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UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
AMENDMENT NO. 1
SCHEDULE 13D
UNDER THE SECURITIES EXCHANGE ACT OF 1934*
EASYRIDERS, INC.
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(Name of Issuer)
COMMON STOCK, $.001 par value
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(Title of Class of Securities)
277848 1 0 7
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(CUSIP Number)
John E. Martin
567 San Nicolas Drive, Suite 400
Newport Beach, California 92660
Telephone: (949) 718-4630
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(Name, Address and Telephone Number of Person
Authorized to Receive Notices and Communications)
September 23, 1998
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(Date of Event which Requires Filing of this Statement)
If the filing person has previously filed a statement on Schedule 13G
to report the acquisition which is the subject of this Schedule 13D, and is
filing this schedule because of Section 240.13d-1(e), 240.13d-1(f) or
240.13d-1(g), check the following box [ ].
NOTE: Schedules filed in paper format shall include a signed original and five
copies of the schedule, including all exhibits. See Section 240.13d-7(b) for
other parties to whom copies are to be sent.
*The remainder of this cover page shall be filled out for a reporting person's
initial filing on this form with respect to the subject class of securities, and
for any subsequent amendment containing information which would alter
disclosures provided in a prior cover page.
The information required on the remainder of this cover page shall not be deemed
to be "filed" for the purpose of Section 18 of the Securities Exchange Act of
1934 ("Act") or otherwise subject to the liabilities of that section of the Act
but shall be subject to all other provisions of the Act (however, see the
Notes).
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SCHEDULE 13D
CUSIP No. 277848 1 0 7
(1) NAME OF REPORTING PERSONS
I.R.S. IDENTIFICATION NOS. OF ABOVE PERSONS (entities only)
John E. Martin
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(2) CHECK THE APPROPRIATE BOX IF A MEMBER OF A GROUP (a) [ X ]
(See Instructions) (b) [ ]
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(3) SEC USE ONLY
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(4) SOURCE OF FUNDS (See Instructions)
PF and OO
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(5) CHECK BOX IF DISCLOSURE OF LEGAL PROCEEDINGS
IS REQUIRED PURSUANT TO ITEMS 2(d) OR 2(e) [ ]
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(6) CITIZENSHIP OR PLACE OF ORGANIZATION
United States
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(7) SOLE VOTING POWER -0-
NUMBER OF
SHARES --------------------------------------------------------
BENEFICIALLY (8) SHARED VOTING POWER 5,282,947
OWNED BY
EACH --------------------------------------------------------
REPORTING (9) SOLE DISPOSITIVE POWER 5,282,947
PERSON WITH
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(10) SHARED DISPOSITIVE POWER -0-
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(11) AGGREGATE AMOUNT BENEFICIALLY OWNED BY EACH REPORTING PERSON
5,282,947 shares
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(12) CHECK BOX IF AGGREGATE AMOUNT IN ROW (11) EXCLUDES CERTAIN
SHARES (See Instructions) [X]
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(13) PERCENT OF CLASS REPRESENTED BY AMOUNT IN ROW (11)
26.6%
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(14) TYPE OF REPORTING PERSON (See Instructions)
IN
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SCHEDULE 13D
Item 1. Security and Issuer
Common Stock, $.001 par value ("Common Stock"), of Easyriders, Inc. (the
"Company"). The Company's principal executive offices are located at 28210
Dorothy Drive, Agoura Hills, California 91301.
Item 2. Identity and Background
This statement is filed by John E. Martin ("Mr. Martin"). The residence
address of Mr. Martin is 18931 Glenmont Terrace, Irvine, California 92715.
The present principal occupation or employment of Mr. Martin, and the
name, principal business and address of any corporation or other organization
in which such employment is conducted are: Mr. Martin is the Chairman of the
Board of Directors of the Company. The principal business address of the
Company is 28210 Dorothy Drive, Agoura Hills, California 91301.
During the last five years, Mr. Martin has not: (a) been convicted in a
criminal proceeding (excluding traffic violations or similar misdemeanors), or
(b) been a party to a civil proceeding of a judicial or administrative body of
competent jurisdiction and as a result of such proceeding such person was or is
subject to a judgment, decree or final order enjoining future violations of, or
prohibiting or mandating activities subject to, federal or state securities
laws or finding any violation with respect to such laws.
Mr. Martin is a United States citizen.
Item 3. Source and Amount of Funds or Other Consideration
The shares referred to in Item 5(a) below as being beneficially owned by
Mr. Martin were acquired by Mr. Martin in the following transactions:
(a) pursuant to a reorganization transaction in which Newriders, Inc., a
Nevada corporation ("Newriders"), became a wholly-owned subsidiary of the
Company, Mr. Martin exchanged 242,300 shares of Newriders common stock for
121,150 shares of the Company's common stock, and Mr. Martin exchanged a
warrant to purchase up to 250,000 shares of Newriders common stock presently
exercisable at $4.00 per share for a warrant to purchase up to 125,000 shares
of the Company's common stock presently exercisable at $8.00 per share. Mr.
Martin had previously acquired 192,300 shares of Newriders common stock
(equivalent to 96,150 shares of the Company's common stock) through the use of
his own personal funds, and the balance of 50,000 shares of Newriders common
stock (equivalent to 25,000 shares of the Company's common stock) were issued
to Mr. Martin in 1997 for his agreement to serve as the Chairman of the Board
of Directors of Newriders and as its interim Chief Executive Officer.
(b) Mr. Martin acquired 1,000,000 shares of the Company's common stock
in a reorganization transaction which closed on September 23, 1998 in exchange
for transferring his 49.0% interest in M & B Restaurants, LLC, a Texas limited
liability company ("M & B") to the Company. Mr. Martin had previously acquired
his 49.0% interest in M & B in March 1998 with $1,500,000 of his personal funds.
(c) Mr. Martin purchased 4,036,797 shares of the Company's common stock
from the Company on September 23, 1998 in connection with the closing of a
reorganization transaction. Mr. Martin purchased 1,666,667 of the shares for
$5,000,000, at a cost of approximately $3.00 per share, with funds which Mr.
Martin borrowed ($1,000,000 was
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borrowed on a personal line of credit from Bank of America and $4,000,000
was borrowed from Goldman, Sachs & Co. as a margin loan against a
securities account owned by Mr. Martin), and Mr. Martin purchased the
remaining 2,370,130 shares, at a cost of approximately $3.08 per share, by
executing promissory notes in favor of the Company in an aggregate
principal amount of $7,300,000 (one promissory note for $5,000,000 and
another promissory note for $2,300,000).
None of the stock purchases or stock acquisitions described in this Item 3 were
made with funds borrowed by Mr. Martin with the exception of the acquisitions
described above in Item 3(c).
Item 4. Purpose of Transaction
The shares referred to in Item 5(a) below as being beneficially owned by
Mr. Martin were acquired by Mr. Martin for investment purposes. Mr. Martin may
acquire and/or dispose of additional shares of the Company's common stock from
time to time, either in the open market or in privately negotiated transactions.
Any decision by Mr. Martin to increase or decrease his holdings in the Company's
common stock may depend, however, on numerous factors, including, without
limitation, the price of shares of the Company's common stock, the terms and
conditions related to their purpose and sale, the prospects and profitability of
the Company, other business and investment alternatives of Mr. Martin and
general economic and market conditions.
Mr. Martin presently has no plans or proposals which relate to or would
result in: (a) the acquisition by any person of additional securities of the
Company or the disposition of securities of the Company; (b) an extraordinary
corporate transaction, such as a merger, reorganization or liquidation,
involving the Company or any of its subsidiaries; (c) a sale or transfer of a
material amount of assets of the Company or any of its subsidiaries; (d) any
change in the present board of directors or management of the Company, including
any plans or proposals to change the number or term of directors or to fill any
existing vacancies on the board; (e) any material change in the present
capitalization or dividend policy of the Company; (f) any other material change
in the Company's business or corporate structure; (g) changes in the Company's
charter, bylaws or instruments corresponding thereto or other actions which may
impede the acquisition of control of the Company by any person; (h) causing a
class of securities of the Company to be delisted from a national securities
exchange or to cease to be authorized to be quoted in an inter-dealer quotation
system of a registered national securities association; (i) a class of equity
securities of the Company to become eligible for termination of registration
pursuant to Section 12(g)(4) of the Act; or (j) any action similar to any of
those enumerated above. However, Mr. Martin may formulate plans or proposals
with respect to one or more of the foregoing in the future.
