<PAGE> 1
SCHEDULE 14A INFORMATION
Proxy Statement Pursuant to Section 14(a)
of the Securities Exchange Act of 1934
(Amendment No.____)
Filed by the Registrant [X]
Filed by a Party other than the Registrant [ ]
Check the appropriate box:
[ ] Preliminary Proxy Statement
[ ] Confidential, for Use of the Commission Only (as permitted by Rule
14a-6(e)(2))
[X] Definitive Proxy Statement
[ ] Definitive Additional Materials
[ ] Soliciting Material Pursuant to ss.240.14a-11(c) or ss.240.14a-12
BIKERS DREAM, INC.
(Name of Registrant as Specified in Its Charter)
-------------------------------------------------------------
(Name of Person(s) Filing Proxy Statement, if other than the Registrant)
Payment of Filing Fee (Check the appropriate box):
[X] No fee required.
[ ] Fee computed on table below per Exchange Act Rules 14a-6(i)(1) and 0-11.
1) Title of each class of securities to which transaction applies:
-----------------------------------------------
2) Aggregate number of securities to which transaction applies:
-----------------------------------------------
3) Per unit price or other underlying value of transaction computed
pursuant to Exchange Act Rule 0-11 (set forth the amount on which the
filing fee is calculated and state how it was determined):
-----------------------------------------------
4) Proposed maximum aggregate value of transaction:
-----------------------------------------------
5) Total fee paid:
-----------------------------------------------
[ ] Fee paid previously with preliminary materials.
[ ] Check box if any part of the fee is offset as provided by Exchange
Act Rule 0-11 (a) (2) and identify the filing for which the offsetting
fee was paid previously. Identify the previous filing by registration
statement number, or the Form or Schedule and the date of its filing.
1) Amount Previously Paid: __________________________
2) Form, Schedule or Registration Statement No.: _______________
3) Filing Party: ___________________________________________
4) Date Filed: ____________________________________________
<PAGE> 2
BIKERS DREAM, INC.
-----------------------
NOTICE OF ANNUAL MEETING OF SHAREHOLDERS
To Be Held September 23, 1999
-----------------------
To the Shareholders of Bikers Dream, Inc.:
The Annual Meeting of Shareholders of Bikers Dream, Inc., a California
corporation (the "Company"), will be held at 237 Park Avenue, 9th floor, New
York, New York 10017 on September 23, 1999, at 9:00 a.m., local time, and any
adjournments thereof, to consider and act upon the following matters:
(1) The election of five directors;
(2) The authorization and ratification of: (i) the issuance and sale in
private placements of up to 3,090 shares (the "Preferred Shares") of
the Company's Series D 5% Cumulative Convertible Preferred Stock, par
value $0.01 per share (the "Series D Preferred Stock") and Common Stock
Purchase Warrants to purchase up to 125,000 shares of Common Stock
("Warrants"), (ii) the issuance of that number of shares of the
Company's Common Stock, no par value ("Common Stock"), issuable upon
conversion of the Series D Preferred Stock being approved for issuance,
based on the conversion formula set forth in the Certificate of
Determination governing the Series D Preferred Stock, (iii) the
issuance of the maximum number of shares of Common Stock issuable upon
exercise of the Warrants in accordance with their terms; and (iv) the
issuance of Series D Preferred Stock, in accordance with the terms of
the Certificate of Determination governing the Series D Preferred
Stock, as a dividend upon all shares of Series D Preferred Stock being
approved for issuance;
(3) The ratification of the selection of Singer, Lewak, Greenbaum &
Goldstein LLP as the Company's independent certified public accountants
for fiscal year 1999; and
(4) The transaction of such other business as may properly come before the
meeting and any adjournments thereof.
The subject matter of each of the above proposals is described within the
accompanying Proxy Statement.
The Board of Directors has fixed the close of business on August 6, 1999 as
the record date for the determination of shareholders entitled to notice of, and
to vote at, the Annual Meeting.
In order to constitute a quorum for the conduct of business at the Annual
Meeting, holders of a majority of all outstanding voting shares of the Company
must be present in person or be represented by proxy.
Whether or not you expect to attend the Annual Meeting in person, please
date, sign and mail the enclosed Proxy in the postage-paid return envelope
provided as promptly as possible. The Proxy is revocable and will not affect
your right to vote in person if you attend the meeting.
By Order of the Board of Directors
Herm Rosenman
President and Chief Executive Officer
Mira Loma, California
August 23, 1999
<PAGE> 3
BIKERS DREAM, INC.
3810 WACKER DRIVE
MIRA LOMA, CALIFORNIA 91752
-----------------------
PROXY STATEMENT
FOR
ANNUAL MEETING OF SHAREHOLDERS
TO BE HELD SEPTEMBER 23, 1999
-----------------------
To Our Shareholders:
Your Board of Directors furnishes this Proxy Statement in connection with
its solicitation of your Proxy in the form enclosed to be used at the Company's
Annual Meeting of Shareholders to be held on September 23, 1999, at the time and
place and for the purposes set forth in the accompanying Notice of Annual
Meeting of Shareholders.
The Company's Annual Report on Form 10-KSB/A, as filed with the Securities
and Exchange Commission, including audited financial statements, is being mailed
to you on or about August 23, 1999 with this Proxy Statement.
We cordially invite you to attend the Annual Meeting. Whether or not you
plan to attend, please date, sign and return your Proxy promptly in the postage
paid return envelope provided. You may revoke your Proxy at any time prior to
its exercise at the meeting by notice to the Company's Secretary and, if you
attend the meeting, you may vote your shares in person. You may also revoke your
Proxy by returning a duly executed Proxy bearing a later date. If no instruction
is given, the proxy will be voted FOR each of the proposals described herein.
The named proxies may vote in their discretion upon such other matters as may
properly come before the meeting.
Only shareholders of record at the close of business on August 6, 1999 will
be entitled to vote at the meeting. As of August 6, 1999, the record date for
determining shareholders entitled to notice of and to vote at the Annual
Meeting, the Company had issued and outstanding 5,137,590 shares of common
stock, no par value ("Common Stock"), one share of Series A Convertible
Preferred Stock, no par value (the "Series A Preferred Stock"), 702,194 shares
of Series B Convertible Preferred Stock, no par value (the "Series B Preferred
Stock") and 1,545 shares of Series D Convertible Preferred Stock ("Series D
Preferred Stock").
Holders of Common Stock and Series A Preferred Stock are entitled to one
vote per share. Holders of Series B Preferred Stock are entitled to that number
of votes equal to the number of shares of Common Stock issuable upon conversion
of such Series B Preferred Stock at the time the shares are voted, which is
140,439, as of August 6, 1999. Holders of Series D Preferred Stock have no
voting rights. All shares entitled to vote shall hereinafter be collectively
referred to as "Shares." Notwithstanding the foregoing, shareholders may
exercise cumulative voting rights with respect to the election of directors.
Cumulative voting allows a shareholder to cast a number of votes equal to the
number of directors to be elected (five) multiplied by the number of votes held
in his or her name on the Record Date. This total number of votes may be cast
for one nominee or may be distributed among as many candidates as the
shareholder desires.
<PAGE> 4
Pursuant to California law, no shareholder can cumulate votes unless prior
to the voting at the Annual Meeting, a shareholder has given notice of the
shareholder's intention to cumulate the shareholder's votes at the Annual
Meeting and the nominee for which the shareholder intends to cumulate votes has
properly been nominated. If any shareholder has given such notice, all
shareholders may cumulate their votes for candidates in nomination. The Board of
Directors does not, at this time, intend to give such notice or to cumulate the
votes it may hold pursuant to the proxies solicited herein unless the required
notice by a shareholder is given, in which event votes represented by proxies
delivered pursuant to this Proxy Statement may be cumulated in the discretion of
the proxy holders, in accordance with the recommendation of the Board of
Directors. Therefore, discretionary authority to cumulate votes in such event is
solicited in this Proxy Statement.
The presence, in person or by proxy, of a majority of the Shares is
necessary to constitute a quorum at the Annual Meeting. The five candidates for
election of directors receiving the highest number of votes will be elected,
whether or not votes are cumulated. The ratification of the appointment of
Singer, Lewak, Greenbaum & Goldstein, LLP as the Company's independent public
accountants for the 1999 fiscal year requires the approval of a majority of the
Shares present or represented by proxy and voting at the meeting. The approval
of a majority of the Shares present or represented by proxy and voting at the
meeting is also required for the authorization and ratification of: (i) the
issuance and sale in private placements of up to 3,090 shares (the "Preferred
Shares") of Series D Preferred Stock and Common Stock Purchase Warrants to
purchase up to 125,000 shares of Common Stock ("Warrants"), (ii) the issuance of
that number of shares of Common Stock issuable upon conversion of the Series D
Preferred Stock being approved for issuance, based on the conversion formula set
forth in the Certificate of Determination governing the Series D Preferred
Stock, (iii) the issuance of the maximum number of shares of Common Stock
issuable upon exercise of the Warrants in accordance with their terms; and (iv)
the issuance of Series D Preferred Stock, in accordance with the terms of the
Certificate of Determination governing the Series D Preferred Stock, as a
dividend upon all shares of Series D Preferred Stock being approved for
issuance.
Abstentions and "broker non-votes" (shares which are held by brokerage
firms for their clients, but as to which the firms have not received voting
instructions from their clients and therefore do not have the authority to vote)
will be counted for purposes of determining a quorum, but will not count as
votes in favor of the election of directors, and will have no effect on the vote
on Proposals 2 and 3.
The Company has been advised by its directors and officers that they expect
that the 979,310 outstanding shares of Common Stock over which they have or
share voting power, representing 19% of the total voting shares outstanding as
of the record date, will be voted in favor of the proposals presented in this
Proxy Statement. See "Beneficial Ownership of Securities."
The entire cost of soliciting proxies will be borne by the Company,
including expenses in connection with preparing and mailing proxy solicitation
materials. In addition to use of the mails, proxies may be solicited by
officers, directors and regular employees of the Company, without extra
compensation, by telephone, telegraph or personal solicitation, and no
additional compensation will be paid to such persons. If requested, the Company
will reimburse brokerage houses and other custodians, nominees and fiduciaries
for their reasonable expenses incurred in mailing proxy material to their
principals.
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<PAGE> 5
PROPOSAL 1
ELECTION OF DIRECTORS
At the Annual Meeting, management will present as nominees and recommend to
the shareholders that each of the first five persons listed below (the current
directors) be elected to serve as directors until the next annual meeting of
shareholders or until their respective successors are duly elected and
qualified. Each nominee has agreed to serve if elected.
