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SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 10-K/A
[X] ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF
THE SECURITIES EXCHANGE ACT OF 1934
FOR THE FISCAL YEAR ENDED DECEMBER 31, 1999
OR
[ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF
THE SECURITIES EXCHANGE ACT OF 1934
FOR THE TRANSITION PERIOD FROM _________ TO _________
COMMISSION FILE NO. 000-22101
SPIGADORO, INC.
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(EXACT NAME OF REGISTRANT AS SPECIFIED IN ITS
CHARTER)
DELAWARE 13-3920210
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(STATE OR OTHER JURISDICTION (I.R.S. EMPLOYER
OF INCORPORATION OR ORGANIZATION) IDENTIFICATION NO.)
SPIGADORO, INC.
70 EAST 55TH STREET, 24TH FLOOR
NEW YORK, NEW YORK 10022
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(ADDRESS OF PRINCIPAL EXECUTIVE OFFICES)
REGISTRANT'S TELEPHONE NUMBER, INCLUDING AREA CODE: (212) 754-4271
SECURITIES REGISTERED PURSUANT TO SECTION 12(b) OF THE ACT:
NONE
SECURITIES REGISTERED PURSUANT TO SECTION 12(g) OF THE ACT:
COMMON STOCK, $0.01 PAR VALUE
Indicate by check mark whether the registrant: (1) has filed all
reports required to be filed by Section 13 or 15(d) of the Securities Exchange
Act of 1934 during the preceding 12 months (or for such shorter period that the
registrant was required to file such reports), and (2) has been subject to such
filing requirements for the past 90 days. Yes [X] No [ ]
Indicate by check mark if disclosure of delinquent filers pursuant to
Item 405 of Regulation S-K is not contained herein, and will not be contained,
to the best of registrant's knowledge, in definitive proxy or information
statements incorporated by reference in Part III of this Form 10-K or any
amendment to this Form 10-K. [X]
The aggregate market value of the voting and non-voting common equity
held by non-affiliates of the registrant as of the close of business on March
27, 2000 was approximately $22,919,179.
As of March 27, 2000, 60,892,099 shares of the registrant's common
stock, $0.01 par value (excluding treasury shares), were issued and outstanding.
DOCUMENTS INCORPORATED BY REFERENCE
See the Exhibit Index hereto.
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PART III
ITEM 10. DIRECTORS AND EXECUTIVE OFFICERS OF THE REGISTRANT
The following table sets forth the names, ages and positions of our
executive officers and directors:
NAME AGE POSITION
- ---- --- --------
Jacob Agam 45 Chairman of the Board and Chief Executive Officer
Carlo Petrini 66 Co-Chairman of the Board
Lucio De Luca 49 Chief Operating Officer and Director
Klaus Grissemann 56 Chief Financial Officer and Director
Marc S. Goldfarb (1) 36 Director
Erich Weber (1) 58 Director
Robert Weiss (1) 53 Director
- ----------------------------------
(1) Member of Audit Committee
JACOB AGAM has served as our Co-Chairman of the Board since our
organization in October 1996 and became our Chairman and our Chief Executive
Officer in April 1998 and the Chairman of the Board and President of Petrini in
March 2000. Mr. Agam has served as the Chairman of the Board and Chief Executive
Officer of Gruppo Spigadoro N.V., a Dutch holding company and principal
stockholder of Spigadoro, since September 1998 and the Chairman of the Board of
iEntertainment Network, Inc., a developer and publisher of proprietory Internet
and on-line multi-player games, since August 1999. Mr. Agam is a founder and
Chairman of Vertical Capital Ltd. and Orida Capital Ltd., companies engaged in
private equity investments and advisory services, respectively, since their
inception in 1998, and the Chairman of Vertical Financial Holdings, an affiliate
of Vertical Capital and a stockholder of Spigadoro, since 1991. Mr. Agam, in his
capacity as Chairman of Vertical, spends a portion of his business time
providing services to companies other than Spigadoro. Orida provides services
for Vertical pursuant to an agreement between Orida and Vertical. Mr. Agam
received a law degree from Tel Aviv University in 1984 and an LLM degree in
securities and corporate finance from the University of Pennsylvania in 1986.
CARLO PETRINI has served as our Co-Chairman of the Board since February
2000 and has served as a director of Spigadoro since December 1999. Mr. Petrini
is a direct descendant of the founder of Petrini, has worked for Petrini for 43
years and has served as its Chairman of the Board from 1980 until March 2000.
Mr. Petrini currently serves as Vice President and a director of Petrini. Mr.
Petrini also co-founded the American-Italian Pasta Company, a United States
pasta manufacturing and distribution company, which was sold in 1989 and
subsequently listed on the New York Stock Exchange. Mr. Petrini is also a board
member of various Italian trade groups, industrial and food companies, as well
as Banca d'Italia (Perugia).
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LUCIO DE LUCA has served as our Chief Operating Officer and director of
Spigadoro since December 1999. Mr. De Luca has over 24 years of experience in
the food and manufacturing industry and served as Chief Operating Officer of
Petrini from December 1998 until March 2000 and Chief Executive Officer of
Petrini since March 2000. From 1994 to 1998, Mr. De Luca served as General
Manager of several divisions of Averna Group, a large Italian industrial holding
company. From 1990 to 1993, Mr. De Luca served as President of Pepsi Cola Foods
International Inc. Italy. From 1987 to 1989, he served as Divisional Manager of
Mars (Italy) and from 1978 to 1987, Mr. De Luca served in various capacities,
including Marketing Director of Henkel (Italy), a large German chemical company.
Mr. De Luca also served in London, England from 1974 to 1978, as General Manager
of Compagnia Commerciale Meridionale, an Italian import-export company.
KLAUS GRISSEMANN has served as our Chief Financial Officer since our
organization in October 1996 and has served as a director of Spigadoro since
December 1996. In 1989, Mr. Grissemann joined IAT AG, one of our subsidiaries,
as Chief Financial Officer and has served as a director of IAT AG since 1993.