Item 5. Interest in Securities of Issuer
(a) 5,282,947 shares of the Company's common stock are beneficially
owned by Mr. Martin, consisting of approximately 26.6% of such shares
outstanding as of September 23, 1998.
As of the date of this report, Joseph Teresi beneficially owns an
aggregate of 6,993,507 shares, or approximately 35.3% of the Company's
outstanding common stock. Additionally, Mr. Teresi holds proxies with respect
to the voting of an additional 1,370,000 shares or approximately 6.9% of the
Company's outstanding common stock until May 29, 2000. The shares of the
Company's common stock held by Mr. Martin and Mr. Teresi are subject to that
certain Stockholders' Voting Agreement described in Item 6 of this report, and
accordingly Mr. Martin may be deemed to share voting power for limited purposes
with respect to shares of the Company's common stock beneficially owned by Mr.
Teresi. Mr. Martin disclaims beneficial ownership of the shares of the
Company's common stock reported hereunder as beneficially owned by Mr. Teresi.
(b) Mr. Martin holds sole voting and dispositive power with respect to
the 5,282,947 shares of the Company's common stock described in Item 5(a) as
being beneficially owned by him, except in
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matters affecting the voting of the shares for the nomination, election and
removal of members of the Company's Board of Directors, as to which the
provisions of a Stockholders' Voting Agreement described in Item 6 apply, and
as to which matters voting power of such shares may be deemed to be shared with
Mr. Teresi.
(c) During the 60 days prior to the filing of this Schedule 13D,
Mr. Martin effected the transactions in the Company's common stock which are
described in Item 3 of this schedule.
(d) Not applicable.
(e) Not applicable.
Item 6. Contracts, Arrangements, Understandings or Relations with Respect to
Securities of the Issuer
Mr. Martin is not a party to any contract, arrangement, understanding or
relationship with any person with respect to any securities of the Company,
including but not limited to transfer or voting of any of the securities,
finder's fees, joint ventures, loan or option arrangements, put or calls,
guarantees of profits, division of profits or loss, or the giving or
withholding of proxies, other than the following:
(a) Mr. Martin and Joseph Teresi entered into that certain Stockholders'
Voting Agreement dated September 23, 1998 in which both Mr. Martin and Mr.
Teresi are entitled to designate to the other four individuals ("Director
Designees") to be voted for and to serve on the Board of Directors of the
Company. Each of Mr. Martin and Mr. Teresi is to use his best efforts to cause
each of their respective affiliates to: (i) nominate for election and (ii) vote
all of his shares entitled to vote thereon for the election of the other
party's Director Designees at any meeting of the stockholders of the Company or
by written consent of the holders of voting securities of the Company without a
meeting. Under the Stockholders' Voting Agreement, both Mr. Martin and Mr.
Teresi will use his best efforts to cause each of his respective affiliates' to
vote all of his shares entitled to vote thereon to remove a Director Designee
from the Company's Board of Directors if either Mr. Martin or Mr. Teresi
desires to have one of his Director Designees removed. If a vacancy on the
Company's Board of Director is filled by a person not acceptable to the person
who designated the Director Designee (whose death, resignation, removal, etc.)
created the vacancy, then Mr. Martin and Mr. Teresi will jointly request the
Company's secretary to call a special meeting of shareholders for the election
of directors.
Each of Mr. Martin and Mr. Teresi appointed the other as his attorney in
fact and proxy for the purposes described above. The Stockholders' Voting
Agreement Terminates on the date the outstanding principal of, and any and all
accrued and unpaid interest on, three promissory notes payable by the Company
to Mr. Teresi in the aggregate principal amount of $13,000,000 are repaid in
full or the date on which Mr. Teresi advises the Company's Secretary that Mr.
Teresi elects to waive the benefits of this Agreement, whichever first occurs.
(b) A total of 5,157,947 shares of the Company's common stock beneficially
owned by Mr. Martin are held in a securities account owned by Mr. Martin at
Goldman Sachs, and are subject to a margin loan, as described in Item 3(c).
Securities of other companies are also held in the securities account. In the
event of the securities held in the securities account fails to exceed the
amount of the margin loan by a certain percentage, then Goldman Sachs may sell
securities held in the account to restore a minimum required loan to collateral
ratio. With the exception of the margin loan in the securities account described
immediately above, there has been no pledge of the Company's common stock
beneficially owned by Mr. Martin, and Mr. Martin has not entered into another
arrangement that provides for a contingency that could give another person
voting power or investment power over his shares.
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Item 7. Materials to be Filed as Exhibits
<TABLE>
<CAPTION>
<S> <C>
Exhibit No. Description
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<S> <C>
1 Stockholders' Voting Agreement between John Martin and
Joseph Teresi dated September 23, 1998 -- Previously
filed
2 Stock Purchase Agreement dated June 30, 1998 ("Stock
Purchase Agreement") between the Company and John E.
Martin (Incorporated by Reference from the Company's
Form S-4 registration statement (file no. 333-58501)
filed July 6, 1998 - as Exhibit 10.4.10) -- Previously
filed
3 Promissory Note comprising Exhibit A to the Stock
Purchase Agreement, by John E. Martin in favor of the
Company in the amount of $5,000,000 -- Previously filed
4 Promissory Note comprising Exhibit B to the Stock
Purchase Agreement, by John E. Martin in favor of the
Company in the amount of $2,300,000 -- Previously filed
5 Bank of America Individual Loan Agreement dated
September 21, 1998
6 Goldman, Sachs & Co. Trust, Estate and Guardian Account
Agreement dated August 19, 1998
</TABLE>
6
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SIGNATURES
After reasonable inquiry and to the best of my knowledge and belief, I
certify that the information set forth in this statement is true, complete and
correct.
Date: November 30, 1998 By: /s/ John E. Martin
--------------------------------
John E. Martin
7
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EXHIBIT NO. 5
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BANK OF AMERICA INDIVIDUAL LOAN AGREEMENT
NATIONAL TRUST AND SAVINGS ASSOCIATION
This Agreement dated as of Sept. 21, 1998, is between Bank of America National
Trust and Savings Association (the "Bank") and John E. Martin (the "Borrower"),
1. LINE OF CREDIT AMOUNT AND TERMS
1.1 LINE OF CREDIT AMOUNT.
(a) During the availability period described below, the Bank will provide a
line of credit to the Borrower. The amount of the line of credit (the
"Commitment") is Two Million Dollars ($2,000,000).
(b) This is a non-revolving line of credit. Any amount borrowed, even if
repaid before the expiration date of the line of credit, permanently
reduces the remaining available line of credit.
(c) The Borrower agrees not to permit the outstanding principal balance of the
line of credit to exceed the Commitment.
1.2 AVAILABILITY PERIOD. The line of credit is available between the date of
this Agreement and January 15, 1999 (the "Expiration Date") unless the Borrower
is in default.
1.3 INTEREST RATE.
(a) Unless the Borrower elects an optional interest rate as described below,
the interest rate is the Bank's Reference Rate minus one quarter of one
(.25) percentage point.
(b) The Reference Rate is the rate of interest publicly announced from time to
time by the Bank in San Francisco, California as its Reference Rate. The
Reference Rate is set by the Bank based on various factors, including the
Bank's costs and desired return, general economic conditions and other
factors, and is used as a reference point for pricing some loans. The Bank
may price loans to its customers at, above, or below the Reference Rate.
Any change in the Reference Rate shall take effect at the opening of
business on the day specified in the public announcement of a change in
the Bank's Reference Rate.
1.4 REPAYMENT TERMS.
(a) The Borrower will pay interest on October 1, 1998, and then monthly
thereafter until payment in full of any principal outstanding under this
line of credit.
(b) The Borrower will repay in full all principal and any unpaid interest or
other charges outstanding under this line of credit no later than the
Expiration Date.
(c) Any amount bearing interest at an optional interest rate (as described
below) may be repaid at the end of the applicable interest period, which
shall be no later than the Expiration Date.
1.5 MANDATORY PREPAYMENT. Anything herein to the contrary notwithstanding, any
proceeds arising from the sale, encumbrance, transfer, liquidation, assignment
or other disposition, including loans margined against such stock of any
PepsiCo, Inc.'s or Easyriders, Inc.'s stock or options to purchase such stock by
the Borrower or guarantor shall be used to prepay any outstanding loans under
the Commitment.
