Exhibit 5
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INDUCEMENT AGREEMENT
This Inducement Agreement dated April 1997 between Tamarix Investors Ltd.
("Tamarix") and Trident Rowan Group, Inc., a Maryland corporation ("TRG") (the
"Agreement").
WHEREAS, the Parties acknowledge the execution of the 7 March 1997
agreement between Tamarix and Finprogetti S.p.A. ("Finprogetti") to purchase
certain shares of common stock of TRG (the "Finprogetti Purchase Agreement" for
the "TRG Shares"); and
WHEREAS, the Parties acknowledge that Tamarix is also negotiating an
agreement with certain individuals to purchase certain TRG Shares which they own
(the "Individual Shareholders Purchase Agreement"); and
WHEREAS, TRG believes that the active participation of Tamarix will be
instrumental in the growth of its business and that Tamarix will also make
substantial contributions in identifying opportunities in the same or allied
businesses, and
WHEREAS, TRG fully supports the terms of the Finprogetti Purchase Agreement
and the Individual Shareholders Purchase Agreement, and is entering into this
Agreement as a further inducement for Tamarix to enter into and perform under
the Finprogetti Purchase Agreement and the Individual Shareholders Purchase
Agreement and in consideration for Tamarix entering into the Finprogetti
Purchase Agreement, and
WHEREAS, in connection with its pending secondary offering TRG wishes to
induce Tamarix to enter a lock-up agreement required by its underwriters, by
issuing certain warrants to purchase its common stock.
NOW THEREFORE, the Parties hereto, upon the terms and conditions set forth
herein hereby agree as follows:
1. TRG, acting through its Board of Directors, shall take every action
possible to facilitate the closing of the Purchase Agreement and the performance
thereunder. In particular, the TRG Board shall, at a time and in a manner which
Tamarix and TRG shall agree on or before 10 April 1997,
a. amend the TRG By-Laws, effective on the Closing Date for the
Purchase Agreement,
(i) to limit the size of the TRG Board of Directors to no more than
eleven (11) Directors so long as Finprogetti shall not have sold to
Tamarix all of its 1,635,000 TRG Shares pursuant to the Purchase
Agreement, and to limit the size of the TRG Board of Directors to no
more than ten (10)
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Directors immediately after Finprogetti shall have sold to Tamarix all
of such TRG Shares pursuant to the Purchase Agreement;
(ii) to provide that all Directors, including those Directors now
serving on the Board who shall be elected to serve on the Board as
re-constituted, shall serve for staggered, three-year terms;
(iii) to give Tamarix, so long as it shall own one million or more TRG
Shares, the power to nominate a Director who shall be the Chairman of
the Board and who shall serve in the 1998 class year, a Director who
shall serve in the 1999 class year, and a director who shall serve in
the 2000 class year; to give Tamarix, so long as it shall own at least
500,000 but not more than 999,999 TRG Shares, the power to nominate a
Director who shall be the Chairman of the Board and who shall serve in
the 1998 class year, and a Director who shall serve in the 1999 class
year; and to give Tamarix, so long as it shall own at least 300,000
but not more than 499,999 TRG Shares, the power to nominate a Director
who shall serve in the 1998 Class Year;
(iv) to provide for no fewer than three independent Directors, who
shall be persons of good character who are experienced in business
matters and who are reasonably acceptable to Tamarix;
(v) to provide for a five-member Executive Committee of the Board of
Directors, which shall include the Chairman of the Board of Directors
or a Director whom he designates, the Chief Executive Officer, one
Director nominated by Tamarix, one independent Director, and one
Director who lives and is employed in Italy, and which shall have the
power to take the following actions among others: to direct the
day-to-day business activities of the Company which are within budget
and operating guidelines prescribed by the Board of Directors and
which are not matters which require action by the shareholders of the
Company;
(vi) to provide that all actions requiring the vote of the Board of
Directors shall be taken by the vote of a majority of the Directors
(for example, by the affirmative vote of six Directors so long as
there shall be eleven Directors), and
(vii) to provide that the By-Laws of TRG as amended shall not be
further amended, in whole or in part, without the written consent of
Tamarix so long as Tamarix shall own at least 7.5% of the issued and
outstanding shares of common stock of TRG.