From 1979 until 1988, Mr. Grissemann served as Chief Financial Officer of Jaeger
Le Coultre AG, a Swiss watch manufacturer. Mr. Grissemann graduated from
Kantonale Handelsschule business school in Zurich.
MARC S. GOLDFARB has served as a director of Spigadoro since September
1999. Since August 1998, Mr. Goldfarb has served as the President and Managing
Director of Orida Capital USA, Inc., a consulting firm that is the U.S.
representative of the Vertical Group, a global private equity firm. Prior to
joining Orida Capital USA, Mr. Goldfarb was a corporate and securities attorney
for over 10 years, most recently as a partner at Bachner, Tally & Polevoy LLP in
New York, where he specialized in corporate finance, venture capital and mergers
and acquisitions. Mr. Goldfarb holds a B.S. degree in Management and Industrial
Relations from Cornell University and a J.D. from the University of Pennsylvania
Law School.
DR. ERICH WEBER has served as a director of Spigadoro since June 1998.
Dr. Weber has served in several management positions at Revi Informatik, a data
processing consulting company, since 1992 following ten years as a partner and
manager of electronic data processing consulting of Revisuisse Price Waterhouse,
Zurich. Prior thereto, he served as department manager of infomatics for Migros
Genossenschaftsbund and Alusuisse, a producer of aluminum products. Dr. Weber
earned his doctorate in Economic Science from the University of Zurich in 1970.
ROBERT WEISS has served as a director of Spigadoro since June 1998. In
1980, Mr. Weiss founded Robert Weiss Consulting, an independent electrical
engineering consulting company, and has served as its President since 1980.
Previously, he served nine years as a consultant to Alusuisse, a producer of
aluminum products, in its headquarters and department of research and
development. Mr. Weiss received a degree in Chemistry from Technical College
Winterthur in 1970.
All directors hold office until the next annual meeting of stockholders
or until their successors are elected and qualified. Vacancies and any
additional positions created by board
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action are filled by action of the existing Board of Directors. All officers
serve at the discretion of the Board of Directors.
RIGHTS TO NOMINATE DIRECTORS
Under the terms of the Petrini acquisition in December 1999, we agreed
that for so long as Gruppo Spigadoro (or its current shareholders), their
respective affiliates and Carlo Petrini collectively hold at least:
o 50% of the outstanding shares of our common stock, Gruppo
Spigadoro or its assignees will have the right to nominate 50%
of the members for election to our Board of Directors;
o 25% of the outstanding shares of our common stock, Gruppo
Spigadoro or its assignees will have the right to nominate 25%
of the members for election to our Board of Directors;
o 10% of the outstanding shares of our common stock, Gruppo
Spigadoro or its assignees will have the right to nominate a
single member for election to our Board of Directors.
Gruppo Spigadoro has not yet nominated any members of our Board of Directors.
However, the existence of such rights increases the control over us by Gruppo
Spigadoro and its affiliates, including members of the Vertical Group. Prior to
December 1999, Vertical Financial had the right to nominate two members for
election to our Board of Directors. Mr. Agam, our Chairman of the Board and
Chief Executive Officer, and Mr. Goldfarb were nominated to our Board of
Directors by Vertical Financial. See "-- Director Compensation" and "--Certain
Relationships and Related Transactions."
COMMITTEES OF THE BOARD OF DIRECTORS
Audit Committee
The Audit Committee consists of Messrs. Goldfarb, Weber, and Weiss. The
primary functions of the Audit Committee are to recommend engagement of our
independent public accountants and to maintain communications among such
independent auditors, the Board of Directors and our internal accounting staff
with respect to accounting and audit procedures, the implementation of
recommendations by such independent auditors, the adequacy of our internal
controls and related matters.
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ADVISORY COMMITTEES TO THE BOARD OF DIRECTORS
Advisory Compensation Committee
The Advisory Compensation Committee consists of Messrs. Petrini, De
Luca, and Mario Amoroso, a Director of Petrini. The principal functions of the
Advisory Compensation Committee are to review the management organization and
development, review significant employee benefit programs, including bonus
plans, stock option and other equity-based programs, deferred compensation plans
and any other cash or stock incentive programs and to advise and recommend to
the Board of Directors action to be taken by the Board of Directors with respect
to such matters.
Advisory Acquisition Committee
The Advisory Acquisition Committee consists of Messrs. De Luca,
Grissemann, Petrini and Robert Taylor, who serves as our Director of Corporate
Development. The Acquisition Committee advises the Board of Directors on matters
concerning our acquisition program, including identification of acquisition
targets, determination of the preliminary approach and negotiation strategy, and
management of contract preparation.
SECTION 16(a) BENEFICIAL OWNERSHIP REPORTING COMPLIANCE
Section 16(a) of the Securities Exchange Act of 1934, as amended,
requires our directors and officers and persons who own more than 10% of a class
of our equity securities which are registered under the Exchange Act to file
with the Securities and Exchange Commission initial reports of ownership and
reports of changes of ownership of such registered securities. To our knowledge,
based solely on a review of the copies of such reports furnished to us and on
representations that no other reports were required, no person required to file
such a report failed to file on a timely basis during fiscal 1999.
