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HomeMy WebLinkAboutResolution - 2008-R0262 - Comprehensive Settlement Agreement - Choctaw Partners - 07_22_2008Resolution No. 2008—RO262 July 22, 2008 Item No. 5.12 RESOLUTION BE IT RESOLVED BY THE CITY COUNCIL OF THE CITY OF LUBBOCK: THAT the Mayor of the City of Lubbock BE and is hereby authorized and directed to execute for and on behalf of the City of Lubbock a Comprehensive Settlement Agreement and Release of Claims by and between the City of Lubbock and Choctaw Partners, a Texas General Partnership, the Estate of Joe J. Reynolds, J.A.R., Inc., a Texas Business Corporation, Jeffrey C. Reynolds, Anisse B. Reynolds and Billy David Turrentine, Jr. which is attached hereto and which shall be spread upon the minutes of the Council and as spread upon the minutes of this Council shall constitute and be a part of this Resolution as if fully copied herein in detail. Passed by the City Council this 22nd ATTEST: Rebe ca Garza, City Secretary APPROVED AS TO CONTENT: Gary Zheng, Director of Electric Utilities APPROVED AS TO FORM: Ma hew L. Wade Natural Resources Attorney mlw/cedocs/Settlement Resolution Choctaw -City 071608 day of July , 2008. e� /;ZE- Tom Martin, Mayor Resolution No. 2008—RO262 COMPROMISE SETTLEMENT AGREEMENT AND RELEASE OF CLAIMS This Compromise Settlement Agreement and Release of Claims ("Settlement Agreement") is by and between the City of Lubbock, a Texas home -rule municipal corporation (hereinafter referred to as the "City"), 'and Lubbock Power & Light (hereinafter referred to as "LP&L"), and Choctaw Partners, a Texas General Partnership, (hereinafter referred .to as "Choctaw") and the Estate of Joe J. Reynolds, Deceased, acting by and through its Independent Executor, Jeffrey C. Reynolds (hereinafter referred to as the "Estate") J.A.R., Inc., a Texas Business Corporation, (hereinafter referred to as "JAR'), acting by and through its President, Jeff Reynolds, and Jeffrey C. Reynolds, Individually, and Anisse B. Reynolds (hereinafter referred to as "Anisse") and Billy David Turrentine, Jr. (hereinafter referred to as "Turrentine") (collectively referred to as the "Parties"). WITNESSETH WHEREAS, Lubbock Power & Light is the municipally owned electric utility of the City (all references herein to the "City" encompass and include "LP&L" as well); and WHEREAS, the City and Choctaw entered into a Gas Purchase Contract (hereinafter referred to as the "Contract") on December 8, 1988 to supply natural gas to LP&L; and WHEREAS, Choctaw is a Texas General Partnership whose original partners composed of Joe J. Reynolds and David Turrentine as of the execution date of the Contract; and WHEREAS, JAR became a partner in Choctaw after the date of execution of the Contract; and WHEREAS, Choctaw granted in the favor of the City a Deed of Trust in the oil and gas leasehold estate owned by Choctaw (herein the "Property") as recorded in Volume 180, Page 774, Real Property Records of Cochran County, Texas as security for performance of the Contract (hereinafter referred to as the "Deed of Trust"); and WHEREAS, Jeffrey C. Reynolds was appointed the executor of the Estate of Joe J. Reynolds, Deceased after Joe J. Reynolds passed away in 2004; and WHEREAS, a dispute has arisen relative to the terms and meaning of the Contract; and WHEREAS, the City, Choctaw, the Estate, JAR, Anisse and Turrentine are willing to settle all claims to avoid the inconvenience, distractions, uncertainties, and Page 1 of 14 expenses attendant to litigation and trial, in exchange for the consideration and releases set forth below; and WHEREAS, Turrentine has agreed to transfer, sell and convey all of his interest in and to the Contract, Choctaw Partners, or any other interest as set forth in a Partnership Sales Agreement between Turrentine, Anisse, JAR, and the Estate. NOW THEREFORE, the parties hereto agree as follows: 1. As consideration for entering this Settlement Agreement, Choctaw, the Estate, JAR, Anisse, and Turrentine do hereby release, acquit, and forever discharge the City from any and all contractual liability, claims, demands, damages, attorney's fees, costs, liens, whether statutorily provided or otherwise, expenses, services, actions, causes of action, or suit in equity, of whatsoever kind or nature, whether heretofore or hereafter accruing, arising out of the Contract, or any dispute related thereto, by and between the City and Choctaw. 