MUTUAL RELEASE AND SETTLEMENT AGREEMENT

THIS MUTUAL RELEASE AND SETTLEMENT AGREEMENT (“Agreement”) is made as of this day of December, 2001 by and among BANK ONE, TEXAS, N.A., in its capacity as Trustee under that certain Indenture dated as of December 21, 1994, as amended and restated by that certain Amended and Restated Indenture dated as of August 6, 1996, and in its capacity as a federally chartered bank (“Bank One”), on the one hand, and DENNIS MURPHY, in his capacity as the duly elected and acting Chapter 7 Trustee (“Bankruptcy Trustee”) for the bankruptcy estate of First Lenders Indemnity Corporation (“Debtor”), on the other hand.

RECITALS

This Agreement is made with reference to the following facts:

A. The Debtor is the debtor in a Chapter 7 bankruptcy case (“Bankruptcy Case”) pending before the United States Bankruptcy Court for the Central District Of California (Santa Ana Division) (“Bankruptcy Court”), carried as Case No. SA 97-16576 RA. The Bankruptcy Trustee is the duly elected and acting Chapter 7 Trustee of the Debtor in the Bankruptcy Case.

B. Bank One is the trustee under that certain Indenture concerning an issuer named “First Lenders Indemnity Corporation” dated as of December 21, 1994, as amended and restated by that certain Amended and Restated Indenture dated as of August 6, 1996 (together, the “Indenture”). The Adversary Proceedings (as defined below) arise out of and relate to the Indenture.

C. Prior to the commencement of the Bankruptcy Case, the Debtor or its affiliates issued promissory notes to various entities (as “entity” is defined in 11 U.S.C. Section 101). Certain of those entities purchased notes issued under the Indenture with such notes being “authenticated” by Bank One pursuant to the Indenture (“BOA Notes”). Those entities, or where applicable, any assignee, transferee or holder of such BOA Notes, shall hereinafter be referred to as the “Bank One Authenticated Noteholders” or “BOA Noteholders.” For reference purposes, attached hereto as Exhibit 1 is a list of such BOA Noteholders, believed by Bank One and the Bankruptcy Trustee to be accurate as of the date hereof. The Exhibit 1 is subject to further revision and updating after the date of this Agreement as Bank One or the Bankruptcy Trustee receive new or different information regarding the BOA Noteholders.

D. Bank One is holding approximately $25.2 million in disputed funds (the “Disputed Funds”) in various accounts established pursuant to the Indenture and in an account established between the parties pursuant to a Stipulation and Order Re Investment of Funds Held by Omni, entered on or about December 31, 1997.

E. Bank One, as indenture trustee on behalf of the BOA Noteholders, timely filed a proof of claim in the Bankruptcy Case on November 4, 1997 (“BOA Noteholder Proof of Claim”) which is reflected on the claims docket in this Bankruptcy Case as Claim No. 799. The BOA Proof of Claim states that Bank One, on behalf of the BOA Noteholders, holds a secured claim against the Debtor in the amount of $27,274,574.41 plus interest.

F. Bank One, on behalf of itself and not on behalf of the BOA Noteholders, timely filed a proof of claim in the Bankruptcy Case on November 4, 1997 (“Bank One Proof of Claim") which is reflected on the claims docket in this Bankruptcy Case as Claim No. 800. The Bank One Proof of Claim states that Bank One holds a secured claim against the Debtor in the amount of $150,494.62 plus interest for indenture trustee services rendered and costs incurred by Bank One under the Indenture (including attorneys’ fees and costs). The amendment to the Bank One Proof of Claim contemplated below, if filed within the time frames contemplated below, will be deemed to be timely and appropriate.

G. On September 30, 1997, Bank One commenced an adversary proceeding against the Bankruptcy Trustee and the Debtor in the Bankruptcy Case, captioned Bank One, Texas, N.A., vs. Dennis Murphy, Chapter 7 Trustee, etc., et al., Adversary No. SA 97-2085-RA (“Security Interest Litigation”), to determine that Bank One, on behalf of the BOA Noteholders, holds a valid and perfected security interest upon certain assets of the Debtor’s estate including, without limitation, the Debtor’s auto contracts and the proceeds thereof that are held in certain accounts with Bank One pursuant to the Indenture and certain accounts established pursuant to the Indenture. Subsequently, the Trustee filed counterclaims against Bank One seeking, among other things, to avoid Bank One’s asserted liens under 11 U.S.C. Section 544(a) and to recover alleged preferential transfers. On May 26, 2000, the Bankruptcy Court entered an order granting a motion by Bank One for summary adjudication, and ruled that (i) Bank One has a valid and perfected security interest in the Debtor’s auto contracts and identifiable cash proceeds of the auto contracts on deposit in the accounts with Bank One pursuant to the Indenture and a deposit account established pursuant to the Indenture known as the “Reserve Account,” and (ii) the Debtor’s estate has no equity in its interest in the foregoing assets. No final judgment has been entered in the Security Interest Litigation, and the Bankruptcy Trustee has not commenced an appeal of the Court’s order granting summary adjudication, although he has indicated that he intends to pursue an appeal after a final judgment is entered absent a settlement.

