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EXHIBIT 10.5.5
EXHIBIT F-1 TO NOTE AND WARRANT PURCHASE AGREEMENT
(Form of Warrant)
THIS WARRANT AND THE SHARES OF COMMON STOCK
ISSUABLE UPON EXERCISE HEREOF HAVE NOT BEEN
REGISTERED UNDER THE SECURITIES ACT OF 1933, AS
AMENDED, OR UNDER ANY STATE SECURITIES LAWS AND MAY NOT BE SOLD EXCEPT PURSUANT
TO AN EFFECTIVE REGISTRATION STATEMENT, OR AN
EXEMPTION FROM REGISTRATION, UNDER SAID ACT AND LAWS.
WARRANT TO PURCHASE
SHARES OF COMMON STOCK
OF
EASYRIDERS, INC.
Expires September __, 0000
Xxx Xxxx, Xxx Xxxx
September __, 1998
FOR VALUE RECEIVED, subject to the provisions hereinafter set forth, the
undersigned, EASYRIDERS, INC., a Delaware corporation (together with its
successors and assigns, the "Issuer"), hereby certifies that
NOMURA HOLDING AMERICA INC.
or its registered assigns is entitled to subscribe for and purchase, during the
period specified in this Warrant, 348,157 shares (subject to adjustment as
hereinafter provided) of the duly authorized, validly issued, fully paid and
non-assessable Common Stock of the Issuer, at an exercise price per share equal
to the Warrant Price then in effect, subject, however, to the provisions and
upon the terms and conditions hereinafter set forth. Capitalized terms used in
this Warrant and not otherwise defined herein shall have the respective meanings
specified in Section 7 hereof.
1. Term. The right to subscribe for and purchase shares of Warrant
Stock represented hereby shall commence on the date of issuance of this Warrant
and shall expire at 5:00 P.M., Eastern Time, on September [__], 2005 (such
period being the "Term").
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2. Method of Exercise; Payment; Issuance of New Warrant; Transfer and
Exchange.
(a) Time of Exercise. The purchase rights represented by this Warrant
may be exercised in whole or in part at any time and from time to time during
the Term.
(b) Method of Exercise. The Holder hereof may exercise this Warrant, in
whole or in part, by the surrender of this Warrant (with the exercise form
attached hereto duly executed) at the principal office of the Issuer, and by the
payment to the Issuer of an amount of consideration therefor equal to the
Warrant Price in effect on the date of such exercise multiplied by the number of
shares of Warrant Stock with respect to which this Warrant is then being
exercised, payable at such Holder's election (i) by certified or official bank
check, (ii) by surrender to the Company for cancellation of (x) first, a
Revolving Note or Revolving Notes and (y) after such time as no Revolving Notes
remain outstanding, a Term Note or Term Notes (in respect of any such Notes the
Holder shall be the sole legal and beneficial owner) to the extent of a portion
of the principal amount thereof or (at the election of the Holder) accrued and
unpaid interest thereon which is equal in the aggregate to the aggregate Warrant
Price of the shares of Warrant Stock being purchased upon such exercise (and, if
Holder makes such election, for such purposes, all interest accrued on such
Notes to the date of such exercise shall first be applied to such payment before
any of the principal amount thereof shall be so surrendered and applied), or
(iii) by surrender to the Issuer for cancellation of a portion of this Warrant
representing that number of unissued shares of Warrant Stock which is equal to
the quotient obtained by dividing (A) the product obtained by multiplying the
Warrant Price by the number of shares of Warrant Stock being purchased upon such
exercise by (B) the difference obtained by subtracting the Warrant Price from
the Current Market Price per share of Warrant Stock as of the date of such
exercise, or (iv) by a combination of the foregoing methods of payment selected
by the Holder of this Warrant. In any case where the consideration payable upon
such exercise is being paid in whole or in part pursuant to the provisions of
clause (ii) or clause (iii) of this Section 2(b), such exercise shall be
accompanied by written notice from the Holder of this Warrant specifying the
manner of payment thereof, and in the case of an application of clause (ii),
stating the respective amounts of principal and interest of the Notes to be
applied to such payment, and in the case of an application of clause (iii),
containing a calculation showing the number of shares of Warrant Stock with
respect to which rights are being surrendered thereunder and the net number of
shares to be issued after giving effect to such surrender. If, pursuant to
clause (ii) above, less than the entire unpaid principal amount of any Note
shall be applied toward payment of the consideration payable upon any exercise
of this Warrant, the Holder thereof shall surrender the Note and the Issuer
shall issue a new Note (dated the date of the Note being surrendered)
representing the balance of the unpaid principal amount of the Note so
surrendered, payable to such Holder or as such Holder may otherwise direct.
(c) Issuance of Stock Certificates. In the event of any exercise of the
rights represented by this Warrant in accordance with and subject to the terms
and conditions hereof, (i) certificates for the shares of Warrant Stock so
purchased shall be dated the date of such exercise and delivered to the Holder
hereof within a reasonable time, not exceeding three Business Days after such
exercise, and the Holder hereof shall be deemed for all purposes to be the
Holder of the shares of Warrant Stock so purchased as of the date of such
exercise, and (ii) unless this Warrant has expired, a new Warrant representing
the number of shares of Warrant Stock, if any, with respect to which this
Warrant shall not then have
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been exercised (less any amount thereof which shall have been cancelled in
payment or partial payment of the Warrant Price as hereinabove provided) shall
also be issued to the Holder hereof within such time.
(d) Transferability of Warrant. Subject to the provisions of Section
2(e) hereof, this Warrant may be transferred on the books of the Issuer by the
Holder hereof in person or by duly authorized attorney, upon surrender of this
Warrant at the principal office of the Issuer, properly endorsed (by the Holder
executing an assignment in the form attached hereto) and upon payment of any
necessary transfer tax or other governmental charge imposed upon such transfer.
