PAYMENT, RETIREMENT AND RELEASE AGREEMENT
EXHIBIT
10.6
This
Payment, Retirement and Release Agreement (the “Agreement”) is dated as of July
27, 2006 by and between the Pension Benefit Guaranty Corporation, an agency
of
the Federal Government of the United States of America (“PBGC”) and PubliCARD,
Inc., a Pennsylvania corporation (“PubliCARD”).
WITNESSETH:
WHEREAS,
PubliCARD maintained a pension plan for certain of its employees known as the
Publiker Retirement Income Plan (“Plan”), a defined benefit pension plan covered
by Title IV of the Employee Retirement Income Security Act of 1974,
as
amended
(“ERISA”);
WHEREAS,
by agreement dated September 23, 2004, PubliCARD and PBGC agreed that the Plan
should be terminated with an effective termination date of March 31, 2003 (the
“Termination Date”), and that PBGC should thereafter act as statutory trustee of
the Plan;
WHEREAS,
as a result of the termination of the Plan and pursuant to Section 4062 of
ERISA, PubliCARD and each member of its controlled group (as that term is
defined in Section 4001(a)(14) of ERISA), including its wholly-owned subsidiary,
Infineer, Ltd. (“Infineer”), became jointly and severally liable to the PBGC, as
a United States government agency and as the statutory trustee of the Plan,
for
the amount of unfunded benefit liabilities (as that term is defined in Section
4001(a)(18) of ERISA) under the Plan and for the amount of unpaid contribution
owed to the Plan as of the Termination Date (the unfunded benefit liabilities
and the unpaid contributions are hereinafter collectively referred to as the
“Termination Liabilities”);
WHEREAS,
PBGC and PubliCARD entered into a Settlement Agreement dated as of September
23,
2004 (as amended and restated as of June 1, 2005, the “Settlement Agreement”)
providing for the settlement of the Termination Liabilities and delivery of
PubliCARD’s Promissory Note dated September 23, 2004, payable to the order of
PBGC in the amount of $7,501,310 (the “Note”);
WHEREAS,
no payments have been made in respect of the Note; and
WHEREAS,
PBGC and PubliCARD wish to provide for the settlement and discharge of
PubliCARD’s obligations under the Settlement Agreement and the
Note.
WHEREAS,
PBGC and PubliCARD (1) intend that the transaction set forth in this Agreement
shall constitute a contemporaneous exchange for new value given to PubliCARD,
and (2) stipulate that the transaction is fair and equitable and is the result
of arm's length negotiations between PBGC and PubliCARD.
NOW,
THEREFORE, the parties hereto mutually covenant and agree as
follows:
SECTION
I
PAYMENTS
TO PBGC
1.1 Initial
Payment.
On the
date of this Agreement, PubliCARD shall pay to PBGC the amount of $256,391.31
by
wire transfer of immediately available funds as provided in the wire
instructions attached as Exhibit A. The date and time on which such wire
transfer is sent is the “Effective Time.”
1.2 Discharge
of Note and Settlement Agreement.
At the
Effective Time, and as a result of the payment called for by Section 1.1, the
obligations of PubliCARD under or with respect to the Settlement Agreement
and
the Note shall be satisfied and discharged in their entirety and the Settlement
Agreement and the
Note
shall terminate and be of no further effect. Promptly after the Effective Time,
PBGC shall use its best efforts to return the Note to PubliCARD, marked
cancelled.
1.3 Release
of Security.
At the
Effective Time, all security interests, liens or other encumbrances in assets
(including capital stock of subsidiaries) of PubliCARD and each present or
former member of its Controlled Group (as that term is defined in Section
4001(a)(14) of ERISA), including Infineer, in favor of PBGC shall be released
and discharged and the obligations of PubliCARD under or with respect to the
Security Documents (as defined in Section II of the Settlement Agreement) and
such security interests, liens or other encumbrances shall be terminated and
of
no further effect. On and after the Effective Date, PBGC shall execute and
deliver all documents and take such other action as PubliCARD may reasonably
request in order to effect or evidence the discharge of such security interests,
liens or other encumbrances and shall use its best efforts to return to
PubliCARD any stock certificates or other instruments pledged as
security.
SECTION
II
ADDITIONAL
PAYMENTS TO PBGC
2.1 Through
July 27, 2011.
