SCHEDULE 14A
(Rule 14a-101)
INFORMATION REQUIRED IN PROXY STATEMENT
SCHEDULE 14A INFORMATION
Proxy Statement Pursuant to Section 14(a) of the
Securities Exchange Act of 1934
Filed by the registrant |X|
Filed by a party other than the registrant |_|
Check the appropriate box:
|X| Preliminary proxy statement
|_| Confidential, for Use of the Commission
Only (as permitted by Rule 14a-6(e)(2))
|_| Definitive proxy statement
|_| Definitive additional materials
|_| Soliciting material pursuant to Rule 14a-11(c) or Rule 14a-12
Moto Guzzi Corporation
(Name of Registrant as Specified in Its Charter)
N/A
(Name of Person(s) Filing Proxy Statement, if Other Than the Registrant)
Payment of filing fee (Check the appropriate box):
|_| No fee required.
|X| Fee computed on table below per Exchange Act
Rules 14a-6(i)(1) and 0-11.
1. Title of each class securities to which transaction applies:
Class A Common Stock, $.01 par value
2. Aggregate number of securities to which transaction applies:
5,999,092 Shares of Class A Common Stock
3. Per unit price or other underlying value of transaction computed
pursuant to Exchange Act Rule 0-11 (set forth the amount on which
the filing fee is calculated and state how it was determined):
4. Proposed maximum aggregate value of transaction: $43,737,575
5. Total fee paid: $8,747.52
|_| Check box if any part of the fee is offset as provided by Exchange Act
Rule 0-11(a)(2) and identify the filing for which the offsetting fee was paid
previously. Identify the previous filing by registration statement number, or
the Form or schedule and the date of its filing.
1. Amount Previously Paid:
2. Form, Schedule or Registration Statement No.:
3. Filing Party:
4. Date Filed:
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MOTO GUZZI CORPORATION
445 Park Avenue, 6th Floor
New York, New York 10022
United States of America
PROPOSED SALE - YOUR VOTE IS IMPORTANT
Dear Moto Guzzi Corporation Stockholder:
We cordially invite you to attend a Special Meeting of stockholders of
Moto Guzzi Corporation, which will be held at __________, on July __, 2000 at
__________a.m., local time. At the Special Meeting, we will ask you to approve a
sale of substantially all our assets (through a sale of our four operating
subsidiaries) to Aprilia S.p.A. pursuant to a Preliminary Share Sale and
Purchase Agreement dated as of April 14, 2000 and to approve a change of our
name to "__________."
Your vote is very important. In order to complete the sale and to change
our name we need both the presence of stockholders sufficient to constitute a
quorum and the affirmative vote of a majority of our outstanding Class A common
stock. Only stockholders of record on __________, 2000 are entitled to attend
the Special Meeting and vote.
O.A.M. S.p.A., which owns approximately 61% of our Class A common stock
(as well as approximately 13% of our Series B preferred stock) has agreed to
vote all of its shares in favor of the sale and the name change. Assuming that
no additional shares of Class A common stock are issued prior to the record date
for the Special Meeting, the affirmative vote of OAM will be sufficient to
ensure stockholder approval of the sale and the name change. Therefore, if there
is a quorum present at the Special Meeting, the proposals regarding the sale and
the name change will be approved by the stockholders even if no other
stockholders vote in favor of them. However, it is important that as many as
possible of the stockholders be present or represented at the meeting, among
other things to be sure there is a quorum.
Even if you plan to attend the Special Meeting, please take the time to
vote by completing the enclosed proxy card and mailing it to us. If you sign,
date and mail your proxy card without indicating how you want to vote, your
shares will be voted in favor of the sale of our operating subsidiaries and in
favor of the change of our name. You have the option of revoking your proxy at
any time or of voting your shares personally if you attend the meeting.
The accompanying proxy statement includes answers to frequently asked
questions and a summary description of the sale, followed by a more detailed
discussion of the sale and other related matters. We encourage you to read the
entire proxy statement carefully.
Our board of directors has determined, based on a recommendation of a
special committee of the board, that the sale is in the best interests of our
stockholders and unanimously recommends that you vote "FOR" the sale and "FOR"
the change of our name to "_________________."
Sincerely,
Mark S. Hauser
Chairman
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Moto Guzzi CorpORATION
445 Park Avenue, 6th Floor
New York, NY 10022
United States of America
NOTICE OF SPECIAL MEETING OF STOCKHOLDERS
TO BE HELD ON JULY __, 2000
To Our Stockholders:
NOTICE IS HEREBY GIVEN that a special meeting of stockholders of Moto
Guzzi Corporation will be held at __________, on July __, 2000 at
__________a.m., local time, for the following purposes:
1. To consider and vote on a proposal to sell our four operating
subsidiaries pursuant to a Preliminary Share Sale and Purchase
Agreement, dated as of April 14, 2000, with Aprilia S.p.A;
2. To consider and vote upon a proposal to amend our Certificate of
Incorporation to change our name to "__________"; and
3. To transact any other business which may properly come before the
meeting or any adjournment or postponement of the meeting.
Only stockholders of record at the close of business on __________, 2000
will be entitled to notice of or to vote at the meeting or any adjournment or
postponement of the meeting. A complete list of stockholders entitled to vote at
the meeting will be available at the meeting for inspection by any stockholder.
The holder of more than 50% of the shares which are entitled to vote has
agreed to vote in favor of the sale and the name change proposals. Therefore, if
there is a quorum present at the meeting, the proposals regarding the sale and
the name change will be approved by the stockholders even if no other
stockholders vote in favor of it.
Our board of directors has determined that the sale is in the best
interests of the Moto Guzzi stockholders and unanimously recommends that you
vote "FOR" the sale and "FOR" the change of our name to "___________".
You are urged to attend the meeting. Whether or not you plan to attend,
please fill in, date and sign the enclosed proxy card and return it promptly in
the enclosed envelope. You may revoke your proxy at any time before it is voted
by following the directions on page __ of the enclosed proxy statement or by
voting in person at the meeting.
June __, 2000
BY ORDER OF THE BOARD OF DIRECTORS
Secretary
Whether or not you plan to attend the special meeting, please fill in,
date and sign the enclosed proxy card and return it promptly in the enclosed
return envelope, which requires no postage if mailed in the United States.
Please do not send stock certificates with your proxy card.
<PAGE>
--------------------
MOTO GUZZI CORPORATION
445 Park Avenue
New York, New York 10022
PROXY STATEMENT
--------------------
This Proxy Statement is being furnished to our stockholders in connection
with the solicitation of proxies by our board of directors from the holders of
shares of Class A common stock, par value $.01 per share, for use at a special
meeting of our stockholders to be held on ______, July __, 2000, at _____ a.m.
local time, at ________________________, New York, New York, and at any
adjournment or postponement thereof.
On April 14, 2000, we signed a sale agreement in which we agreed to sell
our four operating subsidiaries (Moto Guzzi, S.p.A., MGI Motorcycle GmbH, Moto
Guzzi France S.a.r.l. and Moto Guzzi North America, Inc.) to Aprilia S.p.A. for
Lit. 71.5 billion (approximately $34.0 million) plus or minus the amount by
which the subsidiaries' net worth at April 30, 2000 is more or less than its net
worth at December 31, 1999 (which we anticipate will increase the sale price by
approximately Lit.14.5 billion (approximately $6.9 million)). Because the sale
of the four subsidiaries will be a sale of substantially all our assets, the
transaction cannot take place unless it is approved by holders of a majority of
our outstanding Class A common stock. At the special meeting, holders of shares
of Class A common stock on the record date will be asked to consider and vote
upon a proposal to give that approval.
Only holders of record of shares of Class A common stock at the close of
business on June __, 2000, the record date for the special meeting, are entitled
to notice of, and to vote at, the special meeting. At the close of business on
Record Date, 5,859,089 Shares were issued and outstanding, which constituted our
only issued and outstanding class of voting securities.
The date of this Proxy Statement is June 8, 2000, and this Proxy Statement
is first expected to be mailed to stockholders on June __, 2000.
<PAGE>
TABLE OF CONTENTS
Page
QUESTIONS AND ANSWERS ABOUT THE SALE AND VOTING PROCEDURES...................1
CURRENCY AND EXCHANGE RATE INFORMATION.......................................4
Presentation of Currencies...................................................4
Exchange Rates...............................................................4
SPECIAL NOTE REGARDING FORWARD-LOOKING STATEMENTS............................5
SUMMARY......................................................................6
The Sale Agreement and the Sale..............................................6
The Special Meeting..........................................................8
RISK FACTORS................................................................11
THE SPECIAL MEETING.........................................................14
PROPOSAL 1 SALE OF SUBSIDIARIES.............................................17
THE SALE AGREEMENT AND THE SALE.............................................26
PROPOSAL 2 CHANGE OF CORPORATE NAME.........................................31
WHERE YOU CAN FIND MORE INFORMATION.........................................32
INCORPORATION OF CERTAIN INFORMATION BY REFERENCE...........................32
-i-
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QUESTIONS AND ANSWERS ABOUT THE SALE AND VOTING PROCEDURES
Q. What will happen in the proposed transaction?
A. We will sell our four operating subsidiaries (Moto Guzzi S.p.A., MGI
Motorcycle GmbH, Moto Guzzi France S.a.r.l and Moto Guzzi North America
Inc.) to Aprilia S.p.A. The subsidiaries are essentially our only assets.
Q. Why did Moto Guzzi's board decide that the sale is the best way to
maximize stockholder value now?
A. The board believes that the timing for a sale of the Moto Guzzi operations
is optimal. Moto Guzzi is a great name in the world of performance and
luxury motorcycles. However, the business has had a negative cash flow for
several years and we don't have the funds to support it or to make the
investment which would be necessary to make it profitable. By contrast,
Aprilia is a financially strong company. It will benefit from access to
our trademark and our cruiser motorcycles. Also, it may be able to achieve
purchasing efficiencies and other efficiencies for the Moto Guzzi
operations which our subsidiaries could not achieve on their own. Because
of this, Aprilia is willing to pay what we believe is a very good price
for our subsidiaries.
We believe it is in our stockholders' interest to take advantage of the
opportunity to sell the subsidiaries to Aprilia. Please read the more
detailed description of our reasons for the sale on pages 6 and 7.
Q. Will the Company have to pay taxes because of the sale?
A. The sale will be a taxable transaction. However, we have a substantial
basis in the shares we are selling. Because of that, we do not expect to
have to pay any significant taxes as a result of the sale.
Q. What is the sale price?
A. The sale price for the shares of the subsidiaries will be Lit. 71.5
billion (approximately $34.0 million) plus or minus the amount by which
the subsidiaries' net worth at April 30, 2000 is more or less than its net
worth at December 31, 1999 (which we anticipate will increase the sale
price by approximately Lit.14.5 billion (approximately $6.9 million)). In
addition, Aprilia will satisfy debts of the subsidiaries to us totaling
approximately Lit.2.0 billion (approximately $1.0 million) and cause OAM
to be released from a Lit.4 billion (approximately $1.9 million) guarantee
of obligations of the subsidiaries. Because the amounts to be paid are
specified in the sale agreement in Italian lire, the dollar value of the
sale price will depend on the dollar/lire exchange rate when the sale is
completed.
Q. What will be done with the sale proceeds?
A. We will pay our debts, which are quite small. We will have to pay the
transaction costs of the sale, which we estimate will total Lit._________
(approximately $_________), including financial advisor fees of Lit.
_________ (approximately $_____). In addition, we will have to redeem our
Series B preferred stock, unless it is converted into Class A common
stock. With respect to remaining proceeds, we have agreed with O.A.M.,
S.p.A., the holder of approximately 61% of our outstanding Class A common
stock, and Trident Rowan, OAM's parent, that we will, as promptly as
practicable after the closing of the sale, but in no event later than 90
days following the closing, hold a meeting of stockholders to consider and
vote upon a proposal to liquidate all our assets and dissolve the Company.
If we liquidate, our assets (i.e., the remaining proceeds of the sale)
will be distributed to the holders of our Class A common stock. As a
holder of Class A common stock, you will have an opportunity to vote on
the proposal that will be liquidated. However, because OAM owns 61% of the
Class A common stock, it can approve the liquidation even if no other
stockholders vote in favor of it. Conversely, the liquidation will not be
approved unless OAM votes in favor of it. Although OAM and Trident Rowan
insisted that we agree to submit a liquidation proposal to our
stockholders, OAM is not committed to vote its shares of Class A common
stock for the liquidation proposal. During the period between the closing
of the sale and the stockholder meeting relating to the liquidation
proposal, we may seek to find other companies in which to invest proceeds
from the sale. If we do so, we may propose the acquisition of, or an
investment in, another company as an alternative to liquidation at the
stockholder meeting.
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Q. Will I still be a stockholder of Moto Guzzi Corporation after the sale?
A. Yes. But its name will be " ."
Q. What effect will the sale have on customers and employees?
A. The board believes that, because the sale will position the Moto Guzzi
operations as an integral part of one of Italy's premier motorcycle
companies, it will provide strategic growth opportunities that will
benefit both customers and employees in a manner that we could not achieve
on our own.
Q. How do I vote?
A. After you have carefully read this proxy statement, just mail your signed
proxy card in the enclosed postage-paid envelope to
________________________________, as soon as possible so that your shares
may be represented and voted at the special meeting. You may also vote in
person at the special meeting. If your shares are held in a "street name,"
i.e., in the name of a broker, bank or other record holder, you must
either direct the record holder as to how to vote your shares or obtain a
proxy from the record holder to vote at the special meeting.
Q. What happens if I do not instruct a broker who holds my shares on how to
vote?
A. If a broker holds your shares as nominee, it will not be able to vote them
without instructions from you. You should receive a voter information form
from your broker, which you may use to instruct your broker. If you do not
instruct your broker on how to vote, your shares will not be voted. That
will have the same effect as voting against the sale and the name change.
Q. May I change my vote?
A. Yes. You may withdraw your proxy or change your vote by delivering a
later-dated, signed written notice of revocation or proxy card to
________________________________, before the special meeting or by voting
in person with regard to a matter at the special meeting. You may also
withdraw your proxy or change your vote by telephone as described in this
proxy statement.
Q. Who must approve the sale?
A. o Moto Guzzi's board of directors (already approved);
o Aprilia's board of directors (already approved); and
o the holders of a majority of the outstanding shares of our Class A
common stock.
The Moto Guzzi board of directors has determined, based upon a
recommendation of a special committee of the board, that the sale is in
the best interests of the Moto Guzzi stockholders and unanimously
recommends that you vote to approve the sale.
We must also obtain some regulatory approvals for the sale. Please read
the more detailed description of the regulatory approvals on page 29.
Q. What will happen if the stockholders approve the sale but do not approve
the change of name?
A. One of the requirements for the sale to take place is that we remove the
words "Moto Guzzi" from our name. Therefore, if the stockholders do not
approve the change of name, Aprilia will not have to purchase our
subsidiaries.
Q. What vote is required to approve the change of name?
A. It takes an amendment to our Certificate of Incorporation to change our
name. The amendment must be approved by the holders of a majority of the
outstanding shares of our Class A common stock.
Q. Has the majority stockholder agreed to approve the change of name?
A. In effect, yes. OAM has agreed with Aprilia that it will take such
measures as are necessary to cause the change of name to be approved by
us.
Q. Do the shareholders of Aprilia vote on the sale?
A. No. Only our stockholders vote on the sale.
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Q. When do you expect to complete the sale?
A. We are working to complete all aspects of the sale as quickly as possible.
Under the sale agreement we are required to use our best efforts to
complete the sale by July 31, 2000. If we do not complete the sale by
August 31, 2000, the sale agreement will automatically terminate.
Q. What happens if I do not return my proxy?
A. If you do not return your proxy, you will not be counted as a voting
stockholder unless you attend the special meeting and vote in person.
Please read the more detailed description of the consequences of not
voting your shares on page o.
Q. Will I have dissenters' appraisal rights?
A. No. Our stockholders will not have dissenters' appraisal rights because of
the sale.
Q. When and where is the special meeting?
A. The special meeting will be held at _________________________ on July __,
2000 at ________a.m., local time.
Q. On what other matters will I vote at the special meeting?
A. It is unlikely that you will be asked to vote on any other matters at the
special meeting, except possibly procedural items relating to the conduct
of the special meeting.
Q. Who can answer any additional questions I have?
A. If you have questions about the sale or the special meeting you should
contact:
Moto Guzzi Corporation
445 Park Avenue , 6th Floor
New York, NY 10022
Attn: Secretary
(212) 644-4441
Q. Where can I find more information about the Company?
A. Various sources described under "Where You Can Find More Information" on
page 29 of this proxy statement provide further information.
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CURRENCY AND EXCHANGE RATE INFORMATION
Presentation of Currencies
In this proxy statement, references to "dollar(s)" or "$" are to U.S.
dollars, the lawful currency of the United States, references to "Lit." "lira"
or "lire" are to the lawful currency of Italy and references to "euro" or "EUR"
are to the single currency introduced in the participating member states of the
European Union.
For your convenience, this proxy statement contains translations of lire
amounts into U.S. dollar amounts at the rate of Lit. 2100 to $1.00. However, it
will not necessarily be possible to convert lire, or lire denominated assets,
into dollars at that rate.
Exchange Rates
January 1, 1999 marked the third phase of European Monetary Union, with
the introduction of the euro as a currency in its own right. Italy was one of
the eleven European Union member states that adopted the euro as their single
currency as of that date. Irrevocable rates were established for the conversion
of the national currencies of each of the participating European Union member
states into euros. The conversion rate in respect of Italy was fixed at 1,936.27
lire per euro.
The table below provides, for the periods indicated, the period-end,
average, high and low exchange rates between the lire and the dollar (expressed
in lire per dollar), based on the noon buying rates. The average rates for each
period reflect the average of the noon buying rates on the last business day of
each month during the relevant period. On June 5, 2000, the noon buying rate was
$1.00 = Lit. ___.
Average End of
High Low Rate Period
-------------------------------------
(lire per dollars)
2000 (through June 5).................. o o o o
1999................................... 1,933 1,636 1,819 1,925
1998................................... 1,828 1,592 1,737 1,654
1997................................... 1,841 1,516 1,712 1,769
1996................................... 1,602 1,496 1,538 1,519
1995................................... 1,736 1,569 1,629 1,584
The table below provides, for the periods indicated, the period-end,
average, high and low exchange rates between the dollar and the euro (expressed
in dollars per euro), based on the noon buying rates. The average rates for each
period reflect the average of the noon buying rate on the last business day of
each month during the relevant period. On June 5, 2000, the noon buying rate was
EUR 1.00= $___.
Average End of
High Low Rate Period
------------------------------------
(dollars per euro)
June 2000 (through June 5)............. o o o o
May 2000............................... ___ ___ ___ ___
April 2000 ............................ ___ ___ ___ ___
March 2000............................. ___ ___ ___ ___
February 2000.......................... 1.0060 0.9643 0.9834 0.9643
January 2000........................... 1.0338 0.9709 1.0138 0.9709
December 1999.......................... 1.0280 1.0019 1.0122 1.0064
November 1999.......................... 1.0530 1.0095 1.0332 1.0095
October 1999........................... 1.0859 1.0610 1.0741 1.0668
September 1999......................... 1.0689 1.0385 1.0497 1.0643
August 1999............................ 1.0793 1.0441 1.0606 1.0581
July 1999.............................. 1.0719 1.0139 1.0355 1.0694
June 1999.............................. 1.0516 1.0296 1.0377 1.0310
May 1999............................... 1.0787 1.0422 1.0630 1.0422
April 1999............................. 1.0590 1.0564 1.0701 1.0564
March 1999............................. 1.1015 1.0716 1.0886 1.0808
February 1999.......................... 1.1339 1.0972 1.1203 1.0995
January 1999........................... 1.1812 1.1371 1.1591 1.1371
There are currently no Italian foreign exchange control restrictions which
might affect our ability to convert the proceeds of the sale of our operating
subsidiaries from lire into dollars.
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SPECIAL NOTE REGARDING FORWARD-LOOKING STATEMENTS
The Securities and Exchange Commission encourages companies to disclose
forward-looking information so that investors can better understand a company's
future prospects and make informed investment decisions. This proxy statement
and our documents which are incorporated by reference into it contain such
"forward-looking statements." These include statements regarding the period
following completion of the sale.