Proxies will be voted for the election of the five nominees named below
unless instructions are given to the contrary. Proxies cannot be voted for a
greater number of persons than the number of nominees named. Should any nominee
become unable to serve as a director, the persons named in the enclosed form of
Proxy will, unless otherwise directed, vote for the election of such other
person as the present Board of Directors may recommend to fill that position.
DIRECTORS AND EXECUTIVE OFFICERS
The table below sets forth certain biographical information, present
occupation and business experience for the past five years of each director and
executive officer of the Company, including those persons nominated to serve on
the Board of Directors. Officers of the Company are elected by the Board of
Directors and hold office until their successors are chosen and qualified, until
their death or until they resign or have been removed from office. All corporate
officers serve at the discretion of the Board of Directors.
NAME OFFICE
---- ------
Herm Rosenman Chief Executive Officer, President;
Director
Donald J. Duffy Director
Humbert Powell Director
John K. Russell Director
Bruce Scott Director
Michael J. Fisher Chief Financial Officer
Harold L. Collins Vice President and General Counsel
Anne Todd Controller
HERM ROSENMAN, age 51, has been the Company's president and chief executive
officer and a director since September 1997. At the annual meeting of the
shareholders of the Company in July 1998, he was appointed chairman of the board
of directors. From 1996 through 1997, Mr. Rosenman was a principal with Pacific
Consulting Group. From 1994 to 1997, Mr. Rosenman was the chief executive
officer of RadNet, a healthcare provider. From 1991 to 1995, he was the
President and chief executive officer of Ireland Coffee, an upscale coffee chain
he founded in a joint venture. From 1988 to 1991, Mr. Rosenman was the chief
financial officer of Rexene, a plastics and petrochemicals manufacturer. Prior
to 1988, Mr. Rosenman worked for Coopers & Lybrand for 20 years, 10 of which he
was a partner, where he served clients in many industries including
manufacturing, telecommunications, pharmaceuticals and construction. Mr.
Rosenman also serves on the board of directors of Integrated Intelligence Corp.,
a privately owned company. Mr. Rosenman received a B.B.A. from Pace University
and an M.B.A. from the Wharton School of Business. Mr. Rosenman is married to
Diana Rosenman, Director of Marketing and Public Relations of the Company. See
"Certain Relationships and Related Transactions."
3
<PAGE> 6
DONALD J. DUFFY, age 32, has been a director since December 1995 and is the
former chief executive officer of the Company. Until the last Annual Meeting
held in 1998, Mr. Duffy served as the chairman of the board of directors. Mr.
Duffy is a principal of Meyer, Duffy & Associates, Inc. ("Meyer, Duffy"), an
investment management and strategic consulting group based in New York which he
founded in September 1994. Meyer, Duffy is involved in the financing of
development stage private and public companies. From June 1992 to September
1994, Mr. Duffy was a senior analyst at Oak Hall Capital Advisors, specializing
in research and investments in retail, gaming and technology companies.
HUMBERT POWELL, III, age 61, has been a director since December 1995. Mr. Powell
has been an associate with Sanders, Morris and Mundy, an investment banker and
broker/dealer, since December 1996. Prior to joining Sanders, Morris and Mundy,
Mr. Powell held a variety of positions in corporate finance and investment
banking, including Chairman of Marleau, Lemire USA from 1995 to November 1996
and Senior Managing Director of Bear Stearns & Co. from 1984 to 1994. Mr. Powell
also serves on the board of directors of Osicom Technologies.
JOHN K. RUSSELL, age 49, has been a director since May 1997. Mr. Russell is
President of the Ducati Owners Club Northeast and owns and operates a fine arts
business. Mr. Russell has over twenty years of retail experience and an
extensive background managing, supervising and consulting in motorcycle related
businesses.
BRUCE A. SCOTT, age 52, has been a director since July 1998. Since January 1998,
Mr. Scott has been the President of Cana Capital Corporation, the Secretary and
Treasurer of Big Bike Boutique, a retail apparel distributor, the President of
Bikers Dream stores in Tampa Bay, Jacksonville, Panama City and Daytona,
Florida, and the president of another motorcycle dealership in Florida. From
December 1995 through December 1997, Mr. Scott was the Senior Vice President of
Republic Security Services, a security system company which was, at the time, a
division of Republic Industries. From 1985 to 1995 Mr. Scott was the President
of Scott Alarm, a privately held security system company that was sold to
Republic Industries in 1995.
MICHAEL J. FISHER, age 52, was appointed in July 1999 to serve as chief
financial officer. From 1997 until the time he joined the Company, Mr. Fisher
was chief financial officer of Pro-Mart Industries, a consumer laundry and
clothing storage products company. From 1989 to 1996, Mr. Fisher was Vice
President Operations, Service and Finance at Thermador Corporation, a
manufacturer of high-end cooking products.
HAROLD L. COLLINS, age 48, was appointed in April 1999 by the board of directors
to serve as vice president and general counsel. Mr. Collins has been employed by
the Company since November 1998. From 1977 until the time he joined the Company,
Mr. Collins maintained a private law practice. His areas of practice included
business litigation, personal injury litigation, family law and adversary
proceedings in bankruptcy.
ANNE TODD, age 31, was named controller and appointed corporate secretary in
1997. Ms. Todd was previously assistant controller for the Company from 1995 to
1997. Prior to joining the Company, Ms. Todd was assistant controller for
American Standard from 1993 to 1995.
4
<PAGE> 7
MEETINGS AND COMMITTEES OF THE BOARD OF DIRECTORS
The Board of Directors convened five formal meetings during the fiscal year
ended December 31, 1998. In addition, the Board took action several times during
the year by unanimous written consent. No Director attended less than 75% of the
total number of meetings of the Board of Directors or all committees of which he
was a member, except that Mr. Rosenman abstained from participating in the one
meeting of the compensation committee which was held during the year to
determine his bonus for 1998.
The Board has a compensation committee and an audit committee. The
compensation committee is comprised of Messrs. Duffy, Rosenman and Russell. The
audit committee is comprised of Messrs. Duffy, Powell and Russell. The audit
committee meets to review the results of the annual audit and to discuss the
financial statements. The compensation committee evaluates the performance of
the Company's officers and makes recommendations to the Board concerning
compensation. The Board does not have a nominating committee.
In 1998, the audit committee did not convene a formal meeting, as the
results of the audit for the fiscal year ended 1997 were reviewed by the entire
membership of the Board of Directors. The compensation committee held one formal
meeting in 1998, the purpose of which was to discuss Mr. Rosenman's bonus for
1998. See "Executive Compensation."
COMPENSATION OF DIRECTORS
During the fiscal year ended December 31, 1998, no cash compensation was
paid to directors of the Company for their services as directors.
As partial consideration for Mr. Rosenman's services as a director of the
Company, the Company granted to Mr. Rosenman options to purchase 10,000 shares
of Common Stock at an exercise price of $5.00 per share, on September 1, 1997,
which were repriced at $4.00 per share on October 22, 1998 and repriced again at
$3.00 per share on December 28, 1998.
In October 1998, options to purchase 10,000 shares at a price of $7.90 that
were previously granted to Humbert Powell and options to purchase 10,000 shares
at a price of $7.05 that were previously granted to John Russell were canceled
and new options were issued to each of them at an exercise price of $4.00 per
share, which price includes a premium of approximately 10% above the fair market
value of the Common Stock as of the date of approval by the Compensation
Committee. The Compensation Committee approved the reductions in the exercise
price from $7.90 and $7.05 to $4.00 to more closely reflect the market price of
the Common Stock and thereby maintain the value of the options as an incentive.
As a result of this stock option repricing, the Company canceled a total of
20,000 stock options and granted the same number of new stock options (10,000
options to each of Humbert Powell and John Russell) at the aforementioned
exercise price of $4.00 per share.
In July 1998, the Company's stockholders approved a stock option plan (the
"Plan") that authorizes incentive stock options for employees (including
officers) and non-qualified stock options for non-employee directors and
consultants. A total of 1,000,000 shares of Common Stock were reserved for
issuance under the Plan.
Under the Plan, as of the date of their first election or appointment as
directors, each director of the Company is automatically granted non-qualified
stock options to purchase 5,000 shares of the Company's Common Stock, and
thereafter on each anniversary of their first election or appointment as
director, each director of the Company will automatically be granted
non-qualified stock options to purchase 2,000 shares of the Company's Common
Stock. Except as expressly authorized by the Plan, directors of the Company
5
<PAGE> 8
who are members of the committee that administers the Plan are not otherwise
eligible to participate in the Plan. The exercise price for each non-qualified
stock option granted under the Plan is the fair market value of the Company's
Common Stock on the date of grant. Each such non-qualified stock option has a
term of five years, subject to earlier termination. If a holder of any
non-qualified stock option granted under the Plan no longer serves on the Board,
then the outstanding non-qualified stock options of such holder will expire one
year after such termination, or their stated expiration date, whichever occurs
first.
During the year ended December 31, 1998, the Company's five directors were
each awarded options under the Plan for the purchase of 5,000 shares of Common
Stock, all with an exercise price of $3.75 per share, none of which were
exercised during that year.
SECTION 16(A) BENEFICIAL OWNERSHIP REPORTING COMPLIANCE
Section 16(a) of the Securities Exchange Act of 1934 requires the Company's
directors and executive officers, and persons who beneficially own more than ten
percent of a registered class of the Company's equity securities ("reporting
persons"), to file with the Securities and Exchange Commission (the
"Commission") initial reports of ownership and reports of changes in ownership
of Common Stock and other equity securities of the Company. Reporting persons
are required by Commission regulations to furnish the Company with copies of all
Section 16(a) forms they file.
Except as described below, to the Company's knowledge, based solely on a
review of the copies of reports and amendments thereto on Forms 3, 4 and 5
furnished to the Company by reporting persons during, and with respect to, its
fiscal year ended December 31, 1998, and on a review of written representations
from reporting persons to the Company that no other reports were required to be
filed for such fiscal year, all Section 16(a) filing requirements applicable to
the Company's directors, executive officers and greater than ten percent
beneficial owners during such period were satisfied in a timely manner, except
(i) Anne Todd, who was appointed Principal Accounting Officer in 1998, failed to
timely file one report, and (ii) Christopher Ebert, who served as Chief
Financial Officer from June 22, 1998 to October 7, 1998, failed to timely file
one report. In addition, based on information available to the Company, it
appears that (i) Humbert Powell III, who was appointed as a director in 1995,
failed to timely file two reports, one of which related to one transaction and
(ii) Donald Duffy, who was then the Co-Chief Executive Officer and a director of
the Company, failed to timely file three reports with respect to five
transactions in 1997.
