH AVE SURPRISE AZ 853748914 LAKELAND FL 338102490 SUMMERFIELD FL 344916940 JEANETTE WEBER ZHAO ZENG QUINCE CANNON 4518 AMOROSA WAY 18067 W CAMINO REAL DR 4137 DERBY DR SAN ANTONIO TX 782612895 SURPRISE AZ 853748914 LAKELAND FL 338094077 4817-7864-8726.6 10 Case 2:17-cv-00393-SCM Document 327-2 Filed 05/24/19 Page 112 of 204 PageID: 14552 QUINCE A CANNON REV LIVING JERRY & JEANETTE WEBER REV TR CHARLES AMANTE TRUST 4518 AMOROSA WAY 1023 SOLEDAD WAY 4137 DERBY DR SAN ANTONIO TX 782612895 THE VILLAGES FL 321599113 LAKELAND FL 338094077 2004 WETTER FAM REV LIV TRUST GLORIA BERG SHEILA CANNON 490 N BEACON POINT LOOP N 333 LAKE HOWARD DR NW APT 213A 4490 CINDY RD LILLIWAUP WA 985559623 WINTER HAVEN FL 338802306 LAKELAND FL 338102490 WHITMORE FAMILY TRUST LOUISE BLACK WARREN CHACE 2828 ROSEWELL PL 2804 DERBYSHIRE AVE 424 RANCHWOOD DR THE VILLAGES FL 321623315 LAKELAND FL 338034180 LEESBURG FL 347488128 CLARENCE A & BARBARA A THE RON & CHERYL WIENER TR LELAND BODMER CHIPMAN 13101 N TAILWIND DR 520 SWAN DR 5285 N STATE RD TUCSON AZ 857559508 SEBRING FL 338756292 ORLEANS MI 488659723 THE CIABOTTI FAMILY TRUST BARBARA WILLIAMSON HILDA BOSTICK 1490 KILLINGSWORTH WAY UNIT PO BOX 26 1705 FLORAHOME WAY 114 WEBSTER FL 335970026 THE VILLAGES FL 321632199 THE VILLAGES FL 321622185 STEVEN WINFIELD CAROLYN BURNETT KAZUKO COLBATH 5735 NEW PARIS WAY 1320 SKYLINE DR 82 LAKEVIEW TERRACE DR ELLENTON FL 342227254 TAVARES FL 327782533 ALTOONA FL 327029613 CAROLYN W. CONWAY LIVING STEVEN L WINFIELD & JOHN & MARGARET BUSCH TRUST TRUST 5735 NEW PARIS WAY 3344 ROANOKE ST 1675 SUNSET RIDGE DR ELLENTON FL 342227254 THE VILLAGES FL 321627104 THE VILLAGES FL 321622229 JAMES COX ARLIN DOTY ALETHA M FOHRMAN & 5316 53RD AVE E LOT R30 4856 COLONNADES CIR W #117 13017 PENEFIELD LN BRADENTON FL 342035613 LAKELAND FL 338111572 HUNTLEY IL 601427852 4817-7864-8726.6 11 Case 2:17-cv-00393-SCM Document 327-2 Filed 05/24/19 Page 113 of 204 PageID: 14553 GLENN CRIBBS DAVID DUCH FREDERICK FAM REV LIV TRUST 1323 ITCHEPACKESASSA DR 5103 SILHOUETTE CT 2208 JASPER WAY LAKELAND FL 338100160 SPRING HILL FL 346074403 THE VILLAGES FL 321623358 MICHAEL CRONIN EVELYN DURANT JOSEPH FREDETTE 677 BARNACLE CT 1559 BIRCHWOOD DR N PO BOX 523 ENGLEWOOD FL 342236561 MOBILE AL 366934922 MANCHESTER PA 173450523 THE RICHARD V DAHL REVOCABLE HIRAM DURANT HAROLD FRENCH C/O RICHARD V DAHL FOUNDERS 1559 BIRCHWOOD DR N 139 SHOBER LN RIDGE 6600 AUTO CLUB RD #355 MOBILE AL 366934922 MONROE VA 245742596 BLOOMINGTON MN 554382789 RAUSINE EDWARDS DAVIS LIVING TRUST WANDA FRENCH 4028 GLEN GARRY RD W 16743 SE 77TH NORTHRIDGE CT 200 HILLSBORO DR CALENLANO THE VILLAGES FL 321628361 NORTH TAZEWELL VA 246309533 LAKELAND FL 338131637 TODD A DEAN & ROBERT EDWARDS GERTRUDE FRENCH PO BOX 285 12 FAIRWAY CT 3697 DANTE MOUNTAIN RD MOUNT LOOKOUT WV 266780285 QUEENSBURY NY 128049756 CLINCHCO VA 242268507 THE RAYMOND G DEVRIES TRUST THE ANDRAS FABRY TRUST DAVID FRENCH U/I 3547 53RD AVE W UNIT 193 924 ARKLEY DR 1316 PAMONA LN BRADENTON FL 342103489 VIRGINIA BEACH VA 234624650 THE VILLAGES FL 321599172 PAUL DILLEN ELIZABETH FARREL HAROLD FRENCH JR 2902 EVINS MILL RD 114 WOODLAKE DR 139 SHOBER LN SMITHVILLE TN 371665141 GOODVIEW VA 240952427 MONROE VA 245742596 EVELYN DOLOR THE MILDRED FEY TRUST TINA FRITZ 2419 EMERALD LAKE DR APT 210 721 VISTA PL 1729 CHESTWOOD DR SUN CITY CENTER FL 335733804 THE VILLAGES FL 321593033 VIRGINIA BEACH VA 234537015 4817-7864-8726.6 12 Case 2:17-cv-00393-SCM Document 327-2 Filed 05/24/19 Page 114 of 204 PageID: 14554 THE MARA T DONADIO REVOCABLE EDITH FLOOD HARVEY FROMME 700 LA PENINSULA BLVD UNIT 205 139 BEVERLY DR PO BOX 267 NAPLES FL 341134040 WINTER HAVEN FL 338842002 RINCON GA 313260267 HARRY K JACKLE & CLAIRE W ROBEN GAFTMAN SYLVIA GULLAGE JACKLE 1894 SASSPARILLA WAY 5532 NW 27TH PL 6498 RAY RD APT 110 THE VILLAGES FL 321623868 OCALA FL 344828747 RALEIGH NC 276138847 LANA GARDNER GREGORY HANSON DONALD A JACKSON 580 LITTLE RIVER PATH 1823 SCARBORO CT 248 EGRET DR THE VILLAGES FL 321626027 THE VILLAGES FL 321621670 HAINES CITY FL 338442357 THOMAS GEARHART JANE HARBECKE DOLORES JOHNSON 10373 S 200 W 4224 LIRON AVE APT 102 3228 HAWKS RIDGE DR SILVER LAKE IN 469829019 FORT MYERS FL 339167822 LAKELAND FL 338104010 MARK I GERMANN TRUST WALTER HARBECKE THOMAS J KELLY TR 941 TALAPIA LOOP 4224 LIRON AVE APT 102 3 MECKAUER CIR THE VILLAGES FL 321624090 FORT MYERS FL 339167822 BETHEL CT 068011260 DEBASHIS GHOSHAL EDWIN HAZELRIGG JANIS KOCH 6033 GLENEAGLES CIR 1426 MASENO DR 11400 LONG FELLOW DR SAN JOSE CA 951382372 VENICE FL 342924634 BONITA SPGS FL 341355963 IRA GILES JOSEPH HICKEY THOMAS J KUHN REVOCABLE 402 GREENFIELD CT 4112 GLEN GARRY RD E 1500 LAKE DR MARIETTA GA 300683211 LAKELAND FL 338131633 GRAND ISLAND FL 327359714 THOMAS GORMAN WELDON HONEYCUTT HENRY B LARUE FAM TR 32 RIDGE RD 139 ARROWHEAD LN 37121 GRAYS AIRPORT RD GROTON CT 063408929 HAINES CITY FL 338449711 LADY LAKE FL 321595303 4817-7864-8726.6 13 Case 2:17-cv-00393-SCM Document 327-2 Filed 05/24/19 Page 115 of 204 PageID: 14555 THE GORMAN FAMILY TRUST H LORENZ HORN FRANK LAWYER 32 RIDGE RD 8986 BLOOMFIELD BLVD 3017 PINEVIEW DR GROTON CT 063408929 SARASOTA FL 342384448 HOLIDAY FL 346919727 THEODORE J & FELICIA A THE HUGHES FAMILY TRUST THE LEEGSTRA TRUST GRANOSKI 2034 DUNSTER CT 46541 CHELON CT 2115 HERON DR THE VILLAGES FL 321623462 MACOMB MI 480443680 LAKE WALES FL 338594823 JAMES GREER CHERYL HUNTER DAVID J LEMASTERS TR 12465 SE 90TH TER 6601 34TH AVE W 2378 UNITY TER SUMMERFIELD FL 344919422 BRADENTON FL 342095934 THE VILLAGES FL 321625107 WILLIAM LUTHER JOLENE C NATOLI REVOCABLE MARVIN J PIECZYNSKI REV LIV 5181 S KENNETH TER 33243 PENNBROOKE PKWY 20159 US HIGHWAY 23 S FLORAL CITY FL 344362179 LEESBURG FL 347487244 PRESQUE ISLE MI 497779061 CINDY MATNEY GALE NEFF THE PLESNER LIVING TRUST 150 HILLSBORO DR 1324 CHATEAU WAY 1705 FLORAHOME WAY NORTH TAZEWELL VA 246309500 THE VILLAGES FL 321622038 THE VILLAGES FL 321632199 THE CROOKS IRREVOCABLE ANNE MCFARLANE CYNTHIA PLESNER SPECIAL 5939 SANDSTONE AVE 7417 SUNNYSIDE DR 1324 CHATEAU WAY SARASOTA FL 342435348 LEESBURG FL 347489169 THE VILLAGES FL 321622038 THE JUD P NEIGHBERS LIVING WILLIIAM MERDEATH DECL OF THE FLORA J POTTS TRUST 3501 PATRICIA PL 4831 WHITE SPRUCE ST 4218 DAY BRIDGE PL ELLENTON FL 342224516 SEBRING FL 338708875 ELLENTON FL 342227237 WILLIAM D MERDEATH TRUST JOHN W NELLETT & JAMIE QUOLAS 3501 PATRICIA PL 2023 HARTLEBURY WAY 13703 TRINITY LEAF PL ELLENTON FL 342224516 SUN CITY CENTER FL 335736358 RIVERVIEW FL 335792373 4817-7864-8726.6 14 Case 2:17-cv-00393-SCM Document 327-2 Filed 05/24/19 Page 116 of 204 PageID: 14556 ROBIN MILAZZO ROSE NELLETT JAMES REESE 1507 CERVANTES PL 2023 HARTLEBURY WAY 1820 GINGERQUILL DR THE VILLAGES FL 321599164 SUN CITY CENTER FL 335736358 GRAYLING MI 497387522 PAUL MORGAN KENT J NICHOLS & THOMAS RIBAUDO 8720 MYSTIC CIR 614 COTTAGE RD 216 DEL RIO DR NORTH PORT FL 342872137 BATAVIA IL 605103381 THE VILLAGES FL 321595664 MORIN FAMILY LIVING JOHN OHLSSON THE RITTER TRUST 6756 ERIN CIR 6035 SEA RANCH DR UNIT 701 100 LANE 570 LAKE JAMES ZEPHYRHILLS FL 335421851 HUDSON FL 346671582 FREMONT IN 467379003 RAYMOND E MORRIS REVOCABLE EDWARD R PETERS&CLEMENTINE JEROME ROSENTHAL TRUST HELEN 1951 N HONORE AVE A406 1700 EL CAMINO REAL APT 104 208 PARK LAND DR SARASOTA FL 342359117 THE VILLAGES FL 321591001 LAKE PLACID FL 338525195 JAMES M MULLINS REV TRUST EMIL PETERS REV LIVING MARC ROZNER 324 E BEACH DR APT 404 512 68TH ST 4837 BRIARBEND DR PANAMA CITY FL 324015809 HOLMES BEACH FL 342171203 HOUSTON TX 770354933 CHRIST OF SADORF SITTE TRUST ARTHUR STINSON 451 1/2 15TH AVE N PO BOX 1063 128 CITRUS RD NE ST PETERSBURG FL 337044445 SISTER BAY WI 542341063 LAKE PLACID FL 338529768 DEBRA SANFORD W DALE SMITH JOY STRELIOFF 4112 GLEN GARRY RD E PO BOX 1180 6500 NW 67TH TER LAKELAND FL 338131633 BELLEVIEW FL 344211180 OCALA FL 344822201 ANN SAWYER GEORGE SMUDDE THE THOMPSON FAMILY TRUST 13786 SW 114TH AVE 4531 LILAC AVE 2125 LAWSONIA LOOP DUNNELLON FL 344325617 GLENVIEW IL 600251452 WINTER HAVEN FL 338819788 4817-7864-8726.6 15 Case 2:17-cv-00393-SCM Document 327-2 Filed 05/24/19 Page 117 of 204 PageID: 14557 BERTALOU SCHAFER TRUST GEORGE & DOLORES SMUDDE REV EDWARD THURKOW 9000 W 120TH TER 4531 LILAC AVE 607 CEDAR LN OVERLAND PARK KS 662131537 GLENVIEW IL 600251452 LADY LAKE FL 321593214 JOSEF SCHIRPKE FORTUNATO SORIANO DONALD TINDAL 3673 LAKE BAYSHORE DR J-513 546 W FENWAY DR 415 EVERGREEN DR BRADENTON FL 342055140 HERNANDO FL 344425156 DESTIN FL 325412201 ROBERT SCHULTZ SORIANO TRUST GARY TOPHAM 4324 EMMAUS RD 546 W FENWAY DR 82 LAKEVIEW TERRACE DR FRUITLAND PK FL 347315917 HERNANDO FL 344425156 ALTOONA FL 327029613 THE SCHWARZ TRUST WALTRAUD SPANGLER GARY TOPHAM 5622 SW 14TH AVE 2409 BERKSHIRE DR 82 LAKEVIEW TERRACE DR CAPE CORAL FL 339148007 WINTER HAVEN FL 338843062 ALTOONA FL 327029613 THE RICHARD L STANLEY LIV ROBERT SCRIMA ALICIA TOPPING TRUST 1310 DE LA GARZA PL 112 FAIRWAY BLVD #411 7801 34TH AVE N LOT 13 THE VILLAGES FL 321620143 P C BEACH FL 324072817 SAINT PETERSBUR FL 337101144 THE JOHN D SHUTE & EMILY SHUTE EUGENE STIEF RONALD TRACHTENBERG 4393 ADELAIDE AVE 951 OLEANDER ST 32809 TIMBERWOOD DR NORTH PORT FL 342888823 LADY LAKE FL 321592141 LEESBURG FL 347488139 THE JAMES F AND DORIS T. SIGLIN RAYMOND W STILES REVOCABLE THE TYLER FAMILY TRUST 15443 LAKESHORE VILLA ST 9000 W 120TH TER 2522 SWANS LANDING TAMPA FL 336131353 OVERLAND PARK KS 662131537 LAND O LAKES FL 34639 EMILIO VALDES MARTIN YACKLEY ELIZABETH D BOOTH & N/A 3228 HAWKS RIDGE DR 754 TERRANOVA LN 3124 E HENDERSON CIR LAKELAND FL 338104010 WINTER HAVEN FL 338843414 LAKELAND FL 338034416 4817-7864-8726.6 16 Case 2:17-cv-00393-SCM Document 327-2 Filed 05/24/19 Page 118 of 204 PageID: 14558 LARISA VERVILLE THE KORE E YODER & SUSANNA A LUCINDA BUCH 3232 HAMPTON LN 3200 FRONT MOUNTAIN RD 38928 TALL DR THE VILLAGES FL 321627669 BELLEVILLE PA 170048815 ZEPHYRHILLS FL 335401884 ARUN VIRICK ANDERS E & GLADYS E ANDERSON BUCH LIVING TRUST N/A 1512 FOXBOROUGH LN 2331 LANCASTER DR 38928 TALL DR PLANO TX 750935234 SUN CITY CTR FL 335736508 ZEPHYRHILLS FL 335401884 WASKOWIZ FAMILY TRUST BEVERLY J ANDERSON TR ALAN BUCKLEY 5866 JULIANN CT 725 IRON OAK WAY 2244 PILAR PL WASHINGTON TWP MI 480944221 THE VILLAGES FL 321634094 THE VILLAGES FL 321622483 JOSEPH A CANTREL LIVING TRUST JOANNE WELLS CHARLES ANDERSON N/A 955 VANCE HILL RD 725 IRON OAK WAY 38928 TALL DR NEWPORT CTR VT 058579599 THE VILLAGES FL 321634094 ZEPHYRHILLS FL 335401884 B. L. WESTMORELAND THE CHARLES F ANDERSON TR CHRISTOPHER CARLSON 4101 ERNEST DR 725 IRON OAK WAY 7334 38TH CT E WESLEY CHAPEL FL 335435910 THE VILLAGES FL 321634094 SARASOTA FL 342436402 KARLAN WHITE PHILLIP BABUREK ROBERT J CIUNCI 15408 LAKESHORE VILLA DR 2086 TROUT CT 4561 RANDAG DR TAMPA FL 336131317 THE VILLAGES FL 321623227 FORT MYERS FL 339034731 PHILIP WINKLER JOSEPH BABUREK WILLIAM COATES III & 10222 GARDEN ALCOVE DR 9917 FOSTER AVE 1239 RADISON AVE TAMPA FL 336473117 BRATENAHL OH 441081033 SUN CITY CTR FL 335738022 MORRIS WOLFF FRANCES BARNES DORI FLOUD 657 MULLINS PATH 6206 26TH AVE W 17260 N CTY RD 9 THE VILLAGES FL 321626063 BRADENTON FL 342095515 WELINGTON CO 80549 4817-7864-8726.6 17 Case 2:17-cv-00393-SCM Document 327-2 Filed 05/24/19 Page 119 of 204 PageID: 14559 BEN F WOOD REVOCABLE LIVING BARTH FAMILY REV LIV TRUST N/A ROBERT FRANCIS 22 NEW GREEN CT 5294 LEATHERWOOD DR 11010 SYDELLE DR KINGWOOD TX 773395324 WEST CHESTER OH 450691874 N CHESTERFLD VA 23235-3330 MARK GOSLIN CLEGG S HOLLIDAY & C BERNADETTE LEYMAN 4640 47TH STREET 9606 GOVERNORS CLUB PLACE 341 TANAGER CT SARASOTA FL 342353605 BRADENTON FL 342024054 LAKELAND FL 338034842 KAREN HOEFER GRIFFITH JAMES B HOWELL III KATHY MCBRIDE LIVING 5274 BENJAMIN LN 23 SHADOW BROOKE DR 17483 VIA NAVONA WAY SARASOTA FL 342332445 BRIDGETON NJ 083023616 MIROMAR LAKES FL 33913-7879 KAREN H. GRIFFITH TR JAMES KELLEY GLORIA A MCCREIGHT & 5274 BENJAMIN LN 6023 CONDOR DR 466 COUNTRY OAKS DR SARASOTA FL 342332445 LAKELAND FL 338095690 PLANT CITY FL 33565-9283 ANNE HACKWORTH RICHARD L KERN & JOHN MCDANIEL 460 SWEETWATER WAY PO BOX 81 11209 SAINT ANDREWS CT HAINES CITY FL 338446362 SAINT CHARLES IL 601740081 RIVERVIEW FL 33579-7045 ANNE HACKWORTH RICHARD KING JOSEPH MITCHELL 460 SWEETWATER WAY 7405 N SOCRUM LOOP RD LOT 29 129 COUNTRY LAKE CT HAINES CITY FL 338446362 LAKELAND FL 338092234 WEST BABYLON NY 11704-5093 CHARLES HAUGH JOHN & KAREN L KNIGHT JOINT TERESA NASH 7689 CAMDEN HARBOUR DR 3640 INNISBROOK DR 224 HICKOCK DR BRADENTON FL 34212-9305 LAKELAND FL 33810-5766 FISH HAVEN ID 83287-5099 CHARLES HAUGH ROBERT G KOSSEL TTEE THE NIXON FAMILY LIV TRUST 6501 17TH AVE W APT I102 3323 HIGHLAND FAIRWAYS BLVD 2226 SIFIELD GREENS WAY BRADENTON FL 34209-7800 LAKELAND FL 33810-5754 SUN CITY CENTER FL 33573-7172 4817-7864-8726.6 18 Case 2:17-cv-00393-SCM Document 327-2 Filed 05/24/19 Page 120 of 204 PageID: 14560 REV TRUST AGREEMNT OF DONALD E LAVIN SR&MARJORIE J DONALD PARRILLO & 6550 SHORELINE DR APT 7206 2550 SE 7TH ST 30 FOXFIELD LOOK SAINT PETERSBUR FL 337084586 POMPANO BEACH FL 330626120 ORMOND BEACH FL 321742424 DONALD E LAVIN TTEE N/A ROBERT T HILLERUD & PHILLIP PENROSE C/O TIPTOP TOPPERS 2701 N COURSE 770 SUNDIAL CT UNIT 708 5960 30TH AVE S APT 308 DR # 601 FT WALTON BCH FL 325486044 GULFPORT FL 337075346 POMPANO BEACH FL 330693033 STEVEN HILLERUD JANE A LEEDLE DONALD E RICHTER TRUST 1029 BROOK ARBOR DR 2920 RIDLEY RD 15911 PRENTISS POINTE CIR APT 202 MANSFIELD TX 760635446 HARTLAND WI 530299379 FORT MYERS FL 339084183 FRANK RIDOLFO E STAUB LILLIAN UPPERMAN 3733 HIGHLAND FAIRWAYS BLVD 4501 W SHANNON LAKES DR APT 120 2027 HEATHFIELD CIR LAKELAND FL 338105765 TALLAHASSEE FL 323092298 SUN CITY CTR FL 335737307 ROSITA M ROBERTS-BURNS REV E BRIAN STAUB SHERRI WELDON TRUST 4501 W SHANNON LAKES DR APT 120 5309 NICHOLS DR E 3153 BURBANK LN TALLAHASSEE FL 323092298 LAKELAND FL 338124077 THE VILLAGES FL 321627515 PETER X & CAROLYN A ROBINSON THE SUMMERLIN FAM REV LEO WETZEL 623 ALLEGHENY DR PO BOX 97 3585 HIGHLAND FAIRWAYS BLVD SUN CITY CENTER FL 335735112 DAVENPORT FL 338360097 LAKELAND FL 338105759 CAROLINE ROYA ROBIN SUTCLIFFE KENNETH YOUNG 12910 CRISTI WAY 4640 47TH ST 620 DANCY RD BOKEELIA FL 339222615 SARASOTA FL 342353605 FROSTPROOF FL 338438123 NOEL RUSSELL HAZEL TEIGELER DONALD ABNEY PO BOX 1262 3490 CHURCH RD PO BOX 6443 ELFERS FL 346801262 SAINT AUGUSTINE FL 320841970 NALCREST FL 338566443 4817-7864-8726.6 19 Case 2:17-cv-00393-SCM Document 327-2 Filed 05/24/19 Page 121 of 204 PageID: 14561 NOEL RUSSELL HAZEL H TEIGELER TRUST D AGNEW PO BOX 1262 3490 CHURCH RD 1906 HARRISBURG AVE ELFERS FL 346801262 SAINT AUGUSTINE FL 320841970 MOUNT JOY PA 175529591 SHERRY SEWARD NORMAN F TEIGELER REV LIVING LINDA AMSBAUGH 2502 GLADIOLAS CT 3490 CHURCH RD 1473 EL DORADO DR THE VILLAGES FL 321627036 SAINT AUGUSTINE FL 320841970 DAVENPORT FL 338376658 JOSEPH SITRA KENNETH R TOWNSLEY & KENNETH L ASHLEY 11500 NE 150TH AVENUE RD 517 BAYSHORE DR 2755 TAYLOR RD FORT MC COY FL 321347219 AUBURNDALE FL 338235820 WINTER HAVEN FL 338801025 ARTHUR SLACK JAMES TRAYNOR KENNETH L ASHLEY 816 LA JOLLA AVE 1008 LA MESA LN 2755 TAYLOR RD SUN CITY CENTER FL 335735106 LADY LAKE FL 321595674 WINTER HAVEN FL 338801025 ARTHUR SLACK REV LIV TRUST ROBERT TYOE KENNETH BALDWIN 816 LA JOLLA AVE 4100 100TH AVE N 140 RIVIERA DUNES WAY APT 1101 SUN CITY CENTER FL 335735106 PINELLAS PARK FL 337823839 PALMETTO FL 342217118 WILLIAM CARROLL CHARLES BARRETT JOHN O EVERSON REV TRUST 3711 EDGEWATER DR 4593 ROUTE 6 17347 LAKE WORTH BLVD SEBRING FL 338722066 WELLSBORO PA 169018048 PORT CHARLOTTE FL 339482402 CLARENCE A & BARBARA A RAYMOND BAUMGARTNER LAWRENCE FRAKES CHIPMAN 2972 LAKE HURON LN 123 POMEROY DR 5285 N STATE RD TAVARES FL 327789111 CROSSVILLE TN 385586916 ORLEANS MI 488659723 MELVIN ROY & RUBY LUCILLE WILFRED P BECKER REV LIV TRUST MARY FULTON CLARK 4129 CENTER POINTE DR 4152 SMOKE SIGNAL 2287 LOWRY RD SARASOTA FL 342331633 SEBRING FL 338724500 THE VILLAGES FL 321627763 4817-7864-8726.6 20 Case 2:17-cv-00393-SCM Document 327-2 Filed 05/24/19 Page 122 of 204 PageID: 14562 PEDRO COLON KATHY BECKER-BUSH MARGARET GAITHER 4408 PLUMBAGO CT 100 CENTRAL AVE APT 813 136 DEER RUN LAKE DR SPRING HILL FL 346072439 SARASOTA FL 342365728 ORMOND BEACH FL 321748142 PEDRO COLON BENEDICT FAMILY TRUST GALLO LIVING TRUST 4408 PLUMBAGO CT 11001 SE 174TH LOOP 1667 PENNECAMP DR SPRING HILL FL 346072439 SUMMERFIELD FL 344918619 THE VILLAGES FL 321623212 BARBARA CRANDALL MARK BROWN PHILIP GERACI 850 OLD OAKS LN 113 SWAN HILL RD 6376 WILLOW LN LEESBURG FL 347488195 WHITNEY POINT NY 138622717 MARCY NY 134032519 CARY CUYLER ROLAND BROWN GLADYS RUTH GIBSON REV 24529 PARLANGE CT 17469 SE 110TH CT 1185 BRUNSON WAY LEESBURG FL 347487874 SUMMERFIELD FL 344918023 THE VILLAGES FL 321628724 IVAN D'SOUZA MICHAEL BURGER THE PAUL A. GIFFORD TRUST 2295 PAWLEYS ISLAND PATH BLDG 988 988 BLVD OF THE ARTS 709 HUDSON LN THE VILLAGES FL 321622315 APT 112 SARASOTA FL 342364833 LADY LAKE FL 321593065 LOLA DIXON JESSE CAMPBELL GEORGE D & MARYSUE GRUSE 3711 EDGEWATER DR 7939 W RIVERBEND RD 2203 PALMA SOLA BLVD SEBRING FL 338722066 CRYSTAL RIVER FL 344287158 BRADENTON FL 342095220 RAYMOND DUNCAN JESSE L CAMPBELL TTEE JAMES HALLORAN 10308 TOOKE LAKE BLVD 7939 W RIVERBEND RD 1918 INVERNESS GREENS DR WEEKI WACHEE FL 346133919 CRYSTAL RIVER FL 344287158 SUN CITY CTR FL 335737218 FRANK HARMON KENNETH LANG MICHAEL PONTLIANA 9218 SE 179TH WESLEY ST 1436 SOUTHSHORE DR 5950 ELDE RD THE VILLAGES FL 321620858 TAVARES FL 327784214 COTTON MN 557248108 4817-7864-8726.6 21 Case 2:17-cv-00393-SCM Document 327-2 Filed 05/24/19 Page 123 of 204 PageID: 14563 PHILIP HEAPS KAREN LARSEN JOEL PRITCHARD 2816 PIER DR 24508 PARLANGE CT 176 SUNSET DR RUSKIN FL 335706138 LEESBURG FL 347487874 LEESBURG FL 347489239 ROBERT HEDLUND H LINDSEY DIANE RICHARDS 805 50TH C AVE E 17096 SE 115TH TERRACE RD 18218 BAYWOOD FOREST DR BRADENTON FL 342034831 SUMMERFIELD FL 344917840 HUDSON FL 346675770 THE HENSLER REVOCABLE TRUST BERNARD LOBUE & THOMAS RICHARDS 312 STROLL LN 4336 HARNEY CT 18218 BAYWOOD FOREST DR SUN CITY CENTER FL 335736234 NEW PORT RICHEY FL 346551675 HUDSON FL 346675770 DOROTHY HOOKER GERALD LOOMER PAUL ROBIE 31811 HARRIS RD 2115 CALLAWAY DR 3300 HALEY POINTE RD TAVARES FL 327784627 THE VILLAGES FL 321624388 SAINT AUGUSTINE FL 320847000 JANET C HSU REV LIV TR N/A JOHN MACKO RICHARD RUTKOWSKI 17286 SE 85TH WILLOWICK CIR 2526 SAFFRON LN 1944 PEACHTREE AVE THE VILLAGES FL 321622822 THE VILLAGES FL 321625115 THE VILLAGES FL 321627559 ALANA B JENSEN REV TRUST N/A EDWIN B MCCLURE & ALBERT SAFFIRE 2966 BONIFAY PATH 1120 NORTH SHORE DR NE 1002 174 DOCKSIDE PKWY THE VILLAGES FL 321632202 ST PETERSBURG FL 337011451 EAST AMHERST NY 140511093 CHARLES JOHNSON JOHN MERHOTTEIN JAMES SCHERER 853 SCOTT ST 2451 FOSGATE PL 3051 LAS VEGAS BLVD THE VILLAGES FL 321626457 THE VILLAGES FL 321625048 SEBRING FL 338705011 WILLIAM KLEMM DONALD NASCIMBEN IRA FBO JERRY SCHWADERER 7608 PINEAPPLE LN 563 S HAMPTON BLVD 1071 DONEGAN RD 1544 PORT RICHEY FL 346684029 AUBURNDALE FL 33823 N/A N/ N/A LARGO FL 337712955 4817-7864-8726.6 22 Case 2:17-cv-00393-SCM Document 327-2 Filed 05/24/19 Page 124 of 204 PageID: 14564 WILLIAM C PATEL & HOMAI H RONALD KUYKENDALL SHARON SIKORA PATEL 17508 ALISARA TRL 1944 PEACHTREE AVE 4052 SAVAGE STATION CIRCLE HENRYVILLE IN 471268466 THE VILLAGES FL 321627559 NEW PRT RCHY FL 346536129 THELMA SLY ABRAHAM REVOCABLE TRUST RON BIDDLE TRUST 505 PANSY ST 16525 N 109TH PL 402 EAKIN DR NW DAVENPORT FL 338377133 SCOTTSDALE AZ 852559092 BAINBRIDGE ISLA WA 981101758 MARTIN STEFFENSON N. ACKERSON TRUST CHARLES E BLUE & JUDITH H 7116 FLORESTATE DR 3731 S AVENIDA DE ANGELES 2308 W CALLE CACILLO HUDSON FL 346671852 GOLD CANYON AZ 851182985 GREEN VALLEY AZ 856228058 GISELA SUTPHEN TTEE ARLYE ADAMS STEVEN BOLTE 2041 BEACH DR SE 111 MCCOSH DR 1797 W 28TH AVE ST PETERSBURG FL 337052839 CHESAPEAKE VA 233206015 APACHE JUNCTION AZ 851209500 CHARLES TAYLOR ALLEN LIVING TRUST THE CARROLL FAMILY TRUST 2140 COMMONWEALTH AVE 26 E BUTLER DR 5519 W BIG OAK ST AUBURN HILLS MI 483262415 PHOENIX AZ 850203522 PHOENIX AZ 850839360 SARINA URQUHART DAVIC & SUSAN AUDSLEY FAM BARBARA CLARK 1738 CAMBRIDGE CIR PO BOX 978 1330 E GEORGIA AVE REDLANDS CA 923744227 PINEDALE AZ 859340978 PHOENIX AZ 850143032 ROY VANNEST SUSAN AUDSLEY CAROLYN COSTA 429 PLEASANT VIEW RI RD PO BOX 978 265 S COLUMBIA DR RAVENSWOOD WV 26164 PINEDALE AZ 859340978 WOODBURN OR 970714417 ALFRED E & JOHANNA M WADE SHIRLEY A BARNES & CUSANO LIVING TRUST LIVING 1752 S HERITAGE 39825 S LAKE CREST DR 37345 STANFORD AVE MESA AZ 852105915 TUCSON AZ 857392450 ZEPHYRHILLS FL 335413642 4817-7864-8726.6 23 Case 2:17-cv-00393-SCM Document 327-2 Filed 05/24/19 Page 125 of 204 PageID: 14565 DONNA MARIE WILLARD THE BARRON FAM REV DANKER TRUST REVOCABLE 4102 E SUMMERHAVEN DR 14526 TRADING POST DR. 4720 WATER PARK DR UNIT Q PHOENIX AZ 850444678 SUN CITY WEST AZ 853755793 BELCAMP MD 210171498 RONALD WRIGHT CAROL BARRON MARY TIMOSZYK DAVEY 1738 CAMBRIDGE CIR 4102 E SUMMERHAVEN DR 5229 E HASHKNIFE RD REDLANDS CA 923744227 PHOENIX AZ 850444678 PHOENIX AZ 850547197 SYLVESTER YOUNCE ROBERT & ROSA BENNEN FAMILY AGATHA DAVIS 9541 SW 90TH ST 1130 E CANON DEL ORO LN 6291 S FOUR PEAKS PL OCALA FL 344817494 NOGALES AZ 856214701 CHANDLER AZ 852493943 MICHAEL D DAVIS & JULIE A DAVIS KARINA FIANDACA TERRI J GRANT & N/A 37279 S DESERT BLUFF DR 3036 N CALLE LADERA 6803 W CORRINE TUCSON AZ 857392197 TUCSON AZ 857153207 PEORIA AZ 853815329 THE DOUGLAS GRIMM &EVELYNE ROBERT W DAVIS TTEE THE FIORINO FAMILY TR GRIMM N/A 2395 S ORCHARD VIEW 62649 E AMBERWOOD DR 5257 W ARID CANYON DR GREEN VALLEY AZ 856141439 TUCSON AZ 857391842 MARANA AZ 856584065 ALLAN GRODSKY&HEDY BLAIR ESTRELLITA DE LA TORRE FRERICHS LIVING TRUST GRODSKY N/A 4102 E SUMMERHAVEN DR 1160 W CAMINO URBANO 38319 S. DESERT BLUFF DR. PHOENIX AZ 850444678 GREEN VALLEY AZ 856224803 TUCSON AZ 857392155 THOMAS J DIGREGORY TRUST BARBARA GEARHART ROBERT HABER 132 W PASEO DE CHINO 11080 PALEIS CIR 8613 E ORANGE BLOSSOM LN GREEN VALLEY AZ 856143756 CLIO MI 484202315 SCOTTSDALE AZ 852507428 THE DONALDSON FAMILY GEMELARO LIVING TRUST GORDON S HADEN TR N/A 36618 S DESERT SUN DR 11111 E PANTANO TRL 982 S FLORIDA SPRINGS CT TUCSON AZ 857393090 TUCSON AZ 857305668 GREEN VALLEY AZ 856146209 4817-7864-8726.6 24 Case 2:17-cv-00393-SCM Document 327-2 Filed 05/24/19 Page 126 of 204 PageID: 14566 CHARLES J DRISCOLL & JASON RD & KATHLEEN E GILLESPIE JOAN HALL 8009 E NICARAGUA DR 13601 N TAN TARA PT 1230 E SENECA PL TUCSON AZ 857303504 SUN CITY AZ 853512745 TUCSON AZ 857193641 PETER & SUSAN EISENKLAM TANDRA GOODWIN CHALMER HANS 1413 E LELAND ST 6070 W MILLAY ST 65656 E ROCKY TERRACE DR MESA AZ 852032092 TUCSON AZ 857438258 SADDLEBROOKE AZ 857391619 YVETTE EZO JOHN A & GERTRUDE B GOUDY STEPHEN HEATH 3407 W REDFIELD ROAD 9106 N 80TH LN 189 E VIA TERESITA PHOENIX AZ 850535642 PEORIA AZ 853454821 SAHUARITA AZ 856298946 ALESHA FIANDACA IRA FBO GARY W GRANT N/A HUDSON FAMILY TRUST 3036 N CALLE LADERA 6803 W CORRINE 1193 SAPPHIRE LN TUCSON AZ 857153207 PEORIA AZ 853815329 SHOW LOW AZ 859013919 KARMA FIANDACA LIVING TERRI GRANT HUTCHESON LIVING TRUST N/A 3036 N CALLE LADERA 6803 W CORRINE DR 18 N RIDGE RD TUCSON AZ 857153207 PEORIA AZ 853815329 MASHPEE MA 026492884 ROBERT J & HILDEGARD JAGEN KOSHEL FAM TR ELIZABETH MASON TRUST 37530 S OCOTILLO CANYON DR 5907 N PLACITA DEL CONDE 14518 TRADING POST DR SADDLEBROOKE AZ 857391881 TUCSON AZ 857184313 SUN CITY WEST AZ 853755793 WILLIAM JOHN JR& JEAN M JOHN RICHARD LANG THE MASON FAM TR 39923 S OLD ARENA DR 623 W CRENSHAW LN 5907 N PLACITA DEL CONDE TUCSON AZ 857395915 GREEN VALLEY AZ 856145744 TUCSON AZ 857184313 ROBERT VON JOHNSON TTEE N/A DAVID L LARSON SURVIVORS THE MICHAEL D. MCCREARY 26 E BUTLER DR 33 CAMELIA DR 5111 E ROCKRIDGE RD PHOENIX AZ 850203522 NAPA CA 945581306 PHOENIX AZ 850181932 4817-7864-8726.6 25 Case 2:17-cv-00393-SCM Document 327-2 Filed 05/24/19 Page 127 of 204 PageID: 14567 COREY JONES MARK LARSON THE MCCRILLIS FAMILY TRUST PO BOX 75157 7860 E BENSON HWY UNIT 100 14320 N RUSTY GATE TRL PHOENIX AZ 850871020 TUCSON AZ 857568314 ORO VALLEY AZ 857559345 ALBERTA JORDAN TRUST LETSCH LIVING TRUST MALCOLM & SYLVIA MCGREGOR 132 W PASEO DEL CHINO 37213 S DESERT SUN DR 574 W MICKELSON LN GREEN VALLEY AZ 856143756 TUCSON AZ 857393079 GREEN VALLEY AZ 856145747 DONALD C KESSLER & NORMA N/A LINK SURVIVORS TRUST THOMAS MCSHEA 37561 S DESERT SUN DR 2621 KINGSFORD LN 7521 E WAVERLY CIR TUCSON AZ 857393085 TROPHY CLUB TX 762623438 TUCSON AZ 857154229 THE JEANNETTE R MICHALSKI RICHARD KESTER MARKS LIVING TRUST TRUST PO BOX 810 11111 E PANTIANO TRAIL 3403 E MAIN ST #2106 PEARCE AZ 856250810 TUCSON AZ 857305668 MESA AZ 852138683 G WILLIAM KEYES REVOCABLE BEVERLY MARTIN-JONES THE MONTANO TRUST TRUST PO BOX 75157 14320 N RUSTY GATE TRL 145 GREAT FRONTIER DR PHOENIX AZ 850871020 ORO VALLEY AZ 857559345 GEORGETOWN TX 786334595 RICHARD KINKADE THE MASON FAM TR THE NUGENT LIV TR 1013 SHANNON CT 5907 N PLACITA DEL CONDE 1838 W CAMINO URBANO JANESVILLE WI 535463742 TUCSON AZ 857184313 GREEN VALLEY AZ 856224668 RUTH ELAINE KNAACK THE MCCONNER FAM TR KATHLEEN OCONNELL 1421 N BANK SWALLOW RD 5907 N PLACITA DEL CONDE 80 COLINAS GREEN VALLEY AZ 856146020 TUCSON AZ 857184313 SEDONA AZ 863519238 THOMAS J PAULIN TTEE THE SADLIER FAMILY REV TRUST THE SULLIVAN FAMILY TRUST 10541 N LAMBERT PL 578 S 232ND AVE 64563 E WIND RIDGE CIR ORO VALLEY AZ 857378576 BUCKEYE AZ 853263872 TUCSON AZ 857392108 4817-7864-8726.6 26 Case 2:17-cv-00393-SCM Document 327-2 Filed 05/24/19 Page 128 of 204 PageID: 14568 MARY PETERSON DUANE SARKELA MARC TAYLOR 230 W ROLLING HILLS ST 425 W CALLE DE ORO 2472 W CROCUS DR ORO VALLEY AZ 857046729 GREEN VALLEY AZ 856143205 PHOENIX AZ 850235937 REAGOR FAMILY TRUST NESTER SHAY NATASHA L THOMPSON LIV TRUST 439 S ROSEMONT 6305 N 34TH AVE 4181 W KENT DR MESA AZ 852062140 PHOENIX AZ 850171404 CHANDLER AZ 852267215 ARTHUR REYES STANLEY SPIELBUSCH CARL AMES THOMPSON SEPARATE 15223 E REDROCK DR 3054 N 159TH DR 5635 E LINCOLN DR #11 FOUNTAIN HLS AZ 852685814 GOODYEAR AZ 853956427 PARADISE VLY AZ 852534121 SHELLY RICHMAN SPIELBUSCH FAMILY REVOCABLE JUDITH G TUGGLE REV TR 3023 GREENWICH ST 3054 N 159TH DR 683 CHIVE DR CARLSBAD CA 920107030 GOODYEAR AZ 853956427 PRESCOTT AZ 863053890 MARGARET RICKETTS EDWARD SPOHN ULOTH LIVING TRUST 1171 E CAMINO DIESTRO 2615 E MAXINE PL 1601 MCDOWELL RD ORO VALLEY AZ 857047905 VAIL AZ 856419623 EVANSVILLE IN 477125400 RICHARD RICKETTS CHERYL STAHL RITA A WALDEN REV TR 1171 E CAMINO DIESTRO 5223 E HERRERA DR 635 S PARK CENTRE AVE APT 1322 ORO VALLEY AZ 857047905 PHOENIX AZ 850547183 GREEN VALLEY AZ 856146278 VICTOR W & CONNIE M WESTLUND RIDEOUT REV LIVING TRUST STAHL FAMILY LIVING TRUST REV 19431 N PONDEROSA CIR 5223 E HERRERA DR 5505 E MCLELLAN RD #62 SUN CITY AZ 853731209 PHOENIX AZ 850547183 MESA AZ 852053405 ROBINSON LIVING TRUST EUGENE STEINER WIETHOLTER FAMILY TRUST 9544 W RUNNING DEER TRL 23 MASON ADDITION ST 842 E STONEWOOD DR PEORIA AZ 853838753 BISBEE AZ 856031143 CASA GRANDE AZ 851221757 4817-7864-8726.6 27 Case 2:17-cv-00393-SCM Document 327-2 Filed 05/24/19 Page 129 of 204 PageID: 14569 DIANE ROBINSON SUAREZ FAMILY TRUST THE WISECARVER FAM TRUST PO BOX 1859 74 DAVILA CIR 5909 S MEADOW HILLS LOOP WICKENBURG AZ 853581859 TUCSON AZ 857452919 GREEN VALLEY AZ 856226331 JOAN BANTA CASSELMAN FAMILY TRUST JOHN C DRAKE & MARIA L DRAKE 2623 COLLEGE HEIGHTS RD 8013 BOCA CIEGA DR 9618 W HIDDEN VALLEY CIR N PRESCOTT AZ 863014186 ST PETE BEACH FL 337061638 SUN CITY AZ 853511319 DAVID BECKER CHAPPELL REV LIV TRUST DUNNING LIVING TRUST 2549 FOX RUN LN 13106 W BALLAD DR 41229 N RIVER BEND RD BULLHEAD CITY AZ 864428676 SUN CITY WEST AZ 853751854 ANTHEM AZ 850865802 STEVEN BRIESKE GARY L CHILDRESS & DONALD R & SHARON E EDMISTON 4667 N AGUA FRIA DR 934 CHINQUAPIN PL 2862 OSBORN DR APT A PRESCOTT VALLEY AZ 863145147 HOUSTON TX 770941169 LK HAVASU CTY AZ 864066600 CRAIG & SANDRA BROWN LIV DAVID CHRISTOFF MICHAEL ENGLISH 13240 N IRON HAWK DR 50 PINON CT 4313 MYRTLE BEACH DR PRESCOTT AZ 863051581 SEDONA AZ 863366637 AUSTIN TX 787386534 THE WILLIAM K& DEBRA G CHARLES J BURCZYK & CLARISSA J CLINE TR ETHERIDGE 11611 W DONGES BAY RD 7501 E THOMPSON PEAK PKWY UNIT 13019 W DESERT GLEN DR MEQUON WI 530973309 152 SCOTTSDALE AZ 852554531 SUN CITY WEST AZ 853754826 DONALD E FOGG REVOCABLE LINDA LOUISE BUTLER C AND G CONSULTANTS INC. TRUST 938 PINON OAK DR 2220 FREMONT DR 6151 S MARION WAY PRESCOTT AZ 863053821 LK HAVASU CTY AZ 864068315 CENTENNIAL CO 801212619 MARTHA FOGG REV INTERVIVOS GREGORY C BYERS REV NATANAEL CORTES TRUST 938 PINON OAK DR 14045 N SAHARA DR 6151 S MARION WAY PRESCOTT AZ 863053821 SUN CITY AZ 853512942 CENTENNIAL CO 801212619 4817-7864-8726.6 28 Case 2:17-cv-00393-SCM Document 327-2 Filed 05/24/19 Page 130 of 204 PageID: 14570 THE CARD FAMILY REVOCABLE DANNER LIVING TR K DIANE FUERST PO BOX 466 PO BOX 1015 2396 E PAWNEE TRL LK HAVASU CTY AZ 864050466 LAKE HAVASU CIT AZ 864051015 FORT MOHAVE AZ 864267031 SUSAN CASE THE DAVID J DAVIS TRUST THE GIANFORTE REV FAMILY 2516 HUNTINGTON LN 9201 W HIDDEN VALLEY LN 1250 PRINCESS DR REDONDO BEACH CA 902784534 SUN CITY AZ 853511745 LAKE HAVASU CIT AZ 864067909 ARTHUR H & MARY GILLETT THOMAS J CASE & THE DOTSON FAMILY TRUST FAMILY PO BOX 171 986 BRIDGEWATER DR 13019 W DESERT GLEN DR OLYMPIA WA 985070171 PRESCOTT AZ 863016677 SUN CITY WEST AZ 853754826 GONZALEZ LIVING TRUST SANDRA HOBBS ROBERT R KRAUSE & 688 ACOMA BLVD SOUTH 2014 E WAGONER RD PO BOX 1011 LAKE HAVASU CIT AZ 864067715 PHOENIX AZ 850221433 BULLHEAD CITY AZ 864301011 JAMES GRAIF HOLMES FAMILY TRUST ZONNIE KRAUSE 1319 S MONTE TESORO DR 3118 LEES AVE PO BOX 1011 COTTONWOOD AZ 863264750 LONG BEACH CA 908084217 BULLHEAD CITY AZ 864301011 EDA LEHMAN, SANDRA KREITNER & FBO THE GROVES REV TR JOSEPH V HUJBER ATTN EFI KREITNER 1430 7157 W AVENUE L6 2263 DAYTONA AVE BROADWAY STE 1105 LANCASTER CA 935364576 LAKE HAVASU CIT AZ 864036849 NEW YORK NY 100183394 HEINZ W & PATRICIA C HAENISCH ALFRED S HUK REVOCABLE LIVING WILLIAM LOSASSO 100 PINE KNOLLS DR 13507 W ROBIN LN 2396 E PAWNEE TRL SEDONA AZ 863366521 SUN CITY WEST AZ 853752033 FORT MOHAVE AZ 864267031 DONALD J & RITA M MACKEY LIV HALL FAMILY TRUST EMIL IHRIG TR 8 WINEGLASS DR 12436 W FETLOCK TRL 5824 BASIL LN PRESCOTT AZ 863016157 PEORIA AZ 853832577 PRESCOTT AZ 863053857 4817-7864-8726.6 29 Case 2:17-cv-00393-SCM Document 327-2 Filed 05/24/19 Page 131 of 204 PageID: 14571 THE STEVEN P & MARY K HARBECK DONNA KAMEN ROBIN MARTIN 1108 N BUENA VIS W 20 ALYSSUM CT 1152 PELICAN DR DEWEY AZ 863275503 RENO NV 895118137 FRISCO TX 750331686 YOUNG HASKETT THE DONALD P KELLEY LIV TRUST THE LEO & JOAN MASSICOTTE 584 YAVAPAI HILLS DR 3425 CLEARWATER DR 12200 E STATE ROUTE 69 LOT 372 PRESCOTT AZ 863015784 PRESCOTT AZ 863057191 DEWEY AZ 863274530 JENNIFER HAWES BERNARD KENNEDY MICHAEL P MATTERA TTEE 3043 S RAGEN DR 11647 CATCLAW CT 3575 N MOORPARK RD APT B8 YUMA AZ 853655115 SURPRISE AZ 853782547 THOUSAND OAKS CA 913602699 RALPH J &JEAN HENNESSY AKA THE KIEFER FAMILY TRUST THE MAZZELLA FAMILY LIVING DORIS 5821 SYMPHONY DR 1442 MEADOWRIDGE RD 10062 W PALMER DR PRESCOTT AZ 863053853 PRESCOTT AZ 863055245 SUN CITY AZ 853513919 MAX G&ALETA L MCCABE REV JOAN E HESLOP & ALVIN & SYLVIA KOSMALA TRUST TRUST 1751 N 300 W 4432 HORNET DR 9633 W KIMBERLY WAY CENTERVILLE UT 840143132 PRESCOTT AZ 863016720 PEORIA AZ 853822618 ALETA MCCABE FLOYD DALE NEUMANN & RANDALL PERIN 9633 W KIMBERLY WAY 4050 N SAGEBRUSH CIRC 1642 MCCULLOCK BLVD N PMB #154 PEORIA AZ 853822618 PRESCOTT VLY AZ 863147622 LAKE HAVASU CIT AZ 864030958 THE GERALD F MCNALLY AND TERRY EUGENE NEWMAN & DAVID PHILLIPS FRANCES 3670 KICKING HORSE DR 319 BUCKINGHAM PL 7 WALKING DIAMOND DR LAKE HAVASU CIT AZ 864042213 PRESCOTT AZ 863035836 PRESCOTT AZ 863016160 MICHAEL D & MARGARET A MECCA DAVID NOEHRING KATHRYN PHILLIPS 10311 W. GULF HILLS DR. 8743 W BETTY ELYSE LN 319 BUCKINGHAM PL SUN CITY AZ 853511616 PEORIA AZ 853823782 PRESCOTT AZ 863035836 4817-7864-8726.6 30 Case 2:17-cv-00393-SCM Document 327-2 Filed 05/24/19 Page 132 of 204 PageID: 14572 ROBERT MELANG RICHARD D OBITZ SURVIVORS THE PHILLIPS LIVING TRUST 10534 W PALMERAS DR 15609 GULF HILLS CT 319 BUCKINGHAM PL SUN CITY AZ 853731940 SUN CITY AZ 853511212 PRESCOTT AZ 863035836 GEOFFREY MERRILL HARRY & SHARON OFFERMAN WILLA PRAZAK-PABST 26498 N 84TH DR 1609 W DALTON CIR PO BOX 1812 PEORIA AZ 853833651 PAYSON AZ 855413519 SUN CITY AZ 853721812 STEPHEN MEYER THE PABST FAMILY TRUST JERRY QUOLAS 3413 ESTRELLA DR 9518 W GREENHURST DR 7470 E PLATEAU RIDGE RD PASCO WA 993015137 SUN CITY AZ 853512025 PRESCOTT VLY AZ 863154580 KEITH MILLER GEORGE PANKER GARY LEE RAMSEY TTEE 23919 W PINNACLE VISTA LN 325 NORTH ST 200 BRIDLE WAY UNIT 233 WITTMANN AZ 853615602 SEQUIM WA 983828667 YAKIMA WA 989017983 MOMENT ENTERPRISES LP PATRICIA PANKER MICHEL L RATY & 402 ACACIA DR 325 NORTH ST 1062 VERDE SANTA FE PKWY SEDONA AZ 863366965 SEQUIM WA 983828667 CORNVILLE AZ 863254940 ELM CHILDREN'S TRUST ANNE ELLEN PATTEN DOROTHY REAUME 1988 S ARROWHEAD LN 11647 W CATCLAW CT 55 CATHEDRAL ROCK DR UNIT 16 COTTONWOOD AZ 863267094 SURPRISE AZ 853782547 SEDONA AZ 863518633 THE NELSSEN FAMILY REVOCABLE THE GLORIA M PEAK LIVING TRUST ROGER ROBINSON 1814 E BELL RD APT 1009 11728 E LONGHORN DR 1308 N STOCKTON HILL RD STE A371 PHOENIX AZ 850222862 DEWEY AZ 863275901 KINGMAN AZ 864015139 SUSAN ROGERS THE RALPH & ANNA SOBBA THOMPSON FAMILY TRUST 7337 N BRILLIANT SKY WAY 1545 E EL RODEO RD # 137 PO BOX 1055 PRESCOTT VALLEY AZ 863159054 FORT MOHAVE AZ 864268309 CHINO VALLEY AZ 863231055 4817-7864-8726.6 31 Case 2:17-cv-00393-SCM Document 327-2 Filed 05/24/19 Page 133 of 204 PageID: 14573 KENNETH ROGERS JOHN A STARY TTEE H TIPPETT 7337 N BRILLIANT SKY WAY PO BOX 4074 3850 N STATE ROUTE 89 UNIT 115 PRESCOTT VLY AZ 863159054 CAMP VERDE AZ 863224074 PRESCOTT AZ 863018434 ROTHSTEIN FAM REV TRUST THE RICHARD GLENN STEVENS BOULET/VAN DEWEGHE TRUST 1112 N RUSTY NAIL RD 10626 W EMERALD PT 11557 W SAND TROUT CT PRESCOTT VALLEY AZ 863141478 SUN CITY AZ 853512742 SURPRISE AZ 853782665 SALLY ELIZABETH STOOTHOFF GERALD J SHAYNE TTEE THE VAN HORN FAMILY TRUST LIVING 1636 GRANITE SPRINGS DR 4228 HIGHLANDER AVE 1426 KWANA CT PRESCOTT AZ 863051104 LAKE HAVASU CIT AZ 864068029 PRESCOTT AZ 863014447 STAN SHEPHERD SALLY STOOTHOFF LARRY VERHULST PO BOX 26583 1426 KWANA CT PO BOX 26557 PHOENIX AZ 850686583 PRESCOTT AZ 863014447 PRESCOTT VALLEY AZ 863126557 WILLIAM D.