ITEM 11. EXECUTIVE COMPENSATION
The following summary compensation table sets forth the aggregate
compensation paid by us to Jacob Agam, our Chief Executive Officer, and to our
four other most highly compensated executive officers whose aggregate
compensation exceeded $100,000 for fiscal 1999 for services rendered during the
fiscal years ended December 31, 1999, 1998, and 1997 ("named executive
officers"):
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SUMMARY COMPENSATION TABLE
Annual Compensation(1) Long-Term Compensation
--------------------------------------------- -------------------------------------------
Other Annual Restricted Securities All other
Name and Principal Salary Bonus Compensation Stock Underlying Compensation
Position Year ($) ($) ($) Awards(s) Options(#) ($)
- -------- ---- --- --- --- --------- ---------- ---
Jacob Agam (2)
Chairman of the Board of
Directors and Chief Executive
Officer....................... 1999 75,000 -- -- -- 40,000 --
1998 25,000 -- -- -- -- --
Klaus Grissemann(3)
Chief Financial
Officer....................... 1999 142,176 -- 8,685(5) -- 25,000 --
1998 144,845 -- 8,731(5) -- 50,000 --
25,000(4)
1997 142,083 -- 8,792(5) -- -- --
Nico Hildebrand(6)
Chief Operating Officer....... 1999 119,565 29,891 -- -- 60,000 --
Lucio De Luca(7)
Chief Operating Officer ...... 1999 155,682(8) -- 20,757(8) -- 250,000 4,567(9)
18,681(10)
1998 13,250(8) 21,000(8) -- -- --
10,600(10)
Carlo Petrini
Co-Chairman of the Board of
Directors .................... 1999 -- -- 259,470(8) -- -- --
31,136(10)
1998 -- -- 265,000(8) -- -- --
18,600(10)
1997 -- -- 265,000(8) -- -- --
18,600(10)
(1) Compensation is paid in Swiss Francs, German Marks, or Italian Lira and
is converted into U.S. dollars at the exchange rate of $1.00 = 1927
Lira for 1999, and $1.00 = 1887 Lira for 1998 and 1997, $1.00 = 1.84 DM
for 1999 and $1.00 = 1.50 SF, $1.00 = 1.45 SF, and $1.00 = 1.44 SF for
1999, 1998 and 1997 respectively.
(2) Mr. Agam served as Co-Chairman of the Board since our organization in
1996 and became the sole Chairman and Chief Executive Officer in April
1998. Under an employment agreement effective January 1, 2000, Mr. Agam
was entitled to an annual salary of $300,000 per year plus certain
other benefits. This agreement was terminated in April 2000. Excludes
$144,000, $144,000 and $123,000 paid or accrued to Vertical Financial
as compensation for the services of Jacob Agam, our Chairman, during
1999, 1998 and 1997, respectively. See "-- Director Compensation" and
"-- Employment Contracts and Termination of Employment and
Change-In-Control Arrangements."
(3) Mr. Grissemann is not directly employed by Spigadoro. His services are
provided on a per diem basis by Grissemann Consulting S.A. See "--
Employment Contracts and Termination of Employment and
Change-In-Control Arrangements."
(4) Consists of a payment to Mr. Grissemann for services rendered in
connection with the acquisition of Columbus Computer Handels-und
Vertriebs in November 1998. See "-- Employment Contracts and
Termination of Employment and Change-In-Control Arrangements."
(5) Represents payments made by us for automobile leases.
(6) Mr. Hildebrand resigned as our Chief Operating Officer effective
December 31, 1999.
(7) In connection with the Petrini acquisition, we entered into an
employment agreement with Mr. De Luca effective as of January 1, 2000
under which Mr. De Luca is entitled to an annual salary of $55,000. Mr.
De Luca is also entitled to compensation from Petrini for services
rendered as the Chief Executive Officer of Petrini. See "--Employment
Contracts and Termination of Employment and Change-In-Control
Arrangements."
(8) Represents compensation received from Petrini for services rendered as
executive officers or directors of Petrini.
(9) Represents life insurance premiums paid by Petrini.
(10) Represents payments received from Petrini for automobile leases.
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OPTION GRANTS IN THE LAST FISCAL YEAR
The following table sets forth certain information regarding stock options
granted to our named executive officers during the fiscal year ended December
31, 1999. No stock appreciation rights were granted to these individuals during
such year.
Individual Grants
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Potential
Number of Percent of Realizable Value
Securities Total At Assumed
Underlying Options Exercise Annual Rate of
Options Granted to or Base Stock Price
Granted Employees Price Expiration Appreciation For
Name (#) in Fiscal Year ($/Sh) Date Option Term(1)
---- --- -------------- ------ ---- -----------
5%($) 10%($)
Jacob Agam 40,000(3) 6.1% 1.875 11/16/09 47,167 119,531
Klaus Grissemann 25,000(3) 3.8% 1.875 11/16/09 29,479 74,707
Nico Hildebrand 60,000(2) 9.1% 7.25 (2) -- --
Lucio De Luca 250,000(4) 37.9% 2.75 12/22/09 432,365 1,095,698
Carlo Petrini -- -- -- -- -- --
- ----------------
(1) Calculated by multiplying the exercise price by the annual appreciation
rate shown (as prescribed by the SEC rules) and compounded for the term
of the options, subtracting the exercise price per share and
multiplying the gain per share by the number of shares covered by the
options. These amounts are not intended to forecast possible future
appreciation, if any, of the price of our common stock. The actual
value realized upon exercise of the options will depend on the fair
market value of our common stock on the date of exercise.
(2) Mr. Hildebrand resigned as an executive officer of Spigadoro effective
as of December 31, 1999 and, as a result, these options have
terminated.
(3) The options are all exercisable in full commencing from the date of
grant.
(4) The options are exercisable as follows: 50,000 options on January 1,
2000, and the remaining 200,000 options in three equal annual
installments commencing January 1, 2001.