BENEFICIAL OWNERSHIP OF SECURITIES
The following table sets forth certain information regarding ownership of
the Company's voting securities, which include its Common Stock, Series A
Preferred Stock and Series B Preferred Stock, as of August 6, 1999, by each
director of the Company, the chief executive officer of the Company, each person
known by the Company to be the beneficial owner of more than five percent of any
class of the Company's voting securities, and all of the directors and the chief
executive officer of the Company as a group, excluding in each case rights under
options or warrants not exercisable within 60 days. All persons named have sole
voting power and investment power over their shares except as otherwise noted.
The figures set forth below have been adjusted to reflect the Company's reverse
stock split as of February 5, 1998.
6
<PAGE> 9
<TABLE>
<CAPTION>
TITLE OF NAME AND ADDRESS OF NUMBER OF PERCENT OF
CLASS BENEFICIAL OWNER SHARES CLASS
-------- ------------------- OWNED ---------
---------
<S> <C> <C> <C>
Common Stock Herm Rosenman (1) 205,001 (2) 3.84% (3)
3810 Wacker Drive
Mira Loma, CA 91752
Common Stock Donald Duffy (4) 1,403,643 (5) 25.13% (3)
c/o Meyer, Duffy & Associates,
Inc.
237 Park Avenue
New York, NY 10017
Common Stock MD Strategic L.P. 933,448 (6) 17.45% (3)
c/o Meyer, Duffy & Associates,
Inc.
237 Park Avenue
New York, NY 10017
Common Stock Humbert Powell, III (7) 15,000 (8) * (3)
712 Fifth Avenue, 11th Floor
New York, NY 10019
Common Stock John K. Russell (9) 15,000 (10) * (3)
3810 Wacker Drive
Mira Loma, CA 91752
Common Stock Bruce Scott (11) 22,000 (12) * (3)
3810 Wacker Drive
Mira Loma, CA 91752
Common Stock Bulldog Capital Management 398,834 7.8% (3)
Limited Partnership, Inc.
33 North Glendon Avenue
Suite 750
Clearwater, FL 33755
Common Stock Directors and Officers as a Group 1,660,644 28.51% (3)
(5)
</TABLE>
7
<PAGE> 10
<TABLE>
<CAPTION>
TITLE OF NAME AND ADDRESS OF NUMBER OF PERCENT OF
CLASS BENEFICIAL OWNER SHARES CLASS
-------- ------------------- OWNED ---------
---------
<S> <C> <C> <C>
Series A Pfd Elizabeth M. Custer TTEE FBO 1 100% (13) (14)
William M. Custer
14 S. High Street
P.O. Box 673
New Albany, OH 43504
Series A Pfd. Stock Directors and Officers as a Group 0 0% (14)
Series B Pfd. Stock Mull Acres Investments, Inc. 600,000 85.4% (15) (16)
c/o Furman Selz
230 Park Avenue
New York, NY 10169
Series B Pfd. Stock Len Lichter 102,194 14.6% (17)(16)
405 Park Avenue
New York, NY 10022
Series B Pfd. Stock Directors and Officers as a Group 0 0% (16)
</TABLE>
- --------------------------------------------
(1) Mr. Rosenman is a Director, President and CEO of the Company.
(2) Includes 667 shares of Common Stock received in consideration of Mr.
Rosenman's services as a consultant to the Company, and 20,000 shares
granted pursuant to Mr. Rosenman's stock grant and stock option agreement
with the Company (20,000 of said shares are issuable on the earlier of
termination of employment or September 1, 2000). Mr. Rosenman disclaims
beneficial ownership of 20,000 of the shares described in the immediately
preceding sentence as they are not issuable until the earlier of September
1, 2000 or the termination of his employment. Also includes 178,334 shares
underlying presently exercisable options. Does not include: 10,000 shares
granted to Mr. Rosenman pursuant to his stock grant and stock option
agreement with the Company which do not vest until January 1, 2000. Also
does not include 400,000 shares of Common Stock underlying options issued
to Mr. Rosenman which will not vest within 60 days. Includes 6,000 shares
underlying presently exercisable options that were granted to Diana
Rosenman, Mr. Rosenman's wife. Does not include 10,000 shares of Common
Stock issuable to Diana Rosenman upon the exercise of options which will
not vest within 60 days.
(3) Percent of class calculation based on 5,137,590 shares of Common Stock
outstanding as of August 6, 1999, plus number of shares of Common Stock,
if any, issuable to the named securityholders upon conversion of preferred
stock and/or exercise of options and warrants exercisable within 60 days.
8
<PAGE> 11
(4) Mr. Duffy is a Director of the Company.
(5) Includes (i) 11,193 shares of Common Stock owned by Mr. Duffy individually,
(ii) 55,000 shares of Common Stock which Mr. Duffy has the right to acquire
upon the exercise of currently exercisable stock options, (iii) 944,450
shares of Common Stock which are held by various investment partnerships of
which Mr. Duffy is a member of the limited liability company which serves
as the general partner, including MD Strategic L.P., and a corporation of
which Mr. Duffy is an executive officer (collectively, the "Investment
Entities"), and (iv) 393,000 shares of Common Stock which the Investment
Entities have the right to acquire upon the exercise of currently
exercisable stock options and/or warrants. Mr. Duffy disclaims beneficial
ownership of all securities beneficially owned by the Investment Entities.
(6) Includes (i) 720,448 shares of Common Stock owned by MD Strategic L.P., and
(ii) 213,000 shares of Common Stock which MD Strategic L.P. has the right
to acquire upon the exercise of currently exercisable warrants. Mr. Donald
Duffy is a member of the general partner of MD Strategic L.P. (see footnote
5 to this table).
(7) Mr. Powell is a director of the Company.
(8) Issuable upon exercise of presently exercisable options.
(9) Mr. Russell is a director of the Company.
(10) Issuable upon exercise of presently exercisable options.
(11) Mr. Scott is a director of the Company.
(12) Includes: (i) 17,000 shares of Common Stock and (ii) 5,000 shares of
Common Stock issuable upon the exercise of currently exercisable options.
(13) Represents less than 5% of the outstanding Common Stock of the Company as
of August 6, 1999, assuming conversion of said share of Series A
Preferred Stock to Common Stock on such date.
(14) Percent of class calculation based on one share of Series A Preferred Stock
outstanding as of August 6, 1999.
(15) Represents less than 5% of the outstanding Common Stock of the Company as
of August 6, 1999, assuming conversion of said 600,000 shares of Series B
Preferred Stock to Common Stock on such date.
(16) Percent of class calculation based on 702,194 shares of Series B Preferred
Stock outstanding as of August 6, 1999.
(17) Represents less than 5% of the outstanding Common Stock of the Company as
of August 6, 1999, assuming conversion of said 102,194 shares of Series B
Preferred Stock to Common Stock on such date.
* Represents less than 1% of the outstanding shares of Common Stock of the
Company as of August 6, 1999.
9
<PAGE> 12
EMPLOYMENT AGREEMENTS
The Company entered into a three year employment agreement with Herm
Rosenman in September 1997, pursuant to which Mr. Rosenman is employed as
President and Chief Executive Officer of the Company. The term of this agreement
was extended to five years by amendment in December 1997. Under the terms of
this agreement, as amended, Mr. Rosenman is to receive base compensation of
$17,361 for each month of the first, second and third years, and at least
$20,000 for each month of the fourth and fifth years, of the term. In accordance
with the terms of the employment agreement and as agreed to by the parties, the
Company deferred payment of $7,361 each month for the months of September and
October 1997, $4,861 each month for the months of November and December 1997 and
$2,361 each month during the year of 1998. Further, pursuant to the employment
agreement, the Company is obligated to pay all amounts so deferred in equal
monthly installments throughout the remainder of the term commencing January
1999, determined by dividing the total amount of payments deferred by the total
number of monthly payments remaining during the term as of January 1, 1999. As
of January 1, 1999, the total amount deferred was $52,778. The Board may
annually review Mr. Rosenman's salary and, in its sole discretion, based upon
such factors as the Board may choose to consider, may increase such salary. Mr.
Rosenman is also eligible to participate in any bonus plans applicable to
executive officers of the Company as may be established by the Board. In
addition, the Company reimburses Mr. Rosenman for certain automobile expenses
and provides him with a motorcycle manufactured by the Company for his personal
use, and if Mr. Rosenman serves the full five year term of his employment
agreement, title to this motorcycle will be transferred to him at the end of the
term. In the event that Mr. Rosenman becomes physically or mentally disabled or
incapacitated during any period of the term, the Company will pay him his base
compensation less the aggregate amount of all income disability benefits that he
may, or may be entitled to, receive for such period. Mr. Rosenman's employment
agreement further provides that on the date of any termination without cause of
Mr. Rosenman's employment under his employment agreement arising from a change
in control, the Company is obligated to pay to Mr. Rosenman an amount equal to
18 months' salary, as determined according to the amount paid to Mr. Rosenman at
the time of termination, payable on a monthly basis.
In connection with Mr. Rosenman's employment agreement, the Company and
Mr. Rosenman entered into a stock grant and stock option agreement in December
1997. Pursuant to the stock grant and stock option agreement, the Company agreed
to grant 30,000 shares of Common Stock (after giving effect to the reverse stock
split of the Company's Common Stock that was effected as of February 5, 1998) to
Mr. Rosenman, which shares would vest in equal allotments of 10,000 shares on
each of September 1, 1998, September 1, 1999 and September 1, 2000, provided
that Mr. Rosenman was still employed by the Company under his employment
agreement at each such vesting date. Under an amendment to the stock grant and
stock option agreement entered into in December 1998, the vesting dates for the
first two allotments of 10,000 shares (a total of 20,000 shares) were changed to
January 1, 1999, and the vesting date for the last allotment of 10,000 shares
was changed to January 1, 2000 in lieu, partially, of a cash bonus to Mr.
Rosenman. Once vested, none of the 30,000 shares are issuable until September 1,
2000 or upon termination of Mr. Rosenman's employment, whichever occurs first.
Under the original stock grant and stock option agreement, the Company
agreed to grant 460,000 options to Mr. Rosenman at an exercise price of $5.00
per share (as adjusted for the reverse stock split of the Common Stock of the
Company effected as of February 5, 1998), which shares would vest in specified
allotments over a period of five years. In October 1998, these options, together
with 13,334 previously granted options, were canceled and new options were
issued at an exercise price of $4.00 per share, which price included a premium
of approximately 10% above the fair market value of the Common Stock as of the
date of approval by the Compensation Committee. The Compensation Committee
approved the reduction in
10
<PAGE> 13
the exercise price from $5.00 to $4.00 to more closely reflect the market price
of the Common Stock and thereby maintain the value of the options as an
incentive. As a result of this stock option repricing, the Company canceled a
total of 473,334 stock options and granted the same number of new stock options
at the aforementioned exercise price of $4.00 per share.