& ROSALIE WAGNER JUANITA SHOTLIFF TR TAN SKY MANAGEMENT CO LLC TRUST 13218 CASTLE ROCK DR 12975 VIA LATINA 4420 S. KATHY RD SUN CITY WEST AZ 853754804 DEL MAR CA 920143731 FLAGSTAFF AZ 860059339 RONALD C TEETERS&VICKY L THE SIPE FAMILY TRUST PAUL WALTHER TEETERS 19418 N SIGNAL BUTTE CIR 4985 N HIGHWAY 95 SPACE#3 1901 N ARENA DEL LOMA RD SUN CITY AZ 853731218 PARKER AZ 853449623 CAMP VERDE AZ 863227519 STANLEY J SKIBA & THE SARGENT CASTLE TRUST RICHARD WASMER 2811 TONTO DR 245 COUGAR DR 530 S BRADSHAW DR LK HAVASU CTY AZ 864068554 SEDONA AZ 863367087 PRESCOTT AZ 863035808 CLARE SMALL LIVING TRUST THE LC & JD TEETS LIVING TRUST ROXANNE WATKINS 402 ACACIA DR 451 W SALT MINE RD 18860 N 87TH DR SEDONA AZ 863366965 CAMP VERDE AZ 863227031 PEORIA AZ 853828774 4817-7864-8726.6 32 Case 2:17-cv-00393-SCM Document 327-2 Filed 05/24/19 Page 134 of 204 PageID: 14574 DONALD E & MARY JO SMALL LIV GEORGIA THOMAS HERTA A WEBER 1988 TRUST 2381 SEMINOLE DR 10189 E DURHAM RD 17300 N 88TH AVE APT 244 BULLHEAD CITY AZ 864427451 DEWEY AZ 863275229 PEORIA AZ 853824740 THE LOWELL M WIGGINS REV LIV EUGENE YOUG JANA LONG 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WILSON 445 ROSE ST NE 1150 8TH AVE SW UNIT 205 111 PINEHURST LOOP SALEM OR 973014471 LARGO FL 337703174 SEQUIM WA 983823657 EVE L LENFESTEY TTEE BETTY J VOBRAK TR THE COLBORN REV LIV TRUST 1212 E LAKE CANNON DR NW PO BOX 54196 1127 BROKEN WAGON TRAIL WINTER HAVEN FL 338812332 JACKSONVILLE FL 322454196 DEWEY AZ 863275422 686 WARREN AVE LTD EVE LENFESTEY PARTNERSHIP DOUGLAS COMBS 1212 E LAKE CANNON DR NW ATTN JOHN OR LINDA SHEBEK 686 1879 E BAKER ST WINTER HAVEN FL 338812332 COPPER BASIN RD PRESCOTT AZ PRESCOTT VALLEY AZ 863142020 86303-4604 N/A N/ N/A 4817-7864-8726.6 48 Case 2:17-cv-00393-SCM Document 327-2 Filed 05/24/19 Page 150 of 204 PageID: 14590 ERNIE METHENY WANDA ADAMS SHERYL CURREY 2541 S CRYSTAL LAKE DR 751 EMPRESS DR 2085 MIMOSA DR AVON PARK FL 338258694 LK HAVASU CTY AZ 864033211 LK HAVASU CTY AZ 864035715 METHENY REVOCABLE LIVING CARRIE F. 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PRESCOTT AZ 863036752 PATRICIA D MOE TTEE CONNIE PARKIN ERNEST RICHARDSON & PO BOX 12019 9623 W CIELO GRANDE W6217 LONE OAK DR PRESCOTT AZ 863042019 PEORIA AZ 853831151 MINONG WI 548599217 IRA FBO PATRICIA D MOE PATRICIA PATTEE SCOTT RICHARDSON PO BOX 12019 4162 S PHEASANT RUN DR W 6217 LONE OAK DR PRESCOTT AZ 863042019 FLAGSTAFF AZ 860057073 MINONG WI 548599217 THE MORSE LIVING HOWARD W PETERSON TTEE ERNEST RICHARDSON & 4600 N VERDE VISTA DR 19303 N NEW TRADITION RD APT 361 W6217 LONE OAK DR PRESCOTT VLY AZ 863145217 SUN CITY WEST AZ 853753860 MINONG WI 548599217 RODGERS FAMILY TRUST NORMAN L TAYLOR & LIANE C VESELL 2080 W KATAHN DR 1341 N BLUE STAR RD 100 NW 69TH CIRCLE 13-6 PRESCOTT AZ 863053972 CHINO VALLEY AZ 863239190 BOCA RATON, FL 33487 4817-7864-8726.6 51 Case 2:17-cv-00393-SCM Document 327-2 Filed 05/24/19 Page 153 of 204 PageID: 14593 ARTHUR D KERN & MARILYN JANE KATIE SCHAEFFER DANIEL WATSON KERN TTEES PO BOX 2708 9020 E BIGHORN DR UTD 11/14/2000 FBO ARTHUR D CHINO VALLEY 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C/O KATHLEEN PORRO (POA) 766 SHREWSBURY AVE SPRING LAKE, NJ 07762 894 EAST GLEN AVE TINTON FALLS, NJ 07724 RIDGEWOOD, NJ 07450 DONALD S RADCLIFFE & BEVERLY BRYANT STUART SHAYMAN KATHLEEN RADCLIFFE JT TEN 1838 COUNTY RD 690 NORTH 840 NORTHWOODS DR 239 LONG HILL RD FAIRFIELD IL 62837 DEERFIELD, IL 60015 LITTLE FALLS, NJ 07424 4817-7864-8726.6 55 Case 2:17-cv-00393-SCM Document 327-2 Filed 05/24/19 Page 157 of 204 PageID: 14597 STEPHEN BECKER BENE TO JEROME H PETERSON CAROL LEE RHODES CHARLES BECKER (DECD) 1619 BLAKE AVE 11456 QUAIL VILLAGE WAY WEDBUSH SECURITIES INC CTDN SOUTH MILWAUKEE, WI 53172 NAPLES, FL 34119 45 VAN BUREN AVE WESTWOOD, NJ 07675 PHILLIP M BEARD TTEE JULIUS SASSENRATH & JONATHAN E STONE & UTD 12/19/1998 FBO DORIS SASSENRATH CO TTEES JANET T STONE JT TEN PHILLIP MICHAEL BEARD LIV TR TD 2/20/91 FBO DORIS E& JULIUS 12 OVERBROOK FARM RD 7321 23RD AVE 8174 SHADOWOOD CT BLOOMFIELD, CT 06002 JENISON, MI 49428 GRANITE BAY, CA 95746 PAUL J ROSE TTEE CHARLES A SCHMITZ & ANTHONY A MEOLA & UTD 10/13/14 FBO 13672 HARMONY WAY 37 SUMMERWINDS DR MAXINE W ROSE REV LIV TRUST APPLE VALLEY, MN 55124 LAKEWOOD, NJ 08701 2213 LEMANS DRIVE CARROLLTON, TX 75006 WILLIAM B TELFAIR JOSEPH VERDERROSA & SCOTT T DIETER WEDBUSH SECURITIES INC CTDN MARY ANN VERDERROSA TIC 211 MELBOURNE AVE IRA ROLLOVER 08/02/13 54 11TH ST MAMARONECK, NY 10543 307 RUDDER RD TOMS RIVER, NJ 08753 SHEPHERDSTOWN, WV 25443 MARLYN W RINEHART TTEE CHARLENA EMBRY UTD 00/00/00 ROBERT L BOXER & 159 GOLD COVE LANE U/W TRUST AUTW 78 PAVILION PARK JOHNS CREEK, GA 30097 1306 S CARLE AVE ROCHESTER, NY 14620 URBANA, IL 61801 SELENE VON BARTHELD GEORGE R KERN TTEE WEDBUSH SECURITIES INC CTDN UTD 12/30/1991 FBO FLYING ARROW ESTATE IRA CONTRIBUTORY 5/12/14 GEORGE R KERN REV TRUST PO BOX 246 C/O JONATHAN VON BARTHELD 5657 BENEVA WOODS CIR POTEET, TX 78065 4 MARIA LANE SARASOTA, FL 34233 KINNELON, NJ 07405 ROBERT L MUSSO & NANCY J PLATT STEPHEN POLAKOFF & KYLE J STROH SUCC TTEES S 5027 HILLCREST LANE 9 HOOPER AVE UTD 2/11/13 FBO VERADALE, WA 99037 ATLANTIC HIGHLAN, NJ 07716 2870 SNOUFFER RD COLUMBUS, OH 43235 JUNE A YOUNG EXEC ANDREW BEARD JOEL LIEBERMAN & FOR THE ESTATE OF POA: KENNETH BEARD AMY LIBERMAN JTWROS JAMES J YOUNG 222 CITRUS AVENUE 10130 DOVER CARRIAGE LN 1610 ANCHOR DR 7321 23RD AVE LAKE WORTH, FL 33449 SAN ANTONIO, TX 78213 JENISON, MI 49428 4817-7864-8726.6 56 Case 2:17-cv-00393-SCM Document 327-2 Filed 05/24/19 Page 158 of 204 PageID: 14598 KENNETH E BEARD, POA & NORMAN BRYANT SHARON COPPOLA & CAROL BEARD TTEES 1838 COUNTY RD 690 307 TUTTLE AVE UTD 1/5/1977 FBO NORTH FAIRFIELD IL 62837 SPRING LAKE, NJ 07762 7321 23RD AVE JENISON, MI 49428 CRAIG DIETER DAVID VANBRUNT PRICE & VIRGINIA GARVINE WEDBUSH SECURITIES INC CTDN KAREN OLIVOLA PRICE JTWROS 427 BAYBERRY LN IRA CONTRIBUTORY 8/15/14 20 SILVER SPUR DR WEST GROVE, PA 19390 38 LOCUST ROAD DENISON, TX 75021 PLEASANVILLE, NY 10570 RICHARD A BEARD TTEE ALISHA JOHRI UTD 12/28/1998 KEVIN CONLIN 20 WOODMAN PLACE RICHARD BEARD LIVING TRUST 17719 NORTH COUNTY ROAD 100E ABERDEEN, NJ 07747 7321 23RD AVE ARTHUR, IL 61911 JENISON, MI 49428 GEORGE KERN CTDN BURN ROSE LLC A/C 1 PAUL ROSE & FBO ISABELLA J SWAIM ATTN DR B MISKIV GAYLE ROSE JTWROS UNDER FL UTMA 1318 ISLAND GREEN STREET 2213 LEMANS DR 5657 BENEVA WOODS CIR CHAMPIONSGATE, FL 33896 CARROLLTON, TX 75006 SARASOTA, FL 34233 DR JOSEPH A DONADIO & RUSSELL KOUGH TTEE RITA KAYE MARA T DONADIO CO-TTEES UTD 08/13/1998 FBO 1935 FAIRVIEW AVE UTD 07/19/1996 FBO DIANE W KOUGH LIVING TRUST RIVERSIDE, CA 92506 700 LA PENNISULA BLVD UNIT 205 3231 YORKTOWN ST NAPLES, FL 34113 SARASOTA, FL 34231 MARVIN L MASON LISA L KEEL & DANA S SHELTON JTWOS BRADLEY MASON III ROBERT L TAVERONI JTWROS 416 SHANDON CT 9471 PARKSIDE DRIVE 517 BORRIE AVE 1120 KING AVE CENTERVILLE, OH 45458 BRIELLE, NJ 08730 COLUMBUS, OH 43212 RUSSELL KOUGH TTEE SHARON MASON-POTENZA WILMETTE CHURCH OF CHRIST UTD 08/13/1998 FBO 301 KIMBARY DR 2126 WILMETTE AVE DIANE W KOUGH LIVING TRUST DAYTON OH 45458 WILMETTE, IL 60091 3231 YORKTOWN ST 301 KIMBARY DR SARASOTA, FL 34231 DAYTON, OH 45458 MARVIN MASON WALLACE A PRICE & 4810 SMOKETALK LANE ESTELLA STEWART KATHLEEN PRICE JTWROS WESTERVILLE OH 43081 3218 BOURDEAUX DRIVE 68360 OLOHIO ST 1120 KING AVE CORPUS CHRISTI, TX 78414 WAIALUA, HI 96791 COLUMBUS, OH 43212 4817-7864-8726.6 57 Case 2:17-cv-00393-SCM Document 327-2 Filed 05/24/19 Page 159 of 204 PageID: 14599 Jerry L. Watts c/o Page, Scrantom, Sprouse, ELLIOT S VESELL HILARY P VESELL 1111 Bay Avenue 3rd Floor 768 LEXINGTON AVE 15 BROADVIEW ST Columbus, GA 31901 HERSHEY, PA 17033 HERSHEY, PA 17033 SDH Design, LLC Susan Edwards Sharon Nunamaker Attn: Sharon Nunamaker 850 Carroll Rd. 822 Currytown Road 822 Currytown Road Latta, South Carolina 29565 North Augusta, SC 29860 North Augusta, SC 29860 Lee Attix Greenwood Dwayne Edwards Neal Jacobson/David Henry Tutor Joseph Schramm, III FisherBroyles LLP 411 Georgia Avenue Securities & Exchange Commiss 100 Overlook Center, 2nd Floor North Augusta, SC 29841 200 Vesey Street, Suite 400 Princeton, New Jersey 08540 [email protected] New York, NY 10281 George M. Taylor, III Marc P. Solomon Richard J. Brockman Burr & Forman LLP Burr & Forman LLP Burr & Forman LLP 420 North 20th Street 420 North 20th Street 420 North 20th Street, Suite 3400 Suite 3400 Suite 3400 Birmingham, AL 35203 Birmingham, Alabama 35203 Birmingham, Alabama 35203 Development Authority of Columbus, GA Nora O’Neill Thomas Longino c/o J. Edward Sprouse, Esq. Frederic Dorwart Lawyers Longino Public Finance Page, Scrantom, Sprouse, Tucker & Ford 124 East Fourth Street 2917 Central Avenue, Suite 205 1111 Bay Avenue, Third Floor Tulsa, Oklahoma 74103 Birmingham, Alabama 35209 Columbus, Georgia 31901 Development Authority of Columbus, GA- Tax Commissioner, Strickland Attn: Chairman Muscogee County 6830 Columbus River Road 1200 Sixth Avenue 100 10th Street Columbus, Georgia 31904 Columbus, Georgia 31902 Columbus, Georgia 31901 HD Supply Facilities Thyssenkrup Elevator Corp. Matrixcare Maintenance P.O. Box 933004 10900 Hampshire Avenue S Ste. 100 PO Box 509058 Atlanta, Georgia 31193-3004 Bloomington, MN 55438 San Diego, CA 92150 Encompass Group LLC, Brame Specialty Co., Inc. See The Matrix Inc. Dept. 40254 PO Box 271 41 Odell School Road 615 Macon Street Durham, NC 27702 Concord, North Carolina 28027 McDonough, GA 30253 4817-7864-8726.6 58 Case 2:17-cv-00393-SCM Document 327-2 Filed 05/24/19 Page 160 of 204 PageID: 14600 Illustratus Staples Advantage Sysco Atlanta, LLC 8455 Lenexa Drive Dept. ATL PO Box 405386 2225 Riverdale Road Overland Park, K 66214 Atlanta, Georgia 30384-5386 College Park, Georgia 30337 Fun Express LLC Medical Supply Solutions S&S Worldwide, Inc. PO Box 14463 PO Box 1286 PO Box 210 Des Moines, Iowa 50306 Hickory, NC 28603 Hartford, CT 06141-0210 Berkshire Hathaway Smartlinx Solutions, LLC Imaging Resource Group Homestate Companies 333 Thornall Street PO Box 112 1314 Douglas Street Edison, NJ 08837 Drexel, NC 28619 Omaha, Nebraska 68102 One Source Rentokil North America, Inc. Ecolab Communications PO Box 472127 PO Box 32027 1655 E Arlington Blvd. Charlotte, NC 28247-2127 New York, NY 10087-2027 Greenville, NC 27858 HOB Vikus Corporation Grove Menus Attn: Bryan W. Starnes 2255 Center Street 16404 NE 1274th Street PO Box 2568 Chattanooga, TM 37421 Kearney, MO 64060 Hickory, NC 28603 Liberty Utilities Georgia Columbus Water Works MediaCom 75 Remittance Drive PO Box 1600 498 Fashion Ave. Ste. 1918 Columbus, GA 31901 New York, NY 10018 Columbus, Georgia 31901 Aloha Lawn Care & Knox Pest Control Cook’s Pest Control Landscaping 1570 Eastern Blvd. PO Box 3307 8009 Glen Valley Drive Montgomery, AL 36117 Auburn, Alabama 36831 Midland, Georgia 31820 Carr Riggs & Ingram Travers W. Paine III, P.C. Jackson Heating & Air 4360 Chamblee Dunwoody Rd. Suite 420 560 Ninth Street 1411 Whitesville Street Atlanta, Georgia 30341 Augusta, Georgia 30901 LaGrange, GA 30240 4817-7864-8726.6 59 Case 2:17-cv-00393-SCM Document 327-2 Filed 05/24/19 Page 161 of 204 PageID: 14601 Wahl Telecommunications The Plumbing & Rooter Employment Publishing Systems Company, LLC 175 Strafford Ave., Ste. 1 1196 Lakewood Drive SW 3155 Williams Rd. Wayne, PA 19087-3340 Social Circle, Georgia 30025 Columbus, GA 31909 River Mill Data Robert Cook Heat & Air Jordan Electric Company Management, LLC 4816 Drew Ave. PO Box 6218 PO Box 157 Columbus, Georgia 31904 Columbus, GA 31917 Columbus, Georgia 31902 Unity With Pam / G.W. Exterminating Pro-Tec Fire & Safety Move of God Ministries Company, Inc. 2330 Protec Way 308 Mallory Road 3908 Woodruff Rd. Logansville, Georgia 30052 Columbus, GA 31907 Columbus, GA 31904 Employment Screening Trib Publications, Inc. Fuller Quality Services, Inc. Services PO Box 426 PO Box 1281 2500 Southlake Park Manchester, GA 31816 Fortson, Georgia 31808 Birmingham, Alabama 35244 Amtrust North America, Preferred Carpet Care Burris Lawn Service, LLC Inc. 367 School Court 6195 Candlestick Loop PO Box 6939 Columbus, GA 31907 Columbus, GA 31909 Columbus, GA 31909 Georgia Department of Muscogee County Tax Direct Supply, Inc. Revenue Commissioner PO Box 88201 Columbus Regional Office 1501 13th Citizens Service Center 3111 Citizens Way Milwaukee, WI 53288 Street, Ste. A Columbus, Georgia 31901 Columbus, Georgia 31096 United States Attorney’s Office Muscogee County Tax United States Attorney’s Office Middle Middle District of Georgia Commissioner District of Georgia C.B. King United States Courthouse P.O. Box 1441 Post Office Box 1702 201 W. Broad Avenue, 2nd Floor Columbus, Georgia 31902-1340 Macon, Georgia 31202-1702 Albany, Georgia 31701 United States Attorney’s Office Edje Construction, Inc. Ledger-Enquirer Middle District of Georgia 2490 West Bridge Place NE P.O. Box 4168 Post Office Box 2568 Marietta, Georgia 30062 Macon, Georgia 31208-4168 Columbus, Georgia 31902-2568 4817-7864-8726.6 60 Case 2:17-cv-00393-SCM Document 327-2 Filed 05/24/19 Page 162 of 204 PageID: 14602 Finance Department Rachel R. Stern Douglas-Coffee County Industrial Columbus Consolidated Manning, Price & Stern Authority Government 7000 W. Palmetto Park Rd., Ste 502 114 North Peterson Avenue, Suite 205 P.O. Box 1340 Boca Raton, Florida 33433 Douglas, Georgia 31533 Columbus, GA 31902-1340 Douglas-Coffee County Industrial c/o Sidney L. Cottingham, Esq. Altus GTS Inc. Coffee County Magazine Cottingham & Porter, P.C. 2400 Veterans Memorial Blvd., Ste. 300 P.O. Box 55 319 East Ashley Street Kenner, Louisiana 70062 Glenville, Georgia 30427 Douglas, Georgia 31533-5301 Dade Paper Coffee Emergency Group CRH Industrial Medicine 600 Hartman Industrial P.O. Box 731587 205 Shirley Avenue Court SW, Ste #200 Dallas, Texas 75373-1587 Douglas, Georgia 31533 Austell, GA 30168 Georgia Automatic Sprinkler H&B Embroidery, Trophies Holt Ney Zatcoff Co. Inc. & More & Wasserman, LLP 1405 Harbin Circle 112 S. Madison Avenue 100 Galleria Pkwy. #1800 Valdosta, Georgia 31601 Douglas, Georgia 31533 Atlanta, Georgia 30339 Instructional Dietetic Matrixcare Patricia Breedlove Associates, Inc. P.O. Box 1414 80 Kermit Carter Road P.O. Box 796 Minneapolis, Minnesota 55480-1414 Hazlehurst, Georgia 31539 Vidalia, Georgia 30475 Scheer, Green & Burke Co. Performance Food Service Repasco L.P.A. P.O. Box 931533 P.O. Box 310 1 Seagale Suite 640 Atlanta, Georgia 31193-1533 Enigma, Georgia 31749 Toledo, Ohio 43604-1558 Shanda Henderson, Tax Commissioner Southland Fire Protection, LLC Workwise Prof Services Coffee County, Georgia 1631 U.S. Highway 84 W 1012 Ward Street Ext W County Court House Blackshear, Georgia 31516 Douglas, Georgia 31533 101 South Peterson Avenue Douglas, Georgia 31533 Georgia Department of United States Attorney’s Office Sidney L. Cottingham Revenue Northern District of Georgia 319 Ashley St. E Douglas Regional Office Richard B. Russell Federal Building Douglas, Georgia 31533-5301 1214 N. Peterson Ave #1 75 Ted Turner Dr. SW Suite 600 Douglas, Georgia 31533 Atlanta, GA 30303-3309 4817-7864-8726.6 61 Case 2:17-cv-00393-SCM Document 327-2 Filed 05/24/19 Page 163 of 204 PageID: 14603 Gordon Janson Evangelistic Gainesville and Hall Co Development Au City of Douglas Association, c/o Stewart, Melvin & Frost, LLP Attn: Charles Davis, Finance Dirc d/b/a Summers Landing Hunt Tower, Suite 600, 200 Main Street 224 E. Bryan Street 1360 West Gordon Street PO Box 3280 Douglas, Georgia 31533 Douglas, Georgia 31533 Gainesville, GA 30501/30503 Gainesville and Hall Co Development Aut Hall County Tax Commissioner c/o Treadwell Syfan, (Stewart, Mel) Hall County Government Center Hall County Tax Commissioner 200 Main Street Suite 600 2875 Browns Bridge Road PO Box 1579 P.O. Box 328 1st Floor Gainesville, Georgia 30503 Gainesville, GA 30501/30503 Gainesville, Georgia 30504 Jeremy S. Perry A & B Services A Place for Mom City of Gainesville, CFO d/b/a Paul Davis Restoration 701 5th Ave., Suite 3200 300 Henry Ward Way, Suite 103 4034 Enterprise Way, Suite 190 Seattle, Washington 98104 Gainesville, GA 30501 Flowery Branch, Georgia 30542 All-Star Fire LLC City of Gainesville Tax Office Food Fitness First, Inc. 3284 Medlock Bridge Rd. P.O. Box 2496 P.O. Box 980 Norcross, Georgia 30092 Gainesville, Georgia 30503 Vidalia, Georgia 30475 Flat Iron Capital Guardian Pharmacy Lint Security, Inc. 1700 Lincoln Street 1750 Enterprise Way, Suite 105 2490 Hilton Drive 12th Floor Marietta, Georgia 30067 Gainesville, Georgia 30501 Denver, CO 80203 Martin Piano Company Monster Pest Management Paul Davis Restoration of Lanier Isles 3029 Chestatee Rd. 1025 Old Roswell Rd Ste 206 1025 Old Roswell Rd., #206 Gainesville, Georgia 30506 Roswell, GA 30076 Roswell, Georgia 30076 PruittHealth Medical Supply PFG Miltons Pro-Tec Fire & Sprinkler, Inc. P.O. Box 934967 3500 Old Oakwood Rd. P.O. Box 934967 Atlanta, Georgia Oakwood, Georgia 31193-1533 Atlanta, Georgia 31193-4967 31193-4967 The Right Move Senior Resource and Senior TV Southeast Laser, Inc. Placement Service 975 E. Tallmadge Ave. 1635 Lakes Parkway, Suite D 7270 Hedgerose Drive Akron, Ohio 44310 Lawrenceville, Georgia 30043 Cumming, Georgia 30028 4817-7864-8726.6 62 Case 2:17-cv-00393-SCM Document 327-2 Filed 05/24/19 Page 164 of 204 PageID: 14604 Georgia Department of Revenue Bow-Mil Properties, LLC William A. C. Green Gainesville Regional Office 672 Lanier Park Drive 2320 Limestone Pkwy 528 Broad Street SE Gainesville, Georgia 30501 Gainesville, Georgia 30501 Gainesville, GA 30501-3728 Steven P. Gilliam, Esq. The Medical Clinic Board of Montgomery Jeff A. Lawson, MAI, SRA Smith, Gilliam, Williams & Miles, P.A. c/o John Scott Pierce, Esq. 4481 Walking Stick Lane 301 Green Street, NW Capell & Howard, P.C. Gainesville, Georgia 30506 200 Old Coca-Cola Building 150 South Perry Street Gainesville, Georgia 30501 Montgomery, AL 36104 John Scott Pierce, Esq. American Seniors Housing Charter Communications Capell & Howard, P.C. Association PO Box 742615 150 South Perry Street 5225 Wisconsin Ave NW Cincinnati, OH 45274-2615 Montgomery, Alabama 36104 Washington, DC 20015 Janet Buskey, Revenue Commissioner Finance Department Alabama Department of Montgomery County City of Montgomery Revenue P.O. Box 1667 P.O. Box 1111 50 N. Ripley Street Montgomery, Alabama Montgomery, Alabama 36101 Montgomery, AL 36104 36102-1667 United States Attorney's Office Advanced Solutions Inc., Advanced Solutions Inc., Middle District of Alabama d/b/a Protection 1 d/b/a Protection 1 131 Clayton Street P.O. Box 219044 448 St. Lukes Drive Montgomery, Alabama 36104 Kansas City, Missouri 64121-9044 Montgomery, Alabama 36117 Living Centers-East, Inc. Marcus Cable Associates, Thomas E. Kennedy Department of Labor c/o Mariner Health Care, Inc. 12405 Powerscourt Drive 649 Monroe Street One Ravinia Drive Suite 1500 St. Louis, Missouri 63131 Montgomery, Alabama 36131 Atlanta, Georgia 30346 The Medical Clinic Board of Opelika, AL State of Alabama Janet Buskey c/o John Scott Pierce, Esq. Department of Revenue Revenue Commissioner Capell & Howard, P.C. 50 North Ripley Street 101 S. Lawrence Street 150 South Perry Street Montgomery, Alabama 36132 Montgomery, AL 36104 Montgomery, AL 36104 Lee County Revenue Encompass Group LLC Commissioner City of Opelika Dept. 40254 Attn: Oline W. Price, ACTA 204 South 7th Street PO Box 740209 P.O. Box 999 Opelika, Alabama 36801 Atlanta, Georgia 30374 Opelika, Alabama 36803-0999 4817-7864-8726.6 63 Case 2:17-cv-00393-SCM Document 327-2 Filed 05/24/19 Page 165 of 204 PageID: 14605 First Uniform, Inc. First Fire Protection System, Inc. Medical Supply Solutions 3616 Latrobe Drive PO Box 10594 PO Box 1289 Charlotte, NC 28211 Raleigh, NC 27605 Hickory, NC 28603 One Source Communications Alagasco Opelika Power Services PO Box 8385 PO Box 2224 PO Box 2168 1655 East Arlington Blvd. Birmingham, AL 35246-0022 Opelika, AL 36803-2168 Greenville, NC 27858 PFG Milton’s - Performance Opelika Utilities Waste Management of AL - East Food Group PO Box 2587 PO Box 9001054 3501 Old Oakwood Road Opelika, AL 36803-2587 Louisville, KY 10290-1054 Oakwood, GA 30566-2802 Buford Nutritional Services US Foods IGH Health Services, LLC 32 Ring Around Road PO Box 405873 4101-C Wall Street Pike Road, AL 36064 Atlanta, Georgia 30384-5873 Montgomery, AL 36106 The Sherwin Williams Integracare Medical, Inc. River Region Heating & Air Company PO Box 610 PO Box 68088 2104 Frederick Road Alabaster, AL 35007 Prattville, AL 36068 Opelika, AL 36801 University ACE Hardware Legacy LTC Consulting Lea Brooke Lumpkin 2101 East University Drive PO Box 1957 515 Lee Road 777 Auburn, AL 36830 Alabaster, AL 35007 Valley, AL 36854 Greatfully Green Landscapes, James Jimmerson Weaver’s Pest Pros, LLC LLC 302 Overlook Drive PO Box 254 PO Box 146 Opelika, AL 36801 Opelika, AL 36803-0254 Auburn, AL 36831 Evans Ace Inc., Spartman, Inc. d/b/a Lindale Ace Hardware Klein Plumbing d/b/a May Refrigeration Attn: Gary Evans 3409 Skyway Drive 700 Walker Street 3116 Maple Road Auburn, AL 36830 Opelika, AL 36801 Lindale, Georgia 30147 [email protected] 4817-7864-8726.6 64 Case 2:17-cv-00393-SCM Document 327-2 Filed 05/24/19 Page 166 of 204 PageID: 14606 Cave Spring Housing Ascentium Capital LLC Ascentium Capital LLC Development Corporation c/o Kevin A. Stine 23970 Hwy 59 N 121 Fincher Street 3414 Peachtree Rd., NE, Suite 1600 Kingwood, Texas 77339-1535 Cave Spring, Georgia 30124 Atlanta, Georgia 30326 Attn: Ms. Diane Duffey J. Anderson Davis, Esq. Brinson Askew Berry Seigler Georgia Power Stellar Private Cable Systems/SeniorTV Richardson & Davis, LLP 96 Annex 975 E. Tallmadge Avenue PO Box 5007 Atlanta, GA 30396 Akron, OH 44310 615 West First Street Rome, Georgia 30162-5007 Grove Menues True Natural Gas SEDC Cook’s Pest Control 16404 NE 127th Street PO Box 530812 203 Highway 411 SE Kearney, MO 64060 Atlanta, GA 30353-0812 Rome, Georgia 30161 City of Rome Finance Alarm Systems & Go Green Medical Waste Solutions Attn: Sheree Shore Telenet Systems PO Box 2222 601 Broad St PO Box 2732 Dahlonega, GA 30533 P.O. 1433 Rome, GA 30165 Rome, GA 30161 Georgia Department of Revenue Kevin Payne, Floyd County Tax Office Rome Regional Office Tax Commissioner Floyd County, GA P.O. Box 26 314 East Main Street, Ste. 150 101 West 5th Ave Rome, Georgia 30162-0026 Cartersville, Georgia 30120 Rome, Georgia 30161 Savannah Economic Development Authority BellSouth Telecommunications Comcast P.O. Box 128 707 E. Second Avenue 2925 Courtyards Drive Savannah, Georgia 31402 Rome, Georgia 30161 Norcross, Georgia 30071 Attn: President Savannah Economic Development Authority Thomas S. Gray, Jr., Esq. Sentimental Productions 131 Hutchinson Island Road Gray Pannell & Woodward PO Box 14716 4th Floor 24 Drayton St. #1000 Cincinnati, OH 45250 Savannah, Georgia 31421 Savannah, Georgia 31401 Attn: Chairman City of Savannah Water Valley Proteins Guardian Pharmacy of Atlanta, LLC Reclamation 151 Valpro Drive 10929 Highway 301 South, Ste. 111 1400 E. President Street Winchester, VA 22603 Atlanta, Georgia 30458 Savannah, Georgia 31404 4817-7864-8726.6 65 Case 2:17-cv-00393-SCM Document 327-2 Filed 05/24/19 Page 167 of 204 PageID: 14607 Georgia Department of Revenue Sysco Jacksonville, Inc. University Extended Care Savannah Regional Office 1501 Lewis Industrial Drive 561 University Dr. 1000 Towne Center Blvd. Jacksonville, Florida 32254 Evans, GA 30809 Building 900, Suite A Pooler, Georgia 31322 City of Savannah Finance Dept Chatham County Tax United States Attorney’s Office David Maxwell Commissioner Southern District of Georgia P.O. Box 1027 222 W. Oglethorpe Ave. #107 22 Barnard Street, Suite 300 2 East Bay St. Savannah, Georgia 31401 Savannah, Georgia 31401 Savannah, Georgia 31401 Performance Food Group, Inc. United States Attorney’s Office c/o Vivian Hudson Uchitel America Cablevision of Carolina, Inc. Southern District of Georgia Simpson Uchitel & Wilson 327 Hillsborough Street 600 James Brown Blvd, Suite 200 34490 Piedmont Rd., NE Raleigh, NC 27603 Augusta, Georgia 30901 Atlanta, Georgia 30305 [email protected] Development Authority of Department of Labor State of Georgia Chris H. Atkinson, Esq. Atkinson Walton County Employer Accounts Section Ferguson, LLC 132 E. Spring Street Sussex Place - Room 738 118 Court Street Monroe, Georgia 30655 148 Andrew Young International Blvd., NE Monroe, Georgia 30655 Attn: W. Morris Jordan Atlanta, Georgia 30303-1751 American Security Safe & Amerimed EMS ARM Solutions Inc. Lock, LLC P.O. Box 1853 P.O. Box 3666 2569 Iris Drive SE, Suite A Buford, Georgia 30515 Camarillo, California 93011-3666 Conyers, Georgia 30013 Covington Newspaper Baccus Pest Control Brian Trent Company, Inc. P.O. Box 1208 202 Joshua Ct. 1166 Usher Street NW Monroe, Georgia 30655 Social Circle, Georgia 30025 Covington, Georgia 30014 Darling International Destiny Fire & Safety, LLC Freshway Market 1283 College Park Dr. P.O. Box 233 1261 North Cherokee Road Dover, Delaware 19904 McDonough, Georgia 30253 Social Circle, Georgia 30025 Georgia Department of Labor Guarantee Insurance Company Miguel Cossio 7249 Industrial Blvd. NE P.O. Box 630694 1075 South Main Street, Ste. 400 Covington, Georgia 30014 Cincinnati, Ohio 45263-0694 Madison, Georgia 30650 4817-7864-8726.6 66 Case 2:17-cv-00393-SCM Document 327-2 Filed 05/24/19 Page 168 of 204 PageID: 14608 Quill.com Print Logic Inc. Sherwin Williams P.O. Box 37600 2016 Leroy Anderson Road 6230 Shiloh Road, Suite 230 Philadelphia, Pennsylvania Monroe, Georgia 30655 Alpharetta, Georgia 30005 19101-0600 Simpson, Uchitel & Wilson Social Circle Ace Home Center UMB Bank, N.A. 3490 Piedmont Road, NE 181 S. Cherokee Rd. P.O. Box 414589 Atlanta, Georgia 30305 Social Circle, Georgia 30025 Kansas City, Missouri 64141-4589 Utility Management Services, US Foods Wayne Moon P.O. Box 890134 P.O. Box 281945 P.O. Box 904 Charlotte, North Carolina Atlanta, Georgia 30384-1945 Oxford, Georgia 30054 28289 Walton County Tax Commissioner Georgia Department of Revenue City of Social Circle 303 South Hammond Drive, Ste. 100 1800 Century Blvd. NE PO Box 310 Walton County Government Building Atlanta, Georgia 30345 Social Circle, Georgia 30025 Monroe, Georgia 30655 Ascentium Capital LLC c/o Kevin A. Stine Turner Brame Special Co., Inc. Baker, Donelson, Bearman, 3920 Antoinette Drive PO Box 271 3414 Peachtree Rd., NE, Ste 1600 Montgomery, Alabama 36111 Durham, North Carolina 27702 Atlanta, Georgia 30326 Advanced Disposal Solid ITW Food Equipment Group Alere Toxicology Waste Southeast 701 S. Ridge Ave. 51 Sawyer Road, Suite 200 1303 Washington Blvd. Troy, Ohio 45374 Waltham, MA 02453-3448 P.O. Box 781150 Tallassee, AL 36078 Montgomery Water Works Alabama Power Target Exterminating & Lawn & Sewer Board PO Box 242 8113 Sorrel Lane PO Box 1670 Birmingham, Alabama 35292 Montgomery, AL 36117 Montgomery, Alabama 36102 US Foods Buford Nutritional Services Cintas Corporation #231 9399 West Higgins Road, 4125 Buford Dr NE 2765 Gunter Park Dr. W Suite 500 Buford, GA 30518 Montgomery, Alabama 36109 Rosemont, IL 60018 4817-7864-8726.6 67 Case 2:17-cv-00393-SCM Document 327-2 Filed 05/24/19 Page 169 of 204 PageID: 14609 Air Conditioning by Luquire Sysco Central Alabama, Inc. Legacy LTC Consulting 1155 Eastern Blvd. 1000 Sysco Drive 139 Thoroughbred Lane Montgomery, Alabama 36117 Calera, Alabama 35040 Alabaster, AL 35007 Maxus, Inc. Creative Security Systems Sell & Melton, LLP c/o Clark Hammond PO Box 211358 577 Mulberry Street 14th Floor P.O. Box 530910 Montgomery, Alabama Macon, GA 31201 Birmingham, AL 35253 Richard B. Miller Daniel, Lawson, Tuggle & Jerles Lawson Financial Corporation c/o Sell & Melton, LLP 912 Main Street 3104 E. Camelback Road 577 Mulberry Street 14th Floor P.O. Box 89 Suite 1004 Macon, GA 31201 Perry, Georgia 31069-3334 Phoenix, AZ 85016 Robert W. Lawson Lawson Financial Corporation Lawson Financial Corporation Cantone Research, Inc. 1660 Gulf Blvd, #208 3104 E. Camelback Road 766 Shrewsbury Avenue Clearwater, FL 33767 Suite 1004 Tinton Falls, NJ 07724 Phoenix, AZ 85016 Shakelford, Bowen, McKinley & Norton, Cottingham & Porter, P.C. Dickinson Wright PLLC 9201 N. Central Expressway 319 E Ashley St. 424 Church Street, Suite 800 Fourth Floor Douglas, GA 31533 Nashville, TN 37219 Dallas, Texas 75231 Sidney L. Cottingham John D. Gorzalski Shakelford, Bowen, McKinley & Norton, c/o Cottingham & Porter, P.C. c/o Dickinson Wright PLLC 47 Music Square East 319 Ashley Street, Suite E 2600 W. Big Beaver Rd Suite 300 Nashville, Tennessee 37203 Douglas, GA 31533 Troy, MI 48084 Gray Pannell & Brinson, Askew, Berry, Seigler, Richardson Gray Pannell & Woodward LLP Woodward LLP & Davis, LLP The Realty Building One Buckhead Plaza The Omberg House 24 Drayton Street, Suite 1000 Savannah, 3060 Peachtree Road, N.W. 615 West 1st Street GA 31401 Suite 730 Rome, Georgia 30161 Atlanta, GA 30305 Gainesville and Hall County Development Gainesville and Hall County Development Authority Capell & Howard P.C. Authority c/o Stewart Melvin & Frost, LLP P.O. Box 1857 Stewart Melvin & Frost, LLP Hunt Tower, Suite 600 Opelika, Alabama 36803 P.O. Box 3280 200 Main Street Gainesville, GA 30503 Gainesville, GA 30501 4817-7864-8726.6 68 Case 2:17-cv-00393-SCM Document 327-2 Filed 05/24/19 Page 170 of 204 PageID: 14610 The Medical Clinic Board of the City of Page, Scrantom, Sprouse, Tucker and Ford, Development Authority of Columbus, GA Opelika, Alabama Synovus Centre c/o William L. Tucker, Esq. c/o John Scott Pierce, Esq. 1111 Bay Avenue 3rd Floor Page, Scrantom, Sprouse, Tucker & Ford Capell & Howard, P.C. Columbus, GA 31901 1111 Bay Avenue, Third Floor 150 