Words such as "anticipate," "estimate," "expects," "projects," "intends,"
"plans," and "believes," and words and terms of similar substance, used in
connection with any discussion of future operating or financial performance, or
the sale, identify forward-looking statements. All forward-looking statements
are based on our management's present expectations of future events. However,
like all statements about expected future events, they are subject to factors
and uncertainties that could cause actual results to differ materially from
those described in the forward-looking statements. Factors regarding the Moto
Guzzi operations which could cause actual results to differ materially from
those described in the forward-looking statements include: the need for
additional financing to absorb negative cash flows and to achieve sales growth;
the acceptability of the Moto Guzzi products and services in an intensely
competitive marketplace; the ability of Moto Guzzi timely to deliver current and
new products of acceptable quality; relationships with domestic and foreign
distributors; the impact of changes in world currency rates compared to lire and
euros; labor relations; and general economic conditions in Italy and in
countries where Moto Guzzi motorcycles and parts are sold.
For additional information that could cause actual results to differ
materially from those described in the forward-looking statements, please see
the current report on Form 8-K, annual report on Form 10-K, and quarterly report
on Form 10-Q that we filed with the Securities and Exchange Commission on April
20, 2000, April 27, 2000 and June __, 2000, respectively.
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SUMMARY
This summary highlights selected information from this proxy statement and
may not contain all of the information that is important to you. For a more
complete description of the sale, you should read this entire document and the
other documents we refer to in this document, including the materials attached
as annexes. We have included page references in this summary to direct you to
more complete descriptions of the topics we have summarized.
The Company
Moto Guzzi Corporation
445 Park Avenue, 6th Floor
New York, NY 10022
Our wholly-owned subsidiary, Moto Guzzi S.p.A., is a leading Italian
manufacturer of performance and luxury motorcycles and motorcycle parts,
marketed under the "Moto Guzzi (Registered)" brand name. Our other subsidiaries
distribute these products in countries outside Italy. Moto Guzzi has built a
loyal customer base over the past 79 years through the outstanding performance
and reliability of its motorcycles, as well as its strong distribution network.
The current customer base ranges from professional motorcycle enthusiasts to
government agencies, police departments and highway patrols around the world.
We were originally incorporated in Delaware on August 9, 1995 under the
name of North Atlantic Acquisition Corp. On August 27, 1997, we raised
approximately $8 million through a public offering. On August 18, 1998, we
acquired Moto Guzzi S.p.A. and Moto Guzzi North America, Inc., through a merger
with their parent in which we were the surviving corporation. Until that
transaction, we had no business and our only significant assets were cash and
cash equivalents.
Our Class A common stock and Class A warrants are quoted on the OTC
Bulletin Board under the symbols "GUZIE.OB" and "GUZWE.OB" respectively. Our
nominal warrants and Series B preferred stock are not publicly traded.
The Sale Agreement and the Sale
Structure of the sale (page 25)
In the proposed sale, Aprilia will purchase from us our operating
subsidiaries Moto Guzzi, S.p.A., MGI Motorcycle GmbH, Moto Guzzi North America
Inc., and Moto Guzzi France S.a.r.l.
The sale agreement is attached as Annex A. You should read the sale
agreement, as it is the legal document that governs the sale.
The Sale Consideration (page 25)
The sale price for the shares of the subsidiaries will be Lit. 71.5
billion (approximately $34.0 million) plus or minus the amount by which the
subsidiaries' net worth at April 30, 2000 is more or less than its net worth at
December 31, 1999 (which we anticipate will increase the sale price by
approximately Lit.14.5 billion (approximately $6.9 million)). In addition,
Aprilia will satisfy debts of the subsidiaries to us totaling approximately
Lit.2.0 billion (approximately $1.0 million) and cause OAM to be released from a
Lit.4 billion (approximately $1.9 million) guarantee of obligations of the
subsidiaries.
Our Reasons for the sale (page 20)
Reasons favoring the sale include:
o the losses which have been suffered by our subsidiaries;
o our low stock prices;
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o the fact that Aprilia's proposal was the best we received after IMI
had contacted a large number of possible purchasers and had
conducted an auction among those who expressed interest in a
possible transaction;
o IMI's opinion that the sale consideration to be received from
Aprilia is fair, from a financial point of view, to our
stockholders; and
o a determination that we would not be able to achieve on a
stand-alone basis stockholder value equal to the sale consideration
being paid by Aprilia.
Factors which mitigated against the sale include:
o the fact that we will have no operating business after the sale;
o the fact that we will have to pay substantial transaction costs in
connection with the sale (estimated to be Lit. ____ billion
(approximately $___);
o the fact that Lit. 10.5 billion (approximately $5 million) of the
sale proceeds will be held in escrow for a year and Lit. 2.0 billion
(approximately $1.0 million) of the sale proceeds will be held in
escrow for seven years; and
o the fact that our need to complete a transaction quickly may have
limited our ability to be sure we are getting the highest possible
price for our subsidiaries.
A discussion of all the material factors considered by the special
committee and our board (including some relating to the period before a sale is
completed) appears beginning on page ___.
Opinion of our Financial Advisor (page 22)
In deciding to approve the sale agreement and the sale, our board of
directors considered the views of our financial advisor, Banca d'Intermediazione
Mobiliare IMI S.p.A. delivered orally to the board on April 14, 2000. The board
subsequently received a written opinion from Banca d'Intermediazione Mobiliare
IMI S.p.A. dated as of April 14, 2000 that the sale consideration is fair to our
stockholders from a financial point of view. This opinion is attached as Annex
B. We encourage you to read this opinion in its entirety.
Interests of certain persons in the sale (page 24)
Some of our directors and officers have interests in the sale that are
different from, or in addition to, yours. Those interests are described under
the caption "The Sale Agreement and the Sale - Interests of Certain Persons in
the Sale." Our board was aware of these interests when it was considering the
sale. Because of these interests, our board created a special committee to
review the sale and make a recommendation to the board about it. However, even
some of the members of that special committee may receive indirect benefits from
the sale which will not be received by holders of Class A common stock. You
should be aware of these interests when you consider the board's recommendation
that you vote in favor of the sale.
Required vote
Stockholders who own a majority of our outstanding Class A common stock
will have to vote in favor of the sale and in favor of the change of our name in
order for the proposals regarding them to be approved. In connection with the
sale agreement, O.A.M. S.p.A, which owns approximately 61% of our Class A common
stock, entered into an agreement with Aprilia to vote all of its stock in favor
of the sale and to cause us to take such actions as may be required to change
our name to remove the words "Moto Guzzi." Assuming that no additional shares of
Class A common stock are issued (on conversion of Series B preferred stock or
otherwise) prior to the record date for the special meeting, the affirmative
vote of OAM will be sufficient to ensure stockholder approval of the sale and of
the name change, assuming there is a quorum present (a quorum is two-thirds of
our shares).
Conditions to the sale
Our and Aprilia's obligations to effect the sale are subject to the
satisfaction or waiver of the following conditions:
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o notification of and clearance by the Italian antitrust authority;
o approval by our stockholders of the sale; and
o approval by our stockholders of a change of our corporate name to
eliminate the words "Moto Guzzi."
The sale agreement will automatically terminate if stockholder approval of
the sale and the change of our corporate name are not obtained by August 31,
2000.
Management of the Subsidiaries
Aprilia wanted us to bear the subsidiaries' operating losses and cash
losses until the sale was completed. We weren't sure we would have enough funds
to do that. Therefore, we suggested, and Aprilia agreed, that Aprilia take
responsibility for the subsidiaries' operations beginning May 2, 2000. To
accomplish that we, among other things, agreed to give Aprilia control of the
subsidiaries' boards of directors beginning on that date. Assuming the sale
takes place, Aprilia will be responsible for the subsidiaries' losses (and
entitled to their profits) after April 30, 2000.
Funding of the subsidiaries until completion of the sale
Under the sale agreement, Aprilia also has agreed to lend the subsidiaries
any funds they need after May 2, 2000, up to a total of Lit.10 billion
(approximately $5.0 million), if the funds are not available from other sources.
If the subsidiaries need to borrow from Aprilia, we will need to give Aprilia a
lien on up to 25% of the equity and quota of the subsidiaries as collateral.
Assuming the sale is completed, the subsidiaries will not have to repay the
loans, at least until Aprilia owns them. Therefore, if the sale is completed,
Aprilia will, in effect, bear the subsidiaries' losses (and benefit from any
profits they may have) beginning May 2, 2000.
If we borrow money from Aprilia and the sale is not completed, we will have to
repay the borrowings immediately after the sale agreement is terminated. We
might not be able to do that. If we cannot, and Aprilia forecloses the lien on
our subsidiaries' stock, it may acquire up to 25% of the equity and quota of our
subsidiaries for far less than 25% of what it has agreed in the sale agreement
to pay for the subsidiaries.
Termination of the sale agreement
We and Aprilia may terminate the sale agreement by mutual written consent,
even after our stockholders have approved the sale. We have agreed to use our
best efforts to obtain stockholder approval of the sale by July 31, 2000. If we
haven't obtained stockholder approval by August 31, 2000, the sale agreement
will automatically terminate.
Payments of expenses
We and Aprilia will each pay our own fees and expenses incurred in
connection with the sale agreement.
The Special Meeting
General (page 14)
The special meeting will be held at __________, on July __, 2000 at
__________a.m., local time.
Purpose of the special meeting (page 14)
The purpose of the special meeting will be to vote upon proposals to
approve the sale of our operating subsidiaries to Aprilia and to change our name
to "___________" .
Record date; quorum; required vote; shares outstanding and entitled to vote
(page 14)
Only holders of record of our Class A common stock at the close of
business on _______________, 2000, will be entitled to notice of and to vote at
the special meeting. The holders of two-thirds of the shares of our Class A
common stock must be present in person or represented by proxy for there to be a
quorum.
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Holders of record of our Class A common stock on the record date are
entitled to one vote per share. The affirmative vote of a majority of our
outstanding Class A common stock is required to approve the sale and to approve
the change of our name. As of the record date, there were 5,999,092 shares of
Class A common stock outstanding.
Brokers cannot vote shares they hold for beneficial owners with regard to
the sale or the change of name without the owners' specific instructions.
Failure to vote with regard to the sale and change of name proposals has the
same effect as votes against them
All beneficial owners of our Class A common stock are urged to return the
enclosed proxy card marked to indicate their votes or to instruct the broker or
other person in whose name the shares are held to vote the shares in favor of
the sale and in favor of the change of our name. Because approval of the sale
proposal and the change of name proposal each requires the affirmative vote of
holders of a majority of our Class A common stock, failure to vote has the same
effect as voting against the proposals.
Security ownership of management (page ___)
As of June 5, 2000, our directors and executive officers and their
affiliates beneficially owned an aggregate of _____ shares of Class A common
stock (approximately 65% of the outstanding Class A common stock). We expect
that all of those directors and executive officers and their affiliates will
vote their shares in favor of the sale and in favor of the change of our name.
Voting agreement (page 26)
In order to enable us to fulfill a requirement in the sale agreement, OAM,
which owns approximately 61% of our Class A common stock, entered into an
agreement with Aprilia to vote all of its stock in favor of the sale and to
cause us to take such actions as may be necessary to change our name to remove
the words "Moto Guzzi." The affirmative vote of OAM will be sufficient to ensure
stockholder approval of the sale and the name change even if no other
stockholders vote for them. However, unless holders of an additional 6% of our
Class A common stock are present or represented by proxy at the meeting, there
will not be a quorum. Trident Rowan owns 300,000 shares of Class A common stock,
representing 5% of our Class A common stock, and is expected to vote for the
sale and the name change. Our officers and directors and officers and directors
of Trident Rowan own an aggregate of approximately 1% of our Class A common
stock and are expected to vote for the sale and the name change.
Voting of proxies; revocation of proxies (page 15)
Properly executed proxies will be voted in accordance with the
instructions indicated in the proxies. The persons named in the proxies will
have discretionary power to vote on any matters other than the sale and the
change of name that are properly presented at the special meeting. A stockholder
may revoke a proxy before the special meeting by complying with any of the
procedures described in this proxy statement under "The Special Meeting--Voting
of Proxies; Revocation of Proxies." Also a stockholder will revoke a proxy as to
a proposal by voting in person with regard to it. A stockholder's presence at
the meeting will not revoke a proxy except with regard to a proposal on which
the stockholder votes in person.
Our Board of Directors' recommendation (page 20)
Our board of directors has determined that the sale is in the best
interests of our stockholders and unanimously recommends that you vote "FOR" the
sale and "FOR" the change of name.
The board's recommendations were made after a special committee,
consisting entirely of directors who are not affiliated with OAM or its parent,
Trident Rowan Group, Inc., recommended that the board do so.
Regulatory Approvals (page 29)
To complete the sale, we must obtain approvals from Italian regulatory
agencies, including the Italian antitrust authority.
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Tax consequences
The sale will be a taxable transaction to us. However, we have a
substantial basis in the shares we will be selling. Because of that, we do not
expect to have to pay any significant taxes as a result of the sale.
Dissenters' Appraisal Rights
Holders of our Class A common stock or other securities will not be
entitled to dissenters' appraisal rights in connection with the sale.
Risk Factors
The sale of the subsidiaries is subject to certain risks to which you
should give particular consideration in evaluating whether to vote for the sale.
They are discussed in the section of this proxy statement captioned "Risk
Factors" beginning on page 11.
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RISK FACTORS
You should particularly carefully consider the following risk factors in
evaluating whether to vote in favor of the sale.
We were under substantial pressure to sell the subsidiaries rapidly
The subsidiaries have been suffering significant cash losses. It is very
possible that we would not have been able to obtain financing with which to fund
those losses past July or August 2000. Therefore, it was very important that we
be sold, or sell our subsidiaries, before then. Despite the urgent need to find
a buyer for us or for our subsidiaries, we believe our bankers conducted an
effective auction, that everyone who wanted to submit a proposal regarding a
transaction with us was afforded sufficient time and information to do so, and
that the price we are being paid is a very fair one. Nonetheless, it is possible
that if we had had more time to complete a transaction, we might have gotten a
higher price than what Aprilia has agreed to pay.
There are uncertainties about what we will do with the sale proceeds
With respect to remaining proceeds, we have agreed with O.A.M., S.p.A.,
the holder of approximately 61% of our outstanding Class A common stock, and
Trident Rowan, OAM's parent, that we will, as promptly as practicable after the
closing of the sale, but in no event later than 90 days following the closing,
hold a meeting of stockholders to consider and vote upon a proposal to liquidate
all our assets and dissolve the Company. If we liquidate, our assets (i.e., the
remaining proceeds of the sale) will be distributed to the holders of our Class
A common stock. As a holder of Class A common stock, you will have an
opportunity to vote on the proposal that will be liquidated . However, because
OAM owns 61% of the Class A common stock, it can approve the liquidation even if
no other stockholders vote in favor of it. Conversely, the liquidation will not
be approved unless OAM votes in favor of it. Although OAM and Trident Rowan
insisted that we agree to submit a liquidation proposal to our stockholders, OAM
is not committed to vote its shares of Class A common stock for the liquidation
proposal. During the period between the closing of the sale and the stockholder
meeting relating to the liquidation proposal, we may seek to find other
companies in which to invest proceeds from the sale. If we do so, we may propose
the acquisition of, or an investment in, another company as an alternative to
liquidation at the stockholder meeting.
Approximately $5.0 million of the purchase price of the operating subsidiaries
will be held in escrow for between one and seven years
Lit. 10.5 billion (approximately $5 million and approximately % of the
sale proceeds after transaction expenses) will be paid into escrow instead of
being paid to us. Of this, Lit. 8.5 billion will remain in escrow for one year
and the remaining Lit. 2 billion will remain in escrow for seven years. That
means that, if we liquidate our assets prior to the first anniversary of the
closing, we will not be able to distribute a significant portion of our assets
to our stockholders. Further, if there are claims against the escrow, the time
when we will get access to what is held in escrow (if we ever do) could be
delayed well beyond the first anniversary of the closing. And it is possible
that, because of claims against the escrow, we will never receive a substantial
portion of what is held in escrow.
Stockholder approval of the sale will reduce the conversion price of our Series
B preferred stock and require us to redeem it
There are several events which, among other things, will reduce the
conversion price of our Series B preferred stock from $5 per share of Class A
common stock (20 shares of Class A common stock for each share of Series B
preferred stock) to $2 per share (50 shares of Class A common stock for each
share of Series B preferred stock) and will require us immediately to redeem the
Series B preferred stock for $100 per share, plus accrued and unpaid dividends.
One of these events is stockholder approval of a sale of all or substantially
all our assets. Because the sale to Aprilia will be a sale of substantially all
of our assets, our stockholders' approval of the sale will reduce the conversion
price of the Series B preferred stock and require us to redeem it. We are going
to try to redeem the Series B preferred stock before, or very shortly after, it
can be converted at the reduced rate. However, we may not be able to prevent
conversion of the Series B preferred stock at the reduced rate. If all the
Series B preferred stock were converted into Class A common stock at the reduced
rate, that would more than double the outstanding Class A common stock and would
dilute the per share interest of the Class A common stockholders in the proceeds
of the sale of our subsidiaries by approximately ____%, even though we would be
retaining the $12.35 million of those proceeds which we would otherwise have to
use to redeem the Series B preferred stock. We are currently asking the holders
of our Series B preferred stock to agree not to convert their Series B shares in
exchange
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for our agreement to complete the redemption of our Series B preferred stock no
later than September 30, 2000. We are currently asking the holders of our Series
B preferred stock to agree not to convert their Series B shares in exchange for
our agreement to complete the redemption of our Series B preferred stock no
later than September 30, 2000.
If we do not sell our operating subsidiaries, we may nonetheless be required to
redeem the Series B preferred stock, but we won't have the funds with which to
do that
Even if our stockholders do not approve the sale of our subsidiaries, we
may have to redeem our Series B preferred stock shortly, and in any event we
have to redeem it by December 31, 2001. Among the events which would require us
to redeem our Series B preferred stock before December 31, 2001 (and would
reduce the conversion price to $2 per share) is a default by us or our
subsidiaries in obligations totaling more than $250,000. It is possible that our
subsidiaries' current or future delinquencies in paying their trade debt would
be such a default. We are also in violation of requirements in our Lit.10
billion (approximately $4.8 million) credit agreement with Centrobanca S.p.A.
that we meet various financial ratio tests. Indeed, it is possible that, because
of delinquent trade debt and violations of our credit agreement with
Centrobanca, we were required to redeem our Series B preferred stock when it was
issued. However, we have obtained acknowledgement from Fineco, S.A., the holder
of approximately 48% of the Series B preferred stock that delinquent trade debt
and certain violations of our credit agreement with Centrobanca S.p.A. existing
when we issued the Series B shares is not an event that required us to redeem
the Series B preferred stock or reduced its conversion price). Nonetheless, if
Centrobanca were to declare our obligations under that credit agreement to be
due, we probably would be required to redeem the Series B preferred stock. If we
became required to redeem the Series B preferred stock, but did not sell our
subsidiaries, we would not have the funds with which to meet that requirement.
If the holders of the Series B preferred stock were to convert their shares into
Class A common stock at the reduced conversion price, the existing holders of
Class A common stock would suffer substantial dilution of their interest in the
Company. We are currently seeking to enter into an agreement with our holders of
Series B preferred stock whereby the Series B holders would agree not to convert
their Series B shares in exchange for our agreement to redeem the Series B
preferred stock no later than by September 30, 2000.
Almost all our directors (including at least one member of the special
committee) had interests which could have affected their decisions to approve
the sale of our subsidiaries
The section of this proxy statement captioned "Interests of Certain
Persons in the Sale" discusses factors other than the interests of the Class A
common stockholders which may have influenced the decision of some of the
directors to approve the sale. They include:
o OAM and its parent, Trident Rowan, have been required to make loans to us
or to our subsidiaries to provide the funds our subsidiaries have needed
to stay in business and to give guarantees on behalf of our subsidiaries.
