FUNDING AGREEMENT
FUNDING
AGREEMENT (this “Agreement”),
dated
as of January 18, 2008, by and among PubliCARD, Inc., a Pennsylvania corporation
(the “Debtor”),
The
500 Group, LLC, a [Delaware] limited liability company (the “500
Group”),
and
Xxxxxxx Xxxxx, Folio Holdings, LLC, IA Capital Partners, LLC, Ridge View Group,
LLC, and Xxxxxx X. Xxxxxxxx (collectively, the “Investors”).
RECITALS
WHEREAS,
the 500 Group and the Debtor are parties to a Contribution Agreement, entered
into as of October 26, 2007 (the “Contribution
Agreement”),
pursuant to which the 500 Group has agreed to purchase shares representing
90%
of the outstanding shares (the “Shares”)
of the
Common Stock, par value $0.01 per share (the “New
Common Stock”),
of
Chazak Value Corp. (as successor to the Debtor upon its emergence from
bankruptcy, the “Company”)
in
connection with the implementation of the Debtor’s Plan of Reorganization, as
amended (the “Plan”);
WHEREAS,
the Investors desire to fund the 500 Group’s acquisition of Shares under the
Contribution Agreement through the investment of an aggregate of $500,000 in
exchange for membership interests in the 500 Group and to provide for the
distribution of the Shares to the Investors following the 500 Group’s receipt of
such Shares pursuant to the Plan in proportion to 500 Group membership interests
purchased hereunder;
WHEREAS,
in connection with the receipt of their portion of the Shares, the Investors
and
the Company desire to enter into a stockholders agreement, substantially in
the
form attached hereto as Exhibit A (the “Stockholders
Agreement”),
and a
registration rights agreement, substantially in the form attached hereto as
Exhibit B (the “Registration
Rights Agreement”).
NOW,
THEREFORE, in consideration of these premises and for other good and valuable
consideration, the receipt and sufficiency of which are hereby acknowledged,
the
parties hereto agree as follows:
SECTION
1.
INVESTMENT
1.1 Purchase
of 500 Group Membership Interests; Funding Under the Contribution
Agreement.
(a) On
the
date hereof, each Investor shall deliver by wire transfer to an account
specified by the 500 Group the amount set forth below its name on the signature
page hereto, which amounts shall total $500,000 (the “Investment”),
each
such Investor shall execute a counterpart signature to the 500 Group’s operating
agreement and the 500 Group shall issue to each Investor limited liability
company membership interests in the 500 Group reflecting the amount of its
investment (the “LLC
Interests”).
(b) Upon
receipt of the Investment, the 500 Group shall deliver such funds to the Debtor
pursuant to the Contribution Agreement, which funds shall be held separate
and
apart by the Debtor from its other funds, and Debtor shall not otherwise use
such funds pending the effectiveness of the Plan. In the event that the Plan
does not become effective by February 15, 2008, the Investment shall be returned
to the 500 Group, which will then deliver such funds, as applicable, to the
Investors in cancellation of the LLC Interests acquired by the
Investors.
1.2 Issuance
and Distribution of Shares of New Common Stock.
Under
the terms of the Plan and upon its effectiveness, the Company shall deliver
to
the 500 Group a certificate representing the Shares purchased under the
Contribution Agreement pursuant to the Plan. Upon its receipt of such Shares,
the 500 Group shall distribute to each Investor 20% of the Shares of New Common
Stock in respect of the LLC Interests purchased hereunder (the “Distribution”).
In
connection with the Distribution of such shares of New Common Stock to the
Investors, the 500 Group shall deliver to the Company, duly endorsed for
transfer, its certificate representing the Shares and shall direct that the
Company issue to each Investor a certificate representing its shares of New
Common Stock to be received hereunder.
1.3 Stockholders
Agreement and Registration Rights Agreement.
In
connection with the Distribution, each of the Investors and the Company shall
execute and deliver the Stockholders Agreement and Registration Rights
Agreement.
1.4 Representations
and Warranties of the Investors.
Each of
the Investors hereby, severally and not jointly, represents and warrants as
follows.
(a) Investment
Intent.