H. In November 1999, the Bankruptcy Trustee commenced an adversary proceeding against, among others, Bank One in the Bankruptcy Case, captioned Dennis Murphy, Chapter 7 Trustee, vs. Bank One, Texas, N.A., et al., Adversary No. SA 99-1291 RA (“Avoidance Action”). The Bankruptcy Trustee’s complaint in the Avoidance Action seeks to determine, among other things, that (i) the Debtor was or operated as a Ponzi scheme, (ii) the Indenture is an unenforceable, illegal contract because the Debtor entered into the Indenture in furtherance of the alleged Ponzi scheme, and (iii) the security interest in favor of Bank One, on behalf of the BOA Noteholders, may be avoided as a fraudulent transfer. The Avoidance Action is presently pending before the Bankruptcy Court and will likely proceed to trial sometime in 2002. The Security Interest Litigation and the Avoidance Action are sometimes hereinafter collectively referred to as the “Adversary Proceedings.”

I. Bank One holds and asserts a disputed claim against the Debtor for fraud and indemnity (“Fraud and Indemnity Claim”) relating to the Debtor’s conduct prior to the commencement of the Bankruptcy Case. The Fraud and Indemnity Claim may be asserted against the Debtor’s bankruptcy estate through the timely filing of the amendment to the Bank One Proof of Claim contemplated below.

J. The Bankruptcy Trustee and Bank One (together with the “Opt-In Noteholders” defined below, the “Parties”) desire to settle and resolve all disputes between them relating to the Adversary Proceedings and the Fraud and Indemnity Claim in order to avoid incurring the inconvenience, expense and risk of continued litigation.

K. The Bankruptcy Trustee and Bank One, and their respective counsel, participated in a mediation on November 5 and 6, 2001 before Kenneth Klee, Esq. with respect to all of the disputes between them relating to the Bankruptcy Proceeding, the Adversary Proceedings and the Fraud and Indemnity Claim (“Mediation”). At the conclusion of the Mediation, the parties reached a settlement in principle on the terms set forth herein.

L. Each of these recitals is a recital of fact within the meaning of California Evidence Code Section 622 and not a recital of consideration. To the extent necessary to effectuate the intention of the parties hereto, each of the facts recited above shall be deemed to be also a term, condition or provision of the within Agreement and each of the terms, conditions and provisions of this Agreement shall be deemed to be also a recital of fact.

NOW, THEREFORE, in consideration of the mutual promises contained herein, and for other good and valuable consideration, the sufficiency of which is hereby acknowledged, the Parties to this Agreement agree as follows:

ARTICLE 1: Definitions

Terms defined in 11 U.S.C. Section 101 which are used herein shall have the meanings given to those terms in 11 U.S.C. Section 101. In addition to those terms and to the terms elsewhere defined in this Agreement, the following definitions apply in this Agreement:

1.1 “Effective Date” means the date on which all conditions precedent in Article 3 have occurred unless waived as described in Section 3.2 below.

1.2 “Final Order” means an order which has been entered by the Bankruptcy Court, and is no longer subject to appeal or other review by any available reviewing court, including without limitation the United States District Court, the Bankruptcy Appellate Panel, the Ninth Circuit Court Of Appeals or the United States Supreme Court because (1) all periods within which an appeal or application for review by a higher court have expired, without any appeal or application for review having been filed or (2) if an appeal or other application for review by a higher court has timely been filed, such appeal or application for review has resulted in the entry of an order affirming the decision of the Bankruptcy Court, with all additional review periods from that affirmance having expired without any appeal or other application for further review thereof having timely been filed.

1.3 “State Court Class Action” means that certain action before the Superior Court of the State of California for the County of Los Angeles, captioned Homer L. Johnson, et al. v. Bank One, Texas, N.A., et al., Case No. BC 179760, filed October 20, 1997.

ARTICLE 2: Initial Obligations of the Parties.

2.1 Promptly following execution of this Agreement, and in no event later than January 22, 2002 (unless extended by written agreement of Bank One and the Bankruptcy Trustee), the Bankruptcy Trustee will prepare and file a motion for an order approving this Agreement pursuant to Rule 9019 of the Federal Rules of Bankruptcy Procedure (the “Settlement Motion”). The Settlement Motion will also seek an order setting a date for a hearing after the conclusion of the notice and opt-out procedures contemplated below for the Court to finally approve and confirm the settlement provided for in this Agreement. In the Settlement Motion, and in his declaration supporting the Settlement Motion, the Bankruptcy Trustee will provide reasonably detailed information regarding his best estimate of the amount the BOA Noteholders will collectively receive from the Debtor’s bankruptcy estate as well as from the settlement proceeds in the State Court Class Action and the Retained Funds (as defined below) to be offered by Bank One based on various assumptions to be explained by the Bankruptcy Trustee. However, the Bankruptcy Trustee shall not be obligated to make any representations or warranties or to provide any assurances regarding the actual amounts the BOA Noteholders may ultimately receive. The form and substance of the Settlement Motion and corresponding order thereon will be subject to Bank One's approval, which will not be unreasonably withheld. Without limiting the generality of the foregoing, such order on the Settlement Motion shall (A) include findings, among others, that Bank One acted reasonably and prudently in connection with its conduct and settlement of the Adversary Proceedings, and (B) approve the amendment of the Bank One Proof of Claim as described in Section 4.3, below, (C) approve the “Administrative Claim” as described in Section 4.2, below, and (D) set a date for a hearing after the conclusion of the notice and opt-out procedures contemplated below for the Court to finally approve and confirm the settlement provided for in this Agreement.