If,
during the period from the date of this Agreement through July 27, 2011,
PubliCARD receives Net Proceeds in excess of $250,000, PubliCARD shall pay
to
PBGC 50% of the amount of such excess. Net Proceeds shall mean the amount
received by PubliCARD in cash or marketable securities, less the amount of
reasonable transaction costs and expenses (including marketing costs and
expenses, closing costs and expenses, commissions of investment bankers, brokers
and other intermediaries, attorneys’ fees and expenses and deed preparation fees
and expenses) and debt paid, retained or assumed, from any of the
following:
|
a.
the sale by PubliCARD of any or all capital stock of
Infineer;
|
|
b.
the sale by Infineer of all or substantially all of its assets and
a
distribution of the proceeds of such sale to
PubliCARD;
|
|
c.
the sale by PubliCARD of any or all capital stock of TecSEC, Incorporated
(“TecSEC”); or
|
|
d.
proceeds received by PubliCARD from settlements, buyouts or assignments
of
claims with respect to insurance policies covering environmental
liabilities for which claims were made prior to the date
hereof.
|
The
first
payment of amounts due under this Section 2.1 shall be made within 15 days
after
the first date on which Net Proceeds exceeds $250,000 and additional payments
shall be made from time to time thereafter within 15 days after additional
Net
Proceeds are received. Deferred payments of purchase price, escrowed amounts
and
the like shall not be taken into account until actually received by
PubliCARD.
2.2 On
July 27, 2011.
If, on
July 27, 2011, (i) PubliCARD exists as a going concern and (ii) PubliCARD holds
capital stock of Infineer (and Infineer exists as a going concern) or capital
stock of TecSEC (and TecSEC exists as a going concern), for purposes of Section
5.1, PubliCARD shall be deemed to have sold such capital stock of Infineer
and
TecSEC so held by it on July 27, 2011 for its fair market value (“Deemed Net
Proceeds”), as reasonably determined by the Board of Directors of PubliCARD and
agreed to by the PBGC. At the request of PBGC, PubliCARD shall provide to PBGC
information in its possession deemed relevant to confirming the fair market
value of such capital stock. Such Deemed Net Proceeds shall be added to Net
Proceeds under Section 2.1 for purposes of determining the amount of additional
payments to the PBGC, if any.
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SECTION
III
RELEASE
PBGC
hereby releases and forever discharges PubliCARD and each present or former
member of its Controlled Group (as that term is defined in Section 4001(a)(14)
of ERISA), including Infineer, and their respective past and present corporate
parents, subsidiaries, affiliates, shareholders, custodians, agents, advisors,
officers, directors, assigns, employees, representatives, receivers, heirs,
executors, trustees and administrators, and/or the heirs, executors,
administrators, successors and assigns of each of the foregoing, from any and
all claims, actions, demands, causes of action and allegations of liability
past
or present, known or unknown, arising from or in connection with the Plan,
the
Termination Liabilities, the Settlement Agreement or the Note that PBGC may
have
had or may now have or may in the future have, in law (federal, state, or
foreign, including ERISA), admiralty or equity. However, the foregoing release
shall not apply to any claim arising under this Agreement.
SECTION
IV
REPRESENTATIONS
AND WARRANTIES
4.1 PubliCARD
represents and warrants to PBGC as follows: It has full power and authority
to
enter into this Agreement and to perform its obligations hereunder, and this
Agreement constitutes a legal, valid, and binding obligation of PubliCARD,
enforceable in accordance with the terms hereof. The person executing this
Agreement on behalf of PubliCARD has authority to bind PubliCARD
hereunder.
4.2 PBGC
represents and warrants to PubliCARD as follows: It has full power and authority
to enter into this Agreement and to perform its obligations hereunder, and
this
Agreement constitutes a legal, valid, and binding obligation of PBGC,
enforceable in accordance with the terms hereof. The person executing this
Agreement on behalf of PBGC has authority to bind PBGC hereunder. PBGC has
not
transferred or assigned the Note or any right or interest arising under the
Settlement Agreement, the Note, or the Security Documents (as defined in Section
II of the Settlement Agreement).
