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):
September 15, 2017
____________________
GLASSBRIDGE ENTERPRISES, INC.
(Exact name of registrant as specified in its charter)
___________________
| Delaware | 001-14310 | 41-1838504 | ||
|
(State or other jurisdiction of incorporation) |
(Commission File Number) |
(IRS Employer Identification Number) |
1099 Helmo Ave. N., Suite 250, Oakdale, Minnesota 55128
(Address of principal executive offices, including zip code)
(651) 704-4000
(Registrant’s telephone number, including area code)
N/A
(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)) |
Indicate by check mark whether the registrant is an emerging growth company as defined in Rule 405 of the Securities Act of 1933 (§230.405 of this chapter) or Rule 12b-2 of the Securities Exchange Act of 1934 (§240.12b-2 of this chapter).
Emerging growth company ¨
If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ¨
| Item 1.01. | Entry into a Material Definitive Agreement. |
GlassBridge Enterprises, Inc. (the “Company” or “we”) entered into a Settlement Agreement (the “Settlement Agreement”), dated as of September 15, 2017 (the “Effective Date”), with CMC Magnetics Corporation, on behalf itself and CMC Magnetics Co., Ltd. and their respective subsidiaries and affiliates (collectively, “CMC”), resolving all claims relating to the previously disclosed lawsuits (the “Lawsuits”) filed by CMC against the Company and its subsidiaries Imation Latin America, Imation Corporation Japan (“ICJ”) and Imation Europe B.V. (“IEBV”) and certain co-defendants (the “Co-Defendants”) that the Company has an obligation to defend and indemnify. In the Lawsuits, CMC alleged that the Company and its subsidiaries were liable for payment of trade payables and related interest totaling approximately $23 million. As of June 30, 2017, the Company recorded, but had not made payment, with respect to $21 million of such disputed trade payables, all of which were recorded as current liabilities of discontinued operations on the Company’s consolidated balance sheets.
The Settlement Agreement provides that CMC will dismiss the Lawsuits with prejudice and release its claims against the Company, its subsidiaries and the Co-Defendants, in each case, upon the delivery of the Initial Payment, the Note and the Guarantee (each as defined below). Pursuant to the terms of the Settlement Agreement: (i) ICJ will cause the release and payment to CMC of approximately an aggregate of $9.2 million in attached assets previously recorded on the Company’s June 30, 2017 consolidated balance sheets as restricted cash within current assets of discontinued operations; (ii) ICJ will make a $1.5 million cash payment (the “Initial Cash Payment”) to CMC by October 10, 2017; (iii) IEBV will cause the release and payment to CMC of approximately $825,000 in attached assets previously recorded on the Company’s June 30, 2017 consolidated balance sheets as restricted cash within current assets of discontinued operations; (iv) ICJ issued to CMC an unsecured promissory note (the “Note”) in the principal amount of $1.5 million, of which $500,000 is payable on or before January 10, 2018 and $1.0 million of which is payable on or before October 10, 2019, and with respect to which no interest shall accrue if principal payments are made when scheduled; (v) the Company issued to CMC a Guarantee (the “Guarantee”) with respect to ICJ’s obligations arising under the Note and the payment obligations described in clauses (i) through (iii) above. The dollar amounts described in clauses (i) and (iii) above are approximate, reflect conversions from Japanese yen and Euros to U.S. dollars as of the Effective Date and are subject to adjustment due to fluctuations in exchange rates and the potential accrual of interest.
The foregoing descriptions of the Settlement Agreement, the Note and the Guarantee do not purport to be complete and are qualified in their entirety by reference to the Settlement Agreement, the Note and the Guarantee, which are incorporated herein by reference. Copies of the Settlement Agreement, the Note and the Guarantee are filed as Exhibits 10.1, 10.2 and 10.3 hereto, respectively.
| Item 2.03. | Creation of a Direct Financial Obligation or an Obligation under an Off-Balance Sheet Arrangement of a Registrant. |
The information provided in Item 1.01 of this Current Report on Form 8-K is incorporated by reference into this Item 2.03.
| 2 |
| Item 9.01 | Financial Statements and Exhibits. |
| (d) | Exhibits. |
The following documents are attached as exhibits to this Current Report on Form 8-K.
| 3 |
EXHIBIT INDEX
| 4 |
SIGNATURE
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.
| GLASSBRIDGE ENTERPRISES, INC. | ||||||
| Dated: September 18, 2017 | By: |
/s/ Danny Zheng |
||||
| Name: | Danny Zheng | |||||
| Title: |
Interim Chief Executive Officer and Chief Financial Officer |
|||||
| 5 |
Exhibit 10.1
SETTLEMENT AGREEMENT
This Settlement Agreement (this “ Agreement ”) is entered as of this 15th day of September 2017 by and between GlassBridge Enterprises, Inc. f/k/a Imation Corp., a Delaware corporation, on behalf of itself and each of the subsidiaries and affiliates identified herein (collectively, “ GBE ”) and CMC Magnetics Corporation on behalf of itself and CMC Magnetics Co., Ltd. and any and all of its subsidiaries and affiliates who have claims against GBE and any of its current or future subsidiaries and affiliates worldwide (collectively, “ CMC ” and together with GBE, each a “ Party ” and collectively, the “ Parties ”).
WHEREAS , the Parties are currently involved in disputes and actions and desire to enter into this Agreement to settle comprehensively all such disputes and actions.