2. As consideration for entering into this Settlement Agreement and the payment to be made by Choctaw and the Estate, the City and LP&L do hereby release, acquit and forever discharge Choctaw, the Estate, JAR, Jeffrey C. Reynolds, Individually and in all capacities, Anisse and Turrentine, their heirs, executors, successors, and assigns from any and all contractual liability, claims, demands, damages, attorney's fees, costs, liens, whether statutorily provided or otherwise, expenses, services, actions, causes of action, or any claim to any oil, gas other minerals or any and all other rights in and to the Property or that could be claimed or otherwise asserted as a result of the Contract, or any breach thereof, or suit in equity, of whatsoever kind of nature, whether heretofore or hereafter accruing, arising out of the Contract by and between the City and Choctaw, or any dispute related thereto. The City further acknowledges and agrees that the obligation to pay such sums is the obligation of Choctaw, JAR, and the Estate only; and not Turrentine, Jeffrey C. Reynolds, Individually, or Anisse, Individually. 3. As further consideration for entering this Settlement Agreement, Choctaw and the Estate, jointly and severally, agree to pay to the City, by and through its electric utility, LP&L, SEVEN HUNDRED AND FIFTY THOUSAND and NO/100 DOLLARS ($750,000.00), in accordance with the terms and conditions outlined as follows: a). Upon final execution and delivery of this Settlement Agreement by all Parties, Choctaw and the Estate agree to pay to the City THREE HUNDRED AND SEVENTY-FIVE THOUSAND and NO/100 DOLLARS ($375,000.00) in cash (or its equivalent) or by check made payable to Lubbock Power & Light; and b). Choctaw and the Estate agree to pay to LP&L the remaining THREE HUNDRED AND SEVENTY-FIVE THOUSAND and N0/100 DOLLARS ($375,000.00) in equal monthly installments of TWELVE THOUSAND FIVE HUNDRED and NO/100 DOLLARS ($12,500.00) commencing on the I" day of August, 2008, and continuing on the first day of each month thereafter for a total Page 2 of 14 of thirty (30) months. Subject to the terms and conditions further outlined in this Settlement Agreement, such payments shall bear no interest. 4. Each installment outlined in Section 2(b) above must be received by LP&L by the first (0) day of the month beginning August 1, 2008. If the first (P) day of the month falls on a holiday, weekend or non -business day, then the installment shall be due on the first business day immediately following the first (I") day of the month. 5. Choctaw and the Estate acknowledge that (i) the settlement amount as set forth above in this Settlement Agreement is true and correct in all respects without the necessity of any further proof or presentation by the City or LP&L and (ii) the obligation to pay the amount outlined herein is a contractual obligation on the part of Choctaw and the Estate. 6. Choctaw and the Estate shall be in default ("event of default") if any one or more of the following events shall occur: a). Either Choctaw or the Estate fails to pay, within ten days when due any payment set forth above; b). Choctaw or the Estate defaults in the performance of any of the covenants or agreements contained in this Settlement Agreement; or c). Choctaw, or the Estate (i) is adjudicated a bankrupt, insolvent, files a voluntary petition for bankruptcy, or admits in writing that Choctaw is unable to pay Choctaw's debts as they become due; (ii) makes a general assignment for the benefit of creditors; (iii) files a petition or answer seeking reorganization or an arrangement with creditors or to take advantage of any bankruptcy or insolvency; or (iv) files an answer admitting the material allegations of, or consent to, or default in answering, a petition filed against Choctaw in any bankruptcy, proceeding for the purpose of effecting any of the foregoing. 