FIRST AMENDMENT TO
AGREEMENT AND PLAN OF MERGER AND REORGANIZATION
FIRST AMENDMENT TO AGREEMENT AND PLAN OF MERGER AND REORGANIZATION, dated
December 3, 1998, among NORTH ATLANTIC ACQUISITION CORP., a Delaware
corporation, ("North"), MOTO GUZZI CORP., a Delaware corporation ("Motoguzzi")
and TRIDENT ROWAN GROUP, INC., a Maryland corporation ("TRG").
WHEREAS, the parties hereto are all of the parties to an Agreement and Plan
of Merger and Reorganization dated August 18, 1998 ("Original Agreement"), and
the parties desire to amend certain provisions thereof as provided herein.
IT IS AGREED:
ARTICLE I
AMENDMENTS
SECTION 1.01 Definitions. All capitalized terms used in this First
Amendment and not defined herein shall have the meanings ascribed to them in the
Original Agreement.
SECTION 1.02 Notwithstanding anything to the contrary provided in the
Original Agreement, the Certificate of Incorporation of the Surviving
Corporation shall be in the form attached hereto as Exhibit A.
SECTION 1.03 Section 2.02 of the Original Agreement shall be amended and
restated in its entirety as follows:
"SECTION 2.02 Conversion of Outstanding Stock of Motoguzzi.
(a) Except as provided in Section 2.03 of the Original
Agreement, upon consummation of the Merger, (i) the shares of common stock, $.01
par value, ("Old Motoguzzi Common Stock") of Motoguzzi outstanding on the date
of this First Amendment and immediately prior to the Effective Time and the
shares of preferred stock, $.01 par value, ("Old Motoguzzi Preferred Stock") of
Motoguzzi outstanding on the date of this First Amendment and immediately prior
to the Effective Time, shall, by virtue of the Merger and without any action on
the part of the holder thereof, and subject to reduction in accordance with
Section 2.03 of the Original Agreement and increase in accordance with Section
2.02(c) below, be converted into and exchanged for (A) 3,110,058 shares of the
Class A Common Stock, $.01 par value ("Class A Common Stock") of North, subject
to adjustment as herein provided and (B) warrants in the form
attached as Exhibit B hereto (the "Nominal Warrants") to purchase 592,400 shares
of Class A Common Stock, (ii) in consideration of the contribution to the
capital of Motoguzzi of certain intercompany indebtedness described in Section
2.06(b) of the Original Agreement there shall be issued to the holders of such
indebtedness 871,953 shares of Class A Common Stock and Nominal Warrants to
purchase 166,080 shares of Class A Common Stock, and (iii) if all outstanding
Warrants to purchase an aggregate of 1,500,000 shares of Old Motoguzzi Common
Stock at $4.00 per share (the "Old Motoguzzi Warrants") are surrendered (as
provided in Section 2.06(a) of the Original Agreement) there shall be issued to
such surrendering warrant holders 217,989 shares of Class A Common Stock and
Nominal Warrants to purchase 41,520 shares of Class A Common Stock. The Class A
Common Stock and the Nominal Warrants are together referred to herein as the
"Merger Consideration". The number of shares of Class A Common Stock and the
number of Nominal Warrants payable as the Merger Consideration shall be rounded
up or down to the nearest whole number of shares or warrants. If the holders of
less than all Old Motoguzzi Warrants surrender same, then the Merger
Consideration described in the preceding clause (iii) shall be reduced by
multiplying the Merger Consideration in clause (iii) by the percentage of Old
Motoguzzi Warrants so surrendered and each Old Motoguzzi Warrant not so
surrendered shall, after the Effective Time, have such continuing rights as are
provided by the terms thereof.
(b) Except as otherwise provided in this Agreement and except
for shares with respect to which the holder thereof votes against the Merger
("Dissenter") and ultimately receives payment thereon pursuant to Section 262 of
the DGCL ("Dissenter Securities"), each share of Old Motoguzzi Common Stock
outstanding on the date hereof and immediately prior to the Effective Time and
each share of Old Motoguzzi Preferred Stock outstanding on the date hereof and
immediately prior to the Effective Time will be converted into .4146744 shares
of Class A Common Stock and Nominal Warrants for .07898667 shares of Class A
Common Stock.
(c) If Available Cash (as defined in Section 4.05 of the
Original Agreement) is less than $8,150,000 at the Effective Time, the number of
shares of Class A Common Stock issued as part of the Merger Consideration shall
be increased by one share for each $11 of such shortfall, allocable pro rata as
provided in Section 2.02(a) of the Original Agreement as amended by this First
Amendment; provided, however that the foregoing shall not apply to the extent
that Available Cash is reduced by amounts paid to stockholders of North who are
not officers and directors of North, who elect to have their shares redeemed in
accordance with North's Certificate of Incorporation."