NOW, THEREFORE , in exchange for the mutual promises contained herein and other good and valuable consideration, the receipt and sufficiency of which is hereby acknowledged by the Parties, each Party, intending to be legally bound, agrees as follows:
| 1. | Dismissal of Actions and Release of Claims . In consideration of and conditional upon the completion of (i) the Initial Cash Payment (as defined in Section 2 below), (ii) the issuance and delivery to CMC of the ICJ Promissory Note (as defined in Section 4 below), and (iii) the execution and delivery to CMC of the GBEI Guarantee (as defined in Section 5 below), CMC agrees, upon completion of the last to occur of the foregoing items (i), (ii), and (iii) to: |
| (A) | promptly cause the dismissal, with prejudice, of each pending action brought by CMC against GBE and all named defendants and co-defendants in such actions, including without limitation the following actions (collectively, the “ Actions ”): |
| (1) | CMC Magnetics Co., Ltd. v. Imation Corporation Japan pending in the Tokyo District Court, Civil Division 42, Section D-Go-Ro (Heisei 28 nen (wa) No. 3535) (the “ Japanese Litigation ”); |
| (2) | CMC Magnetics Corporation v. Imation Europe B.V. pending in the Noord-Holland District Court/Amsterdam (the “ Dutch Litigation ”); and |
| (3) | CMC Magnetic Corporation v. Imation Corp., Imation Latin America, et al. pending in the State of Minnesota District Court/Second Judicial District; |
| Settlement Agreement | Page 1 of 9 |
| (B) | release all liens, attachments and encumbrances against any assets of GBE and of any of the named defendants in the Actions (collectively, the “ Restricted Assets ”); and (C) provide, along with GBE, the mutual general release of claims and covenant not to sue set forth in Section 6 , hereof. |
| 2. | Cash Payments . Imation Corporation Japan (“ ICJ ”) and Imation Europe B.V. (“ IEBV ”) will pay to CMC the following amounts (the “ Cash Payments ”): |
| (a) | ICJ will cause the release and payment to CMC of the Restricted Assets of ICJ in an amount equal to approximately (1) $1,532,869.97 (USD) and (2) ¥856,188,510 (JPY); 1 / |
| (b) | ICJ will pay an additional amount equal to $1,500,000 (USD) to CMC (the “ Initial Cash Payment ”); and |
| (c) | IEBV will cause the release and payment to CMC of the Restricted Assets of IEBV in an amount equal to approximately 689,211.32€ (Euro). 2 / |
Notwithstanding anything to the contrary in this Agreement, including without limitation the releases contemplated hereby, GlassBridge Enterprises, Inc. (“ GBEI ”) shall guarantee the obligations of ICJ and IEBV to make the Cash Payments required by this Agreement. To the extent any portion of the Cash Payments is required to be disgorged by CMC in an insolvency proceeding for ICJ or IEBV, GBEI shall remain unconditionally liable to CMC for such disgorged amount and waives any and all defenses of any nature to the payment of such amount, providing only that there shall have been entry of a final order in such insolvency proceeding requiring disgorgement by CMC. GBEI, in its discretion, shall either have the obligation to indemnify CMC for any costs or expenses attendant to CMC’s defending any such disgorgement claim, or – provided that GBEI provides CMC with adequate security guaranteeing payment of its reimbursement obligations in the preceding sentence in a form reasonably acceptable to CMC, GBEI shall have the right, but not the obligation, to defend at its own expense any such disgorgement claim on behalf of CMC. The Initial Cash Payment referred to in Section 2(b) above shall be paid by wire transfer to be initiated not later than October 10, 2017, and the Parties shall make best efforts to cause the Initial Cash Payments referred to in Sections 2(a) and 2(c) above to be paid by wire transfer not later than October 10, 2017. CMC shall, at its own expense, provide whatever assistance shall reasonably be required of it by GBE, GBEI, ICJ, IEBV or any other affiliate or subsidiaries whose assets are attached, encumbered, or otherwise restricted by CMC to effectuate the release of such funds which shall be payable to CMC upon such release. All payments made hereunder shall be made by electronic transfer of funds to CMC as follows:
| 1 / | The amount of Restricted Assets of ICJ is subject to adjustment for accrual of interest based on the terms of the applicable bank account(s) and asset attachment(s). |
| 2 / | The amount of Restricted Assets of IEBV is subject to adjustment for accrual of interest based on the terms of the applicable bank account(s) and asset attachment(s). |
| Settlement Agreement | Page 2 of 9 |
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| Account No.: | |
| Swift Code: | |
| Account Name: |
| 2(I). | Procedural Agreements for Japanese Restricted Assets . With respect to the release of Restricted Assets of ICJ contemplated by Section 2(a) above arising in connection with the Japanese Litigation, the Parties agree as follows: CMC and ICJ shall enter into a settlement before the Tokyo District Court under the court proceedings (saiban-jo-no-wakai), in which (a) ICJ acknowledges that it owes CMC payment obligations in the amount of the Restricted Assets of ICJ and agrees to pay that amount and (b) ICJ agrees to the withdrawal of securities (tanpo) deposited by CMC in relation to the preliminary attachments of ICJ’s assets in Japan. |
| 2(II). | Procedural Agreements for Dutch Restricted Assets . With respect to the release of Restricted Assets of IEBV contemplated by Section 2(c) above arising in connection with the Dutch Litigation, the Parties agree as follows: to the extent necessary to achieve the release of the Restricted Assets of IEBV, CMC and IEBV shall enter into such agreements or submit such documents as are necessary before the Noord-Holland District Court/Amsterdam under such court’s proceedings in which (a) IEBV acknowledges that it owes CMC payment obligations in the amount of the Restricted Assets of IEBV and agrees to pay that amount and (b) IEBV shall agree to the withdrawal of securities, payments, court fees and bonds deposited by CMC in relation to the Dutch Litigation. |
| Settlement Agreement | Page 3 of 9 |
| 3. | Cooperation in Release of Litigation Related Bonds and Instruments . In addition to the payment of the Cash Payments to CMC, GBE agrees to cooperate in taking the necessary actions to enable CMC to receive all payments made by CMC as security for the Actions set forth in Section 1 above and the proceedings filed by CMC Magnetics Co., Ltd. against Imation Taiwan Ltd. in the Taiwan Shilin District Court, and GBE agrees and acknowledges that such funds belong to CMC (the foregoing, the “ CMC Security Payments, Deposits & Bonds ”). GBE, GBEI, ICJ, IEBV shall, at its own expense, provide whatever assistance shall reasonably by required of it by CMC to effectuate the release of such CMC Security Payments, Deposits & Bonds. |
| 4. | ICJ Promissory Note . |
| (a) | GBEI agrees to cause ICJ to issue to CMC on the date hereof a promissory note in the aggregate principal amount of $1,500,000 (USD) in substantially the form attached hereto as Exhibit A (the “ ICJ Promissory Note ”). Payments of principal under the ICJ Promissory Note shall be due and payable as follows: (1) $500,000 (USD) due and payable on or before January 10, 2018 and (2) $1,000,000 (USD) due and payable on or before October 10, 2019. |
| (b) | In the event that CMC does not receive timely payment of any amount due under the ICJ Promissory Note, then CMC may demand that such failure to pay be cured by notice sent by Federal Express, DHL, or similar overnight courier service addressed as follows: |
Imation Corporation Japan
c/o GlassBridge Enterprises, Inc.
