<PAGE> 1
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 10-Q
[X] QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
EXCHANGE ACT OF 1934 FOR THE PERIOD ENDED JUNE 30, 1996
or
[ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
EXCHANGE ACT OF 1934 FOR THE TRANSITION PERIOD FROM ________________
TO ________________
Commission File Number: 1-13042
RIDE, INC.
- --------------------------------------------------------------------------------
(Exact name of registrant as specified in its charter)
Washington 91-1571027
- ------------------------------------- ------------------------------------
(State or other jurisdiction of (I.R.S. Employer Identification No.)
incorporation or organization)
8160 304th Avenue Southeast
Preston, Washington 98050
- ---------------------------------------- ------------------------------------
(Address of principal executive offices) (Zip Code)
(206) 222-6015
- --------------------------------------------------------------------------------
(Registrant's telephone number, including area code)
Indicate by check mark whether the registrant (1) has filed all reports required
to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during
the preceding 12 months (or for such shorter period that the registrant was
required to file such reports), and (2) has been subject to such filing
requirements for the past 90 days.
Yes X No
----- -----
Indicate the number of shares outstanding of each of the issuer's classes of
common stock, as of the latest practicable date:
Common Stock, without par value -- 10,604,958 as of July 31, 1996
<PAGE> 2
INDEX
RIDE, INC.
PART I. FINANCIAL INFORMATION
Item 1. Financial Statements (Unaudited)
Condensed consolidated balance sheets -- June 30, 1996 and December
31, 1995
Condensed consolidated statements of operations -- Three months and six
months ended June 30, 1996 and 1995
Condensed consolidated statements of cash flows -- Six months ended
June 30, 1996 and 1995
Notes to condensed consolidated financial statements -- June 30, 1996
Item 2. Management's Discussion and Analysis of Financial Condition and Results
of Operations
PART II. OTHER INFORMATION
Item 1. Legal Proceedings
Item 2. Changes in Securities
Item 3. Defaults upon Senior Securities
Item 4. Submission of Matters to a Vote of Security Holders
Item 5. Other Information
Item 6. Exhibits and Reports on Form 8-K
SIGNATURES
1
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PART I. FINANCIAL INFORMATION
ITEM 1. FINANCIAL STATEMENTS
RIDE, INC.
CONDENSED CONSOLIDATED BALANCE SHEETS
(IN THOUSANDS)
<TABLE>
<CAPTION>
June 30, December 31,
1996 1995
(Unaudited)
--------------------------
<S> <C> <C>
ASSETS
Current assets:
Cash and cash equivalents $ 1,571 $14,271
Securities available for sale -- 3,840
Receivables, less allowance for doubtful accounts of
$411 at June 30, 1996 and $359 at
December 31, 1995 13,993 13,556
Inventories 11,865 4,409
Prepaid expenses and other current assets 633 782
Income taxes receivable 491 --
Deferred tax assets 281 281
--------------------------
Total current assets 28,834 37,139
Plant and equipment, net of accumulated depreciation 6,664 3,649
Goodwill, net of accumulated amortization 16,499 16,489
Other assets 484 322
--------------------------
Total assets $52,481 $57,599
==========================
LIABILITIES AND SHAREHOLDERS' EQUITY
Current liabilities:
Accounts payable $ 4,024 $ 7,828
Accrued expenses 925 1,761
Customer deposits 392 279
Notes payable -- 938
Income taxes payable -- 229
Current portion of long-term debt 82 --
--------------------------
Total current liabilities 5,423 11,035
Long-term debt, less current portion 584 --
Deferred income taxes 69 69
Shareholders' equity:
Preferred stock 500 500
Common stock 38,743 38,244
Retained earnings 7,162 7,751
--------------------------
Total shareholders' equity 46,405 46,495
--------------------------
Total liabilities and shareholders' equity $52,481 $57,599
==========================
</TABLE>
See accompanying notes.
2
<PAGE> 4
RIDE, INC.