The sale will result in any of those loans which are outstanding being
repaid and in OAM's being released from a guarantee of Lit.4 billion
(approximately $1.9 million) of our subsidiaries' bank debt.
o OAM, Trident Rowan (of which two of our directors are principal officers),
Wheatley Partners LP and Wheatley Foreign Partners LP (each of which is an
affiliate of Barry Fingerhut, a director and a member of the special
committee) and William Spier (a director) all own Series B preferred
stock. They could benefit if our stockholders approve the sale of our
operating subsidiaries and, as a result, the conversion price of the
Series B preferred stock is reduced and we become required to redeem it.
o In connection with the sale, we have agreed to pay severance to Mark S.
Hauser and Howard E. Chase, directors of the Company, and Emmanuel Arbib,
a former director of the Company of $168,000, $51,400 and $37,900,
respectively, in exchange for termination of their employment and
consulting agreements with us.
If the sale doesn't take place, we may not be able to repay the loans Aprilia
makes to our subsidiaries
If necessary, Aprilia will be lending our operating subsidiaries whatever
funds they require, up to Lit.10 billion, between May 2, 2000 and completion of
the sale. Those loans will be secured by up to 25% of the equity and quota of
our operating subsidiaries. There is a good chance that if the sale does not
take place neither the operating subsidiaries nor we will be able to repay the
loans. If we cannot repay the loans, Aprilia may acquire up
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to 25% of the equity and quota of our operating subsidiaries by foreclosing its
security interests for far less than 25% of what it agreed to pay for the
subsidiaries in the sale.
We will have to pay substantial transaction costs in connection with the sale
In connection with the sale, we will have to pay transaction costs of
approximately Lit. ____ (approximately $_______), of which Lit. ____
(approximately $ ____) is the fee to IMI, our financial advisor.
We will have to limit our investment of the sale proceeds in order not to be
subject to the Investment Company Act of 1940
Between the time we complete the sale of our subsidiaries and the time we
use the proceeds to invest in other businesses or distribute them to our
shareholders, we will hold a substantial amount of cash and will have no
operating subsidiaries. If we were to invest that cash in investment securities
other than U.S. Government securities, we would become required to register
under the Investment Company Act of 1940. There are severe limits on what a
company registered under the Investment Company Act can do, including a
prohibition against its borrowing and strict limitations upon dealings between
the company and significant stockholders. If, after we registered under the
Investment Company Act, we acquired a significant operating business, we could
terminate our registration under the Investment Company Act and cease being
subject to its restrictions. However, that could complicate the process of our
acquiring the operating business. If we invest the proceeds solely in U.S.
Government securities, the yield on our investments will be substantially lower
than what normally is sought by investors in operating companies.
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THE SPECIAL MEETING
General
This proxy statement is being furnished in connection with the
solicitation by our board of directors of proxies from the holders of our Class
A common stock for use at the special meeting. The special meeting will be held
at ________ , on July __ , 2000 at ________ a.m., local time.
Matters to be Considered at the Special Meeting
The purpose of the special meeting is to consider and vote on proposals
(1) to approve the sale of our operating subsidiaries, which are our only
significant assets, to Aprilia S.p.A, and (2) to amend our Certificate of
Incorporation to change our name to "________." In addition, we will transact
any other business that is properly brought before the special meeting.
Record Date; Required Vote; Shares Outstanding and Entitled to Vote; Quorum;
Adjournment
Record Date
The board of directors has fixed _______, 2000 as the record date for the
special meeting. Accordingly, only holders of shares of our Class A common stock
at the close of business on _______, 2000 are entitled to notice of and to vote
at the special meeting.
Required Vote
The affirmative vote of the holders of a majority of the outstanding
shares of our Class A common stock is required to approve the sale and name
change proposals.
Shares Outstanding and Entitled to Vote
As of the record date, there were 5,999,092 shares of our Class A common
stock outstanding. They were held by approximately 100 holders of record. The
holders of our outstanding Class A warrants, nominal warrants and Series B
preferred stock are not entitled to vote at the special meeting.
Quorum
Under our bylaws, the holders of two-thirds of the outstanding shares of
our Class A common stock must be present in person or represented by proxy for
there to be a quorum.
Shares held of record by a broker which are present in person or
represented by proxy will be counted for purposes of determining a quorum. If,
however, a broker does not have discretionary authority to vote the shares on a
matter in the absence of instructions from the beneficial owners, the shares as
to which the broker does not have instructions will be considered "broker
non-votes." Broker non-votes and abstaining votes will not be counted for or
against a matter or for determining whether a quorum is present. However,
because approval of the sale and the name change proposals each requires the
affirmative vote of a majority of the outstanding shares of Class A common
stock, abstentions and broker non-votes will have the same effect as votes
against the proposals.
If a quorum is not present, the stockholders present may adjourn the
meeting, and any business which might have been transacted at the meeting as
originally called may be transacted at the adjourned meeting.
Shareholdings
As of the record date, our directors and executive officers and their
affiliates, including Trident Rowan, of which three of our directors are
directors, and OAM S.p.A., which is majority owned by Trident Rowan,
beneficially owned approximately 65% of our outstanding Class A common stock.
Accordingly, our directors, executive officers and their affiliates hold all of
the shares required to approve the two proposals and 98%of the shares required
for a quorum.
Voting Agreement
The sale agreement contains a condition that OAM, S.p.A. (the holder of
approximately 61% of the outstanding shares of Class A common stock) agree to
vote its capital stock for the sale, and by letter to Aprilia dated April 14,
2000, OAM agreed to do this. In the letter OAM also agreed, among other things,
to cause us to take such actions as may be required to change our name to remove
the words "Moto Guzzi."
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Voting of Proxies
Voting instructions are included on your proxy card. If you submit a
properly executed proxy to us in time to vote, the individuals named as your
proxy will vote your shares as you have directed.
If you submit a signed proxy card and no instructions are indicated, your shares
will be voted FOR the proposal to approve the sale and FOR the proposal to
change our name.
If any matters other than the two proposals are properly presented at the
special meeting, including consideration of a motion to adjourn the meeting to
another time or place for the purpose of soliciting additional proxies, the
persons named in the enclosed proxy card will have discretion to vote on those
matters in accordance with their best judgement. We are not aware of any matters
which will be presented at the special meeting other than the two proposals.
Voting by Mail
To submit a proxy by mail, you must sign, date and mail your proxy card
and return it in the enclosed prepaid envelope in time for us to receive it
prior to the special meeting.
Voting Electronically or by Telephone
Because Delaware, the state in which we are incorporated, permits
electronic submission of proxies through the Internet or by telephone, instead
of submitting proxies by mail on the enclosed proxy card or sending voting
instructions to your broker, you may submit your proxy or voting instructions
electronically through the Internet or by telephone. Note that there are
separate arrangements for using the Internet and telephone depending on whether
your shares are registered in your name or in the name of a brokerage firm or
bank. You should check your proxy card or the voting instructions forwarded by
your broker, bank or other holder of record to see which options are available.
The Internet and telephone procedures described below for submitting your
proxy or voting instructions are designed to authenticate stockholders'
identities, to allow stockholders to have their shares voted and to confirm that
their instructions have been properly recorded. Stockholders submitting proxies
or voting instructions via the Internet should understand that there may be
costs associated with electronic access, such as usage charges from Internet
access providers and telephone companies, that you would have to pay.
Holders of record may submit their proxies:
o through the Internet by visiting a website established for that
purpose at http:// ________ and following the instructions on that
website; or
o by telephone by calling the toll-free number ________ and following
the recorded instructions.
Revocation of Proxies
If you give a proxy, you may revoke it at any time before it is voted.
Proxies may be revoked by:
o filing with our corporate secretary (including by telegram or
facsimile) a written notice of revocation bearing a later date than
the date of the proxy;
o giving written notice of revocation at the special meeting;
o executing a later-dated proxy relating to the same shares, including
a later proxy given by telephone or Internet; or
o attending the special meeting and voting in person with regard to a
matter.
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Attendance at the special meeting will not in and of itself revoke a
proxy. However, voting in person with regard to a matter will revoke any proxy
you may have given with regard to that matter. Any written notice of revocation
either must be delivered at the special meeting or must be sent, in time to be
received before the day of the special meeting, to:
Moto Guzzi Corporation
445 Park Avenue, 6th Floor
New York, NY 10022
Attention: Secretary
Solicitation of Proxies
We will bear the cost of soliciting proxies, including the cost of
printing and mailing this proxy statement. In addition to the solicitation by
mail, our directors, officers and employees may solicit proxies from
stockholders in person or by telephone, telegram or electronically. Those
directors, officers and employees will not receive additional compensation for
that solicitation but may be reimbursed for their out-of-pocket expenses. We
have also retained a proxy solicitation firm, ____________ to aid it in the
solicitation process. We will pay that firm a fee that is not expected to exceed
____________, plus reasonable expenses. Arrangements will also be made with
brokerage houses and other custodians, nominees and fiduciaries for the
solicitation of votes from beneficial owners of shares held of record by such
persons. We will reimburse those custodians, nominees and fiduciaries for their
reasonable out-of-pocket expenses.
Other Matters
We do not know of any business which will be presented at the special
meeting, other than the proposals regarding the sale of our subsidiaries and the
change of our name. If any other matters properly come before the meeting, the
proxy holders will vote the shares represented by proxies with respect to those
matters in accordance with the proxy holders' judgement.
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PROPOSAL 1
SALE OF SUBSIDIARIES
On April 14, 2000, we signed a sale agreement in which we agreed to sell
our four operating subsidiaries (Moto Guzzi, S.p.A., MGI Motorcycle GmbH, Moto
Guzzi France S.a.r.l. and Moto Guzzi North America, Inc.) to Aprilia S.p.A. for
Lit. 71.5 billion (approximately $34.0 million) plus or minus the amount by
which the subsidiaries' net worth at April 30, 2000 is more or less than its net
worth at December 31, 1999 (which we anticipate will increase the sale price by
approximately Lit.14.5 billion (approximately $6.9 million)). In addition,
Aprilia will satisfy debts of the subsidiaries to us totaling approximately
Lit.2.0 billion (approximately $1.0 million) and cause OAM to be released from a
Lit.4 billion (approximately $1.9 million) guarantee of obligations of the
subsidiaries. Because the sale of the four subsidiaries will be a sale of
substantially all our assets, the transaction cannot take place unless it is
approved by holders of a majority of our outstanding Class A common stock. The
holders of our Class A common stock will be asked to vote at the special meeting
on a proposal to give that approval.
Background of the sale
We have suffered recurring losses from operations and negative cash flows
during the last three years. Arrears of payment to suppliers, which reached
approximately Lit.15 billion (approximately $7.1 million) in January 2000,
affected component supply and production in the first quarter of 2000 and thus
limited our ability to generate cash from operations.
In December 1999, following the termination of negotiations with a company
in the motorcycle business concerning a possible equity investment in us, and
with our knowledge and consent, Trident Rowan, the parent company of our
majority stockholder, O.A.M. S.p.A., engaged Banca d'Intermediazione Mobiliare
IMI S.p.A. ("IMI"), an Italian investment bank, to seek short term financing for
us and to pursue strategic alternatives to enhance shareholder value.
On January 4, 2000 representatives of IMI spoke by telephone with certain
of our directors to discuss potential alternatives regarding us and presented an
outline and timetable for conducting an auction of us and our assets. During
January 2000, representatives of IMI contacted over thirty potential buyers and
investors concerning a possible transaction with us. By the third week of
January, seventeen potential buyers and investors executed the confidentiality
agreements requested by IMI. IMI distributed an information memorandum on us to
each of these parties, and requested that these parties submit written,
non-binding offers for a possible transaction with us by February 11, 2000.
The deadline of February 11th was subsequently extended by one week to
February 18th.
In early February, a representative of IMI met with Mark Hauser, our
Chairman, about the state of the auction. This meeting was followed on February
7th by a meeting with our directors and Mark Segall, a director of Trident
Rowan. At the time, IMI expressed its concern about our financial position and
its potential negative impact on the sale process.
On February 16th representatives of IMI met with Trident Rowan's U.S.
counsel, Kramer Levin Naftalis & Frankel LLP, to explore structural issues. In
particular some potential buyers had indicated concern about their ability to
secure 100% of us in light of our being a listed company and the number of
warrants and similar instruments in circulation.
During January and February, our operations were at risk as a result of a
failure to timely pay our suppliers, and IMI believed that public knowledge of
this fact was interfering with IMI's ability to conduct the auction process. On
February 16th IMI advised us that a substantial capital investment in us was
needed to ensure the completion of the sale process. In response, on February
25, 2000 we issued an aggregate of $12.35 million in Series B preferred stock to
Fineco, S.p.A., O.A.M., S.p.A., Trident Rowan, Wheatley Partners, LP and
Wheatley Foreign Partners, LP (each of which is an affiliate of Barry Fingerhut,
one of our directors) and William Spier (a director). Of this, shares with a
liquidation value of $9.5 million were issued for cash, and shares with a
liquidation value of $2.85 million were issued in consideration of the
conversion of outstanding indebtedness.
By February 18th, IMI had received preliminary offers from four parties,
each relating to a proposed acquisition of 100% of our shares. Three of these
parties continued in negotiations with us and engaged in due diligence on us.
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Following subsequent feedback from one potential buyer that it would only
entertain the purchase of the four operating subsidiaries and no other
transaction structure, IMI communicated to potential buyers that it would
entertain bids for the four subsidiaries, but would give preference to bids for
our shares if the offer price were similar.
Each of the parties who had expressed an interest was provided with access
to a data room and our material documents, oral presentations by management,
legal presentations and access to our facilities. A deadline of April 7th was
set for the submission of final proposals, which were requested to be in the
form of draft purchase agreements containing all principal terms.
On April 7th, IMI received three firm offers. The most competitive offer
(which was from Aprilia) was for cash and ready for signature with negotiated
schedules. The second offer was in line with the first offer economically but
was made subject to the buyer's ability to raise financing and certain open
contractual matters and with schedules and other details still to be negotiated.
The third offer was lower economically, was in part in cash and in part in
stock, and was without schedules and with some key parts of the contract to be
negotiated.
On April 9th, members of a special committee of our board comprised of
Barry Fingerhut, David Mitchell and Frank O'Connell, representatives of IMI,
Clifford Chance Rogers & Wells LLP, our U.S. counsel, and Studio Carnelutti,
Italian counsel to Trident Rowan and the Company, met. Representatives of IMI
and Studio Carnelutti explained in detail the underlying auction process, which
had led to the presentation of the offers by Aprilia and by two other trade
buyers. There was a further analysis and discussion about the terms and
conditions of each of the offers. Aprilia's offer was considered by the special
committee to be the most attractive from both an economic and a legal point of
view. The committee, however, expressed a desire to eliminate the proposed
escrow account following the sale.
In the morning of April 10th, the board of Trident Rowan met in the
presence of representatives of IMI, Kramer Levin Naftalis & Frankel LLP and
Studio Carnelutti. The Trident Rowan board approved a proposed side letter to be
signed by OAM, which, among other things, committed OAM to vote in favor of the
sale at our stockholder meeting which would be required to be held to authorize
the sale, subject to our entering into a side letter with OAM and Trident Rowan
in which we agreed, among other things, to pay IMI's fees in connection with the
sale. In addition, the Trident Rowan board authorized IMI to complete a final
auction based on the April 7th offers.
In the afternoon of April 10th, our board of directors, including the
special committee of our board, and representatives from Clifford Chance Rogers
& Wells LLP, IMI, Studio Carnelutti and Kramer Levin Naftalis &Frankel LLP met
to discuss and review the bids submitted by the final bidding companies. In the
hours before this board of directors meeting, two of the bidders had improved
their offers.
IMI presented our board and the special committee with its analysis of the
bids, and delivered its oral opinion that each of the bids was fair from a
financial point of view to our stockholders. After discussion, the Aprilia offer
was selected as the best by both the special committee and by our board of
directors. They also approved permitting Aprilia to assume management control of
the subsidiaries beginning May 1, 2000 if it would assume responsibility for the
subsidiaries' operating results from that date.
The special committee gave IMI a mandate to grant Aprilia exclusivity
until April 14th by which date the sale agreement was to be finalized. In
addition IMI was instructed to secure from Aprilia a reduction in the duration
of the first installment of the escrow amount, and our board of directors
granted Mr. Gianni Bulgari the power to execute the sale agreement and any other
necessary documents.
On April 13th, agreement was reached on changing the date for the release
of the first installment under the escrow agreement from 24 to 12 months.
On the morning of April 14th, OAM signed the side letter with Aprilia, and
we signed our side letter with OAM and Trident Rowan. In the afternoon, the sale
agreement was signed by Mr. Bulgari on behalf of us and by Aprilia.
On May 2 an initial payment by Aprilia of Lit.71 billion was placed in
escrow with IMI while the shares of the subsidiaries were placed in the custody
of San Paolo Fiduciaria, S.p.A. and Siref, S.p.A.
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Chronology of events related specifically to Aprilia's offer
Over a period of more than four years, Aprilia had made sporadic
approaches about the possibility of its acquiring us or our trademark.
On December 23, 1999, following IMI's receipt of our mandate, a
representative of Caretti & Associati, Aprilia's advisor, met with
representatives of IMI. At the meeting the parties discussed Aprilia's interest
in participating in the auction process.
On January 28, representatives of IMI met for the first time with Mr.
Ivano Beggio, Aprilia's Chairman and sole stockholder, who confirmed a strategic
interest in pursuing a transaction. This was followed by a meeting with
representatives of Caretti & Associati (Aprilia's bankers) and Aprilia
management representatives where an initial information request list was
discussed.
On February 4, IMI met Caretti & Associati and Studio Visconti, Aprilia's
lawyers, to discuss a potential transaction. The capital structure and corporate
structure were the most important issues discussed. IMI was informed that
Aprilia preferred to acquire our subsidiaries. Our capital structure, and the
warrants in particular, combined with the fact that our shares were listed in
the U.S., presented complications from Aprilia's point of view.
On February 16th, Aprilia began reviewing materials in a data room which
we had created.
On February 16th, a representative of IMI went to New York and met with
Aprilia's American counsel, Simpson Thacher and Bartlett, to discuss structuring
issues related to the acquisition of 100% of us. On February 17th,
representatives of Kramer Levin Naftalis & Frankel LLP and Simpson Thacher and
Bartlett discussed the structuring issues related to the acquisition of 100% of
our shares.
On February 17th, IMI organized a meeting between Nick Speyer, our chief
financial officer, and the Aprilia team. During the meeting, our situation was
discussed with a focus on major issues, including inventories, product
warranties and suppliers. At that point, we had arrears of payment to suppliers
of approximately Lit.15 billion ($7.5 billion) that were leading to component
shortages and operational difficulties. Inventories were high compared to our
output, which raised concerns of potentially significant levels of obsolescence.
Warranty management and insurance of second and third year warranty costs were
no longer outsourced as from January 2000 and we had to establish a new warranty
policy for financial reporting as a consequence of this change. At the end of
the two data room days, and the above discussions, an additional information
request was submitted by Aprilia. As a consequence, IMI suggested an additional
data room section once the new information was ready.
On February 18th, IMI met with Caretti & Associati in order to assess the
level of confidence that Aprilia had reached through the analysis of the data
room material. In that meeting, IMI suggested that Carnelutti commence working
on a draft sale agreement which would constitute the form of the final offer and
which should aim to be as binding and definitive as possible. At that meeting
Aprilia communicated that it would only be submitting a bid for our four
operating subsidiaries.
On February 23, IMI organized a second data room providing additional
material to be examined. Two days later, IMI organized a conference call between
the Aprilia team and Nick Speyer to explain in more detail the inventory
valuation.
On March 3, IMI, Studio Carnelutti, Studio Visconti and Caretti &
Associati discussed the first draft of the sale agreement. Different sections
were allocated between the two parties' lawyers for reworking.
On March 7th, IMI organized the first meeting with Arthur Andersen, our
auditors, with the objective of explaining to Aprilia's advisors the level of
audit work that had been performed with regard to us in previous years. During
the meeting, Arthur Andersen also explained the time that would be needed to
complete the audit work for the fiscal year ended 1999.
On March 10th and 13th, IMI organized another data room, which included
the old materials with updates on the legal materials and updates on MGI
Motorcycle Gmbh and Moto Guzzi France Sarl. On March 15th, IMI organized a
separate data room in New York for Moto Guzzi North America, Inc.