1.6 OPTIONAL INTEREST RATES. Instead of the interest rate based on the Bank's
Reference Rate, the Borrower may elect to have all or portions of the line of
credit (during the availability period) bear interest at the rate(s) described
below during an interest period agreed to by the Bank and the Borrower. Each
interest rate is a rate per year. Interest will be paid on the last day of each
interest period, and on the first day of each month during the interest period.
At the end of any interest period, the interest rate will revert to the rate
based on the Reference Rate, unless the Borrower has designated another optional
interest rate for the portion. Upon the
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occurrence of an event of default under this Agreement, the Bank may terminate
the availability of optional interest rates for interest periods commencing
after the default occurs.
1.7 OFFSHORE RATE. The Borrower may elect to have all or portions of the
principal balance of the line of credit bear interest at the Offshore Rate,
subject to the following requirements:
(a) The "Offshore Rate" means the interest rate the Bank and the Borrower
agree will apply to the portion during the applicable interest period.
(b) The interest period during which the Offshore Rate will be in effect will
be no shorter than 30 days and no longer than 120 days. The last day of
the interest period will be determined by the Bank using the practices of
the offshore dollar inter-bank market.
(c) Each Offshore Rate portion will be for an amount not less than the
following:
(i) for interest periods of 91 days or longer, Five Hundred Thousand
Dollars ($500,000).
(ii) for interest periods of between 30 days and 90 days, One Million
Dollars ($1,000,000).
(d) The Borrower may not elect an Offshore Rate with respect to any portion of
the principal balance of the line of credit which is scheduled to be
repaid before the last day of the applicable interest period.
(e) Any portion of the principal balance of the line of credit already bearing
interest at the Offshore Rate will not be converted to a different rate
during its interest period.
(f) Each prepayment of an Offshore Rate portion, whether voluntary, by reason
of acceleration or otherwise, will be accompanied by the amount of accrued
interest on the amount prepaid, and a prepayment fee equal to the amount
(if any) by which:
(i) the additional interest which would have been payable on the amount
prepaid had it not been paid until the last day of the interest
period, exceeds
(ii) the interest which would have been recoverable by the Bank by
placing the amount prepaid on deposit in the offshore dollar market
for a period starting on the date on which it was prepaid and ending
on the last day of the interest period for such portion.
(g) The Bank will have no obligation to accept an election for an Offshore
Rate portion if any of the following described events has occurred and is
continuing:
(i) Dollar deposits in the principal amount, and for periods equal to
the interest period, of an Offshore Rate portion are not available
in the offshore dollar inter-bank market; or
(ii) the Offshore Rate does not accurately reflect the cost of an
Offshore Rate portion.
2. FEES AND EXPENSES
2.1 WAIVER FEE. If the Bank, at its discretion, agrees to waive or amend any
terms of this Agreement, the Borrower will, at the Bank's option, pay the Bank a
fee for each waiver or amendment in an amount advised by the Bank at the time
the Borrower requests the waiver or amendment. Nothing in this paragraph shall
imply that the Bank is obligated to agree to any waiver or amendment requested
by the Borrower. The Bank may impose additional requirements as a condition to
any waiver or amendment.
2.2 EXPENSES. The Borrower agrees to reimburse the Bank for any expenses it
incurs in the preparation of this Agreement and any agreement or instrument
required by this Agreement. Expenses include, but are not limited to, reasonable
attorneys' fees, including any allocated costs of the Bank's in-house counsel.
3. DISBURSEMENTS, PAYMENTS AND COSTS
3.1 REQUESTS FOR CREDIT. Each request for an extension of credit will be made
in writing in a manner acceptable to the Bank, or by another means acceptable to
the Bank.
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3.2 DISBURSEMENTS AND PAYMENTS. Each disbursement by the Bank and each payment
by the Borrower will be:
(a) made at the Bank's branch (or other location) selected by the Bank from
time to time;
(b) made for the account of the Bank's branch selected by the Bank from time
to time;
(c) made in immediately available funds, or such other type of funds selected
by the Bank;
(d) evidenced by records kept by the Bank. In addition, the Bank may, at its
discretion, require the Borrower to sign one or more promissory notes.
3.3 TELEPHONE AUTHORIZATION.
(a) The Bank may honor telephone instructions for advances or repayments or
for the designation of optional interest rates given by any one of the
individual signer(s) of this Agreement or a person or persons authorized
in writing by any one of the signer(s) of this Agreement.
(b) Advances will be deposited in and repayments will be withdrawn from the
Borrower's account number 11153-05080, or such other of the Borrower's
accounts with the Bank as designated in writing by the Borrower.
(c) The Borrower indemnifies and excuses the Bank (including its officers,
employees, and agents) from all liability, loss, and costs in connection
with any act resulting from telephone instructions it reasonably believes
are made by any individual authorized by the Borrower to give such
instructions. This indemnity and excuse will survive this Agreement's
termination.
3.4 DIRECT DEBIT (PRE-BILLING).
(a) The Borrower agrees that the Bank will debit the Borrower's deposit
account number 11153-05080, or such other of the Borrower's accounts with
the Bank as designated in writing by the Borrower (the "Designated
Account") on the date each payment of interest and any fees from the
Borrower becomes due (the "Due Date"). If the Due Date is not a banking
day, the Designated Account will be debited on the next banking day.
(b) Approximately 10 days prior to each Due Date, the Bank will mail to the
Borrower a statement of the amounts that will be due on that Due Date (the
"Billed Amount"). The calculation will be made on the assumption that no
new extensions of credit or payments will be made between the date of the
billing statement and the Due Date, and that there will be no changes in
the applicable interest rate.
(c) The Bank will debit the Designated Account for the Billed Amount,
regardless of the actual amount due on that date (the "Accrued Amount").
If the Billed Amount debited to the Designated Account differs from the
Accrued Amount, the discrepancy will be treated as follows:
(i) If the Billed Amount is less than the Accrued Amount, the Billed
Amount for the following Due Date will be increased by the amount of
the discrepancy. The Borrower will not be in default by reason of
any such discrepancy.
(ii) If the Billed Amount is more than the Accrued Amount, the Billed
Amount for the following Due Date will be decreased by the amount of
the discrepancy.
Regardless of any such discrepancy, interest will continue to accrue based
on the actual amount of principal outstanding without compounding. The
Bank will not pay the Borrower interest on any overpayment.
(d) The Borrower will maintain sufficient funds in the Designated Account to
cover each debit. If there are insufficient funds in the Designated
Account on the date the Bank enters any debit authorized by this
Agreement, the debit will be reversed.
(e) The Borrower may terminate this direct debit arrangement at any time by
sending written notice to the Bank at the address specified at the end of
this Agreement.
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3.5 BANKING DAYS. Unless otherwise provided in this Agreement, a banking day is
a day other than a Saturday or a Sunday on which the Bank is open for business
in California. For amounts bearing interest at an offshore rate (if any), a
banking day is a day other than a Saturday or a Sunday on which the Bank is open
for business in California and dealing in offshore dollars. All payments and
disbursements which would be due on a day which is not a banking day will be due
on the next banking day. All payments received on a day which is not a banking
day will be applied to the credit on the next banking day.
3.6 TAXES. The Borrower will not deduct any taxes from any payments it makes to
the Bank. If any government authority imposes any taxes on any payments made by
the Borrower, the Borrower will pay the taxes and will also pay to the Bank, at
the time interest is paid, any additional amount which the Bank specifies as
necessary to preserve the after-tax yield the Bank would have received if such
taxes had not been imposed. Upon request by the Bank, the Borrower will confirm
that it has paid the taxes by giving the Bank official tax receipts (or
notarized copies) within 30 days after the due date. However, the Borrower will
not pay the Bank's net income taxes.
3.7 ADDITIONAL COSTS. The Borrower will pay the Bank, on demand, for the Bank's
costs or losses arising from any statute or regulation, or any request or
requirement of a regulatory agency which is applicable to all national banks or
a class of all national banks. The costs and losses will be allocated to the
loan in a manner determined by the Bank, using any reasonable method. The costs
include the following:
(a) any reserve or deposit requirements, and
(b) any capital requirements relating to the Bank's assets and commitments for
credit.
3.8 INTEREST CALCULATION. Except as otherwise stated in this Agreement, all
interest and fees, if any, will be computed on the basis of a 360-day year and
the actual number of days elapsed. This results in more interest or a higher fee
than if a 365-day year is used.