1099 Helmo Ave. N.; Suite 250
Oakdale, MN 55128
Attn: CEO & General Counsel
Such notice shall be deemed received the following business day, after which GBE shall have ten (10) business days to fully cure such breach. In the event GBE fails to fully cure within ten (10) business days, the ICJ Promissory Note shall become immediately due and payable.
| Settlement Agreement | Page 4 of 9 |
| 5. | GBEI Guarantee . GBEI shall unconditionally guarantee the obligations of ICJ arising under the ICJ Promissory Note. Such unconditional guarantee shall be evidenced by a Guarantee of GBEI delivered by GBEI to CMC on the date hereof in substantially the form attached hereto as Exhibit B (the “ GBEI Guarantee ”). |
| 6. | Release Upon Payment . |
| (a) | Other than with respect to all obligations due CMC under this Agreement (including the delivery of the Cash Payments, the ICJ Promissory Note, and GBEI Guarantee), CMC together with its affiliates and subsidiaries, and its and their respective agents, attorneys, representatives, and assigns (collectively, the “ CMC Releasors ”) shall be deemed to have released GBE and all of GBE’s subsidiaries and affiliates (including, without limitation, the subsidiaries and affiliates listed on Exhibit C hereto), Joseph A. DePerio, Barry L. Kasoff, Robert Fernander, Realization Services, Inc., the Clinton Group, and Clinton Lighthouse Equity Strategies Fund (Offshore) Ltd.), and with respect to all of the foregoing its and their present and former divisions, subsidiaries, affiliates, associates, owners, predecessors, principals, agents, servants, employees, shareholders, members, partners, agents, officers, directors, consultants, attorneys, and the successors and assigns of each of the foregoing (collectively, the “ GBE Releasees ”), from any and all claims, demands, causes of action, indebtedness, and obligations of any kind, nature, or description, whether known or unknown, liquidated or unliquidated, at law or in equity, and whether sounding in tort or contract, that CMC or any CMC Releasors ever had, now have, or hereafter can, may or shall have against any of the GBE Releasees from the beginning of time through the date of this Agreement. |
| Settlement Agreement | Page 5 of 9 |
| (b) | Other than with respect to all obligations due GBE under this Agreement, GBE together with its affiliates and subsidiaries and each of its and their respective agents, attorneys, representatives, and assigns (collectively, the “ GBE Releasors ”) shall be deemed to have released CMC, each of its subsidiaries and affiliates, and each of its and their present and former divisions, subsidiaries, affiliates, associates, owners, predecessors, principals, agents, servants, employees, shareholders, members, partners, agents, officers, directors, consultants, attorneys, and the successors and assigns of each of the foregoing (collectively, the “ CMC Releasees ”) from any and all claims, demands, causes of action, indebtedness, and obligations of any kind, nature, or description, whether known or unknown, liquidated or unliquidated, at law or in equity, and whether sounding in tort or contract, that GBE or any GBE Releasors ever had, now have, or hereafter can, may or shall have against any of the CMC Releasees from the beginning of time through the date of this Agreement. |
| (c) | In furtherance of the releases set forth in Section 6(a) and 6(b) , hereof, the parties hereby covenant not to sue each other in any forum with respect to any claims released by said paragraphs. |
| (d) | The Parties further agree that the releases set forth in Sections 6(a) and 6(b) , above, shall not take effect until the completion of each and all of (i) the Initial Cash Payment, (ii) the issuance and delivery to CMC of the ICJ Promissory Note, and (iii) the execution and delivery to CMC of the GBEI Guarantee. |
| 7. | Stay of Pending Actions Pending CMC Receipt of Cash Payments . The Parties agree that any and all pending Actions, the dismissal of which is contemplated by Section 1 above, shall be immediately stayed, and all further proceedings therein suspended and enjoined upon the execution and delivery of this Agreement, the ICJ Promissory Note, and GBEI Guarantee. GBE and CMC agree to cooperate in taking whatever additional actions or procedural steps may be required to effect the stay of the Actions in the jurisdictions where they are pending. The stay required by this Section 7 shall terminate upon the material breach by any Party of its obligations under Section 2 hereof. |
| Settlement Agreement | Page 6 of 9 |
| 8. | Confidentiality . Each Party agrees that it will maintain in confidence this Agreement and its terms, unless such Party is required to take action to enforce this Agreement, or compelled to disclose by judicial or administrative process, or in the opinion of counsel, by other requirements of law (including, in the sole discretion of GBE, GBE’s obligations to disclose material agreements pursuant to the disclosure rules promulgated by the United States Securities and Exchange Commission); provided , that , the Parties may provide this Agreement or the details of this Agreement to their respective counsel, accountants, business consultants, and tax advisors, and (if required) current or prospective investors or purchasers, lenders or affiliates, provided further that such Parties are informed as to the confidential nature of this Agreement and affirmatively obligate themselves to maintain such confidentiality. |
| 9. | Interpretation of Agreement . The Parties each acknowledge that this Agreement has been negotiated at arm’s length, and with the assistance of legal counsel, by and between the Parties who are each equally sophisticated and knowledgeable in the matters dealt with in this Agreement. Accordingly, it is mutually agreed by the Parties that the language of this Agreement shall not be presumptively construed either in favor of, or against, any Party on the grounds that such Party is the “drafter” of this Agreement. |
| 10. | Release Not Subject to Cal. Civ. Code § 1542 or Similar Statutes . CMC on behalf of itself and each of the CMC Releasors, and GBE on behalf of itself and each of the GBE Releasors, each acknowledge that upon the date of this Agreement the CMC Releasors and GBE Releasors, respectively, shall be deemed to have, and by operation of this Agreement shall have, expressly waived, relinquished, and released any and all provisions, rights, and benefits conferred by or under Cal. Civ. Code § 1542 or any law of the United States or any state of the United States or territory of the United States, or principle of common law, which is similar, comparable or equivalent to Cal. Civ. Code § 1542, which provides: |
| Settlement Agreement | Page 7 of 9 |
A general release does not extend to claims which the creditor does not know or suspect to exist in his or her favor at the time of executing the release, which if known by him or her must have materially affected his or her settlement with the debtor.
