1296RESOLUTION NO. ~o?9F~
A RESOLUTION APPROVING SETTLEMENT OF CLAIMS BETWEEN THE
CITY OF WEST MEMPHIS, ARKANSAS, AND AERATION INDUSTRIES
INTERNATIONAL, INC.
SPONSORED BY:
WHEREAS, the West Memphis Utility Commission recommends
that all claims by the City of West Memphis and the West
Memphis Utility Commission against Aeration Industries
International, Inc., be resolved by settlement and that the
;~ Release document in substantially the form attached hereto
be approved, and;
WHEREAS, the City Council finds that it is in the best
interest of the City of West Memphis and the West Memphis
Utility Commission to settle all claims with Aeration
Industries International, Inc.;
NOW, THEREFORE, BE IT RESOLVED BY THE CITY COUNCIL OF
THE CITY OF WEST MEMPHIS, ARKANSAS, that the Release
document between Aeration Industries International, Inc.,
and the City of West Memphis, Arkansas, in substantially
the form attached hereto is hereby approved and the Mayor
is hereby authorized to execute the Release document with
Aeration Industries International, Inc. The City Attorney
is hereby authorized to make such clerical modifications to
the Release document as may be necessary, in his opinion,
for the proper execution of such instrument.
ADOPTED this /6T}J~ day of ~v`y , 1992.
K ITH INGRAM, M yor
ATTEST:
DAN CRAFT, C
RECEIVED
CITY CLERK OFFICE
DATE ~ ~°t 4]s
THIS IS A CONFIDENTIAL NON-PUBLIC PRELIMINARY DRAFT
DATED 4/25/92 WHICH WAS PREPARED FOR FURTHER
CONSIDERATION AND DISCUSSION ONLY AND IT IS NOT
TO BE RELIED UPON OR UTILIZED FOR ANY PURPOSE
Rev. 4/26/92
Rev. 5/4/92
Rev . 6/ 1/ 9 2
Rev. 6/6/92
Rev. 6/15/92
Rev. 6/22/92
Rev. 7/11/92
RELEASE
KNOW ALL MEN BY THESE PRESENTS:
PART I
The City of West Memphis, Arkansas, (the "City") acting
by and through its Mayor, Keith M. Ingram, pursuant to
Resolution of the City Council for the City of West Memphis,
30 Arkansas, dated the day of
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1992, and the West
Memphis Utilities Commission, (the "Commission") acting by and
through its Chairman,
pursuant to
Resolution dated the day of , 1992, for and in
consideration of the sum of $95,000.00 cash in hand paid by
the Chubb Group of Insurance Companies and the deliverance of
a promissory note payable to the order of the Commission in
the principal sum of $95,000.00 and bearing interest at the
rate of 8% per annum, executed by Aeration Industries
International, Inc., ("Aeration") in favor of the Commission,
release5.wmu
1 said note bearing date of , 1992, and providing
2 for payment in twelve (12) equal installments of principal,
3 plus accrued interest; the first installment being due on or
4 before the 30th day after the date of execution of the note,
5 and subsequent payments due and payable on the same day of
6 each month thereafter through and including the month of
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1993, do for themselves and for each of their
8 successors and assigns forever release and discharge all
9 actions, rights, causes of action, claims and demands
10 whatsoever whether in tort, contract or otherwise that now
11 exist or may hereafter accrue against Aeration, its existing
12 or past directors, shareholders, officers, agents, servants,
13 employees, affiliates, successors, and assigns, and its and
14 their heirs, administrators and executors (collectively "The
15 Released Parties"), (hereafter sometimes collectivel~• referred
16 to as "Aeration") in favor of the City and/or the Commission
17 arising out of or in any way relating to certain equipment
18 known under the name of "AIRE-02" Aeration System which was
19 sold or furnished by or on behalf of Aeration to the City
20 and/or the Commission, including without limitation any claims
21 relating to or arising from the manufacture, sale or
22 distribution of said equipment or to any warranty, claim,
23 statement, document or representation, relating thereto,
24 whether express or implied, and also all rights alleged in a
25 Complaint filed by the City and the Commission against
26 Aeration in the Circuit Court of Crittenden County, Arkansas,
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1 in cause number CIV-89-532 on or about the 23rd day of
2 February, 1990, now dismissed, said Complaint in such cause
3 being incorporated herein by reference, as though the same
4 were set forth herein, word for word. It is understood and
5 agreed that Bond Consulting Engineers, Inc., ("Bond"), Cy
6 Bond, Jr., Jerome Alford, Dennis Sorrel, the officers,
directors servants a ents and employees of Bond; the
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8 officers, directors, servants, agents and employees of
9 McCullough Environmental Services, Inc., ("McCullough"), Jerry
10 C. Mitchell, and Hershel Morgan ARE NOT existing or past
11 directors, shareholders, officers, agents, servants,
12 employees, affiliates, successors, assigns, heirs,
13 administrators or executors of Aeration Industries
14 International, Inc. It is the intention of the parties that
15 this release shall not operate to bar any claim of the
16 Commission or the City against any other non-party to this
17 Release for the independent acts of negligence, other torts,
t8 breaches of contract or warranty of any such non-party for
~ 3 which they cannot be held jointly and severally liable with
~0 Aeration, but not further or otherwise.