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AGGREGATED OPTION EXERCISES IN LAST FISCAL YEAR
AND FISCAL YEAR END OPTION VALUES
The following table sets forth certain information with respect to the
exercise of stock options during fiscal 1999 by our named executive officers and
the number and value of unexercised options held by each of our named executive
officers as of December 31, 1999:
Number of Securities Value of Unexercised
Shares Underlying Unexercised In-the-Money Options
Acquired Value Options at at
Name on Exercise Realized Fiscal Year-End (#) Fiscal Year-End ($)(1)
---- ----------- -------- ------------------- ----------------------
Exercisable Unexercisable Exercisable Unexercisable
----------- ------------- ----------- -------------
Jacob Agam -- -- 40,000 -- $50,000 --
Klaus Grissemann -- -- 75,000 -- $31,250 --
Nico Hildebrand(2) -- -- 20,000 40,000 -- --
Lucio De Luca -- -- 250,000 -- $93,750
Carlo Petrini -- -- -- -- -- --
- ---------------
(1) Calculated by multiplying the number of in-the-money options at
December 31, 1999 by the difference between the fair market value of
our common stock at December 31, 1999 ($3.125) and the option exercise
price.
(2) Mr. Hildebrand resigned as an executive officer of Spigadoro effective
as of December 31, 1999 and, as a result, these options have
terminated.
EMPLOYMENT CONTRACTS AND TERMINATION OF EMPLOYMENT AND CHANGE-IN-CONTROL
ARRANGEMENTS
Mr. Agam
We entered into an employment agreement effective as of September 1,
1998 with Mr. Agam under which Mr. Agam agreed to serve as our Chief Executive
Officer for a three year term expiring September 1, 2001. Under the employment
agreement, Mr. Agam was entitled to an annual salary of $75,000 per year, plus a
bonus to be approved by the Board of Directors. If the employment agreement was
terminated by us without cause, Mr. Agam was entitled to receive his base salary
for a period of one year following the date of termination. In connection with
the Petrini transaction, we entered into an Amended and Restated Employment
Agreement effective January 1, 2000 with Mr. Agam which provided for an annual
salary of $300,000 and which agreement was subsequently terminated in April 2000
by mutual agreement between us and Mr. Agam and was replaced with
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an agreement with Vertical Financial under which we agreed to pay Vertical
Financial $25,000 per month, plus expenses, through December 2002 for the
services of Mr. Agam as our Chairman of the Board and Chief Executive Officer.
Mr. Grissemann
Mr. Grissemann's services are provided to us on a per diem basis by
Grissemann Consulting S.A. pursuant to an agreement, dated September 1, 1992,
and amended on December 19, 1994, between IAT AG and Grissemann Consulting S.A.
This agreement has an indefinite term and provides that Mr Grissemann is
responsible for the administration and accounting of Spigadoro and that the
amount of his business time which he is to devote to our affairs is to be agreed
among the parties but shall not be less than 30% of Mr. Grissemann's business
time. Grissemann Consulting S.A. is paid a fee of SF 775 (approximately $538)
per day to be amended yearly in line with increases in salary of our other
executive officers plus expenses of an automobile to be provided to Mr.
Grissemann. In July 1998, we further amended the agreement to provide for a
payment to Mr. Grissemann for services provided by him in connection with our
acquisitions or financings. The amount to be paid to Mr. Grissemann for such
services in any year will not exceed $50,000. In 1998, we paid $25,000 to Mr.
Grissemann for services provided in connection with our acquisition of Columbus.
Mr. De Luca
We entered into an Employment Agreement effective January 1, 2000 with
Mr. De Luca pursuant to which Mr. De Luca agreed to serve as our Chief Operating
Officer for an initial term of three years with an annual base salary of
$55,000, housing expenses of up to $20,000 per year and a bonus to be approved
by our Board of Directors. Mr. De Luca also received a one-time signing bonus of
$75,000 and an initial grant of options to purchase 250,000 shares of our common
stock, which options vest over a period of three years. The employment agreement
provides for the termination of Mr. De Luca by us prior to the expiration or its
terms in the event of Mr. De Luca's death or disability or for cause. If the
employment agreement is terminated by us without cause or terminated by Mr. De
Luca for constructive discharge, Mr. De Luca will be entitled to receive a
severance payment equal to his base salary for the lesser of (i) the remainder
of the existing term of Mr. De Luca's employment and (ii) two years from the
effective date of termination. Mr. De Luca is also compensated by Petrini for
services rendered as the Chief Operating Officer of Petrini. In addition, Mr. De
Luca has agreed not to compete with us or our affiliates, solicit any of our
customers or clients or act on behalf of a competitor, or interfere with our
relationships with our affiliates and employees during the term of the
employment agreement and for a period of time following the termination of such
employment agreement.
Petrini entered into an employment agreement effective December 1, 1998
with Mr. De Luca under which Mr. De Luca agreed to serve as the Chief Operating
Officer of Petrini until June 1, 2000. The employment agreement is governed by
Italian law. Mr. De Luca is entitled to an annual salary of Lit. 350,000,000
(approximately $187,000). Mr. De Luca received a bonus of Lit. 50,000,000
(approximately $26,500) in 2000 upon Petrini meeting certain performance
thresholds. Under the agreement, Petrini pays for a car for Mr. De Luca's use.
Mr. De Luca is subject to a confidentiality provision. In March 2000, Mr. De
Luca was appointed Chief Executive Officer of Petrini
Mr. Hildebrand
We entered into an employment agreement effective as of February 1,
1999 with Mr. Hildebrand under which Mr. Hildebrand agreed to serve as our Chief
Operating Officer until January 31, 2000. Under the
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employment agreement, Mr. Hildebrand was entitled to an annual salary of DM
240,000 (approximately $136,000), reimbursement for travel and other business
related expenses and an annual bonus of 3% of the consolidated earnings before
interest, taxes, depreciation and amortization of FSE and Columbus. During the
first year of the agreement, Mr. Hildebrand was entitled to a minimum bonus of
DM 60,000 (approximately $34,000). Under the employment agreement, Mr.
Hildebrand received options to purchase 60,000 shares of our common stock. Mr.
Hildebrand resigned as our Chief Operating Officer effective December 31, 1999.