South Perry Street Columbus, Georgia 31901 Montgomery, Alabama 36104 Randall Calvert 1041 NW Grand Blvd Oklahoma City, OK 73118 Dated: May 24, 2019 /s/ Blake D. Roth Blake D. Roth Ryan K. Cochran (admitted pro hac vice) Waller Lansden Dortch & Davis, LLP 511 Union Street, Suite 2700 Nashville, Tennessee 37219 Telephone: 615.244.6380 Email: [email protected] [email protected] Counsel for the Receiver 4817-7864-8726.6 69 Case 2:17-cv-00393-SCM Document 327-2 Filed 05/24/19 Page 171 of 204 PageID: 14611 EXHIBIT D 4818‐9414‐7974.19 Case 2:17-cv-00393-SCM Document 327-2 Filed 05/24/19 Page 172 of 204 PageID: 14612 WALLER LANSDEN DORTCH & DAVIS, LLP Blake D. Roth Ryan K. Cochran (admitted pro hac vice) 511 Union Street, Suite 2700 Nashville, Tennessee 37219 Telephone: 615.244.6380 Email: [email protected] [email protected] Counsel for the Receiver UNITED STATES DISTRICT COURT DISTRICT OF NEW JERSEY SECURITIES AND EXCHANGE COMMISSION, Plaintiff, v. Case No. 2:17-cv-393-ES-SCM DWAYNE EDWARDS; TODD BARKER; SENIOR SOLUTIONS OF SOCIAL CIRCLE, LLC; OXTON PLACE OF DOUGLAS, LLC, d/b/a OXTON REAL ESTATE OF DOUGLAS, LLC; ROME ALF, LLC; SAVANNAH ALF, LLC; GAINESVILLE ALF, LLC; WATERFORD PLACE ALF, LLC; MONTGOMERY ALF, LLC; COLUMBUS ALF, LLC; and OPELIKA ALF, LLC, Defendants, -and- OXTON SENIOR LIVING, LLC; MANOR HOUSE SENIOR LIVING, LLC; SUSAN EDWARDS, a/k/a SUSAN ROGERS; SHARON NUNAMAKER, a/k/a SHARON HADDEN; and SDH DESIGN, LLC, Relief Defendants. DM4838-1887-4502.12 DM1\9490807.4 Case 2:17-cv-00393-SCM Document 327-2 Filed 05/24/19 Page 173 of 204 PageID: 14613 SCHEDULING ORDER AND PRELIMINARY APPROVAL OF SETTLEMENT AND RELEASE AGREEMENT, INCLUDING PROPOSED DISTRIBUTION PLAN AND BAR ORDER AND JUDGMENT The motion before this Court (the “Preliminary Approval Motion”) concerns a proposed settlement (the “Settlement”) between, among others, the Receiver and Carr, Riggs & Ingram, LLC (“CRI”), as a potential defendant on claims alleged by the Receiver on behalf of the Receivership Entities and the Bondholders. Capitalized terms not otherwise defined in this Scheduling Order shall have the meaning assigned to them in the Settlement Agreement attached to the Preliminary Approval Motion (the “Settlement Agreement”). In the Preliminary Approval Motion, the Receiver seeks the Court’s approval of the terms of the Settlement as set forth in the Settlement Agreement and the entry of a Bar Order and Judgment in the form attached as Exhibit “E” to the Settlement Agreement. After reviewing the terms of the Settlement Agreement and considering the arguments presented in the Preliminary Approval Motion, the Court preliminarily approves the Settlement, including the proposed Distribution Plan, as adequate, fair, reasonable, and equitable. Accordingly, the Court enters this Scheduling Order to: (i) provide for notice of the terms of the Settlement, including the proposed Distribution Plan and Bar Order and Judgment; (ii) set the deadline and the procedure for filing objections to the Settlement, the Distribution Plan, the Bar Order and Judgment, and the Receiver’s request for approval of the professional fees and expenses of the Receiver’s general counsel, Waller, and special counsel, Whiteford Taylor; (iii) set the deadline for responding to any objection so filed; (iv) set the deadline and the manner for the submission of claims by those Bondholders who or which previously owned Bonds for distributions from the Net Settlement Proceeds; (v) set the date, time and location of the final approval hearing before this Court regarding the Settlement, the Distribution Plan, the Bar Order and Judgment, and the Receiver’s request for approval of the 4838-1887-4502.12 2 Case 2:17-cv-00393-SCM Document 327-2 Filed 05/24/19 Page 174 of 204 PageID: 14614 professional fees and expenses of the Receiver’s general counsel, Waller, and special counsel, Whiteford Taylor (the “Final Approval Hearing”), as follows: 1. Preliminary Findings Regarding the Settlement. Based upon the Court’s review of the terms of the Settlement Agreement, the arguments presented in the Preliminary Approval Motion, and the Preliminary Approval Motion’s accompanying Exhibits, the Court preliminarily finds that the Settlement, including the proposed Distribution Plan and Bar Order and Judgment, is fair, reasonable, and equitable; has no obvious deficiencies; and is the product of serious, informed, good-faith, and arm’s-length negotiations and mediation. The Court further preliminarily finds that the Indenture Trustees have acted prudently, in good faith, and in the best interests of those Bondholders who or which currently own Bonds in assigning the Current Bondholder Claims to the Receiver, in entering into the Settlement, and that the Indenture Trustees have the Authority to execute the releases provided in the Settlement Agreement. The Court, however, reserves a final ruling with respect to the terms of the Settlement until after the Final Approval Hearing referenced below in Paragraph 2. 2. Final Approval Hearing. The Final Approval Hearing will be held before United States District Court Judge, the Honorable ______of the United States District Court for the District of New Jersey, United States Courthouse, 50 Walnut Street, P.O. Box 999, Newark, New Jersey 07101, in Courtroom ___, at ______.m. on ______, 2019, which is a date at least ninety (90) calendar days after entry of this Scheduling Order. The purposes of the Final Approval Hearing will be to: (i) determine whether the terms of the Settlement, including the Distribution Plan, should be finally approved by the Court; (ii) determine whether the Bar Order and Judgment attached as Exhibit “E” to the Settlement Agreement should be entered by the Court; (iii) rule upon any objections to the Settlement, the Distribution Plan, and the Bar Order and 4838-1887-4502.12 3 Case 2:17-cv-00393-SCM Document 327-2 Filed 05/24/19 Page 175 of 204 PageID: 14615 Judgment; (iv) rule upon the Receiver’s request for approval of the professional fees and expenses of its general counsel, Waller, and special counsel, Whiteford Taylor; and (v) rule upon such other matters as the Court may deem appropriate. 3. Stay Pending Order on Final Approval or Further Order of Court. Except to the extent necessary to address the Preliminary Approval Motion, the Court hereby preliminarily stays, bars, restrains, and enjoins, the Receiver, the Indenture Trustees, all previous, present and future Bondholders, the Claimants, the Issuers, all other Interested Parties, and all other non- governmental Persons, all and individually, from directly, indirectly, or through a third party, asserting, instituting, reinstituting, intervening in, initiating, commencing, maintaining, continuing, filing, encouraging, soliciting, supporting, participating in, collaborating in, or otherwise prosecuting or pursuing, against the CRI Parties and/or any of the CRI Released Parties, any demand, claim, investigation, action, lawsuit, cause of action, complaint, or proceeding of any nature in any Forum, including, without limitation, any court of first instance or any appellate court, whether individually, derivatively, on behalf of a class, as a member of a class, or in any other capacity whatsoever, that in any way relates to, is based upon, arises from, or is connected with this case, the subject matter of this case, the Receiver, the Receivership Entities, the Bonds, the Bondholders, the Indenture Trustees, and/or any Settled Claim. The foregoing specifically includes any claim by any Person, however denominated, seeking contribution, indemnity, damages, or any other remedy where the alleged injury to such Person, or the claim asserted by such Person, is based upon such Person’s liability to the Receiver, any Receivership Entity, any Bondholder, any Indenture Trustee, any Claimant, and/or any other Interested Party arising out of, relating to, or based in whole or in part upon money owed, demanded, requested, offered, paid, agreed to be paid, or required to be paid to the Receiver, a Receivership Entity, a Bondholder, 4838-1887-4502.12 4 Case 2:17-cv-00393-SCM Document 327-2 Filed 05/24/19 Page 176 of 204 PageID: 14616 an Indenture Trustee, a Claimant, and/or any other Interested Party whether pursuant to a demand, judgment, claim, agreement, settlement, or otherwise. The preliminary stay and injunction imposed by this paragraph shall remain in effect until further order of the Court. 4. Notice. The Court approves the form of Notice attached as Exhibit “A” to the Settlement Agreement, including the Claim Form appended thereto, and finds that the distribution, dissemination and publication of Notice along with the publication of the Short Form Notice once a week for three consecutive weeks in the Wall Street Journal and U.S.A. Today described in the Settlement Agreement and the Preliminary Approval Motion: (i) constitute the best practicable notice; (ii) are reasonably calculated, under the circumstances, to apprise all Interested Parties of the Settlement, the Distribution Plan, the Bar Order and Judgment, and the Receiver’s request for approval of the professional fees and expenses of the Receiver’s general counsel, Waller, and special counsel, Whiteford Taylor; (iii) are reasonably calculated, under the circumstances, to apprise all Interested Parties of the right to object to the Settlement and the Bar Order, and to appear at the Final Approval Hearing; (iv) constitute due, adequate, and sufficient notice; (v) meet all requirements of applicable law, including the Federal Rules of Civil Procedure, the United States Code and the United States Constitution (including Due Process); and (vi) will provide to all Persons a full and fair opportunity to be heard on these matters. The Court further approves the form of Short Form Notice attached as Exhibit “B” to the Settlement Agreement and the proposal as to publication of the Short Form Notice. Therefore: a. The Receiver is hereby directed, no later than seven (7) calendar days after entry of this Scheduling Order, to cause the Notice in substantially the form attached as Exhibit “A” to the Settlement Agreement to be sent via electronic mail, first class mail, or international delivery service to (a) all parties that appeared and requested notice in the SEC Receivership Case; (b) 4838-1887-4502.12 5 Case 2:17-cv-00393-SCM Document 327-2 Filed 05/24/19 Page 177 of 204 PageID: 14617 counsel to the CRI Parties; (c) counsel to the Indenture Trustees; (d) the Underwriter for each Offering; (e) counsel to the Underwriter, at the time of the Offering, for each Offering; (f) the Issuer for each Offering; (g) counsel to the Issuer, at the time of the Offering, for each Offering; (h) bond counsel for each Offering; (i) the Depository Trust Company (“DTC”); (j) the Municipal Securities Rulemaking Board’s Electronic Municipal Market Access System (“EMMA”); (k) to the extent they have identified themselves to the Indenture Trustees each of the past or present Bondholders; (l) the original purchasers of the Bonds whose identity was provided to the SEC by the Underwriters in the course of the SEC’s investigation of the Defendants, and (m) posted on the Receiver’s website http://oxtonseniorlivingreceivership.com. b. With respect to the Notice sent to DTC, the Receiver is hereby further directed to request that DTC forward the Notice to each participant of DTC who is reflected in DTC’s records as a holder of the Bonds. c. With respect to Notice sent to the Underwriters of the Offerings, the Receiver is hereby further directed to request that such Underwriters send the Notice to each past or present beneficial owner of the Bonds to the extent such beneficial owners are identifiable by the Underwriters from their records through reasonable efforts. d. With respect to the Notice sent to EMMA, the Receiver is hereby further directed to request, or cause the Indenture Trustees to request, that EMMA publish the Notice, the Preliminary Approval Motion and all Exhibits thereto (including the Settlement Agreement and all of its Exhibits), and this Scheduling Order on its website under the CUSIP numbers for the respective Bonds issued in connection with each of the Offerings. e. The Receiver is further hereby directed, no later than seven (7) calendar days after the entry of this Scheduling Order, to cause the Notice, the Approval Motion and all Exhibits 4838-1887-4502.12 6 Case 2:17-cv-00393-SCM Document 327-2 Filed 05/24/19 Page 178 of 204 PageID: 14618 thereto (including the Settlement Agreement and all of its Exhibits), and this Scheduling Order to be posted on the Receiver’s web site http://oxtonseniorlivingreceivership.com/. f. The Receiver is hereby further directed, no later than seven (7) calendar days after entry of this Scheduling Order, to cause the Short Form Notice in substantially the same form attached as Exhibit “B” to the Settlement Agreement to be published once a week for three consecutive weeks in the national edition of The Wall Street Journal and U.S.A. Today. g. The Receiver is hereby further directed promptly to provide the Notice, the Motion and all Exhibits thereto (including the Settlement Agreement and all of its Exhibits), and this Scheduling Order, to any Person who requests such documents, in writing by use of a recognized overnight mail carrier, to William F. Ryan, Jr., an attorney at Whiteford, Taylor & Preston, LLP, 7 St. Paul Street, Baltimore, Maryland 21202. The Receiver may provide such materials in the form and manner that the Receiver deems most appropriate under the circumstances of the request. h. No less than ten (10) calendar days before the Final Approval Hearing, the Receiver shall cause to be filed with the Clerk of this Court an affidavit or declaration of compliance with subparts (a) through (g) of this Paragraph 4. 5. Objections and Appearances at the Final Approval Hearing. Any Person who wishes to object to the terms of the Settlement, the Distribution Plan, the Bar Order and Judgment, or Receiver’s request for approval of Receiver’s attorneys’ fees and costs, or who wishes to appear at the Final Approval Hearing, must do so by filing an objection, in writing, with this Court in this case by ECF or by mailing the objection to the Clerk of the United States District Court for the District of New Jersey, United States Courthouse, 50 Walnut Street, P.O. Box 999, Newark, New Jersey 07101, so that it is received no later than ten (10) calendar days before the Final Approval Hearing. All objections filed with the Court must: 4838-1887-4502.12 7 Case 2:17-cv-00393-SCM Document 327-2 Filed 05/24/19 Page 179 of 204 PageID: 14619 a. contain the name, address, telephone number, and (if applicable) an email address of the Person filing the objection; b. contain the name, address, telephone number, and email address of any attorney representing the Person filing the objection; c. be signed by the Person filing the objection, or his or her attorney; d. state, in detail, the basis for any objection; e. attach any document the Court should consider in ruling on the Settlement, the Bar Order and Judgment, or the Receiver’s request for approval of Receiver’s attorneys’ fees and costs; and f. if the Person filing the objection wishes to appear at the Final Approval Hearing, make a request to do so. No Person will be permitted to appear at the Final Approval Hearing without filing a written objection and request to appear at the Final Approval Hearing as set forth in subparts a. through f. of this Paragraph 5. Copies of any objections filed must be contemporaneously served by ECF, or by email or first class mail, upon each of the following: Counsel to the Receiver: Ryan K. Cochran Waller Lansden Dortch & Davis, LLP 511 Union Street, Suite 2700 Nashville, TN 37219 Phone: (615) 850-8778 E-mail: [email protected] William F. Ryan, Jr. Whiteford Taylor & Preston, LLP 7 St. Paul Street, 15th Floor Baltimore, MD 21202 Phone: (410) 347-8741 E-mail: [email protected] 4838-1887-4502.12 8 Case 2:17-cv-00393-SCM Document 327-2 Filed 05/24/19 Page 180 of 204 PageID: 14620 Counsel to Trustee BOKF: Nora R. O’Neill Frederic Dorwart, Lawyers PLLC Old City Hall 124 East Fourth Street Tulsa, OK 74103-5027 Phone: (918) 583-9922 E-mail: [email protected] Counsel to Trustee U.S. Bank: George M. Taylor III Burr & Forman, LLP 420 North 20th Street, Suite 3400 Birmingham, AL 35203 Phone: (205) 458-5254 E-mail: [email protected] Counsel to Trustee UMB: Thomas Longino Longino Public Finance LLC 2917 Central Avenue, Suite 205 Birmingham, AL 35209 Phone: (205) 490-2460 E-mail: [email protected] Counsel to the CRI Parties: Thomas B.K. Ringe, III Anthony J. Costantini Patrick Matusky Duane Morris LLP 30 South 17th Street Philadelphia, PA 19103 Phone: (215) 979-1160 E-mail: [email protected] Lee H. Copeland Copeland, Franco, Screws & Gill, P.A. P.O. Box 347 Montgomery, AL 36101-0347 Phone: (334) 834-1180 E-mail: [email protected] 4838-1887-4502.12 9 Case 2:17-cv-00393-SCM Document 327-2 Filed 05/24/19 Page 181 of 204 PageID: 14621 Any Person filing an objection shall be deemed to have submitted to the jurisdiction of this Court for all purposes of that objection, the Settlement, and the Bar Order and Judgment. Potential objectors who do not present opposition by the time and in the manner set forth above shall be deemed to have waived the right to object (including any right to appeal, seek reconsideration or other review) and to appear at the Final Approval Hearing and shall be forever barred from raising such objections in this action or any other action or proceeding. Persons do not need to appear at the Final Approval Hearing or take any other action to indicate their approval, but if they desire to claim entitlement to distributions from the Net Settlement Proceeds, they must comply with Paragraph 7 of this Scheduling Order regarding submission of claims. 6. Responses to Objections. Any Party to the Settlement Agreement may respond to an objection filed pursuant to Paragraph 5 by filing a response with the Clerk of the Court in this case no later than two (2) calendar days before the Final Approval Hearing. To the extent any Person filing an objection cannot be served by the Court’s CM/ECF system, a response must be served to the email and/or mailing address provided by that Person. 7. Submission of Claims. Any previous Bondholder claiming entitlement to a distribution from the Net Settlement Proceeds must submit a Claim Form in the form appended to the Notice attached as Exhibit “A” to the Settlement Agreement to the Receiver at the address set forth on the Claim Form and as described in the Notice, so that it is received by the Receiver on or before 4:00 p.m. (Eastern), ninety (90) days from the date of entry of this Scheduling Order. Any previous Bondholder’s failure to timely and properly submit a Claim Form, duly providing the information and documentation called for by the Claim Form, shall preclude such previous Bondholder from receiving any distribution from the Net Settlement Proceeds. Current Bondholders are exempt from the requirement of submitting a Claim Form. 4838-1887-4502.12 10 Case 2:17-cv-00393-SCM Document 327-2 Filed 05/24/19 Page 182 of 204 PageID: 14622 8. Adjustments Concerning Hearing and Deadlines. The date, time, and place for the Final Approval Hearing, and the deadlines and date requirements in this Scheduling Order, shall be subject to adjournment or change by this Court without further notice other than that which may be posted by means of ECF in this case. 9. Retention of Jurisdiction. This Court shall retain jurisdiction to consider all further applications arising out of or connected with the proposed Settlement. 10. Entry of Injunction. If the Settlement is approved by the Court, the Court will enter the Bar Order and Judgment in this case. If entered, the Bar Order and Judgment will permanently bar, restrain, and enjoin, among others, Interested Parties, including Bondholders and Claimants, from asserting, bringing, encouraging, assisting, continuing, prosecuting, or pursuing against CRI or any of the CRI Released Parties, any claim, action, lawsuit, cause of action, claim, investigation, demand, complaint, or proceeding of any nature, including, without limitation, contribution or indemnity claims, constituting a Settled Claim. 11. Use of Order. Under no circumstances shall this Scheduling Order be construed, deemed, or used as an admission, concession, or declaration by or against the CRI Released Parties of any fault, wrongdoing, breach or liability. Nor shall the Order be construed, deemed, or used as an admission, concession, or declaration by or against the Receiver or the Indenture Trustees that their claims lack merit or that the relief requested is inappropriate, improper, or unavailable, or as a waiver by any party of any defenses or claims he, she or it may have. Neither this Scheduling Order, nor the proposed Settlement Agreement, or any other settlement document, shall be filed, offered, received in evidence, or otherwise used in these or any other actions or proceedings, except to approve, give effect to, implement or enforce the Settlement or the terms of this Scheduling Order. 4838-1887-4502.12 11 Case 2:17-cv-00393-SCM Document 327-2 Filed 05/24/19 Page 183 of 204 PageID: 14623 IT IS SO ORDERED. SIGNED on ______, 2019. 4838-1887-4502.12 12 Case 2:17-cv-00393-SCM Document 327-2 Filed 05/24/19 Page 184 of 204 PageID: 14624 EXHIBIT E 4818‐9414‐7974.19 Case 2:17-cv-00393-SCM Document 327-2 Filed 05/24/19 Page 185 of 204 PageID: 14625 WALLER LANSDEN DORTCH & DAVIS, LLP Blake D. Roth Ryan K. Cochran (admitted pro hac vice) 511 Union Street, Suite 2700 Nashville, Tennessee 37219 Telephone: 615.244.6380 Email: [email protected] [email protected] Counsel for the Receiver UNITED STATES DISTRICT COURT DISTRICT OF NEW JERSEY SECURITIES AND EXCHANGE COMMISSION, Plaintiff, v. Case No. 2:17-cv-393-ES-SCM DWAYNE EDWARDS; TODD BARKER; SENIOR SOLUTIONS OF SOCIAL CIRCLE, LLC; OXTON PLACE OF DOUGLAS, LLC, d/b/a OXTON REAL ESTATE OF DOUGLAS, LLC; ROME ALF, LLC; SAVANNAH ALF, LLC; GAINESVILLE ALF, LLC; WATERFORD PLACE ALF, LLC; MONTGOMERY ALF, LLC; COLUMBUS ALF, LLC; and OPELIKA ALF, LLC, Defendants, -and- OXTON SENIOR LIVING, LLC; MANOR HOUSE SENIOR LIVING, LLC; SUSAN EDWARDS, a/k/a SUSAN ROGERS; SHARON NUNAMAKER, a/k/a SHARON HADDEN; and SDH DESIGN, LLC, Relief Defendants. 4825-7795-0342.14 Case 2:17-cv-00393-SCM Document 327-2 Filed 05/24/19 Page 186 of 204 PageID: 14626 ORDER GRANTING FINAL APPROVAL OF SETTLEMENT AND RELATED RELIEF INCLUDING A FINAL BAR ORDER This matter comes before the Court on the Receiver’s Request for (I) Entry of Preliminary Approvals and Scheduling Order and (II) Motion for Entry of Order Approving Proposed Settlement, the Proposed Notice of Settlement, and to Enter the Bar Order and Final Judgment (the “Motion”). (Dkt. No. __). The Motion was filed by Derek Pierce, the court- appointed Receiver in this case (“Receiver”). Following notice and Hearing, and having considered the Motion and any and all responses, replies, and other filings with respect to the Motion; and having heard and considered the arguments presented at the Final Approval Hearing1; and upon finding that this Court has jurisdiction over the Motion and that venue is proper in this Court; and upon finding good and sufficient cause for granting the relief sought in the Motion; and for the reasons stated on the record at the Final Approval Hearing and those that follow, the Court GRANTS the Motion. I. FINDINGS OF FACT AND CONCLUSIONS OF LAW A. Factual and Procedural Background 1. The Settlement Agreement The Settlement which is the subject of the Motion is set forth in a written Settlement Agreement by and between: (i) Derek Pierce, in his capacity as Receiver and as assignee of claims of Bondholders2; (ii) Carr, Riggs & Ingram, LLC (“CRI”); (iii) Wink Laney (“Laney”); and (iv) Russ Frederick (“Frederick” and, together with CRI and Laney, the “CRI Parties”);3 (v) BOKF, National Association d/b/a Bank of Oklahoma (“Trustee BOKF”); UMB Bank, N.A. 1 Capitalized terms used in this Order and not otherwise defined herein shall have the meaning set forth in the Preliminary Approval Motion or the Settlement and Release Agreement (“Settlement Agreement”) attached as Exhibit “1” to the Preliminary Approval Motion. 2 Consistent with the terms of the Settlement Agreement, the term Bondholders means all “Persons (as defined in the Settlement Agreement) who or which currently own or previously owned a Bond.” 3 Laney and Frederick are members of CRI. 2 4825-7795-0342.14 Case 2:17-cv-00393-SCM Document 327-2 Filed 05/24/19 Page 187 of 204 PageID: 14627 (“Trustee UMB”); and (vii) U.S. Bank, National Association (“Trustee U.S. Bank” and, together with Trustee BOKF and Trustee UMB, the “Indenture Trustees,” and, singularly, an “Indenture Trustee”), each in their capacities as Indenture Trustees.4 The essential terms of the Settlement are summarized in Section I. A. 5., below, and in the Notice of proposed Settlement previously approved by the Court. The Settlement Agreement itself contains a full and complete statement of terms. 2. Factual Background The Receiver’s Motion arises in the context of an ongoing equitable receivership proceeding, initiated on motion of the Securities and Exchange Commission (“SEC”) and carried out pursuant to orders and under the supervision of this Court. The entities in receivership, at issue in Receiver’s Motion, include the following: Oxton Place of Douglas, LLC d/b/a Oxton Real Estate of Douglas, LLC (“Douglas”), Rome ALF, LLC (“Rome”), Savannah ALF, LLC (“Savannah”), Gainesville ALF, LLC (“Gainesville”), Waterford Place ALF, LLC (“Waterford”), Montgomery ALF, LLC (“Montgomery”), Columbus ALF, LLC (“Columbus”) and Opelika ALF, LLC (“Opelika” and, together with Douglas, Rome, Savannah, Gainesville, Waterford, Montgomery and Columbus, the “Borrowers”). The Borrowers, eight in number, are limited liability companies formed for the purpose of acquiring and operating assisted living and/or memory care facilities. After obtaining conduit municipal bond financing as described below, each Borrower acquired and operated an assisted living and/or memory care facility (separately, a “Facility” and, collectively, the “Facilities”). 4 Each of the parties to the Settlement Agreement is hereinafter referred to as a Party and, collectively, as the “Parties,” to the Settlement Agreement. 3 4825-7795-0342.14 Case 2:17-cv-00393-SCM Document 327-2 Filed 05/24/19 Page 188 of 204 PageID: 14628 The Borrowers were formed by Dwayne Edwards (“Edwards”) and Todd Barker (“Barker”). Edwards and Barker each owned a 50% interest in each of the Borrowers. During the period from August 28, 2014 (Douglas) through September 24, 2015 (Opelika), each of the Borrowers was a party to a conduit municipal bond offering secured by an Indenture (each, an “Offering” and, collectively, the “Offerings”). The stated purposes for each such Offering included the acquisition and operation of a Facility. Through these Offerings, the Borrowers collectively raised from Bondholders approximately $58.5 million.5 Each of the Offerings is secured by an Indenture naming an Indenture Trustee and empowering such indenture trustee to assert and protect the rights of Bondholders. Trustee BOKF is the Indenture Trustee with respect to six of the Offerings, i.e., those relating to Douglas, Rome, Savannah, Gainesville, Waterford and Columbus. Trustee U.S. Bank is the Indenture Trustee with respect to the Opelika Offering. Trustee UMB is the Indenture Trustee with respect to the Montgomery Offering. Pursuant to their respective Indentures, each of the Indenture Trustees has the right, power and authority to pursue claims against third parties for injuries caused to Bondholders in connection with the respective Offerings for which they serve as Indenture Trustee (subject to an assignment of such claims to the Receiver, as discussed below). CRI is a public accounting firm. In connection with each of the Offerings, and continuing through 2016, the CRI Parties performed various professional services for the Borrowers. Each of the Borrowers engaged CRI, among other things, to examine forecasted financial statements prepared by the Borrower’s management (a “Financial Forecast”) and to 5 The bonds issued in connection with the Offerings are herein referred to collectively as the “Bonds” and singularly as a “Bond” and, as noted in footnote 2, the Persons who or which currently own or previously owned a Bond are referred to collectively as the “Bondholders” and singularly as a “Bondholder.” 4 4825-7795-0342.14 Case 2:17-cv-00393-SCM Document 327-2 Filed 05/24/19 Page 189 of 204 PageID: 14629 issue an independent accountant’s report (a “Report”) with respect to such Financial Forecast. CRI issued a Report with respect to each Offering. Management’s Financial Forecast and CRI’s Report were included in the official statement prepared for each Offering (singularly, an “Official Statement” and, collectively, the “Official Statements”). In each such Report, CRI opined that management’s related Financial Forecast was presented in conformity with guidelines for presentation of a financial forecast established by the American Institute of Certified Public Accountants (“AICPA”) and that the underlying assumptions provided a reasonable basis for management’s Financial Forecast. CRI’s Reports and the Official Statements contained cautionary statements regarding the Financial Forecasts, including statements in the Reports that there will usually be differences between forecasted and actual results, because events and circumstances frequently do not occur as expected and those differences may be material. In addition to examining and providing a Report with respect to management’s Financial Forecast, CRI provided other accounting services to each Borrower, including audit, compilation and tax services. During 2016, each of the Borrowers defaulted on its obligations with respect to the Bonds resulting in various bankruptcy and receivership proceedings, including, ultimately, this action brought by the SEC. As a result of such defaults, many of the Bondholders sustained losses by reason of their investments in the Bonds. 