This Warrant is exchangeable at the principal office of the Issuer for Warrants
for the purchase of the same aggregate number of shares of Warrant Stock, each
new Warrant to represent the right to purchase such number of shares of Warrant
Stock as the Holder hereof shall designate at the time of such exchange. All
Warrants issued on transfers or exchanges shall be dated the Closing Date and
shall be identical with this Warrant except as to the number of shares of
Warrant Stock issuable pursuant hereto.
(e) Compliance with Securities Laws.
(i) The Holder of this Warrant, by acceptance hereof,
acknowledges that this Warrant and the shares of Warrant Stock to be
issued upon exercise hereof are being acquired solely for the Holder's
own account and not as a nominee for any other party, and for
investment, and that the Holder will not offer, sell or otherwise
dispose of this Warrant or any shares of Warrant Stock to be issued
upon exercise hereof except pursuant to an effective registration
statement, or an exemption from registration, under the Securities Act
and any applicable state securities laws.
(ii) Except as provided in paragraph (iii) below, this Warrant
and all certificates representing shares of Warrant Stock issued upon
exercise hereof shall be stamped or imprinted with a legend in
substantially the following form:
THIS WARRANT AND THE SHARES OF COMMON STOCK ISSUABLE
UPON EXERCISE HEREOF HAVE NOT BEEN
REGISTERED UNDER THE SECURITIES ACT OF 1933, AS
AMENDED, OR UNDER ANY STATE SECURITIES LAWS AND MAY NOT BE SOLD EXCEPT PURSUANT
TO AN EFFECTIVE REGISTRATION STATEMENT, OR AN
EXEMPTION FROM REGISTRATION, UNDER SAID ACT AND LAWS.
(iii) The restrictions imposed by this Section 2(e) upon the
transfer of this Warrant and the shares of Warrant Stock to be
purchased upon exercise hereof shall terminate (A) when such securities
shall have been effectively registered under the Securities Act, or (B)
upon the Issuer's receipt of an opinion of counsel, in form and
substance reasonably satisfactory to the Issuer (it being understood
that in-house counsel to the Holder shall be deemed to be acceptable
counsel), addressed to the Issuer to the effect that such restrictions
are no longer required to ensure compliance with the Securities Act.
Whenever such restrictions shall cease and terminate as to any such
securities, the Holder thereof shall be entitled to receive from the
Issuer (or its transfer agent and registrar), without expense (other
than applicable transfer taxes, if any), new Warrants (or, in the case
of shares of Warrant Stock, new stock
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certificates) of like tenor not bearing the applicable legends required
by paragraph (ii) above relating to the Securities Act and state
securities laws.
(f) Continuing Rights of Holder. The Issuer will, at the time of or at
any time after each exercise of this Warrant, upon the request of the Holder
hereof or of any shares of Warrant Stock issued upon such exercise, acknowledge
in writing the extent, if any, of its continuing obligation to afford to such
Holder all rights to which such Holder shall continue to be entitled after such
exercise in accordance with the terms of this Warrant, provided that if any such
Holder shall fail to make any such request, the failure shall not affect the
continuing obligation of the Issuer to afford such rights to such Holder.
3. Stock Fully Paid; Reservation and Listing of Shares; Covenants.
(a) Stock Fully Paid. The Issuer represents, warrants, covenants and
agrees that all shares of Warrant Stock which may be issued upon the exercise of
this Warrant or otherwise hereunder will, upon issuance, be duly authorized,
validly issued, fully paid and non-assessable and free from all taxes, liens and
charges created by or through Issuer. The Issuer further covenants and agrees
that during the period within which this Warrant may be exercised, the Issuer
will at all times have authorized and reserved for the purpose of the issue upon
exercise of this Warrant a sufficient number of shares of Common Stock to
provide for the exercise of this Warrant.
(b) Reservation. If any shares of the Common Stock required to be
reserved for issuance upon exercise of this Warrant or as otherwise provided
hereunder require registration or qualification with any governmental authority
under any federal or state law before such shares may be so issued, the Issuer
will in good faith use its best efforts as expeditiously as possible at its
expense to cause such shares to be duly registered or qualified. If the Issuer
shall list any shares of Common Stock on any securities exchange it will, at its
expense, list thereon, maintain and increase when necessary such listing, of,
all shares of Warrant Stock from time to time issued upon exercise of this
Warrant or as otherwise provided hereunder, and, to the extent permissible under
the applicable securities exchange rules, all unissued shares of Warrant Stock
which are at any time issuable hereunder, so long as any shares of Common Stock
shall be so listed. The Issuer will also so list on each securities exchange,
and will maintain such listing of, any other securities which the Holder of this
Warrant shall be entitled to receive upon the exercise of this Warrant if at the
time any securities of the same class shall be listed on such securities
exchange by the Issuer.
(c) Covenants. The Issuer shall not by any action including, without
limitation, amending the Certificate of Incorporation or through any
reorganization, transfer of assets, consolidation, merger, dissolution, issue or
sale of securities or any other action, avoid or seek to avoid the observance or
performance of any of the terms of this Warrant, but will at all times in good
faith assist in the carrying out of all such terms and in the taking of all such
actions as may be necessary or appropriate to protect the rights of the Holder
hereof against impairment. Without limiting the generality of the foregoing, the
Issuer will (i) not permit the par value, if any, of its Common Stock to exceed
the then effective Warrant Price, (ii) not amend or modify any provision of the
Certificate of Incorporation or by-laws of the Issuer in any manner that would
adversely affect in any way the powers, preferences or relative participating,
optional or other special rights of the Common Stock or which would
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adversely affect the rights of the Holders of the Warrants, (iii) take all such
action as may be reasonably necessary in order that the Issuer may validly and
legally issue fully paid and nonassessable shares of Common Stock, free and
clear of any liens, claims, encumbrances and restrictions (other than as
provided herein) upon the exercise of this Warrant, and (iv) use its best
efforts to obtain all such authorizations, exemptions or consents from any
public regulatory body having jurisdiction thereof as may be reasonably
necessary to enable the Issuer to perform its obligations under this Warrant.
