Opinion
Case No. BK-N-03-52300 — BK-N-03-52304 and BK-N-03-52470 — BK-N-03-52474 (Joint Administration).
September 27, 2004
JUDY B. CALTON, ESQ., HONIGMAN MILLER SCHWARTZ AND COHN LLP, Detroit, MI, JOAN C. WRIGHT, ESQ., JAMES R. CAVILIA, ESQ., ALLISON, MacKENZIE, RUSSELL, PAVLAKIS, WRIGHT FAGAN, LTD., Carson City, NV, Attorneys for Trustee.
NEAL L. WOLF, ESQ., TODD L. PADNOS, ESQ., ADELAIDE MAUDSLEY, ESQ., LEBOEUF, LAMB, GREENE MacRAE, LLP, San Francisco, CA, Creditors Committee Attorney.
FOCUS MANAGEMENT GROUP USA, INC., By J. Tim Pruban, President.
C. Alan Bentley, Chapter 11 Trustee.
C. ALAN BENTLEY, Chapter 11 Trustee of the captioned Debtor and the OFFICIAL COMMITTEE OF UNSECURED CREDITORS hereby stipulate to entry of the attached Stipulated Order Approving Common Interest Agreement Relating to Prospective Transaction with FOCUS MANAGEMENT GROUP USA, INC.
STIPULATED ORDER APPROVING COMMON INTEREST AGREEMENT RELATING TO PROSPECTIVE TRANSACTION WITH FOCUS MANAGEMENT GROUP USA, INC.
This matter having come on to be considered upon the agreement of C. ALAN BENTLEY, Chapter 11 Trustee of the captioned Debtor (the "Trustee") and the OFFICIAL COMMITTEE OF UNSECURED CREDITORS (the "Committee"), pursuant to the Motion to Approve Common Interest Agreement Relating to Prospective Transaction (the "Motion") and the agreements placed on the record and ruling of the Court on June 21, 2004 regarding providing parties interested in prospective transactions relating to the Estate's cause of action the ability to enter into common interest agreements, no further notice or hearing being necessary, the Court having considered the Motion and June 21, 2004 hearing, and being fully advised in the premises:
IT IS HEREBY ORDERED that:
1. The Trustee is authorized to enter into the Common Interest Agreement attached hereto with Focus Management Group USA, Inc. ("Focus") or its designee ("J. Tim Pruban").
2. The sharing of information between the Trustee and Focus shall not be a waiver of any attorney-client privilege, work product doctrine or other applicable privileges or protections, all as more fully set forth within the Common Interest Agreement.
3. Upon reasonable request by the Committee, the Committee may have access to any and all information, materials and documents provided to Focus pursuant to the Common Interest Agreement in the same form and on the same terms and conditions as provided to Focus, with the Committee to bear all costs, including copying and postage. The information provided to the Committee shall not be a waiver of any attorney-client privilege, work product doctrine or other applicable privileges or protections as provided by the Order Approving Common Interest Agreements dated November 3, 2003. The Committee's receipt of information, materials, or documents pursuant to this provision does not constitute a waiver of any rights the Committee may have with respect to any transaction contemplated or subsequently entered into between the Trustee and Focus.
COMMON INTEREST AGREEMENT
THIS COMMON INTEREST AGREEMENT (the "Agreement') is made and entered into on this 13th day of September, 2004, by and among C. ALAN BENTLEY, Chapter 11 Trustee (the "Trustee") appointed in the jointly administered Chapter 11 cases of debtors MEGO FINANCIAL CORP., LEISURE HOMES CORPORATION, LEISURE RESORTS CORPORATION, LEISURE SERVICES CORPORATION, ATLANTIC DEVELOPMENT CORPORATION, STEAMBOAT SUITES, INC., CIMARRON GOLF CLUB LLC, OVERLOOK FOOD AND BEVERAGE COMPANY, COLORADO LAND GRAZING COMPANY and BRIGANTINE PREFERRED PROPERTIES (collectively, the "Debtors"), all of which are pending in the United States Bankruptcy Court for the District of Nevada, Reno Division, under the designated case no. 03-52300-GWZ (the "Chapter 11 Case"), and FOCUS MANAGEMENT GROUP USA, INC. ("Focus") and/or its designee ("J. Tim Pruban").
WHEREAS, Focus is investigating a transaction with the Trustee in which it would acquire an interest in the Trustee's causes of action (the "Transaction").
WHEREAS, Focus represents to the Trustee that it is not at present a party in interest in the Chapter 11 case, did not do business with the Debtors, or to the best of its knowledge, with any of the Debtors' former officers and directors, including Ross Mangano and Floyd Kephart.