SECTION
V
GENERAL
PROVISIONS
5.1 This
Agreement and the rights and obligations of the parties hereunder shall be
governed by and construed in accordance with ERISA, and to the extent not
preempted by ERISA or other federal law, the laws of the State of New York,
without regard to conflicts of law principles. The parties consent to the
jurisdiction of the United States District Court for the Southern District
of
New York for any action in connection with this Agreement. If any legal action
or actions are instituted under or with respect to this Agreement, the
prevailing party shall be entitled to recover from the other party all expenses
incurred by the prevailing party relative to such legal action or actions,
including, but not limited to, court costs and reasonable attorneys'
fees.
5.2 Failure
of any party to this Agreement to enforce at any time any of the provisions
of
this Agreement and course of dealing between the parties shall not be construed
to be a waiver of any provision of this Agreement, nor shall in any way affect
the validity of this Agreement or the right of either party to enforce each
and
every one of the provisions of this Agreement.
5.3 This
Agreement constitutes the entire and final agreement with respect to the matters
provided for herein, and no other agreement or understanding exists between
the
parties.
5.4 This
Agreement shall not be modified or amended, except by written instrument signed
by the parties hereto.
5.5 The
invalidity or unenforceability of any provision of this Agreement shall not
affect the validity or enforceability of any other provision or provisions
of
this Agreement, which shall remain in full force and effect.
-3-
5.6 This
Agreement shall inure to the benefit of, and may be enforced solely by, the
parties hereto, and, in each case, their respective successors and
assigns.
5.7 This
Agreement may be executed in identical counterparts, each of which when taken
together shall constitute one and the same instrument. A facsimile transmission
of signature pages shall be sufficient for the purposes of this
Agreement.
5.8 Any
notices, requests or other communications hereunder shall be in writing, and
shall be deemed to have been duly given when mailed by United States registered
or certified mail postage prepaid, or upon receipt if overnight delivery
service, telecopy, or telex is used, addressed as follows:
To
PBGC:
Xxx
Xxxxxxxxx
Deputy
Treasurer
Treasury
Division
Pension
Benefit Guaranty Corporation
0000
X
Xxxxxx, X.X.
Xxxxxxxxxx,
X.X. 00000-0000
(202)
326-4000 ext. 3482
Xxxxxx
Xxxxx
Lead
Financial Analyst
Treasury
Division
Pension
Benefit Guaranty Corporation
0000
X
Xxxxxx X.X.
Xxxxxxxxxx,
X.X. 00000
(202)
326-4000 ext. 3223
Xxxxxxx
X. Xxxxx
Chief
Counsel
Pension
Benefit Guaranty Corporation
Xxxxx
000
0000
X
Xxxxxx, X.X.
Xxxxxxxxxx,
X.X. 20005-4026
(000)
000-0000 (facsimile number)
-4-
To
JPMorgan Asset Management, Inc.
Xxxxx
X.
Groshoff
Vice
President
JPMorgan
Asset Management, Inc.
0000
Xxxxxxxxxx Xxxx
Xxxxx
000
Xxxxxxxxxx,
XX 00000
To
PubliCARD:
PubliCARD,
Inc.
Xxx
Xxxxxxxxxxx Xxxxx, 00xx
Xxxxx
Xxx
Xxxx,
X.X. 00000
Attention:
Chairman of the Board
(000)
000-0000 (facsimile number)
With
copies to:
Xxxx
Xxxxxxx, LLP
000
Xxxx
Xxxxxx
Xxx
Xxxx,
Xxx Xxxx 00000-0000
Attention:
Xxxx X. Xxxxxxxxx and Xxxxxx X. Xxxxxxx
(000)
000-0000 (facsimile number)
5.9 The
captions set forth in this Agreement have been inserted for convenience of
reference only and shall not in any way affect the meaning or construction
of
any of the provisions of this Agreement.
IN
WITNESS WHEREOF, the parties hereto, intending to be legally bound hereby,
have
executed this Agreement as of the day and year first above
mentioned.
PENSION
BENEFIT GUARANTY CORPORATION
/s/
W.
Xxxxx Xxxxxxx III
Name:
W.
Xxxxx Xxxxxxx III
Title:
Vice President JPMorgan Asset Management, Inc. as agent for the Pension Benefit
Guaranty Corporation
PubliCARD,
INC.
/s/
Xxxxxxx X. XxXxxx
Name:
Xxxxxxx X. XxXxxx
Title:
President
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