2.2 Promptly following execution of this Agreement, and in no event later than January 22, 2002 (unless extended by written agreement of Bank One and the Bankruptcy Trustee), Bank One will prepare and the Bankruptcy Trustee and Bank One shall together file a joint motion (“Class Certification Motion”) under 11 U.S.C. Section 105 and, to the extent necessary, Federal Rule of Bankruptcy Procedure 9014, to be jointly heard with the Settlement Motion, for an order:

(a) making applicable in the Bankruptcy Case and the Settlement Motion procedures akin to Rule 23 of The Federal Rules Of Civil Procedure made applicable by Rule 7023 of the Federal Rules of Bankruptcy Procedure;

(b) certifying as a class of defendants or a class of settlement parties in the Bankruptcy Case or in the contested proceeding of the Settlement Motion, the BOA Noteholders (in either case, the “Settlement Class”), for the limited purpose of implementing this Agreement, as contemplated hereinbelow;

(c) waiving the need for a class representative, and/or, at Bank One’s option and subject to Court approval, appointing Bank One or a BOA Noteholder approved by Bank One, which approval will not be unreasonably withheld, to act as a special settlement representative of the Class for the limited purpose of facilitating the class settlement contemplated herein;

(d) establishing opt out procedures (“Opt Out Procedures”) and a deadline (“Opt Out Deadline”) pursuant to which members of the Settlement Class may opt out of the benefits and burdens of this Agreement;

(e) approving the form and manner of notice to members of the Settlement Class; and

(f) identifying, as set forth more fully below, those provisions (“Class Provisions”) of this Agreement which shall be binding upon the members of the Settlement Class who do not affirmatively opt out of this Agreement;

(g) providing that the Class Provisions shall be binding upon all members of the Settlement Class who do not timely opt out; and

(h) seeking such related relief and protections as Bank One reasonably requires.

The form and substance of the Class Certification Motion will be subject to the Bankruptcy Trustee’s approval, which approval will not be unreasonably withheld.

ARTICLE 3: Conditions Precedent

3.1 Except for the obligations imposed by Article 2 hereof, which shall be binding and enforceable upon the execution of this Agreement, the enforceability of this Agreement is conditioned upon the occurrence of each of the following:

(a) Entry of a Final Order of the Bankruptcy Court granting the Settlement Motion and approval of the terms and conditions of that Final Order by Bank One, which such approval shall not be unreasonably withheld (“9019 Condition”).

(b) Entry of a Final Order of the Bankruptcy Court granting the Class Certification Motion and approval of the terms and conditions of that Final Order by Bank One, which such approval shall not be unreasonably withheld (“Class Certification Condition”).

(c) The Opt Out Deadline shall have passed and the face amount of the notes held by the members of the Settlement Class that have timely opted out of the benefits and burdens of this Agreement shall not exceed $2,150,000 (“Maximum Opt Out Condition”).

3.2 Each acting in their sole and absolute discretion, the Parties may elect to waive one or more of the above conditions; provided, however, no such waiver shall be effective unless it is memorialized in a writing signed by a duly authorized representative of the waiving party, and:

(a) The 9019 Condition with respect to the finality of the Final Order may not be waived unless each of the Parties executes a written acknowledgement of such waiver.

(b) The Class Certification Condition and the Maximum Opt Out Condition may each together or separately be waived only by Bank One, and Bank One’s waiver of same shall be effective and bind the Bankruptcy Trustee, even if the Bankruptcy Trustee does not consent to such waiver.

ARTICLE 4: Terms Generally

4.1 Release of Funds. Subject to the terms of this Agreement, within five (5) business days after the Effective Date, Bank One will transfer title and deliver to the Bankruptcy Trustee all but $8.5 million of the Disputed Funds (the “Released Funds”) which Released Funds thereby shall become free and clear property of the estate in the Bankruptcy Case (“Estate”). The balance of the Disputed Funds (“Retained Funds”) shall be retained by Bank One as set forth in Section 4.3, below. The Released Funds shall be delivered by wire transfer to the Bankruptcy Trustee according to the following instructions:

First Lenders Indemnity Corporation
Dennis Murphy, CPA Ch. 7 TTEE
Case No.: SA 97‑16576 RA
City National Bank
Routing #122016066
Accounting #0013193983

4.2 Administrative Claim. Upon the Effective Date, Bank One will have an allowed administrative claim (“Administrative Claim”) against the Estate for its actual fees and expenses (including attorneys' fees and expenses, expert fees and expenses and consultants' fees and expenses) incurred in connection with the Bankruptcy Case, in an amount not to exceed $4.5 million (“Cap”) and no approval by the Bankruptcy Court of such fees and costs (other than the Bankruptcy Court’s approval of the Settlement Motion) shall be required. No fees and expenses incurred by Bank One in the State Court Class Action will be included in the Administrative Claim. Prior to the filing of the Settlement Motion, Bank One shall deliver to the Bankruptcy Trustee a declaration under penalty of perjury setting forth the actual amount of its fees and expenses in support of its administrative claim, including a list of the total fees and expenses for each professional and expert retained by Bank One. Not later than three (3) business days after the Bankruptcy Trustee receives the Released Funds, the Bankruptcy Trustee shall pay to Bank One funds from the Bankruptcy Estate in the amount of the allowed Administrative Claim specified in that declaration, up to the Cap; and such funds when paid shall then be and be deemed to be free and clear of all rights, titles, interests and Claims of any person or entity other than Bank One. As part of the declaration described above, Bank One shall provide the Bankruptcy Trustee instructions regarding where to send the payment for Bank One’s Administrative Claim. Such payment shall not reduce or otherwise affect in any way Bank One’s entitlement to the Retained Funds. Without limiting the generality of the foregoing, such payment shall not be deducted from, credited against, deemed made by, offset against, recouped against or debited from the Retained Funds. Upon receipt by Bank One of the amount of its allowed Administrative Claim, the Administrative Claim and any other claims of Bank One against the Estate for reimbursement of attorneys’ fees and costs and payment of indenture trustee fees and costs will be satisfied in full.