| 11. | Subsequently Learned Information Shall Not Invalidate This Agreement . This Agreement shall not be subject to attack or invalidation on the grounds that any or all of the legal theories or factual assumptions relied upon by any of the Parties for negotiating purposes are ultimately determined to be inaccurate or inappropriate for any reason. |
| 12. | No Admissions Implied . This Agreement has been negotiated and entered into as a settlement and compromise that shall inure to the benefit of all Parties, but shall not constitute or be construed as an admission by any Party as to the validity, invalidity or extent of any asserted claims or defenses, or a waiver or admission of any Party as to any other Party. |
| 13. | Allocation of Expenses of Settlement . The Parties shall each bear its own costs and expenses in connection with the negotiation and execution of this Agreement and the litigations settled thereby, including without limitation, the release of any Restricted Assets and the CMC Security Payments, Deposits & Bonds. |
| 14. | Governing Law, Jurisdiction, and Venue for Enforcement . This Agreement, the negotiation, terms and performance of this Agreement, the rights of the Parties under this Agreement, and all actions arising in whole or in part under or in connection with this Agreement shall be governed by and construed in accordance with the domestic substantive laws of the State of New York, without giving effect to any choice or conflict of law provision or rule that would cause the application of the laws of any other jurisdiction. GBE hereby irrevocably consents and submits to the non-exclusive jurisdiction of the Supreme Court of the State of New York, New York County, and the United States District Court for the Southern District of New York, whichever CMC elects, and waives any objection based on venue or forum non conveniens with respect to any action instituted therein arising under this Agreement. In the event that a court declines to hear an action relating to this Agreement on the grounds that such an action may not be heard in New York, CMC shall be permitted to sue in state or federal court sitting in Minnesota. |
| Settlement Agreement | Page 8 of 9 |
| 15. | Authority to Execute Agreement . Each of the Parties executing this Agreement represent and warrant that each signature below is duly authorized on behalf of the Party indicated, and that no further corporate action is necessary to bind such Party to the terms hereof. |
| 16. | No Oral Modifications . The terms of this Agreement may not be changed, modified, waived, discharged, or terminated orally, but only by an instrument or instruments in writing, signed by the Party against which enforcement of the change, modification, waiver, discharge, or termination is asserted. |
[ Signature Page Follows ]
| Settlement Agreement | Page 9 of 9 |
IN WITNESS WHEREOF , the undersigned have executed this Settlement Agreement as of the first date written above.
CMC MAGNETICS CORPORATION
By: /s/ Bob Wong
Name: Bob Wong
Title: Chairman
GLASSBRIDGE ENTERPRISES, INC.
F/K/A IMATION CORP.
| By: | /s/ Danny Zheng |
| Name: | Danny Zheng |
| Title: | CFO, Interim CEO |
IMATION CORPORATION JAPAN
| By: | /s/ Tavis J. Morello |
| Name: | Tavis J. Morello |
| Title: | Director |
| IMATION EUROPE B.V. | |
| By: | IMATION HOLDING B.V. |
| Its: | Managing Director |
| By: | GLASSBRIDGE ENTERPRISES, INC. |
| Its: | Managing Director |
| By: | /s/ Danny Zheng |
| Name: | Danny Zheng |
| Title: | CFO, Interim CEO |
Signature Page to Settlement Agreement
EXHIBIT A
Form of ICJ Promissory Note
EXHIBIT B
Form of GBEI Guarantee
EXHIBIT C
Certain Subsidiaries and Affiliates of GlassBridge Enterprises, Inc.
Imation ANZ Pty Ltd.
Imation Corporation Japan
Imation Europe B.V.
Imation Hong Kong Limited
Imation Korea Inc.
Imation Latin America Corp.
Imation Middle East FZE
Imation Singapore PTE Ltd.
Imation Taiwan Ltd.
Exhibit 10.2
IMATION CORPORATION JAPAN
Promissory Note
| $1,500,000.00 (USD) | September 15, 2017 |
FOR VALUE RECEIVED, the undersigned, Imation Corporation Japan (the “ Company ”), hereby promises to pay to the order of CMC Magnetics Corporation (the “ Noteholder ”), on or before October 10, 2019 (the “ Maturity Date ”), the principal amount of ONE MILLION FIVE HUNDRED THOUSAND AND 00/100 UNITED STATES DOLLARS ($1,500,000) and interest on the unpaid principal amount of this Note as provided below at CMC Magnetics Corporation 15F, No. 53, Ming Chuan W. Rd., Taipei, 104, Taiwan, or such other address as Noteholder may designate by notice to the Company given in accordance with Section 8.1 below.
| 1. | THE NOTE |
This Promissory Note (this “ Note ”) is issued pursuant to that certain Settlement Agreement by and among GlassBridge Enterprises, Inc. (“ GBE ”), the Company, Imation Europe B.V. (“ IEBV ”, together with GBE and the Company, the “ GBE Parties ”) and the Noteholder (the “ Settlement Agreement ”) dated as of even date with this Note.
| 2. | INTEREST RATE |
No principal amounts under this Note shall accrue interest. The foregoing notwithstanding, following the occurrence and during the continuance of an Event of Default (as defined below), interest shall accrue on outstanding and unpaid principal amounts under this Note at the rate of ten percent (10%) per annum computed on the basis of a 365-day year.
| 3. | PAYMENT PROVISIONS |
3.1 Payments of Principal . Payments under this Note shall be made as follows:
| Date | Principal Payment Amount |
| January 10, 2018 | $500,000 (USD) |
| October 10, 2019 | $1,000,000 (USD) |
3.2 Payments Due on Business Days . “ Business Day ” means any day other than a Saturday, a Sunday, or a day on which commercial banks in New York City, New York are required or authorized to be closed. Notwithstanding anything in this Note to the contrary, any payment of principal or interest on this Note that is due on a date other than a Business Day may be made on the next Business Day.