In December 1998, all 473,334 options were canceled and new options
were issued at an exercise price of $3.00 per share, which price includes a
premium of approximately 20% above the fair market value of the Common Stock as
of the date of approval by the Compensation Committee. In lieu, partially, of a
cash bonus, the Compensation Committee approved the reduction in the exercise
price from $4.00 to $3.00 per share to provide greater economic incentive to Mr.
Rosenman to remain with the Company and to avoid the expense to the Company of a
cash or stock bonus. As a result of this stock option repricing, the Company
canceled a total of 473,334 stock options and granted the same number of new
stock options at the aforementioned exercise price of $3.00 per share. Under the
original stock grant and stock option agreement, the vesting schedule for the
460,000 options granted thereunder provided (after giving effect to the reverse
stock split of the Company's Common Stock that was effected as of February 5,
1998) for vesting of 80,000 options on September 1, 1998, 80,000 options on
September 1, 1999 (of which 40,000 were performance-based options), and 100,000
options (of which 50,000 were performance-based options) on each of September 1,
2000, September 1, 2001 and September 1, 2002. Pursuant to the amendment to
stock grant and stock option agreement, this schedule was amended in December
1998 to provide, in partial substitution for a cash bonus, for vesting of the
remaining then unvested 380,000 options as follows: 80,000 options (of which
40,000 options were performance-based options) on December 31, 1998 and 100,000
options (of which 50,000 options are performance-based options) on each of
December 31, 1999, December 31, 2000 and December 31, 2001. All of the 80,000
options scheduled to vest on December 31, 1998 (including the 40,000
performance-based options) vested on such date.
On May 29, 1999, the Compensation Committee approved an additional
grant of 100,000 options to Mr. Rosenman at an exercise price of $3.06 per
share. 50,000 of these options vest upon the earlier of: (i) the market price of
the Company's Common Stock reaching an average of $6.00 per share for a period
of 90 consecutive trading days during any twelve month period preceding the
filing of the Company's annual report with the Commission and for the additional
ten trading days following the filing of such annual report; (ii) the
termination of Mr. Rosenman without cause (including upon a change of control of
the Company); or (iii) August 31, 2003. The remaining 50,000 shares vest upon
the earlier of: (i) the market price of the Company's Common Stock reaching an
average of $9.00 per share for a period of 90 consecutive trading days during
any twelve month period preceding the filing of the Company's annual report with
the Commission and for the additional ten trading days following the filing of
such annual report; (ii) the termination for Mr. Rosenman without cause
(including upon a change of control of the Company); or (iii) August 31, 2003.
EXECUTIVE COMPENSATION
The following table sets forth certain summary information regarding
compensation paid by the Company for services rendered in all capacities during
the fiscal years ended December 31, 1998 and 1997, respectively, to the
Company's chief executive officer during the fiscal year ended December 31,
1998. Where applicable, the figures set forth below have been adjusted to
reflect the Company's reverse stock split effected as of February 5, 1998.
11
<PAGE> 14
SUMMARY COMPENSATION TABLE
<TABLE>
<CAPTION>
LONG-TERM COMPENSATION
----------------------
SECURITIES
ANNUAL COMPENSATION RESTRICTED UNDERLYING
NAME AND PRINCIPAL POSITION YEAR SALARY BONUS STOCK AWARDS OPTIONS/SARs
- --------------------------- ---- ------ ----- ------------ ------------
<S> <C> <C> <C> <C> <C>
Herm Rosenman, CEO/President (1)
1998 $180,000(2) 0(3) $ 76,875(5) 478,334(6)
1997 $45,000(2) 0 $158,646(4) 473,334(7)
</TABLE>
(1) Herm Rosenman was appointed CEO and President in September 1997. No
other executive officer earned salary and bonus in excess of $100,000
during the fiscal year ended December 31, 1998.
(2) Under Mr. Rosenman's employment agreement with the Company, as amended,
commencing September 1, 1997, the Company has an obligation to pay him
a salary in monthly installments of $17,361 for the first, second and
third years of the agreement and not less than $20,000 for the fourth
and fifth years of the agreement. In accordance with the terms of the
employment agreement and as agreed to by the parties, the Company
deferred payment of $7,361 each month for the months of September and
October 1997, $4,861 each month for the months of November and December
1997 and $2,361 each month during the year of 1998. Further, pursuant
to the employment agreement, the Company is obligated to pay all
amounts so deferred in equal monthly installments throughout the
remainder of the term commencing January 1999, determined by dividing
the total amount of payments deferred by the total number of monthly
payments remaining during the term as of January 1, 1999. As of January
1, 1999, the total amount deferred was $52,778.
(3) On December 28, 1998, in lieu of a cash bonus (i) the vesting schedule
of 30,000 shares of restricted stock previously granted to Mr. Rosenman
in 1997 was changed; and (ii) the exercise price of certain options to
purchase Common Stock previously granted to Mr. Rosenman was reduced
and the vesting schedule for such options was changed. See also notes
(4), (5) and (6).
(4) Includes 667 shares of Common Stock granted in consideration of Mr.
Rosenman's services as a consultant to the Company that vested on
August 1, 1997, and 30,000 shares granted as of September 1, 1997,
pursuant to Mr. Rosenman's stock grant and stock option agreement, of
which 10,000 shares were originally scheduled to vest on each of
September 1, 1998, September 1, 1999 and September 1, 2000. As
discussed in notes (3) and (5), on December 28, 1998 the vesting dates
for the first two allotments of 10,000 shares (a total of 20,000
shares) were changed to January 1, 1999 and the vesting date for the
last allotment of 10,000 shares was changed to January 1, 2000.
Dividends will be paid on such shares (when issued and outstanding)
only to the same extent, if any, that dividends are paid on all other
outstanding shares of Common Stock.
(5) As described in note (4), the vesting dates of the 30,000 shares
originally awarded to Mr. Rosenman in 1997 were changed on December 28,
1998, with 20,000 shares vesting on January 1, 1999 and 10,000 shares
vesting on January 1, 2000. In the table, this change in vesting dates
has been treated as the grant of a new restricted stock award of 30,000
shares in 1998; however, the 1998 award in effect simply replaces, and
is not cumulative with respect to, the prior award of 30,000 shares in
1997. The shares that vest on January 1, 2000 will vest only if Mr.
Rosenman is still employed by the Company on September 1, 1999. All of
the 30,000 shares, once vested, will not become issuable until
September 1, 2000 or upon termination of Mr. Rosenman's employment,
whichever occurs first. Dividends on the 30,000 shares (when issued and
outstanding) will be paid only to the same extent, if any, that
dividends are paid on all other outstanding shares of Common Stock.
As of December 31, 1998, Mr. Rosenman held a total of 667 shares of
restricted stock awarded to him as compensation, and the total value of
such shares, based on the Nasdaq closing sales price for the Company's
Common Stock on that date, was $2,793.
12
<PAGE> 15
(6) Includes non-qualified options to purchase 473,334 shares of Common
Stock that are reflected in this table as securities underlying options
originally granted in the fiscal year ended December 31, 1997. These
options are included in the table for 1998 because they were all
repriced on October 22, 1998 at an exercise price of $4.00 and
subsequently repriced on December 28, 1998 at an exercise price of
$3.00. The vesting schedule for 380,000 of these options was also
changed on December 28, 1998 as reflected in the table below entitled
Option Grants in the Fiscal Year Ended December 31, 1998. Also includes
options to purchase 5,000 shares of Common Stock granted in 1998 in
consideration of Mr.
Rosenman's services as a director of the Company.
(7) Includes non-qualified options to purchase 3,334 shares of Common Stock
granted on August 1, 1997 in consideration of Mr. Rosenman's services
as a consultant to the Company and non-qualified options to purchase
470,000 shares of Common Stock granted on September 1, 1997, of which
460,000 options were granted pursuant to Mr. Rosenman's stock grant and
stock option agreement, as amended, and 10,000 options were granted in
consideration of Mr. Rosenman's services as a director of the Company.
STOCK OPTIONS
The following table sets forth certain information with respect to stock options
granted to the Company's Chief Executive Officer during the fiscal year ended
December 31, 1998.
13
<PAGE> 16
OPTION GRANTS IN THE FISCAL YEAR
ENDED DECEMBER 31, 1998
<TABLE>
<CAPTION>
NUMBER OF PERCENT OF
SECURITIES TOTAL OPTIONS
UNDERLYING GRANTED TO EXERCISE
OPTIONS EMPLOYEES IN PRICE
NAME GRANTED 1998 (10) ($/SHARE) EXPIRATION DATE
---- ------- --------- --------- ---------------
<S> <C> <C> <C> <C>
Herm Rosenman 13,334 (1)(2) 2.11 $3.00 9/1/2002
Herm Rosenman 80,000 (1)(3) 12.69 $3.00 9/1/2003
Herm Rosenman 80,000 (1)(4) 12.69 $3.00 12/31/2003
Herm Rosenman 50,000 (1)(5) 7.93 $3.00 12/31/2004
Herm Rosenman 50,000 (1)(5)(6) 7.93 $3.00 12/31/2004
Herm Rosenman 50,000 (1)(7) 7.93 $3.00 12/31/2005
Herm Rosenman 50,000 (1)(6)(7) 7.93 $3.00 12/31/2005
Herm Rosenman 50,000 (1)(8) 7.93 $3.00 12/31/2006
Herm Rosenman 50,000 (1)(6)(8) 7.93 $3.00 12/31/2006
Herm Rosenman 5,000 (9) 0.79 $3.75 7/31/2003
</TABLE>
(1) Includes non-qualified options to purchase the number of shares of
Common Stock stated in the table that were originally granted in August
and September 1997 but were repriced on October 22, 1998 at an exercise
price of $4.00 and, in lieu (partially) of a cash bonus, were
subsequently repriced on December 28, 1998 at an exercise price of
$3.00. The vesting schedule for 380,000 of these options was also
changed on December 28, 1998, as reflected in subsequent footnotes to
the table.
(2) These options are exercisable commencing September 1, 1997. Of these
options, 3,334 options were granted in consideration of Mr. Rosenman's
services as a consultant to the Company and 10,000 options were granted
in consideration of Mr. Rosenman's services as a director of the
Company.
(3) These options are exercisable commencing September 1, 1998.
(4) These options are exercisable commencing December 31, 1998.
14
<PAGE> 17
(5) These options are exercisable commencing December 31, 1999.
(6) None of these options vest until 75% of the budget is achieved. These
options vest ratably with the percentage of budget achieved in excess
of 75%. As 75% to 100% of the budget is achieved, 75% to 100% of these
options vest. The budget described in this footnote is the budget that
is submitted annually by Mr. Rosenman and the Company's management
team, and approved by the Board of Directors, subject to revision as
approved by the Board of Directors or an authorized committee thereof.