SECTION 1.04 Section 2.06(b) of the Original Agreement shall be amended and
restated in its entirety as follows:
"(b) TRG covenants and agrees that Lit 12,919 million
principal amount of indebtedness, plus interest thereon, owed by Motoguzzi to
TRG and/or to O.A.M. S.p.A., a subsidiary of TRG
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("OAM"), shall be contributed to the capital of Motoguzzi, simultaneously with
the consummation of the Merger. After such capital contribution, the amount of
indebtedness owed by Motoguzzi and its subsidiaries to TRG and its subsidiaries
other than Motoguzzi and the Motoguzzi Subsidiaries at the Effective Time,
including all interest, will not be greater than $800,000, and if such
indebtedness exceeds such amount, any excess automatically and without any
action on the part of TRG, OAM or TRG's subsidiaries shall be contributed to the
capital of Motoguzzi at the Effective Time with no adjustment in the Merger
Consideration set forth in Section 2.02 (a)(ii) of the Original Agreement as
amended by this First Amendment and the Surviving Corporation will be under no
obligation whatsoever to pay same, except as otherwise provided in Section 6.13
of the Original Agreement as amended hereby. TRG has caused OAM to evidence its
agreement to such capital contribution by executing the form of acknowledgment
annexed hereto as Exhibit C."
SECTION 1.05 Schedule 3.04(a) to the Original Agreement is hereby amended
to indicate that the record owner of all of the Old Motoguzzi Common Stock is
OAM and such transfer shall not be deemed a breach of any provision of the
Original Agreement as amended by this First Amendment.
SECTION 1.06 The following shall be added to the end of Section 3.21 of the
Original Agreement:
"The statements of fact contained in Section 1.08 of this
First Amendment are true and correct."
SECTION 1.07 Section 3.24 of the Original Agreement shall be amended and
restated in its entirety as follows:
"SECTION 3.24 "Organization. TRG is a corporation duly organized, validly
existing and in good standing under the laws of Maryland and OAM owns 6,000,000
shares of Old Motoguzzi Common Stock, representing 100% of the outstanding
shares on the date hereof of Old Motoguzzi Common Stock."
SECTION 1.08 The following shall be added to the end of Section 6.13 of the
Original Agreement:
"The parties acknowledge that subsequent to the date of the
Original Agreement, interim financing of (a) 3 billion lire has been provided by
Banco Nazionale del Lavoro to Motoguzzi S.p.A., supported by a guarantee and/or
collateral of OAM and (b) 3 billion lire has been provided by OAM to Motoguzzi
S.p.A., without the issuance of any equity securities of Motoguzzi; that such
amounts shall be repaid by Motoguzzi contemporaneously with or promptly
following the Closing Date; that repayment of such amounts will enable OAM to
repay loans to OAM or to TRG, which loans were made by Persons who are
affiliates of stockholders of TRG; and that the up to $800,000 of intercompany
indebtedness required to be paid by Motoguzzi to TRG pursuant to Section 8.06 of
the Original Agreement, is in addition thereto."
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SECTION 1.09 Section 7.05(b) of the Original Agreement shall be amended and
restated in its entirety as follows:
"North covenants to Motoguzzi that the Proxy and Registration
Statement will comply in all material respects with the applicable provisions of
the Exchange Act and will not at the time of the effectiveness of the Proxy and
Registration Statement and any amendments thereof or supplements thereto and at
the time of the North stockholder meeting contain any untrue statement of a
material fact or omit to state any material fact required to be stated therein
or necessary in order to make the statements therein, in light of the
circumstances under which they were made, not misleading or necessary to correct
any statement in any earlier filing with the Commission of such Proxy and
Registration Statement or any amendment thereof or any supplement thereto or any
earlier communication to the stockholders of North with respect to the
transactions contemplated by this Agreement; provided, however, that no
representation, covenant or agreement is made by North with respect to
information supplied or approved by or on behalf of Motoguzzi or its affiliates
for inclusion in the Proxy and Registration Statement, as provided in Section
6.09 of the Original Agreement. Subject to the fiduciary duty of the Board of
Directors of North, the Proxy and Registration Statement shall contain
statements, where appropriate, to the effect that the Board of Directors of
North has approved this Agreement and the Merger and unanimously recommends that
the stockholders of North vote in favor of approving this Agreement and the
Merger and the other proposals presented in the Proxy and Registration Statement
and North will, subject to applicable securities laws and subject to the
provisions of certain escrow agreements entered into prior to or in connection
with NAAC's initial public offering, cause its directors to (i) vote their
shares of North in support thereof and (ii) obtain proxies in support thereof
from all North stockholders which are affiliates of such directors."