4.3 Settlement of Bank One's Fraud and Indemnity Claim. Upon the Effective Date, Bank One, in its own capacity and not as indenture trustee, shall be deemed to have amended and filed and will be authorized, but not required, to file an amendment to the Bank One Proof of Claim to assert the Fraud and Indemnity Claim against the Debtor in the amount of $8.5 million (the “Amended Bank One Proof of Claim”). Whether or not filed, the Amended Bank One Proof of Claim relating to the Fraud and Indemnity Claim shall be allowed in the amount of $8.5 million. In full settlement and satisfaction of the Fraud and Indemnity Claim asserted in the Amended Bank One Proof of Claim, Bank One will retain for its own account as its own property the Retained Funds, free and clear of any and all claims of the Bankruptcy Trustee.

4.4 Distributions on Claim of Bank One Authenticated Noteholders. Upon the Effective Date, the BOA Noteholders will have an allowed unsecured claim totaling $29,343,503.62 (consisting of $27,274,574.41 in principal and $2,068,931.76 in interest through April 30, 1997) against the Estate (the “Allowed BOA Noteholder Claim”). The Bankruptcy Trustee will make distributions on the Allowed BOA Noteholder Claim on a ratable basis with all other unsecured claims of the Estate. Distributions from the Estate on the Allowed BOA Noteholder Claim will be made to Bank One, as indenture trustee, for the benefit of all BOA Noteholders, including without limitation “Opt-Out Noteholders” and “Opt-In Noteholders”, as those terms are defined in Section 5.1, below. Bank One will have responsibility for distributing the funds to the individual BOA Noteholders. The Bankruptcy Trustee will have no liability in connection therewith. The Allowed BOA Noteholder Claim will be based on Claim No. 799, filed by Bank One on behalf of the BOA Noteholders. Claims relating to principal and interest on BOA notes filed by individual BOA Noteholders will be deemed subsumed in the Allowed BOA Noteholder Claim and the Bankruptcy Trustee may object to such individual claims as duplicative claims.

4.5 Within ten (10) days after the Effective Date, the Parties shall execute and file such documents as are required to dismiss the Adversary Proceedings with prejudice.

ARTICLE 5:
Binding Effect on BOA Noteholders and Allocation of Retained Funds

5.1 On the Effective Date, this Agreement shall be binding upon and inure to the benefit of all of the BOA Noteholders, except for those (“Opt-Out Noteholders”) who have timely opted out pursuant to the Opt Out Procedures authorized by the Bankruptcy Court. Without limiting the generality of the foregoing, the following benefits and burdens shall inure to and burden the BOA Noteholders who have not timely opted out (“Opt-In Noteholders”):

(a) They shall be deemed to have released the claims and other Released Matters, as described in more detail in Section 6.2 of this Agreement.

(b) They shall receive a pro rata distribution of the Retained Funds from Bank One, based upon the ratio of the unpaid principal amount of authenticated notes they respectively hold and the unpaid principal amount of all notes held by the Opt-In Noteholders.

(c) They shall be deemed to have consented to execution of and performance under this Agreement by the Bankruptcy Trustee and Bank One and to have consented to each of the terms and conditions binding and benefiting the Bankruptcy Trustee and Bank One, respectively.

(d) All provisions of this Agreement which bind the “Parties” generally, without specifically identifying a party bound thereby, shall also bind the Opt-In Noteholders, including without limitation the Recitals, the Definitions set forth in Article 1 hereof, and the Miscellaneous Provisions of Article 9 of this Agreement; provided, however, the Opt-In Noteholders’ waiver of any condition precedent shall be neither necessary nor sufficient to waive any such condition precedent.

5.2 BOA Noteholders who have timely opted out shall not be entitled to or burdened by any of the benefits or burdens of this Agreement, and shall not share in the distribution of the Retained Funds, except they shall be entitled to participate in the Allowed BOA Noteholder Claim and corresponding distributions as contemplated in Section 4.4 hereof.

ARTICLE 6: Releases

6.1 Releases By the Bankruptcy Trustee of His Claims Against Bank One.

(a) The “Bankruptcy Trustee Releasors,” as used herein, means the Bankruptcy Trustee and each of his administrators, agents, assigns, attorneys, directors, employees, executors, heirs, officers, parents, partners, predecessors, representatives, subsidiaries and successors, and each of them; and all persons acting by, through, under or in concert with one or more of them.

(b) The “Bank One Releasees,” as used herein, means Bank One, together with its respective past, present and future administrators, affiliates, agents, assigns, attorneys, directors, employees, executors, heirs, officers, parents, partners, predecessors, representatives, subsidiaries and successors, and each of them; and all persons acting by, through, under or in concert with one or more of them.

(c) For consideration hereby acknowledged, the Bankruptcy Trustee Releasors, and each of them, and excepting only the executory provisions of this Agreement and the obligations created thereunder, as of and upon the Effective Date, hereby forever release and discharge the Bank One Releasees, and each of them, of and from any and all claims (as “claim” is defined in 11 U.S.C. Section 101), demands, liens, agreements, contracts, covenants, suits, causes or causes of action, action or actions, claim or claims for relief, obligations, controversies, notes, debts, liens, costs, expenses, (including, without limitation, attorneys’ fees), damages, orders, promises, rights, remedies, duties, obligations, losses and liabilities of whatever kind or nature in law, equity or otherwise, whether now known or unknown, suspected or unsuspected, fixed or contingent and whether or not concealed or hidden, which now exist or heretofore have existed or may hereafter exist as against the Bank One Releasees, or any of them, from the beginning of time to the Effective Date, including but not limited to such matters which in any manner arise out of, are based on or in any way relate to:

(i) The Bankruptcy Case;

(ii) The Indenture;

(iii) The BOA Notes;

(iv) The Disputed Funds;

(v) The Security Interest Litigation including, without limitation (a) the facts and/or theories alleged by or against the Bank One Releasees in any pleading or paper on file therein, and (b) Bank One’s conduct in the prosecution, defense and settlement of the Security Interest Litigation; and

(vi) The Avoidance Action including, without limitation (a) the facts and/or theories alleged against the Bank One Releasees in any pleading or paper on file therein, and (b) Bank One’s conduct in the prosecution, defense and settlement of the Avoidance Action.