21 The City and the Commission warrant that no promise or
22 inducement has been offered except as herein set forth except
23 as contained in the letter from Aeration dated
24 , to the City and the Commission and its
25 attorneys; that this Release is executed without reliance upon
26 any statement or representation by Aeration, its attorneys,
release5.wmu 3
1 officers and agents or any other person or persons concerning
2 the nature and extent of the damages or legal liability
3 therefor.
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6 PART II
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9 The City and Commission, for the consideration stated in
10 Part 1 of this Release and pursuant to the authority granted
11 to them by the above-described Resolutions, agree that in the
12 event other non parties to this Release, including but not
13 limited to Bond Consulting Engineers, Inc., Cy Bond, Jr.,
14 Jerome Alford, Jerry C. Mitchell, McCullough Environmental
15 Services, Inc., OMI, their insurers, sureties, guarantors,
16 heirs or successors (The Potential Defendants) and assigns, or
17 any of them, are responsible or held liable to the City and/or
18 the Commission for damages as a result of but not limited to,
19 the use, management, operation, modification, representations,
20 warranties and recommendations of the "AIRE-02" Aeration
21 System furnished by Aeration to the City and/or the
22 Commission, the execution of this agreement shall operate as a
23 satisfaction of all claims of the City of West Memphis,
24 Arkansas, and the West Memphis Utilities Commission against
25 the such parties to the extent of the pro-rata share, if any,
26 of liability of Aeration Industries International, Inc.,
27 provided however, if there is an independent basis for the
28 imposition of liability such that the theory of actual
29 recovery is not based upon joint liability of a joint
release5.wmu 4
1 tortfeasor, then this Release shall not release the right of
2 the City or Commission to pursue such other non-party to this
3 Release.
4 It is further agreed that this Release shall operate as a
5 reduction, to the extent of the pro-rata share, if any, of The
6 Released Parties, of and from all claims of the parties for
7 whom this Release is executed (the Released Parties) for
8 damages on account of but not limited to, the use, management,
9 operation, modification, representations, warranties and
10 recommendations of the "AIRE-02" Aeration System to the City
11 and/or the Commission, recoverable by said parties against all
12 other non-party joint tortfeasors, including but not limited
13 to the Potential Defendants or any of them; provided however,
14 that if there is an independent basis for the imposition of
15 liability such that the theory of actual recovery is not based
16 upon joint liability of a joint tortfeasor, then this Release
17 shall not affect the amount of the claim and the right of the
18 City or Commission to collect same from any non-party to this
9 Release. Subject to the terms and conditions of this Release,
~l0 the City and/or the Commission hereby specifically reserves
21 all rights against the Potential Defendants, as well as the
22 agents, servants, employees and representatives of Bond and
23 McCullough or any of them, or any other parties other than the
24 Released Parties in any action pending or which may be filed
25 at some later date. Notwithstanding anything to the contrary
26 contained in this entire instrument, this Release shall not
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1 operate to bar claims by the City or the Commission against