7. If an event of default occurs, the City may, at it's option, (i) declare all unpaid amounts due hereunder immediately due and without further notice to either Choctaw or the Estate; and/or (ii) exercise any and all rights available to it in law, equity, contract or otherwise. 8. Any and all payments not paid when due shall bear interest at ten percent (10%) per annum, except as provided otherwise by law. 9. Regardless of any provision herein to the contrary, in no contingency or event shall it ever be deemed that the City has contracted for or be entitled to receive, collect or apply as interest on the balances an amount which exceeds the maximum amount permissible under applicable law. If, from any circumstances whatsoever, fulfillment of any provision of this Settlement Agreement at the time the performance is due would exceed the usury limit prescribed by law, then the obligation to be fulfilled shall be reduced to that limit. If from any circumstances the City shall receive as interest an amount that would exceed the highest lawful rate, the amount that would be excessive Page 3 of 14 interest shall be applied to the reduction of the principal amount owing under this Agreement, or shall be refunded, but shall not be applied to payment of interest. 10. Choctaw and the Estate shall be jointly and severally liable for each and every obligation outlined in this Settlement Agreement. Any default or failure on the part of Choctaw or the Estate shall be deemed a default or failure on the other without further evidence or proof being presented by the City. 11. Choctaw and the Estate agree to extend, renew, modify, confirm, and/or amend the Deed of Trust in favor of the City as security for performance of this Settlement Agreement by Choctaw and the Estate. Furthermore, Choctaw and the Estate agree to execute any and all documents necessary to properly record and effect this security for performance, including, without limitation, the documents attached hereto as Exhibit(s) A. 12 The City and LP&L, by entering into this Settlement Agreement: (i) acknowledge that this settlement is a compromise of a disputed claim as to the liability of Choctaw and the Estate for the City's contractual claims and damages, including a claim for attorneys fees incurred by the City, if any, and the payment made herein is not to be construed as an admission of liability on the part of Choctaw or the Estate. It is understood that the existence of any liability or wrongdoing has been, and continues to be, expressly denied by Choctaw and the Estate; and (ii) represent and warrant LP&L is a division of the City, is not a separate legal entity, and all claims against any and all of the parties to this Agreement relative to or arising out of the Contract are solely held by the City. 13. The terms of this Settlement Agreement shall inure to the benefit of, and be binding upon Choctaw, the Estate and their respective legal representatives, successors, or assigns. All representations and warranties set forth herein shall survive any and all closing. 14. All signatories to this Settlement Agreement hereby represent and warrant that they have the authority to execute this Settlement Agreement and bind the respective parties. 15. This Settlement Agreement states the entire agreement of the Parties with respect to the matters discussed herein, and supersedes all prior or contemporaneous oral or written understandings, agreements, statements, or promises. 16. If this Settlement Agreement does not become effective for any reason, it shall be deemed negotiations for settlement purposes only and will not be admissible in evidence or usable for any purposes whatsoever. 