6.2 Releases By Opt-In Noteholders of Their Claims Against Bank One.

(a) The “Opt-In Releasors,” as used herein, means the Opt-In Noteholders, and each of them, and all of their respective administrators, agents, assigns, attorneys, directors, employees, executors, heirs, officers, parents, partners, predecessors, representatives, shareholders, subsidiaries and successors, and each of them; and all persons acting by, through, under or in concert with one or more of them.

(b) For consideration hereby acknowledged, the Opt-In Releasors, and each of them, and excepting only the executory provisions of this Agreement and the obligations created thereunder, as of and upon the Effective Date, hereby forever release and discharge the Bank One Releasees, and each of them, of and from any and all claims (as “claim” is defined in 11 U.S.C. Section 101), demands, liens, agreements, contracts, covenants, suits, causes or causes of action, action or actions, claim or claims for relief, obligations, controversies, notes, debts, liens, costs, expenses, (including, without limitation, attorneys’ fees), damages, orders, promises, rights, remedies, duties, obligations, losses and liabilities of whatever kind or nature in law, equity or otherwise, whether now known or unknown, suspected or unsuspected, fixed or contingent and whether or not concealed or hidden, which now exist or heretofore have existed or may hereafter exist as against the Bank One Releasees, or any of them, from the beginning of time to the Effective Date, including but not limited to such matters which in any manner arise out of, are based on or in any way relate to:

(i) The Bankruptcy Case;

(ii) The Indenture;

(iii) The BOA Notes;

(iv) The Disputed Funds;

(v) The Amended Bank One Proof of Claim and the BOA Noteholder Proof of Claim;

(vi) The Administrative Claim;

(vii) The Security Interest Litigation including, without limitation (a) the facts and/or theories alleged by or against the Bank One Releasees in any pleading or paper on file therein, and (b) Bank One’s conduct in the prosecution, defense and settlement of the Security Interest Litigation; and

(viii) The Avoidance Action including, without limitation (a) the facts and/or theories alleged against the Bank One Releasees in any pleading or paper on file therein, and (b) Bank One’s conduct in the prosecution, defense and settlement of the Avoidance Action.

6.3 Releases by Bank One of its Claims Against the Bankruptcy Trustee.

(a) The “Bank One Releasors,” as used herein, means Bank One and all of its respective administrators, agents, assigns, attorneys, directors, employees, executors, heirs, officers, parents, partners, predecessors, representatives, shareholders, subsidiaries and successors, and each of them; and all persons acting by, through, under or in concert with one or more of them.

(b) The “Bankruptcy Trustee Releasees,” as used herein, means the Bankruptcy Trustee, together with his respective past, present and future administrators, affiliates, agents, assigns, attorneys, directors, employees, executors, heirs, officers, parents, partners, predecessors, representatives, shareholders, subsidiaries and successors, and each of them; and all persons acting by, through, under or in concert with one or more of them.

(c) For consideration hereby acknowledged, the Bank One Releasors, and each of them, and excepting only the executory provisions of this Agreement and the obligations created thereunder, as of and upon the Effective Date, hereby forever release and discharge the Bankruptcy Trustee Releasees, and each of them, of and from any and all claims (as “claim” is defined in 11 U.S.C. Section 101), demands, liens, agreements, contracts, covenants, suits, causes or causes of action, action or actions, claim or claims for relief, obligations, controversies, notes, debts, liens, costs, expenses, (including, without limitation, attorneys’ fees), damages, orders, promises, rights, remedies, duties, obligations, losses and liabilities of whatever kind or nature in law, equity or otherwise, whether now known or unknown, suspected or unsuspected, fixed or contingent and whether or not concealed or hidden, which now exist or heretofore have existed or may hereafter exist as against the Bankruptcy Trustee Releasees, or any of them, from the beginning of time to the Effective Date, including but not limited to such matters which in any manner arise out of, are based on or in any way relate to:

(i) The Bankruptcy Case;

(ii) The Indenture;

(iii) The BOA Notes;

(iv) The Disputed Funds;

(v) The Security Interest Litigation, including without limitation the facts and/or theories alleged against the Bank One Releasees in any pleading or paper on file therein; and

(vi) The Avoidance Action, including without limitation the facts and/or theories alleged against the Bank One Releasees in any pleading or paper on file therein.

6.4 Limitation on Released Matters.

(a) The matters released by the Bank One Releasors do not include any of the following, all of which shall survive and are unaffected by the Bank One Releasors’ release:

(i) The Fraud and Indemnity Claim and the Allowed BOA Noteholder Claim;

(ii) The Administrative Claim;

(iii) Any matters arising out of or relating to any banking or credit relationship between any of the Bank One Releasors and any of the Bankruptcy Trustee Releasees that is separate from and unrelated to the Debtor, including by way of example but not limitation, home loans, personal or business credit cards, automobile leases, personal or business charge cards, fee and charge back rights under checking or other banking accounts, and other extensions of credit made by a Bank One Releasor to a Bankruptcy Trustee Releasee arising out of business relationships not related to the Debtor.