DIRECTOR COMPENSATION
Our directors currently do not receive any compensation as such, but
directors who are not also our executive officers are reimbursed for expenses
incurred in connection with their service on the Board of Directors. We may
establish different compensation policies in the future. Under the terms of an
agreement between us and Vertical Financial, Vertical Financial received a
monthly payment of $12,000 as compensation for the services of our Chairman of
the Board nominated by Vertical Financial. During 1999, Vertical Financial
received $132,000 as consideration for Mr. Agam's services as our Chairman of
the Board. This agreement terminated in 1999. In April 2000, Mr. Agam's
employment agreement was terminated by mutual agreement between us and Mr. Agam
and was replaced with an agreement with Vertical Financial under which we agreed
to pay Vertical Financial $25,000 per month, plus expenses, through December
2002, for the services of Mr. Agam as our Chairman of the Board and Chief
Executive Officer. In November 1999, we granted options to purchase 25,000,
15,000 and 15,000 shares of our common stock, all immediately exercisable, to
Messrs. Goldfarb, Weber and Weiss, respectively. All of these options were
granted at the fair market value of our common stock on the date of grant. See
"Certain Relationships and Related Transactions - Stock Purchase Agreement and
Related Transactions" and "--Vertical Agreement."
Compensation Committee Interlocks and Insider Participation
During the fiscal year ended December 31, 1999, our Compensation
Committee consisted of Messrs. Walther, Grissemann, Weber and Weiss until
September 27, 1999 and Messrs. Goldfarb, Weber and Weiss following September 27,
1999. None of the members of the Compensation Committee is a current or former
employee or officer of Spigadoro or any of our subsidiaries, except Mr.
Grissemann who, while not our employee, provides the services of a Chief
Financial Officer and is indirectly compensated by us. None of our executive
officers and no member of our Compensation Committee is a member of any other
business entity that has an executive officer that sits on our Board of
Directors or on our Compensation Committee. In February 2000, our Compensation
Committee became an advisory committee to our Board of Directors.
ITEM 12. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT
SECURITY OWNERSHIP OF MANAGEMENT AND PRINCIPAL STOCKHOLDERS
The following table sets forth certain information regarding ownership of
our common stock as of April 25, 2000 by (i) each of our directors, (ii) each of
our named executive officers, (iii) each person known by us to own beneficially
more than five percent of our outstanding common stock, and (iv) all of our
executive officers and directors as a group. As of April 25, 2000, we had
60,393,814 shares of common stock outstanding (excluding treasury shares).
Unless otherwise indicated, the address of our directors and officers is c/o
Spigadoro, Inc., 70 East 55th Street, 24th Floor, New York, New York 10022.
Beneficial ownership is defined in accordance with the rules of the SEC and
generally means the power to vote and/or to dispose of the securities regardless
of any economic interest therein. In computing number and percentage ownership
of shares of our
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common stock beneficially owned by a person, shares of common stock subject to
options held by that person that are exercisable within 60 days are deemed
outstanding. Such shares of our common stock, however, are not deemed
outstanding for purposes of computing the percentage ownership of stockholders
other than such person.
Name and Address of Beneficial Owner Number of Shares
- ------------------------------------ Beneficially Percentage of Shares
Owned Beneficially Owned
----- ------------------
Carlo Petrini 12,241,400 20.1%
Jacob Agam (1) 40,000 (2) *
Klaus Grissemann 249,244 (3) *
Marc Goldfarb 25,000 (2) *
Erich Weber 25,000 (2) *
Robert Weiss 25,000 (2) *
Lucio De Luca 50,000 (4) *
Gruppo Spigadoro N.V. 36,125,130 (5) 59.3%
All executive officers and directors as a group (7
persons) 12,655,644 (6) 20.7%
- ---------------
* Less than 1%
(1) Jacob Agam, our Chairman of the Board and Chief Executive Officer, is
the Chairman of the Board of Vertical Capital, Vertical Financial and
Gruppo Spigadoro. Mr. Agam disclaims beneficial ownership of the shares
beneficially owned by these entities. See "Footnote 5."
(2) Represents shares of common stock issuable upon exercise of options
that are exercisable within 60 days of April 25, 2000.
(3) Includes 75,000 shares of common stock issuable upon exercise of
options that are exercisable within 60 days of April 25, 2000.
(4) Represents shares of common stock issuable upon exercise of options
that are exercisable within 60 days of April 25, 2000. Excludes 200,000
shares of common stock issuable upon exercise of options that are not
exercisable within 60 days of April 25, 2000.
(5) The address for Gruppo Spigadoro is Strawinskylaan 1725, 1077 XX,
Amsterdam, The Netherlands. Includes 6,120,700 shares of common stock
which have been placed in escrow by Gruppo Spigadoro to secure our
obligations owed to Mr. Petrini. Gruppo Spigadoro, N.V. retains the
power to vote these shares of common stock. Through various
intermediate entities, Vertical Capital and its affiliates beneficially
own approximately 75% of the outstanding common stock of Gruppo
Spigadoro and have the power to vote approximately 90% of the
outstanding common stock of Gruppo Spigadoro. As a result, based upon
the voting power of these entities, Vertical Capital may be deemed to
beneficially own the shares of common stock held by Gruppo Spigadoro.
In addition, Vertical Financial, an affiliate of Vertical Capital, owns
890,152 shares of our common stock and warrants to purchase 690,152
shares of common stock that are exercisable within 60 days of April 25,
2000. We have been advised that Vertical Financial also owns equity
interests in Behala Anstalt, Lupin Investments Services Ltd. and
Henilia Financial Ltd. and that Vertical Financial has agreements with
third party investors in each such entity. These entities beneficially
own an aggregate of 589,314 shares of common stock and 890,151 shares
of common stock issuable upon exercise of warrants that are exercisable
within 60 days of April 25, 2000. These equity interests and agreements
entitle Vertical Financial to varying percentages of the profits
resulting from the sale of the shares of each of these entities. Under
agreements with each of these entities, the trustee of each such entity
has voting and dispositive power over the shares held by that entity,
although Vertical Financial retains the right to appoint or terminate
the appointment of the trustee. These shares are not included in the
shares beneficially owned by Vertical Financial. As a result, Vertical
Financial, Vertical Capital and their affiliates (collectively, the
"Vertical Group"), beneficially own approximately 61.8% of our
outstanding common stock. In addition, trusts established for members
of the Agam family indirectly own 100% of Vertical Capital and Vertical
Financial.