(d) Loss, Theft, Destruction of Warrants. Upon receipt of evidence
satisfactory to the Issuer of the ownership of and the loss, theft, destruction
or mutilation of any Warrant and, in the case of any such loss, theft or
destruction, upon receipt of indemnity or security satisfactory to the Issuer
(it being understood and agreed that if the holder of such Warrant is Nomura
Holding America Inc., then a written agreement of indemnity given by Nomura
Holding America Inc. alone shall be satisfactory to the Issuer and no further
security shall be required) or, in the case of any such mutilation, upon
surrender and cancellation of such Warrant, the Issuer will make and deliver, in
lieu of such lost, stolen, destroyed or mutilated Warrant, a new Warrant of like
tenor and representing the right to purchase the same number of shares of Common
Stock.
(e) Rights and Obligations under the Registration Rights Agreement.
This Warrant is entitled to the benefits and subject to the terms of the
Registration Rights Agreement dated as of September __, 1998 between the Issuer
and the Holders (as amended from time to time, the "Registration Rights
Agreement"). The Issuer shall keep or cause to be kept a copy of the
Registration Rights Agreement, and any amendments thereto, at its chief
executive office and shall furnish, without charge, copies thereof to the Holder
upon request.
4. Adjustment of Warrant Price and Warrant Share Number. The number and
kind of Securities purchasable upon the exercise of this Warrant and the Warrant
Price shall be subject to adjustment from time to time upon the happening of
certain events as follows:
(a) Recapitalization, Reorganization, Reclassification, Consolidation,
Merger or Sale. (i) In case the Issuer after the Closing Date shall do any of
the following (each a "Triggering Event") (a) consolidate with or merge into any
other Person and the Issuer shall not be the continuing or surviving corporation
of such consolidation or merger, or (b) permit any other Person to consolidate
with or merge into the Issuer and the Issuer shall be the continuing or
surviving Person but, in connection with such consolidation or merger, any
Capital Stock of the Issuer shall be changed into or exchanged for Securities of
any other Person or cash or any other property, or (c) transfer all or
substantially all of its properties or assets to any other Person, or (d) effect
a capital reorganization or reclassification of its Capital Stock, then, and in
the case of each such Triggering Event, proper provision shall be made so that,
upon the basis and the terms and in the manner provided in this Warrant, the
Holder of this Warrant shall be entitled (x) upon the exercise hereof at any
time after the consummation of such Triggering Event, to the extent this Warrant
is not exercised prior to such Triggering Event, or is redeemed in connection
with such Triggering Event, to receive at the Warrant Price in effect at the
time immediately prior to the consummation of such Triggering Event in lieu of
the Common Stock issuable upon such exercise of this Warrant prior to such
Triggering Event, the Securities, cash and property to which such Holder would
have been entitled upon the consummation of such Triggering Event if such Holder
had
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exercised the rights represented by this Warrant immediately prior thereto,
subject to adjustments (subsequent to such corporate action) as nearly
equivalent as possible to the adjustments provided for in Section 4 hereof or
(y) to sell this Warrant (or, at such Holder's election, a portion hereof) to
the Person continuing after or surviving such Triggering Event, or to the Issuer
(if Issuer is the continuing or surviving Person) at a sales price equal to the
amount of cash, property and/or Securities to which a holder of the number of
shares of Common Stock which would otherwise have been delivered upon the
exercise of this Warrant would have been entitled upon the effective date or
closing of any such Triggering Event (the "Event Consideration"), less the
amount or portion of such Event Consideration having a fair value equal to the
aggregate Warrant Price applicable to this Warrant or the portion hereof so
sold.
(ii) Notwithstanding anything contained in this Warrant to the
contrary, the Issuer will not effect any Triggering Event unless, prior to the
consummation thereof, each Person (other than the Issuer) which may be required
to deliver any Securities, cash or property upon the exercise of this Warrant as
provided herein shall assume, by written instrument delivered to, and reasonably
satisfactory to, the Holder of this Warrant, (a) the obligations of the Issuer
under this Warrant (and if the Issuer shall survive the consummation of such
Triggering Event, such assumption shall be in addition to, and shall not release
the Issuer from, any continuing obligations of the Issuer under this Warrant)
and (b) the obligation to deliver to such Holder such shares of Securities, cash
or property as, in accordance with the foregoing provisions of this Section
4(a), such Holder shall be entitled to receive, and such Person shall have
similarly delivered to such Holder an opinion of counsel for such Person, which
counsel shall be reasonably satisfactory to such Holder, stating that this
Warrant shall thereafter continue in full force and effect and the terms hereof
(including, without limitation, all of the provisions of this paragraph (a))
shall be applicable to the Securities, cash or property which such Person may be
required to deliver upon any exercise of this Warrant or the exercise of any
rights pursuant hereto.
(iii) If with respect to any Triggering Event, the Holder of this
Warrant has exercised its right as provided in clause (y) of subparagraph (i) of
this Section 4(a) to sell this Warrant or a portion thereof, the Issuer agrees
that as a condition to the consummation of any such Triggering Event the Issuer
shall secure such right of Holder to sell this Warrant to the Person continuing
after or surviving such Triggering Event and the Issuer shall not effect any
such Triggering Event unless upon or prior to the consummation thereof the
amounts of cash, property and/or Securities required under such clause (y) are
delivered to the Holder of this Warrant. The obligation of the Issuer to secure
such right of the Holder to sell this Warrant shall be subject to such Holder's
cooperation with the Issuer, including, without limitation, the giving of
customary representations and warranties to the purchaser in connection with any
such sale. Prior notice of any Triggering Event shall be given to the Holder of
this Warrant in accordance with Section 11 hereof.