However, the claims referenced in section 6.4(a)(i) and (ii) hereof shall be satisfied or paid in accordance with sections 4.2, 4.3 and 4.4 above.

(b) The matters released by the Bankruptcy Trustee Releasors do not include any of the following, all of which shall survive and are unaffected by the Bankruptcy Trustee Releasors’ release:

(i) The Bankruptcy Trustee Releasors’ right to object to individual claims of any of the BOA Noteholders;

(ii) Any claims of the Bankruptcy Trustee Releasors against any of the BOA Noteholders; and

(iii) Any matters arising out of or relating to any banking or credit relationship between any of the Bank One Releasors and any of the Bankruptcy Trustee Releasees that is separate from and unrelated to the Debtor, including by way of example but not limitation, home loans, personal or business credit cards, automobile leases, personal or business charge cards, fee and charge back rights under checking or other banking accounts, and other extensions of credit made by a Bank One Releasor to a Bankruptcy Trustee Releasee arising out of business relationships not related to the Debtor.

6.5 Provisions Applicable to All Releases.

(a) As used in this Section 6.5, the term “Releasors” means and includes the Bankruptcy Trustee Releasors, the Opt-In Releasors and the Bank One Releasors, and each of them, respectively.

(b) The Releasors, and each of them, acknowledge that they, and each of them, are familiar with the provisions of California Civil Code Section 1542, which provides as follows:

“A general release does not extend to claims which the creditor does not know or suspect to exist in his favor at the time of executing the release, which if known by him might have materially affected his settlement with the debtor.”

The Releasors, and each of them, being aware of said Code Section, hereby waive any rights they and any of them may have thereunder as well as under any statutes or common law principles of similar effect in any jurisdiction. Releasors understand and hereby waive the provisions of Section 1542 and declare that they know that they may have damages that they know nothing about, and that Releasors are releasing all claims to recover such damages from Releasees. Releasors also declare that they understand that the other Parties to this Agreement would not have agreed to enter into this Agreement if the releases provided for herein did not cover claims and damages and their results which may not yet have manifested themselves or may be unknown to or not anticipated by Releasors at the present time.

(c) Each of the Releasors warrants, represents and agrees that it has not heretofore assigned or transferred, nor purported to assign or transfer, to any person or entity (“Person”) any of the matters they have respectively released hereby (“Released Matters”), and the Bankruptcy Trustee Releasors and Bank One Releasors each agree to indemnify and hold harmless the parties they respectively are releasing hereby (“Releasees”) from all liability, claims, demands, damages, costs, expenses, and attorneys’ fees incurred by any of them as the result of the assertion by any Person who actually has received any such assignment or transfer of any rights or claims for any of the Released Matters from the Bankruptcy Trustee Releasors or the Bank One Releasors in contravention of this paragraph.

(d) Each of the Releasors warrants, represents and agrees that it has not granted any purported or actual lien, security interest, encumbrance or contractual or other right (collectively, the “Interests”) in the Released Matters to any third party, and the Bankruptcy Trustee Releasors and Bank One Releasors agree to indemnify and hold harmless each other from all liability, claims, demands, damages, costs, expenses and attorneys’ fees incurred by any of them as a result of any Person who has received any purported Interest in the Released Matters from the Bankruptcy Trustee Releasors or Bank One Releasors and who asserts claims for the Released Matters against the other party.

(e) Each of the Releasors hereby agrees to perform all acts and to execute, deliver and file all additional agreements, instruments, certificates and documents as any of the Releasees reasonably requests in order to effectuate the purposes of this Release.

ARTICLE 7: Consequences of Non-Occurrence of Conditions Precedent

Without limiting the generality of the foregoing:

7.1 If the Effective Date does not occur before June 1, 2002 (“Deadline”), this Agreement shall then terminate and shall have no further force or effect unless the Bankruptcy Trustee and Bank One both agree in writing to extend the Deadline.

7.2 If the Effective Date does not occur before the Deadline (or any extension thereof), any order certifying the Settlement Class shall be vacated and deemed void ab initio.

ARTICLE 8: Representations and Warranties.

8.1 Of the Bankruptcy Trustee. The Bankruptcy Trustee represents and warrants as follows:

(a) Upon receipt of the Released Funds, the Bankruptcy Trustee will have sufficient free and clear of funds in the Estate to pay the Bank One Administrative Claim at the time provided for hereinabove.

(b) The execution and delivery of this Agreement by the Bankruptcy Trustee is only in his capacity as Chapter 7 Trustee, and not in his individual capacity.

8.2 Of All Parties. Each of the Parties to this Agreement, respectively represents and warrants as to itself as follows:

(a) Such party has all requisite power and authority to execute, deliver and perform this Agreement without any further approval of any kind, other than the Bankruptcy Trustee obtaining Bankruptcy Court approval of this Agreement;

(b) Neither execution, delivery or performance under this Agreement will breach any agreement or contract to which such party is bound; and

(c) This Agreement constitutes a legal, valid and binding obligation of such party enforceable in accordance with its terms.

(d) It has either consulted with or had a full and fair opportunity to consult with counsel of its choosing concerning this Agreement, the Settlement Motion and the Class Certification Motion, and the legal effect of those documents, including but not limited to the provisions and legal effect of California Civil Code Section 1542.

(e) It has read this Agreement, understands the terms, conditions and consequences hereof, and are freely and voluntarily entering into this Agreement.