3. Procedural Background The SEC commenced this action on January 20, 2017, by filing a Complaint naming Edwards, Barker, each of the Borrowers, and Senior Solutions of Social Circle, LLC (“Social Circle”) as defendants. (Dkt. No. 1).6 In its Complaint, the SEC generally alleged that the 6 Social Circle was a ninth entity through which Edwards and Barker, through conduit municipal bond financing, acquired and operated an assisted living facility. The CRI Parties, however, had no involvement with that entity. In 5 4825-7795-0342.14 Case 2:17-cv-00393-SCM Document 327-2 Filed 05/24/19 Page 190 of 204 PageID: 14630 defendants had improperly commingled and misappropriated money from the Offerings and revenues of the Facilities and sought the appointment of a receiver to administer the assets and the receivership estates (“Receivership Estates”) of the Borrowers. On the same day that the Complaint was filed, January 20, 2017, the SEC moved, inter alia, for the appointment of a receiver. (Dkt. No. 2). On January 23, 2017, this Court entered its Order granting the SEC’s motion and appointing the Receiver (the “Receivership Order”). (Dkt. No. 7). Pursuant to the Court’s Receivership Order, this Court has exclusive jurisdiction over and possession of the assets of the Borrowers. The Receivership Order vests in the Receiver all powers and authority of a receiver at equity and all powers conferred upon a receiver by the provisions of 28 U.S.C. §§ 754, 959 and 1692, and Rule 66 of the Federal Rules of Civil Procedure, including the authority to investigate and pursue claims and causes of action for the benefit of the Receivership Estates and their creditors, including the Bondholders. Following the entry of the Receivership Order, and in furtherance of his responsibilities, the Receiver investigated whether claims existed against third parties. Based upon his investigation, the Receiver came to believe that each of the Borrowers, the Indenture Trustees on behalf of those Bondholders who or which currently own a Bond, and those Bondholders who or which previously owned a Bond, held claims against the CRI Parties for alleged injuries caused to each Borrower and the Bondholders arising out of the Offerings and the CRI Parties’ professional services described above (respectively, the “Receivership Borrower Claims,” the “Current Bondholder Claims,” and the “Previous Bondholder Claims”). addition to those named as Defendants identified in the text, the SEC’s Complaint joined the following as “Relief Defendants”: Oxton Senior Living, LLC; Manor House Senior Living, LLC; Susan Edwards a/k/a Susan Rogers; Sharon Nunamaker a/k/a Sharon Hadden; and SDH Design, LLC. 6 4825-7795-0342.14 Case 2:17-cv-00393-SCM Document 327-2 Filed 05/24/19 Page 191 of 204 PageID: 14631 Pursuant to an Assignments of Claims dated April 13, 2018 by and between the Receiver and the Indenture Trustees, as amended pursuant to an Amendment No. 1 to Assignments of Claims dated October 1, 2018, and further amended in the Settlement Agreement (as amended, the “Assignment Agreement”), each of the Indenture Trustees assigned its right, power and authority to pursue the Current Bondholder Claims to the Receiver (the “Assigned Bondholder Claims,” and along with the Receivership Borrower Claims and the Previous Bondholder Claims, the “Claims”). On January 26, 2018, the Receiver filed an application seeking the authority to pursue the Claims and to retain special litigation counsel to assist him in doing so (the “Claims Authorization Motion”). (Dkt. No. 206). On March 6, 2018, this Court granted the Receiver’s Claims Authorization Motion, thereby authorizing the Receiver to pursue such claims. (Dkt. No. 242). On April 13, 2018, and May 3, 2018, respectively, the Receiver, though his counsel, sent to the CRI Parties a Demand Letter before Legal Action and a Supplement to Demand Letter before Legal Action (together, the “Demand Letter”), asserting and seeking to resolve the Claims in advance of commencing a legal proceeding. Thereafter, in an effort to resolve the Claims, the CRI Parties and the Receiver commenced a mediation proceeding and conducted in-person mediation before a JAMS mediator panelist over the period from November 8, 2018, through November 9, 2018 (the “Mediation”). Before, during and after the Mediation, the Receiver and the CRI Parties negotiated at arm’s length and in good faith, and ultimately, without admission or concession of liability or fault, reached the Settlement. On ______, 2019, the Receiver filed the Motion. (Dkt. No. ___). The Court thereafter entered a Scheduling Order on ______, 2019, which, inter alia, preliminarily approved the Settlement, authorized the Receiver to provide notice of the 7 4825-7795-0342.14 Case 2:17-cv-00393-SCM Document 327-2 Filed 05/24/19 Page 192 of 204 PageID: 14632 Settlement, established a schedule for the filing of objections and responses to objections to the Settlement and the relief sought by the Motion, established the deadline and the manner for the submission of claims by previous Bondholders, and set the date for the Final Approval Hearing to determine whether to grant final approval of the Settlement and enter the requested Bar Order and Judgment. (Dkt. No. ___). Pursuant to the Court’s Scheduling Order, on ______, 2019, the Receiver filed a Declaration of Compliance, certifying compliance with the notice requirements of the Scheduling Order. (Dkt. No. __). On ______, 2019, the Court held the scheduled Final Approval Hearing. During the Final Approval Hearing, any and all Persons who properly and timely filed objections to the Settlement and requested to be heard were afforded a full and fair opportunity to be heard. Proponents of the Settlement were likewise afforded a full and fair opportunity to be heard. The arguments of those heard during the Final Approval Hearing have been fully considered by the Court. 4. Summary of the Claims Asserted by the Receiver and the Defenses of the CRI Parties The claims and defenses of the Receiver and the CRI Parties were fully developed and explored in the course of their negotiations and Mediation. They are summarized in the Notice previously approved by the Court. Generally, the Receiver alleged that the CRI Parties breached their obligations to the Borrowers and the Bondholders with respect to the Financial Forecasts and made misstatements by issuing in the CRI Reports “clean opinions” for each such Financial Forecast. In this regard, the Receiver contended, among other things, that the CRI Parties: (i) lacked the independence required to perform their responsibilities as independent certified public accountants in 8 4825-7795-0342.14 Case 2:17-cv-00393-SCM Document 327-2 Filed 05/24/19 Page 193 of 204 PageID: 14633 examining and preparing Reports in connection with the Financial Forecasts; (ii) failed to disclose significant assumptions underlying the Financial Forecasts, without issuing an adverse opinion, including assumptions regarding the use of funds and planned renovations and/or expansions of the Facilities; and (iii) failed properly to obtain support for and evaluate underlying assumptions concerning anticipated revenues that would be generated by realizing certain stabilized occupancy rates during and after renovation and/or expansion of a particular Facility. The Receiver asserted claims against CRI under various theories of recovery, including negligence, intentional tort, breach of contract, and breach of fiduciary duty. For their part, the CRI Parties denied the Receiver’s allegations and raised other defenses. The CRI Parties: (i) denied that they breached any obligations in connection with the Financial Forecasts and/or made any misstatements in the Reports; (ii) denied that they lacked the required independence; (iii) denied that they failed to disclose significant assumptions underlying the Financial Forecasts, including assumptions regarding the use of funds and planned renovations and/or expansions of the Facilities; and (iv) denied that they otherwise failed to obtain support for or evaluate significant assumptions underlying the Financial Forecasts, including assumptions concerning anticipated revenues that would be generated by realizing certain stabilized occupancy rates during and after renovation and/or expansion of a particular Facility. To the contrary, the CRI Parties asserted that, in carrying out the engagements concerning the Financial Forecasts, CRI acted in conformity with AICPA guidance by performing such examination procedures as it considered necessary in the exercise of its professional judgment in the circumstances and by reasonably concluding, based on the preponderance of information, that management’s assumptions were suitably supported and provided a reasonable basis for management’s Financial Forecasts. 9 4825-7795-0342.14 Case 2:17-cv-00393-SCM Document 327-2 Filed 05/24/19 Page 194 of 204 PageID: 14634 The CRI Parties further contended, among other things: (i) that, if the allegations of misconduct by Edwards and Barker were true, the claims of the Borrowers were barred by the doctrine of in pari delicto; (ii) that the Receivership Borrower Claims, the Bondholder Claims, and the Previous Bondholder Claims lacked merit because of the inability of all to prove reasonable reliance on anything the CRI Parties did or said; and (iii) that the conduct and statements of the CRI Parties were not the proximate cause of any loss that either the Borrowers or the Bondholders might have sustained, such loss being caused instead by unforeseeable subsequent events, including, among other things, an ownership break-up between Edwards and Barker, unanticipated regulatory issues and the mismanagement and/or misconduct of other parties. In short, the CRI Parties vigorously denied any wrongdoing on any theory of liability, whether based on common law or statute and whether sounding in negligence, intentional tort, breach of contract, breach of fiduciary duty, or otherwise. 5. Summary of the Essential Terms of the Settlement Under the terms of the Settlement Agreement, CRI will pay $10 million to the Receiver. The Receiver shall, in turn, distribute a portion of the Net Settlement Amount, i.e., the Settlement Amount less attorneys’ fees and costs awarded by the Court, first, to previous Bondholders who timely submit a fully and properly completed Claim Form and qualify for a distribution under the Distribution Plan, and, second, to the Indenture Trustees of the Bonds for distribution, in turn, to those Bondholders who or which currently hold a Bond. Current Bondholders do not need to submit a Claim Form. In return, the CRI Parties seek global peace with respect to all claims that have been, or could have been, asserted against the CRI Released Parties, that in any way relate to the subject matter of this case, the Receiver, the Receivership Entities, the Bonds, the 10 4825-7795-0342.14 Case 2:17-cv-00393-SCM Document 327-2 Filed 05/24/19 Page 195 of 204 PageID: 14635 Bondholders and/or any Settled Claim, including any claim, however denominated, seeking contribution or indemnity. Accordingly, the Settlement is conditioned on the Court’s approval and entry of the Bar Order and Judgment, barring, restraining, and enjoining the Receiver, the Receivership Entities, the Receivership Estates, the Borrowers, the Indenture Trustees, all previous, present and future Bondholders, the Claimants, the Issuers, all Interested Parties, and all non-governmental Persons, from prosecuting or pursuing any such claims against the CRI Released Parties. For the reasons set forth herein, the Court finds that the terms of the Settlement Agreement are adequate, fair, reasonable, and equitable, and that the Settlement should be and is hereby APPROVED. The Court further finds that entry of the Bar Order and Judgment is appropriate and necessary. II. FURTHER FINDINGS AND CONCLUSIONS Accordingly, it is further hereby FOUND, CONCLUDED AND DETERMINED as follows: A. The findings and conclusions set forth herein constitute the Court’s findings of fact and conclusions of law pursuant to Rule 52 of the Federal Rules of Civil Procedure (sometimes, the “Rules”). B. To the extent that any of the following findings of fact constitute conclusions of law, they are adopted as such. To the extent any of the following conclusions of law constitute findings of fact, they are adopted as such. All findings of fact and conclusions of law announced by the Court at the Final Approval Hearing in relation to the Motion are incorporated herein by reference to the extent not inconsistent with this Order. 11 4825-7795-0342.14 Case 2:17-cv-00393-SCM Document 327-2 Filed 05/24/19 Page 196 of 204 PageID: 14636 C. This Court, as a court of equity, has “broad powers and wide discretion to determine the appropriate relief in [this] equity receivership,” including the authority to enter the requested Bar Order and Judgment. SEC v. Kaleta, 530 F. App’x 360, 362 (5th Cir. 2013) (internal quotations omitted). Moreover, the Receiver is a proper party to seek the entry of the Bar Order and Judgment. D. The Court finds that the methodology, form, content, and dissemination of the Notice and Short Form Notice: (i) were implemented in accordance with the requirements of the Scheduling Order; (ii) constituted the best practicable notice; (iii) were reasonably calculated, under the circumstances, to apprise all Interested Parties of the Settlement, the releases contained in the Settlement Agreement, and the injunctions provided for in this Bar Order and Judgment; (iv) were reasonably calculated, under the circumstances, to apprise all Interested Parties of their rights and obligations in connection with the Settlement, the Distribution Plan, the Bar Order and Judgment, and the Receiver’s request for approval of the professional fees and expenses of the Receiver’s general counsel, Waller, and special counsel, Whiteford Taylor; (v) were reasonable and constituted due, adequate, and sufficient notice; (vi) met all requirements of applicable law, including the Rules, the United States Code and the United States Constitution (including Due Process); and (vii) provided all Persons entitled to notice with a full and fair opportunity to be heard on these matters. No other or further notice is necessary or shall be required. E. The legal and factual bases set forth in the Motion establish just and sufficient cause to grant the relief requested therein. 12 4825-7795-0342.14 Case 2:17-cv-00393-SCM Document 327-2 Filed 05/24/19 Page 197 of 204 PageID: 14637 F. The Settlement Agreement and the transactions contemplated thereby, including the releases given therein, are in the best interests of the Borrowers, the Receivership Estates, creditors, including the Bondholders, and all other parties in interest. G. The disclosures made by the Receiver and the Indenture Trustees concerning the Settlement Agreement and the related relief requested pursuant to the Motion were good, complete, and adequate. H. The Settlement, including the Settlement Amount, was reached following extensive investigation of the facts and resulted from vigorous, good faith, arms-length, mediated negotiations involving experienced and competent counsel. I. The Claims that have been or may be asserted against the CRI Parties by the Receiver and/or by others whose claims or potential claims are foreclosed by the Bar Order and Judgment entail vigorously disputed facts and complex, novel, and unsettled issues of law that have also been vigorously disputed. Resolution of such disputed factual and legal issues would require substantial time, effort, and expense to litigate, with a significant risk that the Receiver and such others may not ultimately prevail on such claims. Thus, there is a significant risk that future litigation of such claims may dissipate the assets of the Receivership Estates. Additionally, significant issues exist as to the merit and value of the claims asserted against the CRI Parties by the Receiver or that may be asserted by others whose potential claims are foreclosed by this Bar Order and Judgment. J. After careful consideration of the record and applicable law, the Court concludes that the Settlement is the best option for maximizing the net amount recoverable from the CRI Parties for the Receivership Estates and the Bondholders. 13 4825-7795-0342.14 Case 2:17-cv-00393-SCM Document 327-2 Filed 05/24/19 Page 198 of 204 PageID: 14638 K. The Settlement has been designed to ensure that all affected Bondholders have received an opportunity to resolve their claims against the CRI Parties through receipt of a portion of the Settlement Amount pursuant to the Receiver’s Distribution Plan approved by the Court. L. The ancillary relief measures requested in the Motion, specifically the Bar Order and Judgment, barring, restraining, and enjoining the pursuit and prosecution of claims against the CRI Released Parties, are essential to the CRI Parties’ agreement to enter into the Settlement. In the absence of such a Bar Order and Judgment, the CRI Parties would not enter into the Settlement. M. The Receiver acted reasonably, in good faith, and in the best interests of the Borrowers, the Receivership Estates, and all other Persons in interest, including the Bondholders, in negotiating and entering into the Settlement Agreement. N. The Indenture Trustees have the right to assert and assign to the Receiver the Current Bondholder Claims as Indenture Trustees under the Indentures and to enter into and to approve the Settlement and the Settlement Agreement in their representative capacities and on behalf of those Bondholders who or which currently own a Bond. The Indenture Trustees have acted prudently, in good faith, and in the best interests of those Bondholders who or which currently own a Bond in assigning the Current Bondholder Claims to the Receiver and in approving the Settlement and executing the Settlement Agreement. The actions of the Indenture Trustees with respect to the Settlement and the Settlement Agreement have been consistent with all duties owed by the Indenture Trustees to those Bondholders who or which currently own a Bond and are consistent with the Indentures and applicable laws. 14 4825-7795-0342.14 Case 2:17-cv-00393-SCM Document 327-2 Filed 05/24/19 Page 199 of 204 PageID: 14639 O. The Settlement Agreement and the transactions contemplated thereby, including the releases given therein, meet the standards established for the approval of a compromise and settlement in an equity receivership action; are reasonable, fair, equitable; and are supported by fair and adequate consideration. P. The Settlement Agreement was negotiated, proposed, and entered into by the Receiver, the Indenture Trustees, and the CRI Parties without collusion, in good faith, and from arms-length bargaining positions. Q. The Receiver has demonstrated compelling circumstances and a good, sufficient, and sound business purpose and justification for entering into the Settlement Agreement. R. The allocation of the Net Settlement Proceeds among the Receivership Estates of the Borrowers is fair, reasonable, and equitable, and the distribution of the allocated Net Settlement Proceeds to previous Bondholders who timely submit a fully and properly completed Claim Form and qualify for a distribution under the Distribution Plan, and to the Indenture Trustees for the benefit of those Bondholders who or which currently own a Bond, as provided for in the Settlement Agreement, is fair, reasonable and equitable. S. The fees and expenses of the Receiver and its general counsel and special counsel are reasonable and necessary. T. Given all of the circumstances and the adequacy of the consideration provided to the Receivership Estates, and, in turn, to their Bondholders, by the CRI Parties, the Settlement Agreement constitutes a reasonable, informed, and sound exercise of the Receiver’s and 15 4825-7795-0342.14 Case 2:17-cv-00393-SCM Document 327-2 Filed 05/24/19 Page 200 of 204 PageID: 14640 Indenture Trustees’ business judgment, is prudent, is in the best interests of the Receivership Estates and the respective Bondholders, and should be approved. III. ORDER NOW THEREFORE, IT IS HEREBY ORDERED, ADJUDGED, and DECREED: 1. The relief requested in the Motion is GRANTED. 2. The Settlement Agreement (which is deemed incorporated herein by reference) is hereby approved in all respects. 3. Any objections to the relief sought in the Motion that have not been previously resolved, withdrawn, waived, or settled, and all reservations of rights included in such objections, are hereby overruled on their merits. 4. The Receiver and the Indenture Trustees are authorized and directed to take any and all actions necessary and/or appropriate to effectuate and implement the Settlement Agreement and the relief granted pursuant to this Order, and neither the Receiver nor the Indenture Trustees shall have any liability to any person or entity in connection with any of the actions authorized pursuant to this Order and/or effectuating the Settlement Agreement. 5. Each and every term and provision of the Settlement Agreement including the releases, together with the terms and provisions of this Order, shall be binding in all respects upon all parties in interest with respect to these proceedings. 6. Pursuant to the provisions of Paragraph 61 and 62 of the Settlement Agreement, as of the Settlement Effective Date, the CRI Released Parties shall be completely released, acquitted, and forever discharged from all Settled Claims by the Receiver Releasing Parties and the Indenture Trustees Releasing Parties. 16 4825-7795-0342.14 Case 2:17-cv-00393-SCM Document 327-2 Filed 05/24/19 Page 201 of 204 PageID: 14641 7. Pursuant to the provisions of Paragraph 65 of the Settlement Agreement, as of the Settlement Effective Date, the Receiver Released Parties and the Indenture Trustees Released Parties shall be completely released, acquitted, and forever discharged from all Settled Claims by the CRI Releasing Parties. 8. The failure specifically to include any particular provisions of the Settlement Agreement in this Order shall not diminish or impair the efficacy of such provisions, it being the intent of the Court that the Settlement Agreement and each and every provision, term and condition thereof, be, and therefore is, authorized and approved in its entirety. 9. The provisions of this Order are non-severable and mutually dependent. 10. This Order shall take effect immediately and shall not be stayed, nor shall any stay apply to or otherwise prevent the exercise or performance by any Party of its rights or obligations under the Settlement Agreement. 11. The Indenture Trustees’ first-priority lien, as applicable, on all assets of the Borrowers, including the Claims, shall attach to the Settlement Amount once paid by CRI to the Receiver pursuant to the Settlement Agreement. 12. The Indenture Trustees have the authority to enter into the Settlement Agreement and grant the releases therein. 13. The Indenture Trustees’ entry into the Settlement Agreement is a prudent, good faith, informed exercise of the Indenture Trustees’ sound business judgment. 14. The Settlement Agreement and the settlements, releases, and discharges contemplated thereby shall be binding on all Parties to the Settlement Agreement, the parties in this case, all parties in interest in this case, any and all previous, present or future Bondholders, 17 4825-7795-0342.14 Case 2:17-cv-00393-SCM Document 327-2 Filed 05/24/19 Page 202 of 204 PageID: 14642 and any parties associated with the issuance of the respective Bonds made the basis of the Claims resolved by the Settlement approved herein. 15. The Receiver and the Indenture Trustees, following receipt of the Settlement Amount, are hereby authorized and directed to distribute the professional fees and costs and the Net Settlement Proceeds and to take all reasonable and necessary actions to make such distributions in accordance with the terms of the Settlement Agreement. 16. The Receiver shall file the Claims Report with the Court within sixty (60) days of the entry of this Order. If no objection is filed, the Claims Report shall be the final, binding determination of the allowance or disallowance of each Claim Form. The Court shall separately address any objection to the Claims Report. 17. The Court hereby permanently bars, restrains, and enjoins, the Receiver, the Receivership Entities, the Receivership Estates, the Borrowers, the Indenture Trustees, all previous, present and future Bondholders, the Claimants, the Issuers, all Interested Parties, and all non-governmental Persons, all and individually, from directly, indirectly, or through a third party, asserting, instituting, reinstituting, intervening in, initiating, commencing, maintaining, continuing, filing, encouraging, soliciting, supporting, participating in, collaborating in, or otherwise prosecuting or pursuing, against the CRI Parties and/or any of the CRI Released Parties, any demand, claim, investigation, action, lawsuit, cause of action, complaint, or proceeding of any nature in any Forum, including, without limitation, any court of first instance or any appellate court, whether individually, derivatively, on behalf of a class, as a member of a class, or in any other capacity whatsoever, that in any way relates to, is based upon, arises from, or is connected with this case, the subject matter of this case, the Receiver, the Receivership Entities, the Bonds, the Bondholders, the Indenture Trustees, and/or any Settled Claim. The 18 4825-7795-0342.14 Case 2:17-cv-00393-SCM Document 327-2 Filed 05/24/19 Page 203 of 204 PageID: 14643 foregoing specifically includes any claim by any Person, however denominated, seeking contribution, indemnity, damages, or any other remedy where the alleged injury to such Person, or the claim asserted by such Person, is based upon such Person’s liability to the Receiver, any Receivership Entity, any Bondholder, any Indenture Trustee, any Claimant, and/or any other Interested Party arising out of, relating to, or based in whole or in part upon money owed, demanded, requested, offered, paid, agreed to be paid, or required to be paid to the Receiver, a Receivership Entity, a Bondholder, an Indenture Trustee, a Claimant, and/or any other Interested Party whether pursuant to a demand, judgment, claim, agreement, settlement, or otherwise. 18. Notwithstanding the foregoing, the releases in the Settlement Agreement, and the releases, bars, injunctions, and restraints set forth in this Order, do not limit or prohibit in any way the evidence that may be offered in any case or proceeding, nor do they limit or prohibit the taking of discovery under applicable Rules, nor do they limit or prohibit in any way the Parties’ right to sue for alleged breaches of the Settlement Agreement or to enforce its terms or the terms of this Order. 19. The CRI Released Parties shall have no liability, responsibility, or obligation whatsoever with respect to the notice provided with respect to the Settlement. No Interested Party or any other Person shall have any recourse against CRI or the CRI Released Parties with respect to the notice process or any claims that may arise from or relate to the notice process. 20. The CRI Released Parties shall have no liability, responsibility, or obligation whatsoever with respect to the investment, management, use, administration, or distribution of the Settlement Amount or any portion thereof, including, but not limited to, the costs and 19 4825-7795-0342.14 Case 2:17-cv-00393-SCM Document 327-2 Filed 05/24/19 Page 204 of 204 PageID: 14644 expenses of such investment, management, use, administration, or distribution of the Settlement Amount, and any Taxes arising therefrom or relating thereto 21. The Receiver shall serve a copy of this order via email, first class mail or international delivery service on all parties who received notice of the Motion and any Person who filed an Objection to the Settlement, the Settlement Agreement and/or the Bar Order and Judgment, within three (3) business days of the entry of this Order. 22. The Court expressly finds and determines, pursuant to Rule 54(b), that there is no just reason for any delay in the entry of this Order, which is both final and appealable, and immediate entry by the Clerk is expressly directed. 23. Without in any way affecting the finality of this Order, the Court retains exclusive jurisdiction to, among other things, administer, interpret, implement, and enforce the terms and provisions of this Order and the Settlement Agreement and all amendments thereto and any waivers and consents thereunder, and to adjudicate, if necessary, any and all disputes concerning, arising out of, or relating in any way to the implementation and enforcement of this Order and/or the Settlement Agreement. Dated: , 2019 20 4825-7795-0342.14 Case 2:17-cv-00393-SCM Document 327-3 Filed 05/24/19 Page 1 of 13 PageID: 14645 EXHIBIT 2 Case 2:17-cv-00393-SCM Document 327-3 Filed 05/24/19 Page 2 of 13 PageID: 14646 WALLER LANSDEN DORTCH & DAVIS, LLP Blake D. Roth Ryan K. Cochran (admitted pro hac vice) 511 Union Street, Suite 2700 Nashville, Tennessee 37219 Telephone: 615.244.6380 Email: [email protected] [email protected] Counsel for the Receiver UNITED STATES DISTRICT COURT DISTRICT OF NEW JERSEY SECURITIES AND EXCHANGE COMMISSION, Plaintiff, v. Case No. 2:17-cv-393-ES-SCM DWAYNE EDWARDS; TODD BARKER; SENIOR SOLUTIONS OF SOCIAL CIRCLE, LLC; OXTON PLACE OF DOUGLAS, LLC, d/b/a OXTON REAL ESTATE OF DOUGLAS, LLC; ROME ALF, LLC; SAVANNAH ALF, LLC; GAINESVILLE ALF, LLC; WATERFORD PLACE ALF, LLC; MONTGOMERY ALF, LLC; COLUMBUS ALF, LLC; and OPELIKA ALF, LLC, Defendants, -and- OXTON SENIOR LIVING, LLC; MANOR HOUSE SENIOR LIVING, LLC; SUSAN EDWARDS, a/k/a SUSAN ROGERS; SHARON NUNAMAKER, a/k/a SHARON HADDEN; and SDH DESIGN, LLC, Relief Defendants. DM4838-1887-4502.12 DM1\9490807.4 Case 2:17-cv-00393-SCM Document 327-3 Filed 05/24/19 Page 3 of 13 PageID: 14647 SCHEDULING ORDER AND PRELIMINARY APPROVAL OF SETTLEMENT AND RELEASE AGREEMENT, INCLUDING PROPOSED DISTRIBUTION PLAN AND BAR ORDER AND JUDGMENT The motion before this Court (the “Preliminary Approval Motion”) concerns a proposed settlement (the “Settlement”) between, among others, the Receiver and Carr, Riggs & Ingram, LLC (“CRI”), as a potential defendant on claims alleged by the Receiver on behalf of the Receivership Entities and the Bondholders. Capitalized terms not otherwise defined in this Scheduling Order shall have the meaning assigned to them in the Settlement Agreement attached to the Preliminary Approval Motion (the “Settlement Agreement”). In the Preliminary Approval Motion, the Receiver seeks the Court’s approval of the terms of the Settlement as set forth in the Settlement Agreement and the entry of a Bar Order and Judgment in the form attached as Exhibit “E” to the Settlement Agreement. After reviewing the terms of the Settlement Agreement and considering the arguments presented in the Preliminary Approval Motion, the Court preliminarily approves the Settlement, including the proposed Distribution Plan, as adequate, fair, reasonable, and equitable. Accordingly, the Court enters this Scheduling Order to: (i) provide for notice of the terms of the Settlement, including the proposed Distribution Plan and Bar Order and Judgment; (ii) set the deadline and the procedure for filing objections to the Settlement, the Distribution Plan, the Bar Order and Judgment, and the Receiver’s request for approval of the professional fees and expenses of the Receiver’s general counsel, Waller, and special counsel, Whiteford Taylor; (iii) set the deadline for responding to any objection so filed; (iv) set the deadline and the manner for the submission of claims by those Bondholders who or which previously owned Bonds for distributions from the Net Settlement Proceeds; (v) set the date, time and location of the final approval hearing before this Court regarding the Settlement, the Distribution Plan, the Bar Order and Judgment, and the Receiver’s request for approval of the 4838-1887-4502.12 2 Case 2:17-cv-00393-SCM Document 327-3 Filed 05/24/19 Page 4 of 13 PageID: 14648 professional fees and expenses of the Receiver’s general counsel, Waller, and special counsel, Whiteford Taylor (the “Final Approval Hearing”), as follows: 1. Preliminary Findings Regarding the Settlement. Based upon the Court’s review of the terms of the Settlement Agreement, the arguments presented in the Preliminary Approval Motion, and the Preliminary Approval Motion’s accompanying Exhibits, the Court preliminarily finds that the Settlement, including the proposed Distribution Plan and Bar Order and Judgment, is fair, reasonable, and equitable; has no obvious deficiencies; and is the product of serious, informed, good-faith, and arm’s-length negotiations and mediation. The Court further preliminarily finds that the Indenture Trustees have acted prudently, in good faith, and in the best interests of those Bondholders who or which currently own Bonds in assigning the Current Bondholder Claims to the Receiver, in entering into the Settlement, and that the Indenture Trustees have the Authority to execute the releases provided in the Settlement Agreement. The Court, however, reserves a final ruling with respect to the terms of the Settlement until after the Final Approval Hearing referenced below in Paragraph 2. 