EXHIBIT 10.21
SETTLEMENT AND RELEASE AGREEMENT
This Settlement and Release Agreement (this "Agreement"), made effective as
of September 30, 1997, by and among Capitol Development of Arkansas, Inc., an
Arkansas corporation (f/k/a AWEC Development Corporation) (the "Borrower"),
Capitol Communities Corporation, a Nevada corporation (successor by merger to
AWEC Resources, Inc. and the sole shareholder of Capitol Development of
Arkansas, Inc.) ("CCC"), and Century Realty, Inc., a corporation organized and
existing under the laws of the State of Texas, and which owns property in
Pulaski County, Arkansas, but does business exclusively in Dallas, Texas
("Century"). The Borrower, CCC and Century are sometimes collectively referred
to herein as the "Parties", or individually referred to herein as the "Party".
RECITALS:
A. There is pending before the Chancery Court of Pulaski County, Arkansas,
First Division, in a case styled Century Realty, Inc. v. Capitol Development of
Arkansas, Inc., f/k/a AWEC Development Corporation, and AWEC Resources, Inc.,
Case No. EQ 96-5510 (the "Chancery Court Action"), a Foreclosure Complaint filed
by Century, as Plaintiff, against the Borrower and CCC, as Defendants.
Furthermore, there is pending in that same Chancery Court Action a Counterclaim
filed by Borrower and CCC against Century for a claim of usury and other
charges. All matters in the Chancery Court Action are contested.
B. Century holds legal and beneficial title to 700,000 shares of common
capital stock of CCC (the "CCC Stock"). Borrower executed a Promissory Note
dated September 11, 1995 (the "Unsecured Note") in the principal amount of
$350,000.00 payable to Century. Also, Borrower executed and delivered a
Promissory Note dated September 11, 1995 (the "Secured Note") in the principal
amount of $1,400,000.00 payable to Century.
C. The Secured Note is secured by a Mortgage dated September 11, 1995 (the
"Mortgage") and recorded with the Pulaski County Circuit Clerk and Recorder's
Office as Instrument No.95-53329, encumbering approximately 36 acres of land
which are described as Xxxxxx X-0, X-0 xxx X-0, Xxxxxxxx, Xxxx Center, Maumelle,
Pulaski
County, Arkansas (hereinafter referred to as "Tract D").
D. In addition to Tract D, Borrower holds legal and beneficial title to an
approximate 3.5 acre tract of land adjoining Tract D which is described on
Exhibit "A" affixed hereto and by this reference made a part hereof (the "Corner
Tract"). Borrower represents that the Corner Tract is unencumbered by any liens,
including the lien of the Mortgage.
E. The Borrower, CCC and Century desire to enter into this Agreement in
order to settle all claims pursuant to the Chancery Court Action and to
establish an escrow for delivery of rights concerning Tract D, the Corner Tract
and the CCC Stock.
F. Contemporaneously with the execution of this Agreement, Century has paid
the 1996 general taxes for Tract D in the total sum of $39,587.39 and has timely
paid the 1997 special tax assessment by the Maumelle, Arkansas Multi-Purpose
Improvement District No.2 on Tract D in the sum of $92,470.00 for total advances
for taxes paid by Century in the sum of $132,057.39. Copies of the receipts for
special and general taxes paid by Century are marked Exhibit "B", affixed
hereto, and by this reference made a part hereof.
G. This Agreement is intended to be the Settlement Agreement referred to in
that letter of intent for settlement from Lax, Vaughan, Xxxxxx & Xxxxx, P.A.
dated October 10, 1997, a copy of which is marked Exhibit "C" affixed hereto and
by this reference made a part hereof (the "Letter of Intent").