17. If any provision of this Settlement Agreement is ever held to be invalid or ineffective by any court of competent Jurisdiction with respect to any person or circumstances, the remainder of this Settlement Agreement and the application of such Page 4 of 14 provision to persons and/or circumstances other than those with respect to which it is held invalid or ineffective shall not be affected thereby. 18. No amendment, modification, or alteration of the terms of this Settlement Agreement shall be binding unless such amendment, modification, or alteration is in writing, dated subsequent to this Settlement Agreement, and duly executed by all of the Parties. 19. Each party to this Settlement Agreement acknowledges and agrees that they have obtained legal representation and advice as they have deemed appropriate in entering into this Settlement Agreement. 20. Each party further states that this Settlement Agreement, including the foregoing release, has been carefully read and each party understands the contents thereof and has signed the same as their own respective free act, and has not been influenced in making this settlement by any representative of a party or parties released. 21. It is further understood that the provisions of this Settlement Agreement are contractual and not mere recitals, and that the laws of the State of Texas shall govern this Settlement Agreement and that venue for any action arising out of or related to this Settlement Agreement and the claims associated therewith shall lie exclusively in Lubbock County. Page 5 of 14 EXECUTED this 22nd day of July , 2008. CHOCTAW PARTNERS Prin d e: For and on behalf of the Estate of Joe J. Reynolds, Deceased, a general partner of Choctaw Partners STATE OF TEXAS § COUNTY OF LUBBOCK § Before me, the undersigned authority, personally appeared_ .J& EF= A0 (- 4 �, for and on behalf of the Estate of Joe J. Reynolds, Deceased, a general partner of Choctaw Partners, known to me to be the person whose name is subscribed to the foregoing instrument and acknowledged to me that he executed the same for the purposes and consideration therein expressed. [SEAL] Notary Public for the State of Texas ROS(NE LOVE f Notary Public, State of Texas My Commission Expires 8-16-2008 Page 6 of 14 CHOCTAW PARTNERS Prin ame:_ For and on behalf of JAR Ync., a general partner of Choctaw Partners STATE OF TEXAS § COUNTY OF LUBBOCK § Before me, the undersigned authority, personally appeared 73 ; FF1 A I - Ali A for and on behalf of JAR, Inc., a general partner of Choctaw Partners, known to me to be the person whose name is subscribed to the foregoing instrument and acknowledged to me that he executed the same for the purposes and consideration therein expressed. [SEAL] �t ROSINE LOVE Notary Public, State of Texas My Commission Expires "��'� 8-16-2008 Notary Public for the State of Texas Page 7 of 14 Printed effrey C. Reynolds, Individually STATE OF TEXAS COUNTY OF LUBBOCK Before me, the undersigned authority, personally appeared Jeffrey C. Reynolds, known to me to be the person whose name is subscribed to the foregoing instrument and acknowledged to me that he executed the same for the purposes and consideration therein expressed. [SEAL] Notary Public for the State of Texas ROSINE LOVE (� Notary Public, State of Texas My Commission Expires Page 8 of 14 d�-� aLw.� J. Printed Name: Anisse B. ReynofUs STATE OF TEXAS § COUNTY OF LUBBOCK § Before me, the undersigned authority, personally appeared Anisse B. Reynolds, known to me to be the person whose name is subscribed to the foregoing instrument and acknowledged to me that she executed the same for the purposes and consideration therein expressed. [SEAL] Notary Public for the State of Texas a ROSINE LOVE Notary Public, State of TexasMy Commission Expires B-16-2008 Page 9 of 144-4 STATE OF TEXAS COUNTY OF Z &J.,044 �Vp- Billy D id urrentine, r. 0 M Before me, the undersigned authority, personally appeared Billy David