Exhibit 10.6
EXECUTION VERSION
AGREEMENT
THIS AGREEMENT is made as of April 22, 2003, by and between
International Steel Group Inc., a Delaware corporation ("ISG"), and the Pension
Benefit Guaranty Corporation, a United States government corporation and agency
of the United States ("PBGC").
RECITALS
WHEREAS, Bethlehem Steel Corporation ("BSC") and certain of
its Affiliates (collectively, the "DEBTORS") on October 15, 2001 filed voluntary
cases for reorganization (the "BANKRUPTCY CASES") under Chapter 11 of the
Bankruptcy Code, 11 U.S.C. Sections 101-1330 (the "BANKRUPTCY CODE"); and
WHEREAS, the PBGC has filed an action seeking termination of
the Pension Plan of Bethlehem Steel Corp. & Subsidiary Companies (the "PENSION
PLAN"); and
WHEREAS, each member of the Bethlehem Group, including the
Non-Debtor Sellers, is jointly and severally liable for the Pension Plan's
unfunded benefit liabilities under Title IV of ERISA; and
WHEREAS, Bethlehem and certain Affiliates, including the
Non-Debtor Sellers, have agreed to sell the Acquired Assets specified in the
Asset Purchase Agreement to ISG Acquisition Inc. ("BUYER"); and
WHEREAS, the PBGC filed an objection (the "OBJECTION") to the
consummation of the transactions contemplated by the Asset Purchase Agreement
(the "ISG SALE"); and
WHEREAS, the Consideration Shares may constitute part of the
consideration paid by Buyer for the Acquired Assets as specified in the Asset
Purchase Agreement; and
WHEREAS, the Asset Purchase Agreement provides as a condition
to the closing of the purchase of the Acquired Assets by Buyer that the PBGC
shall have given a release of certain claims; and
WHEREAS, ISG has offered the PBGC the Note in consideration
for the ISG Release and BSC Release; and
WHEREAS, the PBGC has concluded that, by agreeing to receive
the Note in consideration for the ISG Release and BSC Release, the amount
realizable by the PBGC from the assets covered by the ISG Release and BSC
Release will be increased and the ultimate collection of the amounts owed under
Title IV of ERISA with respect to the Pension Plan will be facilitated;
NOW, THEREFORE, for good and valuable consideration, the
receipt and sufficiency of which are acknowledged, the parties agree as follows:
I. DEFINITIONS
As used in this Agreement, the following terms shall have the
meaning set forth below:
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A. "ACQUIRED ASSETS" means the assets of BSC and certain
Affiliates, as set forth in Section 1.1 of the Asset Purchase Agreement, which
are to be purchased, sold, conveyed, assigned or otherwise transferred pursuant
to the Asset Purchase Agreement.
B. "AFFILIATE" means, with respect to any Person, any
other Person directly or indirectly controlling, controlled by or under direct
or indirect common control with such Person.
C. "AGREEMENT" shall mean this Agreement and all of its
Exhibits, by and between ISG and the PBGC.
D. "ASSET PURCHASE AGREEMENT" means the agreement, dated
as of March 12, 2003, by and among BSC, certain Affiliates of BSC, Buyer and
ISG. A copy of the Asset Purchase Agreement is attached hereto as Exhibit E.
E. "BETHLEHEM GROUP" shall mean each Person that is a
member of the Controlled Group of which BSC is a member as of the date the
Bankruptcy Cases were filed.
F. "BSC RELEASE" means a duly executed release
substantially in the form of Exhibit B attached hereto.
G. "CLAIM" means all rights, claims, causes of action,
defenses, debts, demands, damages, obligations, and liabilities of any kind or
nature under contract, at law or in equity, known or unknown, contingent or
matured, liquidated or unliquidated, and all rights and remedies with respect
thereto, including, without limitation, causes of action arising under chapter 5
of the Bankruptcy Code or similar state statutes.