(7) These options are exercisable commencing December 31, 2000.
(8) These options are exercisable commencing December 31, 2001.
(9) These options are exercisable commencing July 31, 1998. These options
were granted in consideration of Mr. Rosenman's services as a director
of the Company.
(10) Includes, for purposes of this table, the total number of options
granted to Herm Rosenman as a consultant and as a director.
The following table sets forth certain information as to the fiscal year-end
value of unexercised options of the Company's Chief Executive Officer. He did
not exercise any options during the fiscal year ended December 31, 1998.
AGGREGATE OPTION EXERCISES IN
FISCAL YEAR ENDED DECEMBER 31, 1998 AND FISCAL YEAR-END OPTION VALUES
<TABLE>
<CAPTION>
NUMBER OF SHARES VALUE OF UNEXERCISED
UNDERLYING UNEXERCISED IN THE MONEY OPTIONS
SHARES OPTIONS AT 12/31/98 AT 12/31/98(1)
ACQUIRED ON VALUE ------------------- ----------------
NAME EXERCISE REALIZED EXERCISABLE UNEXERCISABLE EXERCISABLE UNEXERCISABLE
- ---- ----------- -------- ----------- ------------- ----------- -------------
<S> <C> <C> <C> <C> <C> <C>
Herm Rosenman 0 -- 178,334 300,000 $208,022 $356,250
</TABLE>
(1) The value of the Company's Common Stock for the purposes of the
calculation was based upon the closing sales price for the Company's
Common Stock on December 31, 1998, as reported by The Nasdaq Stock
Market, minus the exercise price.
15
<PAGE> 18
CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS
During 1996 and 1997, the Company incurred a total of $115,603 fees to
Meyer, Duffy & Associates, Inc. ("Meyer, Duffy"), for consulting services with
respect to capital raising. Mr. Don Duffy, a director of the Company, is a
principal of Meyer, Duffy. The fees were paid by the Company in May and June of
1998.
In private offerings in January and June of 1997, the Company sold
$2,210,000 principal amount of 12% promissory notes and $2,710,000 principal
amount of 9.75% promissory notes, respectively. MD Strategic L.P. ("MD
Strategic"), PV II L.P. ("PV II") and MD Ventures III ("MDV III"), partnerships
in which Mr. Duffy is a general partner, purchased an aggregate of $1,480,000 of
such notes. In August 1998, the notes held by the partnerships plus accrued
interest thereon were converted into a total of 1,559,742 shares of Series B
Preferred Stock. These shares were subsequently converted into a total of
311,950 shares of Common Stock (on a post-reverse split basis).
In connection with the January 1997 issuance of the 12% promissory notes,
the Company issued 1,105,000 warrants ("C Warrants") to purchase an equivalent
number of shares of Common Stock (221,000 shares of Common Stock on a
post-reverse split basis). Of this number, a total of 375,000 C Warrants were
issued to MD Strategic and PV II. In September 1997, MD Strategic and PV II
received 275,000 shares of Common Stock (55,000 shares on a post-reverse split
basis) upon the exercise of an equivalent number of warrants. PV II continues to
hold Series C warrants entitling it to purchase 20,000 shares of Common Stock on
a post reverse split basis.
In connection with the June 1997 issuance of the 9.75% promissory notes,
the Company issued 1,367,501 warrants ("E Warrants") to purchase an equivalent
number of shares of Common Stock of the Company (273,500 shares of Common Stock
on a post-reverse-split basis). Of this number, a total of 365,000 E Warrants
were issued to MD Strategic and MDV III. These warrants entitle MD Strategic and
MDV III to purchase a total of 73,000 shares of Common Stock on a post reverse
split basis.
In February 1998, pending the completion of the Company's Series C
Preferred Stock offering, the Company obtained unsecured bridge loans in the
amounts of $500,000 and $300,000, respectively, from MD Strategic and MDV IV,
L.P. ("MDV IV"), partnerships in which Mr. Duffy is a principal. Both loans bore
interest at 12%. MD Strategic and MDV IV also received a total of 150,000
warrants at an exercise price $5.00 per share, pending completion of the Series
C Preferred Stock offering. In April 1998, MD Strategic was issued 48 units of
Series C Preferred Stock and 60,000 additional warrants for total consideration
of $1.2 million consisting of $700,000 in cash and conversion of its $500,000
promissory note. In August 1998, these 48 units were converted into 396,040
shares of Common Stock. In April 1998, MDV IV was issued 12 units of Series C
Preferred Stock and 15,000 additional warrants in exchange for conversion of its
$300,000 promissory note. In August 1998, these 12 units were converted into
99,010 shares of Common Stock.
On April 1, 1998, Meyer, Duffy entered into a Consulting Agreement with the
Company pursuant to the terms of which Meyer, Duffy agreed to provide the
Company consulting services (said services to include advice regarding capital
raising and industry research on the motorcycle industry) in exchange for a fee
of $117,600 (payable in monthly installments of $4,900 over a period of two
years) and warrants to purchase 25,000 shares of Common Stock of the Company
with an exercise price of $4.00 per share.
In order to finance its working capital needs, the Company obtained a $1.5
million inventory flooring line of credit from Cana Capital Corporation ("Cana
Capital"), a company owned by Bruce Scott, a director of the Company, in May
1998 and a $300,000 loan from MD Strategic in October 1998. As of August 9,
1999, the Company had utilized only $400,000 of the Cana Capital line of credit.
Advances under the Cana Capital line of credit bear interest at a rate of 2%
over the prime rate if used to finance the acquisition of new vehicles, and 5%
over the prime rate if used to finance the acquisition of used vehicles. As of
August 9, 1999, the interest rate for advances on new vehicles and used vehicles
was 10.6% and 13.6%, respectively. The MD Strategic loan is evidenced by an
unsecured note bearing interest at eighteen percent (18%) per annum and is due,
together with accrued interest, on the earlier of September 12, 1999 or upon
receipt by the Company of funds from a third-party lender. The Company is in the
process of negotiating a revolving line of credit with an institutional lender
16
<PAGE> 19
and anticipates that it will terminate the line of credit with Cana Capital
Corporation and repay the MD Strategic loan upon obtaining such financing.
In February 1998, the Company entered into a license agreement with Big
Bike Boutique, Inc. ("BBB"), a company owned by Bruce Scott, a director of the
Company and owner of four independently operated Bikers Dream dealerships,
pursuant to which the Company licensed its name to BBB for the purpose of
selling apparel and accessories. The agreement was terminated in October 1998
pursuant to a termination of license agreement and mutual release. In connection
with the termination agreement, the Company issued to Mr. Scott in February 1999
16,000 shares of Common Stock.
In September 1998, the Company entered into a sublease agreement and a
repayment agreement with Big Bike of Daytona, Inc. ("Big Bike"), a Florida
corporation owned by Mr. Scott. Pursuant to the terms of the sublease agreement,
the Company agreed to sublease to Big Bike, for an original term of three years
(which term is in the process of being extended to six years), premises to be
used by Big Bike for the operation of an independent motorcycle retail business.
Under the repayment agreement, the Company has agreed to reimburse Big Bike for
a portion of the cost of certain tenant improvements advanced by Big Bike; such
reimbursement is to be made by an offset by Big Bike against the rent otherwise
due under the sublease. All profits made by Big Bike on sales of motorcycles,
parts and other inventory consigned by the Company shall be applied to rent due
under the sublease until the amount paid under the sublease in any given year
equals the rent the Company is obligated to pay on the master lease for the
premises; thereafter, Big Bike is obligated to pay the Company half of net
profits on sales of consigned inventory from the Company. Total rent due under
the sublease is capped at the lesser of actual net profits from the sale of
consigned inventory from the Company or the amount owed by the Company under the
master lease.
The Company has entered into an employment agreement and a stock grant and
stock option agreement with Herm Rosenman, president and chief executive officer
of the Company. See "Employment Agreements."
The Company entered into a three year employment agreement with Diana
Rosenman in May, 1998, pursuant to which Ms. Rosenman is employed as the
director of marketing and public relations at initial annual salary of $110,000,
subject to annual review by the Board's compensation committee. In addition, the
Company agreed to grant Ms. Rosenman an option to purchase 16,000 shares of the
Company's Common Stock at $4.00 per share, vesting over a period of three years.
Upon termination other than for cause, Ms. Rosenman is entitled to payment equal
to six months salary, based on her then current rate of compensation. Ms.
Rosenman is the wife of Herm Rosenman, the Company's president and chief
executive officer.
In November 1998, the Company entered into a three year employment
agreement with Harold Collins, pursuant to which Mr. Collins is employed as the
Company's general counsel at an initial annual salary of $150,000. Mr. Collins'
salary will be adjusted annually based on a review of his performance and the
Company's financial condition at the time of such adjustment. The employment
agreement provides that Mr. Collins shall be eligible to participate in such
bonus plans, stock grant and stock option plans applicable to executive officers
of the Company as may be established by the Board of Directors from time to
time, pursuant to the terms of such plans. The agreement provides for a phase-in
period during which Mr. Collins will devote half of his working time to the
affairs of the Company while he winds down his full-time law practice. During
the phase-in period, Mr. Collins' salary will be adjusted proportionately to
reflect the amount of time devoted by Mr. Collins to the affairs of the Company.
After Mr. Collins winds down his law practice, he will devote his full-time
efforts to the affairs of the Company and will be entitled to receive the full
amount of compensation he is entitled to receive under his employment agreement.
Notwithstanding Mr. Collins' obligation to devote his full-time efforts to the
affairs of the Company after the phase-in period, the employment agreement
provides that Mr. Collins may consult with Mr. Rosenman and Ms. Rosenman on
personal legal matters at their own cost and expense. It is not anticipated that
such consultation would be so material as to interfere with Mr. Collins'
obligation to represent the Company on a full-time basis. Upon termination upon
a change of control, Mr. Collins is entitled to payment equal to six months
salary, based on his then current rate of compensation. If he is terminated for
any other reason, he is entitled to receive six
17
<PAGE> 20
months of severance pay if he has been employed for one year or less, and one
year of severance pay if he has been employed for more than one year.