Such
Investor is (i) an "accredited investor" as defined in Regulation D of the
Securities Act of 1933, as amended (the “Securities
Act”),
and
(ii) acquiring the shares of New Common Stock to be distributed to such Investor
hereunder for investment only and not with a view to the distribution thereof.
(b) Investment
Risk and Experience.
Such
Investor is in a financial position to hold its portion of the Shares for an
indefinite period of time and able to bear the economic risk and withstand
a
complete loss of its or his investment in such Shares and is experienced in
evaluating and investing in companies such as the Company, or is familiar with
the risks associated with the business and operations of the Company, and has
such knowledge and experience in financial and business matters as to be capable
of evaluating the merits and risks of its investment.
(c) Authorization.
The
execution, delivery and performance of this Agreement and each of the
Stockholders Agreement and Registration Rights Agreement to which it or he
is or
will be a party have been duly authorized by all necessary or appropriate
action.
(d) Enforceability.
The
execution and delivery by such Investor of this Agreement and each of the
Stockholders Agreement and Registration Rights Agreement will result in legally
binding obligations of such Investor enforceable against such Investor in
accordance with the respective terms and provisions hereof and thereof, except
as may be limited by bankruptcy, insolvency, reorganization, moratorium and
other similar laws of general applicability relating to or affecting creditors’
rights or general equity principles (regardless of whether considered at law
or
in equity).
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(e) Exemption.
Such
Investor understands that the Shares are not registered under the Securities
Act
on the grounds that the Company intends the sale and the issuance of securities
hereunder to be exempt from registration under the Securities Act pursuant
to
Regulation D thereof, and that the Company's reliance on such exemption is
predicated on the Investor’s representations set forth herein.
(f) Restrictions
on Resale.
Such
Investor understands that the Shares may not be sold, transferred or otherwise
disposed of without registration under the Securities Act and applicable state
securities laws or an exemption therefrom, and that in the absence of an
effective registration statement covering the Shares or an available exemption
from registration under the Securities Act and applicable state securities
laws,
the Shares must be held indefinitely. Such Investor understands that any
certificates representing the Shares will bear a restrictive legend to this
effect as set forth below.
(g) No
Conflicts.
The
execution, delivery and performance of this Agreement and each of the
Stockholders Agreement and Registration Rights Agreement and the consummation
of
the transactions contemplated hereby and thereby do not and will not, with
notice or passage of time or both (i) conflict with or result in a breach of
the
terms, conditions, or provisions of, (ii) constitute a default under or result
in a violation of, (iii) result in the creation of any lien upon its portion
of
the Shares or assets, properties or rights of such Investor pursuant to, (iv)
give any person the right to modify, terminate or accelerate any liability
of,
or charge any fee, penalty or similar payment to such Investor under, or (v)
require any authorization, consent, approval, exemption or other action by
or
declaration or notice to any person pursuant to any law, contract or agreement
to which such Investor is a party, by which such Investor is bound or to which
any of such Investor’s assets are subject.
(h) Separate
Counsel.
Each
Investor has had the opportunity to seek the advice of counsel and other
personal advisors and acknowledges that neither the Company nor any of its
affiliates has provided such Investor with any advice regarding the tax,
economic or other impacts to such Investor of the arrangements contemplated
hereby or by the Stockholders Agreement or Registration Rights
Agreement.
1.5 Legends.
Each
certificate to be issued to an Investor representing its portion of the Shares
shall be stamped or otherwise imprinted with legends substantially similar
to
the following (in addition to any legend required under applicable state
securities laws):
THE
SHARES REPRESENTED HEREBY HAVE NOT BEEN REGISTERED UNDER THE SECURITIES ACT
OF
1933, AS AMENDED (THE “ACT”), AND MAY NOT BE OFFERED, SOLD OR OTHERWISE
TRANSFERRED, ASSIGNED OR PLEDGED UNLESS AND UNTIL REGISTERED UNDER THE ACT
OR
UNLESS THE COMPANY HAS RECEIVED AN OPINION OF COUNSEL SATISFACTORY TO THE
COMPANY AND ITS COUNSEL THAT SUCH REGISTRATION IS NOT REQUIRED.
