EXHIBIT 99.3
SECURITY AGREEMENT
This SECURITY AGREEMENT ("Agreement") dated as of September 23, 2004, made
by PUBLICARD, INC. ("PubliCARD"), to the PENSION BENEFIT GUARANTY CORPORATION
("PBGC"), pursuant to the Settlement Agreement dated September 23, 2004 by and
between PubliCARD and PBGC (the "Settlement Agreement").
RECITALS
WHEREAS, pursuant to the Settlement Agreement PubliCARD has issued a
promissory note ("Note") to the PBGC in the principal amount of Seven Million
Five Hundred One Thousand Three Hundred and Ten Dollars ($7,501,310.00); and
WHEREAS, as security for (a) the due and punctual payment of principal
under the Note and (b) the due and punctual payment of all reasonable costs and
expenses incurred by the PBGC in the collection of amounts due under the Note
and for the enforcement of its rights, and for other obligations that may arise,
under the Settlement Agreement and this Agreement, including, without
limitation, reasonable attorneys fees (collectively, the "Secured Obligations"),
PubliCARD has agreed to grant to the PBGC a security interest in all presently
owned or hereafter acquired personal property and rights to property all as more
fully described herein;
NOW, THEREFORE, in consideration of the premises and of the mutual
covenants herein contained and for good and valuable consideration, the receipt
and sufficiency of which are hereby acknowledged, the Parties agree as follows:
1. DEFINITIONS.
(a) Certain Definitions. Capitalized terms defined elsewhere in this
Agreement have the meanings ascribed to them thereby. As used in this Agreement
and in any related document attached hereto, the following terms shall have the
following meanings:
"Agreement" shall mean this Security Agreement as the same may from
time to time be amended or supplemented.
"Collateral" shall mean all of the personal property and interests
in property, tangible or intangible, hereafter acquired, or now existing of
PubliCARD.
"ERISA" shall mean the Employee Retirement Income Security Act of
1974, as amended, 29 U.S.C. xx.xx. 1001-1461 (2000 & Supp. 1, 2001), as amended
from time to time, and the regulations promulgated and rulings issued
thereunder.
"Event of Default" shall mean an Event of Default as defined in
Section VIII of the Settlement Agreement.
"Other Liens" shall mean liens, security interests or encumbrances
in or on the Collateral.
"UCC" shall mean the Uniform Commercial Code as from time to time in
effect in the relevant jurisdiction.
(b) UCC Terms. Any terms defined in Articles 8 or 9 of the UCC and used in
this Agreement, including, but not limited to, "accounts", "documents,
"instruments", and "proceeds," unless otherwise expressly provided, shall have
the same meanings given to such terms thereunder
2. PAYMENT BY PUBLICARD.
PubliCARD will pay when due the amounts as and when required by the Note.
3. GRANT AND PLEDGE OF SECURITY INTEREST.
Pledge of Collateral. In order to secure the full and punctual payment of
the Secured Obligations, PubliCARD agrees that PBGC shall have, and PubliCARD
hereby pledges and grants to and creates in favor of PBGC, a security interest
under the Uniform Commercial Code and other applicable law, in and to the
Collateral.
4. CONDITIONS PRECEDENT.
(a) The following documents, each of which must be reasonably satisfactory
in form and substance to PBGC, shall be provided contemporaneously with the
execution of this Agreement, unless it would cause a hardship to PubliCARD, and
then in no event later than thirty (30) days after the execution date of this
Agreement, or as otherwise agreed to in writing by PBGC.
(i) Copies of the insurance policies or binders for fire, casualty,
liability, and worker's compensation insurance with respect to the Collateral,
in amounts and issued by insurers reasonably acceptable to PBGC.
(ii) Any necessary UCC-1 Financing Statements with respect to the
Collateral, or any other documents that may be required by the PBGC for the
perfection and filing of PBGC's security interest, duly completed and executed.
(iii) Resolutions of the Board of Directors of PubliCARD that the
company has approved this Agreement, the Settlement Agreement, the Note and any
other document required by the Settlement Agreement.
5. REPRESENTATIONS AND WARRANTIES.
(a) PubliCARD represents and warrants, to the best of its knowledge, that,
as of the date hereof and with respect to the Collateral in existence as of the
date hereof:
(i) it is duly organized and validly existing under the law of the
State of Pennsylvania, and its principal place of business is located within the
State of New York;
(ii) it has all necessary corporate authority to execute, deliver
and perform the obligations under this Agreement;
(iii) it has complete authority to grant a security interest to PBGC
in the Collateral;
(iv) the Collateral is free of all Other Liens.