8.3 Of Individuals. Each individual who is signing this agreement on behalf of an entity respectively represents and warrants that he or she has actual authority to sign and deliver this Agreement on behalf of such respective entity, subject to the approval of the Bankruptcy Court as contemplated in the Conditions Precedent.

ARTICLE 9: Miscellaneous Provisions.

9.1 Performance/No Relief from Forfeiture. This is an agreement bargained for at arm’s length in which each party is waiving valuable rights in reliance on the faithful performance by the others of all the terms and provisions hereof as and when called for. Time is of the essence to each and every clause and condition of this Agreement. Without the agreement of Bank One and the Bankruptcy Trustee, this Agreement shall never be re-opened, modified, or extended, for any length of time, directly or indirectly, for any reason at all, including, without limitation, changed circumstances, grace, relief from forfeiture, mistake, or based on any other claim. The loss that any party may appear to suffer under any circumstances due to the exact and timely adherence to or performance of this Agreement is far outweighed by the benefit that such adherence and performance of the Agreement confers on all parties, on the state and federal courts which may have jurisdiction over any case or bankruptcy case involving any of the Parties, and on future parties that may come before such courts seeking the enforcement of agreements such as this Agreement.

9.2 Prior Attorneys’ Fees and Costs. It is understood and agreed that, except as expressly set forth herein or ordered by the Bankruptcy Court, each of the Parties is to bear its own costs and attorneys’ fees incurred as a consequence of the Litigation, including any fees or costs incurred for the negotiation, preparation and execution of this Agreement.

9.3 Fees and Costs in the Event of a Dispute. In the event any Party prevails in an action, motion, application, and/or petition to enforce any of the terms of this Agreement, or to preserve its or his rights under this Agreement, said prevailing party shall be entitled to an award of reasonable costs and expenses incurred in enforcing the terms of this Agreement, including, without limitation, attorneys’ fees, expert fees, and other expenses.

9.4 No Liability of the Bankruptcy Trustee Vis-à-Vis the Opt-In Noteholders. The Bankruptcy Trustee shall have no liability to the Opt-In Noteholders with respect to any obligations owed the Opt-In Noteholders by Bank One under this Agreement.

9.5 Rules of Construction. The following rules of construction apply to this Agreement and the releases executed pursuant hereto:

(a) “includes” and “including” are not limiting;

(b) “may not” is prohibitive, and not permissive;

(c) “or” is not exclusive;

(d) the singular includes the plural;

(e) the masculine gender includes the feminine and/or neuter and the neuter includes the feminine and/or masculine, and the singular number includes the plural.

(f) If a choice, election, action, decision or the like is to be made in the “sole and absolute discretion” of a party, such election, action, decision or the like will not be affected in any way by any express or implied covenant of good faith or fair dealing or by any other implied term.

(g) References to “hereof,” “within” and the like are references to the entirety of this Agreement, unless the context expressly indicates to the contrary.

(h) Each of the Parties and its counsel have cooperated in the drafting and preparation of this Agreement or have fully assented to its contents. Therefore, the Parties expressly agree that this Agreement shall not be construed against any party as “drafter.” The Parties are of equal sophistication and, accordingly, they agree that the Agreement shall not be construed against any of them based upon any claim of unequal sophistication or bargaining power.

9.6 Severability. The terms and provisions of this Agreement are not severable; except that if a specific term or provision in this Agreement is expressly made severable by this Agreement, such express severability provision shall control.

9.7 No Admissions. This Agreement is freely and voluntarily entered into by the parties hereto after having been apprised of all relevant information and after consultation with their respective counsel. This Agreement is made and entered into in order to compromise the disputes between the parties hereto and to avoid incurring or to reduce any further attorneys’ fees, expert fees and costs in connection with the Litigation. Except as expressly set forth herein, this Agreement does not constitute an admission by any party of any fact, contention, liability or any wrongdoing but is given solely to facilitate the resolution  of the dispute between the parties without further litigation and consequent burdensome expense.

9.8 Survival of Representations and Warranties; Indemnification. All representations and warranties contained in this Agreement will survive the date of this Agreement.

9.9 Notices. All notices or demands of any kind which any of the parties hereto may be required or may desire to serve on any other parties hereto in connection with this Agreement may be served, at the election of the party serving the notice, either by personal service or by mailing a copy thereof by certified or registered mail, proper postage prepaid and return receipt requested, addressed to such party at the address set forth below. If any such notice or demand is mailed as aforesaid, it shall be deemed to have been delivered on the date of delivery reflected on the return receipt, or if no receipt if returned, on the third day after mailing. The address as set forth below may be changed by the respective parties by the giving of written notice as hereinabove provided, and such change shall be effective on the date of the delivery, as set forth:

To: Bank One, Texas, N.A.

100 E. Broad Street

Columbus, OH 43271-0158

Attention: Jeffrey Ayres, Esq.

Copy To: Pillsbury Winthrop LLP

650 Town Center Drive, 7^th Floor

Costa Mesa, CA 92626

Attention: Craig A. Barbarosh, Esq.

To: Mr. Dennis Murphy

2235 N. Lake Street, Suite 205

Altadena, CA 91001

Copy To: Weinstein, Eisen & Weiss

1925 Century Park East, Suite 1150

Los Angeles, CA 90067-2712

Attention: Deborah H. Eisen, Esq.

9.10 Integration. This Agreement is intended by the Parties as the final expression of their agreement and therefore incorporates all negotiations of the Parties hereto and is the entire agreement of the Parties hereto; and each of the parties hereto acknowledges that they are relying on no written or oral agreement, representation, warranty or understanding of any kind made by any party hereto or by any employee, attorney or agent of any party hereto except for those expressly set forth or contemplated herein.

