New Flyer plans to use the net proceeds of the Marcopolo investment to continue to support its future growth and diversification initiatives in accordance with the Company's strategic plan and for general corporate purposes. In May 2012 of a Joint Venture with the UK's largest bus builder, Alexander Dennis Limited, to introduce a MiDi bus in Canada and the US to both public and private operators. In August 2012 New Flyer completed its conversion from an Income Deposit Security structure to a common share corporation.
The two companies also signed a Memorandum of Understanding to explore opportunities to cooperate on engineering, technical, purchasing and operational matters, with a focus on reducing New Flyer's bus manufacturing and aftermarket part costs and enhancing New Flyer's competitiveness. The companies further agreed to assess Marcopolo's technology and products for possible introduction into the Canadian and US markets through New Flyer as well as New Flyer's technology and products for potential distribution into global markets.
The investment agreement permits Marcopolo to nominate a member to the Board of Directors of New Flyer (the "Board") while Marcopolo holds at least 10% of the outstanding common shares of New Flyer and grants Marcopolo pre-emptive rights to purchase additional securities in certain circumstances to maintain its proportionate interest in New Flyer. Marcopolo has agreed to certain disposition and standstill restrictions including a requirement to hold the shares it acquires for a period of at least two years and a restriction on acquisitions of additional New Flyer securities and certain other actions for a period of at least two years. The agreement also provides that if New Flyer in the future enters into an agreement with a third party providing for the acquisition of all of New Flyer's shares or assets, then Marcopolo will, subject to certain exceptions, agree to vote in favor of and to sell its shares as part of the transaction unless Marcopolo has made an alternative proposal that the Board believes is superior or that the shareholders have determined to accept.