WHEREAS, Focus desires to perform due diligence into the existence, merits, costs and other issues with respect to the Transaction, which due diligence would include (i) written and non-written information from Debtors and Trustee, including their legal counsel and other agents, employees and/or representatives, to allow Focus to undertake an analysis of possible or actual litigation and/or adversary proceedings or contested matters, including any appellate proceedings arising therefrom, on behalf of the Debtors' estates (the "Bankruptcy Litigation"); and (ii) the provision or disclosure of information related to reviews, studies and analysis performed by Debtors and the Trustee (including their legal counsel, agents, employees and/or representatives) of the liens, claims, and interests of purported secured and other creditors and the prosecution of possible or actual litigation and/or adversary proceedings or contested matters, including any appellate proceedings, arising therefrom, amounts of administrative claims, potential recoveries from assets and distributions on administrative claims (the "Claims Review");
WHEREAS, the Trustee has a fiduciary duty to maximize the value of the Estates' assets available for distribution to creditors;
WHEREAS, it is in the interest of the Estates to make information about the Bankruptcy Litigation and Claims Review available to Focus while preserving the Estates' privileges with respect to the Bankruptcy Litigation and Claims Review;
NOW THEREFORE, because the Trustee and Focus (the "Parties") wish to continue to pursue their separate but mutual interests with respect to the Transaction, and also to avoid any risk or suggestion of any waiver of the confidentiality of privileged communications, work product or documents, IT IS AGREED as follows:
1. For purposes of this Agreement, the term "Counsel" means and includes legal counsel for the respective Parties, together with their respective partners and associate attorneys, as well as any legal assistants, secretaries, or other support staff working for such legal counsel. Execution of this Agreement on behalf of the Parties binds all Counsel for the Parties, as well as the Parties.
2. With the advice of Counsel, the Parties have concluded that it is in each of their individual and mutual best interests regarding the pursuit of the Transaction to share certain information related or relevant thereto with some or all of Counsel. The Parties therefore acknowledge and agree that they share common interests and that their interests will be best served if Counsel can fully exchange information subject to the continued protection of the attorney-client privilege, work product doctrine, and other applicable privileges or protections. The Parties and the undersigned Counsel hereby agree that any Materials that either Party or its Counsel may, in its discretion, share with the other Party or its Counsel shall be subject to the terms of this Agreement. Such "Materials" shall include, but are not limited to, any oral or written communications potentially relating to the Transaction, and any disclosed documents, mental impressions, opinions, advice, factual and/or legal analyses and memoranda, interview reports, reports of experts, consultants or investigators, meetings in person, by telephone, electronic mail, or other forms of communication, together with records or reports of such communications, which in the reasonable opinion of any Party or its Counsel potentially relate to the Transaction. "Materials" includes any copies or reproductions of Materials made by a receiving Party. In the case of oral communications, all of the same shall be subject to the terms hereof unless expressly otherwise so agreed between the parties in writing.
3. Nothing in this Agreement shall be construed to affect the separate and independent representation of each Party by its respective Counsel or to create an attorney-client relationship between any attorney and anyone other than the Party(s) heretofore or otherwise represented by that attorney.
4. Some or all of the Materials may be confidential or privileged from disclosure to adverse or other parties as a result of the attorney-client privilege, the work product doctrine, or other applicable privileges or protections. It is the desire, intention, and mutual understanding of the Parties that: (a) the sharing of Materials between the Parties is not intended to, and shall not, waive or diminish in any way the confidentiality of such Materials or their continued protection under the attorney-client privilege, the work product doctrine, or other applicable privileges or protections; and (b) all Materials provided by a Party pursuant to this Agreement that are otherwise entitled to protection under the attorney-client privilege, the work product doctrine, or other applicable privileges or protections shall remain entitled to such protection under the common interest and/or joint defense doctrines. Unless and except as may from time to time be ordered by a court of competent jurisdiction, or as may otherwise be lawfully subject to disclosure pursuant to subpoena or other legal process, the Parties therefore agree that Materials provided by the other Party pursuant to this Agreement shall not be disclosed to anyone other than those described in Paragraph 5 without the prior written consent of the providing Party or its Counsel.