On March 23, Studio Carnelutti and Studio Visconti met to finalize the
drafting of the sale agreement and on March 24 IMI organized a second meeting
among Nick Speyer, Arthur Andersen and Aprilia's other advisors to discuss the
type of aggregated or consolidated numbers that would be taken into
consideration for the proposed purchase price adjustment. The issues discussed
in the meeting were the audit timetable and aggregation
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consolidation principles that would be used for the closing balance sheet.
Arthur Andersen assured that the audit was on schedule and expected the 1999
audited numbers to be ready by mid April 2000.
On March 28, IMI organized a further meeting between Nick Speyer and
Aprilia's advisors to discuss the 1999 preliminary numbers and the schedules
that would be part of the sale agreement for the determination of the purchase
price adjustment. The net loss for 1999 was slightly increased from the first
draft projections Aprilia had received in February.
On March 29th, IMI and Studio Carnelutti met with Aprilia's advisors with
the objective to finalize the sale agreement. Aprilia's advisors indicated that
- apart from an automatic adjustment to its original offer of Lit. 85 billion
which would come about from losses as from October 1, 1999, as well as an upward
adjustment in respect of recent capital injections - it intended to reduce its
offer by Lit. 6 billion (approximately $2.9 million) due to various due
diligence findings, including the poorer than expected 1999 results. The meeting
finished early due to disagreement on this pricing issue.
On March 31, an IMI representative met with a representative of Caretti &
Associati to explain the procedures for submitting a bid on or before April 7th
to be considered at meetings of the Trident Rowan board and our board which were
scheduled for April 10th.
On April 3, IMI participated to a final drafting section with Aprilia's
advisors. On April 5, there was another meeting where final schedules were
attached to the contract and on April 6, Aprilia's board approved the bid which
was given to IMI.
The special committee of our board met with representatives of IMI, Studio
Carnelutti and Clifford Chance Rogers & Wells LLP on April 9th to discuss the
transaction and the recommendation the special committee would make at the board
meeting scheduled for the following day. After identifying the Aprilia proposal
as the most attractive of the three proposals which had been presented, the
special committee instructed IMI to request that Aprilia assume management
control as from May 1, 2000, and bear any operating losses from that date. The
special committee felt the proposed base price was too low. It also was
concerned that (a) losses to the expected July or August closing date of the
transaction could reduce the sale price below an acceptable level and (b) we
might not have sufficient funds to be able to absorb those losses. Therefore,
the special committee instructed IMI to attempt to get Aprilia to increase the
base purchase price, to take over management control of the subsidiaries
effective May 1, 2000, and, because it would have management control of the
subsidiaries after May 1, (i) to have the purchase price adjustment be limited
to changes in net worth between December 31, 1999 and April 30, 2000 and (ii) to
have Aprilia bear (and fund) any operating losses, and retain any operating
profits, after May 1.
In the afternoon of April 10th, at our offices, our board of directors and
the special committee met in the presence of representatives of IMI, Clifford
Chance Rogers & Wells LLP, Carnelutti and Kramer Levin Naftalis & Frankel LLP.
Prior to the board of directors meeting, Aprilia increased its offer by Lit 2.5
billion (approximately $1.2 million) and agreed to assumption of management
responsibility from May 1, 2000 under which it would also assume responsibility
for all losses commencing from that date. In addition, IMI presented an analysis
that showed that Aprilia's offer was the most binding of all those submitted in
the sense that, once signed, completion was subject only to matters within our
control or which were considered extremely likely to occur. Other offers
involved both contractual matters which still had to be resolved and proposed
closing conditions which we would not be able to control.
In agreeing to grant Aprilia exclusivity until April 14, the board gave
IMI a further mandate to negotiate a reduction in the date for the release of
the first installment of the escrow amount from 24 to 12 months.
Between April 10th and April 13th there were further negotiations
regarding the terms of the transaction. As a result of those negotiations, the
date for the first release of funds from escrow was reduced to 12 months from 24
months. Also, it was agreed that Aprilia's obligation to fund losses between May
1 and the closing date would be limited to making loans to the subsidiaries
totaling up to Lit. 10 billion (approximately $4.8 million), which would be
immediately repayable if the sale agreement was terminated, and which would be
secured by up to 25% of the stock and quota of each of the operating
subsidiaries.
In the morning of April 14, OAM signed the voting agreement and we
delivered our side letter to OAM and Trident Rowan. In the afternoon the sale
agreement was signed. Aprilia and we issued a joint press release announcing the
execution of the sale agreement that day.
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Our Reasons for the sale; Recommendations of our Board of Directors
The special committee of our board of directors determined that the sale
is our best interests and the best interests of our stockholders and unanimously
recommended that our board approve the sale. Our board of directors has
determined that the sale is advisable, fair to and in our best interests and the
best interests of our stockholders and has unanimously approved the sale.
In reaching their respective determinations, the special committee and the
board of directors considered a number of factors, without assigning any
relative weights to them. They included the following:
o historical information concerning the business, financial
performance and condition, management, competitive position and
prospects of our subsidiaries;
o our historical stock prices and operating performance;
o that IMI was able to induce Aprilia to increase the purchase price
above what it had initially proposed;
o that we had announced in February 2000 that we had engaged IMI to
seek interim financing and to pursue strategic alternatives and the
possibility of our being sold, and IMI had contacted a large number
of possible purchasers and had conducted an auction among those who
expressed interest in a possible transaction in which potential
purchasers were afforded sufficient time and information to submit
proposals; with the result that three firm proposals were received
of which Aprilia's was the most attractive;
o that IMI had informed the special committee and the board, and has
subsequently confirmed in writing that the sale consideration to be
received from Aprilia is fair, from a financial point of view, to
our stockholders; and
o the determination that we would not be able to achieve on a
stand-alone basis stockholder value equal to the sale consideration
being paid by Aprilia.
In reaching their respective conclusions, the special committee and board
also considered the following factors, which they believed mitigated against the
sale:
o the fact that we will have no operating business after the sale;
o the fact that we will have to pay substantial transaction costs in
connection with the sale (estimated to be Lit. ___ billion
(approximately $___));
o the fact that a portion of the sale proceeds will be held in escrow
for up to seven years;
o the possibility that Aprilia may make changes to our subsidiaries
before the sale takes place which, if the sale is not completed,
will make it even more difficult than it had been to make the
subsidiaries operate successfully;
o the possibility that if the sale is not completed, we will not be
able to repay sums Aprilia lends to our subsidiaries between May 2,
2000 and the time the efforts to complete the sale terminate;
o the fact that our need to complete a transaction quickly may have
limited our ability to be sure we are getting the highest possible
price for our subsidiaries;
o the risk that the sale would not be completed; and
o the risk that the announcement of the sale and the efforts necessary
to complete the transaction could disrupt operations by, among other
things, diverting management and other resources from day-to-day
operations.
In making its determination to enter into the sale agreement, the special
committee and our board weighed the factors described above, both positive and
negative, and determined that the positive factors clearly outweighed the
negative factors. In view of the wide variety of information and factors
considered, the special committee and our board did not find it practical to,
and did not, assign any relative or specific weights to any of the factors, and
individual directors may have had different views as to which factors were more
significant than others.
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In reaching its conclusions, the special committee and our board were
aware of the potential benefits to be realized by its officers, directors and
certain stockholders from the sale, which are described below under the caption
"Interests of Certain Persons in the Sale."
Other than considerations described above which the special committee and
our board believed mitigated against the sale, neither the special committee nor
the board identified any particular risks or adverse effects on non-affiliated
stockholders.
The discussion above of factors deemed material by the special committee
and the board in considering the sale is not intended to be exhaustive, but is
believed to include all the material factors which they considered.
The board of directors, acting on the recommendation of a special
committee of its members, has unanimously approved the sale agreement and the
sale and unanimously recommends to the stockholders that they approve the sale.
Terms of Engagement of IMI
By letter dated December 23, 1999, Trident Rowan, the parent company of
OAM, our majority stockholder, engaged IMI to seek short term financing for us
and to pursue strategic alternatives to enhance stockholder value. Pursuant to
the engagement letter, a fee of Lit. ___ (approximately $___) will be due to IMI
in connection with the sale. The engagement letter also requires Trident Rowan
and OAM to reimburse IMI for all out-of-pocket expenses, including the fees of
any other advisor, arising out of the engagement and agreed to indemnify IMI and
certain related persons and entities for certain losses, claims, damages or
liabilities arising out of IMI's engagement. By letter dated April 14, 2000, in
order to induce Trident Rowan and OAM to deliver their voting agreement to
Aprilia, we agreed to pay IMI's fees in connection with the sale.
IMI is a well known Italian investment banking and advisory firm. IMI, as
part of its investment banking business, is continuously engaged in the
valuation of businesses and securities in connection with mergers and
acquisitions, negotiated underwritings, competitive biddings, secondary
distributions of listed and unlisted securities, private placements and
valuations for corporate and other purposes.
Opinion of Financial Advisor
Trident Rowan, our ultimate parent company, retained IMI to act as its
exclusive financial advisor in connection with a review of our strategic
alternatives and the proposed sale transaction based upon IMI's substantial
experience with transactions similar to the sale transaction. On April 14, 2000,
IMI delivered to the our board and the special committee its oral opinion that
the estimated total cash payment (the "Estimated Total Consideration") from
Aprilia contained in the sale agreement was fair from a financial point of view
to the holders of the our stock. IMI subsequently delivered to our board and the
special committee its written opinion, dated April 14, 2000, that, based upon
and subject to the factors and assumptions set forth therein, as of such date,
the Estimated Total Consideration was fair from a financial point of view to the
holders of our stock.
The full text of the IMI opinion, which sets forth the procedures
followed, assumptions and qualifications made, matters considered and
limitations on the review undertaken by IMI, is attached as Annex C to this
proxy statement. You are urged to read the IMI opinion carefully and in its
entirety. The IMI opinion was provided to our board and the special committee
for its information in connection with its consideration of the sale and does
not constitute a recommendation to any stockholder as to how to vote on the
proposals. The summary of the IMI opinion set forth in this proxy statement is
qualified in its entirety by reference to the full text of the IMI opinion.
In preparing the IMI opinion, IMI performed a variety of financial and
comparative analyses, including those described below. The summary of IMI's
analyses set forth below does not purport to be a complete description of the
analyses underlying the IMI opinion or the presentation made by IMI to our board
and the special committee. The preparation of a fairness opinion is a complex
analytic process involving various determinations as to the most appropriate and
relevant methods of financial analyses and the application of those methods to
the particular circumstances, and, therefore such an opinion is not readily
susceptible to partial analysis or summary description. In arriving at its
opinion, IMI did not attribute any particular weight to any analysis or factor
considered by it, but rather made qualitative judgments as to the significance
and relevance of each analysis and factor. Accordingly, IMI believes that its
analyses must be considered as a whole and that selecting portions of its
analyses, without considering all analyses, would create an incomplete view of
the process underlying the IMI opinion.
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In performing its analyses, IMI made numerous assumptions with respect to
our industry performance, general business, economic, market and financial
conditions and other matters, many of which are beyond our control. No company,
transaction or business used in such analyses as a comparison is identical to us
or the proposed sale, nor is an evaluation of the results of such analyses
entirely mathematical; rather, such analyses involve complex considerations and
judgments concerning financial and operating characteristics and other factors
that could affect the acquisition, public trading or other values of the
companies, business segments or transactions being analyzed. Any estimates
contained in the analyses performed by IMI are not necessarily indicative of
actual values or future results, which may be significantly more or less
favourable than suggested by such analyses. Additionally, estimates of the value
of businesses or securities do not purport to be appraisals or to reflect the
prices at which such businesses or securities might actually be sold.
Accordingly, such analyses and estimates are inherently subject to substantial
uncertainty. In addition, the IMI opinion and IMI's presentation to our board
and special committee were among several factors taken into consideration by our
board and the special committee in making their determinations to approve the
sale. Consequently, the IMI analyses described below should not be viewed as,
and were not, determinative of the opinions of our board and the special
committee with respect to the proposed sale.
In arriving at its opinion, IMI reviewed, among other things, (i) the sale
agreement; (ii) a draft of our Annual Report on form 10-K for the year ended
December 31, 1999; (iii) the Form S-4 Registration Statement relating to the
merger of Moto Guzzi Corp. with and into North Atlantic Acquisition Corp., as
amended; (iv) the Annual Reports on Form 10-K of Trident Rowan for the four
years ended December 31, 1998; (v) certain of our Quarterly Reports on Form
10-Q; and (vi) certain internal financial analyses and forecasts for us prepared
by its management. IMI also held discussions with members of our senior
management and of Trident Rowan regarding the strategic rationale for, and
potential benefits for stockholders of, the sale and our past and current
business operations, financial condition and future prospects. IMI also
considered certain financial and stock market data of the Company, compared that
data with similar data for other publicly held companies in businesses similar
to us and considered the financial terms of certain other transactions which
have recently been effected. In addition, IMI considered such other information,
financial studies, analyses and investigations and financial, economic and
market criteria that it deemed relevant.
In connection with its review, IMI did not assume any responsibility for
independent verification of any of the foregoing information and relied on such
information being complete and accurate in all material respects. With respect
to financial forecasts, IMI assumed that they were reasonably prepared on bases
reflecting the best currently available estimates and judgments of our
management as to our future financial performance. IMI also assumed, with our
consent, that the sale would be consummated in the manner and on the terms set
forth in the sale agreement and that in the course of obtaining the necessary
legal, regulatory and third party consents and approvals no restrictions would
be imposed that would have a material adverse effect on the contemplated
benefits of the sale. IMI was not requested to make, and did not make, an
independent evaluation or appraisal of our assets or liabilities (contingent or
otherwise), nor was it furnished with any such evaluations or appraisals. IMI
was not requested to undertake, and did not undertake, an analysis of the tax
impact of the proposed sale on our stockholders. The IMI opinion is necessarily
based upon financial, economic, market, exchange rate and other conditions as
they existed and could be evaluated at the date thereof. IMI did not express any
opinion as to what the value of our capital stock actually will be subsequent to
April 14, 2000 and subsequent to completion of the proposed sale.
The following is a summary of the analyses performed by IMI in connection
with the preparation of the IMI opinion.
Comparative Stock Price Performance Analysis. IMI reviewed the per share
daily closing prices of our Class A common stock over the six month period from
November 5, 1999 to April 7, 2000 compared with the performance of other U.S.
and European motorcycle manufacturers including Harley-Davidson Inc. and Ducati
Motor Holding S.p.A. IMI also reviewed our high, low and average per share daily
closing stock prices for the six month period ending April 7, 2000 and computed
the premium or discount of the estimated total consideration given 5,990,092
shares outstanding in relation to the aforementioned prices. IMI observed that
the estimated total consideration represented a premium of approximately 18%
over the average stock price in the preceding six months (and a premium of 71%
above the low and a discount of 24% below the high). IMI also observed that in
the same six month period the Italian Lira devalued by approximately 8% thereby
reducing the dollar value of the estimated total consideration and that the sale
process was public knowledge for a large part of the period.
Discounted Cash Flow Analysis. IMI performed a discounted cash flow
analysis for the years 2000 to 2004 to estimate the present value of the
stand-alone unlevered free cash flows that we are expected to generate if we
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perform in accordance with scenarios based on certain financial forecasts. For
purposes of this analysis, unlevered cash flows were defined as unlevered net
income plus depreciation plus amortization less capital expenditures less
investment in working capital.
IMI performed its analyses based on financial forecasts provided to it by
us for two separate business scenarios: a base case (the "Base Case") and a
sensitivity case (the "Sensitivity Case"). The Base Case reflects our current
business plan, including our management forecasts for the years 2000 to 2004.
The Sensitivity Case includes management's adjustments to the Base Case to
provide for higher investment outlays, slower sales growth and consequently
lower operating margin expansion.
The Base Case projections included (i) projected revenues of Lit. 95.9
billion, Lit. 115.9 billion, Lit. 148.0 billion, Lit. 194.0 billion and Lit.
270.5 billion in 2000, 2001, 2002, 2003 and 2004 and (ii) projected net
(loss)/income of (Lit. 8.6 billion), (Lit. 4.2 billion), Lit. 4.9 billion, Lit.
14.5 billion and Lit. 31.1 billion in 2000, 2001, 2002, 2003 and 2004.
We informed IMI that the Base Case projections were based on several
significant assumptions. The Base Case projections are influenced significantly
by the investments needed to generate competitive production efficiencies, by
R&D outlays to create new product models, by pricing per unit and by the success
of new product models. The Base Case projections assume a tripling of sales from
6,600 units in 2000 to 18,000 units by 2004.
IMI calculated our terminal values based on perpetual free cash flow
growth rates ranging from 3.0% to 4.0%. The unlevered free cash flow streams and
terminal values were then discounted using a range of discount rates from 11.0%
to 13.0%. The range of discount rates was selected based in part on an analysis
of comparable companies' weighted average costs of capital, the experience and
professional judgment of IMI with respect to the motorcycle manufacturing
industry and our particular financial and operating circumstances. Based on this
analysis, our implied enterprise value (i.e. value of equity plus book value of
debt less cash) for us ranged from approximately Lit.79 billion to Lit.136
billion for the Base Case and from approximately Lit.47 billion to Lit.88
billion for the Sensitivity Case. IMI observed that the estimated enterprise
value of the sale i.e. Lit.134 billion (being the Estimated Total Consideration
plus estimated debt less cash in the Management Accounts at April 30, 2000)
represented a premium in all cases excepting the upper value of the Base Case.
Comparable Companies Analysis. This methodology involves comparing
selected financial, operating and stock market data for us to corresponding data
of selected companies in the U.S. and European motorcycle industry and in
particular to Harley-Davidson and Ducati. Normally comparisons are made using
the stock prices as multiples of the respective 2000 and 2001 earnings per share
("EPS") as well as using enterprise values as multiples of the respective 2000
and 2001 sales, earnings before interest, taxes, depreciation and amortization
("EBITDA") and earnings before interest and taxes ("EBIT"). In this case,
however, we are forecast to have negative EPS and EBIT for the years 2000 and
2001 and negative EBITDA in 2000 and a very low EBITDA of Lit. 3.6 billion in
2001 and therefore the methodology cannot be applied except for enterprise value
(sales multiples).
In the case of enterprise value/sales multiples the proposed sale gives a
multiple for the year 2000 and 2001 of 1.4x and 1.2x compared with 4.6x and 3.9x
for Harley-Davidson and 1.6x and 1.4x for Ducati when applying Institutional
Brokers Estimate System ("IBES") sales forecasts for 2000 for the latter two
companies. IBES is a data service that monitors and publishes compilations of
sales and earnings estimates by selected research analysts regarding companies
of interest to institutional investors. IMI did not review the methodologies or
assumptions used by IBES in compiling its estimates and IBES was not asked to
consent to the use of its name herein.
Comparable Transactions Analysis. This methodology involves comparing the
multiples of the sale with multiples of other transactions in the U.S. and
European motorcycle industry. As with the above comparable companies analysis,
our financial forecasts for 2000 and 2001 limit the application of this
methodology to enterprise value/sales. IMI compared the proposed sale with the
acquisition of 50% of Ducati by a financial investor group led by Texas Pacific
Group in March 1996. The Ducati transaction involved enterprise value/sales of
2.3x and 1.2x for the first two forecast years compared with 1.4x and 1.2x for
the proposed sale.
Interests of Certain Persons in the Sale
In considering the recommendation of the board of directors with respect
to the sale, stockholders should be aware that certain of our directors and
officers may have interests with regard to the sale which are different from the
interests of the other stockholders. They include:
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o OAM and its parent, Trident Rowan, which have been required to make
loans to us or to our subsidiaries to provide the funds our
subsidiaries have needed to stay in business. Most of these loans
were converted into Series B preferred stock in February, 2000.