3.9 INTEREST ON LATE PAYMENTS. At the Bank's sole option in each instance, any
amount not paid when due under this Agreement (including interest) shall bear
interest from the due date at the Bank's Reference Rate plus 2.00 percentage
points. This may result in compounding of interest.
3.10 DEFAULT RATE. Upon the occurrence and during the continuation of any
default under this Agreement, advances under this Agreement will at the option
of the Bank bear interest at a rate per annum which is 3.00 percentage points
higher than the rate of interest otherwise provided under this Agreement. This
will not constitute a waiver of any event of default.
4. CONDITIONS
The Bank must receive the following items, in form and content acceptable to the
Bank, before it is required to extend any credit to the Borrower under this
Agreement.
4.1 GUARANTIES. A Guaranty signed by John Martin, Trustee of the John Martin
Revocable Trust dated June 16, 1992, in the amount of Two Million Dollars
($2,000,000).
4.2 AUTHORIZATIONS. Evidence that the execution, delivery and performance by the
Borrower and each guarantor of this Agreement and of any instrument or
agreement required under this Agreement have been duly authorized.
4.3 OTHER ITEMS. Any other items that the Bank reasonably requires.
5. REPRESENTATIONS AND WARRANTIES
When the Borrower signs this Agreement, and until the Bank is repaid in full,
the Borrower makes the following representations and warranties. Each request
for an extension of credit constitutes a renewed representation.
5.1 AUTHORIZATION. This Agreement, and any instrument or agreement required
hereunder, are within the Borrower's powers, have been duly authorized, and do
not conflict with any of its organizational papers.
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5.2 ENFORCEABLE AGREEMENT. This Agreement is a legal, valid and binding
agreement of the Borrower, enforceable against the Borrower in accordance with
its terms, and any instrument or agreement required hereunder, when executed and
delivered, will be similarly legal, valid, binding and enforceable.
5.3 NO CONFLICTS. This Agreement does not conflict with any law, agreement, or
obligation by which the Borrower is bound.
5.4 FINANCIAL INFORMATION. All financial and other information that has been or
will be supplied to the Bank is:
(a) sufficiently complete to give the Bank accurate knowledge of the
Borrower's (and any guarantor's) and any trustor's financial condition.
(b) in form and content required by the Bank.
(c) in compliance with all government regulations that apply.
5.5 LAWSUITS. There is no lawsuit, tax claim or other dispute pending or
threatened against the Borrower, its property or any of its business, which, if
lost, would impair the Borrower's financial condition or that of the Borrower's
business or would impair the Borrower's ability to repay the loan, except as
have been disclosed in writing to the Bank.
5.6 PERMITS, FRANCHISES. The Borrower possesses all permits, memberships,
franchises, contracts and licenses required and all trademark rights, trade name
rights, patent rights and fictitious name rights necessary to enable it to
conduct the business in which it is now engaged.
5.7 OTHER OBLIGATIONS. The Borrower is not in default on any obligation for
borrowed money, any purchase money obligation or any other material lease,
commitment, contract, instrument or obligation, except as have been disclosed in
writing to the Bank.
5.8 INCOME TAX RETURNS. The Borrower has no knowledge of any pending assessments
or adjustments of its income tax for any year, except as have been disclosed in
writing to the Bank.
5.9 NO EVENT OF DEFAULT. There is no event which is, or with notice or lapse of
time or both would be, a default under this Agreement.
6. COVENANTS
The Borrower agrees, so long as credit is available under this Agreement and
until the Bank is repaid in full:
6.1 USE OF PROCEEDS. To use the proceeds of the credit only for partially
financing the acquisition of 28% of the outstanding shares of Easyriders, Inc.
6.2 USE OF PROCEEDS - INELIGIBLE SECURITIES. Not to use any portion of the
proceeds of the credit to purchase during the underwriting period, or for thirty
days thereafter, Ineligible Securities underwritten by BancAmerica Robertson
Stephens. BancAmerica Robertson Stephens is a wholly-owned subsidiary of
BankAmerica Corporation, and is a registered broker-dealer which is permitted to
underwrite and deal in certain Ineligible Securities. "Ineligible Securities"
means securities which may not be underwritten or dealt in by member banks of
the Federal Reserve System under Section 16 of the Banking Act of 1933 (12
U.S.C. Section 24, Seventh), as amended. The restrictions of this paragraph
shall also cover Ineligible Securities underwritten by any other present or
future subsidiary of BankAmerica Corporation which underwrites Ineligible
Securities.
6.3 FINANCIAL INFORMATION. To provide the following financial information and
statements and such additional information as requested by the Bank from time to
time:
(a) Upon the Bank's request, the Borrower's and the guarantor's annual
financial statements.
(b) By January 5, 1999, evidence that (i) written instructions have been sent
to PepsiCo, Inc. to exercise sufficient number of options to repay the
line of credit no later than the Expiration Date, or (ii) other
arrangements have been made to repay the line of credit.
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<PAGE> 6
6.4 TRUSTS. Not to transfer any of the Borrower's assets to a trust unless the
trust is acceptable to the Bank in form and content, and the trustee guaranties
payment of the Borrower's obligations under this Agreement prior to any such
transfer.
6.5 OTHER DEBTS. Not to have outstanding or incur any direct or contingent debts
(other than those to the Bank), or become liable for the debts of others,
without the Bank's written consent. This does not prohibit:
(a) Endorsing negotiable instruments received in the usual course of business.
(b) Debts and lines of credit in existence on the date of this Agreement
disclosed to the Bank in writing.
(c) Additional debts for margin loans not to exceed Seven Million Five Hundred
Thousand Dollars ($7,500,000), additional margin proceeds are applied to
Borrower's indebtedness to the Bank.
(d) A promissory note made by Borrower payable to Easyriders, Inc. in an
amount not to exceed Seven Million Five Hundred Thousand Dollars
($7,500,000).
6.6 OTHER LIENS. Not to create, assume, or allow any security interest or lien
(including judicial liens) on property the Borrower now or later owns, except:
(a) Liens for taxes not yet due.
(b) Liens securing indebtedness permitted under Paragraph 6.4(c) of this
Agreement.
6.7 NOTICES TO BANK. To promptly notify the Bank in writing of:
(a) any lawsuit over One Hundred Thousand Dollars ($100,000) against the
Borrower (or any guarantor) or any trustor or any of the Borrower's
property or business.
(b) any substantial dispute between the Borrower (or any guarantor) or any
trustor and any government authority, or which may affect the Borrower's
property or business.
(c) any failure to comply with this Agreement.
(d) any material adverse change in the Borrower's (or any guarantor's) or any
trustor's financial condition or operations.
(e) any change in the Borrower's name or address.
6.8 COMPLIANCE WITH LAWS. To comply with the laws, regulations, and orders of
any government body with authority over the Borrower's business.
6.9 MAINTENANCE OF PROPERTIES. To make any repairs, renewals, or replacements to
keep the Borrower's properties in good working condition.
6.10 COOPERATION. To take any action requested by the Bank to carry out the
intent of this Agreement.
6.11 ADDITIONAL NEGATIVE COVENANTS. Not to, without the Bank's written consent:
(a) engage in any business activities substantially different from the
Borrower's present business.
(b) acquire or purchase a business or its assets.
(c) sell or otherwise dispose of any assets for less than fair market value or
enter into any sale and leaseback agreement covering any of its fixed or
capital assets.
6.12 PEPSICO, INC. STOCK OPTIONS. To maintain, together with guarantor,
unencumbered stock options for a total of no less than One Million Sixty
Thousand Two Hundred and Thirteen (1,060,213) shares of PepsiCo Inc. stock.
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<PAGE> 7
7. DEFAULT
If any of the following events occur, the Bank may do one or more of the
following: declare the Borrower in default, stop making any additional credit
available to the Borrower, and require the Borrower to repay its entire debt
immediately and without prior notice. If an event of default occurs under the
paragraph entitled "Bankruptcy," below, with respect to the Borrower, then the
entire debt outstanding under this Agreement will automatically become due
immediately.
7.1 FAILURE TO PAY. The Borrower fails to make a payment under this Agreement
when due.
7.2 FALSE INFORMATION. The Borrower has given the Bank false or misleading
information or representations.
7.3 DEATH. The Borrower dies; any guarantor dies.
7.4 BANKRUPTCY. The Borrower (or any guarantor) or any trustor files a
bankruptcy petition, a bankruptcy petition is filed against the Borrower (or any
guarantor) or any trustor, or the Borrower (or any guarantor) or any trustor
makes a general assignment for the benefit of creditors.
