Unassociated Document
UNITED
STATES
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
Date
of Report (Date of earliest event reported):
January 30, 2008
______________
Chazak
Value Corp.
(Exact
name of registrant as specified in its charter)
______________
Delaware
|
000-29794
|
26-1846318
|
(State
or Other Jurisdiction
|
(Commission
|
(I.R.S.
Employer
|
of
Incorporation)
|
File
Number)
|
Identification
No.)
|
75
Rockefeller Plaza, 16th Floor, New York, NY 10019
(Address
of Principal Executive Office) (Zip Code)
(212)
265-7013
(Registrant’s
telephone number, including area code)
PubliCARD,
Inc.
(Former
name or former address, if changed since last report)
Check
the
appropriate box below if the Form 8-K filing is intended to simultaneously
satisfy the filing obligation of the registrant under any of the following
provisions:
¨
|
Written
communications pursuant to Rule 425 under the Securities Act (17
CFR
230.425)
|
¨
|
Soliciting
material pursuant to Rule 14a-12 under the Exchange Act (17 CFR
240.14a-12)
|
¨
|
Pre-commencement
communications pursuant to Rule 14d-2(b) under the Exchange Act
(17 CFR
240.14d-2(b))
|
¨
|
Pre-commencement
communications pursuant to Rule 13e-4(c) under the Exchange Act
(17 CFR
240.13e-4(c))
|
Item
1.01
|
Entry
into a Material Definitive
Agreement.
|
PubliCARD,
Inc, a Pennsylvania corporation (“PubliCARD”), and Chazak Value Corp. (“Chazak”
or the “Company”) are parties to the Agreement and Plan of Merger (the “Merger
Agreement”), dated as of January 29, 2008, pursuant to which PubliCARD agreed to
merge with and into Chazak (the “Merger”) as part of the reorganization of
PubliCARD under Chapter 11 of the U.S. Bankruptcy Code. Immediately prior to
the
Merger, Chazak had no assets and was a wholly-owned subsidiary of PubliCARD.
A
purpose of the Merger, which was completed on January 30, 2008, was to
reincorporate PubliCARD in Delaware under a new name. This description of the
Merger Agreement is qualified in its entirety by reference to the full text
of
such agreement, a copy of which is filed as Exhibit 10.1 to this Current Report
on Form 8-K and incorporated by reference herein.
The
information disclosed in Items 3.02, 5.01 and 5.02 of this Current Report on
Form 8-K is incorporated by reference into this Item 1.01.
Item
1.03
|
Bankruptcy
or Receivership.
|
On
January 9, 2008, the United States Bankruptcy Court for the Southern District
of
New York (the “Court”) confirmed PubliCARD's First Amended Plan of
Reorganization dated November 19, 2007 (as modified, the “Plan of
Reorganization”) (In re: PubliCARD, Inc., Case No. 07-11517). The following
description of the Plan of Reorganization is qualified in its entirety by
reference to the full text of such document, a copy of which is filed as
Exhibits 2.1 and 2.2 to this Current Report on Form 8-K and incorporated by
reference herein.
The
Plan
of Reorganization provides for, among other things, the reorganization of
PubliCARD as Chazak, the cancellation of PubliCARD’s preferred stock and the
common stock (the “PubliCARD Preferred Stock” and the “PubliCARD Common Stock,”
respectively) upon the effectiveness of the Plan of Reorganization, and the
issuance by Chazak of 5,133,352 shares of common stock, par value $0.01 per
share (the “Chazak Common Stock”), as follows:
|
(i)
|
Five
percent (5%) of the Chazak Common Stock, or 256,676 shares, to
the holders
of “Allowed Interests” (as such term is defined in the Plan of
Reorganization) arising under or in connection with the PubliCARD
Preferred Stock (collectively
as a class, the “PubliCARD Preferred Stockholders”);
|
|
(ii)
|
Five
percent (5%) of the Chazak Common Stock, or 256,676 shares, to
the holders
of “Allowed Interests” arising under or in connection with the PubliCARD
Common Stock (collectively as a class, the “PubliCARD C Stockholders”);
and
|
|
(iii)
|
Ninety
percent (90%) of the Chazak Common Stock, or 4,620,000 shares,
to The 500
Group, LLC, a Delaware limited liability company (“The 500 Group”), in
exchange for providing $500,000 of equity financing to
Chazak.