Also, OAM has been required to guarantee some of our debt. The sale
will end the need for OAM and Trident Rowan to make loans to us
(which they may not in any event have funds to do) and in OAM's
being released from a guarantee of Lit.4 million of our
subsidiaries' bank debt. One of our directors is a principal officer
of Trident Rowan and an additional two of our directors are
directors of Trident Rowan.
o Certain of our officers and directors will continue to hold
positions in the subsidiaries after the sale.
o In connection with the sale, we have agreed to pay severance to two
of our directors, Mark S. Hauser and Howard E. Chase, and to
Emmanuel Arbib, one of our former directors, of $168,000, $51,400
and $37,900, respectively, in exchange for termination of their
employment and consulting agreements with us.
o OAM, Trident Rowan (of which one of our directors is a principal
officer and an additional two of our directors serve as directors),
Wheatley Partners, LP and Wheatley Foreign Investment, LP (each of
which is an affiliate of Barry Fingerhut, a director and a member of
the special committee) and William Spier (a director) all own Series
B preferred stock. If our stockholders' approve the sale of our
operating subsidiaries, the conversion price of the Series B
preferred stock will be reduced and we will become required to
redeem it. Based upon estimated total net sale proceeds of Lit. 76.0
billion approximately $40.9 million) (including sums held in
escrow), if all the Series B preferred stock is converted at the
reduced price, the sale proceeds available with regard to the shares
of Class A common stock issuable upon conversion of the shares of
Series B preferred stock at the reduced conversion price will be two
and one-half times the redemption price of the Series B preferred
stock. We are asking the holders of our Series B preferred stock to
agree not to convert their Series B shares in exchange for our
agreement to complete the redemption of our Series B preferred stock
no later than September 30, 2000.
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THE SALE AGREEMENT AND THE SALE
The following is a summary of significant provisions of the sale
agreement. The sale agreement is attached as Annex A. You should read the sale
agreement for a complete understanding of its terms.
Structure of the Sale
The sale agreement provides that, following the approval of our
stockholders and the satisfaction or waiver of some other conditions, Aprilia
S.p.A. will acquire from us all of the outstanding shares of Moto Guzzi S.p.A.
and Moto Guzzi North America, Inc., all of the outstanding quota of MGI
Motorcycle GmbH and 99% of the outstanding quota of Moto Guzzi France S.a.r.l.
(Aprilia will acquire the remaining 1% of Moto Guzzi France S.a.r.l. from the
person who owns it).
The Sale Consideration
The sale price for the shares of the subsidiaries will be Lit. 71.5
billion (approximately $34.0 million) plus or minus the amount by which the
subsidiaries' net worth at April 30, 2000 is more or less than its net worth at
December 31, 1999 (which we anticipate will increase the sale price by
approximately Lit.14.5 billion (approximately $6.9 million)). In addition,
Aprilia will satisfy debts of the subsidiaries to us totaling approximately
Lit.2.0 billion (approximately $1.0 million) and cause OAM to be released from a
Lit.4 billion (approximately $1.9 million) guarantee of obligations of the
subsidiaries.
Escrow
Aprilia will pay Lit 10.5 billion (approximately $5.0 million) of the sale
proceeds (approximately $40.9 million) into an escrow account, instead of paying
it directly to us. Aprilia will be able to use the escrow fund to satisfy any
claims it may have that our representations and warranties in the sale agreement
were not correct. The sum held in escrow in excess of Lit.2 billion
(approximately $1.0 million) plus the amount of any claims which have been made
against the escrow fund, will be released to us on the first anniversary of the
closing of the sale of the subsidiaries, and the balance of the escrow fund, to
the extent it is not subject to claims, will be released to us on the seventh
anniversary of the closing.
Time of the Sale
The closing of the sale of the subsidiaries will take place promptly after
our stockholders approve the sale and a change of our corporate name to
eliminate the words "Moto Guzzi." The sale agreement will automatically
terminate if these stockholder approvals are not obtained by August 31, 2000.
Management of Subsidiaries after May 2, 2000
We agreed that beginning May 2, 2000, Aprilia would oversee the management
of the four subsidiaries. To facilitate this, we put two Aprilia designees on
the board of directors of each of the subsidiaries beginning May 2, 2000.
Aprilia is required to lend the subsidiaries any funds they need, and cannot
otherwise obtain, between May 2, 2000 and the time the sale is completed or the
sale agreement is terminated. The loans will have to be repaid if the sale
agreement is terminated. If Aprilia makes loans to the subsidiaries, we have to
give Aprilia security interests in up to 25% of the equity and quota of each of
the subsidiaries as security for the obligation to repay the loans. During the
period Aprilia is overseeing the operations of the subsidiaries, it must cause
the subsidiaries to conduct their operations in the ordinary course.
Voting Agreement; Our agreement to pay IMI's fees and to present a liquidation
proposal to our stockholders within 90 days of the closing of the sale
The sale agreement contains a condition that OAM, S.p.A. (the holder of
approximately 61% of the issued and outstanding shares of Class A common stock)
agree to vote its capital stock for the sale, and by letter to Aprilia dated
April 14, 2000, OAM agreed to vote its shares for the sale. In the letter, OAM
also agreed, among other things, to cause us to take such actions as may be
required to change our name to remove the words "Moto Guzzi." Trident Rowan owns
approximately 5% of our Class A common stock and is expected to vote for the
sale and the name change. Our officers and directors and officers and directors
of Trident Rowan own an aggregate of approximately % of our Class A common stock
and are expected to vote for the sale and the name change.
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In the letter, OAM also agreed (i) to transfer, by April 30, 2000, any
industrial and intellectual properties in its possession regarding the
manufacturing of and marketing of motorcycles and their parts, (ii) not to
compete with Aprilia in the manufacturing and marketing of motorcycles for five
years, (iii) to guarantee our ability to fulfill our obligations under the sale
agreement for one year following the closing of the sale, and (iv) to provide
any necessary financing we need prior to April 30, 2000.
In order to induce OAM to deliver its letter to Aprilia, we agreed with
OAM and Trident Rowan by letter dated April 14, 2000 that, among other things,
we would pay IMI's fees in connection with the sale. The April 14th letter was
amended on June 8, 2000 to provide that we will, as promptly as practicable
after the closing of the sale, but in no event later than 90 days following the
closing, hold a meeting of stockholders to consider and vote upon a proposal to
liquidate all our assets and dissolve the Company. As a holder of Class A common
stock, you will have an opportunity to vote on the proposal that will be
liquidated. However, because OAM owns 61% of the Class A common stock, it can
approve the liquidation even if no other stockholders vote in favor of it.
Conversely, the liquidation will not be approved unless OAM votes in favor of
it. Although OAM and Trident Rowan insisted that we agree to submit a
liquidation proposal to our stockholders, OAM is not committed to vote its
shares of Class A common stock for the liquidation proposal. During the period
between the closing of the sale and the stockholder meeting relating to the
liquidation proposal, we may seek to find other companies in which to invest
proceeds from the sale. If we do so, we may propose the acquisition of, or an
investment in, another company as an alternative to liquidation at the
stockholder meeting.
Representations and Warranties
We and Aprilia have made customary representations and warranties in the
sale agreement (for an Italian agreement) about ourselves and our businesses.
Our representations and warranties relate to, among other things:
o our power and authority to enter into the sale agreement and perform
our obligations under it;
o the organization of the subsidiaries and similar corporate matters;
o the authorization, execution and delivery of the sale agreement;
o our ownership of the shares and quota of the subsidiaries;
o the authorized and issued capital of each of the subsidiaries;
o the assets held by the subsidiaries;
o the real property held by the subsidiaries;
o the intellectual property held by the subsidiaries;
o litigation relating to the subsidiaries;
o taxes relating to the subsidiaries;
o environmental issues relating to the subsidiaries;
o the balance sheets, corporate books and records of the subsidiaries;
o the management of the businesses of the subsidiaries;
o the accounts receivable of the subsidiaries;
o the employees of the subsidiaries;
o approvals from various Italian government agencies;
o the nature of certain contracts;
o guarantees or commitments by any of the subsidiaries;
o product liability issues related to the subsidiaries; and
o the insurance policies of the subsidiaries.
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Aprilia's representations and warranties relate to, among other things:
o its organization and similar corporate matters;
o the authorization, execution and delivery of the sale agreement;
o the absence of conflicts with its organizational documents, other
material agreements and laws; and
o the availability of the funds necessary to complete the transactions
contemplated by the sale agreement.
Conditions to the Sale Agreement
Aprilia's and our obligations to effect the sale are subject to the
satisfaction or waiver of the following conditions:
o notification to the Autorita Garante della Concurrenza e Del
Merchant (the Italian antitrust authority);
o approval of the sale by our stockholders;
o approval by our stockholders of a change of our corporate name to
eliminate the words of "Moto Guzzi"; and
o the absence of any pending bankruptcy proceedings relating to any of
the subsidiaries.
Unless our stockholders approve the sale and the change of our corporate
name by August 31, 2000, the sale agreement will automatically terminate.
Certain Covenants
General Covenants
In the sale agreement, we agreed to the following:
o not to cause any subsidiary to declare or pay dividends;
o not to amend any organizational documents relating to the
subsidiaries;
o not to alter the present ownership structure of any of the
subsidiaries;
o to transfer all intellectual property rights to Aprilia, including
the trademark "Moto Guzzi"; and
o to allow representatives of Aprilia to oversee the management of the
subsidiaries beginning May 2, 2000.
Covenants relating to the management of the subsidiaries prior to April 30, 2000
We agreed that from the date of the execution of the sale agreement until
April 30, 2000, we would cause each of our subsidiaries to:
o operate its business in the ordinary course consistent with the
manner in which it was being operated on the date of the sale
agreement;
o take all reasonable steps to maintain the goodwill of its business,
the continued employment of its executives and other employees and
good relationships with the vendors, suppliers, contractors and
others with which it does business;
o maintain its assets in good condition;
o perform all obligations and duties imposed by applicable laws and
regulations; and
o maintain adequate insurance coverage.
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Agreements relating to the management of the subsidiaries after April 30, 2000
The sale agreement provides that Aprilia will oversee the subsidiaries'
operations beginning May 2, 2000. To carry that out Aprilia designees have been
added to the subsidiaries' boards of directors. Aprilia is required to cause the
subsidiaries to operate their business in the ordinary course.
During the period between May 2, 2000 and the closing of the sale, Aprilia
will lend the subsidiaries any funds they need to operate between that date and
closing of the sale, up to Lit. 10 billion (approximately $4.8 million). If the
sale does not take place, the loans will be repayable when the sale agreement
terminates. The obligation to repay the loans will be secured by up to 25% of
the shares and quota of the subsidiaries.
Covenant not to Compete
We agreed for a period of three years after April 30, 2000 not to engage
worldwide, directly or indirectly, in the business of manufacturing, selling,
distributing or marketing motorcycles, or components or spare parts for them. We
also agreed to cause our directors to enter into similar agreements.
Amendment and Waiver
The sale agreement may be amended with the consent of both Aprilia and us.
Termination of the Sale Agreement
Aprilia and we may terminate the sale agreement by mutual written consent,
even after our stockholders have approved it.
The sale agreement will terminate automatically if required approvals by
our stockholders have not been obtained by August 31, 2000.
Expenses
Aprilia and we will each bear our own costs (including financial advisor
fees, legal fees, accounting and other fees and disbursements) incurred in
connection with the negotiation, preparation, execution and carrying into effect
of the sale agreement.
Indemnification
Indemnification for Breaches of Representations and Warranties
Aprilia and we each indemnifies the other for any damages arising from the
breach of any of the representations and warranties in the sale agreement.
However, neither of us indemnifies the other for damages totaling less than Lit.
1.0 billion (approximately $0.5 million) and our total indemnification is
limited to Lit.10.5 billion (approximately $5.0 million), which is the sum which
will be held in escrow. We have also agreed to indemnify Aprilia against costs
or liabilities from stockholder litigation instituted in the United States with
respect to the sale agreement.
Indemnification of Directors
Aprilia will not cause any action to be brought against anyone who served
on the board of directors of any of the subsidiaries in the five years prior to
April 30, 2000. Aprilia has further agreed to indemnify those directors if an
action is brought. In addition, we have agreed that if the sale agreement is
terminated after April 30, 2000, we will not cause any action to be brought
against those who serve on the board of directors of any of the subsidiaries
after April 30, 2000 (that is, during the period designees of Aprilia will be
serving on those boards).
Regulatory Approvals
The parties must comply with federal and foreign regulatory requirements
before they can complete the sale. Although there can be no guarantee that the
parties will obtain the requisite consents or approvals on a timely basis, or at
all, we believe that the necessary approvals can be obtained before August 31,
2000. A discussion of the principal regulatory requirements follows.
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Italian Antitrust
We cannot complete the sale until we have notified and furnished certain
information to the Autorita Garante della Concorrenza e del Mercato (the Italian
antitrust authority). We have filed notification forms with the Italian
antitrust authority. We do not believe that the sale would violate Italian
antitrust laws.
Absence of Appraisal Rights
Under Delaware law, our stockholders will not have dissenters' appraisal
rights as a result of the sale.
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PROPOSAL 2
CHANGE OF CORPORATE NAME
It is a condition to Aprilia's obligation to purchase our subsidiaries
that we have removed the words "Moto Guzzi" from our corporate name. Therefore,
we are asking our stockholders to approve an amendment to our certificate of
incorporation to change our name to "________________." If the sale is not
completed, the certificate of incorporation will not be amended even though our
stockholders have approved the proposal. If the stockholders fail to approve
this proposal, Aprilia will not have to complete sale transaction, regardless of
whether our stockholders approve the sale.
The affirmative vote of the holders of a majority of the outstanding
shares of our Class A common stock is required to approve the proposal to change
our corporate name to "__________."
A copy of the proposed amended Article I of our certificate of
incorporation, incorporating the change contemplated by the proposal, is annexed
to this proxy statement as Annex C.
Our board of directors has unanimously approved the change of corporate
name and unanimously recommends to the stockholders that they approve the
amendment to our certificate of incorporation.
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WHERE YOU CAN FIND MORE INFORMATION
We file annual, quarterly and other reports, proxy statements and other
information with the SEC. You may read and copy any reports, statements or other
information on file at the SEC's public reference room located at 450 Fifth
Street, NW, Washington, D.C. 20549 or at one of the SEC's other public reference
rooms in New York, New York and Chicago, Illinois. Please call the SEC at
1-800-SEC-0330 for further information about the public reference rooms. The SEC
filings are also available to the public from commercial document retrieval
services and at the Internet world wide web site maintained by the SEC at
www.sec.gov.
INCORPORATION OF CERTAIN INFORMATION BY REFERENCE
The following documents we have filed with the SEC (File No. 000-22813)
are incorporated by reference in this proxy statement:
Annual Report on Form 10-K for the year ended December 31, 1999;
Current Report on Form 8-K dated April 20, 2000; and
Quarterly Report on Form 10-Q for the quarterly period ended March 31,
2000.
The SEC permits us to "incorporate by reference" information into this
proxy statement. This means that we can disclose important information to you by
referring you to another document filed separately with the SEC. The information
incorporated by reference is deemed to be part of this proxy statement, except
for any information superseded by information contained directly in this proxy
statement. We incorporate by reference into this proxy statement additional
documents that we may file with the SEC from the date of this proxy statement to
the date of the special meeting.
This proxy statement incorporates important business and financial
information about Moto Guzzi that is not included in or delivered with this
proxy statement. This information is available without charge to you upon your
written or oral request to Secretary, Moto Guzzi Corporation, 445 Park Avenue,
6th Floor, New York, NY, 10022, telephone (212) 644-4441. In order to obtain
timely delivery of this information, you should request this information no
later than July __, 2000. See "Where You Can Find More Information" above. If
you would like to request documents from Moto Guzzi, please do so promptly in
order to receive them before the Special Meeting.
You should rely only on the information contained or incorporated by
reference in this proxy statement in making your decision about how to vote on
the proposals which will be presented to the meeting. We have not authorized
anyone to provide you with information that is different from what is contained
in this proxy statement. This proxy statement is dated June 8, 2000. You should
not assume that the information is accurate as of any other date and you should
not view either the mailing of this proxy statement to stockholders nor the
completion of the sale as implying otherwise.
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ANNEX A
MOTO GUZZI CORPORATION
(the "Vendor")
- and -
- on one side -
APRILIA S.p.A.
(the "Purchaser")
- on the other side -
---------------------------------------------
PRELIMINARY SHARE SALE AND PURCHASE AGREEMENT
---------------------------------------------
April 14, 2000
<PAGE>
PRELIMINARY SHARE SALE AND PURCHASE AGREEMENT
THIS AGREEMENT dated this 14th day of April, 2000.
BY AND AMONG
Moto Guzzi Corporation, a corporation existing under the laws of Delaware, with
registered office in 350 Park Avenue, New York, NY 10022 USA, hereby represented
by Mr. Gianni Bulgari , (hereinafter the "Vendor");
on the first part
and
Aprilia S.p.A., a company existing under the laws of Italy, with registered
office in Via Galileo Galilei, 1, 30033 Noale (VE), fiscal code no. 10089520158
hereby represented by Mr. Ivano Beggio, in the quality of Chairman of the Board
of Directors (hereinafter the "Purchaser");
on the second part
WHEREAS
a) the Vendor is the owner of 100% of the subscribed, issued and fully paid
share capital of Moto Guzzi S.p.A., a company existing under the Italian
law, with registered office in Mandello del Lario (LC) via Parodi 57;
b) the Vendor is the owner of 100% of the subscribed, issued and fully paid
quota capital of MGI Motorcycle GmbH, a company existing under the German
law, with registered office in Grasellenbach-Hammelbach;
c) the Vendor is the owner of 99% of the subscribed, issued and fully paid
quota capital of Moto Guzzi France S.a.r.l., a company existing under the
French law, with registered office in Villepinte, Zone d'Activites
Centrales, Parc de Villepinte lot D 18, 7 allee des Grives;
d) the remaining 1% of Moto Guzzi France S.a.r.l. (the "Remaining Quota") is
owned by Matteo Emilio Pizzoccaro, born in Milan on the 4th of February,
1967, Fiscal Code: PZZ MTM 67B04 F205N;
e) the Vendor is the owner of 100% of the outstanding shares (all of which
are duly issued and fully paid) of Moto Guzzi North America Inc., a
company existing under the laws of North Carolina (USA), with registered
office in 455 W Depot Street, Angier, NC 27501 (Moto Guzzi S.p.A., Moto
Guzzi France S.a.r.l., MGI Motorcycle GmbH and Moto Guzzi North America
Inc. hereinafter jointly referred to as the "Subsidiaries");
f) the Vendor desires to sell to the Purchaser and the Purchaser, based on
the information contained in the Information Memorandum delivered to
Purchaser prepared by Banca IMI, financial advisor to the Vendor and the
Vendor, and after evaluation of the Information (as defined hereinafter)
as a result of the due diligence activity, desires to purchase from the
Vendor the entire interest held by the Vendor in the Subsidiaries; in
particular, the Vendor desires to sell to the Purchaser and the
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Purchaser desires to purchase from the Vendor: (i) 100% shareholding in
Moto Guzzi S.p.A.; (ii) 99% quotaholding in Moto Guzzi France S.a.r.l.;
(iii) 100% quotaholding in MGI Motorcycle GmbH and; (iv) 100% shareholding
in Moto Guzzi North America Inc.
g) OAM (as defined below) and Vendor have granted to the Subsidiaries certain
shareholders' loans indicated in Schedule 1 attached hereto and intend to
be reimbursed of such loans in connection with the transaction described
herein;
h) OAM has secured certain repayment obligations undertaken by Moto Guzzi SpA
vis a vis Banca Nazionale del Lavoro,
Modena Branch, by providing cash collateral, and intends to be released
from such guarantee obligations in connection with the transaction
described herein, and the Purchaser intends to assume such guarantee
obligations;
i) the Vendor is entitled to the use of certain industrial and intellectual
property of the Subsidiaries, including the Moto Guzzi trademarks
indicated in Schedule 2 and, with the consummation of the transaction
contemplated herein, intends to assign to Purchaser all its interest in
such industrial and intellectual property, including in all Moto Guzzi
trademarks and to cease all use thereof;
THIS AGREEMENT WITNESSES THAT in consideration of the foregoing premises and the
respective promises, covenants and agreements contained herein, the Parties
hereto hereby agree as follows:
1. INTERPRETATION
1.1 Defined Terms
For the purposes of this Agreement, unless the context otherwise requires,
the following terms shall have the meanings set out below and grammatical
variations of such terms shall have the corresponding meanings;
capitalized terms used in this Agreement and not otherwise defined have
the meanings set out in this section 1.1.