SECTION 1.10 Section 10.02 of the Original Agreement shall be amended and
restated in its entirety as follows:
"SECTION 10.02 Establishment of Remedy Fund. Contemporaneous with the
consummation of the Merger, the Exchange Agent shall deliver in escrow to TRG,
as escrow agent pursuant to the Escrow Agreement attached to the Original
Agreement as Exhibit H and subject to the provisions of Section 10.03 of the
Original Agreement as amended by this First Amendment, certificates for 200,000
shares of Class A Common Stock comprising part of the Merger Consideration, (the
"Remedy Fund"), which Remedy Fund shall reduce, pro rata, the number of shares
of Class A Common Stock to be received by the holders of Old Motoguzzi Common
Stock, Old Moto Guzzi Preferred Stock and Old Moto Guzzi Warrants which are
surrendered as provided in Section 2.06(a) of the Original Agreement. To
facilitate the transfer of the shares in the Remedy Fund pursuant to the Escrow
Agreement, TRG is hereby designated and appointed by each holder of Class A
Common Stock comprising part of the Merger Consideration as the agent with
irrevocable power of attorney to execute such stock powers as may be required to
effectuate any transfer of such shares in the Remedy Fund. The Remedy Fund shall
also include any and all stock distributions made in respect of
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the securities in the Remedy Fund, such distributions to be held pursuant to the
Escrow Agreement. Subject to the limitations set forth in Article X of the
Original Agreement as amended by this First Amendment, from and after the
Effective Time, (i) the entire Remedy Fund shall be available to compensate the
Surviving Corporation for any Damages which may be sustained, suffered or
incurred by it, whether as a result of any Third Party Claim or otherwise, which
arise from or are in connection with or are attributable to (x) the breach of
any of the covenants, representations, warranties, agreements, obligations or
undertakings of Motoguzzi contained in this Agreement, or (y) any judgment,
order, government notice, government demand or other government sanction,
including any remediation or other action taken in response thereto, arising out
of or based upon any condition existing at the Closing Date which is not
described in the Ecoservice Srl report identified in the Motoguzzi Disclosure
Schedules and which violates any Laws, regardless of whether the representation
in Section 3.07 (b) or (c) of the Original Agreement is breached and (ii) that
portion of the Remedy Fund which consists of shares of Class A Common Stock
owned by TRG or OAM shall be available to compensate the Surviving Corporation
for any Damages which may be sustained, suffered or incurred by it, whether as a
result of any Third Party Claim or otherwise, which arise from or are in
connection with or are attributable to the breach of any of the covenants,
representations, warranties, agreements, obligations or undertakings of TRG
contained in this Agreement. Upon final adjudication or resolution of a claim
under Article X of the Original Agreement as amended by this First Amendment,
TRG shall deliver to the Surviving Corporation, such full number of the shares
held in the Remedy Fund as equals or fractionally exceeds the adjudicated or
resolved amount of such claim divided by the Market Price (as defined below) of
the Class A Common Stock. The "Market Price" of a share of Class A Common Stock
will be deemed to be the average of the last sales prices of the Class A Common
Stock for the ten business days ending on the day immediately prior to the final
adjudication or resolution of a claim under Article X of the Original Agreement
as amended by this First Amendment, as reported by The Nasdaq Stock Market or
any other United States stock exchange on which the Class A Common Stock is
listed, or in the absence of such reported prices, the determination of Market
Price shall be made jointly by TRG and the Independent Committee. Any shares
delivered to the Surviving Corporation in settlement of a claim under Article X
or the Original Agreement as amended by this First Amendment, will be canceled
and returned to the status of authorized and un-issued shares of capital stock
of the Surviving Corporation. If the Merger is consummated, TRG shall not, in
any event, have any liability to North, the Surviving Corporation, their
respective stockholders or any other person for any Damages except to the extent
of its interest in the Remedy Fund."