H. "CONSIDERATION SHARES" shall mean shares of ISG Class
B Common Stock (as defined in the Asset Purchase Agreement) that constitute a
portion of the consideration for the Acquired Assets, as specified in Section
2.2(d) of the Asset Purchase Agreement.
I. "CONTROLLED GROUP" shall have the meaning ascribed
thereto under Section 4001(a)(14) of ERISA.
J. "EFFECTIVE DATE" shall mean the Closing Date as
defined in Section 3.1 of the Asset Purchase Agreement.
K. "ERISA" shall mean the Employee Retirement Income
Security Act of 1974, as amended, 29 U.S.C. Sections 1001 et seq., and any
successor statute of similar import, together with the regulations thereunder,
in each case as in effect from time to time. References to sections of ERISA
shall be construed to refer to any successor sections.
L. "INTERNAL REVENUE CODE" means the Internal Revenue
Code of 1986, as amended, 26 U.S.C. Sections 1, et seq., and any successor
statute of similar import, together with regulations thereunder, in each case as
in effect from time to time. References to sections of the Internal Revenue Code
shall be construed to refer also to any successor sections of similar import.
M. "ISG RELEASE" means a duly executed release
substantially in the form of Exhibit A attached hereto.
N. "JOINT VENTURES" means the Persons so defined in
Section 12.1 of the Asset Purchase Agreement.
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O. "LIEN" means any mortgage, pledge, security interest,
encumbrance, lien (statutory or other), conditional sale agreement, claim or
liability.
P. "NON-DEBTOR SELLERS" means Persons defined as Sellers
in Section 12.1 of the Asset Purchase Agreement that are not Debtors under the
Bankruptcy Cases.
Q. "NOTE" means a duly executed promissory note
substantially in the form of Exhibit C attached hereto.
R. "PERSON" means any individual, corporation,
partnership, limited liability company, joint venture, association, joint-stock
company, trust, unincorporated organization or Governmental entity.
S. "REGISTRATION RIGHTS AGREEMENT" means a duly executed
agreement substantially in the form of Exhibit D attached hereto.
II. ISG'S OBLIGATIONS
A. On the Effective Date, ISG shall deliver the Note and
the Registration Rights Agreement to the PBGC.
B. If the Consideration Shares are not delivered to the
general unsecured prepetition creditors of BSC prior to July 1, 2004, or if an
Alternative Plan (as defined in Section 5.7(d) of the Asset Purchase Agreement)
(the "ALTERNATIVE PLAN") is confirmed, then, not later than July 10, 2004 or
within 10 days after the confirmation of the Alternative Plan, as the case may
be, ISG shall deliver to the PBGC the number of shares of ISG Class B Common
Stock having an aggregate value of $11,250,000, which represents 75% of the
aggregate value of the Consideration Shares to be delivered to BSC in connection
with the consummation of the transactions contemplated by the Asset Purchase
Agreement (the "REPLACEMENT SHARES").
III. PBGC'S OBLIGATIONS
A. The PBGC shall immediately withdraw its Objection to
the ISG Sale.
B. On the Effective Date, the PBGC shall deliver the ISG
Release to ISG.
C. On the Effective Date, the PBGC shall deliver the BSC
Release to BSC.
D. If the PBGC receives any distribution in respect of
any Claims against any member of the Bethlehem Group, other than any
Consideration Shares or any Replacement Shares and the Note and Registration
Rights Agreement, the PBGC shall deliver such distribution to BSC to be held for
payment of all Claims that are or will be entitled to secured or priority
treatment under Sections 506 or 507 of the Bankruptcy Code or payment to Buyer
as provided in Section 2.3 of the Asset Purchase Agreement. In the event it is
not possible to deliver such distribution to BSC, the PBGC shall deliver it to
ISG. The PBGC may reduce any amount deliverable by it pursuant to this Section
by the amount of any out-of-pocket expenses actually paid by the PBGC after the
date hereof in connection with such distribution.
