SECURITIES AND EXCHANGE COMMISSION
Washington, D. C. 20549
Form 8-K
CURRENT REPORT
Pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934
Date of Report (Date of earliest event reported) : June 30, 1999
NORTON MOTORCYCLES, INC.
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(Exact name of registrant as specified in its charter)
Colorado 33-8819-D 84-1036901
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(State or other jurisdiction (Commission (IRS Employer
of incorporation) File Number) Identification No.)
6462 City West Parkway, Suite 150, Eden Prairie, MN 55344
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(Address of principal executive offices) (Zip Code)
Registrant's telephone number, including area code: 612-837-0260
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14252 23rd Avenue North, Plymouth, MN 55447-4910
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(Former name or former address, if changed since last report.)
Item 5
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Other Events.
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a. New Senior Officers. The Board of Directors of Norton Motorcycles,
Inc., ("Norton" or the "Company") has elected two new senior
executives. Mr. Robert Kilpatrick is the Company's new chief
executive officer and Mr. John M. Tastad is the Company's new
president. Mr. Kilpatrick is an executive experienced with start-up
and early growth stage companies. He has worked for companies such
as Harley Davidson, Star Craft Manufacturing, Citicorp, Calico
Commerce, eLoan, Quicken, Bankers Trust and Lawyer's Title.
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Mr. Tastad was the founder and chief executive officer of Energy
Solutions International (ESI). From 1992 until 1997 Mr. Tastad
developed ESI from a Minneapolis start-up to a nationally recognized
energy services company. In July of 1997 ESI was sold to Northern
States Power. Mr. Tastad, a member of Norton's Board of Directors,
is a motorcycle rider and enthusiast.
Mr. Mark Osterberg, Norton's former chief executive officer, will
assume the role of chief financial officer of the company.
b. Additional Financing.
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1. Bridge Loan. NMI Investments, LLC, an entity owned by Mr. Tastad
and Mr. Kilpatrick, has committed to provide the Company a
$1,000,000 Bridge Loan facility. The Bridge Loan will have a
twelve-month term renewable at the option of the Company for a
further twelve-month term on the payment of $10,000. The Bridge
Loan will be interest only at the rate of twelve percent (12%).
The entire loan amount will be payable on the last day of the term.
Additionally, NMI Investments received 12,500 warrants to purchase
common stock of the Company at $4.00 per share. These warrants
will be exercisable for two years. The loan is being secured by
motorcycle designs and prototypes and the Norton trademarks.
2. Additional Future Financing. The Company is currently planning to
issue preferred stock via a private placement. The preferred stock
is anticipated to be offered at $7.50 per share with a five-year
term and will be convertible into common stock on a one-for-one
basis. NMI Investments, LLC, has committed to subscribe for
$4,000,000 of such preferred stock offering.
c. Increase in Board of Directors. In consideration of the Bridge Loan
and the agreement to purchase the convertible stock as above-referenced,
Norton Motors International, Inc., (the Company's largest shareholder)
has agreed to vote their shares in the Company so as to increase the
Board of Directors of the Company from four members to five and to elect
Robert Kilpatrick to the Board of Directors.
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d. Trademark License. In July 1999 Norton entered into a license and
distribution agreement with Norton Motors Deutschland (NMD), a Munich
based distributor of classic Norton parts and holder of certain Norton
trademarks in Europe. The agreement, which requires Norton to pay
royalties based on sales in certain European countries, provides Norton
with a five-year exclusive trademark license and purchase options. In
addition, NMD has been appointed the distributor of Norton products in
Germany.
e. Recent Litigation. On July 13, 1999, Robert E. Cieslukowski
commenced a lawsuit against Norton. The case is venued in United States
District Court, District of Minnesota. Also, named as defendants in this
action are Norton Motors International, Inc. ("NMI"), Norton Acquisition
Corporation, Myron Calof and Mark Osterberg.
In his complaint, Mr. Cieslukowski, claims that NMI breached the
Repayment Agreement between himself and NMI dated February 27, 1999.
Specifically, Mr. Cieslukowski claims that the following obligations
from NMI are delinquent:
1. A bridge note in the amount of $200,000;
2. A convertible subordinate debenture in the principal amount of
$250,000;
3. A loan in the principal amount of $94,071; and,
4. Expenses in an aggregate amount of $1,219.
Mr. Cieslukowski has named Norton as a defendant in this matter
arguing that it is also liable for the above indebtedness under
alternative theories of Fraudulent Transfer and Successor Liability.
Specifically, the complaint alleges that the transfer of assets from
NMI to Norton was made without reasonable consideration and with the
intent to defraud its creditors. This transfer was fully disclosed
and described in Norton's 8-K filed with the SEC on May 4, 1999 as
well as in its 10-KSB filed with the SEC on July 1, 1999. The
complaint also alleges that the aforementioned transfer amounted to
a consolidation or merger of NMI and Norton and therefore Norton is
merely a continuation of NMI.
Norton and NMI deny these allegations and have turned this matter
over to their attorneys. Although any litigation is subject to
uncertainty, NMI and Norton believe that the transfer of assets was
in consideration for fair value received and hence the transfer was
proper. Additionally, the transfer of assets was in the best
interest of the NMI creditors.
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Pursuant to the requirements of the Securities Act of 1934, the
registrant has duly caused this report to be signed on its behalf by the
undersigned hereunto duly authorized.
NORTON MOTORCYCLES, INC.
Date: July 22, 1999
By: /s/ Robert Kilpatrick
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Robert Kilpatrick, CEO