3.3 Optional Prepayment . At any time and from time to time prior to the Maturity Date, the Company may prepay this Note, in whole or in part, at any time without premium or penalty.
3.4 Notice of Optional Prepayment . Notice of each optional prepayment of this Note pursuant to Section 3.3 above must be given in accordance with Section 8.1 hereof not fewer than two (2) Business Days before the prepayment date, which such notice must specify the date of prepayment, the aggregate principal amount to be prepaid on such date, and the application of such payments.
| Promissory Note ( Imation Corporation Japan / CMC Magnetics Corporation ) |
Page 1 of 4 |
| 4. | DEFAULTS |
4.1 An “ Event of Default ” will exist if any of the following conditions or events occurs and is continuing:
4.1.1 The Company defaults in the payment, when due, of any payment under Section 2 and such default is not remedied within thirty (30) days after the same becomes due and payable; or
4.1.2 The Company (i) files, or consents by answer or otherwise to the filing against it of, a petition for Reorganization (as defined below); (ii) makes an assignment for the benefit of its creditors; (iii) consents to the appointment of a custodian, receiver, trustee, or other officer with similar powers with respect to it, or with respect to any substantial part of the Company’s property; (iv) is adjudicated as insolvent or to be liquidated; or (v) takes corporate action for the purpose of approving a Reorganization with respect to the Company, or any of the foregoing;
4.1.3 A governmental authority enters an order appointing, without consent by the Company, a custodian, receiver, trustee, or other officer with similar powers with respect to it or with respect to any substantial part of the Company’s property, or constituting an order for relief or approving a petition for Reorganization, or any such petition is filed against the Company and such petition is not dismissed within 180 days; or
4.1.4 Any one or more of the GBE Parties shall breach, or be in default under, any of its obligations under the Settlement Agreement.
For purposes of this Section 4.1 , “ Reorganization ” means (i) any insolvency or bankruptcy case or proceeding, or any receivership, liquidation, reorganization, or other similar case or proceeding in connection therewith, relative to the Company or its assets, (ii) any liquidation, dissolution or other winding up of the Company, whether voluntary or involuntary and whether or not involving insolvency or bankruptcy.
4.2 Acceleration . Upon the occurrence and during the continuance of any Event of Default specified in Section 4.1.2 or Section 4.1.3 , the principal balance of this Note will automatically, without notice, become immediately due and payable. Upon the occurrence and during the continuance of any Event of Default of the type specified in Section 4.1.1 or 4.1.4 , the Noteholder may declare the principal balance of this Note due and payable by giving at least ten (10) days’ notice to the Company.
| 5. | NO TRANSFERS |
This Note may not be offered for sale, sold, assigned, transferred, or pledged. The foregoing notwithstanding, the Noteholder may assign this Note to an Affiliate provided such assignment complies with all applicable laws and regulations. For purposes of this Section 5 , (a) “ Affiliate ” means any entities that directly or indirectly, through one or more intermediaries, controls, are controlled by or are under common control with the Noteholder and (b) “ control ” means the power to direct the management and policies of another, whether through the ownership of voting securities, by contract or otherwise.
| 6. | COMPANY WAIVERS |
The Company hereby waives presentment, demand, notice of nonpayment, protest, and all other demands and notices (except as expressly provided herein) in connection with the delivery, acceptance, performance, and/or enforcement of this Note.
| Promissory Note ( Imation Corporation Japan / CMC Magnetics Corporation ) |
Page 2 of 4 |
| 7. | AMENDMENT AND WAIVER |
7.1 Requirements . This Note may be amended and the observance of this Note may be waived (either retroactively or prospectively) as follows:
| (a) | in the case of a waiver, by a written waiver or consent signed by the party against whom the waiver is to be enforced; |
| (b) | in the case of an amendment, by a written instrument signed by the Company and the Noteholder. |
7.2 Binding Effect, etc . Any amendment, waiver or consent consented to as provided in this Section 7 will be binding upon the Noteholder and upon the Company without regard to whether such Note has been marked to indicate such amendment or waiver. No such amendment or waiver will extend to or affect any obligation, covenant, agreement, default or Event of Default not expressly amended or waived or impair any right consequent thereon. No course of dealing between the Company and the Noteholder nor any delay in exercising any rights hereunder will operate as a waiver of any rights of the Noteholder.
| 8. | MISCELLANEOUS |
8.1 Notices . All notices and other communications required or permitted to be given or otherwise provided under this Note must be in writing and must be given or otherwise provided: (a) by hand (in which case, it will be effective upon delivery); (b) by facsimile (in which case, it will be effective upon receipt of confirmation of good transmission by the intended recipient; provided, that such communication is also sent by some other means permitted by this Section 7.1 ); or (c) by overnight delivery by a nationally recognized courier service (in which case, it will be effective on the Business Day after being deposited with such courier service); in each case, to the address (or facsimile number) listed below:
If to the Noteholder , to :
CMC Magnetics Corporation
15F, No. 53, Ming Chuan W. Rd.
Taipei, 104, Taiwan
Attn: Chairman & CEO
with a copy to :
Tsar & Tsai Law Firm
8th Fl., 245 DunHua S. Rd., Sec. 1
Taipei 106, Taiwan
Attn: Jennifer Lin & Sophia Yeh
If to the Company , to :
Imation Corporation Japan
c/o GlassBridge Enterprises, Inc.
1099 Helmo Avenue, Suite 250
Oakdale, MN 55128
Attn: CEO & General Counsel
The Company and the Noteholder may specify different address or facsimile number by giving notice in accordance with this Section 8.1 to the other party. Notice provided in accordance with this Section 8.1 shall be sufficient to constitute service of process in connection with any action arising in whole or in part under or in connection with this Note.
| Promissory Note ( Imation Corporation Japan / CMC Magnetics Corporation ) |
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8.2 Governing Law/Venue . This Note, the negotiation, terms and performance of this Note, the rights of the parties under this Note, and all actions arising in whole or in part under or in connection with this Note shall be governed by and construed in accordance with the domestic substantive laws of the State of New York, without giving effect to any choice or conflict of law provision or rule that would cause the application of the laws of any other jurisdiction. The Company hereby irrevocably consents and submits to the non-exclusive jurisdiction of the Supreme Court of the State of New York, New York County, and the United States District Court for the Southern District of New York, whichever Noteholder elects, and waives any objection based on venue or forum non conveniens with respect to any action instituted therein arising under this Note. In the event that a court declines to hear an action relating to this Note on the grounds that such an action may not be heard in New York, the Noteholder shall be permitted to sue in state or federal court sitting in Minnesota .