SECTION 1.11 Section 10.03 of the Original Agreement shall be amended and
restated in its entirety as follows:
"SECTION 10.03 Claims Against Remedy Fund. TRG is hereby designated the
agent of the holders of the shares in the Remedy Fund for purposes of
prosecuting, defending or settling any claim brought under Article X of the
Original Agreement as amended by this First Amendment. Actions taken or omitted
to be taken, and or consents given, or omitted to be given, by TRG in connection
with any such claim shall bind the
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interests of all of such holders of such shares in respect of such claim. Upon
determination by the Independent Committee that an event giving rise to a claim
under Section 10.02 above has occurred, the Independent Committee shall give
notice to TRG of such determination, specifying (i) the covenant, representation
or warranty, agreement, undertaking or obligation contained herein which it
asserts has been breached, (ii) in reasonable detail, the nature and dollar
amount of any claim the Surviving Corporation may have against the Remedy Fund
as a result thereof, and (iii) whether such claim arises from the commencement
of a Third Party Claim. The Independent Committee and TRG shall, in good faith,
attempt to resolve any such claim. If, within 30 days of its notification to
TRG, any claim has not been resolved, the Independent Committee or TRG,
individually and as agent for all holders of the shares in the Remedy Fund,
shall have the right, but not the obligation, to seek to have the claim resolved
by mediation by submission to JAMS/Endispute or its successor, and if the matter
is not resolved through such mediation process within the first to occur of (i)
the expiration of 60 days from such submission, or (ii) the holding of two
meetings of TRG and North (acting by such independent Committee) with such
mediator, then such claim shall be submitted to final and binding arbitration,
provided, however, that (x) except for an action arising out of a breach by TRG
of any of the representations or warranties made, or covenants given, by TRG
hereunder, no mediation or arbitration shall be brought against TRG except
solely in its capacity as agent for the holders of the shares in the Remedy Fund
and (y) any claim which arises from a Third Party Claim shall not be resolved or
submitted to mediation or arbitration until 30 days following resolution of such
Third Party Claim, and TRG, as agent for the Surviving Corporation, (i) shall
have the right to assume the defense of such Third Party Claim, by counsel
reasonably acceptable to the Independent Committee, the cost thereof to be borne
by the Surviving Corporation, subject to reimbursement if it is determined that
the claim is compensable to the Surviving Corporation as provided in Article X
of the Original Agreement as amended by this First Amendment, in which event
such costs shall constitute part of the Damages, recoverable as and to the
extent provided in Article X of the Original Agreement as amended by this First
Amendment and (ii) TRG may settle any such Third Party Claim on behalf of the
Surviving Corporation, subject to the reasonable approval of the Independent
Committee. Upon final adjudication or settlement of any claim under Section
10.02, TRG shall deliver to the Surviving Corporation such number of shares from
the Remedy Fund as is sufficient to recompense Surviving Corporation in
satisfaction of such claim as calculated in Section 10.02 above. In any action
or proceeding between the Parties hereto, each Party shall bear its own costs
and expenses, except as otherwise provided in Section 10.08 of the Original
Agreement"
SECTION 1.12 Section 10.04 of the Original Agreement shall be amended and
restated in its entirety as follows:
"SECTION 10.04. Duration of Remedy Fund. Other than claims for breach of
the representations and warranties made by Motoguzzi under Sections 3.01, 3.02,
3.04, 3.10, 3.22 of the Original Agreement and the first sentence of Section
3.15 of the Original Agreement (collectively "Core Claims"), no notice of claim
against the Remedy Fund may be given and shall not be valid if given, after the
60th day following the mailing
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by certified mail, return receipt requested, or delivery by hand, to each
then-serving member of the Board of Directors of the Surviving Corporation of
the reviewed financial statements of the Surviving Corporation for its fiscal
quarter ending March 31, 1999. Notice of Core Claims against the Remedy Fund may
not be given, and shall not be valid if given, after the 60th day following the
mailing by certified mail, return receipt requested, or delivery by hand, to
each then-serving member of the Board of Directors of the Surviving Corporation
of the audited financial statements of the Surviving Corporation for the fiscal
year ending December 31, 1999, together with the executed report of the
auditors. The Remedy Fund will remain in place until the later of (i) the date
of final settlement or adjudication of any pending claims made against the
securities in the Remedy Fund and delivery of the appropriate securities, or
(ii) the date after which no notice of claims may be given. After delivery of
securities from the Remedy Fund to the Surviving Corporation in full settlement
of any claims, TRG shall deliver to the registered owners thereof all shares
then held by it in the Remedy Fund."
SECTION 1.13 Section 10.05 of the Original Agreement shall be amended and
restated in its entirety as follows:
"Section 10.05 Amount of Claim. No claim may be brought against the Remedy
Fund unless, and then only to the extent that, the amount of Damages suffered in
respect of all claims asserted, without duplication, net of any offsets pursuant
to SECTION 10.06 of the Original Agreement exceeds $600,000."