THE
SALE,
PLEDGE OR TRANSFER OF THE SHARES REPRESENTED BY THIS CERTIFICATE IS SUBJECT
TO
THE TERMS AND CONDITIONS OF A CERTAIN STOCKHOLDERS AGREEMENT, WHICH ALSO
INCLUDES CERTAIN
RESTRICTIONS ON THE VOTING OF THE SHARES REPRESENTED HEREBY. ANY PERSON
ACCEPTING ANY INTEREST IN SUCH SHARES SHALL BE DEEMED TO AGREE TO AND SHALL
BECOME BOUND BY ALL THE PROVISIONS OF SUCH AGREEMENT. A COPY OF SUCH AGREEMENT
WILL BE FURNISHED TO THE RECORD HOLDER OF THIS CERTIFICATE WITHOUT CHARGE UPON
WRITTEN REQUEST TO THE COMPANY AT ITS PRINCIPAL PLACE OF BUSINESS.
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SECTION
2.
MISCELLANEOUS.
2.1 Governing
Law.
(a) This
Agreement shall be governed by and construed under the laws of the State of
Delaware in all respects as such laws are applied to agreements among Delaware
residents entered into and to be performed entirely within Delaware, without
reference to principles of conflicts of laws. The parties agree that any action
brought by any party under or in relation to this Agreement, including without
limitation to interpret or enforce any provision of this Agreement, shall be
brought in, and each party agrees to and does hereby submit to the jurisdiction
and venue of, any state or federal court located in the City of New York, New
York.
(b) Each
party hereto hereby irrevocably and unconditionally waives any right such party
may have to a trial by jury in respect of any litigation directly or indirectly
arising out of or relating to this Agreement, or the transactions contemplated
by this Agreement. Each party certifies and acknowledges that (i) no
representative, agent or attorney of any other party has represented, expressly
or otherwise, that such other party would not, in the event of litigation,
seek
to enforce the foregoing waiver, (ii) each party understands and has considered
the implications of this waiver, (iii) each party makes this waiver voluntarily,
and (iv) each party has been induced to enter into this Agreement by, among
other things, the mutual waivers in this paragraph 2.1(b).
2.2 Successors
and Assigns.
Except
as otherwise expressly provided herein, the provisions hereof shall inure to
the
benefit of, and be binding upon, the parties hereto and their respective
successors, assigns, heirs, executors and administrators.
2.3 Entire
Agreement.
This
Agreement, the Contribution Agreement and the Exhibits hereto constitute the
full and entire understanding and agreement between the parties with regard
to
the subjects hereof and no party shall be liable or bound to any other in any
manner by any oral or written representations, warranties, covenants and
agreements except as specifically set forth herein and therein. Each party
expressly represents and warrants that it is not relying on any oral or written
representations, warranties, covenants or agreements outside of this
Agreement.
2.4 Severability.
In the
event one or more of the provisions of this Agreement should, for any reason,
be
held to be invalid, illegal or unenforceable in any respect, such invalidity,
illegality, or unenforceability shall not affect any other provisions of this
Agreement, and this Agreement shall be construed as if such invalid, illegal
or
unenforceable provision had never been contained herein.
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2.5 Amendment
and Waiver. Subject
to the provisions applicable law (i) this Agreement may be amended, modified
or
supplemented only in writing executed by each of the parties hereto, and (ii)
any provisions herein may be waived only in writing executed by the party or
parties against whom such waiver is asserted; provided,
that,
no such waiver shall be deemed to extend to any prior or subsequent default,
misrepresentation or breach of warranty or covenant hereunder or affect in
any
way any rights arising by virtue of any prior or subsequent default,
misrepresentation, or breach of warranty or covenant.
2.6 Delays
or Omissions.
It is
agreed that no delay or omission to exercise any right, power or remedy accruing
to any party, upon any breach, default or noncompliance by another party under
this Agreement shall impair any such right, power, or remedy, nor shall it
be
construed to be a waiver of any such breach, default or noncompliance, or any
acquiescence therein, or of any similar breach, default or noncompliance
thereafter occurring. It is further agreed that any waiver, permit, consent
or
approval of any kind or character on any party’s part of any breach, default or
noncompliance under this Agreement or any waiver on such party’s part of any
provisions or conditions of this Agreement must be in writing and shall be
effective only to the extent specifically set forth in such writing. All
remedies, either under this Agreement, by law, or otherwise afforded to any
party, shall be cumulative and not alternative.
