EXHIBIT 10.36
SETTLEMENT AGREEMENT
THIS SETTLEMENT AGREEMENT ("Agreement") is made this 22nd day of November,
1994, by and among the PENSION BENEFIT GUARANTY CORPORATION ("PBGC"), INTELOGIC
TRACE, INC. ("Debtor"), and INTELOGIC TRACE SYSTEMS GROUP, INC., INTELOGIC TRACE
CANADA, INC., ITTG, INC., TLA, INC., and INTELOGIC TRACE MARION GROUP OF PUERTO
RICO, INC. (collectively, the "Subsidiaries").
WITNESSETH:
WHEREAS, the PBGC is a wholly-owned United States government corporation
established to administer and enforce the pension plan termination insurance
program created under Title IV of the Employee Retirement Income Security Act of
1974 ("ERISA"), AS AMENDED, 29 U.S.C. ss.ss. 1301-1461 (1988 and Supp. V 1993);
and
WHEREAS, the Debtor is a corporation organized under the laws of the state
of New York with its principal place of business in San Antonio, Texas; and
WHEREAS, the Debtor is the contributing sponsor of the Intelogic Trace,
Inc. Retirement Income Plan ("Pension Plan"), within the meaning of 29 U.S.C.
ss. 1301 (a) (13) (B); and
WHEREAS, the Debtor and the Subsidiaries are members of a controlled group
within the meaning of 29 U.S.C. ss. 1301 (a) (14); and
WHEREAS, the Pension Plan is a tax-qualified, defined
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benefit pension plan which is covered by Title IV of ERISA, 29 U.S.C. ss. 1321;
and
WHEREAS, generally, the contributing sponsor of a pension plan that
terminates under Title IV of ERISA and all members of its controlled group are
jointly and severally liable for: (1) any unfunded benefit liabilities under the
terminated plan, pursuant to 29 U.S.C. ss. 1362 (b); (2) and unpaid minimum
funding contributions due to the plan, pursuant to 29 U.S.C. ss. 1362(c); and
(3) and unpaid premiums due to the PBGC, pursuant to 29 U.S.C. ss.ss. 1306-07;
and
WHEREAS, on August 5, 1994, the Debtor filed a petition under Chapter 11 of
the Bankruptcy Code and is currently operating its business as a
debtor-in-possession; and
WHEREAS, nonE of the Subsidiaries has filed a petition under Chapter 11 of
the Bankruptcy Code; and
WHEREAS, on September 30, 1994, the PBGC filed with the Bankruptcy Court
the following three contingent claims against the Debtor in connection with the
Pension Plan:
(a) a claim for unfunded benefit liabilities of the Pension Plan, pursuant
to 29 U.S.C. ss. 1362(b) ("Unfunded Benefit Liabilities Claim");
(b) a claim for unpaid minimum funding contributions due to the Pension
Plan, pursuant to 29 U.S.C. ss. 1362(c) ("Minimum Funding Contribution Claim");
and
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(c) a claim for any unpaid premiums due to the PBGC, pursuant to 29 U.S.C.
ss. 1307 ("Premium Claim") (the Unfunded Benefit Liabilities Claim, the Minimum
Funding Contribution Claim, and the Premium Claim are hereinafter collectively
referred to as the "Claims"); and
WHEREAS, the PBGC assets that the Debtor and the Subsidiaries are jointly
and severally liable for all amounts included in the Claims; and
WHEREAS, the PBGC asserts that portions of the Minimum Funding Contribution
Claim, the Unfunded Benefit Liabilities Claim, and the Premium Claim are
entitled to various priorities under 11 U.S.C. ss. 507(a); and
WHEREAS, the Debtor and the Subsidiaries dispute the PBGC's assertions; and
WHEREAS, on November 21, 1994, the PBGC determined that the Pension Plan
must be terminated; and
WHEREAS, the parties have agreed to settle their differences in order to
avoid the risk, expense and delay of litigation,
NOW THEREFORE, in consideration of these premises, the parties agree to the
terms and condition set forth below.
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AGREEMENT
1. PBGC shall be allowed a general unsecured claim in the amount of
approximately $3,391,150, which has been calculated in accordance with ERISA and
regulations promulgated thereunder ("PBGC" Claim"). It is hereby agreed that the
PBGC Claim shall be treated as a "Class 6 - Other Unsecured Claim" under the
Modified First Amended Plan of Reorganization of Intelogic Trace, Inc. ("POR")
and shall receive a pro rata distribution with other Class 6 creditors, and in
addition, the PBGC shall receive an amount of New Preferred Stock equal to 20%
of the New Preferred Stock that the PBGC would otherwise receive as a Class 6
creditor. The PBGC agrees that any payments to be made pursuant to the POR shall
first be applied against any outstanding unpaid contributions due to the Pension
Plan for the plan year ending July 31, 1994 and for the short plan year
commencing on August 1, 1994 and ending on the effective date of the termination
of the Pension Plan.
2. At the discretion of the PBGC, the Subsidiaries shall assign and convey
all of their assets, if any, to the PBGC on or before the effective date of the
Modified First Amended Plan of Reorganization of Intelogic Trace, Inc. The
Debtor and the Subsidiaries shall take all reasonable and necessary documents to
carry out the intent of this paragraph, including, without limitation all
actions reasonably necessary to permit the liquidation,
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collection, sale or other disposition of any assets of the Subsidiaries.
3. The Debtor and the Subsidiaries shall provide PBGC with information
concerning any assets of the Subsidiaries as PBGC may reasonably request. The
Debtors and the Subsidiaries also shall permit PBGC and its designees, upon
reasonable prior notice, to inspect, audit and make copies of and extracts from
all books and records and other papers in the possession of the Debtor or the
Subsidiaries pertaining to any assets of the Subsidiaries.
4. This Agreement is conditioned on: (1) the Debtor's consent to
termination of the Pension Plan under 29 U.S.C. ss. 1342, effective November 21,
1994, and (2) approval by the United States Bankruptcy Court for the Western
District of Texas.
5. This Agreement may be signed in any number of counterparts, each of
which shall be original, with the same effect as if the signatures thereto and
hereto were upon the same instrument.
IN WITNESS WHEREOF, the parties have caused this Agreement to be executed
by their duly authorized agents on the dates indicated below.
INTELOGIC TRACE, INC.
Dated: 11/22/94 /s/ MARK S. HELWEGE
By: Mark S. Helwege
Title: President
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INTELOGIC TRACE SYSTEMS GROUP, INC.
Dated: 11/22/94 /s/ MARK S. HELWEGE
By: Mark S. Helwege
Title: President
INTELOGIC TRACE CANADA, INC.
Dated: 11/22/94 /s/ MARK S. HELWEGE
By: Mark S. Helwege
Title: President
ITTG, INC.
Dated: 11/22/94 /s/ MARK S. HELWEGE
By: Mark S. Helwege
Title: President
TLA, INC.
Dated: 11/22/94 /s/ MARK S. HELWEGE
By: Mark S. Helwege
Title: President
INTELOGIC TRACE MARION GROUP OF
PUERTO RICO, INC.
Dated: 11/22/94 /s/ MARK S. HELWEGE
By: Mark S. Helwege
Title: President
PENSION BENEFIT GUARANTY CORPORATION
Dated: 11/24/94 /s/ JEFFREY B. COHEN
By: Jeffrey B. Cohen
Title: Deputy General Counsel
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