SECTION 1.14 The following definitions contained in Article XII of the
Original Agreement are hereby amended and restated in their entirety as follows:
"Motoguzzi Material Adverse Change" means any material adverse change in
the condition, financial or otherwise, of Motoguzzi and the Motoguzzi
Subsidiaries, taken as a whole, from such condition as it existed at December
31, 1997, and as reflected in Motoguzzi's December 31, 1997 Financial
Statements, excluding, however, (i) any suspension of operations of Motoguzzi
and the Motoguzzi Subsidiaries, taken as a whole unless such suspension
continues for more than 30 consecutive business days, (ii) any decrease in sales
of Motoguzzi motorcycles to unaffiliated third parties unless such decrease is
at a rate, determined on a cumulative basis for the period January 1, 1998
through the end of the month immediately preceding the month in which a
determination is made (the "Operating Period"), which is greater than 900
motorcycles below the Motoguzzi 1998 motorcycles sales budget, as amended
through the date of this First Amendment, for the Operating Period, provided
that motorcycles which are sold at more than 30% off of Motoguzzi's suggested
retail price shall not be deemed sold for purposes hereof, (iii) any recall of
motorcycles unless such recall is for more than 1,000 motorcycles and requires
that repairs be made which will cost greater than 20% of Motoguzzi's suggested
retail price of such motorcycles, (iv) any interruption in supply of material
components or other materials necessary for the manufacture and assembly of
motorcycles, unless such interruption lasts for more than 60 days and results in
a decrease in production of more than 500 motorcycles, or (v) the
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assertion after the date hereof of any claims, the incurring after the date
hereof of any liabilities or the occurrence after the date hereof of any other
event or circumstance unless such claims or liabilities, or losses or costs
related to such events or circumstances, individually or in the aggregate are in
excess of $3 million after reduction to the extent of any applicable insurance
coverage and (A) if it is a claim or liability, it has a manifestly reasonable
likelihood of success, and (B) if it is a claim or liability which results from
a notice or demand by any governmental agency, (x) such governmental agency
shall have competent jurisdiction and (y) the ability of such governmental
agency to enforce against Motoguzzi any claim or liability in respect thereof
would not terminate as a result of Motoguzzi relocating its manufacturing and
assembly operations away from its present premises at Xxxxxxxx, Italy or the
substance of such claim would not be cured by Motoguzzi incurring capital
expenditures which are included in its capital expenditure budget.
"Motoguzzi Material Adverse Effect" means a material adverse effect on the
results of operations, financial condition, business, assets or prospects of
Motoguzzi and the Motoguzzi Subsidiaries (as defined hereinafter) taken as a
whole; provided that if the foregoing has a financial effect then a Motoguzzi
Material Adverse Effect shall not be deemed to exist unless such financial
effect is greater than $600,000; provided further, that if the applicable event,
circumstance or occurrence is included in any of clauses (i) through (v) of the
definition of Motoguzzi Material Adverse Change, then only for purposes of
determining whether the condition in Section 9.03(a) of the Original Agreement
has been satisfied and whether the Original Agreement, as amended by this First
Amendment, may be terminated as provided in Section 11.01(b) or Section 11.01(c)
of the Original Agreement, a Motoguzzi Material Adverse Effect shall not be
caused thereby unless a Motoguzzi Material Adverse Change would have resulted
therefrom.
SECTION 1.15 All references in the Original Agreement and the Exhibits and
Schedules thereto to and related to Class B Preferred Stock, including without
limitation references thereto in Sections 2.04, 4.12 and 7.05, shall be and
hereby are removed and deleted. Exhibit H to the Original Agreement shall be
amended and restated in the form of Exhibit H attached hereto.
ARTICLE II
MISCELLANEOUS
SECTION 2.01 This First Amendment may be executed in one or more
counterparts, and by the different Parties in separate counterparts, each of
which when executed shall be deemed to be an original but all of which when
taken together shall constitute one and the same agreement.
SECTION 2.02 The Original Agreement, as amended by this First Amendment,
shall continue in full force and effect. In the event of any inconsistency
between the Original Agreement and the Exhibits and Schedules thereto and this
First Amendment, the provisions of this First Amendment shall prevail.
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IN WITNESS WHEREOF, the Parties have caused this First Amendment to be
executed as of the date first written above.
MOTO GUZZI CORP. NORTH ATLANTIC ACQUISITION CORP.
By: /s/ Xxxxxx X. Xxxxx By: /s/ Xxxxx X. Xxxxxxxx
----------------------------------- -----------------------------
Name: Xxxxxx X. Xxxxx Name: Xxxxx X. Xxxxxxxx
Title: Director Title: President
TRIDENT ROWAN GROUP, INC.
By: /s/ Xxxxxx X. Xxxxx
-----------------------------------
Name: Xxxxxx X. Xxxxx
Title: Chairman
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