2.7 Notices.
All
notices required or permitted hereunder shall be in writing and shall be deemed
effectively given: (a) upon personal delivery to the party to be notified,
(b)
when sent by confirmed electronic mail or facsimile if sent during normal
business hours of the recipient; if not, then on the next business day, (c)
five
(5) days after having been sent by registered or certified mail, return receipt
requested, postage prepaid, or (d) one (1) day after deposit with a nationally
recognized overnight courier, specifying next day delivery, with written
verification of receipt. All communications to the Investors shall be sent
to
the address as set forth on the signature pages hereof and communications to
the
Company and the 500 Group, at their respective corporate offices, or at such
other address as any such party may designate by ten (10) days advance written
notice to the other parties hereto.
2.8 Attorneys’
Fees.
In the
event that any suit or action is instituted under or in relation to this
Agreement, including without limitation to enforce any provision in this
Agreement, the prevailing party in such dispute shall be entitled to recover
from the losing party all fees, costs and expenses of enforcing any right of
such prevailing party under or with respect to this Agreement, including without
limitation, such reasonable fees and expenses of attorneys and accountants,
which shall include, without limitation, all fees, costs and expenses of
appeals.
2.9 Titles
and Subtitles.
The
titles of the sections and subsections of this Agreement are for convenience
of
reference only and are not to be considered in construing this
Agreement.
2.10 Counterparts.
This
Agreement may be executed in any number of counterparts, each of which shall
be
an original, but all of which together shall constitute one instrument.
Facsimile or email transmission of an executed counterpart of this Agreement
shall be deemed to constitute due and sufficient delivery of such counterpart,
and such signatures shall be deemed original signatures for purposes of the
enforcement and construction of this Agreement.
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[SIGNATURE
PAGES TO FOLLOW]
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IN
WITNESS WHEREOF, the parties hereto have executed this FUNDING AGREEMENT as
of
the date set forth in the first paragraph hereof.
| PUBLICARD, INC. | ||
| |
|
|
| By: | /s/ Xxxxxx X. Xxxxxxxx | |
|
Name: Xxxxxx X. Xxxxxxxx |
||
|
Title:
Chief
Executive Officer
|
||
| THE 500 GROUP, LLC | ||
| |
|
|
| By: | /s/ Xxxxxx X. Xxxxxxxx | |
|
Name: Xxxxxx X. Xxxxxxxx |
||
| Title: Managing Member | ||
| INVESTORS: | ||
| XXXXXXX XXXXX | ||
| |
|
|
| By: | /s/ Xxxxxxx Xxxxx | |
|
|
||
| Amount to be invested in | ||
| The 500 Group, LLC: $100,000 | ||
| FOLIO HOLDINGS, LLC | ||
| |
|
|
| By: | /s/ Xxxxxxxx Xxxxx | |
|
Name: Xxxxxxxx Xxxxx |
||
| Title: Managing Member | ||
| Amount to be invested in | ||
| The 500 Group, LLC: $100,000 | ||
|
IA
CAPITAL PARTNERS, LLC
|
||
| |
|
|
| By: | /s/ Xxxxx Xxxxxxxxx | |
|
Name: Xxxxx Xxxxxxxxx |
||
| Title: Managing Member | ||
|
Amount
to be invested in
|
||
| The 500 Group, LLC: $100,000 | ||
| RIDGE VIEW GROUP, LLC | ||
| |
|
|
| By: | /s/ Xxxxx Xxxxxx | |
|
Name: Xxxxx Xxxxxx |
||
| Title: Managing Partner | ||
| Amount to be invested in | ||
|
The
500 Group, LLC: $100,000
|
||
| XXXXXX X. XXXXXXXX | ||
| |
|
|
| By: | /s/ Xxxxxx X. Xxxxxxxx | |
|
|
||
| Amount to be invested in | ||
| The 500 Group, LLC: $100,000 | ||