8.3 Waiver of Jury Trial . TO THE EXTENT NOT PROHIBITED BY APPLICABLE LAW THAT CANNOT BE WAIVED, THE PARTIES HERETO HEREBY WAIVE, AND COVENANT THAT THEY SHALL NOT ASSERT (WHETHER AS PLAINTIFF, DEFENDANT, OR OTHERWISE) ANY RIGHT TO TRIAL BY JURY IN ANY ACTION ARISING IN WHOLE OR IN PART UNDER OR IN CONNECTION WITH THIS NOTE , or the negotiation, terms or performance hereof or thereof , WHETHER NOW EXISTING OR HEREAFTER ARISING, AND WHETHER SOUNDING IN CONTRACT, TORT, OR OTHERWISE. THE PARTIES HERETO AGREE THAT EITHER OF THEM MAY FILE A COPY OF THIS PARAGRAPH WITH ANY COURT AS WRITTEN EVIDENCE OF THE KNOWING, VOLUNTARY, AND BARGAINED-FOR AGREEMENT BETWEEN THE PARTIES HERETO IRREVOCABLY TO WAIVE THEIR RESPECTIVE RIGHTS (IF ANY) TO TRIAL BY JURY IN ANY PROCEEDING, AND ANY AND ALL LEGAL PROCEEDINGS WITH RESPECT TO THIS NOTE SHALL INSTEAD BE TRIED IN A COURT OF COMPETENT JURISDICTION BY A JUDGE SITTING WITHOUT A JURY.
8.4 Construction; Headings . This Note shall be deemed to be jointly drafted by the Company and the Noteholder and shall not be construed against any person or party as the drafter hereof. The headings of this Note are for convenience of reference and shall not form part of, or affect the interpretation of, this Note.
8.5 Successors and Assigns . All covenants and other agreements contained in this Note by or on behalf of the Company shall bind its successors and assigns, and inure to the benefit of Noteholder, its successors and assigns, whether so expressed or not.
8.6 Corporate Existence, Power and Authority . Company represents and warrants to Noteholder as follows: (i) Company is a corporation duly formed and in good standing under the laws of Japan; (ii) the execution, delivery and performance of this Note is within the corporate powers of Company, have been duly authorized and are not in contravention of law or the terms of the constitutive documents of Company, or any indenture, agreement or undertaking to which Company is a party or by which Company or its property are bound; and (iii) this Note constitutes the legal, valid and binding obligation of Company enforceable in accordance with its terms.
[ Remainder of Page Intentionally Left Blank ]
| Promissory Note ( Imation Corporation Japan / CMC Magnetics Corporation ) |
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IN WITNESS WHEREOF , the undersigned has caused this Note to be executed by a duly authorized officer as of the date first written above.
| IMATION CORPORATION JAPAN | ||
| By: | /s/ Tavis J. Morello | |
| Name: | Tavis J. Morello | |
| Title: | Director | |
Accepted and Agreed :
CMC MAGNETICS CORPORATION
| By: | /s/ Bob Wong |
| Name: | Bob Wong |
| Title: | Chairman |
Signature Page to Promissory Note
Exhibit 10.3
GUARANTEE
THIS GUARANTEE (“ Guarantee ”), dated as of September 15, 2017, is made by GlassBridge Enterprises, Inc. f/k/a Imation Corp., 1099 Helmo Avenue, Suite 250, Oakdale, MN 55128 (“ Guarantor ”), in favor of CMC Magnetics Corporation, 15F, No. 53, Ming Chuan W. Rd., Taipei, 104, Taiwan (“ CMC ”).
WHEREAS, CMC and Guarantor, among other parties, are about to enter into a Settlement Agreement of even date herewith (the “ Settlement Agreement ”) pursuant to which Imation Corporation Japan (“ ICJ ”) will execute a $1,500,000.00 (USD) promissory note (the “ ICJ Promissory Note ”) in favor of CMC;
WHEREAS, pursuant to the Settlement Agreement, ICJ and Imation Europe BV (“ IEBV ”) are obligated to make certain “Cash Payments” as further detailed in Section 2 thereof;
WHEREAS, due to the close business and financial relationships between ICJ, IEBV and Guarantor, in consideration of the benefits which will accrue to Guarantor and as an inducement for and in consideration of CMC entering into the Settlement Agreement, it is:
NOW, THEREFORE, in consideration of the premises and for other good and valuable consideration, the receipt and sufficiency of which are hereby acknowledged, Guarantor hereby agrees in favor of CMC as follows:
1. Guarantee .
(a) Guarantor absolutely and unconditionally guarantees and agrees to be liable for the full and indefeasible payment and performance when due of all obligations: (i) of ICJ and IEBV (collectively, the “ Imation Subsidiaries ”) pursuant to Section 2 (a) , (b) and (c) of the Settlement Agreement; and (ii) under the ICJ Promissory Note, whether by acceleration or otherwise. The Guarantor shall, in addition to its other obligations hereunder, forthwith pay to CMC all attorneys’ fees, costs, expenses and disbursements incurred by CMC or caused by or in any way related to enforcement of this Guarantee. All of the obligations set forth in this Section 1(a) shall be referred to herein collectively as the “ Guaranteed Obligations ”.
(b) This Guarantee is an irrevocable, absolute, and unconditional guarantee of payment and performance, and not of collection of the Guaranteed Obligations.
(c) Guarantor hereby confirms its intent, agreement, and understanding to be primarily obligated for payment and performance of all Guaranteed Obligations as if it had been the original obligor with respect to such Guaranteed Obligations.