THE BOARD OF DIRECTORS RECOMMENDS A VOTE
IN FAVOR OF EACH OF THE NOMINEES FOR THE
BOARD OF DIRECTORS SET FORTH IN PROPOSAL 1
18
<PAGE> 21
PROPOSAL 2
APPROVAL OF ISSUANCE AND SALE OF
SERIES D PREFERRED STOCK,
WARRANTS TO PURCHASE COMMON STOCK,
COMMON STOCK ISSUABLE UPON CONVERSION OF PREFERRED STOCK,
COMMON STOCK ISSUABLE UPON EXERCISE OF WARRANTS, AND
PREFERRED STOCK ISSUABLE AS DIVIDENDS UPON PREFERRED STOCK
On February 5, 1999, the Company completed the sale by private placement of
1,500 shares of Series D Preferred Stock for a purchase price of $1,000 per
share and issued warrants to purchase a total of 35,000 shares of Common Stock
(subject to adjustment for stock dividends, combinations or splits with respect
to the underlying Common Stock). The Company issued an additional 45 shares of
Series D Preferred Stock and 25,000 warrants as commissions for this placement,
along with the payment of $45,000 in cash. The 1,545 shares of Series D
Preferred Stock and 60,000 warrants so issued are referred to collectively as
the "Initial Shares" and the "Initial Warrants", respectively. The Company used
the proceeds from the offering of the Initial Shares and Initial Warrants to
fund general working capital requirements.
Each share of Series D Preferred Stock is convertible, in whole or in part,
into a number of shares of Common Stock equal to $1,000 per share (as adjusted
for any stock dividends, combinations or splits with respect to such shares)
(the "Stated Value"), plus accrued and unpaid dividends, divided by the
Conversion Price, as defined below. The Initial Warrants are currently
exercisable at a price of $4.125 per share and expire on February 5, 2004.
On February 5, 1999, the Company also obtained commitments from the
purchasers of the Series D Preferred Stock to purchase up to an additional 1,500
shares of Series D Preferred Stock at the price of $1,000 per share in two
separate tranches of 500 shares (said 500 shares, together with 15 shares
issuable as commissions, the "First Put Shares") and 1,000 shares (said 1000
shares, together with 30 shares issuable as commissions, the "Second Put
Shares") respectively. Upon the purchase of the First Put Shares, the purchasers
will also receive warrants to purchase a total of 15,000 shares of Common Stock
(subject to adjustment for stock dividends, combinations or splits with respect
to the underlying Common Stock) at a price equal to 110% of the closing bid
price of the Common Stock on the day the Company gives notice to the purchaser
of its intention to exercise its right (the "First Put") to require the
purchasers to purchase the First Put Shares (said 15,000 warrants together with
8,333 warrants issuable as commissions, the "First Put Warrants"). Upon the
purchase of the Second Put Shares, the purchasers will also receive warrants to
purchase a total of 25,000 shares of Common Stock (subject to adjustment for
stock dividends, combinations or splits with respect to the underlying Common
Stock) at a price equal to 115% of the closing bid price of the Common Stock on
the day the Company gives notice to the purchaser of its intention to exercise
its right (the "Second Put") to require the purchasers to purchase the Second
Put Shares (said 25,000 warrants, together with 16,667 warrants issuable as
commissions, the "Second Put Warrants"). The First Put Warrants and Second Put
Warrants are exercisable on the date of receipt of the First Put exercise notice
and Second Put exercise notice, respectively, and expire five years thereafter.
Other than with respect to exercise price and expiration date, the terms of the
First Put Warrants and the Second Put Warrants are identical to the terms of the
Initial Warrants. Upon issuance of the First Put Shares the Company shall pay,
in addition to the 15 shares of Series D Preferred Stock and 8,333 First Put
Warrants referenced above, cash commissions in the amount of $15,000. Upon
issuance of the Second Put Shares the Company shall pay, in addition to the 30
shares of Series D Preferred Stock and 16,667 Second Put Warrants referenced
above, cash commissions in the amount of $30,000.
The Company intends to use the proceeds from the sale of the First Put
Shares and Second Put Shares to fund general working capital requirements and
the expansion of its business operations.
19
<PAGE> 22
The Company's right to exercise the First Put is contingent upon
satisfaction of the following conditions:
- the receipt of shareholder approval (as more fully discussed below
under "Reason for Shareholder Approval");
- that the Company continue to be a fully reporting public company;
- that the closing bid price of the Common Stock for the five trading
days prior to delivery of the exercise notice is not less
than $1.50;
- no material adverse change in the Company's business;
- no Event of Default with respect to the Series D Preferred Stock;
- the Company's ongoing compliance with Nasdaq listing requirements;
and
- the execution and delivery by the Company and the subscribers
of appropriate documents evidencing the transaction substantially
in the form previously agreed upon.
The Company's right to exercise the Second Put is contingent upon
satisfaction of all the foregoing conditions, as well as the additional
condition that there be an effective registration statement registering the
public resale by the purchasers of the Common Stock underlying both the
securities issued by the Company on February 5, 1999 and the securities issuable
by the Company in connection with the First Put.
The Certificate of Determination for the Series D Preferred Stock and form
of Initial Warrants are annexed hereto as Exhibit A and Exhibit B, respectively.
The following is a summary of their terms and conditions. Reference is made to
the full texts thereof for a complete description of the terms and conditions of
the Series D Preferred Stock and the Initial Warrants. Capitalized terms used
herein and not defined hereby have the meanings ascribed to them in the
Certificate of Determination and/or the Initial Warrants.
REASON FOR SHAREHOLDER APPROVAL
Pursuant to the terms of the Subscription Agreement governing the sale and
issuance of the Initial Shares, the First Put Shares and the Second Put Shares
(collectively, the "Preferred Shares") and the Initial Warrants, the First Put
Warrants and the Second Put Warrants (collectively, the "Warrants"), the Company
covenanted to obtain, on or before September 30, 1999, shareholder approval of
the issuance of shares of Common Stock in excess of 19.9% of the outstanding
Common Stock upon conversion of the Preferred Shares and exercise of the
Warrants (the "Approval"). Until the Company obtains the Approval, the issuance
of shares of Common Stock upon conversion of the Preferred Shares and exercise
of the Warrants, collectively, in excess of 19.9% of the outstanding Common
Stock may violate rules promulgated by the Nasdaq ("Rule 4310(c)(25)(H)"). Until
such approval is obtained, the maximum number of shares of Common Stock which
can be issued on conversion of the Series D Preferred Stock and exercise of the
Warrants is 1,027,996, which represents 19.9% of the number of shares of the
Common Stock outstanding as of February 5, 1999, the date of the issuance of the
Initial Shares and the Initial Warrants.
Rule 4310(c)(25)(H) requires shareholder approval for the issuance of
shares of Common Stock in a transaction involving the sale or issuance by a
company of common stock, or securities convertible into common stock, equal to
20% or more of the common stock or 20% or more of the voting power outstanding
before the issuance for less than the greater of book or market value of the
stock.
The Company's right to exercise the First Put and the Second Put is
contingent upon obtaining the Shareholder Approval by September 30, 1999. The
Company will use the $1.5 million of proceeds which it expects to receive from
the sale of the First Put Shares and the Second Put Shares for general business
purposes and the expansion of its manufacturing operations. The Company has
determined that the sale of the First Put Shares and the Second Put Shares is
the most expedient method by which the Company can raise capital for these
purposes, as compared to other sources of debt and equity financing.
Prior to the sale of the Initial Shares, the Company began seeking an
inventory and accounts receivable based line of credit facility of up to $10
million to be used to pay off all or part of the Company's existing indebtedness
and to finance its working capital needs and the expansion of its business
operations. However, no such credit facility has been obtained to date. The
Company recently has implemented changes in its operating system and inventory
management procedures. While the Company is hopeful that such changes
20
<PAGE> 23
will increase the likelihood of obtaining a line of credit facility on
acceptable terms, there is no assurance that the Company will be able to
successfully do so in the near future, thereby increasing the Company's need for
alternative forms of financing such as through the issuance of Series D
Preferred Stock.
The terms of the Series D Preferred Stock were more favorable to the
Company than the terms of other preferred stock financings which were
potentially available to the Company at the time the Series D Preferred Stock
offering was being negotiated. Like the Series D Preferred Stock, the other
proposed financings featured the issuance of convertible preferred stock that
would have converted to Common Stock at a conversion price pegged to the market
price. (See discussion under caption entitled "Conversion" below.) However, the
other proposed forms of convertible preferred stock would have converted to
Common Stock at a lower conversion price than the Series D Preferred Stock
(approximately 75% to 80% of market), thereby yielding a greater number of
common shares upon conversion. Such larger number of shares would have resulted
in even greater dilution to the Company's shareholders. (See discussion of
dilution under the caption entitled "Conversion" below.) Moreover, the other
proposed forms of preferred stock would have required the Company to pay a
higher dividend than the dividend now payable on the Series D Preferred Stock.
(See discussion under caption below entitled "Dividends".)
Given the current absence of a revolving line of credit and the lack of
other sources of equity financing on terms as favorable as the Series D
Preferred Stock, the Company is presently relying on the $1.5 million which it
has already received from the sale of the Initial Shares and the additional $1.5
million which it expects to receive from the sale of the First Put Shares and
the Second Put Shares, respectively, in order to meet its anticipated working
capital needs. If the Approval is not obtained by September 30, 1999, the
Company will not be able to exercise the First Put or the Second Put, thereby
losing the opportunity to obtain this additional $1.5 million. Therefore,
failure to obtain the Approval will delay expansion of the Company's
manufacturing operations indefinitely until such time as the Company is able to
secure other debt or equity financing on satisfactory terms.
In addition, if the Company fails to obtain the Approval by September 30,
1999, it will be required to pay a dividend rate of 10% per annum on the Series
D Preferred Stock (instead of the standard dividend rate of 5% per annum) and
the holders of Series D Preferred Stock would have the option to require the
Company to redeem their currently outstanding shares. It is unlikely that Bikers
Dream would have sufficient cash to redeem the Series D Preferred Stock if
required to do so. Moreover, the Company is prohibited under its agreement with
Tandem Capital, one of its existing lenders, from redeeming any shares of its
capital stock. If a redemption were to occur, Tandem Capital would have the
option of charging an additional 7% on its existing term loan, or demanding full
repayment on all outstanding indebtedness plus accrued interest. As of June 30,
1999, $4.5 million remained outstanding on the Tandem Capital loan. In light of
the foregoing, the failure to obtain the Approval could deplete all of the
Company's available cash and thus materially impair the ability of the Company
to continue to operate its business.
DIVIDENDS
The holders of the Series D Preferred Stock are entitled to receive
dividends on a quarterly basis, at the rate of 5% simple interest per annum on
the Stated Value per share, when, as and if declared by the Company. The
dividends are payable, at the option of the Company, either in cash or
additional shares of Series D Preferred Stock at the rate of one share of Series
D Preferred Stock for each $1,000 of such dividend not paid in cash. Dividends
may be paid at the Company's option with Series D Preferred Stock only if the
Common Stock deliverable upon conversion of such Series D Preferred Stock has
been included for public resale in an effective registration statement filed
with the Securities and Exchange Commission; otherwise the dividend will be paid
in cash. The dividends on the Series D Preferred Stock are cumulative and shall
be paid or declared and set aside for payment prior to any payment or
declaration of dividends on, or purchase or redemption of, any Common Stock or
any other class of preferred stock of the Company.