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E. The PBGC shall not without the prior written consent
of ISG and BSC assign, compromise, waive or release any of its claims or rights
against any member of the Bethlehem Group. The PBGC shall use commercially
reasonable efforts to assist BSC in obtaining confirmation of a plan of
liquidation.
F. The PBGC's obligations under Sections III.B.-E.
hereof shall be contingent on the occurrence of the Effective Date.
IV. REPRESENTATIONS AND WARRANTIES
A. The PBGC represents and warrants to ISG as follows:
(1) Authorizations. The PBGC possesses full
corporate power and authority to execute, deliver and perform this
Agreement. The officer of the PBGC executing this Agreement has been
duly authorized to execute and deliver this Agreement.
(2) Binding Effect. This Agreement has been duly
executed and delivered by the PBGC and constitutes a legal, valid and
binding obligation of the PBGC and is enforceable against it in
accordance with its terms, subject to general equitable principles
(whether considered in a proceeding in equity or at law) and an implied
covenant of good faith and fair dealing.
(3) Reliance. The PBGC recognizes and
acknowledges that ISG has relied on the representations and warranties
contained herein in entering into this Agreement and that these
representations and warranties shall survive the execution and delivery
of this Agreement.
(4) Securities Law Matters.
(a) The PBGC acknowledges that the shares of ISG
Class B Common Stock that may be issued hereunder have not
been and will not be registered under the Securities Act
or any applicable state securities laws and that the
contemplated sale is being made in reliance on a private
placement exemption to accredited investors (as such term
is defined in Rule 501(a) promulgated under the Securities
Act of 1933 (the "SECURITIES ACT")); provided, however,
that nothing in this Section is in denigration of the
PBGC's rights under the Note or the Registration Rights
Agreement.
(b) The PBGC has such knowledge and experience in
financial and business matters as to be capable of
evaluating the merits and risks of its investment in the
ISG Class B Common Stock and is able to bear the economic
risks of such investment.
(c) The PBGC is an "accredited investor" as
defined in Rule 501(a) promulgated under the Securities
Act.
(d) The PBGC acknowledges that upon the original
issuance thereof, and until such time as the same is no
longer required under applicable requirements of the
Securities Act or applicable state securities laws (at
which time ISG shall remove such legends promptly upon
request of PBGC), certificates representing the ISG Class
B Common Stock, and all certificates issued in exchange
therefor or in substitution thereof, shall bear the
following legend:
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THE SECURITIES REPRESENTED BY THIS
CERTIFICATE HAVE NOT BEEN REGISTERED UNDER
THE SECURITIES ACT OF 1933, AS AMENDED (THE
"SECURITIES ACT"), OR ANY STATE SECURITIES
OR BLUE SKY LAWS. SUCH SHARES HAVE BEEN
ACQUIRED FOR INVESTMENT AND MAY NOT BE SOLD,
TRANSFERRED, PLEDGED OR HYPOTHECATED IN THE
ABSENCE OF AN EFFECTIVE REGISTRATION
STATEMENT FOR SUCH SHARES UNDER THE
SECURITIES ACT AND ANY APPLICABLE STATE
SECURITIES OR BLUE SKY LAWS, UNLESS, IN THE
OPINION (WHICH SHALL BE IN FORM AND
SUBSTANCE REASONABLY SATISFACTORY TO THE
ISSUER) OF REPUTABLE SECURITIES LAW COUNSEL,
SUCH REGISTRATION IS NOT REQUIRED.
In addition, such certificates shall also bear such other
legends as counsel for ISG reasonably determines are
required under the applicable laws of any state until such
time as the same is no longer required (at which time ISG
shall remove such legends promptly upon request of the
PBGC).
B. ISG represents and warrants to the PBGC as follows:
(1) Authorization. ISG is a corporation duly
organized, existing and in good standing under the laws of Delaware.
ISG possesses full corporate power and authority to execute, deliver
and perform this Agreement. The officer executing this Agreement on
behalf of ISG has been duly authorized to do so.