(d) Guarantor shall make all payments to CMC on the Guaranteed Obligations free and clear of, and without deduction or withholding for or on account of, any setoff, counterclaim, defense, duties, taxes, levies, imposts, fees, deductions, withholding, restrictions or conditions of any kind. One or more successive or concurrent actions may be brought hereon against Guarantor either in the same action in which either or both of the Imation Subsidiaries are sued or in separate actions. In the event any claim or action, or action on any judgment, based on this Guarantee is brought against Guarantor, Guarantor agrees not to deduct, set-off, or seek any counterclaim for or recoup any amounts which are or may be owed by CMC to Guarantor.
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(e) Notwithstanding anything to the contrary contained herein, the amount of the obligations payable by Guarantor under this Guarantee shall be the aggregate amount of the Guaranteed Obligations under this Guarantee unless a court of competent jurisdiction adjudicates Guarantor’s obligations to be invalid, avoidable or unenforceable for any reason (including, without limitation, because of any applicable state or federal law relating to fraudulent conveyances or transfers), in which case the amount of the obligations payable by Guarantor hereunder shall be limited to the maximum amount that could be guaranteed by Guarantor without rendering Guarantor's obligations under this Guarantee invalid, avoidable or unenforceable under such applicable law.
(f) Guarantor hereby independently expressly agrees that the validity of this Guarantee and the obligations of the Guarantor hereunder shall in no way be terminated, affected, diminished or impaired by reason of the assertion or failure to assert by CMC against Guarantor or the Imation Subsidiaries, or its or their respective successors or assigns, any of the rights or remedies reserved to CMC pursuant to the provisions of the Settlement Agreement and/or the ICJ Promissory Note, and the Guarantor hereby expressly waives any arguments to the contrary.
2. Waivers and Consents .
(a) Notice of acceptance of this Guarantee, is hereby waived by Guarantor. Guarantor also waives notice of and hereby consents to: (i) any amendment, modification, supplement, extension, renewal, or restatement of the Settlement Agreement and/or the ICJ Promissory Note, including, without limitation, extensions of time of payment of or increase or decrease in the amount of any of the Guaranteed Obligations, the interest rate, fees, other charges, or any collateral, and the guarantee made herein shall apply to the Guaranteed Obligations as so amended, modified, supplemented, renewed, restated, or extended, increased or decreased; (ii) the taking, exchange, surrender, and releasing of collateral or guarantees now or at any time held by or available to CMC for the obligations of the Imation Subsidiaries or any other party at any time liable on or in respect of the Guaranteed Obligations, (iii) the exercise of, or refraining from the exercise of, any rights against the Imation Subsidiaries or any collateral; and (iv) the settlement, compromise, or release of, or the waiver of any default with respect to, any of the Guaranteed Obligations. Guarantor agrees that the amount of the Guaranteed Obligations shall not be diminished and the liability of Guarantor hereunder shall not be otherwise impaired or affected by any of the foregoing.
(b) This Guarantee shall be a continuing guarantee, and no invalidity, irregularity or unenforceability of all or any part of the Guaranteed Obligations shall affect, impair or be a defense to this Guarantee, nor shall any other circumstance which might otherwise constitute a defense available to or legal or equitable discharge of the Imation Subsidiaries in respect of any of the Guaranteed Obligations, or Guarantor in respect of this Guarantee, affect, impair or be a defense to this Guarantee. Without limitation of the foregoing, the liability of Guarantor hereunder shall not be discharged or impaired in any respect by reason of any failure by CMC to perfect or continue perfection of any lien or security interest in any collateral or any delay by CMC in perfecting any such lien or security interest. As to interest, fees and expenses, whether arising before or after the commencement of any case with respect to either or both Imation Subsidiaries under the United States Bankruptcy Code or any similar statute, Guarantor shall be liable therefor, even if liability for such amounts does not, or ceases to, exist by operation of law. Guarantor acknowledges that CMC has not made any representations to Guarantor with respect to the Imation Subsidiaries or otherwise in connection with the execution and delivery by Guarantor of this Guarantee and Guarantor is not in any respect relying upon CMC or any statements by CMC in connection with this Guarantee.
(c) Unless and until the indefeasible payment and satisfaction in full of all of the Guaranteed Obligations in immediately available funds, Guarantor hereby irrevocably and unconditionally waives and relinquishes (i) all statutory, contractual, common law, equitable and all other claims against the Imation Subsidiaries, any collateral for the Guaranteed Obligations for subrogation, reimbursement, exoneration, contribution, indemnification, setoff or other recourse in respect to sums paid or payable to CMC by Guarantor hereunder and (ii) any and all other benefits which Guarantor might otherwise directly or indirectly receive or be entitled to receive by reason of any amounts paid by or collected or due from Guarantor; and (iii) any defenses which might be available to the Guarantor and/or the Imation Subsidiaries.
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3. Reinstatement . If after receipt of any payment of, or proceeds of collateral applied to the payment of, any of the Guaranteed Obligations, CMC is required to surrender or return such payment or proceeds to any Person for any reason, then the Guaranteed Obligations intended to be satisfied by such payment or proceeds shall be reinstated and continue and this Guarantee shall continue in full force and effect as if such payment or proceeds had not been received by CMC. Guarantor shall be liable to pay to CMC, and does indemnify and hold CMC harmless for the amount of any payments or proceeds surrendered or returned.
4. Amendments and Waivers . Neither this Guarantee nor any provision hereof shall be amended, modified, waived, or discharged orally or by course of conduct, but only by a written agreement signed by an authorized officer of CMC. CMC shall not by any act, delay, omission, or otherwise be deemed to have expressly or impliedly waived any of its rights, powers, and/or remedies unless such waiver shall be in writing and signed by an authorized officer of CMC. Any such waiver shall be enforceable only to the extent specifically set forth therein. A waiver by CMC of any right, power, and/or remedy on any one occasion shall not be construed as a bar to or waiver of any such right, power, and/or remedy which CMC would otherwise have on any future occasion, whether similar in kind or otherwise.