(b) Subdivision or Combination of Shares. If the Issuer, at any time
while this Warrant is outstanding, shall subdivide or combine any shares of
Common Stock, (i) in case of subdivision of shares, the Warrant Price shall be
proportionately reduced (as at the effective date of such subdivision or, if the
Issuer shall take a record of Holders of its Common Stock for the purpose of so
subdividing, as at the applicable record date, whichever is earlier) to reflect
the increase in the total number of shares of Common Stock outstanding as a
result of such subdivision, or (ii) in the case of a combination of shares, the
Warrant
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Price shall be proportionately increased (as at the effective date of such
combination or, if the Issuer shall take a record of Holders of its Common Stock
for the purpose of so combining, as at the applicable record date, whichever is
earlier) to reflect the reduction in the total number of shares of Common Stock
outstanding as a result of such combination.
(c) Certain Dividends and Distributions. If the Issuer, at any time
while this Warrant is outstanding, shall:
(i) Stock Dividends. Pay a dividend in, or make any other
distribution to its stockholders (without consideration therefor) of,
shares of Common Stock, the Warrant Price shall be adjusted, as at the
date the Issuer shall take a record of the Holders of the Issuer's
Capital Stock for the purpose of receiving such dividend or other
distribution (or if no such record is taken, as at the date of such
payment or other distribution), to that price determined by multiplying
the Warrant Price in effect immediately prior to such record date (or
if no such record is taken, then immediately prior to such payment or
other distribution), by a fraction (1) the numerator of which shall be
the total number of shares of Common Stock outstanding immediately
prior to such dividend or distribution, and (2) the denominator of
which shall be the total number of shares of Common Stock outstanding
immediately after such dividend or distribution (plus in the event that
the Issuer paid cash for fractional shares, the number of additional
shares which would have been outstanding had the Issuer issued
fractional shares in connection with said dividends); or
(ii) Liquidating Dividends, etc. Make a distribution of its
property to the Holders of its Common Stock as a dividend in
liquidation or partial liquidation or by way of return of capital other
than as a dividend payable out of funds legally available for dividends
under the laws of the State of Delaware, the Holder of this Warrant
shall, upon exercise (including without limitation payment of the
Warrant Price), be entitled to receive, in addition to the number of
shares of Warrant Stock receivable thereupon, and without payment of
any additional consideration therefor, a sum equal to the amount of
such property as would have been payable to such Holder had such Holder
been the Holder of record of such Warrant Stock on the record date for
such distribution or if no such record is taken, on the date of such
distribution; and appropriate provision therefor shall be made a part
of any such distribution, or
(iii) Other Dividends. Make a distribution of cash or property
to the Holders of its Common Stock (other than as described in clause
(i) or (ii) of this Section 4(c)), the Issuer shall give the Holder of
this Warrant notice no less than 30 days prior to the record date for
such distribution or if no such record is taken, the date of such
distribution, which notice shall describe the nature of the proposed
distribution.
(d) Issuance of Additional Shares of Common Stock. If the Issuer, at
any time while this Warrant is outstanding, shall issue any Additional Shares of
Common Stock (otherwise than as provided in the foregoing subsections (a)
through (c) of this Section 4), at a price per share less than the Current
Market Price then in effect or (at any time after September __, 1999) less than
the Warrant Price then in effect, or at any time without consideration, then the
Warrant Price upon each such issuance shall be adjusted to that price
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(rounded to the nearest cent) determined by multiplying the Warrant Price then
in effect by a fraction:
(i) the numerator of which shall be equal to the sum of (A)
the number of shares of Common Stock outstanding immediately prior to
the issuance of such Additional Shares of Common Stock plus (B) the
number of shares of Common Stock (rounded to the nearest whole share)
which the aggregate consideration for the total number of such
Additional Shares of Common Stock so issued would purchase at a price
per share equal to the Current Market Price then in effect or (at any
time after September __, 1999), if greater, the Warrant Price then in
effect, and
(ii) the denominator of which shall be equal to the number of
shares of Common Stock outstanding immediately after the issuance of
such Additional Shares of Common Stock.
The provisions of this subsection (d) shall not apply under any of the
circumstances for which an adjustment is provided in subsections (a), (b) or (c)
of this Section 4. No adjustment of the Warrant Price shall be made under this
subsection (d) upon the issuance of any Additional Shares of Common Stock which
are issued pursuant to any Common Stock Equivalent if upon the issuance of such
Common Stock Equivalent (x) any adjustment shall have been made pursuant to
subsection (e) of this Section 4 or (y) no adjustment was required pursuant to
subsection (e) of this Section 4.
(e) Issuance of Common Stock Equivalents. If the Issuer, at any time
while this Warrant is outstanding, shall issue any Common Stock Equivalent and
the price per share for which Additional Shares of Common Stock may be issuable
thereafter pursuant to such Common Stock Equivalent shall be less than the
Current Market Price then in effect or (at any time after September __, 1999)
less than the Warrant Price then in effect, or if, after any such issuance of
Common Stock Equivalents, the price per share for which Additional Shares of
Common Stock may be issuable thereafter pursuant to such Common Stock Equivalent
is amended or adjusted, and such price as so amended shall be less than the
Current Market Price or (at any time after September __, 1999) less than the
Warrant Price, in each case in effect at the time of such amendment, then the
Warrant Price upon each such issuance or amendment shall be adjusted as provided
in the first sentence of subsection (d) of this Section 4 on the basis that (1)
the maximum number of Additional Shares of Common Stock issuable pursuant to all
such Common Stock Equivalents shall be deemed to have been issued (whether or
not such Common Stock Equivalents are actually then exercisable, convertible or
exchangeable in whole or in part) as of the earlier of (A) the date on which the
Issuer shall enter into a firm contract for the issuance of such Common Stock
Equivalent, or (B) the date of actual issuance of such Common Stock Equivalent,
and (2) the aggregate consideration for such maximum number of Additional Shares
of Common Stock shall be deemed to be the minimum consideration received or
receivable by the Issuer for the issuance of such Additional Shares of Common
Stock pursuant to such Common Stock Equivalent. No adjustment of the Warrant
Price shall be made under this subsection (e) upon the issuance of any
Convertible Security which is issued pursuant to the exercise of any warrants or
other subscription or purchase rights therefor, if any adjustment shall
previously have been made in the Warrant Price then in effect upon the issuance
of such warrants or other rights pursuant to this subsection (e). If no
adjustment is required under this subsection (e) upon issuance of any Common
Stock Equivalent or once an adjustment is made under
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this subsection (e) based upon the Current Market Price in effect on the date of
such adjustment, no further adjustment shall be made under this subsection (e)
based solely upon a change in the Current Market Price after such date.