NOW, THEREFORE, in consideration of the above recitals, which by this
reference are incorporated herein, together with the mutual representations and
agreements set forth below, the Parties expressly agree as follows:
1. Settlement Terms: Deliveries Into Escrow. Contemporaneously with the
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execution of this Agreement, Borrower shall execute and deliver to Standard
Abstract & Title Company (the "Escrow Agent") a Warranty Deed conveying to
Century, in lieu of foreclosure, Tract D and the Corner Tract (the "Century
Deed"), and Century shall endorse in blank and deliver to the Escrow Agent the
certificates for the CCC Stock, Century shall execute and deliver to Escrow
Agent a complete satisfaction (the "Satisfaction") of the Consent
Decree as defined in Section 2 hereof, and Century shall execute a Quitclaim
Deed to Tract D and the Corner Tract in favor of the Borrower and deliver same
to the Escrow Agent (the "Borrower Deed"). Contemporaneously with the execution
of this Agreement, Borrower will have paid to Century the sum of $17,500.00, the
receipt of which is hereby acknowledged by Century. Furthermore, Borrower may
pay to Century the sum of $17,500.00 each month (the "Option Payments") for a
total of five consecutive monthly payments with the first such payment being due
on November 17, 1997, and each additional payment due on the 17th of each month
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thereafter. A "Default" shall occur with regard to an Option Payment only if an
Option Payment remains unpaid after four (4) business days after notice is given
to Borrower and CCC as provided in Section 5 hereof. In the event that all such
payments are not in default, then Borrower shall have the right to pay off the
debts pursuant to the Secured Note, Unsecured Note and Mortgage and purchase the
CCC Stock by paying to the Escrow Agent, in escrow, the sum of $2,132,057.39
(the "Purchase Price"). All Option Payments and the Purchase Price shall be made
by wire to transfer to Century in accordance with written instructions given to
Borrower contemporaneously with the execution of the Agreement. If the Purchase
Price is timely delivered to the Escrow Agent, then the Escrow Agent shall
deliver the Purchase Price to Century and simultaneously deliver the
Satisfaction, the Century Deed, the Borrower Deed and the CCC Stock to Borrower
whereupon the Escrow shall terminate. In either instance, the obligations due
Century pursuant to the Secured Note and the Unsecured Note shall be satisfied
in full. If there is a default in Borrower's payment of the Option Payments then
the Escrow Agent shall delivery to Century the Satisfaction, the Century Deed,
the Borrower Deed and the CCC Stock. In addition, even if the Option Payments
are made in a timely fashion but the Purchase Price is not delivered on or
before the 17th day of April, 1998, then the Escrow Agent shall deliver to
Century the Satisfaction, the Century Deed, the Borrower Deed and the CCC Stock.
The Escrow shall terminate the earlier of April 17, 1998 or upon default in the
making of the Option Payments, whichever occurs first. The parties agree that
the Option Payments are to be given as consideration for Borrower's right to
purchase the CCC Stock and to repurchase Tract D and the Corner Tract pursuant
hereto if Borrower timely pays the Purchase Price and is not consideration for
the use or
forbearance of the use of money.
2. Mutual Release. Upon execution of this Agreement, the Parties shall
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each execute a Consent Foreclosure Decree for the Chancery Court Action granting
to Century an in r~m judgment for the sums claimed by Century in the Chancery
Court Action in substantially the form which is marked Exhibit "C", attached
hereto and by this reference made a part hereof (the "Consent Decree").
Notwithstanding the entry of the Consent Decree, Century hereby releases and
forever discharges the Borrower and CCC and their respective agents, employees,
officers, directors, servants, representatives, attorneys, successors and
assigns, from any and all causes of actions, suits, claims and demands of every
kind and character, known or unknown, without limitation, including any action
at law or in equity, which Century has or may ever have against the Borrower or
CCC, provided, however, the rights and obligations arising pursuant to this
Agreement and the Consent Decree are excepted. Borrower and CCC hereby release
and forever discharge Century and its agents, employees, officers, directors,
servants, representatives, attorneys, successors and assigns, from any and all
causes of action, suits, claims and demands of every kind and character, known
or unknown, without limitation, including any action at law or in equity and
more specifically the counterclaim of Borrower and CCC in the Chancery Court
Action, which Borrower or CCC has or may ever have against Century, provided,
however, the rights and obligations arising pursuant to this Agreement are
excepted. It is the intention of the Parties that the Consent Decree is given to
protect the superior lien rights of Century in and to Tract D Borrower's option
to pay the Purchase Price pursuant to Section 1 hereof. Therefore, prior to
termination of the escrow pursuant to Section 1 hereof, Century covenants and
agrees to take no action whatsoever to enforce of the Consent Decree and will
not permit or cause the foreclosure sale to occur pursuant to the Consent
Decree.
