UNITED STATES BANKRUPTCY COURT THE DISTRICT OF ARIZONA

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1 1 1 Dale C. Schian, No. 0 SCHIAN WALKER, P.L.C. 0 North Central Avenue, #00 Phoenix, Arizona 01 Phone (0) - Fax (0) - ecfdocket@swazlaw.com Attorneys for Taylor R. Coleman Lawrence E. Wilk, No. 00 JABURG & WILK, P.C. 0 North Central Avenue, #00 Phoenix, Arizona 01-0 Phone (0) -00 Fax (0) -0 lew@jaburglaw.com Attorneys for James R. Sell, Receiver of American National Mortgage Partners, LLC, and ANMP th St., LLC David W. Dow, No North Central Avenue, #10 Phoenix, Arizona 00- Phone (0) Fax (0) ddow@mhplaw.com Attorneys for ANMP Committee of Unsecured Creditors and the Davis Creditors C. Taylor Ashworth, No. 0 Alan A. Meda, No. 00 Warren Stapleton, No. 0 STINSON MORRISON HECKER, L.L.P. 0 North Central Avenue, #00 Phoenix, Arizona 00- Phone (0) -00 Fax (0) 0- rmcgee@stinsonmoheck.com Attorneys for Castle Debtors Michael W. Carmel, No East Columbus Avenue Phoenix, Arizona 01- Phone (0) - Fax (0) -0 michael@mcarmellaw.com Attorney for James R. Sell, Receiver of American National Mortgage Partners, LLC, and ANMP th St., LLC Richard C. Gramlich, No. 0 CARMICHAEL & POWELL, P.C. 01 North th Street, # Phoenix, Arizona 0- Phone (0) 1-0 Fax (0) r.gramlich@cplawfirm.com Attorneys for Dellheim Creditors UNITED STATES BANKRUPTCY COURT THE DISTRICT OF ARIZONA In re: DEXTER DISTRIBUTING CORPORATION, et al., THIS FILING APPLIES TO: Debtors. ALL DEBTORS SPECIFIED DEBTOR No RJH CHAPTER (Jointly Administered With Case Nos PHX-RJH, 0-0-PHX-RJH, 0-0- PHX-RJH through 0-0-PHX-RJH, 0-0-PHX-RJH, 0--PHX-RJH and 0-1-PHX-RJH) JOINT MOTION TO APPROVE SETTLEMENT

2 1 1 Pursuant to Fed. R. Bankr. P. 0, New Castle and Castle Realty, the reorganized debtors for Dexter Distributing Corporation and Real Estate Holding Corporation; Castle Megastore Corporation; 0 Gateway Street, L.L.C.; 1 East Fairview Ave., L.L.C.; 00 East Camelback, L.L.C.; N. th St., L.L.C.; ; I-Dunlap, L.L.C.; Silverdale Building, L.L.C.; East Sprague Avenue, L.L.C.; 1 Progress Drive, Medford, L.L.C.; N. Columbia Center Blvd., L.L.C.; S.W. Capitol Highway, L.L.C.; Deer Valley/th Avenue, L.L.C.; 1 E. Fifth Ave., L.L.C.; 1 Central Avenue S.E., L.L.C.; East Apache Trail, L.L.C.; 0 Tacoma Mall Blvd., L.L.C.; W. Roosevelt, L.L.C.; Internet Fulfillment, L.L.C.; and Adult Web Fulfillment, L.L.C. (collectively, the "Castle Debtors"); Taylor R. Coleman ("Coleman"); the ANMP Committee of Unsecured Creditors (the "ANMP Committee"); Robert and Brianna Dellheim, Ralph S. Vescio, Rudolph A. Ouwens and Pensco Pension Services FBO: Rudolph A. Ouwens, IRA (collectively, the "Dellheim Creditors"); and James R. Sell, as Receiver of American National Mortgage Partners, LLC and ANMP th St., LLC and as Receiver for a number of affiliated entities subject to a receivership order entered in a Maricopa County Superior Court proceeding Case No (the "Receiver"), request that the Court approve the Stipulation in Aid of Confirmation of Chapter 1 Plan. This motion is supported by the following Memorandum of Points and Authorities. MEMORANDUM OF POINTS AND AUTHORITIES Coleman, the Castle Debtors and the Receiver (collectively, the "Parties") previously resolved the claims against the Castle Debtors and Coleman that the Receiver held arising from the American National Mortgage Partners ("ANMP") loans pursuant to a Stipulation in Aid of Confirmation of Plan of Reorganization (the "Stipulation"). The parties to the Stipulation agreed that they believed that the Receiver was the owner of all such claims and that any claims that might be asserted by ANMP Investors (as defined in the Stipulation) would be duplicative of the ANMP Claim (as defined in the Stipulation) that the Receiver held. Nevertheless, numerous ANMP Investors have filed proofs of claim in these proceedings by which they seek to recover from Coleman claims that appear to be identical to the ANMP Claim, but also assert other claims, theories and causes of action. --