Turrentine, Jr., known to me to be the person whose name is subscribed to the foregoing instrument and acknowledged to me that he executed the same for the purposes and consideration therein expressed. L `i TAMMY W. TARANGO k Notary Public, State of Texas Notary Publil for the .j My Commission Expires OiSE,,� August 08, 2010 State of Texas i/Iillt� Page 10 of 14 ESTATE OF JOE J. REYNOLDS, DECEAS D Pri ed e: Jeffrey C. Reynolds Independent Executor of the Estate of Joe J. Reynolds, Deceased STATE OF TEXAS § COUNTY OF LUBBOCK § Before me, the undersigned authority, personally appeared Jeffrey C. Reynolds, Independent Executor of the Estate of Joe J. Reynolds, Deceased, known to me to be the person whose name is subscribed to the foregoing instrument and acknowledged to me that he executed the same for the purposes and consideration therein expressed. [SEAL] ROSiNE LOVE ®i Notary Public, State of Texas My Commission Expires ��OF� B-16-2008 Notary Public for the State of Texas Page 11 of 14 CITY OF LUBBOCK By: Tom Martin, Mayor STATE OF TEXAS COUNTY OF LUBBOCK Before me, the undersigned authority, personally appeared Tom Martin, Ma oar of the CITY OF LUBBOCK, known to me to be the person whose name is subscribed to the foregoing instrument and acknowledged to me that he executed the same for the purposes and consideration therein expressed. SEAL Notary Public for the State of Texas �Ut PRY PU�' ELISA SMCHEZ Notary Public, Shale of Texas My Commission Expires 11-07-21i11 Page 12 of 14 CITY OF LUBBOCK LUBBOCK POWER & LIGHT LI-N STATE OF TEXAS § COUNTY OF LUBBOCK § W.R. COLLIER Chairman, Electric Utility Board Before me, the undersigned authority, personally appeared W.R. COLLIER, known to me to be the person whose name is subscribed to the foregoing instrument and acknowledged to me that she executed the same for the purposes and consideration therein expressed. [SEAL] Notary Public for the State of Texas AS TO FORM AND CONTENT: for Jeffrey C. Reynolds STEPHEN T. KRIER Attorney for the Estate of Joe J. Attorney for the City of Lubbock, Lubbock Power & Light MATTHEW WADE Attorney for the City of Lubbock, Lubbock Power & Light RUDO PH A. WOERNDLE Attorney for Billy David Turrentine Jr. Page 13 of 14 Jul 21 2008 11:07RM Rudolph R Woerndle P C 4325701560 p.4 STATE OF TEXAS § COUNTY OF LUBBOCK § CITY OF LUBBOCK LUBBOCK POWER & LIGHT By: W.R. COLLIER Chairman, Electric Utility Board Before me, the undersigned authority, personally appeared W.R. COLLIER, known to me to be the person whose name is subscribed to the foregoing instrument and acknowledged to me that she executed the same for the purposes and consideration therein expressed. [SEAL] Notary Public for the State of Texas AS TO F AN CONTENT: M Atto ey for Je y C. Reynolds 1- S T. KRIER Atto ey for the Estate of Joe J. Reynolds J CK McCUTC �_ rney r the City of Lubbock, Lubbock Power & Light MA HEW WADE Attorney for the City of Lubbock, Lubbock Power & Light RUDOLPH A. WOERNDLE Attorney for Billy David Turrentine Jr. Page 13 of 14 CITY OF LUBBOCK LUBBOCK POWER & LIGHT By: W.R. COLLIER Chairman, Electric Utility Board STATE OF TEXAS COUNTY OF LUBBOCK Before me, the undersigned authority, personally appeared W.R. COLLIER, known to me to be the person whose name is subscribed to the foregoing instrument and acknowledged to me that she executed the same for the purposes and consideration therein expressed. INIHI r, ��; ► ;�o • n OLIVIA PIERCE Notary Public. State of Texas [SEA �;�s My Commission Expires September 15, 2006 �► Notary Public for the State of Texas APPROVED AS TO FORM AND CONTENT: NOLAN GREAK Attorney for Choctaw Partnership STEPHEN T. KRIER Attorney for the Estat2of e J. Reyno JrKMcCUTCH . Aey for the City of Lubbock, Lubbock Power &Light M!