|
Under
the
Plan of Reorganization, certain creditors of PubliCARD (the holders of “Allowed
Administrative Claims”, “Allowed Tax Claims”, “Allowed Priority Claims” and
“Allowed Secured Claims”, as each such term is defined in the Plan of
Reorganization) will be paid in full, and certain other creditors (the holders
of “Allowed Unsecured Claims”, as such term is defined in the Plan of
Reorganization) will receive payments of approximately seventeen percent (17%)
of the respective amount of their claims.
Information
as to the assets and liabilities of PubliCARD as of December 31, 2007, presented
in the form in which it was furnished to the Court as part of PubliCARD’s
Monthly Consolidated Statement for the Period Ended December 31, 2007,
is
filed
as Exhibit 99.1 to this Current Report on Form 8-K and incorporated by reference
herein.
Item
3.02
|
Unregistered
Sales of Equity
Securities.
|
On
January 30, 2008, in accordance with the Plan of Reorganization, the Company
issued 4,620,000 shares of Chazak Common Stock to The 500 Group for $500,000
in
cash, pursuant to that certain Contribution Agreement, dated as of October
26,
2007, between The 500 Group and PubliCARD (the “Contribution Agreement”). The
Company’s issuance of shares of Chazak Common Stock to The 500 Group (and the
subsequent distribution of such shares to the Funding Parties (defined below),
as described in Item 5.01 of this Current Report on Form 8-K) is exempt from
registration under Section 4(2) of the Securities Act of 1933, as amended (the
“Securities Act”), and Rule 506 of Regulation D thereunder because it is a
private placement to accredited investors (as such term is defined in Regulation
D). A copy of the Contribution Agreement is included as Exhibit 10.2 to this
Current Report on Form 8-K.
The
shares of Chazak Common Stock being issued to the PubliCARD Common Stockholders
and PubliCARD Preferred Stockholders as described in Item 1.03 of this Current
Report on Form 8-K are being issued pursuant to Section 1145 of the United
States Bankruptcy Code and, as such, are exempt from the registration
requirements of the Securities Act.
The
information disclosed in Item 5.01 of this Current Report on Form 8-K is
incorporated by reference into this Item 3.02.
Item
3.03
|
Material
Modifications to Rights of Security
Holders.
|
On
January 30, 2008, the effective date of the Plan of Reorganization, all of
the
PubliCARD Common Stock and the PubliCARD Preferred Stock was cancelled. The
Company has filed with the Securities and Exchange Commission (the “SEC”) a Form
8-A with respect to the registration of the Chazak Common Stock under Section
12(g) of the Securities Exchange Act of 1934 (the “Exchange Act”) and Rule
12g-3(a) thereunder and is the successor issuer to PubliCARD. The Company has
also filed with the SEC a Form 15, as amended, with respect to the termination
of the registration of the PubliCARD Common Stock under the Exchange
Act.
The
information disclosed in Item 5.03 of this Current Report on Form 8-K is
incorporated by reference into this Item 3.03.
Item
4.01
|
Changes
in Registrant’s Certifying
Accountant.
|
On
February 1, 2008, the Company engaged Mahoney Cohen & Co. CPA, P.C. as its
independent registered public accounting firm to audit the Company’s financial
statements for the fiscal year ended December 31, 2007.
Item
5.01
|
Changes
in Control of
Registrant.