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
(UNAUDITED)
(IN THOUSANDS, EXCEPT PER SHARE AMOUNTS)
<TABLE>
<CAPTION>
Three months ended June 30, Six months ended June 30,
--------------------------- -------------------------
1996 1995 1996 1995
--------------------------- -------------------------
<S> <C> <C> <C> <C>
Net sales $ 13,501 $ 12,278 $ 26,278 $ 17,264
Cost of goods sold 9,337 9,046 18,727 13,187
--------------------------- -------------------------
Gross profit 4,164 3,232 7,551 4,077
Selling, general and administrative expenses 3,596 1,885 8,671 3,428
--------------------------- -------------------------
Operating income (loss) 568 1,347 (1,120) 649
Interest income, net 76 81 251 161
--------------------------- -------------------------
Income (loss) before income taxes 644 1,428 (869) 810
Income tax expense (benefit) 233 514 (298) 305
--------------------------- -------------------------
Net income (loss) $ 411 $ 914 ($ 571) $ 505
=========================== =========================
Per share:
Primary $ 0.04 $ 0.10 ($ 0.06) $ 0.06
Fully diluted $ 0.04 $ 0.09 ($ 0.06) $ 0.05
Weighted average common shares outstanding:
Primary 11,222 9,305 10,538 8,814
Fully diluted 11,422 9,773 10,538 9,360
</TABLE>
See accompanying notes.
3
<PAGE> 5
RIDE, INC.
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
(UNAUDITED)
(IN THOUSANDS)
<TABLE>
<CAPTION>
Six months ended June 30,
-------------------------
1996 1995
-------------------------
<S> <C> <C>
Net cash used in operating activities $(12,964) $ (3,709)
INVESTING ACTIVITIES:
Purchase of plant and equipment (3,323) (414)
Sale of securities available for sale 3,840 --
Other (383) (39)
-------------------------
Net cash provided by (used in) investing activities 134 (453)
FINANCING ACTIVITIES:
Proceeds from exercise of Common Stock options 358 42
Proceeds from sale of Common Stock 62 --
Repayment of notes payable (938) --
Proceeds from long-term debt 675 --
Repayment of long-term debt (9) --
Proceeds from exercise of Common Stock warrants -- 2,083
Dividends paid (18) (18)
-------------------------
Net cash provided by financing activities 130 2,107
-------------------------
Net decrease in cash and cash equivalents (12,700) (2,055)
Cash and cash equivalents at beginning of period 14,271 5,830
-------------------------
Cash and cash equivalents at end of period $ 1,571 $ 3,775
=========================
SUPPLEMENTAL DISCLOSURE:
Cash paid for income taxes $ 343 $ 486
Cash paid for interest $ 38 --
NONCASH FINANCING ACTIVITY:
Preferred stock dividends declared but not paid $ 9 $ 9
Tax benefit of stock option exercises $ 79 $ 16
</TABLE>
See accompanying notes.
4
<PAGE> 6
RIDE, INC.
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
JUNE 30, 1996
(UNAUDITED)
1. BASIS OF PRESENTATION
The accompanying unaudited condensed consolidated financial statements have been
prepared by Ride, Inc. (the "Company"), in accordance with generally accepted
accounting principles for interim financial statements and with the instructions
to Form 10-Q and Article 10 of Regulation S-X. Accordingly, they do not include
all of the information and disclosures required by generally accepted accounting
principles for complete financial statements. In the opinion of the Company's
management, all adjustments (consisting of normal recurring accruals) necessary
for a fair presentation have been included. The Company's revenues are highly
seasonal, occurring primarily between June and December as its products are
shipped to customers. The results of operations for the three and six month
periods ended June 30, 1996, therefore may not be indicative of the results for
the full fiscal year. For further information, refer to the consolidated
financial statements and footnotes thereto included in the Company's annual
report on Form 10-K for the year ended December 31, 1995. All amounts are stated
in US dollars.
2. NET INCOME (LOSS) PER SHARE
Primary net income per share for the three month periods ended June 30, 1996 and
1995 and for the six month period ended June 30, 1995 has been computed by
dividing net income, after reduction for Preferred Stock dividends, by the
weighted average number of common shares and equivalents outstanding. Common
share equivalents included in the computation represent shares issuable upon
assumed exercise of stock options and warrants having exercise prices below the
average market price of the Common Stock using the treasury stock method. Fully
diluted net income per share has been computed by dividing net income by the
weighted average number of common shares and equivalents outstanding assuming
the conversion of the Preferred Stock occurred at the beginning of the period.