7.5 RECEIVERS; TERMINATION. A receiver or similar official is appointed for the
Borrower's (or any guarantor's) or any trustor's business, or the business is
terminated; or any guarantor is liquidated or dissolved.
7.6 LAWSUITS. Any lawsuit or lawsuits are filed against the Borrower (or any
guarantor) or any trustor in an aggregate amount of One Hundred Thousand Dollars
($100,000) or more in excess of any insurance coverage.
7.7 JUDGMENTS. Any judgments or arbitration awards are entered against the
Borrower (or any guarantor) or any trustor; or the Borrower (or any guarantor)
or any trustor enters into any settlement agreements with respect to any
litigation or arbitration, in an aggregate amount of One Hundred Thousand
Dollars ($100,000) or more in excess of any insurance coverage.
7.8 GOVERNMENT ACTION. Any government authority takes action that the Bank
believes materially adversely affects the Borrower's (or any guarantor's) or any
trustor's financial condition or ability to repay.
7.9 MATERIAL ADVERSE CHANGE. A material adverse change occurs, or is reasonably
likely to occur, in the Borrower's (or any guarantor's) or any trustor's
business condition (financial or otherwise), operations, properties or
prospects, or ability to repay the credit.
7.10 CROSS-DEFAULT. Any default occurs under any agreement in connection with
any credit the Borrower (or any guarantor) or any trustor has obtained from
anyone else or which the Borrower (or any guarantor) or any trustor has
guaranteed.
7.11 DEFAULT UNDER RELATED DOCUMENTS. Any guaranty, subordination agreement,
security agreement, deed of trust, or other document required by this Agreement
is violated or no longer in effect.
7.12 OTHER BANK AGREEMENTS. The Borrower (or any guarantor) or any trustor fails
to meet the conditions of, or fails to perform any obligation under any other
agreement the Borrower (or any guarantor) or any trustor has with the Bank or
any affiliate of the Bank.
7.13 USE OF PROCEEDS. The Borrower does not utilize or invest the proceeds of
any extension of credit made under this Agreement for the purposes described by
the Borrower to the Bank.
7.14 OTHER BREACH UNDER AGREEMENT. The Borrower fails to meet the conditions of,
or fails to perform any obligation under, any term of this Agreement not
specifically referred to in this Article.
7.15 PEPSICO, INC. STOCK DEVALUATION. The market value of PepsiCo, Inc. common
shares declines to $20.00 per share or less.
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<PAGE> 8
8. ENFORCING THIS AGREEMENT; MISCELLANEOUS
8.1 FINANCIAL COMPUTATIONS. Except as otherwise stated in this Agreement, all
financial information provided to the Bank and all financial covenants will be
made in accordance with accounting principles applied consistently with those
applied in the preparation of the Borrower's financial statements dated March
27, 1998, and shall specifically exclude any upward revaluation of assets (other
than marketable securities) after that date.
8.2 CALIFORNIA LAW. This Agreement is governed by California law.
8.3 SUCCESSORS AND ASSIGNS. This Agreement is binding on the Borrower's and the
Bank's successors and assignees. The Borrower agrees that it may not assign this
Agreement without the Bank's prior consent. The Bank may sell participations in
or assign this loan, and may exchange financial information about the Borrower
with actual or potential participants or assignees. If a participation is sold
or the loan is assigned, the purchaser will have the right of set-off against
the Borrower.
8.4 ARBITRATION.
(a) This paragraph concerns the resolution of any controversies or claims
between the Borrower and the Bank, including but not limited to those that
arise from:
(i) This Agreement (including any renewals, extensions or modifications
of this Agreement);
(ii) Any document, agreement or procedure related to or delivered in
connection with this Agreement;
(iii) Any violation of this Agreement; or
(iv) Any claims for damages resulting from any business conducted between
the Borrower and the Bank, including claims for injury to persons,
property or business interests (torts).
(b) At the request of the Borrower or the Bank, any such controversies or
claims will be settled by arbitration in accordance with the United States
Arbitration Act. The United States Arbitration Act will apply even though
this Agreement provides that it is governed by California law.
(c) Arbitration proceedings will be administered by the American Arbitration
Association and will be subject to its commercial rules of arbitration.
(d) For purposes of the application of the statute of limitations, the filing
of an arbitration pursuant to this paragraph is the equivalent of the
filing of a lawsuit, and any claim or controversy which may be arbitrated
under this paragraph is subject to any applicable statute of limitations.
The arbitrators will have the authority to decide whether any such claim
or controversy is barred by the statute of limitations and, if so, to
dismiss the arbitration on that basis.
(e) If there is a dispute as to whether an issue is arbitrable, the
arbitrators will have the authority to resolve any such dispute.
(f) The decision that results from an arbitration proceeding may be submitted
to any authorized court of law to be confirmed and enforced.
(g) The procedure described above will not apply if the controversy or claim,
at the time of the proposed submission to arbitration, arises from or
relates to an obligation to the Bank secured by real property located in
California. In this case, both the Borrower and the Bank must consent to
submission of the claim or controversy to arbitration. If both parties do
not consent to arbitration, the controversy or claim will be settled as
follows:
(i) The Borrower and the Bank will designate a referee (or a panel of
referees) selected under the auspices of the American Arbitration
Association in the same manner as arbitrators are selected in
Association-sponsored proceedings;
(ii) The designated referee (or the panel of referees) will be appointed
by a court as provided in California Code of Civil Procedure Section
638 and the following related sections;
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<PAGE> 9
(iii) The referee (or the presiding referee of the panel) will be an
active attorney or a retired judge; and
(iv) The award that results from the decision of the referee (or the
panel) will be entered as a judgment in the court that appointed the
referee, in accordance with the provisions of California Code of
Civil Procedure Sections 644 and 645.
(h) This provision does not limit the right of the Borrower or the Bank to:
(i) exercise self-help remedies such as setoff;
(ii) foreclose against or sell any real or personal property collateral;
or
(iii) act in a court of law, before, during or after the arbitration
proceeding to obtain:
(A) an interim remedy; and/or
(B) additional or supplementary remedies.
(i) The pursuit of or a successful action for interim, additional or
supplementary remedies, or the filing of a court action, does not
constitute a waiver of the right of the Borrower or the Bank, including
the suing party, to submit the controversy or claim to arbitration if the
other party contests the lawsuit. However, if the controversy or claim
arises from or relates to an obligation to the Bank which is secured by
real property located in California at the time of the proposed submission
to arbitration, this right is limited according to the provision above
requiring the consent of both the Borrower and the Bank to seek resolution
through arbitration.
(j) If the Bank forecloses against any real property securing this Agreement,
the Bank has the option to exercise the power of sale under the deed of
trust or mortgage, or to proceed by judicial foreclosure.
8.5 SEVERABILITY; WAIVERS. If any part of this Agreement is not enforceable, the
rest of the Agreement may be enforced. The Bank retains all rights, even if it
makes a loan after default. If the Bank waives a default, it may enforce a later
default. Any consent or waiver under this Agreement must be in writing.
8.6 ADMINISTRATION COSTS. The Borrower shall pay the Bank for all reasonable
costs incurred by the Bank in connection with administering this Agreement.
8.7 ATTORNEYS' FEES. The Borrower shall reimburse the Bank for any reasonable
costs and attorneys' fees incurred by the Bank in connection with the
enforcement or preservation of any rights or remedies under this Agreement and
any other documents executed in connection with this Agreement, and including
any amendment, waiver, "workout" or restructuring under this Agreement. In the
event of a lawsuit or arbitration proceeding, the prevailing party is entitled
to recover costs and reasonable attorneys' fees incurred in connection with the
lawsuit or arbitration proceeding, as determined by the court or arbitrator. In
the event that any case is commenced by or against the Borrower under the
Bankruptcy Code (Title 11, United States Code) or any similar or successor
statute, the Bank is entitled to recover costs and reasonable attorneys' fees
incurred by the Bank related to the preservation, protection, or enforcement of
any rights of the Bank in such a case. As used in this paragraph, "attorneys'
fees" includes the allocated costs of in-house counsel.
8.8 ONE AGREEMENT. This Agreement and any related security or other agreements
required by this Agreement, collectively:
(a) represent the sum of the understandings and agreements between the Bank
and the Borrower concerning this credit;
(b) replace any prior oral or written agreements between the Bank and the
Borrower concerning this credit; and
(c) are intended by the Bank and the Borrower as the final, complete and
exclusive statement of the terms agreed to by them.