5. Corporate Existence, Power and Authority . Guarantor represents and warrants to CMC as follows: (i) Guarantor is a corporation duly formed and in good standing under the laws of the State of Delaware; (ii) the execution, delivery and performance of this Guarantee is within the corporate powers of Guarantor, have been duly authorized and are not in contravention of law or the terms of the amended and restated certificate of incorporation and by-laws of Guarantor, or any indenture, agreement or undertaking to which Guarantor is a party or by which Guarantor or its property are bound; and (iii) this Guarantee constitutes the legal, valid and binding obligation of Guarantor enforceable in accordance with its terms.
6. Governing Law; Choice of Forum; Service of Process; Jury Trial Waiver .
(a) This Guarantee, the negotiation, terms and performance of this Guarantee, the rights of the parties under this Guarantee, and all actions arising in whole or in part under or in connection with this Guarantee shall be governed by and construed in accordance with the domestic substantive laws of the State of New York, without giving effect to any choice or conflict of law provision or rule that would cause the application of the laws of any other jurisdiction.
(b) Guarantor hereby irrevocably consents and submits to the non-exclusive jurisdiction of the Supreme Court of the State of New York, New York County, and the United States District Court for the Southern District of New York, whichever CMC elects, and waives any objection based on venue or forum non conveniens with respect to any action instituted therein arising under this Guarantee. In the event that a court declines to hear an action relating to this Guarantee on the grounds that such an action may not be heard in New York, CMC shall be permitted to sue in state or federal court sitting in Minnesota.
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(c) GUARANTOR HEREBY WAIVES ANY RIGHT TO TRIAL BY JURY OF ANY CLAIM, DEMAND, ACTION, OR CAUSE OF ACTION (1) ARISING UNDER THIS GUARANTEE; OR (2) IN ANY WAY CONNECTED WITH, OR RELATED OR INCIDENTAL TO, THE DEALINGS OF GUARANTOR AND CMC IN RESPECT OF THIS GUARANTEE OR THE TRANSACTIONS RELATED HERETO OR THERETO, IN EACH CASE WHETHER NOW EXISTING OR HEREAFTER ARISING, AND WHETHER IN CONTRACT, TORT, EQUITY, OR OTHERWISE. GUARANTOR HEREBY AGREES AND CONSENTS THAT ANY SUCH CLAIM, DEMAND, ACTION, OR CAUSE OF ACTION SHALL BE DECIDED BY COURT TRIAL WITHOUT A JURY, AND THAT GUARANTOR OR CMC MAY FILE AN ORIGINAL COUNTERPART OF A COPY OF THIS AGREEMENT WITH ANY COURT AS WRITTEN EVIDENCE OF THE CONSENT OF GUARANTOR AND CMC TO THE WAIVER OF THEIR RIGHT TO TRIAL BY JURY.
(d) CMC shall not have any liability to Guarantor (whether in tort, contract, equity, or otherwise) for losses suffered by Guarantor in connection with, arising out of, or in any way related to, the transactions or relationships contemplated by this Guarantee, or any act, omission, or event occurring in connection herewith, unless it is determined by a final and non-appealable judgment or court order binding on CMC that the losses were the result of acts or omissions constituting gross negligence or willful misconduct.
7. Notices . All notices, requests, and demands hereunder shall be in writing and (a) made to CMC at its address designated in writing by CMC and to Guarantor at its chief executive office set forth in writing to CMC, or to such other address as either party may designate by written notice to the other in accordance with this provision; and (b) deemed to have been given or made: if delivered in person, immediately upon delivery; if by telex, telegram or facsimile transmission, immediately upon sending and upon confirmation of receipt; if by nationally recognized overnight courier service with instructions to deliver the next business day, one (1) business day after sending; and if by certified mail, return receipt requested, five (5) days after mailing.
8. Partial Invalidity . If any provision of this Guarantee is held to be invalid or unenforceable, such invalidity or unenforceability shall not invalidate this Guarantee as a whole, but this Guarantee shall be construed as though it did not contain the particular provision held to be invalid or unenforceable, and the rights and obligations of the parties shall be construed and enforced only to such extent as shall be permitted by applicable law.
9. Entire Agreement . This Guarantee represents the entire agreement and understanding of the parties hereto concerning the subject matter hereof, and supersedes all other prior agreements, understandings, negotiations and discussions, representations, warranties, commitments, proposals, offers, and contracts concerning the subject matter hereof, whether oral or written.
10. Successors and Assigns . This Guarantee shall be binding upon Guarantor and its successors and assigns, and shall inure to the benefit of CMC and its successors, endorsees, transferees, and assigns. The liquidation, dissolution, or termination of Guarantor shall not terminate this Guarantee as to Guarantor.
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11. Construction . All references to the term "Guarantor" wherever used herein shall mean Guarantor and its successors and assigns (including, without limitation, any receiver, trustee, or custodian for Guarantor or any of its assets, or Guarantor in its capacity as debtor or debtor-in-possession under the United States Bankruptcy Code). All references to the term "CMC" wherever used herein shall mean CMC and its successors and assigns, and all references to the term “Imation Subsidiaries” wherever used herein shall mean ICJ and IEBV and their respective successors and assigns (including, without limitation, any receiver, trustee or custodian for the Imation subsidiaries or any of their assets, or the Imation Subsidiaries in their capacity as debtor or debtor-in-possession under the United States Bankruptcy Code). All references to the term "Person" or "person" wherever used herein shall mean any individual, sole proprietorship, partnership, corporation (including, without limitation, any corporation which elects subchapter S status under the Internal Revenue Code of 1986, as amended), limited liability company, limited liability partnership, business trust, unincorporated association, joint stock corporation, trust, joint venture, or other entity or any government or any agency or instrumentality or political subdivision thereof. All references to the plural shall also mean the singular and to the singular shall also mean the plural.
[ Signature Page Follows ]
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IN WITNESS WHEREOF, Guarantor has executed and delivered this Guarantee as of the day and year first above written.
| GLASSBRIDGE ENTERPRISES, INC. | ||
| By: | /s/ Danny Zheng | |
| Name: | Danny Zheng | |
| Title: | CFO & Interim CEO | |
Accepted and Agreed :
CMC MAGNETICS CORPORATION
| By: | /s/ Bob Wong |
| Name: | Bob Wong |
| Title: | Chairman |
Signature Page to Guarantee