CONVERSION
Subject to the restrictions discussed below, any holder of Series D
Preferred Stock has the right at any time to convert, in whole or in part,
shares of Series D Preferred Stock into a number of shares of Common
21
<PAGE> 24
Stock equal to $1,000 per share plus accrued and unpaid dividends on such share
divided by the Conversion Price. The Conversion Price means the lesser of (i)
110% of the average closing bid price of the Company's Common Stock for the
trading day immediately preceding the date of the issuance of the shares of
Series D Preferred Stock; or (ii) at 90% of the average of the four lowest
Closing Bid Prices for the 22 trading days immediately preceding the conversion
of the respective shares of Series D Preferred Stock. Therefore, there is a
possibility that the Series D Preferred Stock may convert to Common Stock at a
rate which is below the prevailing market price of the Common Stock at the time
of the conversion.
The exact number of shares of Common Stock into which currently outstanding
Series D Preferred Stock may ultimately be convertible will vary over time as
the result of ongoing changes in the trading price of the Company's Common
Stock. Decreases in the trading price of the Company's Common Stock will cause
an increase in the number of shares of Common Stock issuable upon conversion.
The maximum number of shares of Common Stock issuable upon conversion of the
Series D Preferred Stock, together with the shares issuable upon exercise of the
Warrants, cannot exceed 1,027,996 under Nasdaq Rule 4310(c)(25)(H) prior to the
receipt of the Approval. This number of shares represents 19.9% of the Company's
outstanding Common Stock as of the date the Initial Shares and the Initial
Warrants were issued. However, after the Approval is obtained, there is no cap
on the number of common shares into which the shares of Series D Preferred Stock
can be converted. Therefore, after the Approval is obtained, it is possible that
significant additional dilution of existing shareholders' interests may occur.
The following consequences could result:
- If the market price of the Company's Common Stock declines,
thereby proportionately increasing the number of shares of Common
Stock issuable upon conversion of the Series D Preferred Stock, an
increasing downward pressure on the market price of the Common
Stock might result (sometimes referred to as a downward "spiral"
effect).
- The dilution caused by conversion of Series D Preferred Stock and
sale of the underlying shares could also cause downward pressure
on the market price of the Common Stock.
- Once downward pressure is placed on the market price of the
Company's stock, this pressure could encourage short sales by
holders of Series D Preferred Stock and others, thus placing
further downward pressure on the price of the Common Stock.
- The conversion of Series D Preferred Stock would dilute the book
value and earnings per share of Common Stock held by existing
shareholders of Bikers Dream.
In the event the Company declares any dividend or distribution on its
Common Stock, or splits, combines or reclassifies its Common Stock, then the
Conversion Price will be proportionately adjusted so that each holder of Series
D Preferred Stock will be entitled to receive the same number of shares of
Common Stock upon conversion of the Series D Preferred Stock as though such
conversion occurred prior to the event requiring the adjustment. Similarly, if
the Company merges with another entity or sells substantially all of its assets,
the holders of the Series D Preferred Stock shall be entitled to convert each
share of Series D Preferred Stock into the consideration (whether it consists of
stock, other securities and/or property) which that holder would have been
entitled to receive had such holder converted its holdings of Series D Preferred
Stock to Common Stock immediately prior to such merger or asset sale. The
Conversion Price will also be adjusted pursuant to formula (thereby entitling
the holders of the Series D Preferred Stock to receive additional shares of
Common Stock upon conversion) in the event the Company makes certain additional
issuances of Common Stock.
The Series D Preferred Stock shall automatically convert two years from
the date of issuance into shares of Common Stock at the Conversion Price;
however, such a conversion may occur without the consent of a holder of Series D
Preferred Stock only if the shares of Common Stock issuable upon such conversion
may be resold publicly without restriction under applicable securities laws.
22
<PAGE> 25
REDEMPTION
The Series D Preferred Stock is redeemable at the option of the Company
by paying to each holder of Series D Preferred Stock that amount which is equal
to the closing bid price of the Company's Common Stock on the date notice of
redemption is given by the Company to such holder, multiplied by the number of
shares of Common Stock that would be issued upon conversion of the Series D
Preferred Stock being redeemed and the dividends accrued thereon, at the
Conversion Price that would be in effect on the Redemption Date, but in no event
may the amount paid upon redemption be less than 110% of the Stated Value of the
Series D Preferred Stock being redeemed plus accrued dividends thereon.
The Company is required to redeem Series D Preferred Stock, or in the
alternative, pay a dividend rate of 10% per annum (instead of the standard
dividend rate of 5% per annum otherwise payable in accordance with the terms of
the Certificate of Determination governing the terms of the Series D Preferred
Stock) after the occurrence of certain triggering events, including, among other
things:
- Failure of the Company to pay dividends when required;
- Material breaches of the Company's agreements with purchasers
of Series D Preferred Stock, including failure to register the
Common Stock issuable upon conversion of Series D Preferred
Stock and failure to maintain the effectiveness of any such
registration;
- Failure to maintain a Nasdaq listing for the Company's
Common Stock;
- Failure to deliver Common Stock certificates in a timely
fashion after the conversion of Series D Preferred Stock; and
- Failure to obtain the Approval.
With respect to the last item listed above, see also the discussion in "Reason
for Shareholder Approval."
LIQUIDATION RIGHTS
Upon a voluntary or involuntary dissolution, liquidation or winding-up
of the Company, the holders of Series D Preferred Stock shall be entitled to
receive, before any payment or distribution shall be made on any Common Stock or
any other class of preferred stock of the Company, out of the assets of the
Company available for distribution to such holders, the Stated Value per share
of Series D Preferred Stock and all accrued and unpaid dividends to and
including the date of payment to any such holder. In the event the assets of the
Company available for distribution to the holders of Series D Preferred Stock
are insufficient to permit payment in full of all amounts owing to the Series D
holders, then all of such assets shall be distributed proportionately among the
holders of the Series D Preferred Stock to the exclusion of the holders of
Common Stock or any other class of preferred stock of the Company.
The Board of Directors has unanimously approved, and recommends that
the shareholders authorize and ratify: (i) the issuance of the Preferred Shares
and the Warrants, (ii) the issuance of that number of shares of the Company's
Common Stock issuable upon conversion of the Series D Preferred Stock approved
for issuance hereby, based on the conversion formula set forth in the
Certificate of Determination governing the Series D Preferred Stock, (iii) the
issuance of the maximum number of shares of Common Stock issuable upon exercise
of the Warrants in accordance with the terms thereof, and (iv) the issuance of
Series D Preferred Stock as a dividend upon Series D Preferred Stock approved
for issuance hereby in accordance with the terms of the Certificate of
Determination governing the Series D Preferred Stock.
THE BOARD OF DIRECTORS RECOMMENDS A VOTE "FOR" PROPOSAL 2
23
<PAGE> 26
PROPOSAL 3
APPROVAL OF INDEPENDENT AUDITORS
The Board of Directors is recommending the ratification of its
selection of Singer, Lewak, Greenbaum & Goldstein LLP as the Company's
independent certified public accountants to audit the financial statements of
the Company for the 1999 fiscal year. Although ratification of the choice of
auditors is not legally required, the Board believes such ratification to be in
the best interests of the Company. In the event such approval of shareholders is
not received, the Board will select another firm to audit the Company's
financial statements. Singer, Lewak, Greenbaum & Goldstein LLP has advised the
Company that neither it nor any of its partners or associates has any direct or
indirect financial interest in or any connection with the Company other than as
accountants and auditors. A representative of Singer, Lewak, Greenbaum &
Goldstein LLP is expected to be present and available to answer appropriate
questions at the Annual Meeting and will be given the opportunity to make a
statement if desired.
The following resolution will be offered at the meeting:
RESOLVED, that Singer, Lewak, Greenbaum & Goldstein LLP be and hereby
is appointed as the independent certified public accountants of the
Company for its 1999 fiscal year.
THE BOARD OF DIRECTORS RECOMMENDS A VOTE "FOR" PROPOSAL 3
OTHER MATTERS
The Board of Directors does not know of any other matters which may
come before the Annual Meeting. However, if any other matter shall properly come
before the Annual Meeting, the proxy holders named in the proxy accompanying
this statement will have discretionary authority to vote all proxies in
accordance with their best judgment.
SHAREHOLDER PROPOSALS
Any shareholder who intends to present a proposal at the Company's 2000
Annual Meeting of Shareholders must deliver the proposal to the Company no later
than March 31, 2000 and must otherwise comply with Rule 14a-8 under the
Securities Exchange Act of 1934 in order to have the proposal included in the
proxy materials for that meeting. Any shareholder proposal submitted other than
for inclusion in the Company's proxy materials for that meeting must be
delivered to the Company no later than March 31, 2000 or such proposal will be
considered untimely. If a shareholder proposal is received after March 31, 2000,
the Company may vote in its discretion as to that proposal all of the shares for
which it has received proxies for the 2000 Annual Meeting of Shareholders.
ADDITIONAL INFORMATION
This Proxy Statement is accompanied by the Company's Annual Report on
Form 10-KSB/A for the fiscal year ended December 31, 1998. The Securities and
Exchange Commission (the "Commission") maintains a World Wide Web site on the
Internet at http://www.sec.gov that contains reports, proxy and information
statements and other information regarding registrants that file electronically
with the Commission. Exhibits to the Company's Annual Report on Form 10-KSB/A
will be made available to shareholders at no charge upon their written request
to the Company, 3810 Wacker Drive, California 91752, Attention: Mr. Louis
Rabman.
Mira Loma, California By Order of the Board of Directors
August 23, 1999
24
<PAGE> 27
[Form of Proxy]
BIKERS DREAM, INC.
3810 WACKER DRIVE
MIRA LOMA, CALIFORNIA 91752
THIS PROXY IS SOLICITED BY THE BOARD OF DIRECTORS
The undersigned, as owner of ________ shares of Common Stock of Bikers
Dream, Inc., a California corporation (the "Company"), hereby acknowledges
receipt of the Proxy Statement and the notice of the shareholders meeting to be
held on September 23, 1999, at 9:00 a.m. local time, at 237 Park Avenue, 9th
Floor, New York, New York 10017, and hereby further revokes all previous proxies
and appoints Herm Rosenman or Donald Duffy, or either of them, as proxy of the
undersigned at said meeting and any adjournments thereof with the same effect as
if the undersigned were present and voting the shares.