2. Final Approval Hearing. The Final Approval Hearing will be held before United States District Court Judge, the Honorable ______of the United States District Court for the District of New Jersey, United States Courthouse, 50 Walnut Street, P.O. Box 999, Newark, New Jersey 07101, in Courtroom ___, at ______.m. on ______, 2019, which is a date at least ninety (90) calendar days after entry of this Scheduling Order. The purposes of the Final Approval Hearing will be to: (i) determine whether the terms of the Settlement, including the Distribution Plan, should be finally approved by the Court; (ii) determine whether the Bar Order and Judgment attached as Exhibit “E” to the Settlement Agreement should be entered by the Court; (iii) rule upon any objections to the Settlement, the Distribution Plan, and the Bar Order and 4838-1887-4502.12 3 Case 2:17-cv-00393-SCM Document 327-3 Filed 05/24/19 Page 5 of 13 PageID: 14649 Judgment; (iv) rule upon the Receiver’s request for approval of the professional fees and expenses of its general counsel, Waller, and special counsel, Whiteford Taylor; and (v) rule upon such other matters as the Court may deem appropriate. 3. Stay Pending Order on Final Approval or Further Order of Court. Except to the extent necessary to address the Preliminary Approval Motion, the Court hereby preliminarily stays, bars, restrains, and enjoins, the Receiver, the Indenture Trustees, all previous, present and future Bondholders, the Claimants, the Issuers, all other Interested Parties, and all other non- governmental Persons, all and individually, from directly, indirectly, or through a third party, asserting, instituting, reinstituting, intervening in, initiating, commencing, maintaining, continuing, filing, encouraging, soliciting, supporting, participating in, collaborating in, or otherwise prosecuting or pursuing, against the CRI Parties and/or any of the CRI Released Parties, any demand, claim, investigation, action, lawsuit, cause of action, complaint, or proceeding of any nature in any Forum, including, without limitation, any court of first instance or any appellate court, whether individually, derivatively, on behalf of a class, as a member of a class, or in any other capacity whatsoever, that in any way relates to, is based upon, arises from, or is connected with this case, the subject matter of this case, the Receiver, the Receivership Entities, the Bonds, the Bondholders, the Indenture Trustees, and/or any Settled Claim. The foregoing specifically includes any claim by any Person, however denominated, seeking contribution, indemnity, damages, or any other remedy where the alleged injury to such Person, or the claim asserted by such Person, is based upon such Person’s liability to the Receiver, any Receivership Entity, any Bondholder, any Indenture Trustee, any Claimant, and/or any other Interested Party arising out of, relating to, or based in whole or in part upon money owed, demanded, requested, offered, paid, agreed to be paid, or required to be paid to the Receiver, a Receivership Entity, a Bondholder, 4838-1887-4502.12 4 Case 2:17-cv-00393-SCM Document 327-3 Filed 05/24/19 Page 6 of 13 PageID: 14650 an Indenture Trustee, a Claimant, and/or any other Interested Party whether pursuant to a demand, judgment, claim, agreement, settlement, or otherwise. The preliminary stay and injunction imposed by this paragraph shall remain in effect until further order of the Court. 4. Notice. The Court approves the form of Notice attached as Exhibit “A” to the Settlement Agreement, including the Claim Form appended thereto, and finds that the distribution, dissemination and publication of Notice along with the publication of the Short Form Notice once a week for three consecutive weeks in the Wall Street Journal and U.S.A. Today described in the Settlement Agreement and the Preliminary Approval Motion: (i) constitute the best practicable notice; (ii) are reasonably calculated, under the circumstances, to apprise all Interested Parties of the Settlement, the Distribution Plan, the Bar Order and Judgment, and the Receiver’s request for approval of the professional fees and expenses of the Receiver’s general counsel, Waller, and special counsel, Whiteford Taylor; (iii) are reasonably calculated, under the circumstances, to apprise all Interested Parties of the right to object to the Settlement and the Bar Order, and to appear at the Final Approval Hearing; (iv) constitute due, adequate, and sufficient notice; (v) meet all requirements of applicable law, including the Federal Rules of Civil Procedure, the United States Code and the United States Constitution (including Due Process); and (vi) will provide to all Persons a full and fair opportunity to be heard on these matters. The Court further approves the form of Short Form Notice attached as Exhibit “B” to the Settlement Agreement and the proposal as to publication of the Short Form Notice. Therefore: a. The Receiver is hereby directed, no later than seven (7) calendar days after entry of this Scheduling Order, to cause the Notice in substantially the form attached as Exhibit “A” to the Settlement Agreement to be sent via electronic mail, first class mail, or international delivery service to (a) all parties that appeared and requested notice in the SEC Receivership Case; (b) 4838-1887-4502.12 5 Case 2:17-cv-00393-SCM Document 327-3 Filed 05/24/19 Page 7 of 13 PageID: 14651 counsel to the CRI Parties; (c) counsel to the Indenture Trustees; (d) the Underwriter for each Offering; (e) counsel to the Underwriter, at the time of the Offering, for each Offering; (f) the Issuer for each Offering; (g) counsel to the Issuer, at the time of the Offering, for each Offering; (h) bond counsel for each Offering; (i) the Depository Trust Company (“DTC”); (j) the Municipal Securities Rulemaking Board’s Electronic Municipal Market Access System (“EMMA”); (k) to the extent they have identified themselves to the Indenture Trustees each of the past or present Bondholders; (l) the original purchasers of the Bonds whose identity was provided to the SEC by the Underwriters in the course of the SEC’s investigation of the Defendants, and (m) posted on the Receiver’s website http://oxtonseniorlivingreceivership.com. b. With respect to the Notice sent to DTC, the Receiver is hereby further directed to request that DTC forward the Notice to each participant of DTC who is reflected in DTC’s records as a holder of the Bonds. c. With respect to Notice sent to the Underwriters of the Offerings, the Receiver is hereby further directed to request that such Underwriters send the Notice to each past or present beneficial owner of the Bonds to the extent such beneficial owners are identifiable by the Underwriters from their records through reasonable efforts. d. With respect to the Notice sent to EMMA, the Receiver is hereby further directed to request, or cause the Indenture Trustees to request, that EMMA publish the Notice, the Preliminary Approval Motion and all Exhibits thereto (including the Settlement Agreement and all of its Exhibits), and this Scheduling Order on its website under the CUSIP numbers for the respective Bonds issued in connection with each of the Offerings. e. The Receiver is further hereby directed, no later than seven (7) calendar days after the entry of this Scheduling Order, to cause the Notice, the Approval Motion and all Exhibits 4838-1887-4502.12 6 Case 2:17-cv-00393-SCM Document 327-3 Filed 05/24/19 Page 8 of 13 PageID: 14652 thereto (including the Settlement Agreement and all of its Exhibits), and this Scheduling Order to be posted on the Receiver’s web site http://oxtonseniorlivingreceivership.com/. f. The Receiver is hereby further directed, no later than seven (7) calendar days after entry of this Scheduling Order, to cause the Short Form Notice in substantially the same form attached as Exhibit “B” to the Settlement Agreement to be published once a week for three consecutive weeks in the national edition of The Wall Street Journal and U.S.A. Today. g. The Receiver is hereby further directed promptly to provide the Notice, the Motion and all Exhibits thereto (including the Settlement Agreement and all of its Exhibits), and this Scheduling Order, to any Person who requests such documents, in writing by use of a recognized overnight mail carrier, to William F. Ryan, Jr., an attorney at Whiteford, Taylor & Preston, LLP, 7 St. Paul Street, Baltimore, Maryland 21202. The Receiver may provide such materials in the form and manner that the Receiver deems most appropriate under the circumstances of the request. h. No less than ten (10) calendar days before the Final Approval Hearing, the Receiver shall cause to be filed with the Clerk of this Court an affidavit or declaration of compliance with subparts (a) through (g) of this Paragraph 4. 5. Objections and Appearances at the Final Approval Hearing. Any Person who wishes to object to the terms of the Settlement, the Distribution Plan, the Bar Order and Judgment, or Receiver’s request for approval of Receiver’s attorneys’ fees and costs, or who wishes to appear at the Final Approval Hearing, must do so by filing an objection, in writing, with this Court in this case by ECF or by mailing the objection to the Clerk of the United States District Court for the District of New Jersey, United States Courthouse, 50 Walnut Street, P.O. Box 999, Newark, New Jersey 07101, so that it is received no later than ten (10) calendar days before the Final Approval Hearing. All objections filed with the Court must: 4838-1887-4502.12 7 Case 2:17-cv-00393-SCM Document 327-3 Filed 05/24/19 Page 9 of 13 PageID: 14653 a. contain the name, address, telephone number, and (if applicable) an email address of the Person filing the objection; b. contain the name, address, telephone number, and email address of any attorney representing the Person filing the objection; c. be signed by the Person filing the objection, or his or her attorney; d. state, in detail, the basis for any objection; e. attach any document the Court should consider in ruling on the Settlement, the Bar Order and Judgment, or the Receiver’s request for approval of Receiver’s attorneys’ fees and costs; and f. if the Person filing the objection wishes to appear at the Final Approval Hearing, make a request to do so. No Person will be permitted to appear at the Final Approval Hearing without filing a written objection and request to appear at the Final Approval Hearing as set forth in subparts a. through f. of this Paragraph 5. Copies of any objections filed must be contemporaneously served by ECF, or by email or first class mail, upon each of the following: Counsel to the Receiver: Ryan K. Cochran Waller Lansden Dortch & Davis, LLP 511 Union Street, Suite 2700 Nashville, TN 37219 Phone: (615) 850-8778 E-mail: [email protected] William F. Ryan, Jr. Whiteford Taylor & Preston, LLP 7 St. Paul Street, 15th Floor Baltimore, MD 21202 Phone: (410) 347-8741 E-mail: [email protected] 4838-1887-4502.12 8 Case 2:17-cv-00393-SCM Document 327-3 Filed 05/24/19 Page 10 of 13 PageID: 14654 Counsel to Trustee BOKF: Nora R. O’Neill Frederic Dorwart, Lawyers PLLC Old City Hall 124 East Fourth Street Tulsa, OK 74103-5027 Phone: (918) 583-9922 E-mail: [email protected] Counsel to Trustee U.S. Bank: George M. Taylor III Burr & Forman, LLP 420 North 20th Street, Suite 3400 Birmingham, AL 35203 Phone: (205) 458-5254 E-mail: [email protected] Counsel to Trustee UMB: Thomas Longino Longino Public Finance LLC 2917 Central Avenue, Suite 205 Birmingham, AL 35209 Phone: (205) 490-2460 E-mail: [email protected] Counsel to the CRI Parties: Thomas B.K. Ringe, III Anthony J. Costantini Patrick Matusky Duane Morris LLP 30 South 17th Street Philadelphia, PA 19103 Phone: (215) 979-1160 E-mail: [email protected] Lee H. Copeland Copeland, Franco, Screws & Gill, P.A. P.O. Box 347 Montgomery, AL 36101-0347 Phone: (334) 834-1180 E-mail: [email protected] 4838-1887-4502.12 9 Case 2:17-cv-00393-SCM Document 327-3 Filed 05/24/19 Page 11 of 13 PageID: 14655 Any Person filing an objection shall be deemed to have submitted to the jurisdiction of this Court for all purposes of that objection, the Settlement, and the Bar Order and Judgment. Potential objectors who do not present opposition by the time and in the manner set forth above shall be deemed to have waived the right to object (including any right to appeal, seek reconsideration or other review) and to appear at the Final Approval Hearing and shall be forever barred from raising such objections in this action or any other action or proceeding. Persons do not need to appear at the Final Approval Hearing or take any other action to indicate their approval, but if they desire to claim entitlement to distributions from the Net Settlement Proceeds, they must comply with Paragraph 7 of this Scheduling Order regarding submission of claims. 6. Responses to Objections. Any Party to the Settlement Agreement may respond to an objection filed pursuant to Paragraph 5 by filing a response with the Clerk of the Court in this case no later than two (2) calendar days before the Final Approval Hearing. To the extent any Person filing an objection cannot be served by the Court’s CM/ECF system, a response must be served to the email and/or mailing address provided by that Person. 7. Submission of Claims. Any previous Bondholder claiming entitlement to a distribution from the Net Settlement Proceeds must submit a Claim Form in the form appended to the Notice attached as Exhibit “A” to the Settlement Agreement to the Receiver at the address set forth on the Claim Form and as described in the Notice, so that it is received by the Receiver on or before 4:00 p.m. (Eastern), ninety (90) days from the date of entry of this Scheduling Order. Any previous Bondholder’s failure to timely and properly submit a Claim Form, duly providing the information and documentation called for by the Claim Form, shall preclude such previous Bondholder from receiving any distribution from the Net Settlement Proceeds. Current Bondholders are exempt from the requirement of submitting a Claim Form. 4838-1887-4502.12 10 Case 2:17-cv-00393-SCM Document 327-3 Filed 05/24/19 Page 12 of 13 PageID: 14656 8. Adjustments Concerning Hearing and Deadlines. The date, time, and place for the Final Approval Hearing, and the deadlines and date requirements in this Scheduling Order, shall be subject to adjournment or change by this Court without further notice other than that which may be posted by means of ECF in this case. 9. Retention of Jurisdiction. This Court shall retain jurisdiction to consider all further applications arising out of or connected with the proposed Settlement. 10. Entry of Injunction. If the Settlement is approved by the Court, the Court will enter the Bar Order and Judgment in this case. If entered, the Bar Order and Judgment will permanently bar, restrain, and enjoin, among others, Interested Parties, including Bondholders and Claimants, from asserting, bringing, encouraging, assisting, continuing, prosecuting, or pursuing against CRI or any of the CRI Released Parties, any claim, action, lawsuit, cause of action, claim, investigation, demand, complaint, or proceeding of any nature, including, without limitation, contribution or indemnity claims, constituting a Settled Claim. 11. Use of Order. Under no circumstances shall this Scheduling Order be construed, deemed, or used as an admission, concession, or declaration by or against the CRI Released Parties of any fault, wrongdoing, breach or liability. Nor shall the Order be construed, deemed, or used as an admission, concession, or declaration by or against the Receiver or the Indenture Trustees that their claims lack merit or that the relief requested is inappropriate, improper, or unavailable, or as a waiver by any party of any defenses or claims he, she or it may have. Neither this Scheduling Order, nor the proposed Settlement Agreement, or any other settlement document, shall be filed, offered, received in evidence, or otherwise used in these or any other actions or proceedings, except to approve, give effect to, implement or enforce the Settlement or the terms of this Scheduling Order. 4838-1887-4502.12 11 Case 2:17-cv-00393-SCM Document 327-3 Filed 05/24/19 Page 13 of 13 PageID: 14657 IT IS SO ORDERED. SIGNED on ______, 2019. 4838-1887-4502.12 12 Case 2:17-cv-00393-SCM Document 327-4 Filed 05/24/19 Page 1 of 11 PageID: 14658 EXHIBIT 3 Case 2:17-cv-00393-SCM Document 327-4 Filed 05/24/19 Page 2 of 11 PageID: 14659 UNITED STATES DISTRICT COURT DISTRICT OF NEW JERSEY SECURITIES AND EXCHANGE COMMISSION, Plaintiff, v. Case No. 2:17-cv-393-ES-SCM DWAYNE EDWARDS; TODD BARKER; SENIOR SOLUTIONS OF SOCIAL CIRCLE, LLC; OXTON PLACE OF DOUGLAS, LLC, d/b/a OXTON REAL ESTATE OF DOUGLAS, LLC; ROME ALF, LLC; SAVANNAH ALF, LLC; WATERFORD PLACE ALF, LLC; MONTGOMERY ALF, LLC; COLUMBUS ALF, LLC; and OPELIKA ALF, LLC, Defendants, -and- OXTON SENIOR LIVING, LLC; MANOR HOUSE SENIOR LIVING, LLC; SUSAN EDWARDS, a/k/a SUSAN ROGERS; SHARON NUNAMAKER, a/k/a SHARON HADDEN; and SDH DESIGN, LLC, Relief Defendants. If you bought bonds listed on the attached Exhibit “A,” you could get a payment from a Settlement. A federal court authorized this notice. This is not a solicitation from a lawyer. A Settlement in the amount of $10,000,000 has been proposed to compensate investors who purchased certain Bonds issued by: Douglas-Coffee County Industrial Authority; Cave Spring Housing Development Corporation; Savannah Economic Development Authority; Gainesville and Hall County Development Authority; The Medical Clinic Board of the City of Montgomery-1976 East; the Development Authority of Columbus, Georgia; and The Medical Clinic Board of the City of Opelika, Alabama. The attached Exhibit “A” identifies the Bonds at issue. The Settlement1 resolves Claims made by the Receiver for the entities which were the ultimate beneficiaries of these issuances and for the Bondholders of such entities over whether Carr, Riggs & Ingram, LLC (“CRI”), an accounting firm which performed various professional services for those entities, caused injuries to them and to the Bondholders. The Settlement avoids costs and risks from commencing and continuing a lawsuit, pays money to qualifying investors, and releases and bars claims against CRI and related parties, including its members and employees. Court-appointed lawyers for the Receiver will ask the Court for up to $2,243,065, to be paid out of the $10,000,000 Settlement, as fees and expenses for investigating the facts, asserting the Claims, negotiating the Settlement, and 1 Capitalized terms not otherwise defined herein shall have the meaning given them in the Settlement Agreement, a copy of which is available at www.oxtonseniorlivingreceivership.com/ [settlement landing page]. 4824-7331-5732.11 1 Case 2:17-cv-00393-SCM Document 327-4 Filed 05/24/19 Page 3 of 11 PageID: 14660 providing notice of the Settlement. The two sides disagree on whether the Receiver could have prevailed at trial and, if he prevailed, on how much money, if any, the Receiver could have recovered. Your legal rights are affected whether you act, or don’t act. Read this notice carefully. The Court in charge of this case still has to decide whether to approve the Settlement. Payments will be made if the Court approves the Settlement and after any appeals are resolved. Please be patient. BASIC INFORMATION ………………………………….……………………..……………. PAGE 2 1. Why did I get this notice package? 2. What is this dispute about? 3. Why is this a receivership? 4. Why is there a Settlement? WHO IS IN THE SETTLEMENT……………………………………………………………… PAGE 4 5. How do I know if I am part of the Settlement? THE SETTLEMENT BENEFITS—WHAT YOU GET………………………..….…………… PAGE 4 6. What does the Settlement provide? 7. How much will my payment be? HOW YOU GET A PAYMENT—SUBMITTING A CLAIM FORM ……….……...... PAGE 5 8. How can I get a payment? 9. When would I get my payment? 10. What am I giving up to get a payment? 11. Can I get out of the Settlement? THE LAWYERS ….………………………….…………...... PAGE 6 12. Do I have a lawyer in the case? 13. How will the lawyers be paid? OBJECTING TO THE SETTLEMENT…………………...……………………………………. PAGE 6 14. How do I tell the Court that I don’t like the Settlement? THE COURT’S FINAL APPROVAL HEARING………………………………………..……………… PAGE 8 15. When and where will the Court decide whether to approve the Settlement? 16. Do I have to come to the hearing? 17. May I speak at the hearing? IF YOU DO NOTHING……………………………….………………………………………. PAGE 8 18. What happens if I do nothing at all? GETTING MORE INFORMATION…………………………………………………………… PAGE 8 19. Are there more details about the Settlement? 20. How do I get more information? 4824-7331-5732.11 2 Case 2:17-cv-00393-SCM Document 327-4 Filed 05/24/19 Page 4 of 11 PageID: 14661 BASIC INFORMATION 1. Why did I get this notice package? You, someone in your family, or someone for whom you act may have purchased certain Bonds issued by the following entities: Douglas-Coffee County Industrial Authority; Cave Spring Housing Development Corporation; Savannah Economic Development Authority; Gainesville and Hall County Development Authority; The Medical Clinic Board of the City of Montgomery-1976 East; the Development Authority of Columbus, Georgia; and The Medical Clinic Board of the City of Opelika, Alabama. A list of the specific Bond issuances in question is included in Exhibit “A” to this notice. The Court caused this notice to be sent to you because you have a right to know about a proposed Settlement, and about all of your options, before the Court decides whether to approve the Settlement. This notice explains the Claims, the Settlement, your legal rights, what benefits are available, who is eligible for them, and how to get them. The Court in charge of the case is the United States District Court for the District of New Jersey, and the case is known as Securities and Exchange Commission v. Dwayne Edwards, et al., Case No. 2:17-cv-393-ES-SCM. This case was filed by the United States Securities and Exchange Commission (“SEC”), which is called the plaintiff, against, among others, Dwayne Edwards (“Edwards”), Todd Barker (“Barker”), and several of their companies which benefitted from the issuance of the Bonds, Oxton Place of Douglas, LLC d/b/a Oxton Real Estate of Douglas, LLC, Rome ALF, LLC, Savannah ALF, LLC, Gainesville ALF, LLC, Waterford Place ALF, LLC, Montgomery ALF, LLC, Columbus ALF, LLC, and Opelika ALF, LLC (collectively, the “Entities”), all of whom are called defendants. To marshal, preserve and administer the assets of the Entities, the Court appointed Derek Pierce as Receiver. 2. What is this dispute about? This Settlement is of a dispute raised by the Receiver concerning services provided by CRI and several of its members and employees. The Entities are limited liability companies formed by Barker and Edwards for the purpose of acquiring and operating assisted living and/or memory care facilities. After obtaining conduit municipal bond financing, each Entity acquired and operated such an assisted living and/or memory care facility. CRI is a public accounting firm. In connection with each of the municipal bond offerings identified in Exhibit “A,” and continuing through 2016, each of the Entities engaged CRI, among other things, to examine forecasted financial statements for each offering prepared by the Entity’s management and to issue an independent accountant’s report with respect to each such forecast. In each such report, CRI opined that management’s related forecast was presented in conformity with guidelines for presentation of a forecast established by the American Institute of Certified Public Accountants and that the underlying assumptions provided a reasonable basis for management’s forecast. In addition to examining and providing a report with respect to management’s forecast, CRI provided other accounting services to each Entity, including audit, compilation and tax services. During 2016, each of the Entities defaulted on its obligations with respect to the bond offerings resulting in various bankruptcy and receivership proceedings, including, ultimately, the action brought by the SEC. As a result of such defaults, many of the current and former Bondholders sustained damages by reason of their investments in the Bonds. Generally, the Receiver claimed that CRI and its members and employees breached their obligations to the Entities and the Bondholders with respect to the Financial Forecasts and made false and misleading statements by issuing in the reports “clean opinions” for each such Financial Forecast. In this regard, the Receiver contended, among other things, that CRI: (i) lacked the independence required to perform their responsibilities as independent certified public accountants in examining and preparing reports in connection with the Financial Forecasts; (ii) failed to disclose significant assumptions underlying the Financial Forecasts, without issuing an adverse opinion; and (iii) failed properly to obtain support for and evaluate certain underlying assumptions. The Receiver asserted Claims against CRI sounding in negligence, intentional tort, breach of contract, and breach of fiduciary duty. For its part, CRI vigorously denied any wrongdoing and contended, among other things: (i) that, if the allegations of misconduct by Edwards and Barker were true, the Claims of the Entities were barred by the doctrine of in pari delicto; (ii) that any 4824-7331-5732.11 3 Case 2:17-cv-00393-SCM Document 327-4 Filed 05/24/19 Page 5 of 11 PageID: 14662 Claims lacked merit because of the inability of the party allegedly injured to prove reasonable reliance on anything CRI did or said; and (iii) that the conduct and statements of CRI were not the proximate cause of any loss sustained, such loss being caused instead by unforeseeable subsequent events, including, among other things, an ownership break-up between Edwards and Barker, unanticipated regulatory issues and the mismanagement and/or misconduct of other parties. 3. Why is this a receivership? By order dated January 23, 2017, the Court granted the SEC’s motion to appoint a receiver. Under that order, the Receiver is empowered to marshal, preserve, and administer the assets and estates of the Entities. In addition, under authority granted by the Court’s order dated March 6, 2018, the Receiver is pursuing the Claims of the Bondholders against CRI assigned to the Receiver by the Indenture Trustees on the Bonds. 4. Why is there a Settlement? The Court did not decide in favor of the Receiver or CRI. There was no trial. Instead, both sides agreed to a Settlement. That way, they avoid the cost of a trial, and the people affected will have a right to compensation. The Receiver and his attorneys think the Settlement is best for all current and previous Bondholders. WHO IS IN THE SETTLEMENT 5. How do I know if I am part of the Settlement? All current and previous Bondholders are entitled to participate in the Settlement. Current Bondholders do not need to do anything to participate in the Settlement. Previous Bondholders must timely and properly submit a valid Claim Form to participate in the Settlement. The Claim Form is due [Month 00], 2019. The Claim Form can be found at www.oxtonseniorlivingreceivership.com and is also attached to this notice. THE SETTLEMENT BENEFITS—WHAT YOU GET 6. What does the Settlement provide? The Settlement provides a recovery to current Bondholders. The Settlement also provides a recovery to previous Bondholders who sustained loss on the Bonds and who timely and properly submit a Claim Form. The only previous Bondholders who or which may receive a distribution under the Distribution Plan are those who or which both: (a) sold at a loss on or before 4:00 p.m. (Eastern), ninety (90) days from the date of the entry of the Scheduling Order, and (b) submit a Claim Form to the Receiver at the address set forth on the Claim Form, so that it is received by the Receiver on or before 4:00 p.m. (Eastern), ninety (90) days from the date of entry of the Scheduling Order. The Claim Form is due by 4:00 p.m. (Eastern) [Month 00], 2019. The Claim Form can be found at www.oxtonseniorlivingreceivership.com and is also attached to this notice. In addition, the Settlement provides for the entry of a Bar Order that will prevent the Receiver, the Indenture Trustees, all previous, present and future Bondholders, the Claimants, the Issuers, all Interested Parties, and all non-governmental Persons from prosecuting or pursuing any claims against CRI and related parties, including its members and employees relating to the Bonds. 7. How much will my payment be? Until the Settlement is fully administered, it is not possible to determine what individual Bondholders will receive. The Settlement Amount will be allocated between the Borrowers as follows: Settlement Amount: $10,000,000 Contingency Fee: ($2,000,000) Dispute Related Expenses: ($243,065) Net Settlement Proceeds: $ 7,756,935 4824-7331-5732.11 4 Case 2:17-cv-00393-SCM Document 327-4 Filed 05/24/19 Page 6 of 11 PageID: 14663 Douglas Rome Savannah Gainesville Waterford Montgomery Columbus Opelika Total BOKF BOKF BOKF BOKF BOKF UMB BOKF U.S. Bank (1) Est. Current $1,663,882 $3,917,403 $4,102,600 $2,851,125 $6,095,832 $5,287,563 $4,630,220 $4,730,599 $33,279,224 Bondholder Loss (2) % Share 5.0% 11.8% 12.3% 8.6% 18.3% 15.9% 13.9% 14.2% 100% (3) Borrower’s $387,847 $915,318 $954,103 $667,096 $1,419,519 $1,233,353 $1,078,214 $1,101,485 $7,756,935 Allocation of Net Settlement Proceeds The Settlement then allocates each Borrower’s allocation of the Net Settlement Proceeds amongst that Borrower’s previous and current Bondholders as follows: Step-One: Determine Current Bondholders Losses for Each Borrower Estimated Current Bondholder Loss for each Borrower as listed in row (1) of the above chart. Step-Two: Determine the Previous Bondholder Loss for Each Borrower i. (Price at Which Previous Individual Bondholder Bought Bonds - Price at Which Previous Bondholder Sold Bonds) = (x%) (All Previous Bondholder Losses + All Current Bondholder Losses) ii. (x%) * Net Settlement Proceeds Allocated to Borrower = Previous Individual Bondholder’s Recovery iii. Only previous Bondholders who or which sold at a loss will be qualified to receive a distribution under the Distribution Plan. The only previous Bondholders who or which may receive a distribution under the Distribution Plan are those who or which both: (a) sold on or before 4:00 p.m. (Eastern), ninety (90) days from the date of the entry of the Scheduling Order, and (b) submit a Claim Form to the Receiver at the address set forth on the Claim Form, so that it is received by the Receiver on or before 4:00 p.m. (Eastern), ninety (90) days from the date of entry of the Scheduling Order. Step-Three: Determine Distribution to Current Bondholders of Each Borrower Net Settlement Proceeds Allocated to Borrower - Total Previous Bondholders Recovery = Distribution to Indenture Trustee on Account of Current Bondholders’ Losses HOW YOU GET A PAYMENT—SUBMITTING A CLAIM FORM 8. How can I get a payment? Any previous Bondholder claiming entitlement to a distribution from the Net Settlement Proceeds must submit a Claim Form in the form appended to this notice to the Receiver at the address set forth on the Claim Form, so that it is received by the Receiver on or before 4:00 p.m. (Eastern), ninety (90) days from the date of entry of the Scheduling Order, that is, by 4:00 p.m. (Eastern) [Month 00], 2019. Any previous Bondholder’s failure to timely and properly submit a Claim Form, duly providing the information and documentation called for by the Claim Form, shall preclude such previous Bondholder from receiving any distribution from the Net Settlement Proceeds. The Receiver will review and verify each submitted Claim Form. The Receiver will then file with the Court a report outlining the Receiver’s determination as to whether the Claim Form will be allowed or disallowed (the “Claims Report”). Previous Bondholders who have submitted a Claim Form will have the opportunity to object to the Claims Report by filing an objection to the Claims Report within (14) days after the filing of the Claims Report. Objections to the Claims Report will be determined by the Court. If no objection is timely filed to the Claims Report, the Claims Report shall be the final, binding determination on the allowance or disallowance of each Claim Form. CURRENT BONDHOLDERS ARE EXEMPT FROM THE REQUIREMENT OF SUBMITTING A CLAIM FORM. THE SETTLEMENT PROCEEDS DUE CURRENT BONDHOLDERS WILL BE DISTRIBUTED TO 4824-7331-5732.11 5 Case 2:17-cv-00393-SCM Document 327-4 Filed 05/24/19 Page 7 of 11 PageID: 14664 THE INDENTURE TRUSTEES WHO WILL DISTRIBUTE THE FUNDS TO THE CURRENT BONDHOLDERS. 