SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
__________
FORM 8-K
CURRENT REPORT
Pursuant to Section 13 or 15(d) of the
Securities Exchange Act of 1934
June 28, 1999
Date of Report
(Date of Earliest Event Reported)
CAPITOL COMMUNITIES CORPORATION
(Exact Name of Registrant as Specified in its Charter)
Nevada 0-23450 88-0361144
(State of Incorporation) (Commission File No.) (I.R.S. Employer Identification No.)
25550 Hawthorne Boulevard, Suite 207, Torrance, CA 90505
(Address of Principal Executive Offices)
Registrant's Telephone Number: 310-375-2266
ITEM 2. ACQUISITION OR DISPOSITION OF ASSETS
On March 29, 1999, a Contribution Agreement was entered into between
Capitol Communities Corporation's subsidiary, Capitol Development of Arkansas,
Inc. (the "Company") and Trade Partners, Inc. ("Trade Partners"), a unaffiliated
third party, for the purpose of forming TradeArk Properties, LLC ("TradeArk
Properties"), a Michigan limited liability company to develop and sell real
estate. On June 1, 1999, an amendment to the Contribution Agreement was executed
by the parties extending the closing date (the "Closing Date") to no later than
June 30, 1999. On June 14, 1999, the Closing Date, the parties performed all of
the terms and obligations of the Contribution Agreement, including the
capitalization of TradeArk Properties.
Trade Partners, a Michigan corporation that acquires, holds and transfers
life insurance policies on persons with limited life expectancies, referred to
as viatical settlement contracts, contributed to TradeArk Properties viatical
settlement contracts that the parties determined had a discounted net present
value of $8,300,000. The capital contribution provides Trade Partners with a
64.84% membership interest in TradeArk Properties.
The Company contributed certain tracts of real property its owns in
Maumelle, Arkansas (the "Maumelle Property"), including 192 acres of single-
family lots; 19 acres of multi-family lots; 40 acres of commercial lots; and 6
acres of commercial lots, (collectively known as the "Contributed Maumelle
Property"). TradeArk Properties assumed $3,800,000 in debt collateralized by the
Contributed Maumelle Property. The fair market value of the Contributed Maumelle
Property was determined by the parties to be $8,300,000, which after the assumed
debt, represented a capital contribution by the Company of $4,500,000 or a
35.16% membership interest in TradeArk Properties.
Simultaneously on the Closing Date, and pursuant to the terms of the
Contribution Agreement, TradeArk Properties secured a $4,000,000 loan from New
Era Life Insurance Company ("New Era"). The loan has a fixed interest rate of
13% per annum, and matures in 30 months when all accrued interest and principal
is due. $3,156,581.92 of the New Era loan proceeds were used to retire loans
held by the Company and secured by part of the Contributed Property. The New Era
loan is secured by the Contributed Property and viaticals.
After legal fees and other closing costs, the Company received $930,713.18
from the New Era loan proceeds from TradeArk Properties. The Company intends to
use the proceeds for operating capital and expenses.
TradeArk Properties anticipates commencing the development and sale of
finished residential lots on part of the Contributed Property in September 1999.
On March 31, 1999, a Plan and Agreement for Corporate Separation
("Separation Plan") was entered into between the Company and Charlie
Corporation, a related party. On June 14, 1999, the parties executed a First
Amendment to the Plan and Agreement for Corporate Separation. Under the
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terms of the Separation Agreement, Charlie Corporation exchanged 2,839,689
shares of the Company's common stock for all of the issued and outstanding
capital stock in the Company's subsidiaries, Capitol Resorts, Inc. (the "Resort
Subsidiary"), and Capitol Resorts of Florida, Inc., (the "Florida Resorts
Subsidiary"). The exchange also included the Resort Subsidiary's solely-owned
interest in Capitol Club, Exchange Services, Capitol Resorts International and
Entry Resorts Marketing, and the Florida Resorts Subsidiary's solely-owned
interest in Capitol SB Development. Under the terms of the Separation Agreement,
Charlie Corporation assumed the liabilities, including $2,100,000 in related
debt, for the Resort Subsidiary and Florida Resorts Subsidiary, effective June
14, 1999.
With the exchange the Company disposed of its interest in approximately 36
acres of land and improvements near Disney World in Osceola County, Florida held
by Capitol SB Development, and the rights to a ground lease and improvements
referred to as the Ocean Palms Resort located in Pompano Beach, Florida. The
Ocean Palms Resort property consist of a 53 long term leasehold unit complex,
pool, office areas, parking area and other amenities. The assignment of the
ground lease rights is held by the Florida Resorts Subsidiary.
The parties determined that the fair market value of the stock in the
Resorts Subsidiary and the Florida Resorts was $3,344,987, and the fair market
value of the Company's stock was $3,344,987.
The Company is holding the 2,839,689 shares as treasury shares.
ITEM 7. FINANCIAL STATEMENTS, PRO FORMA FINANCIAL INFORMATION AND
EXHIBITS.
(A) and (b). The financial statements required to be filed with this Report are
not presently available. The Company will file the required financial statements
as an amendment to this Form 8-K, as soon as practical but not later than 60
days after the date of the filing of this Report.
(c) EXHIBIT
The following Exhibits are filed as part of this Report.
10.37. Contribution Agreement, dated March 29, 1999, between Capitol
Development of Arkansas, Inc., and Trade Partners, Inc.
10.38. Amendment to Contribution Agreement, dated June 1, 1999.
10.39. Plan And Agreement For Corporation Separation, dated March 31, 1999,
between Capitol Communities Corporation and Charlie Corporation.
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10.40. First Amendment To Plan And Agreement For Corporation Separation,
dated June 14, 1999.
SIGNATURES
Pursuant to the requirements of the Securities and Exchange Act of 1934, as
amended, the registrant has duly caused this report to be signed on is behalf by
the undersigned hereunto duly authorized.
Dated: June 25, 1999 CAPITOL COMMUNITIES CORPORATION
BY: /s/ Michael G. Todd
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Michael G. Todd
President and Chairman of
the Board
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