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b. elect the following persons as Directors for the following class
years, to fill vacancies on the TRG Board:
First Year Directors - term expires at the 1998 shareholders
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meeting
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Xx. Xxxxxxx Xxxxx - Chairman of the Board (nominated by Tamarix)
Dott. Xxxxx Xxxxx-Condivi
Xx. Xxxxxxx Xxxxxxxxx-Xxxxxx (an independent Director)
Second Year Directors - term expires at the 1999 shareholders
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meeting
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Xx. Xxxx Xxxxxx (an independent Director)
A Director nominated by Finprogetti, whose
term shall end at such time as Finprogetti
shall sell the remainder of its TRG Shares
to Tamarix under the Purchase Agreement
Mr. Xxxx Xxxxxx (nominated by Tamarix)
Dott. Xxxxxx Xxxxxxx
Third Year Directors - term expires at the 2000 shareholders
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meeting
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Xx. Xxxxxx Xxxxx - Chief Executive Officer
Xx. Xxxxxxx Xxxxx (nominated by Tamarix)
Xx. Xxxxxx Xxxxxx (an independent Director)
Xx. Xxxxx Xxxxxxx (an independent Director)
In exercising its right under Section 1.a(iv) of this Agreement,
Tamarix agrees that all of the above persons are of good
character and are experienced in business matters, and agrees
that Xx. Xxxxxxxxx-Xxxxxx, Xx. Xxxxxx, Xx. Xxxxxx and Xx. Xxxxxxx
are independent Directors who are acceptable to serve on the
Board.
c. resolve that it shall not recommend to the shareholders of TRG,
and shall oppose, any amendments to the certificate of
incorporation of TRG without the written consent of Tamarix, so
long as Tamarix shall own at least 7.5% of the issued and
outstanding shares of common stock of TRG;
d. call a meeting of the Shareholders to be held no later than 15
July 1997 and to recommend to the Shareholders that the
certificate of incorporation be amended to implement and ratify
the above actions, to ratify and
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confirm the election of the above persons to the above positions
and to take such other actions as Tamarix and TRG shall agree.
2. On or before the Closing Date TRG shall take those actions described in
the Purchase Agreement as its responsibility, including the following:
a. it shall undertake to secure the agreement of Xx. Xxxxxx X.
Xxxxx, Dott. Xxxxx Xxxxx-Condivi, and Dott. Xxxxxx Xxxxxxx to
cancel a one page voting agreement dated July 1995 which they
have entered with Finprogetti;
b. it shall provide or secure the consents necessary under the 17
July 1995 acquisition agreement with Finprogetti to permit
Finprogetti to sell its TRG Shares to Tamarix and to grant its
proxy to Tamarix under the Purchase Agreement;
c. it shall waive any prohibitions in the acquisition agreement
against Finprogetti's sale of the TRG Shares to Tamarix; it shall
terminate the escrow for damages under that agreement, and it
shall release the TRG Shares held in escrow under that agreement
so that they may be part of the TRG Shares sold to Tamarix;
d. it shall agree with Ing. Xxxxxxxxx Xxxxx Xxxxxxx to cancel his
employment contract with TRG; and
e. it shall agree with Tamarix Capital Corporation to cancel its
confidentiality agreement with Tamarix Capital Corporation
entered in 1996. Since Tamarix principals will serve on the Board
of Directors of TRG and will be privy to the confidential
information of TRG, securities law restrictions will require them
to keep confidential the information which they will receive as
TRG insiders, so the confidentiality agreement between TRG and
Tamarix Capital Corporation will no longer be appropriate.
3. TRG agrees that from the date of its Agreement it shall not incur any
additional debts except in the ordinary course of its business, or issue
warrants, shares or convertible securities beyond those warrants, shares and
securities which are outstanding on the date hereof or which are the subject of
the SEC registration statement which is now pending, or which TRG has advised
Tamarix that it intends to incur or to issue, prior to the Closing of the
purchase of TRG Shares as provided in the Finprogetti Purchase Agreement.