9. When would I get my payment? If the Settlement is approved, we do not know when current and previous Bondholders will get their payments. The Court will hold a hearing on [Month 00], 2019, to decide whether to approve the Settlement. If the Court approves the Settlement after that, there may be appeals. It’s always uncertain whether these appeals can be resolved, and resolving them can take time, perhaps more than a year. Everyone who sends in a Claim Form will be informed of the progress of the Settlement. Please be patient. 10. What am I giving up to get a payment? You cannot exclude yourself from the Settlement, and that means that you can’t sue, continue to sue, or be part of any other lawsuit against CRI, its members or employees about the legal or factual issues in this case. It also means that all of the Court’s orders will apply to you and legally bind you. This is true whether or not you submit a Claim Form. 11. Can I get out of the Settlement? No. You cannot exclude yourself from this Settlement. If the Court approves this Settlement, you will be subject to what is called a “Bar Order.” That Bar Order will prevent the Receiver, the Indenture Trustees, all previous, present and future Bondholders, the Claimants, the Issuers, all other Interested Parties, and all other non-governmental Persons from prosecuting or pursuing any claims against CRI and related parties, including its members and employees relating to the Bonds. This Bar Order will only be entered if the Court approves the Settlement. THE LAWYERS 12. Do I have a lawyer in the case? No. The Receiver is represented by the law firms of Waller Lansden Dortch & Davis, LLP in Nashville, TN, and Whiteford Taylor & Preston, LLP in Baltimore, MD. If you want to be represented by your own lawyer, you may hire one at your own expense. 13. How will the lawyers be paid? The Receiver’s attorneys will ask the Court to approve payment of attorneys’ fees and costs of up to $2,243,065, comprised of a fee award of $2 million and costs of $243,065. The fees awarded would pay the Receiver’s counsel for investigating the facts, asserting and pursuing the Claims against CRI, negotiating and obtaining approval of the Settlement, and providing the notice called for by the Settlement. The costs awarded would reimburse the Receiver and his attorneys for out-of-pocket costs incurred by them in asserting and pursuing the Claims and the Settlement. The fee amount of $2 million is based on a contingent fee of 20% agreed upon between the Receiver and his counsel previously approved by the Court. These amounts will be deducted from the Settlement amount of $10,000,000. CRI has agreed not to oppose these fees and expenses. OBJECTING TO THE SETTLEMENT 14. How do I tell the Court that I don’t like the Settlement? You can tell the Court that you don’t agree with the Settlement or some part of it. You can object to the Settlement if you don’t like any part of it. You can give reasons why you think the Court should not approve it. To object, you must mail your written objection to the Clerk of the United States District Court for the District of New Jersey, United States Courthouse, Martin Luther King Building, 50 Walnut Street, P.O. Box 999, Newark, New Jersey 07101, so that it is received no later than [Month 00], 2019. All objections filed with the Court must: a. contain the name, address, telephone number, and (if applicable) an email address of the Person filing the objection; 4824-7331-5732.11 6 Case 2:17-cv-00393-SCM Document 327-4 Filed 05/24/19 Page 8 of 11 PageID: 14665 b. contain the name, address, telephone number, and email address of any attorney representing the Person filing the objection; c. be signed by the Person filing the objection, or his or her attorney; d. state, in detail, the basis for any objection; e. attach any document the Court should consider in ruling on the Settlement, the Bar Order and Judgment, or the Receiver’s request for approval of Receiver’s attorneys’ fees and costs; and f. if the Person filing the objection wishes to appear and be heard at the Final Approval Hearing, make a request to do so. No Person will be permitted to appear and be heard at the final approval hearing without filing a written objection and request to appear and be heard at the final approval hearing. Your written objection must be mailed to all of the following different places: COURT RECEIVER’S COUNSEL CRI’S COUNSEL Clerk of the Court Waller Lansden Duane Morris LLP United States District Court for the Dortch & Davis, LLP Thomas B.K. Ringe District of New Jersey Blake D. Roth 30 S. 17th Street Martin Luther King Building & U.S. 511 Union Street, Suite Philadelphia, PA 191903 Courthouse 2700 50 Walnut Street Room 4015 Nashville, Tennessee Newark, NJ 07101 37219 and Whiteford Taylor & Preston, LLP William F. Ryan, Jr. 7 St. Paul Street, 15th Floor, Baltimore, MD 21202 INDENTURE TRUSTEES’ COUNSEL Bank of Oklahoma U.S. Bank UMB Bank, N.A. Nora R. O’Neill George M. Taylor III Thomas Longino Frederic Dorwart, Lawyers PLLC Burr & Forman, LLP Longino Public Finance LLC Old City Hall 420 North 20th Street 2917 Central Avenue 124 East Fourth Street Suite 3400 Suite 205 Tulsa, OK 74103-5027 Birmingham, AL 35203 Birmingham, AL 35209 4824-7331-5732.11 7 Case 2:17-cv-00393-SCM Document 327-4 Filed 05/24/19 Page 9 of 11 PageID: 14666 THE COURT'S FINAL APPROVAL HEARING 15. When and where will the Court decide whether to approve the Settlement? The Court will hold a Final Approval Hearing at [0:00 _M] on [Month 00], 2019, at the United States District Court for the District of New Jersey, Martin Luther King Building & U.S. Courthouse 50 Walnut Street Room 4015, Newark, NJ 07101, in Courtroom [__]. At the Final Approval Hearing the Court will consider whether the Settlement is fair, reasonable, and adequate. The Court may also decide how much to pay to the Receiver’s counsel. If there are objections, the Court will consider them. At or after the Final Approval Hearing, the Court will decide whether to approve the Settlement. We do not know how long the decision will take. 16. Do I have to come to the hearing? No. The Receiver’s counsel will answer questions the Court may have. But, you are welcome to come at your own expense. If you send an objection, you don’t have to come to Court to talk about it. As long as your written objection is received on time, the Court will consider it. You may also pay your own lawyer to attend, but it’s not necessary. 17. May I speak at the hearing? You may ask the Court for permission to speak at the fairness hearing. To do so, you must send a letter objecting to the Settlement as provided for in answer to Question 14 above. You must also send a separate letter saying that it is your “Notice of Intention to Appear and be Heard in SEC v. Edwards.” Be sure to include your name, address, telephone number, and your signature. Your Notice of Intention to Appear and be Heard must be received no later than [Month 00], 2019, by the Clerk of the Court, the Receiver’s Counsel, Defense Counsel, and Counsel to the Indenture Trustees at the addresses in answer to Question 14. IF YOU DO NOTHING 18. What happens if I do nothing at all? If you are a current Bondholder and do nothing, you’ll get money from this Settlement. If you are a previous Bondholder and do nothing, you’ll get no money from this Settlement. In either event, if the Court approves the Settlement, your Claims against CRI covered by the Settlement will be barred. GETTING MORE INFORMATION 19. Are there more details about the Settlement? Yes. You can read the pleadings relevant to the Settlement that have been filed in the case. You can get a copy of these pleadings by visiting www.oxtonseniorlivingreceivership.com/ [settlement landing page]. 20. How do I get more information? This notice summarizes the proposed Settlement. More details are in a Settlement Agreement. You can get a copy of the Settlement Agreement and other pleadings related to the Settlement by visiting www.oxtonseniorlivingreceivership.com/ [settlement landing page]. DATE: [MONTH 00], 2019. 4824-7331-5732.11 8 Case 2:17-cv-00393-SCM Document 327-4 Filed 05/24/19 Page 10 of 11 PageID: 14667 EXHIBIT A ISSUER CUSIP OPELIKA ALA MED CLINIC BRD HEALTHCARE FAC REV 683507AA5 OPELIKA ALF LLC PROJ (AL) 683507AB3 683507AC1 683507AD9 683507AE7 MONTGOMERY ALA MED CLINIC BRD 1976 EAST REV FIRST 613061AG5 MTG-WATERFORD PL ALF LLC (AL) 613061AH3 SAVANNAH GA ECONOMIC DEV AUTH REV FIRST MTG- 80483CLN9 SAVANNAH ALF LLC (GA) 80483CLP4 CAVE SPRING HOUSING DEVELOPMENT CORPORATION 149596CF3 FIRST MORTGAGE REVENUE BONDS (ROME ALF, LLC 149596CG1 PROJECT (GA) MONTGOMERY ALA MED CLINIC BRD 1976 EAST REV FIRST 613061AJ9 MTG-MONTGOMERY ALF LLC (AL) 613061AK6 GAINESVILLE AND HALL CNTY GA DEV AUTH FIRST MTG- 362754GT4 GAINESVILLE ALF, LLC (GA) 362754GU1 362754GV9 362754GW7 DOUGLAS-COFFEE CNTY GA INDL AUTH FIRST MTG REV 258873AA6 OXTON PL DOUGLAS LLC PROJ-SER (GA) 258873AB4 COLUMBUS GA DEV AUTH REV FIRST MTG-COLUMBUS ALF 19912HFH7 LLC (GA) 19912HFJ3 19912HFK0 4824-7331-5732.11 Case 2:17-cv-00393-SCM Document 327-4 Filed 05/24/19 Page 11 of 11 PageID: 14668 CLAIM FORM UNITED STATES DISTRICT COURT FOR THE DISTRICT OF NEW JERSEY PREVIOUS BONDHOLDER CLAIM FORM Securities and Exchange Commission v. Edwards et al. Case No. 2:17-cv- 393-ES-SCM Name of Person/Entity Making Claim: Received Name and address where notices should be sent: Check this box if this claim amends a previously filed claim. Telephone Number: Email: Claim # ______ Name and address where payment should be sent (if different from above): Check this box if you are aware that anyone else has filed a proof of claim relating to this claim Telephone Number: Email: and attach a copy of such claim. Amount Lost: $______ Issuance(s) (attach additional pages if additional space is needed): Issuer(s): ______ CUSIP No(s). ______ Loss Calculation (attach additional pages if additional space is needed): CUSIP No(s): ______ No. of Bonds Purchased: ______Date(s) Purchased: ______Purchase Price(s): ______ No. of Bonds Sold: ______Date(s) Sold: ______Sale Price(s): ______ Supporting Documentation. You must attach copies of any documents that support your claim (including the basis for calculating your loss(es)), such as account statements, trade histories, purchase and sale directions/orders, itemized statements of accounts, other contracts, etc. DO NOT SEND ORIGINAL DOCUMENTS. ATTACHED DOCUMENTS MAY BE DESTROYED. If the documents are not available, please explain: ______ 5. Signature. I declare under penalty of perjury that the information provided in this claim is true and correct to the best of my knowledge, information and reasonable belief. Print Name: ______ Title: ______ Company: ______(Signature) (Date) Mail Claim Form to: Waller Lansden Dortch & Davis, LLP, 511 Union Street, Suite 2700, Nashville, TN 37219, Attn: CRI Settlement 4824-7331-5732.11 Case 2:17-cv-00393-SCM Document 327-5 Filed 05/24/19 Page 1 of 3 PageID: 14669 EXHIBIT 4 Case 2:17-cv-00393-SCM Document 327-5 Filed 05/24/19 Page 2 of 3 PageID: 14670 LEGAL NOTICE If you bought bonds listed on the attached Exhibit “A,” you could get a payment from a Settlement. A Settlement in the amount of $10 million has been Subject to Court approval, a $10 million fund will be proposed to compensate investors who purchased certain created to compensate the purchasers of the Bonds, and Bonds issued by: Douglas-Coffee County Industrial to pay administration expenses and attorneys’ fees and Authority; Cave Spring Housing Development costs incurred by the Receiver. The fund will be allocated Corporation; Savannah Economic Development by the Receiver, in accordance with the proposed Authority; Gainesville and Hall County Development Distribution Plan. Complete details are found at Authority; The Medical Clinic Board of the City of www.oxtonseniorlivingreceivership.com. Montgomery-1976 East; the Development Authority How can I receive benefits? of Columbus, Georgia; and The Medical Clinic Board Current Bondholders do not need to take any action to of the City of Opelika, Alabama (a full list of the receive compensation from the Settlement. Previous Bonds at issue is attached as Exhibit A). Bondholders must timely and properly submit a Claim What’s this about? Form to receive compensation from the Settlement. The Claim Form is due ____, 2019. The Claim Form The Settlement resolves Claims made by the Receiver can be found at for the entities which were the ultimate beneficiaries www.oxtonseniorlivingreceivership.com. of the Bond issuances and for the Bondholders of such entities over whether Carr, Riggs & Ingram, What are my rights? LLC (“CRI”), an accounting firm which performed You cannot exclude yourself from the Settlement. various professional services for those entities, You may submit written objection to the Settlement caused injuries to them and to the Bondholders. CRI by ______, 2019. Whether you object or not, you denies it did anything wrong. The Court did not will be bound by the Court’s decision. If the Court decide which side was right. But both sides agreed to approves the Settlement, your claims against CRI and the Settlement to resolve the Claims and get benefits related parties covered by the Settlement will be to Bondholders. The two sides disagree on how much barred. That means you can’t sue, continue to sue, or money, if any, could have been won if the Receiver be part of any other lawsuit against CRI and related had won at a trial. parties, including its members or employees about the legal or factual issues in this case. Who’s Included? The Court will hold a hearing on _____, 2019 at ___ The Settlement includes anyone who currently or p.m. EST, to consider whether to approve the previously owned Bonds identified in Exhibit A. Settlement and a request for attorneys’ fees, plus You can get more information, including a detailed reimbursement of costs and expenses. You or your own notice, at www.oxtonseniorlivingreceivership.com. lawyer may appear at the hearing at your own expense. This is only a summary, so please visit the website for complete information. What does the Settlement provide? For more information or a Claim Form: www.oxtonseniorlivingreceivership.com 4824-2921-0260.9 Case 2:17-cv-00393-SCM Document 327-5 Filed 05/24/19 Page 3 of 3 PageID: 14671 Exhibit “A” The proposed Settlement impacts all persons who currently own or previously owned any of the Bonds identified in the list below. CUSIP 683507AA5 683507AB3 683507AC1 683507AD9 683507AE7 613061AG5 613061AH3 80483CLN9 80483CLP4 149596CF3 149596CG1 613061AJ9 613061AK6 362754GT4 362754GU1 362754GV9 362754GW7 258873AA6 258873AB4 19912HFH7 19912HFJ3 19912HFK0 4824-2921-0260.9 Case 2:17-cv-00393-SCM Document 327-6 Filed 05/24/19 Page 1 of 21 PageID: 14672 EXHIBIT 5 Case 2:17-cv-00393-SCM Document 327-6 Filed 05/24/19 Page 2 of 21 PageID: 14673 WALLER LANSDEN DORTCH & DAVIS, LLP Blake D. Roth Ryan K. Cochran (admitted pro hac vice) 511 Union Street, Suite 2700 Nashville, Tennessee 37219 Telephone: 615.244.6380 Email: [email protected] [email protected] Counsel for the Receiver UNITED STATES DISTRICT COURT DISTRICT OF NEW JERSEY SECURITIES AND EXCHANGE COMMISSION, Plaintiff, v. Case No. 2:17-cv-393-ES-SCM DWAYNE EDWARDS; TODD BARKER; SENIOR SOLUTIONS OF SOCIAL CIRCLE, LLC; OXTON PLACE OF DOUGLAS, LLC, d/b/a OXTON REAL ESTATE OF DOUGLAS, LLC; ROME ALF, LLC; SAVANNAH ALF, LLC; GAINESVILLE ALF, LLC; WATERFORD PLACE ALF, LLC; MONTGOMERY ALF, LLC; COLUMBUS ALF, LLC; and OPELIKA ALF, LLC, Defendants, -and- OXTON SENIOR LIVING, LLC; MANOR HOUSE SENIOR LIVING, LLC; SUSAN EDWARDS, a/k/a SUSAN ROGERS; SHARON NUNAMAKER, a/k/a SHARON HADDEN; and SDH DESIGN, LLC, Relief Defendants. 4825-7795-0342.14 Case 2:17-cv-00393-SCM Document 327-6 Filed 05/24/19 Page 3 of 21 PageID: 14674 ORDER GRANTING FINAL APPROVAL OF SETTLEMENT AND RELATED RELIEF INCLUDING A FINAL BAR ORDER This matter comes before the Court on the Receiver’s Request for (I) Entry of Preliminary Approvals and Scheduling Order and (II) Motion for Entry of Order Approving Proposed Settlement, the Proposed Notice of Settlement, and to Enter the Bar Order and Final Judgment (the “Motion”). (Dkt. No. __). The Motion was filed by Derek Pierce, the court- appointed Receiver in this case (“Receiver”). Following notice and Hearing, and having considered the Motion and any and all responses, replies, and other filings with respect to the Motion; and having heard and considered the arguments presented at the Final Approval Hearing1; and upon finding that this Court has jurisdiction over the Motion and that venue is proper in this Court; and upon finding good and sufficient cause for granting the relief sought in the Motion; and for the reasons stated on the record at the Final Approval Hearing and those that follow, the Court GRANTS the Motion. I. FINDINGS OF FACT AND CONCLUSIONS OF LAW A. Factual and Procedural Background 1. The Settlement Agreement The Settlement which is the subject of the Motion is set forth in a written Settlement Agreement by and between: (i) Derek Pierce, in his capacity as Receiver and as assignee of claims of Bondholders2; (ii) Carr, Riggs & Ingram, LLC (“CRI”); (iii) Wink Laney (“Laney”); and (iv) Russ Frederick (“Frederick” and, together with CRI and Laney, the “CRI Parties”);3 (v) BOKF, National Association d/b/a Bank of Oklahoma (“Trustee BOKF”); UMB Bank, N.A. 1 Capitalized terms used in this Order and not otherwise defined herein shall have the meaning set forth in the Preliminary Approval Motion or the Settlement and Release Agreement (“Settlement Agreement”) attached as Exhibit “1” to the Preliminary Approval Motion. 2 Consistent with the terms of the Settlement Agreement, the term Bondholders means all “Persons (as defined in the Settlement Agreement) who or which currently own or previously owned a Bond.” 3 Laney and Frederick are members of CRI. 2 4825-7795-0342.14 Case 2:17-cv-00393-SCM Document 327-6 Filed 05/24/19 Page 4 of 21 PageID: 14675 (“Trustee UMB”); and (vii) U.S. Bank, National Association (“Trustee U.S. Bank” and, together with Trustee BOKF and Trustee UMB, the “Indenture Trustees,” and, singularly, an “Indenture Trustee”), each in their capacities as Indenture Trustees.4 The essential terms of the Settlement are summarized in Section I. A. 5., below, and in the Notice of proposed Settlement previously approved by the Court. The Settlement Agreement itself contains a full and complete statement of terms. 2. Factual Background The Receiver’s Motion arises in the context of an ongoing equitable receivership proceeding, initiated on motion of the Securities and Exchange Commission (“SEC”) and carried out pursuant to orders and under the supervision of this Court. The entities in receivership, at issue in Receiver’s Motion, include the following: Oxton Place of Douglas, LLC d/b/a Oxton Real Estate of Douglas, LLC (“Douglas”), Rome ALF, LLC (“Rome”), Savannah ALF, LLC (“Savannah”), Gainesville ALF, LLC (“Gainesville”), Waterford Place ALF, LLC (“Waterford”), Montgomery ALF, LLC (“Montgomery”), Columbus ALF, LLC (“Columbus”) and Opelika ALF, LLC (“Opelika” and, together with Douglas, Rome, Savannah, Gainesville, Waterford, Montgomery and Columbus, the “Borrowers”). The Borrowers, eight in number, are limited liability companies formed for the purpose of acquiring and operating assisted living and/or memory care facilities. After obtaining conduit municipal bond financing as described below, each Borrower acquired and operated an assisted living and/or memory care facility (separately, a “Facility” and, collectively, the “Facilities”). 4 Each of the parties to the Settlement Agreement is hereinafter referred to as a Party and, collectively, as the “Parties,” to the Settlement Agreement. 3 4825-7795-0342.14 Case 2:17-cv-00393-SCM Document 327-6 Filed 05/24/19 Page 5 of 21 PageID: 14676 The Borrowers were formed by Dwayne Edwards (“Edwards”) and Todd Barker (“Barker”). Edwards and Barker each owned a 50% interest in each of the Borrowers. During the period from August 28, 2014 (Douglas) through September 24, 2015 (Opelika), each of the Borrowers was a party to a conduit municipal bond offering secured by an Indenture (each, an “Offering” and, collectively, the “Offerings”). The stated purposes for each such Offering included the acquisition and operation of a Facility. Through these Offerings, the Borrowers collectively raised from Bondholders approximately $58.5 million.5 Each of the Offerings is secured by an Indenture naming an Indenture Trustee and empowering such indenture trustee to assert and protect the rights of Bondholders. Trustee BOKF is the Indenture Trustee with respect to six of the Offerings, i.e., those relating to Douglas, Rome, Savannah, Gainesville, Waterford and Columbus. Trustee U.S. Bank is the Indenture Trustee with respect to the Opelika Offering. Trustee UMB is the Indenture Trustee with respect to the Montgomery Offering. Pursuant to their respective Indentures, each of the Indenture Trustees has the right, power and authority to pursue claims against third parties for injuries caused to Bondholders in connection with the respective Offerings for which they serve as Indenture Trustee (subject to an assignment of such claims to the Receiver, as discussed below). CRI is a public accounting firm. In connection with each of the Offerings, and continuing through 2016, the CRI Parties performed various professional services for the Borrowers. Each of the Borrowers engaged CRI, among other things, to examine forecasted financial statements prepared by the Borrower’s management (a “Financial Forecast”) and to 5 The bonds issued in connection with the Offerings are herein referred to collectively as the “Bonds” and singularly as a “Bond” and, as noted in footnote 2, the Persons who or which currently own or previously owned a Bond are referred to collectively as the “Bondholders” and singularly as a “Bondholder.” 4 4825-7795-0342.14 Case 2:17-cv-00393-SCM Document 327-6 Filed 05/24/19 Page 6 of 21 PageID: 14677 issue an independent accountant’s report (a “Report”) with respect to such Financial Forecast. CRI issued a Report with respect to each Offering. Management’s Financial Forecast and CRI’s Report were included in the official statement prepared for each Offering (singularly, an “Official Statement” and, collectively, the “Official Statements”). In each such Report, CRI opined that management’s related Financial Forecast was presented in conformity with guidelines for presentation of a financial forecast established by the American Institute of Certified Public Accountants (“AICPA”) and that the underlying assumptions provided a reasonable basis for management’s Financial Forecast. CRI’s Reports and the Official Statements contained cautionary statements regarding the Financial Forecasts, including statements in the Reports that there will usually be differences between forecasted and actual results, because events and circumstances frequently do not occur as expected and those differences may be material. In addition to examining and providing a Report with respect to management’s Financial Forecast, CRI provided other accounting services to each Borrower, including audit, compilation and tax services. During 2016, each of the Borrowers defaulted on its obligations with respect to the Bonds resulting in various bankruptcy and receivership proceedings, including, ultimately, this action brought by the SEC. As a result of such defaults, many of the Bondholders sustained losses by reason of their investments in the Bonds. 3. Procedural Background The SEC commenced this action on January 20, 2017, by filing a Complaint naming Edwards, Barker, each of the Borrowers, and Senior Solutions of Social Circle, LLC (“Social Circle”) as defendants. (Dkt. No. 1).6 In its Complaint, the SEC generally alleged that the 6 Social Circle was a ninth entity through which Edwards and Barker, through conduit municipal bond financing, acquired and operated an assisted living facility. The CRI Parties, however, had no involvement with that entity. In 5 4825-7795-0342.14 Case 2:17-cv-00393-SCM Document 327-6 Filed 05/24/19 Page 7 of 21 PageID: 14678 defendants had improperly commingled and misappropriated money from the Offerings and revenues of the Facilities and sought the appointment of a receiver to administer the assets and the receivership estates (“Receivership Estates”) of the Borrowers. On the same day that the Complaint was filed, January 20, 2017, the SEC moved, inter alia, for the appointment of a receiver. (Dkt. No. 2). On January 23, 2017, this Court entered its Order granting the SEC’s motion and appointing the Receiver (the “Receivership Order”). (Dkt. No. 7). Pursuant to the Court’s Receivership Order, this Court has exclusive jurisdiction over and possession of the assets of the Borrowers. The Receivership Order vests in the Receiver all powers and authority of a receiver at equity and all powers conferred upon a receiver by the provisions of 28 U.S.C. §§ 754, 959 and 1692, and Rule 66 of the Federal Rules of Civil Procedure, including the authority to investigate and pursue claims and causes of action for the benefit of the Receivership Estates and their creditors, including the Bondholders. Following the entry of the Receivership Order, and in furtherance of his responsibilities, the Receiver investigated whether claims existed against third parties. Based upon his investigation, the Receiver came to believe that each of the Borrowers, the Indenture Trustees on behalf of those Bondholders who or which currently own a Bond, and those Bondholders who or which previously owned a Bond, held claims against the CRI Parties for alleged injuries caused to each Borrower and the Bondholders arising out of the Offerings and the CRI Parties’ professional services described above (respectively, the “Receivership Borrower Claims,” the “Current Bondholder Claims,” and the “Previous Bondholder Claims”). addition to those named as Defendants identified in the text, the SEC’s Complaint joined the following as “Relief Defendants”: Oxton Senior Living, LLC; Manor House Senior Living, LLC; Susan Edwards a/k/a Susan Rogers; Sharon Nunamaker a/k/a Sharon Hadden; and SDH Design, LLC. 6 4825-7795-0342.14 Case 2:17-cv-00393-SCM Document 327-6 Filed 05/24/19 Page 8 of 21 PageID: 14679 Pursuant to an Assignments of Claims dated April 13, 2018 by and between the Receiver and the Indenture Trustees, as amended pursuant to an Amendment No. 1 to Assignments of Claims dated October 1, 2018, and further amended in the Settlement Agreement (as amended, the “Assignment Agreement”), each of the Indenture Trustees assigned its right, power and authority to pursue the Current Bondholder Claims to the Receiver (the “Assigned Bondholder Claims,” and along with the Receivership Borrower Claims and the Previous Bondholder Claims, the “Claims”). On January 26, 2018, the Receiver filed an application seeking the authority to pursue the Claims and to retain special litigation counsel to assist him in doing so (the “Claims Authorization Motion”). (Dkt. No. 206). On March 6, 2018, this Court granted the Receiver’s Claims Authorization Motion, thereby authorizing the Receiver to pursue such claims. (Dkt. No. 242). On April 13, 2018, and May 3, 2018, respectively, the Receiver, though his counsel, sent to the CRI Parties a Demand Letter before Legal Action and a Supplement to Demand Letter before Legal Action (together, the “Demand Letter”), asserting and seeking to resolve the Claims in advance of commencing a legal proceeding. Thereafter, in an effort to resolve the Claims, the CRI Parties and the Receiver commenced a mediation proceeding and conducted in-person mediation before a JAMS mediator panelist over the period from November 8, 2018, through November 9, 2018 (the “Mediation”). Before, during and after the Mediation, the Receiver and the CRI Parties negotiated at arm’s length and in good faith, and ultimately, without admission or concession of liability or fault, reached the Settlement. On ______, 2019, the Receiver filed the Motion. (Dkt. No. ___). The Court thereafter entered a Scheduling Order on ______, 2019, which, inter alia, preliminarily approved the Settlement, authorized the Receiver to provide notice of the 7 4825-7795-0342.14 Case 2:17-cv-00393-SCM Document 327-6 Filed 05/24/19 Page 9 of 21 PageID: 14680 Settlement, established a schedule for the filing of objections and responses to objections to the Settlement and the relief sought by the Motion, established the deadline and the manner for the submission of claims by previous Bondholders, and set the date for the Final Approval Hearing to determine whether to grant final approval of the Settlement and enter the requested Bar Order and Judgment. (Dkt. No. ___). Pursuant to the Court’s Scheduling Order, on ______, 2019, the Receiver filed a Declaration of Compliance, certifying compliance with the notice requirements of the Scheduling Order. (Dkt. No. __). On ______, 2019, the Court held the scheduled Final Approval Hearing. During the Final Approval Hearing, any and all Persons who properly and timely filed objections to the Settlement and requested to be heard were afforded a full and fair opportunity to be heard. Proponents of the Settlement were likewise afforded a full and fair opportunity to be heard. The arguments of those heard during the Final Approval Hearing have been fully considered by the Court. 