(f) Purchase of Common Stock by the Issuer. If the Issuer at any time
while this Warrant is outstanding shall, directly or indirectly through a
Subsidiary or otherwise, purchase, redeem or otherwise acquire any shares of
Common Stock at a price per share greater than the Current Market Price then in
effect, then the Warrant Price upon each such purchase, redemption or
acquisition shall be adjusted to that price determined by multiplying such
Warrant Price by a fraction (i) the numerator of which shall be the number of
shares of Common Stock outstanding immediately prior to such purchase,
redemption or acquisition minus the number of shares of Common Stock which the
aggregate consideration for the total number of such shares of Common Stock so
purchased, redeemed or acquired would purchase at the Current Market Price; and
(ii) the denominator of which shall be the number of shares of Common Stock
outstanding immediately after such purchase, redemption or acquisition. For the
purposes of this subsection (f), the date as of which the Current Market Price
shall be computed shall be the earlier of (x) the date on which the Issuer shall
enter into a firm contract for the purchase, redemption or acquisition of such
Common Stock, or (y) the date of actual purchase, redemption or acquisition of
such Common Stock. For the purposes of this subsection (f), a purchase,
redemption or acquisition of a Common Stock Equivalent shall be deemed to be a
purchase of the underlying Common Stock, and the computation herein required
shall be made on the basis of the full exercise, conversion or exchange of such
Common Stock Equivalent on the date as of which such computation is required
hereby to be made, whether or not such Common Stock Equivalent is actually
exercisable, convertible or exchangeable on such date.
(g) Other Provisions Applicable to Adjustments Under this Section 4.
The following provisions shall be applicable to the making of adjustments in the
Warrant Price hereinbefore provided in Section 4:
(i) Computation of Consideration. The consideration received
by the Issuer shall be deemed to be the following: to the extent that
any Additional Shares of Common Stock or any Common Stock Equivalents
shall be issued for a cash consideration, the consideration received by
the Issuer therefor, or if such Additional Shares of Common Stock or
Common Stock Equivalents are offered by the Issuer for subscription,
the subscription price, or, if such Additional Shares of Common Stock
or Common Stock Equivalents are sold to underwriters or dealers for
public offering without a subscription offering, the public offering
price, in any such case excluding any amounts paid or receivable for
accrued interest or accrued dividends and without deduction of any
compensation, discounts, commissions, or expenses paid or incurred by
the Issuer for or in connection with the underwriting thereof or
otherwise in connection with the issue thereof; to the extent that such
issuance shall be for a consideration other than cash, then, except as
herein otherwise expressly provided, the fair market value of such
consideration at the time of such issuance as determined in good faith
by the Board. The consideration for any Additional Shares of Common
Stock issuable pursuant to any Common Stock Equivalents shall be the
consideration received by the Issuer for issuing such Common Stock
Equivalents, plus the additional consideration payable to the Issuer
upon the exercise, conversion or exchange of such Common Stock
Equivalents. In case of the issuance at any time of
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any Additional Shares of Common Stock or Common Stock Equivalents in
payment or satisfaction of any dividend upon any class of Capital Stock
of the Issuer other than Common Stock, the Issuer shall be deemed to
have received for such Additional Shares of Common Stock or Common
Stock Equivalents a consideration equal to the amount of such dividend
so paid or satisfied. In any case in which the consideration to be
received or paid shall be other than cash, the Board shall notify the
Holder of this Warrant of its determination of the fair market value of
such consideration prior to payment or accepting receipt thereof. If,
within thirty days after receipt of said notice, the Majority Holders
shall notify the Board in writing of their objection to such
determination, a determination of the fair market value of such
consideration shall be made by an Independent Appraiser selected by the
Majority Holders with the approval of the Board (which approval shall
not be unreasonably withheld), whose fees and expenses shall be paid by
the Issuer.
(ii) Readjustment of Warrant Price. Upon the expiration or
termination of the right to convert, exchange or exercise any Common
Stock Equivalent the issuance of which effected an adjustment in the
Warrant Price, if such Common Stock Equivalent shall not have been
converted, exercised or exchanged in its entirety, the number of shares
of Common Stock deemed to be issued and outstanding by reason of the
fact that they were issuable upon conversion, exchange or exercise of
any such Common Stock Equivalent shall no longer be computed as set
forth above, and the Warrant Price shall forthwith be readjusted and
thereafter be the price which it would have been (but reflecting any
other adjustments in the Warrant Price made pursuant to the provisions
of this Section 4 after the issuance of such Common Stock Equivalent)
had the adjustment of the Warrant Price been made in accordance with
the issuance or sale of the number of Additional Shares of Common Stock
actually issued upon conversion, exchange or issuance of such Common
Stock Equivalent and thereupon only the number of Additional Shares of
Common Stock actually so issued shall be deemed to have been issued and
only the consideration actually received by the Issuer (computed as in
clause (i) of this subsection (g)) shall be deemed to have been
received by the Issuer.