�� &�04 MA THEW WADE Attorney for the City of Lubbock, Lubbock Power & Light Page 13 of 14 CITY OF LUBBOCK LUBBOCK POWER & LIGHT By: W.R. COLLIER Chairman, Electric Utility Board STATE OF TEXAS § COUNTY OF LUBBOCK § Before me, the undersigned authority, personally appeared W.R. COLLIER, known to me to be the person whose name is subscribed to the foregoing instrument and acknowledged to me that she executed the same for the purposes and consideration therein expressed. [SEAL] Notary Public for the State of Texas APPROVED AS O FORM AND CONTENT: NO AN GAEAM. Att mey for Jeffrey C. Reynolds STEPHEN T. KRIER Attorney for the Estate of Joe J. Reyno1 ;5�ld JA K McCUTCHIN orney f r the City of Lubbock, Lubbock Power & Light Z�cr.04— MATtHEW WADE Attorney for the City of Lubbock, Lubbock Power & Light Page 13 of 15 RujJbLP14 A. WOERNDLE Attorney for Billy David Turrentine Jr. Page 14 of 15 Attachments: Exhibit A — Amendment, Modification, Ratification and Confirmation of Deed of Trust Page 15 of 15 Resolution No. 2008-RO262 Exhibit "A" AMENDMENT, MODIFICATION, RATIFICATION AND CONFIRMATION OF DEED OF TRUST STATE OF TEXAS KNOW ALL MEN BY THESE PRESENTS: COUNTY OF COCHRAN WHEREAS, on December 8, 1988, Choctaw Partners, a Texas General Partnership (the "Grantor"), executed that certain Deed of Trust (the "Deed of Trust") encumbering the property described in the Deed of Trust; and WHEREAS, the Deed of Trust is recorded in Volume 180, Page 774, Real Property Records, Cochran County, Texas; and WHEREAS, the City of Lubbock was named the beneficiary in the Deed of Trust (the" Beneficiary"); and WHEREAS, the Grantor and the Beneficiary desire to renew, extend, amend and modify the Deed of Trust, including, but not limited to the obligations expressly secured by the Deed of Trust, including but not limited to those outlined in Article II of the Deed of Trust, and desire for the Deed of Trust to specifically secure such obligations outlined in Article II of the Deed of Trust; NOW, THEREFORE, for good and valuable consideration, the receipt and sufficiency of which is expressly acknowledged, Borrower and Bank hereby agree as follows: 1. The Secured Indebtedness secured by the Deed of Trust, namely Article II on page 2 of such Deed of Trust, shall be amended by deleting Section 2 in its entirety and replaced with the following:: "Section 2. This Deed of Trust is given to secure the obligations of Grantor to perform the obligations imposed on it in the "Compromise Settlement Agreement and Release of Claims" dated the day of July, 2008." 2. It is expressly agreed by the Grantor and the Beneficiary that all terms of the Deed of Trust not above modified and/or amended shall remain in full force and effect as written therein. 3. Grantor ratifies the Deed of Trust as herein modified and amended and confirms that the Deed of Trust is in full force and effect, is fully enforceable, and creates a valid lien in favor of the Beneficiary upon all of the property described therein. EXECUTED this day of , 2008. Page 1 of 3 CHOCTAW PARTNERSHIP Printed Name: Jeffrey C. Reynolds, President For and on behalf of the Estate of Joe J. Reynolds, a general partner of Choctaw Partnership STATE OF TEXAS § COUNTY OF LUBBOCK § Before me, the undersigned authority, personally appeared Jeffrey C. Reynolds, President, for and on behalf of the Estate of Joe J. Reynolds, a general partner of Choctaw Partnership, known to me to be the person whose name is subscribed to the foregoing instrument and acknowledged to me that he executed the same for the purposes and consideration therein expressed. [SEAL] Notary Public for the State of Texas Page 2 of 3 CHOCTAW PARTNERSHIP Printed Name: Jeffrey C. Reynolds, President For and on behalf of the JAR Inc., a general partner of Choctaw Partnership STATE OF TEXAS § COUNTY OF LUBBOCK § Before me, the undersigned authority, personally appeared Jeffrey C. Reynolds, President, for and on behalf of JAR Inc., a general partner of Choctaw Partnership, known to me to be the person whose name is subscribed to the foregoing instrument and acknowledged to me that he executed the same for the purposes and consideration therein expressed. [SEAL] Notary Public for the State of Texas Page 3 of 3