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<PAGE> 10
In the event of any conflict between this Agreement and any other agreements
required by this Agreement, this Agreement will prevail.
8.9 NOTICES. All notices required under this Agreement shall be personally
delivered or sent by first class mail, postage prepaid, to the addresses on the
signature page of this Agreement, or to such other addresses as the Bank and the
Borrower may specify from time to time in writing.
8.10 HEADINGS. Article and paragraph headings are for reference only and shall
not affect the interpretation or meaning of any provisions of this Agreement.
8.11 PRIOR AGREEMENT SUPERSEDED. This Agreement supersedes the Individual Loan
Agreement entered into as of April 13, 1998, between the Bank and the Borrower,
and any credit outstanding thereunder shall be deemed to be outstanding under
this Agreement.
This Agreement is executed as of the date stated at the top of the first page.
[LOGO]
BANK OF AMERICA
NATIONAL TRUST AND SAVINGS ASSOCIATION
/s/ JOHN W. CHAMBERLIN /s/ JOHN E. MARTIN
- ------------------------------- -------------------------------
By: JOHN CHAMBERLIN JOHN E. MARTIN
Title: VICE PRESIDENT
ADDRESS WHERE NOTICES TO THE BANK ADDRESS WHERE NOTICES TO THE
ARE TO BE SENT: BORROWER ARE TO BE SENT:
The Private Bank - Newport Beach 1115 18931 Glenmont Terrace
500 Newport Center Drive Irvine, California 92612-3507
Newport Beach, California 92660
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<PAGE> 1
EXHIBIT NO. 6
TRUST, ESTATE AND GUARDIAN Goldman, Sachs & Co.
85 Broad Street
ACCOUNT AGREEMENT New York, NY 10004-2456
Title of Account 212-902-1000
[LOGO]
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Title of Account Account Number
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John Martin Rev. Trust 027-15831-0-051
- --------------------------------------------------------------------------------
TO: GOLDMAN, SACHS & CO.
This agreement sets forth our respective rights and obligations in connection
with your accepting a cash or margin account or accounts designated in the
above-referenced manner ("Client"). The agreements and obligations of Client set
forth herein shall be deemed the agreements and obligations of the account or
accounts established hereunder and of the undersigned, acting in the capacity
indicated. This agreement is in addition to (and in no way limits or restricts)
any of the provisions of or the rights which you or any of your affiliates may
have under any other agreements between you or any of your affiliates and
Client. You and Client hereby agree to the following with respect to any of
Client's accounts with you and all transactions with you:
1. EXCHANGE OR MARKET. All transactions under this agreement shall be in
accordance with the rules and customs of the exchange or market and its clearing
house, if any, where the transactions are executed and in conformity with
applicable law and regulations of governmental authorities and future amendments
or supplements thereto.
2. GENERAL LIEN; DELIVERY OF COLLATERAL. Client agrees that all securities and
other property, and the proceeds thereof, and any other obligations, whether or
not due, which you or any of your affiliates may hold for Client or which are,
or may become, due to Client (either individually or jointly with others or in
which Client has any interest) and all rights Client may have against you or any
of your affiliates shall be subject to a general lien, security interest and
right of set-off for the discharge of all Client's obligations to you or any of
your affiliates. Client further agrees that you may, in your discretion at any
time and from time to time, require Client to deliver collateral to margin and
secure Client's performance of obligations to you and your affiliates with
respect to spot, forward, option, swap and other transactions involving or
relating to foreign exchange. Such collateral shall be delivered, within one
business day of your request, in such amount and form and to such account or
recipient as you shall specify. You may, in your discretion and without notice
to Client, deduct any amounts from Client's account and apply or transfer any of
Client's securities and other property interchangeably between any of Client's
accounts, each of which unreservedly guarantees all obligations of Client.
Client acknowledges that you and each of your affiliates act as agents for each
other in respect of the rights subject to lien as described above.
3. PAYMENT AND SETTLEMENT. Client agrees that all cash account transactions will
be handled on a cash basis and Client shall pay for any security purchased for
Client's account, and deliver any securities sold for Client's account, on or
before the settlement date. Client agrees to pay on demand all balances owing
with respect to Client's account. Client warrants that no sale of securities is
contemplated before the securities are paid for as provided above and that each
item sold will be owned by Client at the time of sale.
4. DEFAULT. In the event of default by Client of any obligation under any
transaction or agreement with you or any of your affiliates, if Client shall
become bankrupt, insolvent or subject to any bankruptcy, reorganization,
insolvency or similar proceeding, or if for any reason you or any of your
affiliates deem it advisable for your or their protection, you or any of your
affiliates may, without notice or demand to Client, and at such times and places
as you may determine, cancel, terminate, accelerate, liquidate and/or close-out
any or all transactions and agreements between Client and you or any of your
affiliates, pledge or sell any securities or other property which you or any of
your affiliates may hold for Client or which is due to Client (either
individually or jointly with others) and apply the proceeds to the discharge of
the obligation, set-off, net and recoup any obligations to Client against any
obligations to you or any of your affiliates, exercise all rights of a secured
creditor in respect of all collateral in which you or your affiliates have a
security interest or right of set-off, cover any open positions of Client (by
buying in or borrowing securities or otherwise) and take such other actions as
you or any of your affiliates deem appropriate provided that if applicable law
would stay or otherwise impair the ability of your or any of your affiliates to
take any such action upon any such bankruptcy, reorganization, insolvency or
similar proceeding, you and the applicable affiliate(s) will be deemed to have
taken such action with respect to the cancellation, termination, acceleration,
liquidation and/or close-out of transactions, and the application of appropriate
set-offs, and if and to the extent you deem it appropriate, the sale or
disposition of securities or other assets of Client, the exercise of rights of a
secured creditor, and the application of proceeds immediately prior to such
bankruptcy, reorganization, insolvency or similar proceeding. Client shall
remain liable for any deficiency and shall promptly reimburse you and your
affiliate for any loss or expense incurred thereby, including losses sustained
by reason of an inability to borrow any securities or other property sold for
Client's account.
5. INTEREST, FEES. Client agrees to pay interest charges which may be imposed by
you in accordance with your usual custom, with respect to late payments in
conjunction with any transaction, including for securities purchased, in
Client's account and prepayments in Client's account (i.e., the crediting of the
proceeds of sale prior to settlement date or prior to receipt by you of the item
sold in good deliverable form). Client acknowledges receipt of the enclosed
document entitled "Interest Charges to Clients" and agrees to be bound thereby.
Client agrees to pay promptly any amount which may become due in order to meet
requests for additional deposits or marks to market with respect to any
transactions including unissued securities purchased or sold by Client. Client
agrees to pay promptly any custody or other fees which may be imposed by you
with respect to the account.
6. SALE ORDERS. Except as provided in the last sentence of this Section 6, the
giving of each sell order by Client shall constitute a designation of the sale
as "long" and a certification that the securities to be sold are owned by Client
and, if such securities are not in your possession, the placing of such order
shall constitute a warranty by Client that Client shall deliver such securities
to you on or before settlement date. If Client maintains a margin account,
Client agrees to designate all sell orders as either "long" or "short".
7. REPORTS, STATEMENTS. Reports or confirmations of the execution of orders and
statements of Client's account shall be conclusive if not objected to in writing
within ten (10) days after forwarding by you to Client by mail or otherwise.
Communications mailed, electronically transmitted or otherwise sent to Client at
the address specified in your records shall, until three (3) business days after
you have received notice in writing of a different address, be deemed to have
been forwarded by you when sent and the Client waives all claims resulting from
failure to receive such communications.
8. CUSTODIAL ARRANGEMENTS. If you act as custodian for the securities and other
property in Client's account, you are authorized to register such securities in
your name or the name of your nominee, or cause such securities to be registered
in the name of, or in the name of the nominee of, a recognized depository or
clearing organization. Client understands that when you hold on Client's behalf
bonds or preferred stocks which are callable in part by the issuer, such
securities will be subject to your impartial lottery allocation system in which
the probability of Client's securities being selected as called is proportional
to the holdings of all clients of such securities held in bulk by or for you.