5. The Parties agree that they and their Counsel will not disclose any Materials, or any information contained in any Materials, that were received from the Other Party to anyone except: (a) a Party's Counsel who is responsible for the Transaction; (b) the Trustee; (c) officers, directors, or employees of either Party involved in assisting the review, analysis, and, if and where applicable, prosecution of any Transaction; and (d) such additional persons that the Party originally providing the Materials should agree in writing may have access to some or all of the Materials (each, an "Authorized Person" and collectively, "Authorized Persons"). All Authorized Persons permitted access to Materials shall be specifically advised that the Materials may be privileged, are subject to the terms of this Agreement, and may not be disclosed to anyone other than Authorized Persons. It is expressly understood that nothing contained in this Agreement shall limit the rights of any Party or Counsel with respect to documents or information obtained or received separate and apart from any sharing of information or documents pursuant to this Agreement or the rights of a producing party to use its own material in any way. This Agreement is not intended, and shall not be utilized or asserted, to increase or expand the scope of any privilege of a Party; as such, there shall be no right in any Party to use this Agreement in an effort to avoid production of documents or disclosure of information not otherwise subject to privilege.
6. Focus expressly agrees that it will not disclose any Materials or any information contained in any Materials with any of the Debtors' former officers and directors, including Ross Mangano and Floyd Kephart, or members of Ungaretti Harris, counsel for Ross Mangano.
7. Any shared Materials, and the information contained therein, are to be used by each Authorized Person or Party receiving them solely in connection with the review, analysis and, if and where applicable, prosecution of any Bankruptcy Litigation. Neither the Materials nor the information contained therein may be used for any other purposes whatsoever. In no event may the Materials or information contained therein received by one Party be used or referenced in any matter, proceeding, litigation, arbitration or dispute (including those related to or arising out of any Transaction) against the other Party.
8. Nothing in this Agreement shall obligate any Party or Counsel to share or communicate any Materials or other materials with the other Party or its Counsel. The Parties recognize the implied duty of good faith and cooperation inherent in this Agreement as necessary to the goal of ethically pursuing the Transaction.
9. If any person or entity requests or demands access, by subpoena or otherwise, to Materials provided pursuant to this Agreement, Counsel and the Party receiving the demand or subpoena shall immediately notify Counsel for the Parties which supplied those Materials. Counsel receiving the demand or subpoena shall take all steps reasonably necessary or appropriate to permit the assertion of all applicable rights and privileges with regard to said Materials in the appropriate forum(s) and shall cooperate fully with the providing Party in any proceeding relating to the demanded disclosure, but shall otherwise have no duty to object to or defend against any such production or disclosure.
10. Either Party may withdraw from this Agreement at any time by giving written notice to the other Party and its undersigned Counsel, in which case this Agreement shall no longer be operative, except that each Party and its Counsel, including the withdrawing Party and its Counsel, shall continue to be bound by this Agreement with respect to Materials previously furnished pursuant to this Agreement. In the event that a Party and/or its Counsel determines that it no longer has a mutuality of interest, such Party shall withdraw from this Agreement.
11. The provisions of this Agreement may be modified only by the written agreement of both Parties.
12. Within sixty (60) days after the earlier of: (a) the conclusion of all Intangibles Transaction, or (b) the withdrawal of any Party from this Agreement, each Party and Counsel shall (i) return all written Materials (and copies thereof) it received pursuant to this Agreement to the Party or Counsel who originally furnished such Materials, including all Materials that Counsel may have provided to an Authorized Person, or (ii) destroy or cause to be destroyed all such Materials.
13. The receipt by Counsel of any documents or information pursuant to this Agreement and the representation by such Counsel of a Party in any Bankruptcy Litigation: (a) shall not preclude such Counsel from representing an interest that may be adverse to any other person, including the other Party to this Agreement, (b) shall not be asserted as a basis for seeking to disqualify such Counsel from representing any person or entity in any Chapter 11 Case Matters or any other proceeding, and (c) shall not be asserted as a basis for seeking to disqualify such Counsel from examining or cross-examining any person who testifies in any proceeding related to the Bankruptcy Litigation. This paragraph is not intended to be, and should not be construed as, a deviation from the provisions of 11 U.S.C. § 327 and such other provisions of the United States Bankruptcy Code and the Federal Rules of Bankruptcy Procedure applicable to the employment of professional persons.
14. The execution of this Agreement by the undersigned for each of the Parties has been duly authorized and is the valid, binding, and enforceable act of each of the Parties upon whose behalf this Agreement has been executed. Each Party agrees that this Agreement, and all obligations arising hereunder, shall be binding on any Counsel employed in the future by that Party, including successor or replacement Counsel, as if such Counsel had signed the Agreement. The respective signatories may execute this Agreement in separate counterparts.
15. This Agreement shall be governed by and construed and enforced in accordance with the laws of the State of Nevada, without reference to its principles of choice or conflict of laws.
IN WITNESS WHEREOF, the undersigned, on behalf of themselves and the Parties, and the Trustee have duly executed and delivered this Agreement as of the date first written above.