3 1 1 The ANMP Unsecured Creditors' Committee has communicated regularly with ANMP Investors and actively encouraged ANMP Investors to file claims in these proceedings. Although Coleman believes the claims to be objectionable and asserts that they are duplicative of the ANMP Claim, thereby obligating the Castle Debtors and the Receiver to join Coleman in seeking to disallow these claims, Coleman, the Castle Debtors, the Receiver and the ANMP Unsecured Creditors' Commi ttee, as the representative of these claimants, recognize that the litigation as to the validity and amount of these claims would be a lengthy and expensive process. Therefore, the foregoing Parties and Robert and Brianna Dellheim, Ralph S. Vescio, Rudolph A. Ouwens, and Pensco Pension Services FBO: Rudolph A. Ouwens IRA (collectively, the "Dellheim Creditors") have engaged in extensive negotiations over a prolonged period of time in an attempt to reach a consensual resolution and avoid costly and protracted litigation. An agreement among the foregoing Parties was reached on May, 0 and initially presented to the Court on May, 0. That agreement has now been reduced to an integrated agreement in the form of a "Stipulation in Aid of Confirmation of Chapter 1 Plan" (the "Agreement") that is filed contemporaneously herewith and incorporated herein by this reference. The essential elements of the Agreement are that the ANMP Claim allowed in the Castle Debtors' Amended Plan of Reorganization (the "Castle Plan") will be increased in the amount of $ million and paid in accordance with the Castle Plan, but after the other obligations payable under the Castle Plan. If the Castle Debtors are only able to make the minimum payments called for under the Castle Plan, the Agreement has the effect of extending the payout under the Castle Plan by one year. If the Castle Debtors perform in accordance with their projections, the ANMP Claim, including the increased amount provided for under the Agreement, will be paid much faster. Structuring the deal as an additional $ million to be paid as part of the ANMP Claim offers numerous advantages. However, the primary advantage is that the Parties have utilized a structure that was extensively negotiated among the Parties and documented previously and, therefore, can be quickly and efficiently implemented

4 1 1 In addition to avoiding claim allowance litigation, the Agreement also assures full payment of all Allowed Claims and avoids additional litigation over eligibility and plan confirmation. Finally, the multi-party, multi-debtor aspects of the Agreement have permitted the Parties to resolve additional issues that may not relate directly to the Coleman bankruptcy proceedings but promote an overall resolution of issues among the Parties. To that end, the Dellheim Creditors are dismissing their appeal of the order confirming the Castle Plan and have consented to the Receiver's proposed distribution scheme in connection with the ANMP bankruptcy proceedings. The Dellheim Creditors' entitlement to recover attorneys' fees and costs expended in proceedings that commenced with the Dellheim Creditors' superior court lawsuit against Coleman, the Castle debtors and ANMP, and that has continued throughout the Coleman, Castle and ANMP bankruptcy proceedings, is also being resolved. The Dellheim Creditors are receiving partial reimbursement for their attorneys' fees and costs incurred in those proceedings, but those payments are being made in a manner that does not prejudice the rights of other creditors or administrative claimants. For example, in the Coleman bankruptcy proceedings, the payment will be made after the ANMP Claim has been fully satisfied (pursuant to the terms of the Castle Plan, other unsecured creditors will have been paid off earlier). Although they have not approved the final terms of the Agreement, the Chapter 1 trustee and the Office of the United States Trustee have been informed of the negotiations and the anticipated resolution. The Chapter 1 trustee is believed to be supportive of the Agreement as long as the right of all creditors to receive full payment is preserved and protected. The Agreement was modified to accommodate concerns of the United States Trustee that Coleman not have the ability to amend his plan in a way that is detrimental to ANMP Investors and to provide that Coleman would not be discharged, absent compliance with U.S.C. 1. In considering any proposed settlement, the Court should consider (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 and a proper deference to their reasonable views in the --