(iii) Outstanding Common Stock. The number of shares of Common
Stock at any time outstanding shall (a) not include any shares thereof
then directly or indirectly owned or held by or for the account of the
Issuer or any of its Subsidiaries, and (b) shall be deemed to include
all shares of Common Stock then issuable upon conversion, exercise or
exchange of any then outstanding Common Stock Equivalents or any other
evidences of Indebtedness, shares of Capital Stock or other Securities
which are or may be at any time convertible into or exchangeable for
shares of Common Stock or Other Common Stock.
(h) Other Action Affecting Common Stock. In case after the Closing Date
hereof the Issuer shall take any action affecting its Common Stock, other than
an action described in any of the foregoing subsections (a) through (g) of this
Section 4, inclusive, and the failure to make any adjustment would not fairly
protect the purchase rights represented by this Warrant in accordance with the
essential intent and principle of this Section 4, then the Warrant Price shall
be adjusted in such manner and at such time as the Board may in good faith
determine to be equitable in the circumstances.
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(i) Adjustment of Warrant Share Number. Upon each adjustment in the
Warrant Price pursuant to any of the foregoing provisions of this Section 4, the
Warrant Share Number shall be adjusted, to the nearest one hundredth of a whole
share, to the product obtained by multiplying the Warrant Share Number
immediately prior to such adjustment in the Warrant Price by a fraction, the
numerator of which shall be the Warrant Price immediately before giving effect
to such adjustment and the denominator of which shall be the Warrant Price
immediately after giving effect to such adjustment. If the Issuer shall be in
default under any provision contained in Section 3 of this Warrant so that
shares issued at the Warrant Price adjusted in accordance with this Section 4
would not be validly issued, the adjustment of the Warrant Share Number provided
for in the foregoing sentence shall nonetheless be made and the Holder of this
Warrant shall be entitled to purchase such greater number of shares at the
lowest price at which such shares may then be validly issued under applicable
law. Such exercise shall not constitute a waiver of any claim arising against
the Issuer by reason of its default under Section 3 of this Warrant.
5. Notice of Adjustments. Whenever the Warrant Price or Warrant Share
Number shall be adjusted pursuant to Section 4 hereof (for purposes of this
Section 5, each an "adjustment"), the Issuer shall cause its Chief Financial
Officer to prepare and execute a certificate setting forth, in reasonable
detail, the event requiring the adjustment, the amount of the adjustment, the
method by which such adjustment was calculated (including a description of the
basis on which the Board made any determination hereunder), and the Warrant
Price and Warrant Share Number after giving effect to such adjustment, and shall
cause copies of such certificate to be delivered to the Holder of this Warrant
promptly after each adjustment. Any dispute between the Issuer and the Holder of
this Warrant with respect to the matters set forth in such certificate may at
the option of the Holder of this Warrant be submitted to a "big six" national
accounting firm selected by the Holder, provided that the Issuer shall have ten
days after receipt of notice from such Holder of its selection of such firm to
object thereto, in which case such Holder shall select another such firm and the
Issuer shall have no such right of objection. The firm selected by the Holder of
this Warrant as provided in the preceding sentence shall be instructed to
deliver a written opinion as to such matters to the Issuer and such Holder
within thirty days after submission to it of such dispute. Such opinion shall be
final and binding on the parties hereto. The fees and expenses of such
accounting firm shall be paid by the Issuer.
6. Fractional Shares. No fractional shares of Warrant Stock will be
issued in connection with and exercise hereof, but in lieu of such fractional
shares, the Issuer shall make a cash payment therefor equal in amount to the
product of the applicable fraction multiplied by the Current Market Price then
in effect.
7. Definitions. For the purposes of this Warrant, the following terms
have the following meanings:
"Additional Shares of Common Stock" means all shares of Common
Stock issued by the Issuer after the Closing Date, and all shares of
Other Common, if any, issued by the Issuer after the Closing Date,
except (i) Warrant Stock, (ii) any shares of Common Stock issuable upon
exercise of the Outstanding Common Stock Equivalents (other than those
issued pursuant to the Issuer's 1998 Executive Incentive Compensation
Plan) provided that the number of shares excluded by reason of this
clause (ii) shall be limited to [____] and (iii) any shares of Common
Stock
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issuable upon exercise of the Common Stock Equivalents issued pursuant
to the Issuer's 1998 Executive Incentive Compensation Plan, provided
that the number of shares excluded by reason of this clause (iii) shall
be limited to 2,800,000.
"Board" shall mean the Board of Directors of the Issuer.
"Business Day" means any day except a Saturday, a Sunday or a
legal holiday in New York City.
"Capital Stock" means and includes (i) any and all shares,
interests, participations or other equivalents of or interests in
(however designated) corporate stock, including, without limitation,
shares of preferred or preference stock and any "phantom" stock rights,
(ii) all partnership interests (whether general or limited) in any
Person which is a partnership, (iii) all membership interests or
limited liability company interests in any limited liability company,
and (iv) all equity or ownership interests in any Person of any other
type.
"Certificate of Incorporation" means the Certificate of
Incorporation of the Issuer as in effect on the Closing Date as
hereafter from time to time amended, modified, supplemented or restated
in accordance with the terms hereof and thereof and pursuant to
applicable law.
"Closing Date" means September , 1998.
"Common Stock" means the Common Stock, no par value, of the
Issuer and any other Capital Stock into which any such stock may
hereafter be changed.
"Common Stock Equivalent" means any Convertible Security or
warrant, option or other right to subscribe for or purchase any
Additional Shares of Common Stock or any Convertible Security.
"Company" means Paisano Publications, Inc., a Delaware
corporation and wholly-owned Subsidiary of the Issuer.