3. Representations of Century (a)Century hereby acknowledges and
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represents to Borrower and CCC that Century and its advisors, counsel and
representatives have had the opportunity to review CCC's and Borrower's records
and documents, including, but not limited to (i) all of CCC's 1934 Act filings,
and ask questions of CCC's President, specifically including a draft of CCC's
Amended Annual Report Form 10-KSB for its fiscal year end September 30, 1996,
with a substantially similar document to be filed with the Securities and
Exchange Commission (the "SEC") on or about October 14, 1997 and (ii) the Debt
Settlement and Release Agreement
between Borrower, CCC and the Director of Insurance of the State of Illinois, as
Liquidator for Resure, Inc., dated effective September 30, 1997, and discuss
this Agreement with Century's attorneys and accountants.
(b) Century represents and warrants to Borrower and CCC that the execution,
delivery and performance by Century of this Agreement and the other agreements
and instruments to be delivered hereunder are within Century's corporate powers,
have been duly authorized by all necessary corporate actions of Century, require
(in respect of Century) no action by or in respect of, or filing with, any
governmental body, agency or official, and do not contravene, or constitute a
default under, any provision of law or regulation applicable to Century or
Century's certificates of incorporation or by-laws or of any agreement,
judgment, injunction, order, decree or other instrument binding upon Century.
4. Representations of Borrower and CCC.
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(A) Borrower and CCC hereby represent and warrant that on the date of
execution of this Agreement, that Tract D and the Corner Tract are free from all
claims, liens, security interests and encumbrances other than the Mortgage and
unpaid real estate taxes, if any, which are in the process of being paid by
Century or are not yet due and owing.
(B) Borrower and CCC represent and warrant to Century that the execution,
delivery and performance by Borrower and CCC of this Agreement and the other
agreements and instruments to be delivered hereunder are within Borrower's and
CCC's corporate powers, have been duly authorized by all necessary corporate
actions of Borrower and CCC, require (in respect of Borrower and CCC) no action
by or in respect of, or filing with, any governmental body, agency or official,
and do not contravene, or constitute a default under, any provision of law or
regulation applicable to Borrower or CCC or Borrower's and CCC's certificates of
incorporation or by-laws or of any agreement, judgment, injunction, order,
decree or other instrument binding upon Borrower or CCC.
(C) Borrower and CCC represent and warrant to Century that they have no
knowledge or notice that there exists or any prior use has caused a violation of
Environmental Laws as hereinafter defined, in regard to the Corner Tract. For
purposes of this Agreement, the term "Environmental Laws" shall include any and
all Federal, State or local laws, statutes, rules, regulations, ordinances or
orders (and any judicial interpretations thereof) governing, regulating, or
otherwise providing for the protection of environmental quality and/or human
health, safety and welfare, through the control, management, and/or restriction
of the use, handling, manufacture, generation, processing,
treatment, storage, emission, discharge, disposal, release or spillage of any
contaminant, chemical, material, pollutant or waste that may have hazardous,
toxic or other adverse impacts on the environment or human health, safety and
welfare, including, without limitation, the Comprehensive Environmental
Response, Compensation and Liability Act of 1980 (42 U.S.C. (S) 9601 et
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seq..("CERCLA"), the Hazardous Materials Transportation Act (49 U.S.C (S) 1002),
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the Resource Conservation and Recovery Act of 1976 (42 U.S.C. (S) 6901 et seq.
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("RCRA"), the Toxic Substance Control Act (15 U.S.C. (S) 2601 et seq.),
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the Federal Water Pollution Control Act (33 U.S.C. (S) 1251 et seq.),
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the Clear Air Act (42 U.S.C. (S) 7401 et seq., the Safe Drinking Water Act (42
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U.S.C. (S) 300 f et seq.) and the Emergency Planning and Community Right-to-
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Know Act of 1986 (42 U.S.C. (S) 11001 et seq.), each as heretofore and hereafter
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amended or supplemented, and any analogous present or future local, state or
federal statutes, rules and regulations promulgated thereunder or pursuant
thereto. Furthermore, Borrower and CCC hereby agree to defend, identify and
hold Century and its successors and assigns harmless from and against any and
all claims, proceedings under any Environmental Law(s), lawsuits, administrative
proceedings, liabilities, lawsuits, demands, fines, penalties, judgments,
orders, notice letters, damages, costs and expenses (including, without
limitations, cleanup costs and reasonable attorneys' fees, engineers fees, or
consultants fees arising by reason of any of the aforesaid), arising from, out
of, or by reason of any breach of the representation and warranty contained in
this paragraph.