(2) Binding Effect. This Agreement has been duly
executed and delivered by ISG and constitutes a legal, valid and
binding obligation of ISG and is enforceable against ISG in accordance
with its terms, subject to the effects of applicable bankruptcy,
insolvency, fraudulent conveyance, moratorium and other similar laws
relating to or affecting creditors' rights generally, general equitable
principles (whether considered in a proceeding in equity or at law) and
an implied covenant of good faith and fair dealing.
(3) No Conflict. The execution, delivery and
performance of this Agreement by ISG is not in contravention of, and
does not constitute a default under, the terms of any of ISG's articles
of incorporation, by-laws or other organizational documentation, or any
law, regulation, decree, order, judgment, indenture, agreement or
undertaking to which ISG is a party or by which ISG or any of its
properties are bound or result in the creation of imposition of any
lien on any of the respective properties of ISG.
(4) Validity of Replacement Shares. The
Replacement Shares issuable hereunder have been duly authorized for
issuance and, when issued and delivered in accordance with the
provisions of this Agreement, will be validly issued and fully paid and
non-assessable, and the issuance of such shares will not be subject to
preemptive or other similar rights. The shares of ISG Common Stock (as
defined in the Asset Purchase Agreement) to be issued upon the
conversion of the Replacement Shares if issued and delivered in
accordance with the terms of the Replacement Shares will be validly
issued and fully paid and nonassessable and the issuance of such shares
will not be subject to preemptive or similar rights.
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(5) No Consents Required. No consent, approval,
authorization, filing, registration or other similar formality of or
with any governmental authority, agency or instrumentality, or any
other person or entity is required in connection with the execution,
delivery or performance by ISG of this Agreement, except in connection
with any filing that has been or will be made by ISG to the extent
required under (a) state securities or "blue sky" laws or (b) the
Securities Act.
(6) Reliance. ISG recognizes and acknowledges
that the PBGC has relied on the representations and warranties
contained herein in entering into this Agreement and that these
representations and warranties shall survive the execution and delivery
of this Agreement.
V. GENERAL PROVISIONS
A. 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 and by ERISA, the Internal
Revenue Code, and other laws of the United States to the extent they preempt the
laws of the State of New York. Except as otherwise provided in Section II.B.
hereof, the parties hereto shall submit to the jurisdiction of the bankruptcy
court overseeing the Bankruptcy Cases in connection with any claim or dispute
arising under this Agreement.
B. Entire Agreement. This Agreement and any instruments
or documents delivered or to be delivered in connection herewith represent the
entire agreement and understanding concerning the subject matter between the
parties hereto, and supersedes the term sheet and all other prior agreements,
understandings, negotiations, discussions, proposals and offers concerning the
subject matter hereof, whether oral or written.
C. Severability. If any provision of this Agreement
shall be rendered invalid, inoperative, or unenforceable as applied in any
particular case, such action shall not have the effect of rendering the
provision in question inoperative or unenforceable in any other case or
circumstance. If any provision of this Agreement shall be rendered invalid,
inoperative, or unenforceable in all cases, such action shall not have the
effect of rendering any other provisions of the Agreement invalid, inoperative,
or unenforceable. The invalidity of any portion of this Agreement shall not
affect the remaining portions of the Agreement.
D. Limitation of Rights. BSC is an intended third party
beneficiary of this Agreement. Except as provided in the preceding sentence,
this Agreement is intended to be and is for the sole and exclusive benefit of
ISG, its Affiliates, the PBGC, and their assigns under Section IV.E. hereof.
Nothing expressed or mentioned in or to be implied from the Agreement gives any
person other than the ISG Group and the PBGC any legal or equitable right,
remedy, or claim against the ISG Group or the PBGC under or in respect of this
Agreement.
E. Assignment. This Agreement may not be assigned in
whole or in part by either party without the express written consent of the
other party.