"Agreement" means this preliminary share sale and purchase agreement as
per articles 1351, 2645 bis, and 2932 of the Italian Civil Code, together
with all recitals and the Schedules hereto, as amended or supplemented
from time to time in accordance with its terms.
"Applicable Laws" means all statutes, laws, by-laws, regulations,
ordinances, codes, directives, instructions, rules and orders of
governmental or other public authorities having jurisdiction in respect of
a particular matter, and all amendments thereto, and any judicial or
administrative interpretation thereof by any Governmental Entity,
including any judicial or administrative order, consent, decree or
judgement, applicable to the Subsidiaries.
"Banca IMI" means Banca d'Intermediazione Mobiliare S.p.A., with
registered office in Milano, Corso Matteotti n. 4/6, Italy.
"Business Day" means a day which is neither a Saturday, a Sunday nor a
legal holiday in Italy or the United States of America.
"Closing" means the consummation of the sale and the completion of all the
formalities described in Article 3.4.2 of this Agreement.
"Closing Date" means July 31st, 2000 or such other date as may be agreed
upon in writing between the Parties, as soon as the conditions precedent
under article 2 are fulfilled; provided however that (i) Purchaser and
Vendor, as far as each of them is respectively concerned, shall make all
their best efforts to ensure that all conditions precedent under article 2
shall be fulfilled
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within July 31st, 2000, and (ii) under no circumstances the Closing Date
may take place after August 31st, 2000.
"DM" means the currency of Germany that, at the time of payment, is legal
tender.
"Escrow Account": shall mean the escrow account jointly opened by Vendor
and Purchaser with the Escrow Agent to be managed in accordance with the
Escrow Agreement attached hereto as Schedule 4.
"Escrow Agent": shall mean Banca di Intermediazione Mobiliare IMI SpA,
with registered offices in Milan, Corso Matteotti, 4/6, and/or a fiduciary
company of the same group as Banca IMI, designated by the said Banca IMI.
"Escrow Agreement": shall mean the escrow agreement substantially in the
form attached hereto as Schedule 4, being understood that the economic
terms and conditions contained therein shall not be modified.
"Escrow Fund": means the amount of ITL 10.375.000.000 (ten billion three
hundred seventy five million) deposited in the Escrow Account.
"FF" means the currency of France that, at the time of payment, is legal
tender.
"Financial Statements" means, collectively, the Management Date Financial
Statement and the Interim Financial Statement, prepared according to US
GAAP.
"Information" means all facts, documents and instruments, and information
relating to both the Vendor and the Subsidiaries, made available to the
Purchaser, either directly or through its advisors, with respect to which
the Purchaser acknowledges that it was made aware of the Information and
was able to assess its contents, and includes the Information Memorandum
("Information Memorandum") prepared by Banca IMI and the Vendor. The
Parties however agree that the Information Memorandum is subject to the
disclaimers contained therein, which apply to the sole Banca IMI, and that
therefore Banca IMI will not in any way be responsible for the information
contained in such Information Memorandum and for the Information.
"Interim Financial Statement" means the aggregate asset and liability
statement relating to the Subsidiaries as at December 31st, 1999, a copy
of which is included in Schedule 5, prepared according to US GAAP.
"ITL" means the currency of Italy that, at the time of payment, is legal
tender.
"Liens" means any title defect, conflicting or adverse claim of ownership,
mortgage, security interest, lien, encumbrance, pledge, claim, right of
first refusal, option, charge, restriction, lease, attachment, easement or
any other encumbrance.
"Losses", any damage, cost, loss or liability effectively borne by a Party
which are a direct consequence of the breach of any of the terms and
conditions of this Agreement, or of the shareholders' litigation described
in article 2.5 below.
"Management Date" means April 30th, 2000 at 12.00 p.m., Milan time.
"Management Date Financial Statement" means the aggregate asset and
liability statement relating to the Subsidiaries as of the Management
Date, prepared according to US GAAP and, more precisely, as set out in the
Schedule 3.
"Management Period" means the period between the Management Date and the
Closing Date.
"OAM" means OAM SpA, a company existing under the laws of Italy, with
registered offices in Via Fieno, 8, Milan Italy.
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"Parties" means, collectively, the Vendor, and the Purchaser and "Party"
means any one of them.
"Purchase Price" means the price to be paid by the Purchaser for the
purchase of the Shares, as set out in section 3.2, and as to be adjusted
in accordance with article 3.6 below.
"Purchaser" means Aprilia S.p.A., a company existing under the laws of
Italy with registered office at Via Galileo Galilei, 1, 30033 Noale
(Venezia).
"Purchaser's Auditor" means the auditor which shall be designated by the
Purchaser by April 18th, 2000.
"Remaining Quota" means 1% quotaholding of Moto Guzzi France S.a.r.l. held
by Mr. Matteo Emilio Pizzoccaro.
"Schedule" refers to one of the several written schedules attached to this
Agreement.
"Shareholders' Loans" means the shareholders' loans granted by OAM and
Vendor to the Subsidiaries, as indicated in Schedule 1 attached hereto.
"Shares" means the total of (i) 2.000.000 shares of Moto Guzzi S.p.A.,
which represent 100% of the issued corporate capital of said company or
such number of shares as shall represent 100% of the entire share capital
of Moto Guzzi S.p.A. at the Closing Date; (ii) 4950 quota of Moto Guzzi
France S.a.r.l., which represent 99% of the issued corporate capital of
said company or such number of quotas as shall represent 99% of the entire
capital of Moto Guzzi France S.a.r.l. at the Closing Date; (iii) DM
100.000 quota of MGI Motorcycle GmbH, which represent 100% of the issued
corporate capital of said company or such number of quotas as shall
represent 100% of the entire capital of MGI GmbH at the Closing Date, and;
(iv) 600 shares of Moto Guzzi North America Inc., which represent 100% of
the issued and outstanding corporate capital of said company, or such
number of shares as shall represent 100% of the issued and outstanding
capital of Moto Guzzi North America Inc. at the Closing Date.
"Tax" means any tax, levy, charge, duty, impost, stamp duty or other tax,
payable or levied by any Governmental Entity on the Subsidiaries.
"Tax Return" means any return, declaration, report, information return,
statement or other similar document relating to Taxes, including any
schedule or attachment thereto and any amendment thereof.
"US $" means the currency of the United States of America that, at the
time of payment, is legal tender.
"US GAAP" means the Generally Accepted Accounting Principles in use in the
United States of America.
"Vendor" means, Moto Guzzi Corporation.
"Vendor's Auditor" means Arthur Andersen SpA, Milan office.
1.2 Interpretation Generally
For the purpose of this Agreement, except as otherwise expressly provided
or unless the context otherwise requires:
(a) the terms defined in this Agreement have the meanings ascribed to
them herein and include the plural as well as the singular and the
use of any gender herein shall include the other gender;
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(b) each reference to an "Article" of this Agreement shall include all
sections of such Article and, similarly, each reference to a
"section" shall include all subsections of such section.
1.3 Schedules
The following Schedules are attached to and form part of this Agreement:
1) Shareholders' Loans
2) Trademarks
3) Form of Management Date Financial Statement
4) Escrow Agreement
5) Interim Financial Statement
6) Clifford Chance Timetable
7) Attribution of the payment of the Purchase Price to each Subsidiary
8) Resignation letter by corporate officers
9) By laws of the Subsidiaries
10) Liens on Assets
11) Lease Agreements
12) Liens on Real Property
13) Litigation
14) Law 626/1994 Issues
15) Employees
16) Wages
17) Product liability
18) Insurance policies
19) Commitment not to compete
20) Opinion by Counsel to Vendor
1.4 Accounting Terms
The Interim Financial Statement have been prepared in accordance with US
GAAP. Any accounting term used in this Agreement, or to be used for the
drafting of the Financial Statements shall have the meaning ascribed
thereto pursuant to the US GAAP.
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2. ANTITRUST - APPROVALS - DISCLOSURE - SHAREHOLDERS' LITIGATION
2.1 Antitrust Communication
This Agreement is subject to the notification by the Parties to the
Autorita Garante della Concorrenza e del Mercato ("Italian Antitrust
Authority") of the transaction contemplated hereunder. To this end the
Purchaser, with the cooperation of the Vendor, hereby undertakes to
perform all the obligations set forth in article 16 of Law October 10,
1990, No. 287 by making the required notification within 10 Business Days
from the date hereof.
2.2 Approval by Vendor
The Vendor represents and warrants hereby that the execution of this
Agreement and the consummation of the transaction contemplated herein have
been duly approved by its Board of Directors, including any relevant
Committees, where applicable. The Purchaser shall receive, as soon as
practicable after the date hereof, and prior to April 30th, 2000, the
opinion of US Counsel to the Board of Directors of Vendor, draft of which
is attached hereto as Schedule 20.
2.3 Condition precedent - approval by the Shareholders meeting
The Vendor's Board of Directors shall convene or cause to convene, as soon
as practicable and after the execution of this Agreement and in compliance
with the Applicable Laws, a shareholders meeting of Moto Guzzi Corp.
having as an agenda, inter alia, (i) the approval by the Vendor's
Shareholders of this Agreement and of the transactions contemplated
hereunder and (ii) the change of the corporate name so as to eliminate the
name "Moto Guzzi". A memorandum by Clifford Chance, legal counsel of the
Vendor in the U.S.A., concerning the forecasted timing to convene the
shareholders meeting of the Vendor is contained in Schedule 6.
The Parties agree that any and all effects of this Agreement are
conditional upon the due approval of the Vendor's shareholders of this
Agreement and of the transactions contemplated hereunder. The Parties
acknowledge that such shareholders' approval is required under USA federal
and state laws and regulations in order to clear the transactions
hereunder. Should such approval not take place within August 31st, 2000,
this Agreement shall be terminated and the Closing Date transactions shall
not take place. In such event the Escrow Agent shall act in compliance
with the Escrow Agreement.
The Parties also agree that the consummation of the transactions described
herein shall be, at Purchaser's option, conditional upon the absence at
the Management Date of any pending bankruptcy proceeding filed against any
of the Subsidiaries.
2.4 Disclosure - OAM undertaking to approve the transaction
The Parties acknowledge that OAM, controlling shareholder of the Vendor,
undertook vis-a-vis the Purchaser, inter alia, to vote the approval of
this Agreement and the transactions contemplated hereunder at the Vendor's
shareholders meeting provided in Section 2.3. The Vendor will comply with
any form of disclosure pursuant to the Applicable Laws in respect thereof.
2.5 Indemnification for litigation involving the Purchaser in the USA, as
direct consequence of executing this Agreement
The Vendor agrees to indemnify and hold harmless the Purchaser from any
and all Losses related to or arising out of litigation started in the USA
by any of the Vendor's shareholders, with the exception of OAM, or
creditors vis-a-vis the Purchaser where such litigation is direct
consequence of the execution of this Agreement and is intended to
challenge the effectiveness of this Agreement.
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3. PURCHASE AND SALE OF THE SHARES
3.1 Purchase and Sale of the Shares
Subject to the terms and conditions contained in this Agreement, the
Vendor hereby undertakes to sell, assign and transfer to the Purchaser and
the Purchaser - for itself or for an entity to be designated prior to the
Closing Date in accordance with article 1401 Italian civil code but in any
case fully controlled by the Purchaser, which shall remain jointly and
severally liable with such designated entity - subject to the terms and
conditions contained herein undertakes to purchase from the Vendor legal
and beneficial title to the Shares, free and clear of any and all Liens.
In order to comply with the undertakings under this Agreement the Parties
shall fulfil all the formalities in order to render the transfer of the
Shares of the Subsidiaries effective according to the Applicable Laws.
3.2 Purchase Price
The Purchase Price of the Shares is equal to ITL 85.500.000.000 (eighty
five billion five hundred million) less ITL 13.993.000.000, i.e. the
aggregate negative net worth of the Subsidiaries as on December 31st, 1999
as shown on the Interim Financial Statement, subject to adjustment as per
article 3.6 below. The Purchase Price is to be considered as a whole for
all the transactions provided hereunder and is referred to each Subsidiary
as indicated in Schedule 7.
3.3 Shareholders' Loans
The amount of the Shareholders' Loans is equal to ITL 18.972.061.747, as
estimated by Vendor at the date hereof, subject to review as per article
3.5 below.
3.4 Management Date and Closing Date transactions
3.4.1 At the Management Date the following transactions shall occur:
(a) approval of the balance sheets related to the last corporate year of
the Subsidiaries by the duly convened Shareholders' meetings of all
Subsidiaries (as far as Moto Guzzi SpA is concerned, assemblea
totalitaria);
(b) delivery by the Vendor to the Purchaser of letters, in the form
contained in Schedule 8, for each member of the Board of Directors
and of the Statutory Auditors, or similar corporate bodies, of each
Subsidiary providing that all such Directors, Auditors, or members
of any such corporate bodies shall have no claim or request
whatsoever against any of the Subsidiaries, even with respect to
obligations due to companies or entities anyhow connected to such
Directors, Auditors or members of such corporate bodies (such as by
way of example only the company Como Consultants of Jersey), and
save for the outstanding fees due to them which shall be taken into
account in the Management Date Financial Statement;
(c) the Vendor shall cause the shareholders' meetings of each
Subsidiary, duly convened in compliance with all Applicable Laws, to
appoint all such Directors and Auditors as shall be designated by
Purchaser being however understood that Mr. Gianni Bulgari, Mr. Nick
Speyer as well as Mr. Alessandro Brusi, the current Chairman of the
Board of Auditors, shall be re-elected to serve for the same office
until the Closing Date;
(d) signing of the Escrow Agreement by and among Vendor, Purchaser and
the Escrow Agent;
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(i) deposit by the Purchaser into the Escrow Account of the amount
of ITL 71.507.000.000, and delivery to the Escrow Agent by the
Vendor of the Shares, fiduciarily endorsed to the Escrow
Agent, with irrevocable instructions to the Escrow Agent to
(i) pay at the Closing Date to Vendor the Purchase Price as
adjusted after determination of the Management Date Financial
Statement in accordance with article 3.6 below and after
deduction of the Escrow Fund; (ii) transfer at the Closing
Date to Purchaser the Shares by endorsing such Shares to
Purchaser in full and unrestricted property.
3.4.2 The completion of the sale and purchase of the Shares shall take
place on the Closing Date, at 10.00 a.m., at the offices of Studio Legale
Carnelutti, in Via Principe Amedeo n. 3, Milan, Italy.
On the Closing Date the following activities shall take place:
(i) transfer by the Escrow Agent to Purchaser of the Shares, and
endorsement of the full and unrestricted ownership of the
Shares to Purchaser, in compliance with all Applicable Laws;
(ii) the Escrow Agent shall: (a) pay to Vendor the adjusted
Purchase Price, as per articles 3.6 below, by means of
crediting to the Vendor's account to be indicated in writing
to Purchaser prior to the Closing Date opened with Banca IMI
of an amount equal to the adjusted Purchase Price after
deduction of the Escrow Fund; (b) hold in deposit into the
Escrow Account of the Escrow Fund; it is agreed that at the
request of Vendor the Escrow Fund may be extinguished after
the Closing Date and its amount may be paid to Vendor provided
that, in order to secure the indemnification obligations it
has undertaken pursuant to this Agreement, the Vendor shall
deliver to Purchaser an unconditional first demand bank
guarantee acceptable to the Purchaser for an amount equal to
the Escrow Fund, issued by a primary Italian bank agreed by
Purchaser;
(iii) replacement of the ITL 4.000.000.000 cash collateral given by
OAM to Banca Nazionale del Lavoro Modena Branch by means of an
equivalent guarantee provided by Purchaser and discharge of
OAM from all liability deriving therefrom;
(iv) reimbursement to Vendor of all outstanding Shareholders' Loans
as precisely determined in the Management Date Financial
Statement;
(v) transfer by the Vendor to Purchaser or to Moto Guzzi SpA, as
the case may be, of all Moto Guzzi trademarks and trade names;
(vi) furthermore, the Vendor shall procure that, at the Closing
Date, Matteo Emilio Pizzoccaro shall sell the Remaining Quota
to the Purchaser for a consideration of ITL. 1.000.
Shortly after signature of this Agreement Vendor and Purchaser shall
issue a joint press release concerning the transaction described
herein, to be prepared in compliance with applicable laws and
securities exchange regulations.
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3.5 Management Date Financial Statement
a) Vendor and Purchaser agree that the Management Date Financial Statement
shall be contradictorily prepared by the Vendor's Auditor and by the
Purchaser's Auditor for the purpose to assess the aggregate net worth of
the Subsidiaries and the precise amount of the Shareholders' Loans at the
Management Date. Vendor's Auditor and Purchaser's Auditor shall deliver to
Vendor and Purchaser the Management Date Financial Statement within and
not later than June 15th, 2000.
b) Should Vendor's Auditor and Purchaser's Auditor agree on the determination
of the Management Date Financial Statement, the Management Date Financial
Statement so determined shall not be subject to challenge and shall be
final and binding for Vendor and Purchaser.
c) Should Vendor's Auditor and Purchaser's Auditor not reach an agreement on
the determination of the Management Date Financial Statement within and
not later than June 15th, 2000, each of Vendor's Auditor and of
Purchaser's Auditor shall deliver within the aforesaid deadline to each of
Vendor and Purchaser its proposed draft of Management Date Financial
Statement and shall specify the items of disagreement (the "Disputed
Items").
d) Should Vendor and Purchaser not reach an agreement upon the Disputed Items
within 15 days after the date of delivery of the proposed drafts of
Management Date Financial Statements, an auditor jointly appointed for
such purpose by Vendor's Auditor and Purchaser's Auditor within the
Management Date (the "Independent Auditor") shall determine the Management
Date Financial Statement. The Independent Auditor shall issue its decision
on the Disputed Items and shall deliver to both Vendor and Purchaser the
Management Date Financial Statement within and not later than July, 25th,
2000.
e) The Management Date Financial Statement determined by the Independent
Auditor shall not be subject to challenge and shall be final and binding
for Vendor and Purchaser;
f) it is agreed that the information contained in the Schedules attached
hereto shall be kept into account for the purpose of determining the
Management Date Financial Statement, unless expressly provided to the
contrary, such as by way of exemplification in article 4.2.14 below, and
that no indemnification shall be due by Vendor under article 7.1 below if
the relevant loss has been taken into account for the purpose of the
determination of the Management Date Financial Statement
3.6 Adjustment to the Purchase Price
The amount of the adjustment to the Purchase Price shall be equal to the
difference between (i) the aggregate net worth of the Subsidiaries as set
forth in the Interim Financial Statement and (ii) the aggregate net worth
of the Subsidiaries as set forth in the Management Date Financial
Statement. Should the aggregate net worth of the Subsidiaries as set forth
in the Management Date Financial Statement be higher than the aggregate
net worth of the Subsidiaries indicated in the Interim Financial Statement
the Purchase Price shall be increased by the relevant difference. If such
aggregate net worth is lower, the Purchase Price shall be decreased by the
relevant difference, and shall therefore be lower than ITL 71.507.000.000;
such difference shall be forthwith credited by the Escrow Agent to
Purchaser.
If the Purchase Price as a consequence of the adjustment to the Purchase
Price is higher than ITL 71.507.000.000, the Purchaser shall forthwith pay
into the Escrow Account the increase in the Purchase Price
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4. REPRESENTATIONS AND WARRANTIES
4.1 General Representations and Warranties
In connection with the undertakings of this Agreement and in view of the
proposed sale and purchase of the Shares, the Vendor hereby represents and
warrants as follows.
The Purchaser acknowledges that prior to the date hereof, it has had
access to facts, documents and information (the "Information") relating to
both the Vendor and the Subsidiaries, either directly or through its
advisors, which were made available to it in a data room from 9.00 a.m. to
8.00 p.m. of 16th and 17th February 2000, from 3.00 p.m. to 8.00 p.m. of
March 10th, 2000 and from 9.00 a.m to 8.00 p.m. of March 13th, 2000 and in
New York, USA, from 9.00 a.m. to 8.00 p.m. of March 15th, 2000 and March
16th, 2000. The Purchaser also had the following meetings: (i) two one-day
meetings in March 2000, with Nick Speyer, director of Moto Guzzi S.p.A. in
order to discuss Subsidiaries' finances, (ii) a one-day meeting in
February 2000, a meeting on March 7, 2000 and a meeting on March 24, 2000,
with Arthur Andersen auditing firm of the Vendor, and Nick Speyer to
discuss the accounting principles used, among other things, for the stock,
(iii) and in February 2000 Mr. Cattaneo, a technical consultant of the
Purchaser, had a one-day short visit to the Moto Guzzi S.p.A. plant and
had meeting with the managers of Moto Guzzi S.p.A.