Client further understands that you will withdraw such securities from any
depository prior to the first date on which such securities may be called unless
such depository has adopted an impartial lottery system which is applicable to
all participants. Client may withdraw uncalled securities prior to a partial
call subject to compliance with applicable margin requirements and the terms of
any agreements between you and Client. You are authorized to withdraw securities
sold or otherwise disposed of, and to credit Client's account with the proceeds
thereof or make such other disposition thereof as Client may direct. You are
further authorized to collect all income and other payments which may become
due on Client's securities, to surrender for payment maturing obligations and
those called for redemption and to exchange certificates in temporary form for
like certificates in definitive form, or, if the par value of any shares is
changed, to effect the exchange for new certificates. It is understood and
agreed by Client that although you will use reasonable efforts to effect the
authorization set forth in the preceding sentence, you will incur no liability
for your failure to effect the same.
9. TERMINATION. Client and you agree that the accounts maintained hereunder may
be terminated by you or Client at any time effective upon the giving of notice
of such termination to Client or to you, as the case may be. All applicable
provisions will survive the termination of the account and this agreement.
Without limiting the foregoing, upon any such termination, the provisions of
this agreement shall remain in effect with respect to all securities and other
property then held in such account or accounts and all transactions and
agreements then outstanding between Client and you or any of your affiliates.
10. ORDERS, RECOMMENDATIONS, BUNCHING. Client acknowledges that, on occasion,
you may not be in a position to make a recommendation or render an opinion with
respect to any security. Client agrees that: i) you may, in your sole discretion
and without prior notice to Client, refuse to accept or execute any order from
Client and, in such case, you shall endeavor to give Client notice of such
refusal as soon as practical; ii) you may submit Client's orders jointly with
orders for other clients and you need not designate any of Client's eligible
orders as "Individual" when submitting orders via the DOT system and; iii) the
average price for executions resulting from bunched orders will be assigned to
Client's account.
11. GOVERNING LAW, SUCCESSOR AND ASSIGNS, WAIVER. THIS AGREEMENT AND ITS
ENFORCEMENT SHALL BE GOVERNED BY THE LAWS OF THE STATE OF NEW YORK AND ITS
PROVISIONS SHALL COVER INDIVIDUALLY AND COLLECTIVELY ALL ACCOUNTS WHICH CLIENT
MAY MAINTAIN WITH YOU. This agreement is binding upon and inures to the benefit
of you, your affiliates, Client, and our respective legal representatives,
successors and assigns. Neither you nor Client may assign its rights or delegate
its obligations under this agreement, in whole or in part, without the prior
written consent of the other party, except for an assignment and delegation by
you of all of your rights and obligations hereunder to a successor entity that
assumes substantially all of your assets and businesses (including all of the
obligations under this agreement) by contract, operation of law or otherwise and
that is a registered broker-dealer under relevant Securities and Exchange
Commission rules. Upon any such delegation and assumption of obligations by such
successor entity, you shall be relieved of and fully discharged from all your
obligations hereunder, whether such obligations arose before or after the date
of such delegation and assumption. No waiver of any provision of this agreement
shall be deemed a waiver of any other provision, nor a continuing waiver of the
provision or provisions so waived. All waivers and modifications must be in
writing.
12. ARBITRATION.
(a) ARBITRATION IS FINAL AND BINDING ON THE PARTIES.
(b) THE PARTIES ARE WAIVING THEIR RIGHT TO SEEK REMEDIES IN COURT, INCLUDING
THE RIGHT TO A JURY TRIAL.
(c) PRE-ARBITRATION DISCOVERY IS GENERALLY MORE LIMITED THAN AND DIFFERENT
FROM COURT PROCEEDINGS.
(d) THE ARBITRATORS' AWARD IS NOT REQUIRED TO INCLUDE FACTUAL FINDINGS OR
LEGAL REASONING AND ANY PARTY'S RIGHT TO APPEAL OR TO SEEK MODIFICATION
OF RULINGS BY THE ARBITRATORS IS STRICTLY LIMITED.
(e) THE PANEL OF ARBITRATORS WILL TYPICALLY INCLUDE A MINORITY OF
ARBITRATORS WHO WERE OR ARE AFFILIATED WITH THE SECURITIES INDUSTRY.
ANY CONTROVERSY BETWEEN YOU (TOGETHER WITH ANY OF YOUR AFFILIATES ALSO INVOLVED
IN SUCH CONTROVERSY) OR ANY OF YOUR OR THEIR MANAGING DIRECTORS, OFFICERS,
DIRECTORS OR EMPLOYEES ON THE ONE HAND, AND CLIENT OR CLIENT'S AGENTS ON THE
OTHER HAND, ARISING OUT OF OR RELATING TO THIS AGREEMENT, THE TRANSACTIONS
CONTEMPLATED HEREBY, OR THE ACCOUNTS ESTABLISHED HEREUNDER, SHALL BE SETTLED BY
ARBITRATION, IN ACCORDANCE WITH THE RULES THEN OBTAINING OF ANY ONE OF THE
AMERICAN ARBITRATION ASSOCIATION OR THE NEW YORK STOCK EXCHANGE, INC., OR ANY
OTHER EXCHANGE OF WHICH YOU ARE A MEMBER, OR THE NATIONAL ASSOCIATION OF
SECURITIES DEALERS, INC. OR THE MUNICIPAL SECURITIES RULEMAKING BOARD, AS CLIENT
MAY ELECT. IF CLIENT DOES NOT MAKE SUCH ELECTION BY REGISTERED MAIL ADDRESSED TO
YOU AT YOUR MAIN OFFICE WITHIN TEN (10) DAYS AFTER RECEIPT OF NOTIFICATION FROM
YOU REQUESTING SUCH ELECTION, THEN CLIENT AUTHORIZES YOU TO MAKE SUCH ELECTION
ON BEHALF OF CLIENT. THE AWARD OF THE ARBITRATOR SHALL BE FINAL, AND JUDGMENT
UPON THE AWARD RENDERED MAY BE ENTERED IN ANY COURT, STATE OR FEDERAL, HAVING
JURISDICTION.
NO PERSON SHALL BRING A PUTATIVE OR CERTIFIED CLASS ACTION TO ARBITRATION, NOR
SEEK TO ENFORCE ANY PRE-DISPUTE ARBITRATION AGREEMENT AGAINST ANY PERSON WHO HAS
INITIATED IN COURT A PUTATIVE CLASS ACTION OR WHO IS A MEMBER OF A PUTATIVE
CLASS WHO HAS NOT OPTED OUT OF THE CLASS WITH RESPECT TO ANY CLAIMS ENCOMPASSED
BY THE PUTATIVE CLASS ACTION UNTIL: (i) THE CLASS CERTIFICATION IS DENIED; (ii)
THE CLASS IS DECERTIFIED; OR (iii) THE CLIENT IS EXCLUDED FROM THE CLASS BY THE
COURT. SUCH FORBEARANCE TO ENFORCE AN AGREEMENT TO ARBITRATE SHALL NOT
CONSTITUTE A WAIVER OF ANY RIGHTS UNDER THIS AGREEMENT EXCEPT TO THE EXTENT
STATED HEREIN.
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PLEASE SEE REVERSE SIDE
<PAGE> 2
13. CLIENT REPRESENTATIONS. The undersigned represents that he or she is of
legal age. Client further represents that no one except the Client has an
interest in Client's account unless such interest is revealed in the title of
such account and in any such case, Client has the interest indicated in such
title. Client warrants that you will be kept informed of any changes in the
information supplied to you herein or otherwise in connection with your
establishing and maintaining an account or accounts for Client.
14. POWER AND AUTHORITY. In the case of multiple fiduciaries, you may accept the
instructions of any one fiduciary on behalf of all fiduciaries for any matter
relating to Client's account. Without limiting the generality of the foregoing,
each of the undersigned has full power and authority on behalf of the Client:
(a) to make purchases and sales for Client's account; (b) to withdraw funds,
securities and other property from Client's account; (c) to give and receive
instructions demands, notices, confirmations, reports, statements of account and
communications of every kind; (d) to execute this agreement and other agreements
relating to the foregoing matters and to terminate, modify, or waive any of the
provisions thereof, and (e) generally to deal with you on behalf of Client's
account, either individually or in our joint names, as fully and completely as
if each alone were interested therein, all without notice to the other or
others. Notwithstanding the foregoing, in the case of multiple fiduciaries, each
of the fiduciaries agrees that you may, in your sole discretion: (i) require
joint instruction from some or all of the fiduciaries before taking any action
hereunder and (ii) if you should receive instructions from any one or more of
the fiduciaries which are, in your opinion, in conflict with instructions
received from any other fiduciary(ies), comply with any of such instructions
and/or advise Client of the apparent conflict and/or take no action as to any
such instructions until you receive instructions from any one or more of the
fiduciaries which are satisfactory to you. The authority conferred herein shall
remain in force until written notice of the revocation, signed by Client, is
received at your New York office.