|
The
500
Group, which is controlled by Joseph E. Sarachek (“Sarachek”), the Company’s
Chairman of the Board, President and Chief Executive Officer, acquired control
of the Company through its acquisition of 4,620,000 shares of Chazak Common
Stock as described in Item 3.02 of this Current Report on Form 8-K, representing
90% of the Chazak Common Stock. In accordance with the terms of the Funding
Agreement (the “Funding Agreement”), dated as of January 18, 2008, by and among
PubliCARD, The 500 Group, Sarachek, Charles Fisch (“Fisch”), IA Capital
Partners, LLC (“IA Capital”), Ridge View Group LLC (“Ridge View”) and Folio
Holdings, LLC (“Folio Holdings”), each of Sarachek, Fisch, IA
Capital, Ridge View and Folio Holdings contributed
$100,000 to The 500 Group to fund its $500,000 investment in the Company. In
accordance with the Funding Agreement, on January 31, 2008, The 500 Group
distributed all 4,620,000 shares of Common Stock that it purchased under the
Plan of Reorganization pro rata (924,000 shares each) to its members, consisting
of Sarachek, Fisch, IA Capital, Ridge View and Folio Holdings (together, the
“Funding Parties”).
As a
result of this distribution, each Funding Party holds 18% of the Chazak Common
Stock. The
source of the funds for each Funding Party’s investment in The 500 Group is such
person’s working capital (in the case of entities) or personal funds (in the
case of individuals).
The
Funding Parties and the Company are parties to a Stockholders Agreement and
a
Registration Rights Agreement, both dated as of January 31, 2008. Under the
Stockholders Agreement, during the eighteen-month period which commenced on
January 31, 2008, (i) the Funding Parties agreed to vote their shares of Chazak
Common Stock (a) for each Funding Party’s designee to the Board of Directors of
the Company and (b) in favor of an equity incentive plan to be proposed by
the
Company’s management providing for the issuance of up to 10% (as of the date the
effectiveness of such plan) of the outstanding shares of Chazak Common Stock,
and (ii) each Funding Party agreed to provide a right of first refusal on the
sale of shares of Chazak Common Stock under specified circumstances to the
Company first, and then to the other Funding Parties, to the extent the Company
has not exercised its right in full. Under the Stockholders Agreement, during
such term, each Funding Party's right to designate a director will continue
so
long as such Funding Party continues to hold at least 50% of the number of
shares of Chazak Common Stock distributed to it under the Funding Agreement
by
The 500 Group (as adjusted for stock splits and dividends). Under the
Registration Rights Agreement, during the three-year period which commenced
on
January 31, 2008, the Funding Parties have the right to include their shares
of
Chazak Common Stock in Company registration statements filed under the
Securities Act, except in certain limited circumstances specified in the
Registration Rights Agreement.
In
accordance with the Plan of Reorganization, upon its effectiveness, the members
of PubliCARD’s Board of Directors, other than Sarachek, were replaced with
Chazak’s Board of Directors, which, consistent with the terms of the
Stockholders Agreement, consists of Sarachek, Fisch, Roger Ehrenberg, David
Marcus and Jonathan Lewis (the initial designees of the Funding Parties).
Messrs. Ehrenberg, Marcus and Lewis are the managing members of, and control,
IA
Capital, Ridge View and Folio Holdings, respectively. Also on January 30, 2008,
Mr. Sarachek was elected as Chairman of the Board of Directors of the Company.
The Chazak Board of Directors has not yet established any
committees.
Collectively,
the Funding Parties may be deemed to control the Company. To the Company’s
knowledge, no other person or group was in control of the Company immediately
prior to The 500 Group’s acquisition of Chazak Common Stock.
The
foregoing description of the Funding Agreement, Stockholders Agreement and
Registration Rights Agreement is qualified in its entirety by the full text
of
such agreements, copies of which are filed as Exhibits 10.3, 10.4 and 10.5,
respectively, to this Current Report on Form 8-K and incorporated by reference
herein
Item
5.02
|
Departure
of Directors or Certain Officers; Election of Directors; Appointment
of
Certain Officers; Compensatory Arrangements of Certain
Officers.
|
Pursuant
to the Merger Agreement, the officers of Chazak immediately prior to the merger
continue to serve in the same capacities after the Merger. These officers
are:
Joseph
E. Sarachek,
46,
president and chief executive officer. Mr. Sarachek has been the chief executive
officer and a director of PubliCARD since July 2006, as well as the managing
partner of Triax Capital Advisors, LLC (“Triax”), a restructuring advisory firm
he founded, since January 2003. Prior to founding Triax, Mr. Sarachek was a
managing director of Balfour Capital Advisors, the predecessor to Triax, from
September 2001 until January 2003. From July 2001 until September 2001, Mr.