5. Notices. Any notice, request, demand, statement, authorization,
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approval or consent required or permitted under this Agreement shall be in
writing and shall be made by, and deemed duly given upon (a) personal delivery
or (b) facsimile transmission, to the following addresses and facsimile numbers:
IF TO CENTURY: Century Realty, Inc.
00000 Xxxxx Xxxxxxx Xxxxxxxxxx
Xxxxx 000
Xxxxxx, XX 00000
ATTN: Xxxxx Xxxxxxxx
Telephone:(000) 000-0000
Facsimile:(000) 000-0000
WITH A COPY TO: Xxxxx X. Xxxxxx
LAX, VAUGHAN, XXXXXX & XXXXX, P.A.
000 Xxxx Xxxxxxx Xxxxxx
00xx Xxxxx
Xxxxxx Xxxx, XX 00000
Telephone:(000) 000-0000
Facsimile:(000) 000-0000
IF TO BORROWER OR CCC: Capitol Communities Corporation
00000 Xxxxxxxxx Xxxxxxxxx
Xxxxx 000
Xxxxxxxx, XX 00000
ATTN: Xxxxxxx X. Xxxx
Telephone:(000) 000-0000
Facsimile:(000) 000-0000
AND ALSO TO: Capitol Development of Arkansas, Inc.
X.X. Xxx 00000
Xxxxxxxx, XX 00000
ATTN: Xxxxx X. Xxxx
Telephone:(000) 000-0000
Facsimile:(000) 000-0000
WITH A COPY TO: G. Xxxxxx Xxxxxx
XXXXXX & GRACE, P.A.
000 Xxxx Xxxxx Xxxxxx, Xxxxx 000
Xxxxxx Xxxx, XX 00000
Telephone:(000) 000-0000
Facsimile:(000) 000-0000
or to such other address, facsimile number and/or such other additional parties
as any party may specify by notice given in accordance with this Section 5.
6. Nature of Settlement. Settlement pursuant to this Agreement is being
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made by the Parties solely for the purpose of avoiding the expense and
inconvenience of litigation and in order to effect the business transactions as
set forth herein and shall not be construed as an admission on the part of any
of the Parties of any unlawful or wrongful conduct or of any liability
whatsoever as to any of the Parties, all of which is expressly denied.
7. Applicable Law. To the extent that it is not controlled by the laws of
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the United States of America, this Agreement shall be construed in accordance
with and governed by the laws of the State of Arkansas.
8. Binding Effect. This Agreement shall apply to, and inure to the benefit
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of, and bind all the Parties hereto and their respective heirs, successors and
assigns.
9. Execution and Interpretation. This Agreement may be executed in multiple
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counterparts, each of which shall constitute an original and all of which
together shall constitute one instrument. Signatures on this instrument sent by
telecopy may be treated as original signatures. Any covenant set forth in the
body of this Agreement which may be in conflict with the Letter of Intent shall
be resolved in favor of the provisions set forth in this Agreement.
10. Acceptance by and Obligations of Escrow Agent. Upon acknowledgment of
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receipt of a copy of this Agreement by Escrow Agent, this Agreement will also
serve as the escrow instructions to the Escrow Agent and the Escrow Agent shall
perform its duties and obligations as follows:
(A) Conflicting Demands. Escrow Agent will be obligated to perform
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only the duties that are expressly set forth herein. In case of conflicting
demands upon Escrow Agent, it may (i) refuse to comply therewith as long as such
disagreement continues and make no delivery or other disposition of any funds,
instruments or property then held (and Escrow Agent shall not be or become
liable in any way for such failure or refusal to comply with such conflicting or
adverse claims or demands); and (ii) continue to so refrain and so refuse to act
until all differences have been adjusted by agreement and Escrow Agent has been
notified thereof in writing signed by Century, Borrower and CCC, or (iii) shall
submit any such disagreement regarding the proper delivery of the instruments,
funds and property to arbitration administered by the American Arbitrators
Association under the Commercial Arbitration Rules and judgment on the award
rendered by the arbitrator may be entered in any court having jurisdiction
thereof. The prevailing party in such a dispute shall be awarded reasonable
attorney's fees.
