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0 Boox 20 WE 690
<br />SETTLEMENT AGREEMENT AND RELEASE
<br />THIS SETTLEMENT AGREEMENT AND RELEASE ("Agreement") is made this
<br />G I day of 2005, by and between RBC Centura Bank ("RBC") and the County
<br />of Lee, North Carolina ("Lee County") (collectively the "Parties").
<br />WHEREAS, Carolina Apartment Products, Inc. ("CAP") is a North Carolina corporation
<br />that has done business at 1826 Boone Trail Road, Sanford, Lce County, North Carolina ("Boone
<br />Trail Property") since at least January 1, 2004;
<br />WHEREAS, CAP does not own the real property referred to as the Boone Trail Property;
<br />WHEREAS, RBC extended credit to CAP including a loan in the original principal
<br />amount of Five Hundred Thousand and no/100ths Dollars (5500,000.00) (the "CAP Loan"),
<br />evidenced by a promissory note dated September 29, 2004 and a security agreement dated June
<br />25, 2004;
<br />WHEREAS, the CAP Loan is secured by a perfected security interest in all of CAP's
<br />then-owned and thereafter acquired inventory, chattel paper, accounts and general intangibles,
<br />the proceeds thereof and all related records, as well as a security interest in certain vehicles as
<br />reflected on their certificates of title (all collectively the "CAP Collateral");
<br />WHEREAS, RBC extended credit to Freemor at Sanford, LLC ("FAS") including a loan
<br />in the original principal amount of Three Million, Eight Hundred Thousand and no/100ths
<br />Dollars (53,800,000.00) (the °FAS Loan"), evidenced by a promissory note dated August 4,
<br />2003 and a security agreement dated August 4, 2003;
<br />WHEREAS, the FAS Loan is secured by a perfected security interest in all goods,
<br />furnishings, fixtures, equipment and other items and types of personal property then-owned and
<br />thereafter acquired by FAS and located on the Boone Trail Property, including property used or
<br />useable in the operation or maintenance of the improvements located on such Property (the "FAS
<br />Collateral");
<br />1I'%1-IEREAS, repayment of the credit extended to FAS pursuant to the FAS Loan was
<br />guaranteed pursuant to an Unconditional Guaranty Agreement executed by CAP on or about
<br />August 4, 2003 ("CAP - FAS Guaranty 41") and a Conuncrcial Guaranty executed by CAP on
<br />or About June 28, 2004 ("CAP - FAS Guaranty 92") (collectively the "FAS Guaranty
<br />Agreements");
<br />WHEREAS, to secure the CAP- FAS Guaranty #l, and pursuant to the terns of the CAP-
<br />FAS Guaranty 91 and a related Pledge and Security Agreement dated August 4, 2003, CAP
<br />granted RBC Centura a security interest in any and all of CAP's then-owned and thereafter
<br />acquired equipment, inventory, goods, furnishings, fistures, equipment, and other items and
<br />types of personal property, including fixtures located on the Boone Trail Property (the "CAP -
<br />FAS Guaranty Collateral"), which security interest was properly perfected;
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