(6) Includes 240,000 shares of common stock issuable upon exercise of
options that are exercisable within 60 days of April 25, 2000. Excludes
200,000 shares of common stock issuable upon exercise of options that
are not exercisable within 60 days of April 25, 2000. Also excludes
shares of common stock beneficially owned by Gruppo Spigadoro and the
Vertical Group.
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ITEM 13. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS
VERTICAL STOCK PURCHASE AGREEMENT
Under a stock purchase agreement among us, IAT AG, IAT Germany and
Vertical Financial dated October 4, 1996, we sold an aggregate of 1,875,000
shares of Series A preferred stock and warrants to purchase 1,875,000 shares of
common stock to Vertical Financial, Behala Anstalt, Lupin Investments Services
Ltd., Henilia Financial Ltd. and Avi Suriel for an aggregate purchase price of
$1.5 million. Upon consummation of our initial public offering in April 1997 all
outstanding shares of the Series A preferred stock were converted into shares of
common stock.
The stock purchase agreement further provided that we would pay to
Vertical Financial monthly compensation of $12,000 for the services of our
Chairman nominated by Vertical Financial. Jacob Agam is the current nominee of
Vertical Financial. During fiscal 1999, Vertical Financial received $132,000 as
compensation for the services rendered by Mr. Agam to us. This Agreement
terminated in 1999.
In connection with the stock purchase agreement, we also entered into
an investor rights agreement with Vertical Financial which provides that
Vertical has the right to nominate as a member of the management slate for
election to the Board of Directors one or two persons for so long as Vertical
Financial holds at least 5% or 10%, respectively, of the 1,875,000 shares of
common stock issued by us upon conversion of our Series A preferred stock in
April 1997 or the 1,875,000 shares of common stock issuable upon exercise of the
warrants. As of December 31, 1999, Vertical Financial held 850,152 of such
shares of common stock and held warrants to purchase 690,152 shares of common
stock. We agreed that one such person will be elected Chairman of the Board of
Directors. Vertical Financial has nominated, and our stockholders have elected
Jacob Agam and Marc Goldfarb as directors, and Vertical Financial nominated and
Mr. Agam was elected as our Chairman. The Investor Rights Agreement further
provided for one demand and two piggy-back registration rights for the shares of
common stock held by Vertical Financial and issuable upon exercise of warrants
held by Vertical Financial. Vertical Financial exercised such demand for its
common stock in February 1999 and we registered for resale shares of our common
stock held by Vertical Financial and certain other stockholders.
ESCROW SHARES
Prior to our initial public offering our then stockholders deposited an
aggregate of 498,285 shares of common stock into escrow in connection with our
initial public offering. The escrow shares were not assignable or transferable.
All of the escrow shares were to be released if, for the fiscal year ending
December 31, 1999, our minimum revenues equal or exceed $12.0 million and our
income before provision for taxes equal or exceeded $1.0 million. All of the
escrow shares were to be released from escrow if one or more of the following
remaining conditions were met prior to March 31, 2000:
o the average of the closing bid prices of our common stock for
any 30 consecutive trading days commencing March 26, 1999
exceeded $13.00 per share; or
o we were acquired by or merged into another entity commencing
March 26, 1999 in a transaction in which the value of the per
share consideration received by our stockholders (after giving
effect to the release of shares from escrow) on the date of
such transaction exceeded $13.00 per share.
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On March 31, 2000, the escrow shares were canceled and contributed to our
capital.
SPINOFFS
GERMAN RESTRUCTURING. In March 1998, we transferred the business and
substantially all of the assets and the liabilities (other than intercompany
accounts) of one of our majority-owned German subsidiaries, IAT Germany, to a
newly formed German company, Algo Vision Systems. IAT Germany had provided our
research and development and was responsible for sales and marketing in Germany
of our visual communications technology. The transfer was given economic effect
at January 1, 1998. We acquired a 15% interest in Algo Vision Systems, which
interest was exchanged in July 1999 for shares of capital stock of Algo Vision
plc, an English company whose shares trade on the European Association of
Securities Dealers Automated Quotation System (EASDAQ) and the parent company of
Algo Vision Systems and Algo Vision Schweiz. See "--Algo Vision Transaction."
In connection with this transaction, we contributed approximately
$650,000 to Algo Vision Systems, which represented the excess of the book value
of the assumed liabilities over the assets transferred. We also provided Algo
Vision Systems with a working capital loan of approximately $300,000, of which
$160,000 plus interest was repaid in 1998 and the remaining $140,000 plus
interest was repaid in April 1999. Algo Vision Systems assumed substantially all
of the liabilities of IAT Germany (other than intercompany amounts). IAT Germany
represented and warranted that the liabilities assumed by Algo Vision Systems
were not to be more than the assets transferred to Algo Vision Systems and IAT
Germany agreed to pay Algo Vision Systems an amount equal to the nominal value
of such additional shortfall. We have no further obligation to make future
contributions to Algo Vision Systems.
Algo Vision Systems also assumed all rights and obligations of IAT
Germany under a credit agreement dated December 19, 1995, relating to a loan in
the aggregate principal amount of DM 750,000 (approximately $430,000).
IAT Germany agreed not to compete for a period of five years with the
present core business of Algo Vision Systems (systems, system kits and software
system solutions for visual communications) within Germany.