Sarachek was a managing director of Amroc Capital Advisors, a restructuring
advisory group. From 1998 through January 2000, Mr. Sarachek acted as a
consultant to PubliCARD, but did not have subsequent business with that company
until his appointment as chief executive officer and director in July 2006.
Mr.
Sarachek, an attorney, formerly practiced corporate and bankruptcy law at
McDermott, Will & Emery and Kelley Drye & Warren.
Marc
B. Ross,
41,
chief financial officer, treasurer and secretary. Mr. Ross has been PubliCARD’s
principal financial officer since August 2007, and a principal at Triax since
2004. Prior to joining Triax, from July 2002 until June 2004, Mr. Ross was
a
senior manager in the business advisory group of Protiviti Inc., an
international risk consulting firm with over 900 employees. From October 2000
through June 2002, Mr. Ross was a manager at Cherpock & Rosenfeld LLP, a
boutique firm specializing in bankruptcy, turnaround, fraud and litigation
support.
In
connection with the effectiveness of the Plan of Reorganization, Mr. Sarachek
waived his rights to the transaction fee and the stock options to which he
otherwise would have been entitled under his Engagement Agreement with
PubliCARD, dated as of July 21, 2006 (the “Engagement Agreement”). Also, as of
the effective date of the Plan of Reorganization, Mr. Sarachek agreed to
terminate his right to any payments under the Engagement Agreement for future
services to the Company. Messrs. Sarachek and Ross are not currently being
compensated for their services on behalf of the Company and the Company expects
to negotiate appropriate compensation packages with them in the
future.
The
information disclosed in Item 5.01 of this Current Report on Form 8-K is
incorporated by reference into this Item 5.02.
Item
5.03
|
Amendments
to Articles of Incorporation or Bylaws; Change in Fiscal
Year.
|
Pursuant
to the Merger Agreement, the certificate of incorporation (the “Charter”) and
the bylaws (the “Bylaws”) of Chazak immediately prior to the Merger continue to
be the Company’s certificate of incorporation and bylaws after the Merger and
replaced PubliCARD’s certificate of incorporation and bylaws in their entirety,
effective January 30, 2008.
Under
the
Charter, in accordance with the Plan of Reorganization, Chazak is authorized
to
issue 60,000,000 shares of Chazak Common Stock. The holders of Chazak Common
Stock are entitled to one vote per share on all matters submitted to a vote
of
stockholders. Cumulative voting for the election of directors is not authorized
by the Charter. Chazak is prohibited by its Charter from issuing non-voting
stock.
The
holders of Chazak Common Stock are entitled to receive ratably such dividends
as
may be declared by Chazak’s board of directors from time to time out of legally
available funds. In the event of a liquidation, dissolution or winding up of
Chazak, holders of Chazak Common Stock have the right to a ratable portion
of
assets remaining after payment of liabilities. The Charter imposes no
limitations on the transferability of the Chazak Common Stock.
The
Chazak Common Stock has no preemptive or conversion rights. There are no
redemption or sinking fund provisions with respect to the Chazak Common
Stock.
The
Charter contains a provision that allows the holders of the Chazak Common Stock
to take action at an annual or special meeting of stockholders called in
accordance with the Bylaws or by written consent or electronic transmission
of
stockholders in accordance with the Bylaws. Under the Charter and the Bylaws,
the affirmative vote of the holders of at least sixty-six and two thirds percent
(66 and 2/3%) of the voting power of the outstanding shares of Chazak Common
Stock is required for the stockholders to adopt, amend or repeal the Bylaws.
Under the Bylaws, the affirmative vote of the holders of at least sixty-six
and
two thirds percent (66 and 2/3%) of the voting power of the outstanding shares
of Chazak Common Stock is required for the stockholders to remove a director
without cause, unless a certain stockholders agreement is effective, in which
case the affirmative vote of the holders of a majority of such voting power
is
required.
The
foregoing description of the Charter and Bylaws is qualified in its entirety
by
the full text of such documents, copies of which are filed as Exhibits 3.1
and
3.2, respectively, to this Current Report on Form 8-K and incorporated by
reference herein.