Therefore, with respect to the Information, the Purchaser acknowledges
that it was made aware of the Information, and was able to assess its
contents.
The representations and warranties given to the Purchaser by the Vendor
are limited to those set out below, to the exclusion of any other
expressed or implied warranty.
The Purchaser acknowledges that the Information shall be treated as a
disclosure against the representations and warranties and the Vendor shall
not be responsible for any Losses as long as the Information is deemed
complete, consistent and correct in any material aspect
All representations and warranties, and all indemnification provisions
contained herein (i) shall survive to the consummation of the Closing
transactions, (ii) shall not be affected by article 1495 of the Italian
civil code, and (iii) do not exclude the application of any other remedy
available at law.
4.2 Representations and Warranties of the Vendor
4.2.1 Powers and authority of the Vendor. The Vendor has all necessary
powers and authority to execute and deliver this Agreement as well
as to undertake and perform its obligations hereunder, save as
regards the condition precedent of the approval by the
Shareholders' meeting of Vendor, which shall occur prior to the
Closing Date; the Vendor hereby also represents and warrants that
it is not subject to any bankruptcy procedures nor have bankruptcy
petitions been filed against it.
4.2.2 Organization of the Subsidiaries. Each Subsidiary is a company
limited by shares, duly organized, validly existing under the
Applicable Laws in its jurisdiction of incorporation; furthermore,
each Subsidiary has all necessary corporate powers and authority
to carry on its business as established in its formation documents
or by-laws, which are annexed to this Agreement and contained in
Schedule 9. None of the Subsidiaries is subject to any bankruptcy
procedures nor have bankruptcy petitions been filed against it and
to the best knowledge of Vendor, no such bankruptcy proceeding is
pending against any of the Subsidiaries.
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4.2.3 Authorization. This Agreement has been duly authorized, executed
and delivered by the Vendor, save as regards the condition
precedent of the approval by the Shareholders' meeting of Vendor.
4.2.4 Ownership of the Shares. The Shares have been validly issued and
fully paid and represent, respectively, 100% of the corporate
capital of Moto Guzzi S.p.A., MGI Motorcycle GmbH and Moto Guzzi
North America Inc. and 99% of Moto Guzzi France S.a.r.l.. The
Vendor is the registered and beneficial owner of the Shares, with
good, marketable, undisputed and unrestricted title thereto (e.g.
the Shares are not subject to any pre-emption or option rights or
any other contractual restrictions), free and clear of all Liens.
As a result of the purchase and sale transactions contemplated by
this Agreement, all of the Shares will be owned by the Purchaser
as the registered and beneficial owner, with good, marketable,
undisputed and unrestricted title thereto.
4.2.5 Authorized and Subscribed Capital of Moto Guzzi S.p.A. The
authorized and subscribed capital of Moto Guzzi S.p.A. consists of
2.000.000 shares, each with a par value of ITL 10.000. All shares
in the corporate capital of Moto Guzzi S.p.A. have been subscribed
and fully paid. There is no option right, stock option plan, or
warrant in favour of any third party which grants to such third
party the right to purchase or subscribe, for any portion of the
share capital of Moto Guzzi S.p.A..
4.2.6 Authorized and Subscribed Capital of Moto Guzzi France S.a.r.l.
The authorized and subscribed capital of Moto Guzzi France
S.a.r.l. consists of 1000 shares, each with a par value of FF 500.
All shares in the corporate capital of Moto Guzzi France S.a.r.l.
have been subscribed and fully paid. There is no option right,
stock option plan, or warrant in favour of any third party which
grants to such third party the right to purchase or subscribe, for
any portion of the capital of Moto Guzzi France S.a.r.l.
4.2.7 Authorized and Subscribed Capital of MGI Motorcycle GmbH. The
authorized and subscribed capital of MGI GmbH consists of DM
100,000 total quota capital. All quotas in the corporate capital
of MGI Motorcycle GmbH have been subscribed and fully paid. There
is no option right, stock option plan, or warrant in favour of any
third party which grants to such third party the right to purchase
or subscribe, for any portion of the capital of MGI GmbH.
4.2.8 Authorized and Subscribed Capital of Moto Guzzi North America Inc.
The authorized and outstanding capital of Moto Guzzi North America
Inc. consists of 600 shares, each with a par value of US $ 1. All
the outstanding shares of Moto Guzzi North America Inc. have been
validly issued and are fully paid. There is no option right, stock
option plan, or warrant in favour of any third party which grants
to such third party the right to purchase, subscribe or otherwise
acquire any portion of the capital of Moto Guzzi North America
Inc..
4.2.9 Assets. Each and all of the Subsidiaries own or have the right to
use, and shall own and shall have the right to use at the Closing
Date, all tangible and intangible assets necessary for the
effective operation of its business as currently carried on; all
such tangible and intangible assets are, and shall be at the
Closing Date, free and clean of any and all Liens with the sole
exceptions set forth in Schedule 10 attached hereto.
4.2.10 Real property. The freehold and leasehold properties comprise land
and buildings owned or leased by each and all of the Subsidiaries.
All lease agreements pertaining to the leased real property are
listed in Schedule 11 attached hereto; all such agreements are
valid and in full force and effect and the relevant Subsidiary is
not in breach of any of the
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material provisions of these agreements. The sole Liens affecting
the real property of each and all of the Subsidiaries are those
listed in Schedule 12 attached hereto.
4.2.11 Intellectual Property. Save as provided for by article 6.5 below,
the Subsidiaries own or have the right to use, and shall own and
shall have the right to use at the Closing Date, free and clean of
any Lien, all the industrial and intellectual property, including
patents, know how, trademarks and trade names necessary or
relevant for the carrying out their business. No third party has
made any claim, nor is there any basis for any third party to make
any claim, affecting the full title to all patents, copyrights,
computer programs, trademarks, trade names, know-how, industrial
secrets and other industrial or intellectual property rights, such
as used at present by each and all of the Subsidiaries.
4.2.12 Litigation. With the exceptions mentioned in Schedule 13 attached
hereto, and to the sole extent mentioned therein: (i) the
Subsidiaries are not involved in any litigation pending in front
of civil, criminal or administrative courts or authority, or
arbitration proceedings;(ii) nor, to the best of Vendor's
knowledge, is any such litigation or arbitration proceeding
threatened at the date hereof.
4.2.13 Taxes. With respect to each and all of the Subsidiaries: (i) all
periodic and annual Tax returns required to be filed by them have
been filed with the appropriate Tax authorities in all
jurisdictions in which such Tax returns are required to be filed;
(ii) the above mentioned Tax returns have been prepared in
accordance with Tax laws applicable to the Subsidiaries and; (iii)
all amounts due (including interest, penalties, dues, rights and
other assessments) have been paid by each and all of the
Subsidiaries.
4.2.14 Environment, waste disposal, safety on the workplace. Except as
described in Schedule 14, the business of each and all of the
Subsidiaries is run in compliance with all applicable provisions
of law, related to the protection of the environment, the waste
disposal, the safety on the workplace and accident prevention; all
permits, approvals, authorizations or licenses related thereto
have been duly obtained; no disputes related thereto are pending
or, to the best of the Vendor's knowledge, threatened. As far as
Italian law 626/1994 ("Work Safety Law") is concerned, Moto Guzzi
S.p.A. is not in compliance with the Work Safety Law and that an
amount equal to ITL 2.900.000.000, is necessary in order to fulfil
the requirements provided by the said Work Safety Law, as
indicated in Schedule 14. The Purchaser acknowledges that this
amount has been considered in determining the Purchase Price, and
therefore Vendor's responsibility vis-a-vis the Work Safety Law's
requirements is limited to the costs exceeding such an amount of
ITL 2.900.000.000, and in any case is limited to the maximum
amount of ITL 1.000.000.000.
4.2.15 Balance sheets, books and records. All balance sheets, corporate
books and records of each and all of the Subsidiaries are and
shall be at the Management Date truthful and correct; they are
prepared, and they shall be prepared until the Management Date in
compliance with all applicable laws and with consistent
application of US GAAP. The balance sheets related to the last
corporate year shall be approved prior to the Management Date.
4.2.16 Ordinary course of business. The business of each and all of the
Subsidiaries has been managed, and shall be managed until the
Management Date, according to good and sound business practice and
all agreements have been entered, and shall be entered until the
Management Date, according to normal market conditions. Until the
date hereof the production, distribution, sale and marketing of
the Subsidiaries' products has been made, and shall be made until
the Management Date, in compliance with all Applicable Laws.
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4.2.17 Accounts receivable. All accounts receivable of each and all of
the Subsidiaries have been calculated properly, and shall be
properly calculated until the Management Date, in the accounts of
each and all of the Subsidiaries, subject to reserves which are
reflected in the Management Date Financial Statement. Such
accounts receivable shall be collectible on the ordinary time
thereof with the sole exception of the receivables among
Subsidiaries.
4.2.18 Employees. The sole employees, including directors and dirigenti,
of each and all of the Subsidiaries are, and shall be at the
Management Date, those listed in Schedule 15. All such employees
are, and at the Management Date shall not exceed, the number of
329 and are, and shall be at the Management Date, duly registered
in the relevant paybooks; the overall economic treatment due to
each of said employees and their relative positions are, and shall
be at the Management Date, those which result from the paybooks
and payroll and there are no, and there shall not be at the
Management Date, other forms of remuneration or special treatments
which have been agreed; such employees have been duly remunerated,
and shall be duly remunerated at the Management Date, for all
their services carried out during their respective employment
relationships with each and all of the Subsidiaries, in compliance
with the applicable provisions of law and national collective
bargaining agreement, and, with reference to the amounts or rights
accrued and not yet payable, sufficient funds have been set up,
and shall have been set up at the Management Date, to cover the
relative charges; all the payments due in relation to the
obligatory social insurance and social security contributions and
tax withholdings provided by law have been duly effected, and
shall be duly effected at the Management Date. All details of any
kind of compensation due or paid by each and all of the
Subsidiaries to all their current and former directors and
dirigenti (also according to any kind of agreement or arrangement
with companies or entities anyhow connected to such directors or
dirigenti) are listed in detail in Schedule 16 attached hereto,
under the item "Totale Stipendi Amministrativi"; all arrangements
thereof are compliant with applicable Tax provisions.
4.2.19 On February 7th, 2000, the Italian Ministry of Labour has approved
with Decree n. 2777/50, the redundancy fund contribution plan
filed by Moto Guzzi S.p.A., involving 34 workers and 15 employees
for the period between August 30, 1999, through August 27, 2000
("CIGS").
4.2.20 Notwithstanding the above provision, the Parties agree that the
Vendor will not in any way be responsible for any or all of
employees' requests or actions caused, directly or indirectly, by
Purchaser's decision to adopt collective dismissal or individual
dismissal procedures (licenziamenti collettivi o individuali).
4.2.21 Contracts. Except as indicated in the Schedules attached hereto,
there is no contract, and there shall not be any contract at the
Management Date, which could materially and adversely affect the
operations of any of the Subsidiaries.
4.2.22 Guarantees. There is no guarantee or commitment whatsoever given
by any of the Subsidiaries, in favour of third parties, of Vendor,
or of OAM, and no such guarantee shall be given until the
Management Date.
4.2.23 Product liability. Except as disclosed in Schedule 17 attached
hereto, there is no product liability claim vis a vis any of the
Subsidiaries.
4.2.24 Insurance policies. Schedule 18 is a correct and complete list of
the material insurance Contracts (specifying the insurer, the
coverage and the policy number or covering note
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number with respect to bonders) maintained by the Subsidiaries in
connection with the conduct and operation of their respective
businesses or by which any of their assets are covered. Except as
otherwise disclosed in such Schedule 18, the policy holder is in
good standing with respect to its obligations under the insurance
contracts. The Contracts listed in Schedule 18 are in full force
and effect in accordance with their respective terms and will
remain in full force and effect after the Closing. The Vendor has
not provided inaccurate, incomplete or misleading information in
any material aspect in connection with any such Contracts nor has
the Vendor failed to give any notice or present any claim
thereunder in due and timely fashion, or as required by any such
Contracts, so as to jeopardize full recovery thereunder.
4.2.25 Representations and Warranties of the Purchaser
4.2.26 Organization. The Purchaser is a company existing and in good
standing under the laws of Italy and has all necessary corporate
powers and authority to execute and deliver the documents
described herein to which it will be a party and to perform its
obligations hereunder and thereunder.
4.2.27 Authorization. This Agreement has been duly authorized, executed
and delivered by the Purchaser.
4.2.28 No Violation. The execution and delivery of this Agreement by the
Purchaser and the consummation of the transactions provided for
herein will not result in the violation of, or constitute a
default under or conflict with or cause the acceleration of any
obligation of the Purchaser under: (i) any contract to which the
Purchaser is a party or by which it is bound; (ii) any provision
of the by-laws or resolutions of the board of directors or
shareholders of the Purchaser; (iii) any judgement, decree, order
or award of any court, Governmental Entity or arbitrator having
jurisdiction over the Purchaser.
4.2.29 Immediately available Funds/No Financing. The Purchaser warrants
and represents that it has and will have at the Closing Date all
the necessary funds in order to pay the Purchase Price and to
reimburse the Shareholders' Loans as provided respectively in
Articles 3.2 and 3.3 of this Agreement. The Purchaser warrants and
represents that it will not make any request for financing or
loans from any third party which could affect the completion of
any of the transactions hereunder.
5. SURVIVAL OF REPRESENTATIONS AND WARRANTIES
5.1 Survival of Representations and Warranties of the Vendor
The representations and warranties of the Vendor contained in this
Agreement and any agreement, instrument, certificate or other document
executed or delivered pursuant hereto shall survive the Closing Date for a
period of two years and, notwithstanding the Closing Transactions, nor any
investigation made by or on behalf of the Purchaser, shall continue in
full force and effect for the benefit of the Purchaser during such period.
It is in any case understood that, as far as Tax, labour and social
contribution matters are concerned, all representations and warranties of
the Vendor contained in this Agreement and any agreement, instrument,
certificate or other document executed or delivered pursuant hereto shall
remain in full force and effect until the relevant forfeiture dates, such
as, as regards Italy at the present date, seven years after the Closing
Date for Tax matters and five years after the Closing Date for labour and
social contribution matters.
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5.2 Survival of the Representations and Warranties of the Purchaser
The representations and warranties of the Purchaser contained in this
Agreement and any agreement, instrument, certificate or other document
executed or delivered pursuant hereto shall survive the Closing for a
period of two years.
6. UNDERTAKINGS
6.1 Conduct of Business until the Management Date.
From December 31, 1999 and through the Management Date, the Vendor has
caused and shall cause the Subsidiaries to conduct their respective
businesses only in the ordinary and normal course consistent with good
management practices and shall cause the Subsidiaries to: (a) preserve
intact their present business organization; (b) keep available the
services of present officers and employees without modifying the relevant
employment terms and conditions; (c) preserve the present business
relationships with customers, suppliers and all third parties in general;
(d) maintain and keep the properties, equipment, supplies, inventory and
other assets of the Subsidiaries in good repair and condition except for
deterioration due to ordinary wear and tear and damage due to casualty;
(e) maintain in full force and effect insurance coverage comparable in
amount and in scope of coverage to that now maintained and adequate to the
business; (f) comply with and perform all obligations and duties imposed
by applicable laws, rules, regulations and orders imposed by
administrative authorities, except as may be contested by the Subsidiaries
in good faith by appropriate proceedings.
Until the Management Date the Vendor shall be entitled to execute the
conversion into equity of the Shareholders' Loans, and to grant further
loans at fair market conditions to the Subsidiaries, provided that such
conversion and further loans are previously communicated to Vendor and
that the overall amount of the loans does not exceed ITL 28.000.000.000
(twenty eight billion) including those converted. It is understood that
all such transaction shall be taken into account for the purpose of the
assessment of the Management Date Financial Statement.
6.2 No Dividends
Until the Closing Date, no Subsidiary shall pay any dividend, make any
payments on account of dividends or make any distribution to its
shareholders; the Vendor shall not cause the Subsidiaries to reimburse in
whole or in part the Shareholders' Loans.
6.3 No amendment to statutory documents
The Vendor covenants that, from the date hereof to the Closing Date, the
Articles of Incorporation and By-laws of the Subsidiaries shall not be
amended without the prior written consent of the Purchaser.
6.4 No change in the Subsidiaries structure
The Vendor covenants that, from the date hereof until the Closing Date,
the present ownership structure of the Subsidiaries shall not be modified.
6.5 Industrial and intellectual property
The Vendor assigns hereby to Purchaser all its interests in all industrial
and intellectual property, including patents, know how, trademarks and
trade names necessary or relevant for carrying out the business of the
Subsidiaries, or in any case used in such business, and in particular the
trademark and trade name "Moto Guzzi", effective as on the Closing Date
subject to the conditions precedent set forth herein. The Vendor therefore
undertakes hereby the obligations
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(i) not to dispose in any manner of such industrial and intellectual
property, including by means of licensing or sub licensing, until the
Closing Date, (ii) to use until the Management Date such industrial and
intellectual property only in the ordinary course of business of the
Subsidiaries, and (iii) to desist, as of the Management Date, from using
worldwide all such industrial and intellectual property. Within the
Closing Date Vendor shall modify its corporate name so as to eliminate the
name "Moto Guzzi".
6.6 Non-competition
For a period of three years after the Management Date the Vendor shall not
engage worldwide directly or indirectly, also by means of acquisition of
any controlling interest, in the business of manufacturing, selling,
anyhow distributing, or marketing motorcycles, components or spare parts
thereof. The Vendor acknowledges and accepts that all consideration for
such non competition obligation has been duly calculated and included in
the Purchase Price. The Vendor shall procure that the resigning Directors,
with the exception of Mr. Scandellari, director of Moto Guzzi S.p.A.,
shall undertake analogous valid and binding commitments in favor of
Purchaser, to be given at the Management Date, in the form contained in
Schedule 19.
6.7 Management of the Subsidiaries in the Management Period
6.7.1 During the Management Period the Purchaser shall oversee the
management of the Subsidiaries. To this purpose, Vendor agrees to cause
the Shareholders' meetings of the Subsidiaries duly convened prior to the
Management Date to appoint at the Management Date to serve in the Boards
of Directors of the Subsidiaries the candidates designated by Purchaser.
Mr. Gianni Bulgari as the representative of Vendor shall be appointed to
serve as Chairman of the Board of Directors of Moto Guzzi SpA until the
Closing Date, and Mr. Nick Speyer shall be appointed to serve as Director
of Moto Guzzi SpA until the Closing Date. Mr. Alessandro Brusi, the
current Chairman of the Board of Auditors shall be re-elected to serve for
the same office until the Closing Date.
6.7.2 During the Management Period the Purchaser shall ensure that: (i)
the business of the Subsidiaries shall be conducted only in the ordinary
and normal course, consistent with good management practice and in order
to cause the subsidiaries to preserve intact their present business
organisation; (ii) the Subsidiaries shall refrain from entering into any
extraordinary transaction such as the disposal of shareholdings or of
going concerns.
6.7.3 Should it appear necessary for the ordinary conduct of business,
during the Management Period, to grant loans to the Subsidiaries, such
loans, if not granted by Vendor, after consultations of Gianni Bulgari
and/or Nick Speyer shall be granted or procured by Purchaser at fair
market conditions provided that in such case the Shares are pledged by the
Escrow Agent to the Purchaser or the lender, upon simple presentation of
the loan documentation, in order to secure the reimbursement. It is agreed
in this respect that the Escrow Agent shall be duly empowered to so act by
Vendor and Purchaser in the Escrow Agreement. The number of Shares to be
pledged shall represent a value (calculated on the basis of the Purchase
Price) equal to the double of the loan so granted, and shall not exceed
25% of the existing and outstanding share capital of each Subsidiary.