4. Summary of the Claims Asserted by the Receiver and the Defenses of the CRI Parties The claims and defenses of the Receiver and the CRI Parties were fully developed and explored in the course of their negotiations and Mediation. They are summarized in the Notice previously approved by the Court. Generally, the Receiver alleged that the CRI Parties breached their obligations to the Borrowers and the Bondholders with respect to the Financial Forecasts and made misstatements by issuing in the CRI Reports “clean opinions” for each such Financial Forecast. In this regard, the Receiver contended, among other things, that the CRI Parties: (i) lacked the independence required to perform their responsibilities as independent certified public accountants in 8 4825-7795-0342.14 Case 2:17-cv-00393-SCM Document 327-6 Filed 05/24/19 Page 10 of 21 PageID: 14681 examining and preparing Reports in connection with the Financial Forecasts; (ii) failed to disclose significant assumptions underlying the Financial Forecasts, without issuing an adverse opinion, including assumptions regarding the use of funds and planned renovations and/or expansions of the Facilities; and (iii) failed properly to obtain support for and evaluate underlying assumptions concerning anticipated revenues that would be generated by realizing certain stabilized occupancy rates during and after renovation and/or expansion of a particular Facility. The Receiver asserted claims against CRI under various theories of recovery, including negligence, intentional tort, breach of contract, and breach of fiduciary duty. For their part, the CRI Parties denied the Receiver’s allegations and raised other defenses. The CRI Parties: (i) denied that they breached any obligations in connection with the Financial Forecasts and/or made any misstatements in the Reports; (ii) denied that they lacked the required independence; (iii) denied that they failed to disclose significant assumptions underlying the Financial Forecasts, including assumptions regarding the use of funds and planned renovations and/or expansions of the Facilities; and (iv) denied that they otherwise failed to obtain support for or evaluate significant assumptions underlying the Financial Forecasts, including assumptions concerning anticipated revenues that would be generated by realizing certain stabilized occupancy rates during and after renovation and/or expansion of a particular Facility. To the contrary, the CRI Parties asserted that, in carrying out the engagements concerning the Financial Forecasts, CRI acted in conformity with AICPA guidance by performing such examination procedures as it considered necessary in the exercise of its professional judgment in the circumstances and by reasonably concluding, based on the preponderance of information, that management’s assumptions were suitably supported and provided a reasonable basis for management’s Financial Forecasts. 9 4825-7795-0342.14 Case 2:17-cv-00393-SCM Document 327-6 Filed 05/24/19 Page 11 of 21 PageID: 14682 The CRI Parties further contended, among other things: (i) that, if the allegations of misconduct by Edwards and Barker were true, the claims of the Borrowers were barred by the doctrine of in pari delicto; (ii) that the Receivership Borrower Claims, the Bondholder Claims, and the Previous Bondholder Claims lacked merit because of the inability of all to prove reasonable reliance on anything the CRI Parties did or said; and (iii) that the conduct and statements of the CRI Parties were not the proximate cause of any loss that either the Borrowers or the Bondholders might have sustained, such loss being caused instead by unforeseeable subsequent events, including, among other things, an ownership break-up between Edwards and Barker, unanticipated regulatory issues and the mismanagement and/or misconduct of other parties. In short, the CRI Parties vigorously denied any wrongdoing on any theory of liability, whether based on common law or statute and whether sounding in negligence, intentional tort, breach of contract, breach of fiduciary duty, or otherwise. 5. Summary of the Essential Terms of the Settlement Under the terms of the Settlement Agreement, CRI will pay $10 million to the Receiver. The Receiver shall, in turn, distribute a portion of the Net Settlement Amount, i.e., the Settlement Amount less attorneys’ fees and costs awarded by the Court, first, to previous Bondholders who timely submit a fully and properly completed Claim Form and qualify for a distribution under the Distribution Plan, and, second, to the Indenture Trustees of the Bonds for distribution, in turn, to those Bondholders who or which currently hold a Bond. Current Bondholders do not need to submit a Claim Form. In return, the CRI Parties seek global peace with respect to all claims that have been, or could have been, asserted against the CRI Released Parties, that in any way relate to the subject matter of this case, the Receiver, the Receivership Entities, the Bonds, the 10 4825-7795-0342.14 Case 2:17-cv-00393-SCM Document 327-6 Filed 05/24/19 Page 12 of 21 PageID: 14683 Bondholders and/or any Settled Claim, including any claim, however denominated, seeking contribution or indemnity. Accordingly, the Settlement is conditioned on the Court’s approval and entry of the Bar Order and Judgment, barring, restraining, and enjoining the Receiver, the Receivership Entities, the Receivership Estates, the Borrowers, the Indenture Trustees, all previous, present and future Bondholders, the Claimants, the Issuers, all Interested Parties, and all non-governmental Persons, from prosecuting or pursuing any such claims against the CRI Released Parties. For the reasons set forth herein, the Court finds that the terms of the Settlement Agreement are adequate, fair, reasonable, and equitable, and that the Settlement should be and is hereby APPROVED. The Court further finds that entry of the Bar Order and Judgment is appropriate and necessary. II. FURTHER FINDINGS AND CONCLUSIONS Accordingly, it is further hereby FOUND, CONCLUDED AND DETERMINED as follows: A. The findings and conclusions set forth herein constitute the Court’s findings of fact and conclusions of law pursuant to Rule 52 of the Federal Rules of Civil Procedure (sometimes, the “Rules”). B. To the extent that any of the following findings of fact constitute conclusions of law, they are adopted as such. To the extent any of the following conclusions of law constitute findings of fact, they are adopted as such. All findings of fact and conclusions of law announced by the Court at the Final Approval Hearing in relation to the Motion are incorporated herein by reference to the extent not inconsistent with this Order. 11 4825-7795-0342.14 Case 2:17-cv-00393-SCM Document 327-6 Filed 05/24/19 Page 13 of 21 PageID: 14684 C. This Court, as a court of equity, has “broad powers and wide discretion to determine the appropriate relief in [this] equity receivership,” including the authority to enter the requested Bar Order and Judgment. SEC v. Kaleta, 530 F. App’x 360, 362 (5th Cir. 2013) (internal quotations omitted). Moreover, the Receiver is a proper party to seek the entry of the Bar Order and Judgment. D. The Court finds that the methodology, form, content, and dissemination of the Notice and Short Form Notice: (i) were implemented in accordance with the requirements of the Scheduling Order; (ii) constituted the best practicable notice; (iii) were reasonably calculated, under the circumstances, to apprise all Interested Parties of the Settlement, the releases contained in the Settlement Agreement, and the injunctions provided for in this Bar Order and Judgment; (iv) were reasonably calculated, under the circumstances, to apprise all Interested Parties of their rights and obligations in connection with the Settlement, the Distribution Plan, the Bar Order and Judgment, and the Receiver’s request for approval of the professional fees and expenses of the Receiver’s general counsel, Waller, and special counsel, Whiteford Taylor; (v) were reasonable and constituted due, adequate, and sufficient notice; (vi) met all requirements of applicable law, including the Rules, the United States Code and the United States Constitution (including Due Process); and (vii) provided all Persons entitled to notice with a full and fair opportunity to be heard on these matters. No other or further notice is necessary or shall be required. E. The legal and factual bases set forth in the Motion establish just and sufficient cause to grant the relief requested therein. 12 4825-7795-0342.14 Case 2:17-cv-00393-SCM Document 327-6 Filed 05/24/19 Page 14 of 21 PageID: 14685 F. The Settlement Agreement and the transactions contemplated thereby, including the releases given therein, are in the best interests of the Borrowers, the Receivership Estates, creditors, including the Bondholders, and all other parties in interest. G. The disclosures made by the Receiver and the Indenture Trustees concerning the Settlement Agreement and the related relief requested pursuant to the Motion were good, complete, and adequate. H. The Settlement, including the Settlement Amount, was reached following extensive investigation of the facts and resulted from vigorous, good faith, arms-length, mediated negotiations involving experienced and competent counsel. I. The Claims that have been or may be asserted against the CRI Parties by the Receiver and/or by others whose claims or potential claims are foreclosed by the Bar Order and Judgment entail vigorously disputed facts and complex, novel, and unsettled issues of law that have also been vigorously disputed. Resolution of such disputed factual and legal issues would require substantial time, effort, and expense to litigate, with a significant risk that the Receiver and such others may not ultimately prevail on such claims. Thus, there is a significant risk that future litigation of such claims may dissipate the assets of the Receivership Estates. Additionally, significant issues exist as to the merit and value of the claims asserted against the CRI Parties by the Receiver or that may be asserted by others whose potential claims are foreclosed by this Bar Order and Judgment. J. After careful consideration of the record and applicable law, the Court concludes that the Settlement is the best option for maximizing the net amount recoverable from the CRI Parties for the Receivership Estates and the Bondholders. 13 4825-7795-0342.14 Case 2:17-cv-00393-SCM Document 327-6 Filed 05/24/19 Page 15 of 21 PageID: 14686 K. The Settlement has been designed to ensure that all affected Bondholders have received an opportunity to resolve their claims against the CRI Parties through receipt of a portion of the Settlement Amount pursuant to the Receiver’s Distribution Plan approved by the Court. L. The ancillary relief measures requested in the Motion, specifically the Bar Order and Judgment, barring, restraining, and enjoining the pursuit and prosecution of claims against the CRI Released Parties, are essential to the CRI Parties’ agreement to enter into the Settlement. In the absence of such a Bar Order and Judgment, the CRI Parties would not enter into the Settlement. M. The Receiver acted reasonably, in good faith, and in the best interests of the Borrowers, the Receivership Estates, and all other Persons in interest, including the Bondholders, in negotiating and entering into the Settlement Agreement. N. The Indenture Trustees have the right to assert and assign to the Receiver the Current Bondholder Claims as Indenture Trustees under the Indentures and to enter into and to approve the Settlement and the Settlement Agreement in their representative capacities and on behalf of those Bondholders who or which currently own a Bond. The Indenture Trustees have acted prudently, in good faith, and in the best interests of those Bondholders who or which currently own a Bond in assigning the Current Bondholder Claims to the Receiver and in approving the Settlement and executing the Settlement Agreement. The actions of the Indenture Trustees with respect to the Settlement and the Settlement Agreement have been consistent with all duties owed by the Indenture Trustees to those Bondholders who or which currently own a Bond and are consistent with the Indentures and applicable laws. 14 4825-7795-0342.14 Case 2:17-cv-00393-SCM Document 327-6 Filed 05/24/19 Page 16 of 21 PageID: 14687 O. The Settlement Agreement and the transactions contemplated thereby, including the releases given therein, meet the standards established for the approval of a compromise and settlement in an equity receivership action; are reasonable, fair, equitable; and are supported by fair and adequate consideration. P. The Settlement Agreement was negotiated, proposed, and entered into by the Receiver, the Indenture Trustees, and the CRI Parties without collusion, in good faith, and from arms-length bargaining positions. Q. The Receiver has demonstrated compelling circumstances and a good, sufficient, and sound business purpose and justification for entering into the Settlement Agreement. R. The allocation of the Net Settlement Proceeds among the Receivership Estates of the Borrowers is fair, reasonable, and equitable, and the distribution of the allocated Net Settlement Proceeds to previous Bondholders who timely submit a fully and properly completed Claim Form and qualify for a distribution under the Distribution Plan, and to the Indenture Trustees for the benefit of those Bondholders who or which currently own a Bond, as provided for in the Settlement Agreement, is fair, reasonable and equitable. S. The fees and expenses of the Receiver and its general counsel and special counsel are reasonable and necessary. T. Given all of the circumstances and the adequacy of the consideration provided to the Receivership Estates, and, in turn, to their Bondholders, by the CRI Parties, the Settlement Agreement constitutes a reasonable, informed, and sound exercise of the Receiver’s and 15 4825-7795-0342.14 Case 2:17-cv-00393-SCM Document 327-6 Filed 05/24/19 Page 17 of 21 PageID: 14688 Indenture Trustees’ business judgment, is prudent, is in the best interests of the Receivership Estates and the respective Bondholders, and should be approved. III. ORDER NOW THEREFORE, IT IS HEREBY ORDERED, ADJUDGED, and DECREED: 1. The relief requested in the Motion is GRANTED. 2. The Settlement Agreement (which is deemed incorporated herein by reference) is hereby approved in all respects. 3. Any objections to the relief sought in the Motion that have not been previously resolved, withdrawn, waived, or settled, and all reservations of rights included in such objections, are hereby overruled on their merits. 4. The Receiver and the Indenture Trustees are authorized and directed to take any and all actions necessary and/or appropriate to effectuate and implement the Settlement Agreement and the relief granted pursuant to this Order, and neither the Receiver nor the Indenture Trustees shall have any liability to any person or entity in connection with any of the actions authorized pursuant to this Order and/or effectuating the Settlement Agreement. 5. Each and every term and provision of the Settlement Agreement including the releases, together with the terms and provisions of this Order, shall be binding in all respects upon all parties in interest with respect to these proceedings. 6. Pursuant to the provisions of Paragraph 61 and 62 of the Settlement Agreement, as of the Settlement Effective Date, the CRI Released Parties shall be completely released, acquitted, and forever discharged from all Settled Claims by the Receiver Releasing Parties and the Indenture Trustees Releasing Parties. 16 4825-7795-0342.14 Case 2:17-cv-00393-SCM Document 327-6 Filed 05/24/19 Page 18 of 21 PageID: 14689 7. Pursuant to the provisions of Paragraph 65 of the Settlement Agreement, as of the Settlement Effective Date, the Receiver Released Parties and the Indenture Trustees Released Parties shall be completely released, acquitted, and forever discharged from all Settled Claims by the CRI Releasing Parties. 8. The failure specifically to include any particular provisions of the Settlement Agreement in this Order shall not diminish or impair the efficacy of such provisions, it being the intent of the Court that the Settlement Agreement and each and every provision, term and condition thereof, be, and therefore is, authorized and approved in its entirety. 9. The provisions of this Order are non-severable and mutually dependent. 10. This Order shall take effect immediately and shall not be stayed, nor shall any stay apply to or otherwise prevent the exercise or performance by any Party of its rights or obligations under the Settlement Agreement. 11. The Indenture Trustees’ first-priority lien, as applicable, on all assets of the Borrowers, including the Claims, shall attach to the Settlement Amount once paid by CRI to the Receiver pursuant to the Settlement Agreement. 12. The Indenture Trustees have the authority to enter into the Settlement Agreement and grant the releases therein. 13. The Indenture Trustees’ entry into the Settlement Agreement is a prudent, good faith, informed exercise of the Indenture Trustees’ sound business judgment. 14. The Settlement Agreement and the settlements, releases, and discharges contemplated thereby shall be binding on all Parties to the Settlement Agreement, the parties in this case, all parties in interest in this case, any and all previous, present or future Bondholders, 17 4825-7795-0342.14 Case 2:17-cv-00393-SCM Document 327-6 Filed 05/24/19 Page 19 of 21 PageID: 14690 and any parties associated with the issuance of the respective Bonds made the basis of the Claims resolved by the Settlement approved herein. 15. The Receiver and the Indenture Trustees, following receipt of the Settlement Amount, are hereby authorized and directed to distribute the professional fees and costs and the Net Settlement Proceeds and to take all reasonable and necessary actions to make such distributions in accordance with the terms of the Settlement Agreement. 16. The Receiver shall file the Claims Report with the Court within sixty (60) days of the entry of this Order. If no objection is filed, the Claims Report shall be the final, binding determination of the allowance or disallowance of each Claim Form. The Court shall separately address any objection to the Claims Report. 17. The Court hereby permanently bars, restrains, and enjoins, the Receiver, the Receivership Entities, the Receivership Estates, the Borrowers, the Indenture Trustees, all previous, present and future Bondholders, the Claimants, the Issuers, all Interested Parties, and all non-governmental Persons, all and individually, from directly, indirectly, or through a third party, asserting, instituting, reinstituting, intervening in, initiating, commencing, maintaining, continuing, filing, encouraging, soliciting, supporting, participating in, collaborating in, or otherwise prosecuting or pursuing, against the CRI Parties and/or any of the CRI Released Parties, any demand, claim, investigation, action, lawsuit, cause of action, complaint, or proceeding of any nature in any Forum, including, without limitation, any court of first instance or any appellate court, whether individually, derivatively, on behalf of a class, as a member of a class, or in any other capacity whatsoever, that in any way relates to, is based upon, arises from, or is connected with this case, the subject matter of this case, the Receiver, the Receivership Entities, the Bonds, the Bondholders, the Indenture Trustees, and/or any Settled Claim. The 18 4825-7795-0342.14 Case 2:17-cv-00393-SCM Document 327-6 Filed 05/24/19 Page 20 of 21 PageID: 14691 foregoing specifically includes any claim by any Person, however denominated, seeking contribution, indemnity, damages, or any other remedy where the alleged injury to such Person, or the claim asserted by such Person, is based upon such Person’s liability to the Receiver, any Receivership Entity, any Bondholder, any Indenture Trustee, any Claimant, and/or any other Interested Party arising out of, relating to, or based in whole or in part upon money owed, demanded, requested, offered, paid, agreed to be paid, or required to be paid to the Receiver, a Receivership Entity, a Bondholder, an Indenture Trustee, a Claimant, and/or any other Interested Party whether pursuant to a demand, judgment, claim, agreement, settlement, or otherwise. 18. Notwithstanding the foregoing, the releases in the Settlement Agreement, and the releases, bars, injunctions, and restraints set forth in this Order, do not limit or prohibit in any way the evidence that may be offered in any case or proceeding, nor do they limit or prohibit the taking of discovery under applicable Rules, nor do they limit or prohibit in any way the Parties’ right to sue for alleged breaches of the Settlement Agreement or to enforce its terms or the terms of this Order. 19. The CRI Released Parties shall have no liability, responsibility, or obligation whatsoever with respect to the notice provided with respect to the Settlement. No Interested Party or any other Person shall have any recourse against CRI or the CRI Released Parties with respect to the notice process or any claims that may arise from or relate to the notice process. 20. The CRI Released Parties shall have no liability, responsibility, or obligation whatsoever with respect to the investment, management, use, administration, or distribution of the Settlement Amount or any portion thereof, including, but not limited to, the costs and 19 4825-7795-0342.14 Case 2:17-cv-00393-SCM Document 327-6 Filed 05/24/19 Page 21 of 21 PageID: 14692 expenses of such investment, management, use, administration, or distribution of the Settlement Amount, and any Taxes arising therefrom or relating thereto 21. The Receiver shall serve a copy of this order via email, first class mail or international delivery service on all parties who received notice of the Motion and any Person who filed an Objection to the Settlement, the Settlement Agreement and/or the Bar Order and Judgment, within three (3) business days of the entry of this Order. 22. The Court expressly finds and determines, pursuant to Rule 54(b), that there is no just reason for any delay in the entry of this Order, which is both final and appealable, and immediate entry by the Clerk is expressly directed. 23. Without in any way affecting the finality of this Order, the Court retains exclusive jurisdiction to, among other things, administer, interpret, implement, and enforce the terms and provisions of this Order and the Settlement Agreement and all amendments thereto and any waivers and consents thereunder, and to adjudicate, if necessary, any and all disputes concerning, arising out of, or relating in any way to the implementation and enforcement of this Order and/or the Settlement Agreement. Dated: , 2019 20 4825-7795-0342.14 Case 2:17-cv-00393-SCM Document 327-7 Filed 05/24/19 Page 1 of 24 PageID: 14693 EXHIBIT 6 Case 2:17-cv-00393-SCM Document 327-7 Filed 05/24/19 Page 2 of 24 PageID: 14694 Case 3:13-cv-00477-N-BQ Document 349 Filed 09/11/18 Page 1 of 11 PageID 17046 IN THE UNITED STATES DISTRICT COURT NORTHERN DISTRICT OF TEXAS DALLAS DIVISION SECURITIES AND EXCHANGE § COMMISSION, § § Plaintiff, § § v. § Civil Action No. 3:09-cv-0298-N § STANFORD INTERNATIONAL BANK, § LTD., et al., § § Defendants. § § RALPH S. JANVEY, IN HIS CAPACITY § AS COURT-APPOINTED RECEIVER § FOR THE STANFORD RECEIVERSHIP § ESTATE, AND THE OFFICIAL § STANFORD INVESTORS COMMITTEE, § § Plaintiffs, § Civil Action No. 3:13-CV-0477-N-BG § v. § § PROSKAUER ROSE, LLP, § CHADBOURNE & PARKE, LLP, AND § THOMAS V. SJOBLOM, § § Defendants. § SCHEDULING ORDER This matter is before the Court on the Expedited Request for Entry of Scheduling Order and Motion to Approve Proposed Settlement with Proskauer Rose LLP, to Approve the Proposed Notice of Settlement with Proskauer Rose LLP, to Enter the Bar Order, to Enter the Final Judgment and Bar Order, and for Plaintiffs’ Attorneys’ Fees (the “Motion”) of Ralph S. Janvey (the “Receiver”), as Receiver for the Receivership Estate in SEC v. Stanford International Bank, Ltd., No. 3:09-CV-0298-N (N.D. Tex.) (the “SEC Action”), the Official Stanford Investors Case 2:17-cv-00393-SCM Document 327-7 Filed 05/24/19 Page 3 of 24 PageID: 14695 Case 3:13-cv-00477-N-BQ Document 349 Filed 09/11/18 Page 2 of 11 PageID 17047 Committee (the “Committee”), as a party to the SEC Action and, along with the Receiver, as a plaintiff in Janvey v. Proskauer Rose LLP et al., No. 3:13-cv-00477-N (N.D. Tex.) (the “Receiver Litigation”), Sandra Dorrell and Phillip A. Wilkinson, individually and, on behalf of a putative class of Stanford investors, as plaintiffs in Dorrell v. Proskauer Rose LLP, No. 3:16-cv- 1152-N (N.D. Tex.) (the “Investor Plaintiffs” in the “Investor Litigation”), each of the plaintiffs listed in Exhibit E to the Settlement Agreement1 (the “State Court Plaintiffs” in the “State Court Litigations”) (collectively, the Receiver, the Committee, the Investor Plaintiffs, and the State Court Plaintiffs are referred to as “Plaintiffs,” and collectively, the Receiver Litigation, the Investor Litigation, and the State Court Litigations are referred to as the “Litigation”). The Motion concerns a proposed settlement (the “Settlement”) among and between, on the one hand, Plaintiffs and the Court-appointed Examiner, John J. Little (the “Examiner”);2 and, on the other hand, Proskauer Rose LLP (“Proskauer”), as a defendant in the Litigation. All capitalized terms used in this Scheduling Order that are defined in the Settlement Agreement have the same meaning as in the Settlement Agreement (which is deemed incorporated herein by reference) unless expressly otherwise defined herein. In the Motion, the Plaintiffs seek the Court’s approval of the terms of the Settlement, including entry of a bar order in the SEC Action (the “Bar Order”) and a final judgment and bar order in the Receiver Litigation (the “Judgment and Bar Order”). After reviewing the terms of the Settlement and considering the arguments presented in the Motion, the Court preliminarily approves the Settlement as adequate, fair, reasonable, and equitable. Accordingly, the Court 1 The “Settlement Agreement” refers to the Settlement Agreement that is attached as Exhibit 1 of the Appendix to the Motion [ECF No. _]. 2 The Examiner executed the Settlement Agreement to indicate his approval of the terms of the Settlement and to confirm his obligation to post Notice on his website, as required herein, but is not otherwise individually a party to the Settlement Agreement, the SEC Action, the Receiver Litigation, or the Investor Litigation. 2 Case 2:17-cv-00393-SCM Document 327-7 Filed 05/24/19 Page 4 of 24 PageID: 14696 Case 3:13-cv-00477-N-BQ Document 349 Filed 09/11/18 Page 3 of 11 PageID 17048 enters this scheduling order to: (i) provide for notice of the terms of the Settlement, including the proposed Bar Order in the SEC Action and the proposed Judgment and Bar Order in the Receiver Litigation; (ii) set the deadline for filing objections to the Settlement, the Bar Order, the Judgment and Bar Order, or Plaintiffs’ request for approval of Plaintiffs’ attorneys’ fees; (iii) set the deadline for responding to any objection so filed; and (iv) set the date of the final approval hearing regarding the Settlement, the Bar Order in the SEC Action, the Judgment and Bar Order in the Receiver Litigation, and Plaintiffs’ request for approval of Plaintiffs’ attorneys’ fees (the “Final Approval Hearing”), as follows: 1. Preliminary Findings on Potential Approval of the Settlement: Based upon the Court’s review of the terms of the Settlement Agreement, the arguments presented in the Motion, and the Motion’s accompanying appendices and exhibits, the Court preliminarily finds that the Settlement is fair, reasonable, and equitable; has no obvious deficiencies; and is the product of serious, informed, good-faith, and arm’s-length negotiations. The Court, however, reserves a final ruling with respect to the terms of the Settlement until after the Final Approval Hearing referenced below in Paragraph 2. 2. Final Approval Hearing: The Final Approval Hearing will be held before the Honorable David C. Godbey of the United States District Court for the Northern District of Texas, United States Courthouse, 1100 Commerce Street, Dallas, Texas 75242, in Courtroom 1505, at 10:00 a.m. on December 14, 2018, which is a date at least ninety (90) calendar days after entry of this Scheduling Order. The purposes of the Final Approval Hearing will be to: (i) determine whether the terms of the Settlement should be approved by the Court; (ii) determine whether the Bar Order attached as Exhibit B to the Settlement Agreement should be entered by the Court in the SEC Action; (iii) determine whether the Judgment and Bar Order attached as 3 Case 2:17-cv-00393-SCM Document 327-7 Filed 05/24/19 Page 5 of 24 PageID: 14697 Case 3:13-cv-00477-N-BQ Document 349 Filed 09/11/18 Page 4 of 11 PageID 17049 Exhibit C to the Settlement Agreement should be entered by the Court in the Litigation; (iv) rule upon any objections to the Settlement, Bar Order, or the Judgment and Bar Order; (v) rule upon Plaintiffs’ request for approval of Plaintiffs’ attorneys’ fees; and (vi) rule upon such other matters as the Court may deem appropriate. 3. Notice: The Court approves the form of Notice attached as Exhibit A to the Settlement Agreement and finds that the methodology, distribution, and dissemination of Notice described in the Motion: (i) constitute the best practicable notice; (ii) are reasonably calculated, under the circumstances, to apprise all Interested Parties of the Settlement, the releases therein, and the injunctions provided for in the Bar Order and Judgment and Bar Order; (iii) are reasonably calculated, under the circumstances, to apprise all Interested Parties of the right to object to the Settlement, the Bar Order, or the Judgment and Bar Order, and to appear at the Final Approval Hearing; (iv) constitute due, adequate, and sufficient notice; (v) meet all requirements of applicable law, including the Federal Rules of Civil Procedure, the United States Constitution (including Due Process), and the Rules of the Court; and (vi) will provide to all Persons a full and fair opportunity to be heard on these matters. The Court further approves the form of the publication Notice attached as Exhibit G to the Settlement Agreement. Therefore: a. The Receiver is hereby directed, no later than twenty-one (21) calendar days after entry of this Scheduling Order, to cause the Notice in substantially the same form attached as Exhibit A to the Settlement Agreement to be sent via electronic mail, first class mail, or international delivery service to all Interested Parties; to be sent via electronic service to all counsel of record for any Person who is, at the time of Notice, a party in any case included in In re Stanford Entities Securities Litigation, MDL No. 2099 (N.D. Tex.) (the “MDL”), the SEC Action or the Litigation, who are deemed to have consented to electronic service through the 4 Case 2:17-cv-00393-SCM Document 327-7 Filed 05/24/19 Page 6 of 24 PageID: 14698 Case 3:13-cv-00477-N-BQ Document 349 Filed 09/11/18 Page 5 of 11 PageID 17050 Court’s CM/ECF System under Local Rule CV-5.1(d); and to be sent via facsimile transmission and/or first class mail to any other counsel of record for any other Person who is, at the time of service, a party in any case included in the MDL, the SEC Action or the Litigation. b. The Receiver is hereby directed, no later than twenty-one (21) calendar days after entry of this Scheduling Order, to cause the notice in substantially the same form attached as Exhibit G to the Settlement Agreement to be published once in the national edition of The Wall Street Journal and once in the international edition of The New York Times. c. The Receiver is hereby directed, no later than twenty-one (21) calendar days after entry of this Scheduling Order, to cause the Settlement Agreement, the Motion, this Scheduling Order, the Notice, and all exhibits and appendices attached to these documents, to be posted on the Receiver’s website (http://stanfordfinancialreceivership.com). The Examiner is hereby directed, no later than twenty-one (21) calendar days after entry of this Scheduling Order, to cause the Settlement Agreement, the Motion, this Scheduling Order, the Notice, and all exhibits and appendices attached to these documents, to be posted on the Examiner’s website (http://lpf-law.com/examiner-stanford-financial-group). d. The Receiver is hereby directed promptly to provide the Settlement Agreement, the Motion, this Scheduling Order, the Notice, and all exhibits and appendices attached to these documents, to any Person who requests such documents via email to [email protected], or via telephone by calling Nadia Ramon (210) 630-4200. The Receiver may provide such materials in the form and manner that the Receiver deems most appropriate under the circumstances of the request. e. No less than ten (10) days before the Final Approval Hearing, the Receiver shall cause to be filed with the Clerk of this Court written evidence of compliance with 5 Case 2:17-cv-00393-SCM Document 327-7 Filed 05/24/19 Page 7 of 24 PageID: 14699 Case 3:13-cv-00477-N-BQ Document 349 Filed 09/11/18 Page 6 of 11 PageID 17051 subparts (a) through (d) of this Paragraph, which may be in the form of an affidavit or declaration. 