SWISS RESTRUCTURING. In March 1998, we also transferred the business
and certain of the assets and liabilities of IAT AG, other than, among others,
our intellectual property and the ownership interests in IAT Germany, to Algo
Vision Schweiz, a newly formed Swiss corporation. The transfer was given
economic effect at January 1, 1998. We acquired a 15% interest in Algo Vision
Schweiz, which interest was exchanged for shares of capital stock of Algo
Vision, plc in July 1999. See "--Algo Vision Transaction."
Algo Vision Schweiz gave IAT AG a three year note, denominated in U.S.
Dollars, with an aggregate principal amount equal to the book value of the
transferred assets less the book value of the assumed liabilities as of January
1, 1998 plus the pro-rata portion of any prepaid expenses and any portion of the
liabilities assumed by Algo Vision Schweiz which were paid by IAT AG prior to
the closing date of the transaction. The note had an aggregate principal amount
of approximately $325,000, which was to be reduced by the amount of certain
expenses of IAT AG to be paid by Algo Vision Schweiz. The note accrued interest
at the rate of 3% per annum, payable semi-annually on March 1 and September 1
commencing September 1, 1998. The note was payable in
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March 2001. In connection with the transaction with Algo Vision plc, Algo
Vision Schweiz repaid the note. See "--Algo Vision Transaction."
We loaned Algo Vision Schweiz $250,000 which was evidenced by a note
from Algo Vision Schweiz. This note accrued interest at the rate of 3% per
annum, payable semi-annually on March 1 and September 1 commencing September 1,
1998. The note was payable upon certain events, but no later than March 2001.
In connection with the transaction with Algo Vision plc, Algo Vision Schweiz
repaid the note. We have no further obligation to make future contributions to
Algo Vision Schweiz. See "--Algo Vision Transaction."
At the time of the transactions, an entity controlled by Dr. Viktor
Vogt, one of our former directors and an officer and a principal stockholder of
Algo Vision plc, loaned Algo Vision Schweiz $250,000. The loan accrued interest
at the rate of 3% per annum, payable semi-annually on March 1 and September 1
commencing September 1, 1998. The loan was payable on the third anniversary of
the closing date of the transaction. The loan could be pre-paid at any time
without penalty; provided, however, that the loan could not be paid prior to the
time that the loans by us to Algo Vision Schweiz were paid in full. The loan by
Dr. Vogt to Algo Vision Schweiz was subordinated to the loans made by us to Algo
Vision Schweiz. In connection with the transaction with Algo Vision, plc, Algo
Vision Schweiz repaid the note.
In connection with the restructuring, we maintained our ownership of
all intellectual property developed for our visual communications products but
granted Algo Vision Schweiz a non-exclusive five-year license to use our
intellectual property for multimedia and compression/decompression applications.
Algo Vision Schweiz had the right to grant sublicenses to Algo Vision Systems
and other affiliates. In most cases, the royalty varied between 10% and 20% of
the sales price of the software sold. Algo Vision Schweiz was granted a
five-year option to purchase a 50% co-ownership of our intellectual property for
$1 million. Upon the exercise of such option, the royalty paid by Algo Vision
Schweiz to us would be reduced by one-half and we would pay Algo Vision Schweiz
half of the royalties received by us from third-parties. In addition, after
exercise of the option, Algo Vision Schweiz could grant sub-licenses to
third-parties or transfer the license or co-ownership interest. In July 1999,
the option was transferred to and exercised by Algo Vision plc. See "--Algo
Vision Transaction."
In connection with our restructuring, Dr. Vogt resigned from his
positions as our Co-Chairman of the Board, Chief Executive Officer and President
and from management positions in our subsidiaries, but remained a director and
consultant of Spigadoro until September 1999.
ALGO VISION TRANSACTION
In July 1999, Algo Vision plc exercised its option to purchase an
ownership interest in our intellectual property and, as a result, we entered
into a series of agreements related to (i) the sale of our visual communications
intellectual property rights (other than the IAT name or mark) and (ii) the
exchange of our 15% equity interest in each of Algo Vision Systems and Algo
Vision Schweiz, for shares of capital stock of Algo Vision plc. Dr. Vogt, one of
our former directors serves as the Chairman of the Board and Chief Executive
Officer and is a principal stockholder of Algo Vision plc.
Under the terms of the agreements, Algo Vision plc purchased a 50%
interest in our visual communications intellectual property rights for
$1,000,000 in July 1999, and purchased the remaining 50% interest for an
additional $2,500,000 in August 1999. Algo Vision plc has agreed to pay us
royalties (ranging
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from 5% to 10%) on the sale of certain products utilizing the visual
communications technology purchased by them until August 2001. In connection
with the transaction, Algo Vision Schweiz repaid outstanding loans aggregating
approximately $500,000 made by us to Algo Vision Schweiz as part of the
spin-offs.
In July 1999, we also exchanged our 15% interest in each of Algo Vision
Systems and Algo Vision Schweiz for 500,000 shares of Algo Vision plc. In August
1999, as part of the transaction, we also purchased an additional 250,000 shares
of Algo Vision plc for a purchase price of $2,500,000.
In a series of transactions commencing in February 2000, we sold all of
the shares of Algo Vision plc for approximately $16.8 million.