Item
7.01 Regulation FD
Disclosure.
On
January 31, 2008, Chazak issued a press release in connection with the
effectiveness of the Plan of Reorganization. The press release is filed as
Exhibit 99.2 to this Current Report on Form 8-K.
Item
9.01
|
Financial
Statements and
Exhibits.
|
|
2.1
|
First
Amended Plan of Reorganization of PubliCARD,
Inc..
|
|
2.2
|
Order
Modifying First Amended Plan of Reorganization of PubliCARD,
Inc..
|
|
3.1
|
Certificate
of Incorporation of Chazak Value Corp.
|
|
3.2
|
Bylaws
of Chazak Value Corp.
|
|
10.1
|
Agreement
and Plan of Merger, dated as of January 29, 2008, by and between
Chazak
Value Corp. and PubliCARD, Inc.
|
|
10.2
|
Contribution
Agreement, dated as of October 26, 2007, by and between The 500
Group, LLC
and PubliCARD, Inc.
|
|
10.3
|
Funding
Agreement, dated as of January 18, 2008, by and among PubliCARD,
Inc., The
500 Group, LLC, Joseph E. Sarachek, Charles Fisch, IA Capital,
LLC, Ridge
View Group LLC and Folio Holdings,
LLC.
|
|
10.4
|
Stockholders
Agreement, dated as of January 30, 2008, by and among Chazak Value
Corp.,
Joseph E. Sarachek, Charles Fisch, IA Capital, LLC, Ridge View
Group LLC
and Folio Holdings, LLC.
|
|
10.5
|
Registration
Rights Agreement, dated as of January 30, 2008, by and among Chazak
Value
Corp., Joseph E. Sarachek, Charles Fisch, IA Capital, LLC, Ridge
View
Group LLC and Folio Holdings, LLC.
|
|
99.1
|
Information
as to the assets and liabilities of PubliCARD, Inc. as of December
31,
2007.
|
|
99.2
|
Press
Release issued by Chazak Value Corp. on January 31,
2008.
|
SIGNATURES
Pursuant
to the requirements of the Securities Exchange Act of 1934, the Registrant
has
duly caused this report to be signed on its behalf by the undersigned, hereunto
duly authorized.
|
|
|
|
Chazak
Value Corp.
|
|
|
|
|
By: |
/s/ |
|
Joseph
E. Sarachek |
|
President
and CEO
|
Date:
February 6, 2008
INDEX
TO EXHIBITS
|
2.1
|
First
Amended Plan of Reorganization of PubliCARD,
Inc..
|
|
2.2
|
Order
Modifying First Amended Plan of Reorganization of PubliCARD,
Inc..
|
|
3.1
|
Certificate
of Incorporation of Chazak Value Corp.
|
|
3.2
|
Bylaws
of Chazak Value Corp.
|
|
10.1
|
Agreement
and Plan of Merger, dated as of January 29, 2008, by and between
Chazak
Value Corp. and PubliCARD, Inc.
|
|
10.2
|
Contribution
Agreement, dated as of October 26, 2007, by and between The 500
Group, LLC
and PubliCARD, Inc.
|
|
10.3
|
Funding
Agreement, dated as of January 18, 2008, by and among PubliCARD,
Inc., The
500 Group, LLC, Joseph E. Sarachek, Charles Fisch, IA Capital,
LLC, Ridge
View Group LLC and Folio Holdings,
LLC.
|
|
10.4
|
Stockholders
Agreement, dated as of January 30, 2008, by and among Chazak Value
Corp.,
Joseph E. Sarachek, Charles Fisch, IA Capital, LLC, Ridge View
Group LLC
and Folio Holdings, LLC.
|
|
10.5
|
Registration
Rights Agreement, dated as of January 30, 2008, by and among Chazak
Value
Corp., Joseph E. Sarachek, Charles Fisch, IA Capital, LLC, Ridge
View
Group LLC and Folio Holdings, LLC.
|
|
99.1
|
Information
as to the assets and liabilities of PubliCARD, Inc. as of December
31,
2007.
|
|
99.2
|
Press
Release issued by Chazak Value Corp. on January 31,
2008.
|