4. Objections and Appearances at the Final Approval Hearing: Any Person who wishes to object to the terms of the Settlement, the Bar Order, the Judgment and Bar Order, or Plaintiffs’ request for approval of Plaintiffs’ attorneys’ fees, or who wishes to appear at the Final Approval Hearing, must do so by filing an objection, in writing, with the Court in the SEC Action (3:09-CV-0298-N), by ECF or by mailing the objection to the Clerk of the United States District Court for the Northern District of Texas, 1100 Commerce Street, Dallas, Texas 75242, no later than November 23, 2018. All objections filed with the Court must: a. contain the name, address, telephone number, and (if applicable) an email address of the Person filing the objection; b. contain the name, address, telephone number, and email address of any attorney representing the Person filing the objection; c. be signed by the Person filing the objection, or his or her attorney; d. state, in detail, the basis for any objection; e. attach any document the Court should consider in ruling on the Settlement, the Bar Order, the Judgment and Bar Order, or Plaintiffs’ request for approval of Plaintiffs’ attorneys’ fees; and f. if the Person filing the objection wishes to appear at the Final Approval Hearing, make a request to do so. No Person will be permitted to appear at the Final Approval Hearing without filing a written objection and request to appear at the Final Approval Hearing as set forth in subparts (a) 6 Case 2:17-cv-00393-SCM Document 327-7 Filed 05/24/19 Page 8 of 24 PageID: 14700 Case 3:13-cv-00477-N-BQ Document 349 Filed 09/11/18 Page 7 of 11 PageID 17052 through (f) of this Paragraph. Copies of any objections filed must be served by ECF, or by email or first class mail, upon each of the following: James P. Rouhandeh Daniel J. Schwartz Davis Polk & Wardwell LLP 450 Lexington Avenue New York, New York 10017 Telephone: 212.450.4000 Facsimile: 212.701.5800 Email: [email protected] Email: [email protected] and Bruce W. Collins Neil R. Burger Carrington, Coleman, Sloman & Blumenthal, L.L.P. 901 Main Street, Suite 5500 Dallas, Texas 75202 Telephone: 214.855.3000 Facsimile: 214.855.1333 Email: [email protected] Email: [email protected] and Edward C. Snyder Castillo Snyder, PC One Riverwalk Place 700 N. St. Mary’s, Suite 405 San Antonio, Texas 78205 Telephone: 210-630-4200 Fax: 210-630-4210 E-mail: [email protected] and Douglas J. Buncher Neligan LLP 325 N. St. Paul, Suite 3600 Dallas, Texas 75201 Telephone: 214-840-5320 Fax: 214-840-5301 7 Case 2:17-cv-00393-SCM Document 327-7 Filed 05/24/19 Page 9 of 24 PageID: 14701 Case 3:13-cv-00477-N-BQ Document 349 Filed 09/11/18 Page 8 of 11 PageID 17053 E-mail: [email protected] and Patrick J. Neligan, Jr. Neligan LLP 325 N. St. Paul, Suite 3600 Dallas, Texas 75201 Telephone: 214-840-5320 Fax: 214-840-5301 E-mail: [email protected] and Judith R. Blakeway Clark Hill Strasburger 2301 Broadway San Antonio, Texas 78215 Telephone: 210.250.6004 Fax: 210.250.6100 E-mail: [email protected] and John J. Little Little Pedersen Fankhauser LLP 901 Main Street, Suite 4110 Dallas, Texas 75202 Telephone: 214.573.2307 Fax: 214.573.2323 E-mail: [email protected] and Ralph Janvey 2100 Ross Ave Suite 2600 Dallas, TX 75201 E-mail: [email protected] and Kevin Sadler Baker Botts 1001 Page Mill Road Building One, Suite 200 8 Case 2:17-cv-00393-SCM Document 327-7 Filed 05/24/19 Page 10 of 24 PageID: 14702 Case 3:13-cv-00477-N-BQ Document 349 Filed 09/11/18 Page 9 of 11 PageID 17054 Palo Alto, California 94304-1007 E-mail: [email protected] Any Person filing an objection shall be deemed to have submitted to the jurisdiction of this Court for all purposes of that objection, the Settlement, the Bar Order, and the Judgment and Bar Order. Potential objectors who do not present opposition by the time and in the manner set forth above shall be deemed to have waived the right to object (including any right to appeal) and to appear at the Final Approval Hearing and shall be forever barred from raising such objections in this action or any other action or proceeding. Persons do not need to appear at the Final Approval Hearing or take any other action to indicate their approval. 5. Responses to Objections: Any Party to the Settlement may respond to an objection filed pursuant to Paragraph 4 by filing a response in the SEC Action no later than December 7, 2018. To the extent any Person filing an objection cannot be served by action of the Court’s CM/ECF system, a response must be served to the email and/or mailing address provided by that Person. 6. Adjustments Concerning Hearing and Deadlines: The date, time, and place for the Final Approval Hearing, and the deadlines and date requirements in this Scheduling Order, shall be subject to adjournment or change by this Court without further notice other than that which may be posted by means of ECF in the MDL, the SEC Action, and the Litigation. 7. Retention of Jurisdiction: The Court shall retain jurisdiction to consider all further applications arising out of or connected with the proposed Settlement. 8. Entry of Injunction: If the Settlement is approved by the Court, the Court will enter the Bar Order in the SEC Action and, following remand of the Receiver Litigation by the Fifth Circuit, the Judgment and Bar Order in the Receiver Litigation. If entered, the Bar Order and the Judgment and Bar Order will permanently enjoin, among others, Interested Parties, 9 Case 2:17-cv-00393-SCM Document 327-7 Filed 05/24/19 Page 11 of 24 PageID: 14703 Case 3:13-cv-00477-N-BQ Document 349 Filed 09/11/18 Page 10 of 11 PageID 17055 including Stanford Investors and Claimants, from bringing, encouraging, assisting, continuing, or prosecuting, against Proskauer or any of the Proskauer Released Parties, the Litigation, or any other action, lawsuit, cause of action, claim, investigation, demand, levy, complaint, or proceeding of any nature arising from or relating to any Stanford Claim, including without limitation, contribution or indemnity claims, and the claims filed against Proskauer and Sjoblom in ARCA Investments v. Proskauer Rose LLP, Civil Action No. 3:15-CV-02423-N (N.D. Tex.). 9. Stay of Proceedings: The Receiver Litigation is hereby stayed, except to the extent necessary to give effect to the Settlement. 10. Use of Order: Under no circumstances shall this Scheduling Order be construed, deemed, or used as an admission, concession, or declaration by or against Proskauer of any fault, wrongdoing, breach or liability. Nor shall the Order be construed, deemed, or used as an admission, concession, or declaration by or against Plaintiffs that their claims lack merit or that the relief requested is inappropriate, improper, or unavailable, or as a waiver by any party of any defenses or claims he, she or it may have. Neither this Scheduling Order, nor the proposed Settlement Agreement, or any other settlement document, shall be filed, offered, received in evidence, or otherwise used in these or any other actions or proceedings or in any arbitration, except to give effect to or enforce the Settlement or the terms of this Scheduling Order. 11. Entry of This Order: This Scheduling Order shall be entered separately on the dockets in the SEC Action, the Receiver Litigation, the Investor Litigation, and each of the State Court Litigations that is pending before this Court. 10 Case 2:17-cv-00393-SCM Document 327-7 Filed 05/24/19 Page 12 of 24 PageID: 14704 Case 3:13-cv-00477-N-BQ Document 349 Filed 09/11/18 Page 11 of 11 PageID 17056 SIGNED September 11, 2018. ______DAVID C. GODBEY UNITED STATES DISTRICT JUDGE 11 Case 2:17-cv-00393-SCM Document 327-7 Filed 05/24/19 Page 13 of 24 PageID: 14705 Case 3:13-cv-00477-N-BQ Document 358 Filed 01/16/19 Page 1 of 12 PageID 17113 IN THE UNITED STATES DISTRICT COURT NORTHERN DISTRICT OF TEXAS DALLAS DIVISION RALPH S. JANVEY, IN HIS CAPACITY § AS COURT-APPOINTED RECEIVER § FOR THE STANFORD RECEIVERSHIP § ESTATE, AND THE OFFICIAL § STANFORD INVESTORS COMMITTEE, § § Plaintiffs, § Civil Action No. 3:13-CV-0477-N-BG § v. § § PROSKAUER ROSE, LLP, § CHADBOURNE & PARKE, LLP, AND § THOMAS V. SJOBLOM, § § Defendants. § FINAL JUDGMENT AND BAR ORDER Before the Court is the Expedited Request for Entry of Scheduling Order and Motion to Approve Proposed Settlement with Proskauer Rose LLP, to Approve the Proposed Notice of Settlement with Proskauer Rose LLP, to Enter the Bar Order, to Enter the Final Judgment and Bar Order, and for Plaintiffs’ Attorneys’ Fees (the “Motion”) of Ralph S. Janvey, in his capacity as the Court-appointed Receiver for the Stanford Receivership Estate (the “Receiver”) in SEC v. Stanford International Bank, Ltd., Civil Action No. 3:09-CV-0928-N (the “SEC Action”), and as a plaintiff in this action (the “Receiver Litigation”), the Court-appointed Official Stanford Investors Committee (the “Committee”), as a plaintiff in the Receiver Litigation, Sandra Dorrell and Phillip A. Wilkinson individually and on behalf of a putative class of Stanford investors (collectively, the “Investor Plaintiffs”), as plaintiffs in Dorrell et al. v. Proskauer Rose LLP et al., Civil Action No. 3:16-cv-1152-N (N.D. Tex.) (the “Investor Litigation”), and each of the plaintiffs listed in Exhibit FINAL JUDGMENT AND BAR ORDER Case 2:17-cv-00393-SCM Document 327-7 Filed 05/24/19 Page 14 of 24 PageID: 14706 Case 3:13-cv-00477-N-BQ Document 358 Filed 01/16/19 Page 2 of 12 PageID 17114 E to the Settlement Agreement1 (the “State Court Plaintiffs” in the “State Court Litigations”) (collectively, the Receiver, the Committee, the Investor Plaintiffs, and the State Court Plaintiffs are referred to as “Plaintiffs” and collectively, the Receiver Litigation, the Investor Litigation, and the State Court Litigations are referred to as the “Litigation”). [ECF No. 343.] The Motion concerns a proposed settlement (the “Settlement”) among and between Plaintiffs and Proskauer Rose LLP (“Proskauer”), one of the defendants in the Litigation. Plaintiffs and Proskauer are referred to together as the “Parties.” John J. Little, the Court-appointed Examiner (the “Examiner”) signed the Settlement Agreement as chair of the Committee and as Examiner solely to evidence his support and approval of the Settlement and to confirm his obligation to post the Notice on his website, but is not otherwise individually a party to the Settlement or this action. All capitalized terms used in this Final Judgment and Bar Order that are defined in the Settlement Agreement have the same meaning as in the Settlement Agreement (which is deemed incorporated herein by reference) unless expressly otherwise defined herein. Following notice and a hearing, and having considered the filings and heard the arguments of counsel, the Court hereby GRANTS the Motion. I. INTRODUCTION The SEC Action and the Litigation both arise from a series of events leading to the collapse of Stanford International Bank, Ltd. (“SIBL”). On February 16, 2009, this Court appointed Ralph S. Janvey to be the Receiver for SIBL and related parties (the “Stanford Entities”). [SEC Action, ECF No. 10]. After years of diligent investigation, Plaintiffs believe that they have identified claims against a number of third parties, including Proskauer, that Plaintiffs allege enabled the 1 The “Settlement Agreement” refers to the Settlement Agreement that is attached as Exhibit 1 of the Appendix to the Motion [ECF No. 344]. FINAL JUDGMENT AND BAR ORDER 2 Case 2:17-cv-00393-SCM Document 327-7 Filed 05/24/19 Page 15 of 24 PageID: 14707 Case 3:13-cv-00477-N-BQ Document 358 Filed 01/16/19 Page 3 of 12 PageID 17115 Stanford Ponzi scheme. In the Receiver Litigation, the Investor Litigation, and the State Court Litigations, Plaintiffs assert a number of different claims against Proskauer. Proskauer denies that it is liable for any of those claims and asserts numerous defenses to each of those claims. The relevant history of the claims in the Receiver Litigation, the Investor Litigation, and the State Court Litigations is included in the Settlement Agreement. Multiparty settlement negotiations occurred in late 2017 and at a mediation in New York on April 12, 2018. In these negotiations, potential victims of the Stanford Ponzi scheme were well-represented. The Investor Plaintiffs, the Committee—which the Court appointed to “represent[] in this case and related matters” the “customers of SIBL who, as of February 16, 2009, had funds on deposit at SIBL and/or were holding certificates of deposit issued by SIBL (the ‘Stanford Investors’)” [SEC Action, ECF No. 1149]—the Receiver, and the Examiner—who the Court appointed to advocate on behalf of “investors in any financial products, accounts, vehicles or ventures sponsored, promoted or sold by any Defendant in this action” [SEC Action, ECF No. 322]—and the State Court Plaintiffs (by counsel) all participated in these extensive, arm’s-length negotiations. On April 25, 2018, the Parties reached agreement resulting in the Settlement. For several weeks thereafter, the Parties continued efforts to negotiate and document the terms of the Settlement Agreement. The Parties executed the Settlement Agreement on August 15, 2018. Under the terms of the Settlement, Proskauer will pay $63 million (the “Settlement Amount”) to the Receivership Estate, which (less attorneys’ fees and expenses) will be distributed to Stanford Investors. In return, Proskauer seeks total peace with respect to all claims that have been, or could have been, asserted against Proskauer or any of the Proskauer Released Parties arising out of the events leading to these proceedings. Accordingly, the Settlement is conditioned FINAL JUDGMENT AND BAR ORDER 3 Case 2:17-cv-00393-SCM Document 327-7 Filed 05/24/19 Page 16 of 24 PageID: 14708 Case 3:13-cv-00477-N-BQ Document 358 Filed 01/16/19 Page 4 of 12 PageID 17116 on the Court’s approval and entry of this Final Judgment and Bar Order enjoining Interested Parties from asserting or prosecuting claims against Proskauer or any of the Proskauer Released Parties. On August 24, 2018, Plaintiffs filed the Motion. [ECF No. 343]. The Court thereafter entered a Scheduling Order on September 11, 2018 [ECF No. 349], which, inter alia, authorized the Receiver to provide notice of the Settlement, established a briefing schedule on the Motion, and set the date for a hearing. On December 14, 2018, the Court held the scheduled hearing. For the reasons set forth herein, the Court finds that the terms of the Settlement Agreement are adequate, fair, reasonable, and equitable, and that the Settlement should be and is hereby APPROVED. The Court further finds that entry of this Final Judgment and Bar Order is appropriate and necessary. II. ORDER It is hereby ORDERED, ADJUDGED, AND DECREED as follows: 1. The Court has “broad powers and wide discretion to determine the appropriate relief in [this] equity receivership,” including the authority to enter the Final Judgment and Bar Order. SEC v. Kaleta, 530 F. App’x 360, 362 (5th Cir. 2013) (internal quotations omitted). Moreover, the Court has jurisdiction over the subject matter of this action, and the Receiver and the Committee are proper parties to seek entry of this Final Judgment and Bar Order. 2. The Court finds that the methodology, form, content and dissemination of the Notice: (i) were implemented in accordance with the requirements of the Scheduling Order; (ii) constituted the best practicable notice; (iii) were reasonably calculated, under the circumstances, to apprise all Interested Parties of the Settlement, the releases therein, and the injunctions provided for in this Final Judgment and Bar Order and in the Final Bar Order to be entered in the SEC Action; (iv) were reasonably calculated, under the circumstances, to apprise FINAL JUDGMENT AND BAR ORDER 4 Case 2:17-cv-00393-SCM Document 327-7 Filed 05/24/19 Page 17 of 24 PageID: 14709 Case 3:13-cv-00477-N-BQ Document 358 Filed 01/16/19 Page 5 of 12 PageID 17117 all Interested Parties of the right to object to the Settlement, this Final Judgment and Bar Order, and the Final Bar Order to be entered in the SEC Action, and to appear at the Final Approval Hearing; (v) were reasonable and constituted due, adequate, and sufficient notice; (vi) met all applicable requirements of law, including, without limitation, the Federal Rules of Civil Procedure, the United States Constitution (including Due Process), and the Rules of the Court; and (vii) provided to all Persons a full and fair opportunity to be heard on these matters. 3. The Court finds that the Settlement, including, without limitation, the Settlement Amount, was reached following an extensive investigation of the facts and resulted from vigorous, good-faith, arm’s-length, mediated negotiations involving experienced and competent counsel. The Court further finds that (i) significant issues exist as to the merits and value of the claims asserted against Proskauer by Plaintiffs and by others whose potential claims are foreclosed by this Final Judgment and Bar Order; (ii) such claims contain complex and novel issues of law and fact that would require a substantial amount of time and expense to litigate, with uncertainty regarding whether such claims would be successful; (iii) a significant risk exists that future litigation costs would dissipate receivership assets and that Plaintiffs and other Claimants may not ultimately prevail on their claims; (iv) Plaintiffs and Claimants who have filed Claims with the Receiver will receive partial satisfaction of their claims from the Settlement Amount being paid pursuant to the Settlement; and (v) Proskauer would not have agreed to the terms of the Settlement in the absence of this Final Judgment and Bar Order and assurance of “total peace” with respect to all claims that have been, or could be, asserted arising from its relationship with the Stanford Entities. See SEC v. Kaleta, No. 4:09-3674, 2012 WL 401069, at *4 (S.D. Tex. Feb. 7, 2012), aff’d, 530 F. App’x 360 (5th Cir. 2013) (approving these factors for consideration in evaluating whether a settlement and bar order are sufficient, fair, and necessary). FINAL JUDGMENT AND BAR ORDER 5 Case 2:17-cv-00393-SCM Document 327-7 Filed 05/24/19 Page 18 of 24 PageID: 14710 Case 3:13-cv-00477-N-BQ Document 358 Filed 01/16/19 Page 6 of 12 PageID 17118 The injunction against such claims, including but not limited to Stanford Claims, as set forth herein is therefore a necessary and appropriate order ancillary to the relief obtained for victims of the Stanford Ponzi scheme pursuant to the Settlement. See Kaleta, 530 F. App’x at 362 (affirming a bar order and injunction against investor claims as “ancillary relief” to a settlement in an SEC receivership proceeding). After careful consideration of the record and applicable law, the Court concludes that the Settlement is the best option for maximizing the net amount recovered from Proskauer for the Receivership Estate, Plaintiffs, and the Claimants. 4. Pursuant to the Settlement Agreement and upon motion by the Receiver in the SEC Action, this Court will approve a Distribution Plan that will fairly and reasonably distribute the net proceeds of the Settlement to Stanford Investors who have Claims approved by the Receiver. The Court finds that the Receiver’s claims process and the Distribution Plan contemplated in the Settlement Agreement have been designed to ensure that all Stanford Investors have received an opportunity to pursue their Claims through the Receiver’s claims process previously approved by the Court [SEC Action, ECF No. 1584]. 5. The Court further finds that the Parties and their counsel have at all times complied with the requirements of Rule 11 of the Federal Rules of Civil Procedure. 6. Accordingly, the Court finds that the Settlement is, in all respects, fair, reasonable, and adequate, and in the best interests of all Persons claiming an interest in, having authority over, or asserting a claim against Proskauer, the Stanford Entities, or the Receivership Estate, including but not limited to Plaintiffs and the Interested Parties. The Court also finds that this Final Judgment and Bar Order is a necessary component to achieve the Settlement. The Settlement, the terms of which are set forth in the Settlement Agreement, is hereby fully and finally approved. The Parties are directed to implement and consummate the Settlement in FINAL JUDGMENT AND BAR ORDER 6 Case 2:17-cv-00393-SCM Document 327-7 Filed 05/24/19 Page 19 of 24 PageID: 14711 Case 3:13-cv-00477-N-BQ Document 358 Filed 01/16/19 Page 7 of 12 PageID 17119 accordance with the terms and provisions of the Settlement Agreement and this Final Judgment and Bar Order. 7. Pursuant to the provisions of Paragraph 42 of the Settlement Agreement, as of the Settlement Effective Date, Proskauer and all of the other Proskauer Released Parties shall be completely released, acquitted, and forever discharged from any action, cause of action, suit, liability, claim, right of action, right of levy or attachment, or demand whatsoever, whether or not currently asserted, known, suspected, existing, or discoverable, and whether based on federal law, state law, foreign law, common law, or otherwise, and whether based on contract, tort, statute, law, equity or otherwise, that the Investor Plaintiffs; the Receiver; the Receivership Estate; the Committee; the State Court Plaintiffs; the Claimants; and the Persons, entities and interests represented by those Parties ever had, now has, or hereafter can, shall, or may have, directly, representatively, derivatively, or in any other capacity, for, upon, arising from, relating to, or by reason of any matter, cause, or thing whatsoever, that, in full or in part, concerns, relates to, arises out of, or is in any manner connected with (i) the Stanford Entities; (ii) any certificate of deposit, depository account, or investment of any type with any one or more of the Stanford Entities; (iii) Proskauer’s relationship with any one or more of the Stanford Entities and/or any of their personnel; (iv) Proskauer’s provision of services to or for the benefit of or on behalf of the Stanford Entities; or (v) any matter that was asserted in, could have been asserted in, or relates to the subject matter of the Litigation, the SEC Action, or any proceeding concerning the Stanford Entities pending or commenced in any Forum. The foregoing specifically includes, without limitation, all Plaintiffs’ Stanford Claims against Proskauer and the Proskauer Released Parties, including, without limitation, Sjoblom. FINAL JUDGMENT AND BAR ORDER 7 Case 2:17-cv-00393-SCM Document 327-7 Filed 05/24/19 Page 20 of 24 PageID: 14712 Case 3:13-cv-00477-N-BQ Document 358 Filed 01/16/19 Page 8 of 12 PageID 17120 8. Pursuant to the provisions of Paragraph 43 of the Settlement Agreement, as of the Settlement Effective Date, the Plaintiffs Released Parties shall be completely released, acquitted, and forever discharged from all Stanford Claims by Proskauer. 9. Notwithstanding anything to the contrary in this Final Judgment and Bar Order, the foregoing releases do not release the Parties’ rights and obligations under the Settlement or the Settlement Agreement or bar the Parties from enforcing or effectuating the terms of the Settlement or the Settlement Agreement. Further, the foregoing releases do not bar or release any claims, including but not limited to Stanford Claims, that Proskauer may have against any Proskauer Released Party, including but not limited to Proskauer’s insurers, reinsurers, employees and agents. 10. The Court hereby permanently bars, restrains, and enjoins Plaintiffs, the Claimants, the Interested Parties, and all other Persons or entities anywhere in the world, whether acting in concert with the foregoing or claiming by, through, or under the foregoing, or otherwise, all and individually, from directly, indirectly, or through a third party, instituting, reinstituting, intervening in, initiating, commencing, maintaining, continuing, filing, encouraging, soliciting, supporting, participating in, collaborating in, or otherwise prosecuting, against Proskauer or any of the Proskauer Released Parties, the Litigation or any action, lawsuit, cause of action, liability, claim, investigation, demand, levy, complaint, or proceeding of any nature in any Forum, including, without limitation, any court of first instance or any appellate court, whether individually, derivatively, on behalf of a class, as a member of a class, or in any other capacity whatsoever, that in any way relates to, is based upon, arises from, or is connected with the Stanford Entities; Proskauer’s relationship with the Stanford Entities; the Litigation; the SEC Action; the subject matter of the Litigation or the SEC Action; or any Stanford Claim. The FINAL JUDGMENT AND BAR ORDER 8 Case 2:17-cv-00393-SCM Document 327-7 Filed 05/24/19 Page 21 of 24 PageID: 14713 Case 3:13-cv-00477-N-BQ Document 358 Filed 01/16/19 Page 9 of 12 PageID 17121 foregoing specifically includes, without limitation, all claims filed against Proskauer and Sjoblom in ARCA Investments v. Proskauer Rose LLP, Civil Action No. 3:15-CV-02423-N (N.D. Tex.) (the “ARCA Investments Litigation”). The foregoing also specifically includes any claim, however denominated, seeking contribution, indemnity, damages, or other remedy where the alleged injury to such Person, entity, or Interested Party, or the claim asserted by such Person, entity, or Interested Party, is based upon such Person’s, entity’s, or Interested Party’s liability to any Plaintiff, Claimant, or Interested Party arising out of, relating to, or based in whole or in part upon money owed, demanded, requested, offered, paid, agreed to be paid, or required to be paid to any Plaintiff, Claimant, Interested Party, or other Person or entity, whether pursuant to a demand, judgment, claim, agreement, settlement or otherwise. Notwithstanding the foregoing, there shall be no bar of any claims, including but not limited to the Stanford Claims, that Proskauer may have against any Proskauer Released Party, including but not limited to Proskauer’s insurers, reinsurers, employees and agents. Further, the Parties retain the right to sue for alleged breaches of the Settlement Agreement. 11. Nothing in this Final Judgment and Bar Order shall affect or be construed to affect in any way whatsoever, any right of any Person, entity, or Interested Party to: (a) claim a credit or offset, however determined or quantified, if and to the extent provided by any applicable statute, code, or rule of law, against any judgment amount, based upon the Settlement or payment of the Settlement Amount; (b) designate a “responsible third party” or “settling person” under Chapter 33 of the Texas Civil Practice and Remedies Code; or (c) take discovery under applicable rules in litigation; provided for the avoidance of doubt that nothing in this paragraph shall be interpreted to permit or authorize any action or claim seeking to impose any liability of any kind (including but not limited to liability for contribution, indemnification or FINAL JUDGMENT AND BAR ORDER 9 Case 2:17-cv-00393-SCM Document 327-7 Filed 05/24/19 Page 22 of 24 PageID: 14714 Case 3:13-cv-00477-N-BQ Document 358 Filed 01/16/19 Page 10 of 12 PageID 17122 otherwise) upon Proskauer or any Proskauer Released Party, including, but not limited to, the ARCA Investments Litigation as to Proskauer and Sjoblom. 12. Proskauer and the Proskauer Released Parties have no responsibility, obligation, or liability whatsoever with respect to the content of the Notice; the notice process; the Distribution Plan; the implementation of the Distribution Plan; the administration of the Settlement; the management, investment, distribution, allocation, or other administration or oversight of the Settlement Amount, any other funds paid or received in connection with the Settlement, or any portion thereof; the payment or withholding of Taxes; the determination, administration, calculation, review, or challenge of claims to the Settlement Amount, any portion of the Settlement Amount, or any other funds paid or received in connection with the Settlement or the Settlement Agreement; or any losses, attorneys’ fees, expenses, vendor payments, expert payments, or other costs incurred in connection with any of the foregoing matters. No appeal, challenge, decision, or other matter concerning any subject set forth in this paragraph shall operate to terminate or cancel the Settlement, the Settlement Agreement, or this Final Judgment and Bar Order. 13. Nothing in this Final Judgment and Bar Order or the Settlement Agreement and no aspect of the Settlement or negotiation or mediation thereof is or shall be construed to be an admission or concession of any violation of any statute or law, of any fault, liability, or wrongdoing, or of any infirmity in the claims or defenses of the Parties with regard to any of the complaints, claims, allegations, or defenses in the Litigation, or any other proceeding. 14. Proskauer is hereby ordered to deliver or cause to be delivered the Settlement Amount ($63 million) as described in Paragraph 27 of the Settlement Agreement. Further, the Parties are ordered to act in conformity with all other provisions of the Settlement Agreement. FINAL JUDGMENT AND BAR ORDER 10 Case 2:17-cv-00393-SCM Document 327-7 Filed 05/24/19 Page 23 of 24 PageID: 14715 Case 3:13-cv-00477-N-BQ Document 358 Filed 01/16/19 Page 11 of 12 PageID 17123 15. Without in any way affecting the finality of this Final Judgment and Bar Order, the Court retains continuing and exclusive jurisdiction over the Parties for purposes of, among other things, the administration, interpretation, consummation, and enforcement of the Settlement, the Settlement Agreement, the Scheduling Order, and this Final Judgment and Bar Order, including, without limitation, the injunctions, bar orders, and releases herein, and to enter orders concerning implementation of the Settlement, the Settlement Agreement, the Distribution Plan, and any payment of attorneys’ fees and expenses to Plaintiffs’ counsel. 16. To the extent Plaintiffs continue to maintain claims against any other Defendant in this civil action, the Court expressly finds and determines, pursuant to Federal Rule of Civil Procedure 54(b), that there is no just reason for any delay in the entry of this Final Judgment and Bar Order as to Proskauer, which is both final and appealable as to Proskauer, and immediate entry of final judgment as to Proskauer by the Clerk of the Court is expressly directed. 17. This Final Judgment and Bar Order shall be served by counsel for Plaintiffs, via email, first class mail or international delivery service, on any person or entity that filed an objection to approval of the Settlement, the Settlement Agreement, or this Final Judgment and Bar Order. 18. All relief as to or against Proskauer not expressly granted herein, other than Plaintiffs’ request for approval of Plaintiffs’ attorneys’ fees, which will be addressed by a separate order, is denied. This is a final judgment. The Clerk of the Court is directed to enter Judgment as to Proskauer in conformity herewith. FINAL JUDGMENT AND BAR ORDER 11 Case 2:17-cv-00393-SCM Document 327-7 Filed 05/24/19 Page 24 of 24 PageID: 14716 Case 3:13-cv-00477-N-BQ Document 358 Filed 01/16/19 Page 12 of 12 PageID 17124 SIGNED January 16, 2019. ______DAVID C. GODBEY UNITED STATES DISTRICT JUDGE FINAL JUDGMENT AND BAR ORDER 12