"Convertible Securities" means evidences of Indebtedness,
shares of Capital Stock or other Securities which are or may be at any
time convertible into or exchangeable for Additional Shares of Common
Stock. The term "Convertible Security" means one of the Convertible
Securities.
"Current Market Price" as in effect on any day means the
average of the daily market prices of the Common Stock for the period
of 30 consecutive trading days ending three trading days preceding such
date. The market price for each such day shall be the last sale price
on such day as reported on the New York Stock Exchange Consolidated
Tape, or, if the Common Stock is not listed on the New York Stock
Exchange, Inc. or reported on such Consolidated Tape, then the last
sale price on such day on the principal domestic stock exchange on
which such Stock is then listed or admitted to trading, or, if no sale
takes place on such day on such exchange, the average of the closing
bid and asked prices on such day as officially quoted on such exchange,
or, if the Common Stock is not then listed or admitted to trading on
any
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domestic stock exchange but is quoted in the Nasdaq Stock Markets
National Market System ("NMS/NASDAQ") of the National Association of
Securities Dealers, Inc. Automated Quotation System ("NASDAQ"), then
the Current Market Price for each such trading day shall be the last
sale price on such day as quoted by NMS/NASDAQ, or, if no sale takes
place on such day or if the Common Stock is neither listed or admitted
to trading on any domestic stock exchange nor quoted on such
NMS/NASDAQ, then the Current Market Price for each such trading day
shall be the average of the reported closing bid and asked price
quotations on such day in the over-the-counter market, as reported by
NASDAQ, or, if not so reported, as furnished by the National Quotation
Bureau, Inc., or if such firm at the time is not engaged in the
business of reporting such prices, as furnished by any similar firm
then engaged in such business as selected by the Issuer, or if there is
no such firm, as furnished by any member of the National Association of
Securities Dealers, Inc. selected by the Issuer with the written
approval of the Majority Holders. If at any time the Common Stock is
not listed on any domestic exchange or quoted in the domestic
over-the-counter market, the Current Market Price shall be deemed to be
an amount determined in good faith by the Board and agreed upon in
writing by the Majority Holders within fifteen days of notice by the
Board to the Holders of its determination of the Current Market Price.
If no agreement as to Current Market Price is so reached, the Current
Market Price shall be the fair market value per share of Common Stock
as determined by an Independent Appraiser selected by the Majority
Holders and consented to by the Issuer (which consent shall not be
unreasonably withheld), whose fees and expenses shall be paid by the
Issuer. The determination of fair market value by such Appraiser shall
be based upon the fair market value of the Issuer determined on a going
concern basis as between a willing buyer and a willing seller and
taking into account all relevant factors determinative of value, and
shall be final and binding on all parties. In determining the fair
market value of any shares of Common Stock, no consideration shall be
given to any restrictions on transfer of the Common Stock imposed by
agreement or by federal or state securities laws, or to the existence
or absence of, or any limitations on, voting rights.
"Exchange Act" means the Securities Exchange Act of 1934, as
amended, or any similar federal statute at the time in effect.
"Holders" mean the Persons who shall from time to time own any
Warrant. The term "Holder" means one of the Holders.
"Indebtedness" has the meaning provided in the Note Agreement.
"Independent Appraiser" means a nationally recognized
investment banking firm or other nationally recognized firm that is
regularly engaged in the business of appraising the Capital Stock or
assets of corporations or other entities as going concerns, and which
is not affiliated with either the Issuer or the Holder of any Warrant.
"Issuer" means Easyriders, Inc., a Delaware corporation, and
its successors.
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"Majority Holders" means at any time the Holders of Warrants
exercisable for a majority of the shares of Warrant Stock issuable
under the Warrants at the time outstanding.
"Notes" means the notes of the Company issued pursuant to the
Note Agreement.
"Note Agreement" means the Note and Warrant Purchase
Agreement, dated as of September [__], 1998 among the Issuer, the
Company and Nomura Holding America Inc., as purchaser, as such
agreement may from time to time be amended, modified or supplemented in
accordance with its terms.
"Other Common" means any Capital Stock of the Issuer of any
class which shall be authorized at any time after the date of this
Warrant (other than Common Stock) and which shall have the right to
participate in the distribution of earnings and assets of the Issuer
without limitation as to amount.
"Outstanding Common Stock Equivalents" means the Common Stock
Equivalents outstanding on the Closing Date and listed on Schedule 1
hereto.
"Person" means an individual, a corporation, a partnership, a
trust, an unincorporated organization or a government organization or
an agency or political subdivision thereof.
"Securities" means any debt or equity securities of the
Issuer, whether now or hereafter authorized, any instrument convertible
into or exchangeable for Securities or a Security, and any option,
warrant or other right to purchase or acquire any Security.
"Security" means one of the Securities.
"Securities Act" means the Securities Act of 1933, as amended,
or any similar federal statute then in effect.
"Subsidiary" means any corporation at least 50% of whose
outstanding Voting Stock shall at the time be owned directly or
indirectly by the Issuer or by one or more of its Subsidiaries, or by
the Issuer and one or more of its Subsidiaries.
"Term" has the meaning specified in Section 1 hereof.
"Voting Stock", as applied to the Capital Stock of any
corporation, means Capital Stock of any class or classes (however
designated) having ordinary voting power for the election of a majority
of the members of the Board of Directors (or other governing body) of
such corporation, other than Capital Stock having such power only by
reason of the happening of a contingency.
"Warrants" means the Warrants issued and sold pursuant to the
Note Agreement, including, without limitation, this Warrant, and any
other warrants of like tenor issued in substitution or exchange for any
thereof pursuant to the provisions of Section 2(c), 2(d) or 2(e) hereof
or of any of such other Warrants.
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"Warrant Price" means initially $3.00 and such other prices as
shall result from the adjustments specified in Section 4 hereof.