15. OWNERSHIP. Client agrees that all funds, securities and other property held
for the account and the proceeds thereof shall be held for the account in the
manner indicated in the account title, with all the legal and equitable rights
of every nature and kind, and subject to all the obligations and conditions,
that such form of ownership imposes. In the event of the death, resignation or
incompetency of any one of the fiduciaries, or other change which affects the
manner in which the property in the account is held, you shall immediately be
given written notice thereof and, in addition to the actions permitted under any
agreements relating to Client's account, you are authorized to take such action,
require such documents and tax waivers, and retain such portion of or restrict
transactions in the account, all as you may deem advisable.
MARGIN
NO MARGIN ACCOUNT WILL BE ESTABLISHED FOR THE CLIENT UNLESS AND UNTIL THE
ACCOUNT IS APPROVED FOR MARGIN TRANSACTIONS BY GOLDMAN, SACHS & CO.
PLEASE COMPLETE SECTION 16 ONLY IF CLIENT WISHES TO APPLY FOR A MARGIN ACCOUNT.
16. MARGIN. SECTION 16 APPLIES TO TRANSACTIONS EFFECTED IN A SECURITIES MARGIN
ACCOUNT WHICH HAS BEEN ESTABLISHED BY YOU. THE PROVISIONS OF SECTION 16 ARE IN
ADDITION TO THE OTHER PROVISIONS CONTAINED IN THIS AGREEMENT.
a) Client represents and warrants to you that Client has had an opportunity to
discuss with you the risks associated with the use of margin and that the use
of margin is authorized by law and any governing documents, is suitable for the
Client, and is consistent with Client's investment objectives as supplied to
you, including, if applicable, the designation of safety of principal as
Client's primary investment objective.
b) Client agrees to maintain margins for Client's account as you may require
from time to time. Client agrees to pay interest charges which are imposed, in
accordance with your usual custom, with respect to Client's account and to pay
on demand any debit balance owing with respect to Client's account.
c) Client agrees that securities and other property in Client's account may be
carried in your general loans and may be pledged or hypothecated separately or
in common with other securities and any other property for the sum due to you
thereon or for a greater sum and without retaining in your possession and
control for delivery a like amount of similar securities or other property and
that certain rights of ownership, including the right to vote such securities,
may be transferred to you or by you to others.
BY SIGNING HERE, CLIENT INDICATES A DESIRE TO APPLY FOR A SECURITIES MARGIN
ACCOUNT, AGREES TO ABIDE BY ALL PROVISIONS IN SECTION 16, AND ACKNOWLEDGES THAT
CLIENT'S SECURITIES MAY BE LOANED TO GOLDMAN, SACHS & CO. OR TO OTHERS.
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SIGNATURE: DATE:
/s/ JOHN E. MARTIN 8/19/98 TRUSTEE/TRUSTOR
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SIGNATURE: DATE:
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SIGNATURE: DATE:
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SIGNATURE: DATE:
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17. ASSOCIATION OF FIDUCIARIES AND BENEFICIARIES. Check all applicable boxes
and provide an explanation below if any fiduciary or beneficiary of this
account is associated with any of the entities listed below, or if an immediate
family member of any fiduciary or beneficiary (spouse, brother, sister,
parents, children, mother-in-law, father-in-law, brother-in-law, sister-in-law,
son-in-law, daughter-in-law), or other person, who supports any fiduciary or
beneficiary to a material extent, is associated with any of the following
entities:
[ ] an exchange;
[ ] a member or member organization of any exchange or the NASD or any
broker-dealer;
[ ] a bank, savings and loan institution, trust company, insurance company; or
[ ] an investment company, an investment advisory firm or other institutional
investment entity.
Explanation:
_______________________________________________________________________________
_______________________________________________________________________________
_______________________________________________________________________________
18. FINANCIAL INFORMATION OF TRUST, ESTATE OR GUARDIANSHIP.
<TABLE>
$250,000 $500,000
Below to to Over
$250,000 $500,000 $1,000,000 $1,000,000
-------- -------- ---------- ----------
<S> <C> <C> <C> <C>
Total Net Worth [ ] [ ] [ ] [X]
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Annual Income [ ] [ ] [ ] [X]
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Total Net Liquid Assets [ ] [ ] [ ] [X]
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</TABLE>
PLEASE SEE NEXT PAGE
<PAGE> 3
19. INVESTMENT OBJECTIVES. While individual transactions may vary, Client's
investment objectives with respect to securities transactions are set forth
below. Such information does not apply to other transactions with you or with
any of your affiliates. PLEASE RANK ALL APPLICABLE OBJECTIVES IN ORDER OF
PREFERENCE ("1" INDICATES THE HIGHEST PREFERENCE, "5" INDICATES THE LOWEST
PREFERENCE).
1 GROWTH: Client is more interested in having the market value of the portfolio
grow over the long term than in current income from portfolio; Client is
prepared to accept additional risk to principal to achieve this growth.
3 INCOME: Client is more interested in obtaining a steady stream of current
income from the portfolio than in growth of the portfolio.
___ SAFETY OF PRINCIPAL: Client is interested primarily in preserving the value
of the account assets, and is willing to forego more growth or higher income.
2 TRADING PROFITS: Client wants to take advantage of short-term trading
opportunities, which may involve establishing and then liquidating positions
quickly.
___ SPECULATION: Client is interested in taking above-average risks to principal
in an attempt to achieve above-average returns.
The above information regarding Client's investment objectives represents
Client's current preference and supersedes any indications of such preferences
that Client may have previously provided to you with respect to securities
transactions other than information specifically supplied with respect to
options transactions.
20. ORDERS PLACED BY OTHERS. If you are authorizing someone to place orders on
your behalf, please indicate the person's name below AND COMPLETE THE ENCLOSED
TRADING AUTHORIZATION.
_______________________________________________________________________________
21. DISCLOSURE TO ISSUERS. Client understands that you may be required to
disclose to securities issuers the name, address and securities positions with
respect to securities held in the Client's account in your or your nominee's
name unless you are notified that Client objects. Client hereby notifies you
that Client wishes such disclosure to be made.
[ ] CLIENT SHOULD CHECK THIS BOX IF CLIENT DOES NOT CONSENT TO SUCH DISCLOSURE.
22. PAYMENT AGREEMENT. You are authorized to rely on the payment instructions
set forth below until written notice believed by you in good faith to be genuine
of any changes regarding such instructions is received by you. In addition, when
so instructed, you may, but you are not required to, follow payment instructions
which differ from the instructions set forth below with respect to specified
transactions, provided, however, that only Client or a person with trading
authorization over Client's account may authorize the transfer of funds to an
account which is not in the name of the trust, estate, or guardian account
established hereunder.
PAYMENT INSTRUCTIONS:
________________________________________________________________________________
Name of Bank or Other Recipient:
________________________________________________________________________________
Address:
________________________________________________________________________________
Name of Account:
________________________________________________________________________________
Account Number:
________________________________________________________________________________
Contact Name and Telephone Number (if applicable):
________________________________________________________________________________
The following persons are among those authorized to transfer funds:
________________________________________________________________________________
________________________________________________________________________________
BY SIGNING BELOW, CLIENT ACKNOWLEDGES RECEIPT OF A COPY OF THIS TRUST, ESTATE
AND GUARDIAN ACCOUNT AGREEMENT. A PREDISPUTE ARBITRATION CLAUSE IS CONTAINED
IN SECTION 12 HEREOF.
________________________________________________________________________________
SIGNATURE: DATE:
/s/ John E. Martin 8/19/98 Trustee/Trustor
________________________________________________________________________________
Please Print Name:
________________________________________________________________________________
SIGNATURE: DATE:
________________________________________________________________________________
Please Print Name:
________________________________________________________________________________
SIGNATURE: DATE:
________________________________________________________________________________
Please Print Name:
________________________________________________________________________________
SIGNATURE: DATE:
________________________________________________________________________________
Please Print Name:
________________________________________________________________________________
FOR GOLDMAN, SACHS & CO. USE ONLY
________________________________________________________________________________
Account Representative Receiving Account Manager Reviewing Account
________________________________________________________________________________
Date Date
________________________________________________________________________________