(1) For the election of the following persons as directors of the Company to
serve until the next annual meeting of shareholders or until their
respective successors shall have been elected and qualified:
Donald Duffy, Herm Rosenman,
Humbert Powell, John Russell, Bruce Scott
[ ] AUTHORITY GRANTED to [ ] AUTHORITY WITHHELD to vote
vote for nominees listed for all nominees listed above.
above, except as indicated
to the contrary below.
(INSTRUCTION: TO VOTE AGAINST ANY NOMINEE, WRITE THAT
NOMINEE'S NAME IN THE SPACE PROVIDED BELOW.)
---------------------------------------------------------------------
(2) The authorization and ratification of: (i) the issuance and sale in
private placements of up to 3,090 shares (the "Preferred Shares") of the
Company's Series D Preferred Stock and Common Stock Purchase Warrants to
purchase up to 125,000 shares of Common Stock ("Warrants"), (ii) the
issuance of that number of shares of Common Stock, issuable upon
conversion of the Series D Preferred Stock being approved for issuance,
based on the conversion formula set forth in the Certificate of
Determination governing the Series D Preferred Stock, (iii) the issuance
of the maximum number of shares of Common Stock issuable upon exercise of
the Warrants in accordance with their terms; and (iv) the issuance of
Series D Preferred Stock, in accordance with the terms of the Certificate
of Determination governing the Series D Preferred Stock, as a dividend
upon all shares of Series D Preferred Stock being approved for issuance.
[ ] FOR [ ] AGAINST [ ] ABSTAIN
(3) The approval and adoption of a resolution appointing Singer, Lewak,
Greenbaum & Goldstein LLP as the Company's independent certified public
accountants for fiscal year 1999.
[ ] FOR [ ] AGAINST [ ] ABSTAIN
(4) In their discretion upon such other matters as may properly come before
the meeting and any adjournments thereof.
(continued and to be signed on reverse side)
<PAGE> 28
(continued from previous side)
THE SHARES REPRESENTED BY THIS PROXY WILL BE VOTED AS YOU HAVE INDICATED ABOVE.
IF NO INDICATION HAS BEEN MADE, THE SHARES REPRESENTED BY THIS PROXY WILL BE
VOTED FOR THE ABOVE NOMINEES AND IN FAVOR OF SUCH PROPOSALS, AND AS SAID PROXY
DEEMS ADVISABLE ON SUCH OTHER BUSINESS AS MAY PROPERLY COME BEFORE THE MEETING.
Dated: , 1999
---------------------------
---------------------------------------
---------------------------------------
Sign exactly as your name appears on
your share certificate. When signing as
attorney, executor, administrator,
trustee or guardian, please give full
title. If more than one trustee, all
should sign. All joint owners should
sign. If a corporation, sign in full
corporation name by president or other
authorized officer. If a partnership,
sign in partnership name by authorized
person. Persons signing in a fiduciary
capacity should indicate their full
title in such capacity.
PLEASE MARK, SIGN, DATE AND RETURN THIS PROXY CARD PROMPTLY USING THE ENCLOSED
ENVELOPE.
<PAGE> 29
[Form of Proxy]
BIKERS DREAM, INC.
3810 WACKER DRIVE
MIRA LOMA, CALIFORNIA 91752
THIS PROXY IS SOLICITED BY THE BOARD OF DIRECTORS
The undersigned, as owner of one share of Series A Preferred Stock of
Bikers Dream, Inc., a California corporation (the "Company"), hereby
acknowledges receipt of the Proxy Statement and the notice of the shareholders
meeting to be held on September 23, 1999, at 9:00 a.m. local time, at 237 Park
Avenue, 9th Floor, New York, New York 10017, and hereby further revokes all
previous proxies and appoints Herm Rosenman or Donald Duffy, or either of them,
as proxy of the undersigned at said meeting and any adjournments thereof with
the same effect as if the undersigned were present and voting the shares.
(1) For the election of the following persons as directors of the Company to
serve until the next annual meeting of shareholders or until their
respective successors shall have been elected and qualified:
Donald Duffy, Herm Rosenman,
Humbert Powell, John Russell, Bruce Scott
[ ] AUTHORITY GRANTED to [ ] AUTHORITY WITHHELD TO
vote for nominees listed above, vote for all nominees listed
except as indicated to the above.
contrary below.
(INSTRUCTION: TO VOTE AGAINST ANY NOMINEE, WRITE THAT
NOMINEE'S NAME IN THE SPACE PROVIDED BELOW.)
---------------------------------------------------------------------
(2) The authorization and ratification of: (i) the issuance and sale in
private placements of up to 3,090 shares (the "Preferred Shares") of the
Company's Series D Preferred Stock and Common Stock Purchase Warrants to
purchase up to 125,000 shares of Common Stock ("Warrants"), (ii) the
issuance of that number of shares of Common Stock, issuable upon
conversion of the Series D Preferred Stock being approved for issuance,
based on the conversion formula set forth in the Certificate of
Determination governing the Series D Preferred Stock, (iii) the issuance
of the maximum number of shares of Common Stock issuable upon exercise of
the Warrants in accordance with their terms; and (iv) the issuance of
Series D Preferred Stock, in accordance with the terms of the Certificate
of Determination governing the Series D Preferred Stock, as a dividend
upon all shares of Series D Preferred Stock being approved for issuance.
[ ] FOR [ ] AGAINST [ ] ABSTAIN
(3) The approval and adoption of a resolution appointing Singer, Lewak,
Greenbaum & Goldstein LLP as the Company's independent certified public
accountants for fiscal year 1999.
[ ] FOR [ ] AGAINST [ ] ABSTAIN
(4) In their discretion upon such other matters as may properly come before
the meeting and any adjournments thereof.
(continued and to be signed on reverse side)
<PAGE> 30
(continued from previous side)
THE SHARES REPRESENTED BY THIS PROXY WILL BE VOTED AS YOU HAVE INDICATED ABOVE.
IF NO INDICATION HAS BEEN MADE, THE SHARES REPRESENTED BY THIS PROXY WILL BE
VOTED FOR THE ABOVE NOMINEES AND IN FAVOR OF SUCH PROPOSALS, AND AS SAID PROXY
DEEMS ADVISABLE ON SUCH OTHER BUSINESS AS MAY PROPERLY COME BEFORE THE MEETING.
Dated: , 1999
---------------------------
---------------------------------------
---------------------------------------
Sign exactly as your name appears on
your share certificate. When signing as
attorney, executor, administrator,
trustee or guardian, please give full
title. If more than one trustee, all
should sign. All joint owners should
sign. If a corporation, sign in full
corporation name by president or other
authorized officer. If a partnership,
sign in partnership name by authorized
person. Persons signing in a fiduciary
capacity should indicate their full
title in such capacity.
PLEASE MARK, SIGN, DATE AND RETURN THIS PROXY CARD PROMPTLY USING THE ENCLOSED
ENVELOPE.
<PAGE> 31
[Form of Proxy]
BIKERS DREAM, INC.
3810 WACKER DRIVE
MIRA LOMA, CALIFORNIA 91752
THIS PROXY IS SOLICITED BY THE BOARD OF DIRECTORS
The undersigned, as owner of shares of Series B Preferred Stock of Bikers
Dream, Inc., a California corporation (the "Company"), each of which is
convertible into ________ shares of Common Stock of the Company as of August 6 ,
1999, hereby acknowledges receipt of the Proxy Statement and the notice of the
shareholders meeting to be held on September 23, 1999, at 9:00 a.m. local time,
at 237 Park Avenue, 9th Floor, New York, New York 10017, and hereby further
revokes all previous proxies and appoints Herm Rosenman or Donald Duffy, or
either of them, as proxy of the undersigned at said meeting and any adjournments
thereof with the same effect as if the undersigned were present and voting the
shares.
(1) For the election of the following persons as directors of the Company to
serve until the next annual meeting of shareholders or until their
respective successors shall have been elected and qualified:
Donald Duffy, Herm Rosenman,
Humbert Powell, John Russell, Bruce Scott
[ ] AUTHORITY GRANTED to [ ] AUTHORITY WITHHELD to
vote for nominees listed above, vote for all nominees listed
except as indicated to the above.
contrary below.
(INSTRUCTION: TO VOTE AGAINST ANY NOMINEE, WRITE THAT
NOMINEE'S NAME IN THE SPACE PROVIDED BELOW.)
---------------------------------------------------------------------
(2) The authorization and ratification of: (i) the issuance and sale in
private placements of up to 3,090 shares (the "Preferred Shares") of the
Company's Series D Preferred Stock and Common Stock Purchase Warrants to
purchase up to 125,000 shares of Common Stock ("Warrants"), (ii) the
issuance of that number of shares of Common Stock, issuable upon
conversion of the Series D Preferred Stock being approved for issuance,
based on the conversion formula set forth in the Certificate of
Determination governing the Series D Preferred Stock, (iii) the issuance
of the maximum number of shares of Common Stock issuable upon exercise of
the Warrants in accordance with their terms; and (iv) the issuance of
Series D Preferred Stock, in accordance with the terms of the Certificate
of Determination governing the Series D Preferred Stock, as a dividend
upon all shares of Series D Preferred Stock being approved for issuance.
[ ] FOR [ ] AGAINST [ ] ABSTAIN
(3) The approval and adoption of a resolution appointing Singer, Lewak,
Greenbaum & Goldstein LLP as the Company's independent certified public
accountants for fiscal year 1999.
[ ] FOR [ ] AGAINST [ ] ABSTAIN
(4) In their discretion upon such other matters as may properly come before
the meeting and any adjournments thereof.
(continued and to be signed on reverse side)
<PAGE> 32
(continued from previous side)
THE SHARES REPRESENTED BY THIS PROXY WILL BE VOTED AS YOU HAVE INDICATED ABOVE.
IF NO INDICATION HAS BEEN MADE, THE SHARES REPRESENTED BY THIS PROXY WILL BE
VOTED FOR THE ABOVE NOMINEES AND IN FAVOR OF SUCH PROPOSALS, AND AS SAID PROXY
DEEMS ADVISABLE ON SUCH OTHER BUSINESS AS MAY PROPERLY COME BEFORE THE MEETING.
Dated: , 1999
---------------------------
---------------------------------------
---------------------------------------
Sign exactly as your name appears on
your share certificate. When signing as
attorney, executor, administrator,
trustee or guardian, please give full
title. If more than one trustee, all
should sign. All joint owners should
sign. If a corporation, sign in full
corporation name by president or other
authorized officer. If a partnership,
sign in partnership name by authorized
person. Persons signing in a fiduciary
capacity should indicate their full
title in such capacity.
PLEASE MARK, SIGN, DATE AND RETURN THIS PROXY CARD PROMPTLY USING THE ENCLOSED
ENVELOPE.