"Warrant Share Number" means at any time the aggregate number
of shares of Warrant Stock which may at such time be purchased upon
exercise of this Warrant, after giving effect to all prior adjustments
to such number made or required to be made under the terms hereof.
"Warrant Stock" means Common Stock issuable upon exercise of
any Warrant or Warrants or otherwise issuable pursuant to any Warrant
or Warrants.
8. Information. The Issuer shall deliver to the Holder hereof and to
each holder of shares of Warrant Stock (i) if the Issue is subject to reporting
requirements under the Exchange Act, copies of all regular and periodic reports
and registration statements (other than on Form S-8 or similar form) which the
Issuer may file with the SEC or any securities exchange, or (ii) in all other
circumstances, the documents and other information required under paragraphs
(a), (b)(i), (c)(i), (e), (f), and (g) of Section 7 of the Note Agreement within
the applicable time period specified therein and regardless of whether or not
the Note Agreement is then in effect or the Term has expired.
9. Amendment and Waiver. Any term, covenant, agreement or condition in
this Warrant may be amended, or compliance therewith may be waived (either
generally or in a particular instance and either retroactively or
prospectively), by a written instrument or written instruments executed by the
Issuer and the Majority Holders; provided, however, that no such amendment or
waiver shall reduce the Warrant Share Number, increase the Warrant Price,
shorten the period during which this Warrant may be exercised or modify any
provision of this Section 9 without the consent of the Holder of this Warrant.
10. Governing Law. THIS WARRANT SHALL BE GOVERNED BY AND CONSTRUED IN
ACCORDANCE WITH THE LAWS OF THE STATE OF NEW YORK.
11. Notices. All notices and other communications provided for
hereunder shall be in writing and delivered by hand or sent by first class mail
or sent by telecopy (with such telecopy to be confirmed promptly in writing sent
by first class mail), and if to the Holder of this Warrant or of Warrant Stock
issued pursuant hereto, addressed to such Holder at its last known address or
telecopy number appearing on the books of the Issuer maintained for such
purposes, and if to the Issuer, addressed to:
Easyriders, Inc
000 Xxx Xxxxxxxx Xxxxx
Xxxxx 000
Xxxxxxx Xxxxx, Xxxxxxxxxx 00000
Attention: President
Telecopy No.: (000) 000-0000
or to such other address or addresses or telecopy number or numbers as any such
party may most recently have designated in writing to the other parties hereto
by such notice. All such communications shall be deemed to have been given or
made when so delivered by hand or sent by telecopy, or three business days after
being so mailed.
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12. Remedies. The Issuer stipulates that the remedies at law of the
Holder of this Warrant in the event of any default or threatened default by the
Issuer in the performance of or compliance with any of the terms of this Warrant
are not and will not be adequate and that, to the fullest extent permitted by
law, such terms may be specifically enforced by a decree for the specific
performance of any agreement contained herein or by an injunction against a
violation of any of the terms hereof or otherwise.
13. Successors and Assigns. This Warrant and the rights evidenced
hereby shall inure to the benefit of and be binding upon the successors and
assigns of the Issuer, the Holder hereof and (to the extent provided herein) the
Holders of Warrant Stock issued pursuant hereto, and shall be enforceable by any
such Holder or Holder of Warrant Stock
14. Modification and Severability. If, in any action before any court
or agency legally empowered to enforce any provision contained herein, any
provision hereof is found to be unenforceable, then such provision shall be
deemed modified to the extent necessary to make it enforceable by such court or
agency. If any such provision is not enforceable as set forth in the preceding
sentence, the unenforceability of such provision shall not affect the other
provisions of this Warrant, but this Warrant shall be construed as if such
unenforceable provision had never been contained herein.
15. Integration. This Warrant and the other Warrants issued pursuant to
the Note Agreement replace all prior agreements, supersede all prior
negotiations and constitute the entire agreement of the parties with respect to
the transactions contemplated herein. References to the Note Agreement herein
shall, to the extent that the Notes and other obligations thereunder have been
repaid and such Note Agreement has terminated, mean the Note Agreement as in
effect immediately prior to its termination.
16. Headings. The headings of the Sections of this Warrant are for
convenience of reference only and shall not, for any purpose, be deemed a part
of this Warrant.
EASYRIDERS, INC.
By: _______________________________
Its President
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EXERCISE FORM
EASYRIDERS, INC.
The undersigned _________________, pursuant to the provisions of the within
Warrant, hereby elects to purchase ______ shares of Common Stock of EASYRIDERS,
INC. covered by the within Warrant.
Dated: _____________ Signature ___________________________________________
Address _______________________________
_______________________________
ASSIGNMENT
FOR VALUE RECEIVED, ________________ hereby sells, assigns and transfers unto
_______________ the within Warrant and all rights evidenced thereby and does
irrevocably constitute and appoint _______________, attorney, to transfer the
said Warrant on the books of the within named corporation.
Dated: _____________ Signature ___________________________________________
Address _______________________________
_______________________________
PARTIAL ASSIGNMENT
FOR VALUE RECEIVED, __________________ hereby sells, assigns and transfers unto
_________________ the right to purchase ________ shares of Warrant Stock
evidenced by the within Warrant together with all rights therein, and does
irrevocably constitute and appoint _____________________, attorney, to transfer
that part of the said Warrant on the books of the within named corporation.
Dated: _____________ Signature ___________________________________________
Address _______________________________
_______________________________
FOR USE BY THE ISSUER ONLY:
This Warrant No. W-____ cancelled (or transferred or exchanged) this ___ day
of__________, 19_, shares of Common Stock issued therefor in the name of
___________________, Warrant No. W-____ issued for _____ shares of Common Stock
in the name of_______________________
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Schedule 1
OUTSTANDING COMMON STOCK EQUIVALENTS
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