PETRINI TRANSACTION
On December 29, 1999, under a Stock Purchase Agreement dated as of
November 3, 1999 we acquired all of the outstanding shares of common stock of
Petrini from Gruppo Spigadoro. As a result of the transaction, we changed our
name from IAT Multimedia, Inc. to Spigadoro, Inc. In consideration for the
Petrini shares, we (i) issued an aggregate of 48,366,530 shares of our common
stock, of which 12,241,400 shares were issued at Gruppo Spigadoro's request, to
Carlo Petrini to satisfy part of Gruppo Spigadoro's obligation to Mr. Petrini,
and (ii) assumed approximately $20 million of short term indebtedness of Gruppo
Spigadoro. In assuming such debt, we issued:
o a convertible promissory note to Gruppo Spigadoro in the principal amount
of approximately $6.3 million, which note accrues interest at a rate of 5%
per annum and matures upon the earlier of (i) the completion of a public
offering by us in which we realize at least $20 million of net proceeds or
(ii) December 31, 2000. The note is convertible at any time at our option
into shares of our common stock at a conversion price equal to the greater
of $2.50 or 85% of the average closing price of our common stock for the
five trading days prior to the notice of conversion. We have repaid
approximately $1.3 million of the principal amount of such note to date;
o a non-interest bearing promissory note to Mr. Petrini in the principal
amount of $1.0 million, which note was repaid in March 2000;
o a non-interest bearing promissory note to Mr. Petrini in the principal
amount of 12.05 billion Lire or approximately $5.9 million, which note
was repaid in April 2000; and
o a non-interest bearing convertible promissory note to Mr. Petrini in the
principal amount of approximately $6.2 million, which note matures on
December 31, 2000. The note is convertible at any time at Mr. Petrini's
option into shares of our common stock at a conversion price equal to the
greater of $2.50 or 85% of the average closing price of our common stock
for the five trading days prior to the notice of conversion.
Repayment of the $5.9 million and $6.2 million promissory notes by us
has been guaranteed by Gruppo Spigadoro and has been secured by 6,120,700 shares
of our common stock owned by Gruppo Spigadoro which have been placed in escrow
for the benefit of Mr. Petrini. If any of the these shares of common stock are
sold to
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satisfy our obligations under these two promissory notes, we will be required to
compensate Gruppo Spigadoro for the loss of such shares by issuing an equal
number of shares of common stock to Gruppo Spigadoro.
Under the terms of the transaction, we agreed that for so long as
Gruppo Spigadoro (or its current shareholders), their respective affiliates and
Carlo Petrini collectively hold at least:
o 50% of the outstanding shares of our common stock, Gruppo Spigadoro or its
assignees will have the right to nominate 50% of the members for election
to our Board of Directors;
o 25% of the outstanding shares of our common stock, Gruppo Spigadoro or its
assignees will have the right to nominate 25% of the members for election
to our Board of Directors;
o 10% of the outstanding shares of our common stock, Gruppo Spigadoro or its
assignees will have the right to nominate a single member for election to
our Board of Directors.
Gruppo Spigadoro has not yet nominated any members of our Board of
Directors. However, the existence of such rights increases the control over us
by Gruppo Spigadoro and its affiliates, including members of Vertical Group.
Jacob Agam, our Chairman of the Board and Chief Executive Officer, is also
Chairman of the Board of Gruppo Spigadoro and certain members of the Vertical
Group. Members of the Vertical Group have economic ownership of approximately
75% of the outstanding common stock of Gruppo Spigadoro and have the power to
vote approximately 90% of the outstanding common stock of Gruppo Spigadoro and,
as a result, the Vertical Group has the ability to vote or direct the vote of
approximately 61.8% of our outstanding common stock as of April 25, 2000. In
addition, trusts established for members of the Agam family indirectly own 100%
of Vertical Capital and Vertical Financial.
Effective upon the closing of the Petrini transaction, we added two new
members to our Board of Directors, Mr. Petrini and Lucio De Luca, both of whom
are members of Petrini's management. In addition, Mr. De Luca was appointed as
our Chief Operating Officer, effective January 1, 2000 and Mr.
Petrini was appointed as our Co-Chairman of the Board in February 2000.
ORIDA AGREEMENT
In connection with the Petrini transaction, we assumed Gruppo
Spigadoro's obligations under a consulting agreement with Orida Capital USA
under which Orida Capital has agreed to perform consulting and advisory services
for us, including identifying acquisition and investment opportunities. The
agreement expires in October 2003 and provides for an annual fee of $100,000.
The payments for 1998 and 1999 were made by Gruppo Spigadoro. Mr. Agam is the
founder and Chairman of Orida Capital Ltd., an affiliate of Orida Capital USA,
and Mr. Goldfarb, one of our directors, is President and Managing Director of
Orida Capital USA.
VERTICAL AGREEMENT
In April 2000, we entered into an agreement with Vertical Financial
under which we agreed to pay Vertical Financial $25,000 per month, plus
expenses, through December 2002, for the services of Mr. Agam as our Chairman of
the Board and Chief Executive Officer. See "--Employment Contracts and
Termination of Employment and Change-In-Control Agreements."
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EMPLOYMENT AGREEMENTS
We have entered into employment agreements with each of our executive
officers and have granted options to certain of our executive officers. See
"Executive Compensation -- Employment Contracts and Termination of Employment
and Change-in-Control Arrangements."
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SIGNATURES
In accordance with the requirements of Section 13 or 15(d) of the
Securities Exchange Act of 1934, the registrant has duly caused this report to
be signed on its behalf by the undersigned, thereunto duly authorized.
SPIGADORO, INC.
Dated April 27, 2000 By: /s/ Jacob Agam
------------------------------------
Jacob Agam
Chairman and Chief Executive Officer
Pursuant to the requirements of the Securities Exchange Act of 1934,
this report has been signed by the following persons on behalf of the registrant
and in the capacities and on the dates indicated.
SIGNATURE TITLE DATE
/s/ Jacob Agam
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Jacob Agam Chairman of the Board of Directors April 27, 2000
and Chief Executive Officer
(principal executive officer)
/s/ Klaus Grissemann
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Klaus Grissemann Chief Financial Officer and Director April 27, 2000
(principal accounting and financial
officer)
/s/ Lucio De Luca
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Lucio De Luca Chief Operating Officer and Director April 27, 2000
/s/ Marc S. Goldfarb
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Marc S. Goldfarb Director April 27, 2000
/s/ Carlo Petrini
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Carlo Petrini Co-Chairman of the Board April 27, 2000
/s/ Robert Weiss
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Robert Weiss Director April 27, 2000
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Erich Weber Director April , 2000
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