F. Notices. All notices, requests, or other
communications shall be in writing and shall be deemed to have been given (1) if
by courier, when receipted for, (2) if by certified mail, return receipt
requested, when the return receipt has been received, or (3) if by telex,
facsimile or similar electronic transfer, when sent, with receipt confirmed,
address as follows:
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ISG:
Xx. Xxxxxx X. Xxxx
President & CEO
0000 Xxxxxxxxxx Xxxxx, 0xx Xxxxx
Xxxxxxxxx, XX 00000-0000
Facsimile: (000) 000-0000
With copy to:
Xx. Xxxxxx X. Xxxx, Xx.
Chairman and Chief Executive Officer
XX Xxxx & Co. LLC
000 Xxxx 00xx Xxxxxx - 00xx Xxxxx
Xxx Xxxx, XX 00000
Facsimile: (000) 000-0000
and to
Xxxxx Xxxxxx, Esq.
Xxxxx Day
000 Xxxxxxxx Xxxxxx
Xxxxxxxxx, XX 00000
Facsimile: (000) 000-0000
PBGC: Director, Corporate Finance and Negotiations
Department
Pension Benefit Guaranty Corporation
0000 X Xxxxxx, XX, Xxxxx 000
Xxxxxxxxxx, XX 00000-0000
Facsimile: (000) 000-0000
With copy to:
General Counsel
Pension Benefit Guaranty Corporation
0000 X Xxxxxx, XX, Xxxxx 000
Xxxxxxxxxx, XX 00000-0000
Facsimile: (000) 000-0000
G. Captions and Headings. The titles and captions used
in the Section headings of this Agreement are solely for the convenience of the
parties and shall not be controlling for purposes of the interpretation of this
Agreement.
H. Counterparts. This Agreement may be executed in
identical counterparts, each of which shall be an original as against the party
that signed it, and all which together shall constitute one and the same
instrument. This Agreement will be effective as of the latest date on which it
has been signed by all the parties.
I. Amendment and Waivers. No amendment of any provision
of this Agreement shall be valid unless the amendment is in writing and signed
by the parties to this Agreement. The failure
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of any party to the Agreement to enforce a provision of the Agreement shall not
constitute a waiver of the party's right to enforce that provision of the
Agreement.
J. Reservation of Rights. Nothing in this Agreement
shall preclude the PBGC from exercising its regulatory, enforcement, litigation,
or other authority as set forth in ERISA and the Internal Revenue Code with
respect to any person, other than as expressly provided otherwise in this
Agreement.
K. Rules for Interpretation. For purposes of this
Agreement, unless otherwise provided herein:
(1) whenever from the context it is appropriate, each
term, whether stated in the singular or the plural, will include both
the singular and the plural;
(2) unless otherwise provided in this Agreement, any
reference in this Agreement to another agreement, contract, instrument
or document being in a particular form or having particular terms and
conditions means that such agreement, contract, instrument, or document
will be substantially in such form or substantially on such terms and
conditions;
(3) any reference to the PBGC and ISG includes such
entities' permitted successors and assigns and, to the extent relevant,
any reference to ISG includes its Affiliates; and
(4) the language used in this Agreement shall be
deemed to be the language chosen by the Parties to express their mutual
intent, and no rule of strict construction shall be applied against any
party hereto. A reference to any statute shall be deemed also to refer
to all rules and regulations promulgated under the statute, unless the
context requires otherwise.
[SIGNATURES ON FOLLOWING PAGE]
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IN WITNESS WHEREOF, this Agreement has been duly executed and
delivered as of the day and year first set forth above.
INTERNATIONAL STEEL GROUP INC.
By: /s/ Xxxxxx Xxxx
-----------------------------------------
Name: Xxxxxx Xxxx
Title: President
PENSION BENEFIT GUARANTY CORPORATION
By: /s/ Xxxxxx X. Xxxxxxxxx
-----------------------------------------
Name: Xxxxxx X. Xxxxxxxxx
Title: Director, Corporate Finance and
Negotiations Department
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