Item
1.01. Entry into a Material Definitive Agreement.
Settlement
with PBGC
GlassBidge
Enterprises, Inc., (“GlassBridge” or the “Company”)) and the U.S. Pension Benefit Guaranty Corporation
(the “PBGC”) entered into an agreement on May 13, 2019 to terminate the Imation Cash Balance Pension Plan (the “Plan”)
based on the PBGC’s findings that (i) the Plan did not meet the minimum funding standard required under Section 412 of the
Internal Revenue Code of 1986, as amended; (ii) the Plan would be unable to pay benefits when due and (iii) the Plan should be
terminated in order to protect the interests of the Plan participants. GlassBridge and all other members of Seller’s controlled
group (within the meaning of 29 U.S.C. §1301(a)(14)) (collectively, and including the Company, the “Controlled Group
Members”)) were jointly and severally liable to the PBGC for all liabilities under Title IV of ERISA in connection with
the Plan’s termination, including unfunded benefit liabilities, due and unpaid Plan contributions, premiums, and interest
on each of the foregoing (the “Pension Liabilities”), as a result of which a lien in favor of the Plan, on all property
of each Controlled Group Member, arose and was perfected by PBGC (the “Lien”). On October 1, 2019, the Company entered
into a settlement agreement (“Settlement Agreement”) with the PBGC. Pursuant to the terms of the Settlement Agreement,
GlassBridge shall pay $3,000,000 in cash to PBGC within five days of the date of the execution of the Settlement Agreement (the
“Settlement Payment”). On the 95th day after payment of the Settlement Payment, PBGC will be deemed to have released
all Controlled Group Members from the Lien.
The
foregoing description of the Settlement Agreement does not purport to be complete and is qualified in its entirety by reference
to the complete text of the Settlement Agreement filed as Exhibit 10.1 hereto, which is incorporated herein by reference.
Orix
Transaction
On
October 1, 2019, the Company entered into a Securities Purchase Agreement (the “Purchase Agreement”) with Orix PTP
Holdings, LLC, a Delaware limited liability company (“Orix”). The Purchase agreement provides for the sale of 201
shares of common stock, par value $0.01 per share (the “Purchased Stock”), constituting 20.1% of all issued and outstanding
stock of Imation Enterprises Corp., a Delaware corporation and formerly wholly owned subsidiary of GlassBridge (“Imation”)
to Orix. The Purchase Agreement further provides for the sale and assignment from GlassBridge to Orix of (i) that certain promissory
note, dated as of September 30, 2019, originally issued by Imation in favor of GlassBridge in consideration for the assignment
by GlassBridge to Imation of the Levy Claims (defined below), in the original principal amount of $9,000,000 (“Levy Note”)
and (ii) that certain promissory note, dated as of September 30, 2019, originally issued by Imation in favor of GlassBridge in
connection with the assignment of 11,154 shares of Common Stock, par value 0.0001 per share of Sport-BLX, Inc., a Delaware corporation,
in the original principal amount of $4,000,000 (“Sport-BLX Note” and collectively with the Levy Note, the “Notes”).
Orix acquired the Purchased Stock and the Notes for a total consideration of $17,562,700 (“Cash Consideration”).
The
“Levy Claims” mean the right to receive payments from IMN Capital Holding Inc. in connection with the settlement or
final adjudication (without any ability to further appeal by any party) as to all demands, claims, counterclaims, cross-claims,
third-party-claims, damages, fees (including attorney’s fees), costs and expenses, brought and raised on any matters arising
from the following claims and causes of action:
Company
holding the
Claim
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Jurisdiction
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Court
or Tribunal
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Matter
Name and Identifying Number
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Imation
Europe BV
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France
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Cour
D’Appel De Paris
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16/08482
-N°
Portalis 35L7-
V-B7A-BYR7B
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Imation
Europe BV
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Dutch
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District
Court of The Hague
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C/09/489719/HA
ZA 15-659
|
Under
the terms of the Purchase Agreement, the Board of Directors of Imation was expanded from three to five directors, which includes
one director designated by Orix.
Also
pursuant to the terms of the Purchase Agreement, GlassBridge, Orix and Imation entered into a Stockholders’ Agreement dated
as of October 1, 2019 (the “Stockholders Agreement”) pursuant to which Orix may, among other rights and obligations
set forth in the Stockholders Agreement, sell back all of its Purchased Shares to GlassBridge at book value after April 1, 2021
and during the three-month period after such date and shall, during the term of the Stockholders Agreement, have the right to
purchase all or a portion of the shares owned by GlassBridge in Imation at book value plus 20%, subject to the right of GlassBridge
to respond to the notice by Orix to exercise such right by purchasing all of the shares of Orix.
The foregoing description of the Purchase
Agreement does not purport to be complete and is qualified in its entirety by reference to the complete text of the Purchase Agreement
filed as Exhibit 10.2 hereto, which is incorporated herein by reference.
Transaction
Fee to Clinton Group
On
September 13, 2019, the Board approved a success fee in connection with the completion of the transactions described above to
Clinton Group, Inc., a major shareholder of GlassBridge. The Board approved a fee equal to 15% of the Cash Consideration for its
work on the Orix Transaction and 10% of the difference between the gross Pension Liabilities and the Settlement Payment.
Sport-BLX
Transaction
GlassBridge
made a $1,000,000 demand loan to Sport-BLX, Inc., a Delaware corporation, on October 1, 2019. Certain of the directors and executive
officers of Sport-BLX are also directors and executive officers of GlassBridge.