5 premises. Woodson v. Fireman's Fund Ins. (In re Woodson), F.d (th Cir. ), and Martin v. Kane (In re A&C Properties), F.d 1 (th Cir. ). The Court has great latitude in approving compromise agreements. Woodson, F.d at. In considering the Agreement, the Court need not decide questions of law or fact raised in the controversies sought to be settled or determine that the compromise presented is the best possible outcome. Rather, the Court need only canvass the issues to determine whether the proposed settlement falls "below the lowest point in the zone of reasonableness." Newman v. Stein, F.d, (nd Cir. ). In re Pennsylvania Truck Lines, Inc., 0 B.R., (Bankr. E.D. Pa. ) (holding that a bankruptcy court must consider these factors to see whether the settlement falls below the lowest point in the range of reasonableness). Accordingly, if the Court finds the compromises do not fall below 1 the threshold of reasonableness, the compromises should be approved. Services, Inc., 10 B.R., n. (Bankr. C.D. Cal. 1). In re Planned Protective 1 Consideration of the Woodson factors supports the Court's approval of the Agreement. The Agreement presents a reasonable resolution of the multitude of claims by and between the Parties. The Agreement also avoids litigation. Plainly, the litigation of these issues would necessitate the expenditure of substantial amounts of time and money. Indeed, further investigation of these issues would necessitate lengthy and intensive fact investigation. Setting aside the question of expense, which could easily cost several hundred thousand dollars, the delay occasioned by such litigation could substantially harm the creditors of all three (the Castle Debtors, ANMP and Coleman) estates. In fact, the time, burden, and expense of litigating claims related to Coleman would be significant, and not guaranteed to result in success for any party. "The function of compromise is to avoid litigation involving delay and expense unless there appears to be a sound legal basis for the litigation and a likelihood of substantial ultimate benefit to the estate." In re General Store of Beverly Hills, B.R., 1 (Bankr. th Cir. 1); see also In re A & C Properties, supra, F.d at 1. Rather than spend their limited resources fighting, the Parties to the Agreement have determined a compromise that fairly adjusts the competing claims of the Parties. --

6 1 1 The Parties have achieved a settlement that fairly reflects the complexity of the potential litigation, each side's probability of success, and the interests of the Castle Debtors' and Coleman's joint creditors. Coleman's agreement to increase the ANMP Claim by $ million provides a substantial benefit to ANMP Investors. It is unlikely that litigation against Coleman could achieve more and very likely that it would achieve considerably less. Coleman's release and retention of equity are contingent upon the successful completion of the Coleman Plan. Thus, the Agreement proposed demonstrates a proper deference to the creditors' reasonable views in all three debtors' reorganizations. Agreement. Based upon the foregoing, the Parties respectfully request that the Court approve the DATED this th day of May, 0. SCHIAN WALKER, P.L.C. By /s/ DALE C. SCHIAN, #0 Dale C. Schian Mark C. Hudson Attorneys for Debtor Taylor R. Coleman STINSON MORRISON HECKER, L.L.P. By /s/ DALE C. SCHIAN, For C. Taylor Ashworth Alan A. Meda Warren Stapleton Attorneys for Castle Debtors JABURG & WILK, P.C. By /s/ DALE C. SCHIAN, For Lawrence E. Wilk Attorneys for James R. Sell, Receiver CARMICHAEL & POWELL, P.C. By /s/ DALE C. SCHIAN, For Richard C. Gramlich Attorneys for Dellheim Creditors --

7 /s/ /s/ DALE C. SCHIAN, For David W. Dow Attorney for ANMP Committee of Unsecured Creditors and Davis Creditors DALE C. SCHIAN, For Michael W. Carmel Attorney for James R. Sell, Receiver 1 1 COPY of the foregoing ed this th day of May, 0, to: Russell A. Brown Post Office Box 0 Phoenix, Arizona 0-0 Chapter 1 Trustee trustee@ch1bk.com Trudy A. Nowak, Esq. U.S. Trustee's Office Post Office Box Phoenix, Arizona 0-0 trudy.a.nowak@usdoj.gov Robert J. Miller, Esq. Bryan Cave, L.L.P. Two North Central Avenue, #0 Phoenix, Arizona 00-0 Attorneys for Unsecured Creditors' Committee rjmiller@bryancave.com Mark S. Sifferman, Esq. Norling, Kolsrud, Sifferman & Davis, P.L.C. 1 North Central Avenue, #0 Phoenix, Arizona 01 Attorneys for San Miguel Lenders, L.L.C. marksifferman@nksd.com Neal H. Bookspan, Esq. Michael E. Neumann, Esq. Hahn Howard & Greene, L.L.P. 0 North Central Avenue, #0 Phoenix, Arizona 01 Attorneys for Friends Investors, LLC mneumann@hhglaw.com --

8 Christopher Graver, Esq. Keller Rohrback, P.L.C. 1 North Central Avenue, #00 Phoenix, Arizona Attorneys for Debtors cgraver@kellerrohrback.com /s/ DALE C. SCHIAN Coleman\General\Invol\Plead\JtMtnApprvANMPstl-V