2 any third party named or unnamed herein, except for Aeration,
3 or limit the damages recoverable in such claims if such claims
4 arise apart from and are in no way related, factually or
5 legally such that the theory of recovery is not based upon
6 joint liability with Aeration, from the alleged torts, breach
7 of warranties (express and implied) and breach of contract of
8 Aeration.
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11 PART III
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14 As further consideration for the amounts paid and agreed
15 to be paid as set forth in Part 1 of the Release, the City and
16 the Commission, separately and jointly, agree to indemnify the
17 Chubb Group of Insurance Companies and/or Aeration and the
18 other Released Parties for any sums which any of them may be
19 required to pay by reason of a judgment of law in favor of the
20 Potential Defendants or any of them, or any other persons,
21 firms or corporations against Aeration Industries
22 International, Inc., and the other Released Parties, or any of
23 them, for damages resulting from the manufacture, sale,
24 distribution, use, management, operation, modification,
25 representations, warranties, and recommendations of the "AIRE-
26 02" Aeration System furnished by Aeration Industries
27 International, Inc. to the City and/or the Commission and to
28 reimburse and make good any loss, damage or costs that the
29 said Chubb Group of Insurance Companies and/or Aeration or any
.ri
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1 other of the Released Parties may have to pay by reason of
2 such judgment or judgments to the extent of the consideration
3 actually paid by Aeration and the Chubb Group of Insurance
4 Companies and actually received by the City and Commission for
5 this Release but not further nor otherwise.
6 The undersigned understand that the Released Parties
no liabilit of an sort b reason of the payment made
7 admit Y Y Y
8 or the payments to be made pursuant to the note described
9 above as well as by the execution of this Release and the
10 statements contained therein, and that said payments are in
11 compromise and are made to terminate further controversy
12 respecting all claims for damages that the City and/or the
13 Commission and the Potential Defendants have heretofore
14 asserted or might hereafter assert by reason of said equipment
15 furnished by Aeration to the City and/or the Commission.
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18 PART IV
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21 Should Aeration Industries International, Inc., proceed
~ 2 voluntarily or involuntarily under the provisions of the
3 Bankruptcy Code as set out in the United States Code or become
24 subject to insolvency, reorganization, moratorium,
25 rearrangement, liquidation, conservatorship, or similar laws
26 of general application at the time in effect relating to or
27 affecting the rights of creditors generally, including without
28 limitation, court decisions, general equity principles, and
29 the statutory provisions of the Federal Bankruptcy Code
releaseS.Wmu 7
1 pertaining to the voidability of preferential or fraudulent
2 transfers or conveyances, then the provisions for indemnity
3 contained in this Release shall be of no force and effect
4 except to the extent the Chubb Group of Insurance Companies is
5 entitled to indemnity, and the limit of that indemnity is
6 $95,000.00. Notwithstanding anything to the contrary
7 contained herein, Aeration Industries International, Inc.,
8 shall be permitted indemnity to the extent that any claim by
9 any of the Potential Defendants can not be legally discharged
10 up to the amount actually paid and received by the City and
11 the Commission. There shall be no indemnity payable to
12 Aeration for any judgments or any portions thereof in favor of
13 the Potential Defendants for fraud.
14 This Release is executed in the State of Arkansas, and
15 the provisions of this Release shall be construed and governed
16 by the laws of that State. The parties agree to litigate any
17 dispute concerning the validity, interpretation and
18 enforcement of this Release in either the United States
19 District Court for the Eastern District of Arkansas, Jonesboro
20 Division or the Circuit or Chancery Court of Crittenden
21 County, Arkansas depending upon the jurisdictional amount.
22 The parties further agree that specific performance may be had
23 to enforce the terms of this Release.
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26 PART V
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Should any of the Potential Defendants bring an action
against Aeration or any of the Released Parties after the
filing of a claim by the City or Commission against any of the
Potential Defendants, the City or Commission shall be liable
up to a cumulative maximum of $25,000.00 for the attorneys'
fees of Aeration Industries International, Inc., or any of the
Released Parties in the event that Aeration Industries
International, Inc., or any of the Released Parties is unable
to be dismissed on a pre-trial motion without expending more
than $2,500.00 in attorneys' fees for outside counsel and
outside legal costs and expenses. To the extent that
attorneys' fees are payable under this provision, the City and
Commission shall have the right to reduce the total indemnity
provided for herein by the amount actually paid Aeration
Industries International, Inc., or any of the Released Parties
for the attorneys' fees.
IN WITNESS WHEREOF, the parties hereto have set their
hands this day of , 1992.
CITY OF WEST MEMPHIS, ARKANSAS
KEITH INGRAM, MAYOR
WEST MEMPHIS UTILITIES
COMMISSION
CHAIRMAN
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Approved:
Mr. Kent J. Rubens
Attorney at Law
P.O. Box 768
West Memphis, AR 72303
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