6.7.4 Should this Agreement be terminated in accordance with article 2.3
and should Closing not take place:
(a) Purchaser shall cause all Directors and Statutory Auditors appointed
to serve in the Subsidiaries during the Management Period in
accordance with this Agreement to resign immediately from their
office and the Vendor shall appoint new Directors and Auditors;
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(b) The Vendor undertakes not to vote, or procures that the
Subsidiaries' shareholders' meeting shall not vote, any resolution
having the purpose of claiming any responsibility action, as per
article 2393 of the Italian Civil Code (azione sociale di
responsabilita) or similar actions of the same nature, vis-a-vis all
the Directors and Auditors of the Subsidiaries having held their
office during the Management Period. The Vendor agrees to indemnify
and hold harmless each director against any and all losses, claims,
damages, liabilities, expenses, judgements and expenses, except in
case of liability for fraud or gross negligence.
(c) Vendor shall reimburse all loans granted by Purchaser to the
Subsidiaries and Purchaser shall release the pledges granted in
order to secure the reimbursement of such loans;
(d) all claims of the Parties, if any, regarding the Management Period,
shall be raised not later than 30 days after the end of the
Management Period and shall be finally settled by the binding
decision of Vendor's Auditor and Purchaser's Auditor within 60
(sixty) days after the raising of the claim; should Vendor's Auditor
and Purchaser's Auditor disagree on the settlement of such claims
within the aforesaid deadline, the Independent Auditor shall issue
the final and binding decision on the Parties within the following
30 days. The Purchaser shall only be liable for fraud, gross
negligence or gross violation in the proper conduct of the business
of the Subsidiaries by the Directors appointed upon its indications.
7. INDEMNIFICATION - DISCHARGE OF DIRECTORS
7.1 Indemnification by the Vendor
In the event of any breach of the representations and warranties provided
for in this Agreement, Vendor shall indemnify and hold harmless Purchaser
and/or each and all of the Subsidiaries, as the case may be, from and
against any and all claims, liabilities, charges or damages suffered by
said Purchaser and/or each and all of the Subsidiaries, provided however
that the aggregate indemnification obligation of Vendor shall not exceed,
in any case, an amount equal to 15% of the Purchase Price, including and
subject to the specific limitation of responsibility under Section 4.2.14.
The indemnification provided for in this article 7.1 shall not apply
unless and until the aggregate amount of all claims, liabilities, charges
or damages for which indemnification is sought exceeds the amount of ITL
1.000.000.000 (one billion). All indemnification due to Purchaser or to
any of the Subsidiaries shall be paid by means of deduction in favour of
Purchaser or of the relevant Subsidiary from the Escrow Account, as
provided for in the Escrow Agreement.
7.2 Indemnification by the Purchaser
In the event of any breach of the representations and warranties provided
for in this Agreement, Purchaser shall indemnify and hold harmless Vendor
from and against all claims, liabilities, charges or damages suffered by
Vendor. The indemnification provided for in this article 7.2 shall not
apply unless and until the aggregate amount of all claims, liabilities,
charges or damages for which indemnification is sought exceeds the amount
of ITL 1.000.000.000 (one billion).
7.3 Special Rights of the Vendor with respect to Receivables
The Vendor shall be entitled to obtain the assignment of any receivables
in respect of which indemnification has been obtained by the Purchaser
pursuant to articles4.2 and 7 of this Agreement and to take all actions
necessary for the recovery of the amounts due.
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7.4 Amnesty
At any time between the Closing Date and the date upon which the indemnity
obligations of the Vendor shall expire pursuant to Section 5.1 of this
Agreement, the Vendor shall have the right to notify the Purchaser of its
reasonable request that any of the Subsidiaries avail itself of any
Applicable Laws having as an effect the right to settle any, in whole or
in part, Tax or social security liabilities covered by Vendor's
indemnification obligations hereunder (any such Applicable Law is
hereinafter referred to as an "Amnesty"). In the case that the Vendor
provides such notice, the following provisions shall apply:
i) the Purchaser shall have the right to determine, in its sole
discretion, whether or not the Subsidiaries should avail itself of
the Amnesty. In this case the Vendor shall pay in advance all
Amnesty costs and the overall indemnification obligation of Vendor
shall be reduced accordingly; and
ii) if the Purchaser elects not to allow the relevant Subsidiary to
avail itself of the Amnesty notwithstanding the Vendor's reasonable
request under this Section 7.4 , the Vendor's liability under
Section 7.1 of this Agreement in respect of the matter or part
thereof constituting the subject of such Amnesty shall be limited to
the amount that would have been paid by the Vendor had the Purchaser
elect to proceed with the Amnesty in accordance with the Vendor's
request.
7.5 Handling of Claims
If any event occurs which could give rise to the Vendor's liability under
Section 7.1 of this Agreement, the following provision shall apply:
(a) the Purchaser shall give prompt written notice to the Vendor of such
event, shall provide all reasonable particulars thereof and shall
specify (if possible) all amounts the payment of which is requested
in connection therewith; provided that the failure to promptly
notify the Vendor shall not relieve the Vendor from any liability it
may have under Section 7.1 , except to the extent the Vendor shall
have been materially prejudiced by such failure;
(b) in the case of an action brought by a third party, the Vendor shall
have the right, at its own cost and expense, to participate and, to
the maximum extent permitted by law, join by counsel of their
choosing, in the defense of any action asserted or initiated, which
constitutes the subject matter of a notice to the Vendor of the kind
referred to under Paragraph (a) preceding (a "Third Party Claim");
(c) the Purchaser shall diligently defend, and cause the Subsidiaries to
diligently defend, any Third Party Claim, unless the defense thereof
has been assumed by the Vendor with the consent of the Purchaser;
(d) neither the Purchaser nor the Vendor shall make or accept any
settlement of any Third Party Claim referred to under Paragraph (b)
preceding, nor shall the Purchaser permit the Subsidiaries to do so,
without the prior written consent of the Vendor, which consent shall
not be withheld or delayed without reasonable justification. If the
Vendor without any sound reason refuses or delays its consent to a
settlement proposal submitted by the Purchaser, the Purchaser shall
be entitled to settle the Third Party Claim and to seek and obtain
indemnification from the Vendor of any and all settlement amounts
and expenses; and
(e) if the Purchaser has withheld its consent to a firm, purely monetary
offer to settle any Third Party Claim which the Vendor have
indicated in writing that they are prepared to
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<PAGE>
accept, the Purchaser, the Subsidiaries (as the case may be) shall be free
to refuse to enter into such settlement and to commence or continue
litigation at their own expense, and the Vendor liability under Section
7.1 of this Agreement with respect to such Third Party Claim shall be
limited to the amount of the proposed settlement.
7.6 Discharge of Directors
The Purchaser undertakes not to vote, or procures that the Subsidiaries'
shareholders' meeting shall not vote, any resolution having the purpose of
claiming any responsibility action, as per article 2393 of the Italian
Civil Code (azione sociale di responsabilita) or similar actions of the
same nature, vis-a-vis all the directors of the Subsidiaries having held
their office for the 5 years preceding the Management Date. The Purchaser
agrees to indemnify and hold harmless each director against any and all
losses, claims, damages, liabilities, expenses, judgements and expenses.
The provisions contained in this article 7.6 shall not apply to the litigation
pending against Mr. Falciola, nor in the event of liability of directors
for fraud or gross negligence.
8. MISCELLANEOUS
8.1 Notices
(a) Any notice or other communication required or permitted to be given
hereunder shall be delivered in person, transmitted by telecopy and
registered letter with return receipt, addressed as follows:
(i) if to the Vendor:
MOTO GUZZI CORPORATION
350 Park Avenue
New York, NY 10022
USA
Fax no. +1.212.6445757
Attn.: Mr. Mark Hauser
(ii) if to the Purchaser:
APRILIA S.p.A.
Attn.: The President of the Board of Directors
V. Galileo Galilei n(degree)1
I - 30033 Noale (VE)
Fax no.: +39 0415800660
(b) Any such notice or other communication shall be deemed to have been
given and received on the day on which it was delivered or
transmitted (or, if such day is not a Business Day, on the next
following Business Day).
(c) Any Party may at any time change its address for service from time
to time by giving notice to the other parties in accordance with
this section 8.1.
8.2 Consultation
Subject to any obligations arising under Applicable Laws or regulatory
requirements in force from time to time, the Parties shall consult with
each other before issuing any press release or
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<PAGE>
making any other public announcement with respect to this Agreement or the
transactions contemplated herein and neither the Vendor nor the Purchaser
shall issue any such press release or make any such public announcement
without the prior written consent of the other, which consent shall not be
unreasonably withheld or delayed.
8.3 Disclosure
Except with respect to any public announcement of the transaction
contemplated hereby pursuant to section 8.2 (and then only to the extent
so disclosed in such public announcement), neither the Vendor nor the
Purchaser shall disclose this Agreement or any aspect of such transaction
except to its board of directors, its senior management, its legal,
accounting, financial or other professional advisors or as may be required
or opportune in accordance with any Applicable Laws or any regulatory
authority, stock exchange or stock quotation system having jurisdiction.
8.4 Costs
The Vendor and the Purchaser shall each bear the respective costs
(including legal fees, accounting and other fees and disbursements)
incurred in connection with the negotiation, preparation, execution and
carrying into effect of this Agreement and all documents referred to
herein.
Purchaser shall bear all costs and expenses related to the activity of
Purchaser's Auditor; Vendor shall bear all costs and expenses related to
the activity of Vendor's Auditor; all costs and expenses related to the
activity of the Independent Auditor shall be sustained in equal parts by
Vendor and Purchaser.
8.5 Entire Agreement
This Agreement constitutes the entire agreement between the Vendor and the
Purchaser with respect to the subject matter hereof and supersedes all
prior agreements, understandings, negotiations and discussions, whether
written or oral. There are no conditions, covenants, agreements,
representations, warranties or other provisions, expressed or implied,
collateral, statutory or otherwise, relating to the subject matter hereof
except as herein provided.
8.6 Governing Law; Arbitration
(a) Governing Law. This Agreement shall be governed by, and construed in
accordance with, the laws of Italy.
(b) Arbitration. In the event of any dispute, claim, question or
disagreement arising out of or relating to this Agreement and the
Schedules attached hereto (a "Dispute"), the Parties shall use all
reasonable efforts to settle such Dispute by amicable negotiations
within a period of 30 Business Days. If settlement cannot be
reached, all Disputes shall be finally settled under the Rules of
Arbitration of the International Chamber of Commerce by a panel of
three arbitrators appointed in accordance with the said Rules. The
arbitration shall take place in Rome. The language of the
arbitration shall be the Italian.
8.7 Successors and Assigns
Each of the Parties may not assign and transfer any of the rights under
this Agreement, in whole or in part, without the prior written consent of
the other Party. This Agreement shall inure to the benefit of and shall be
binding on and enforceable by the Vendor and the Purchaser and, where the
context so permits, their respective successors and permitted assigns.
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8.8 Amendments and Waivers
No amendment or waiver of any provision of this Agreement shall be binding
on the Vendor and the Purchaser unless consented to in writing by both of
them. No waiver of any provision of this Agreement shall constitute a
waiver of any other provision, nor shall any waiver constitute a
continuing waiver unless otherwise expressly provided.
8.9 Best efforts
Subject to the terms and conditions herein provided, each of the Parties
hereto shall cooperate and use its respective reasonable best efforts to
take, or cause to be taken, all action and to do, or cause to be done, all
things necessary, proper or advisable under applicable laws and
regulations to consummate and make effective the transactions contemplated
by this Agreement, including using its best efforts to obtain all
necessary or appropriate waivers, consents and approvals (including,
without limitation, any required under any antitrust provisions of
applicable law), to effect all necessary registrations, filings and
submissions and to lift any injunction or other legal bar to the
transactions contemplated hereby (and, in such case, to proceed with such
transactions as expeditiously as possible); provided, that nothing in this
section 8.9 shall affect any responsibility or obligation specifically
allocated to any party in this Agreement.
8.10 No Brokers
Each Party warrants and represents that there are no brokers other than
Banca IMI and Caretti & Associati SpA involved in this Agreement and the
transactions contemplated hereunder, that all Banca IMI's fees will be
paid by the Vendor, and that all Caretti & Associati SpA's fees shall be
paid by Purchaser.
IN WITNESS WHEREOF, this Agreement has been executed by the Parties.
MOTO GUZZI CORPORATION
by: /s/ Gianni Bulgari
-----------------------------------------
Title: Director
-------------------------------------
Authorized Signatory
APRILIA S.P.A.
by: s/s Ivano Beggio
-----------------------------------------
Title: Chairman
-------------------------------------
Authorized Signatory
A-21
<PAGE>
ANNEX B
[BANCA IMI LETTERHEAD]
April 14, 2000
The Board of Directors and the Special Committee
Moto Guzzi Corporation
350 Park Avenue
New York, NY 10022
U.S.A.
Gentlemen:
You have asked us to advise you with respect to the fairness to Moto Guzzi
Corporation (the "Company") from a financial point of view of the consideration
to be received by the Company pursuant to the terms of the Preliminary Share
Sale and Purchase Agreement, dated as of April 14, 2000 (the "Agreement"),
between the Company and Aprilia S.p.A. ("Aprilia"). The Agreement provides for,
among other things, the acquisition of 100% of the outstanding shares of Moto
Guzzi S.p.A., Moto Guzzi France S.a.r.l., MGI Motorcycle GmbH and Moto Guzzi
North America Inc. (hereinafter jointly referred to as the "Subsidiaries")
pursuant to which the Company will receive a total cash consideration of ITL
71.5 billion less any losses incurred in the period between January 1, 2000 and
May 1, 2000 plus the amounts of any equity injections by the Company to the
Subsidiaries as well as the repayment of loans by the Company to the
Subsidiaries as at April 30, 2000 (the "Date of the Management Accounts"). The
management of the Company has informed us that it expects total cash proceeds
from Aprilia of approximately ITL 88 billion (the "Estimated Total
Consideration") once the Management Accounts have been finalized. Banca IMI
observes that the Management Accounts have to be agreed with the auditors of
Aprilia.
The Agreement further provides that (1) Aprilia will take management
responsibility from May 2, 2000 and assume any losses thereafter should the
Transaction be completed (2) ITL 71.5 billion will be paid into an escrow
account on May 2, 2000 and the shares of the Subsidiaries will be placed in bank
custody.
In arriving at our opinion, we have reviewed certain publicly available business
and financial information relating to the Company as well as a draft of the
Agreement. We have also reviewed certain other information, including financial
forecasts provided to us by the Company, and have met with the Company's
management to discuss the business and prospects of the Company.
We have also considered certain financial and stock market data of the Company,
and we have compared those data with similar data for other publicly held
companies in businesses similar to the Company and we have considered the
financial terms of certain other transactions which have recently been effected.
We also considered such other information, financial studies, analyses and
investigations and financial, economic and market criteria which we deemed
relevant.
In connection with our review, we have not assumed any responsibility for
independent verification of any of the foregoing information and have relied on
such information being complete and accurate in all material respects. With
respect to financial forecasts, we have assumed that they were reasonably
prepared on bases reflecting the best currently available estimates and
judgments of the management of Moto Guzzi Corporation as to the future financial
performance of Moto Guzzi Corporation. We have also assumed, with your consent,
that the Transaction would be consummated in the manner and on the terms set
forth in the Agreement and that in the course of obtaining the necessary legal,
regulatory and third party consents and approvals no restrictions would be
imposed that would have a material adverse effect
B-1
<PAGE>
on the contemplated benefits of the Transaction. In addition, we have not been
requested to make, and have not made, an independent evaluation or appraisal of
the assets or liabilities (contingent or otherwise) of Moto Guzzi Corporation,
nor have we been furnished with any such evaluations or appraisals. We have
further not been requested to undertake, and have not undertaken an analysis of
the tax impact of the proposed Transaction on the Moto Guzzi Corporation
stockholders. Our opinion is necessarily based upon financial, economic, market,
exchange rate and other conditions as they exist and can be evaluated on the
date hereof. We are not expressing any opinion as to what value the Moto Guzzi
Corporation stock will have subsequent to April 14, 2000 and subsequent to
completion of the proposed Transaction.
We have acted as financial advisor to the Company in connection with the
Transaction and will receive a fee for our services, a significant portion of
which is contingent upon the consummation of the Transaction. In the past, we
have not performed investment banking services for the Company. Banca IMI is a
recognized Italian investment banking and advisory firm.
It is understood that this letter is for the information of the Board of
Directors and the Special Committee of the Company in connection with its
consideration of the Transaction and does not constitute a recommendation to any
stockholder as to how such stockholder should vote on the proposed Transaction.
Based upon and subject to the foregoing, it is our opinion that, as of the date
hereof, the proposed Estimated Total Consideration to be paid by Aprilia for the
Subsidiaries is fair to the holders of Moto Guzzi Corporation stock from a
financial point of view.
Very truly yours,
BANCA D'INTERMEDIAZIONE MOBILIARE S.P.A.
B-2
<PAGE>
MOTO GUZZI CORPORATION
Directions to the Special Meeting at o
[FORM OF PROXY CARD]
PROXY PROXY
MOTO GUZZI CORPORATION
PROXY FOR SPECIAL MEETING OF STOCKHOLDERS
July __, 2000
THIS PROXY IS SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS
The undersigned hereby appoints _________ and _________, or either of
them, each with full power of substitution, proxies of the undersigned, to act
for and to vote, as and to the extent specified, all shares of common stock of
Moto Guzzi Corporation held by the undersigned at the Special Meeting to be held
at __________, on July __, 2000 at __________a.m., local time, and any
adjournment of that meeting, as described below.
This proxy, when properly executed and returned, will be voted as
specified by the undersigned. Where no choice is specified, this proxy will be
voted FOR both Proposals.
(continued on reverse side)
--------------------------------------------------------------------------------
FOLD AND DETACH HERE
<PAGE>
YOUR VOTE IS IMPORTANT
YOU CAN VOTE IN ONE OF THREE WAYS:
Telephone Internet Mail
- Read the - Read the - Read the
accompanying accompanying
accompanying Proxy Proxy
Proxy Statement Statement and Statement and
and proxy card proxy card proxy card
- Go to the
website
http://o
- Call OR - Enter the OR - Mark, sign and
1-800-________ Control Number date your proxy
on a touch-tone located in the card
telephone box below
- Enter the - Follow the - Detach proxy
Control Number simple card below
located in the instructions
box below
- Follow the - Return the
simple recorded card in the
instructions postage-paid
envelope
provided
CALL TOLL-FREE TO VOTE ________________________________________
1-800-________
Your telephone or Internet vote authorizes the named proxies to vote your shares
in the same manner as if you marked, signed and returned the proxy card
________________________________________________________________________________
CONTROL NUMBER FOR TELEPHONE / INTERNET VOTING
________________________________________________________________________________
DO NOT RETURN YOUR PROXY CARD IF YOU ARE VOTING BY TELEPHONE OR INTERNET
- DETACH HERE -
{Arrow Graphic} {Arrow Graphic}
--------------------------------------------------------------------------------
<PAGE>
PLEASE VOTE
THE BOARD OF DIRECTORS RECOMMENDS A VOTE FOR BOTH PROPOSALS.
1. Proposal to approve the sale of the operating subsidiaries of Moto Guzzi
Corporation to Aprilia S.p.A.
Please mark your vote as indicated in this example |X|
FOR AGAINST ABSTAIN
|_| |_| |_|
2. Proposal to approve the change of Moto Guzzi Corporation's corporate name
to "__________."
Please mark your vote as indicated in this example |X|
FOR AGAINST ABSTAIN
|_| |_| |_|
I PLAN TO ATTEND THE SPECIAL MEETING |_|
Please sign exactly as your name appears below. If shares are held by
joint tenants, both should sign. When signing as attorney, executor,
administrator, trustee or guardian, please give your full title as such. If a
corporation, sign in the full corporate name by the president or other
authorized officer. If a partnership, sign in the partnership name by an
authorized person.
The undersigned hereby acknowledges receipt of notice of said the special
meeting and the related proxy statement.
Dated:_____________________________________
Signed:____________________________________
Signed:____________________________________