(B) No Obligation to Take Legal Action. Escrow Agent shall not be under any
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obligation to take any legal action in connection with this Agreement or for its
enforcement, or to appear in, prosecute, or defend any action or legal
proceeding which, in its opinion, would or might involve it in any costs,
expense, loss or liability, unless and as often as required by it, it is
furnished with satisfactory security and indemnity against all such costs,
expenses, losses, or liabilities.
(C) Status of Escrow Agent. Escrow Agent's duties hereunder shall be
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limited to the safekeeping of money, instruments and securities received by it
as Escrow Agent and for their disbursement in accordance with the written escrow
instructions given it in accordance with this Escrow Agreement.
(D) Written Instructions of Parties. Notwithstanding any contrary
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provision contained herein, Escrow Agent shall, at all times, have full right
and authority to pay over and disburse the money, instruments and property in
accordance with the joint written instructions signed by Century, Borrower and
CCC and their assigns.
(E) Specific Instructions. If Century gives the Escrow Agent written notice
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of Borrower and CCC's default of this Agreement, and the Borrower and CCC cannot
within four (4) business days of the request provide to
the Escrow Agent satisfactory proof of timely payment to Century all of the
Option Payments when due in accordance with the terms of the Agreement or
payment to Century of the Purchase Price by or prior to midnight April 17, 1998,
then the Escrow Agent is specifically instructed to deliver to Century the
Satisfaction, the Borrower Deed, the Century Deed and the CCC Stock. Upon
written notice and satisfactory proof of payment to Century of the Option
Payments and the Purchase Price in accordance with the terms of the Agreement,
the Escrow Agent is specifically instructed to notify Century of such written
notice given by Borrower and CCC and if Century does not dispute such payment in
written form within four (4) business days, then the Escrow Agent is instructed
to deliver to Borrower and CCC the Satisfaction, the Borrower Deed, the Century
Deed and the CCC Stock.
(F) Provisions Relating to Escrow Agent. Escrow Agent shall hold the money,
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instruments and property under the terms and conditions of this Agreement and
shall perform the duties imposed upon it thereby. If at any time in performing
its duties Escrow Agent is required to receive, accept, or act upon any notice
or writing purported to have been executed or issued by or on behalf of the
other parties, Escrow Agent shall not be required to inquire as to the authority
or genuineness of signature of any person who executed or otherwise issued such
writing, or otherwise be required to pass upon any aspect of such instruments
that may be essential for their validity. Escrow Agent may act in reliance upon
the advice of counsel in reference to any matter relating hereto, and shall not
be liable for any acts or omissions of any kind unless occasioned by its own
negligence or willful misconduct. Escrow Agent shall not be bound in any way by
any other agreement regardless of whether it has knowledge of the provisions of
such other agreement.
(G) Century and Borrower each agree to pay to Escrow Agent one-half the
fees and expenses charged or incurred by Escrow Agent in performing its duties
pursuant to this Agreement. The Escrow Agent shall receive $2,132.00 for its
services rendered as Escrow Agent pursuant to this Agreement.
(H) Century, Borrower and CCC agree to indemnify and hold Escrow Agent
harmless from any liability incurred by Escrow Agent providing services pursuant
to this Agreement not caused by the negligence or willful misconduct of Escrow
Agent.
11. Opinion of Counsel of CCC and Borrower. Upon execution of this
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Agreement, Borrower and CCC have caused its counsel to issue the opinion to
Century marked Exhibit "D", affixed hereto and by this reference made a part
hereof.
12. THE PARTIES HERETO STATE THAT EACH HAVE READ THIS AGREEMENT, HAVE BEEN
REPRESENTED BY LEGAL COUNSEL AND UNDERSTAND ITS TERMS AND FREELY AND VOLUNTARILY
SIGN THIS AGREEMENT ON THE DATE FIRST ABOVE WRITTEN.
IN WITNESS WHEREOF, the Parties have executed this Agreement effective on the
date first above mentioned.
CENTURY REALTY, INC.
BY: /s/ Xxxxx X. Xxxxxxxx
NAME: Xxxxx X. Xxxxxxxx
TITLE: Executive Vice President
BORROWER:
CAPITOL DEVELOPMENT OF ARKANSAS, INC.
BY: /s/ Xxxxx X. Xxxx
NAME: Xxxxx X. Xxxx
TITLE: Vice President
CCC:
CAPITOL COMMUNITIES CORPORATION
BY: /s/ Xxxxx X. Xxxx
NAME: Xxxxx X. Xxxx
TITLE: Vice President