4. TRG shall insure that all shares of TRG common stock which are the
subject of the Finprogetti Purchase Agreement and the Individual Shareholders
Purchase Agreement, as well as all shares of TRG common stock which Tamarix
would purchase by exercise of the warrants referred to in Section 5 below, shall
be registered as part of the pending secondary equity offering
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of TRG common stock, but in no event later than three months from the Closing of
the Purchase Agreement.
5. TRG further agrees that upon execution of this Agreement and the
Purchase Agreement, as an inducement for Tamarix to enter into a lockup
agreement required by its underwriters in the pending secondary offering, TRG
shall issue to the Manager of Tamarix warrants to purchase 1,250,000 shares of
common stock of TRG, in form satisfactory to the Manager, effective on the
Closing Date for the Purchase Agreement and exercisable at any time for three
years from the Closing Date for the Purchase Agreement, at the price of the
shares of TRG common stock effective in the pending secondary equity offering.
The transfer of such warrants by the Manager of Tamarix shall be limited to: the
Members of the Manager; the shareholder(s) of any Members of the Manager;
Tamarix; the Members of Tamarix, and such other transferees the transfer to whom
shall be consented to by TRG, such consent being not unreasonably withheld. All
such transfers shall be in accordance with the terms hereof and with all
applicable securities laws. In the event that the registration statement for the
pending secondary offering has not become effective by 30 May 1997, the exercise
price for the warrants shall be the average closing sales price of a share of
TRG common stock as reported by NASD Consolidated Transactions for the 21
business days immediately following 30 May 1997.
6. Should TRG fail to perform any of its obligations provided in Sections 1
- 5 hereunder, TRG agrees to compensate Tamarix for its efforts by paying
Tamarix a fee of U.S. $200,000 and by reimbursing Tamarix for all the expenses
it has incurred to date including reasonable attorney's fees.
7. As and when a chief financial officer for Moto Guzzi Corp. is appointed
prior to the occurrence of the initial public offering of equity securities of
Moto Guzzi Corp., such appointment shall require the consent of Tamarix, which
consent shall not be unreasonably withheld.
8. In the event that a majority of the Board of Directors of Moto Guzzi
Corp. shall be elected by the holders of the convertible preferred shares
currently outstanding, one of the remaining Directors of Moto Guzzi Corp. shall
be a person who was nominated as a Director of TRG by Tamarix.
9. TRG represents that
a. it has disclosed to Tamarix all material facts about its business
operations and financial condition.
b. its Board of Directors has considered the terms of this Agreement,
considers the Agreement to be in the best interests of TRG and its
shareholders, and has approved it, and that no other approvals are
required.
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c. it has full legal right, power and authority to execute and deliver
this Agreement and to perform its obligations hereunder,
d. this Agreement has been duly and validly executed and delivered by
TRG,
e. this Agreement will not, with notice or lapse of time or both,
conflict with, violate, or result in a breach of the terms, conditions
or provisions of, or constitute a default under or result in the
creation or imposition of any lien or encumbrance upon the assets or
properties of TRG under, any obligation, agreement, securities law
rule or regulation, order, decree or judgment of any court or public
authority, applicable to TRG or any contracts to which TRG is a party
or by which its assets or properties may be bound or affected,
f. constitutes the legal, valid and binding obligation of TRG
enforceable against it in accordance with its terms, subject to
bankruptcy, insolvency, moratorium and other laws affecting creditors'
rights generally and to equitable principles whether considered in an
action at law or in equity.
10. This Agreement shall be governed by the internal laws of the State of
New York without regard to provisions relating to conflicts of laws.
11. Any dispute which may arise in relation to this agreement or any
document delivered in connection therewith, or interpretation of them, shall be
remitted to the exclusive jurisdiction of the courts of the United States or New
York State, sitting in the City and County of New York.
12. A condition to the effectiveness of this agreement is that the Closing
of the Finprogetti Purchase Agreement shall take place on or before 25 April
1997.
13. This agreement and the documents referred to in it represent the entire
agreement between the Parties. No amendment, waiver or modification may be made
to this agreement
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except by a writing signed by the Parties.
WHEREFORE, the undersigned have executed and delivered this Agreement on
the date first above written.
TAMARIX INVESTORS LTD.
By:/s/Xxxx Xxxxxx
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TRIDENT ROWAN GROUP, INC.
By:/s/Xxxxxx X. Xxxxx
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