9.11 Headings. All headings contained herein are for convenience purposes only, and shall not be considered when interpreting this Agreement.

9.12 Further Assurances. Bank One and the Bankruptcy Trustee each agree to execute and deliver to the other such reasonable and appropriate additional documents, instruments or agreements as may be necessary or appropriate to effectuate the purposes of this Agreement.

9.13 Applicable Law; Jurisdiction. This Agreement and the rights and obligations of the parties hereto shall be governed by the laws of the State of California without regard to principles concerning choice of law. In any action arising out of or connected with this Agreement, the parties hereto each hereby expressly consent to the exclusive personal jurisdiction of and agree that such dispute may only be determined by the Bankruptcy Court. The Parties consent to service of process by any means authorized by federal or governing state law.

9.14 No Waiver By Inaction. No failure by any party at any time to require the performance by another party of any term of this Agreement shall in any way affect any party’s right to subsequently enforce such term; nor shall any omission by any party to notify any other party of any event which with notice or the passage of time or both would constitute a default be construed as a waiver of such default or any right or remedy of any party; nor shall any waiver by any party of any term hereof be taken to be a waiver of any other term hereof or obligate the waiving party to waive the same or a similar term thereafter.

9.15 Waiver of Right to Trial By Jury. EACH PARTY TO THIS AGREEMENT HEREBY EXPRESSLY WAIVES ANY RIGHT TO TRIAL BY JURY OF ANY CLAIM, DEMAND, ACTION OR CAUSE OF ACTION (A) ARISING UNDER THIS AGREEMENT, INCLUDING, WITHOUT LIMITATION, ANY PRESENT OR FUTURE MODIFICATION THEREOF OR (B) IN ANY WAY CONNECTED WITH OR RELATED OR INCIDENTAL TO THE DEALINGS OF THE PARTIES HERETO OR ANY OF THEM WITH RESPECT TO THIS AGREEMENT (AS NOW OR HEREAFTER MODIFIED) OR ANY OTHER INSTRUMENT, DOCUMENT OR AGREEMENT EXECUTED OR DELIVERED IN CONNECTION HEREWITH, OR THE TRANSACTIONS RELATED HERETO OR THERETO, IN EACH CASE WHETHER SUCH CLAIM, DEMAND, ACTION OR CAUSE OF ACTION IS NOW EXISTING OR HEREAFTER ARISING, AND WHETHER SOUNDING IN CONTRACT OR TORT OR OTHERWISE; AND EACH PARTY HEREBY AGREES AND CONSENTS THAT ANY SUCH CLAIM, DEMAND, ACTION OR CAUSE OF ACTION SHALL BE DECIDED BY COURT TRIAL WITHOUT A JURY, AND THAT ANY PARTY TO THIS AGREEMENT MAY FILE AN ORIGINAL COUNTERPART OR A COPY OF THIS SECTION WITH ANY COURT AS WRITTEN EVIDENCE OF THE CONSENT OF THE PARTIES HERETO TO THE WAIVER OF ANY RIGHT THEY MIGHT OTHERWISE HAVE TO TRIAL BY JURY.

9.16 Third Party Beneficiaries, Successors and Assigns, Etc. Except for the Opt-In Noteholders, this Agreement is not intended to benefit any third party and there are no third party beneficiaries of this Agreement. This Agreement shall be binding upon, inure to the benefit of, and be enforceable against the Parties hereto, and their respective successors and assigns, except that the following provisions neither bind nor benefit the Opt-In Noteholders: Article 2 (“Initial Obligations of the Parties”), Section 9.4 (“Fees and Costs in the Event of a Dispute”)

9.17 Waiver of Right to Object to Payment of Administrative Expenses. Upon Court approval of this Agreement, Bank One will withdraw any pending objections to any fee application of the Bankruptcy Trustee, the Bankruptcy Trustee’s professionals or the Bankruptcy Trustee’s experts, and no further objections will be asserted by Bank One to the allowance or payment of any fees and expenses of the Bankruptcy Trustee or the Bankruptcy Trustee’s experts and professionals.

9.18 Payment of Bankruptcy Trustee’s Mediation Fees. The Bankruptcy Trustee may pay his share of the fees and costs for the Mediation or otherwise reimburse his counsel, Weinstein, Eisen & Weiss, for the amount of mediation fees and costs actually paid.

9.19 Amendment. This Agreement may not be amended, waived or modified in any manner without the prior written consent of the party against whom the amendment, waiver or modification is sought to be enforced; provided, however, the consent of the Opt-In Noteholders shall not be required for any amendment which does not directly affect the amount of Retained Funds that Bank One is to retain and offer to the Opt-In Noteholders pursuant to this Agreement.

9.20 Time of the Essence. Time is of the essence in all matters pertaining to this Agreement.

9.21 Counterparts. This Agreement may be executed in one or more counterparts which together shall constitute a single agreement, and each of which shall be an original for all purposes.

IN WITNESS WHEREOF, the undersigned have executed this Agreement as of the date first hereinabove written.

BANK ONE, TEXAS, N.A. as indenture trustee
and as a federally chartered bank

By:

Jeffrey Ayres

Its:

CHAPTER 7 TRUSTEE

Dennis Murphy

APPROVED AS TO FORM:

PILLSBURY WINTHROP LLP

By:

Darren K. Cottriel

Attorneys for BANK ONE, TEXAS, N.A.

WEINSTEIN, EISEN & WEISS

A PROFESSIONAL CORPORATION

By:

Deborah H. Eisen

Attorneys for the Chapter 7 Trustee