(v) no financing statement covering the Collateral or any part
thereof has been filed with any filing office;
(vi) no material right of setoff, lien or counterclaim exists, with
respect to any part of the Collateral; and
(vii) all information supplied and statements made in any financial
or credit statements or application for credit relating to the Collateral prior
to the execution of this Agreement and supplied to the PBGC are true and correct
in all material respects as of the date furnished and as of the date hereof.
(b) PBGC. The PBGC represents and warrants, to the best of its knowledge,
that:
(i) it is a United States government corporation established under
Title IV of ERISA, and its principal place of business is located in Washington,
DC; and
(ii) it has all necessary authority to execute, deliver and perform
the obligations under this Agreement.
6. COVENANTS OF PUBLICARD. PubliCARD agrees that it will take, or refrain
from taking, the following actions unless such action or failure to act would
not have a material adverse effect on the Collateral.
(a) Perfection of Security Interest. PubliCARD will from time to
time, upon written request from PBGC, promptly execute and deliver to PBGC all
assignments, certificates, supplemental writings, and financing statements, and
do all such other acts or things as PBGC may reasonably request, in order to
evidence and perfect PBGC's security interest.
(b) Demonstration of Title. PubliCARD will take appropriate steps
and execute such documents as are required to prove its title in the Collateral
to PBGC as may be reasonably required and will defend the Collateral and its
proceeds against the claims and demands of all other persons.
(c) Performance of all Covenants. PubliCARD will punctually and
properly perform all of its covenants and duties under any other security
agreement, mortgage, collateral pledge agreement, or material contract of any
kind now or hereafter existing.
(d) Anti-Lien Provision. Without PBGC's prior written consent, not
to be unreasonably withheld nor delayed, PubliCARD shall not encumber, suffer or
grant any security interest or lien ("Other Lien") in any Collateral, or any
part of it, nor shall PubliCARD attempt to do so.
(e) Notification of Material Changes. PubliCARD will promptly notify
PBGC of any material change in any fact or circumstances warranted or
represented by PubliCARD in this Agreement or in any other writing furnished by
PubliCARD to PBGC in connection with the Collateral or the Secured Obligations.
(f) Notification of Material Claim. PubliCARD will promptly notify
PBGC of any material claim, action or proceeding directly affecting the
Collateral or title therein, or in any material part thereof, or the security
interest created herein, and, at the request of PBGC, appear in and defend, at
its own expense, any such action or proceeding.
(g) Notification of Certain Changes. PubliCARD will notify PBGC of
all changes in PubliCARD's name, legal structure, or chief executive office, or
in the location of the Collateral (other than Collateral consisting of equipment
located at third party locations), or PubliCARD's records concerning same.
(h) Location of Records. PubliCARD will keep, within the State of
New York, a copy of the records concerning the Collateral, which records will be
of such character as will enable PBGC or its designees to determine at any time
the status of the Collateral. Within thirty (30) days of the execution date of
this Agreement, PubliCARD will advise the PBGC in writing the specific location
where such records are being held.
(i) Payment of Taxes. PubliCARD will pay all material taxes,
assessments, impositions, judgments, and any other claims that would create a
right of seizure or levy upon the Collateral or create a security interest in
the Collateral; provided, however, PubliCARD shall be entitled to contest any
such taxes, assessments, impositions, judgments or claims as long as such
contest and nonpayment does not result in a lien.
(j) Prohibition against Waste. PubliCARD will not misuse or waste
the Collateral.
(k) Violation of Law. PubliCARD will not use the Collateral in
material violation of any applicable statute or ordinance.
(l) Inspection. PubliCARD will permit PBGC and its designees from
time to time to inspect the Collateral and to inspect, audit, and make copies of
and extracts from all records and all other papers in the possession of
PubliCARD pertaining to the Collateral. PubliCARD will promptly arrange for any
inspections requested by PBGC.
(m) Insurance. PubliCARD will at all times insure the Collateral
against loss or damage by fire, theft, burglary, pilferage, loss in transit, and
such other hazards as PBGC reasonably may specify, in amounts and under policies
and by insurers consistent with those provided in the policies or binders
furnished PBGC as of the date hereof, provided that: (i) if PubliCARD fails to
so insure the Collateral, PBGC may elect to purchase insurance and any amounts
so expended by PBGC shall become part of the Secured Obligations under this
Agreement; (ii) no cancellation of such insurance or material change in the
terms of any policy will be made without the insurance carrier's giving PBGC at
least thirty (30) days prior written notice.
(n) Repair. PubliCARD will keep the Collateral in good repair and
operating condition, unless any such failure does not adversely affect PBGC's
interest in the Collateral in any material way.
7. RIGHTS AND REMEDIES.
In addition to the remedies provided under the Settlement Agreement, upon
the occurrence of an Event of Default, the PBGC, in its sole discretion, may
elect to pursue one or more of the following remedies. The PBGC may waive any
default, or remedy any default in any reasonable manner, without waiving any
other prior or subsequent default.
(a) Notice. Upon the occurrence of any Event of Default, the PBGC
will provide PubliCARD with written notice at least thirty (30) days prior to
enforcing its rights under Settlement Agreement, during which period PubliCARD
may cure the Event of Default.
(b) Remedy in the Event of Certain Other Liens. If there are any
Other Liens that arise and that the PBGC has not agreed may be permitted,
PubliCARD shall pay and discharge the same immediately. If PubliCARD fails to do
so, the PBGC may, at its option, pay or discharge such Other Liens, in whole or
in part, and PubliCARD shall immediately reimburse the PBGC for all costs it has
incurred in doing so. Any such payment made by the PBGC to discharge any such
Other Liens, not reimbursed by PubliCARD, shall form part of the Secured
Obligations and shall be secured by the Collateral.
(c) Other Remedies. No remedy recited in this Agreement shall limit
the PBGC in any manner from pursuing any and all additional remedies provided
under ERISA or other applicable law.
8. RELEASE OF COLLATERAL.
The Collateral shall be released from PBGC's security interest upon the
payment in full of the Secured Obligations (including, but not limited to,
reducing the Note to zero dollars ($0)).
9. INDEMNITY.
PubliCARD assumes liability for, and agrees to indemnify the PBGC (and
each of its employees, directors, and agents) against, and on written demand to
pay, or to reimburse the PBGC for the payment of any or all liabilities,
obligations, losses, damages, penalties, claims, suits, actions, costs,
expenses, and disbursements, including reasonable legal fees and expenses of any
kind and nature imposed on, incurred by, or asserted against the PBGC directly
and principally relating to or arising out of this Agreement; provided, that
PubliCARD shall not be required to indemnify the PBGC against any of the
foregoing that results from the gross negligence or willful misconduct of the
PBGC (or any employee, director or agent thereof).
10. MISCELLANEOUS.
(a) Amendments. PubliCARD understands that this Agreement cannot be
changed or terminated orally, can only be modified upon the written consent of
the parties hereto, and is for the benefit of and binding upon the parties and
their successors and assigns.
(b) Counterparts. This Agreement may be executed in one or more
counterparts, all of which taken together shall constitute one and the same
instrument.
(c) Governing Law. This Agreement, and the rights and obligations of
the parties hereunder, shall be governed by and construed in accordance with the
laws of the State of New York, except to the extent such laws are superseded by
federal law.
(d) Notices. All notices and other communications hereunder shall be
in writing and shall be delivered to the intended recipient at the Address for
Notices specified below or at such other address as shall be designated by any
of them in a notice to each other party set forth therein. All notices and other
communications shall be deemed to have been duly given, in the case of
transmission by telecopy, when received at the recipient's telecopy machine; in
the case of hand delivery, when received; or in the case of overnight express
mail by a nationally recognized carrier, the following business day.
Address for Notices:
To the PBGC:
Xxxxxxxx Xxxx, Manager
Pre-Termination Processing Division
Pension Benefit Guaranty Corporation
0000 X Xxxxxx, X.X.
Xxxxxxxxxx, X.X. 00000-0000
(000) 000-0000 (facsimile number)
With copies to:
General Counsel
Pension Benefit Guaranty Corporation
Xxxxx 000
0000 X Xxxxxx, X.X.
Xxxxxxxxxx, X.X. 20005-4026
(000) 000-0000 (facsimile number)
To PubliCARD:
Xxxxxxx X. XxXxxx
President and Chief Executive Officer
PubliCARD, Inc.
Xxx Xxxxxxxxxxx Xxxxx, 00xx Xxxxx
Xxx Xxxx, X.X. 00000
(000) 000-0000 (facsimile number)
With copies to:
Xxxxxx X. Xxxxxxx, Esq.
Xxxx Xxxxxxx, LLP
000 Xxxx Xxxxxx
Xxx Xxxx, Xxx Xxxx 00000-0000
(000) 000-0000 (facsimile number)
(e) The signatories to this Agreement hereby represent and warrant
that they have full power and authority to enter into this Agreement, that all
necessary corporate approvals or other appropriate action has been taken to
cause them to possess such power and authority and that this Agreement
constitutes a legal, valid and binding obligation of each of the Parties hereto
enforceable against each of the Parties hereto.
(f) 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/Xxxxxxxx Xxxx
---------------------------
Name: Xxxxxxxx Xxxx
Title: Program Manager
PUBLICARD, INC.
Xxxxxxx X. XxXxxx
---------------------------
Name: Xxxxxxx X. XxXxxx
Title: President