The number of common share equivalents included in the fully diluted
computations represent shares issuable upon exercise of stock options and
warrants having exercise prices below either the greater of the average market
price or the ending market price of the Common Stock using the treasury stock
method.
Net loss per share for the six month period ended June 30, 1996 has been
calculated based upon the weighted average number of shares of common stock
outstanding. Common equivalent shares from stock options have been excluded from
the weighted average number of shares outstanding because their effects are
antidilutive.
3. INVENTORIES
Inventories at June 30, 1996 and December 31, 1995 consisted of the following:
<TABLE>
<CAPTION>
June 30, December 31,
1996 1995
-----------------------
(In thousands)
<S> <C> <C>
Finished goods $ 8,182 $ 2,812
Work in process 212 98
Raw materials and supplies 3,471 1,499
-----------------------
$11,865 $ 4,409
=======================
</TABLE>
5
<PAGE> 7
RIDE, INC.
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
(UNAUDITED)
4. LINE OF CREDIT
In June 1996, the Company replaced its line of credit with a U.S. bank with a
new facility with the same bank. The new facility provides $30 million in
borrowings either for direct advances or for letters of credit. The facility
expires March 31, 1997 and contains various financial covenants including
working capital, tangible net worth and quick ratio requirements. The facility
is collateralized by substantially all of the U.S.-based assets of the Company.
At June 30, 1996, no direct advances had been taken against the facility.
5. FOREIGN CURRENCY TRANSACTIONS
The Company enters into foreign currency forward contracts to hedge firm
purchase and sales orders denominated in foreign currencies. At June 30, 1996,
the Company had the following open positions (in thousands):
<TABLE>
<CAPTION>
Foreign Currency Dollar
Foreign Currency Type of Contract Amount Equivalent Maturity Dates
- ------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Deutsche Marks Purchase 6,700 $4,645 July - September 1996
Canadian Dollars Sell 1,700 $1,247 September 1996
</TABLE>
The net loss on these forward contracts as of June 30, 1996 of approximately
$250,000 has been deferred and will be recognized when the related commitments
are settled.
6. LONG-TERM DEBT
The Company's landlord has agreed to loan the Company $750,000 to fund a portion
of the expansion and improvement of the Company's Preston, Washington office,
warehouse and manufacturing facilities. The loan has an annual effective
interest rate of approximately 4.3% and is due in monthly payments of principal
and interest of $9,100 through August 2004. At June 30, 1996, $675,000 of the
total loan amount had been drawn.
6
<PAGE> 8
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS
OF OPERATIONS.
To the extent that this Quarterly Report on Form 10-Q discusses financial
projections, information or expectations about the Company's products or
markets, or otherwise makes statements about the future, such statements are
forward looking and are subject to a number of risks and uncertainties that
could cause actual results to differ materially from the statements made. These
factors include the timely availability and acceptance of new products, the
Company's dependence on outside manufacturers, the management of growth and the
other risks detailed in the Company's Annual Report on Form 10-K as filed with
the Securities and Exchange Commission for the fiscal year ended December 31,
1995. Forward looking statements contained in this Quarterly Report on Form 10-Q
are more specifically identified with the symbol (*).
GENERAL
The Company is a leading designer, manufacturer and marketer of snowboards and
related products through its subsidiaries, Ride Snowboard Company ("Ride
Snowboards"), C.A.S. Sports International, Inc. ("CAS"), Thermal Snowboards,
Inc. ("Ride Manufacturing") and SMP Clothing, Inc. ("SMP"). The Company acquired
CAS in August 1994, Thermal in September 1995 and SMP in October 1995. The
Company also acquired 5150 Snowboards, Inc. ("5150") in September 1995 and later
merged 5150 with and into Ride Snowboards. The results of operations of these
acquired subsidiaries are included in the Company's financial statements from
their respective dates of acquisition.
The Company's operations vary significantly during the year based on the winter
sports season. The season for winter sports, which includes snowboarding,
typically runs from November through March in northern hemisphere markets.
Accordingly, the Company generates the majority of its sales in the third and
fourth quarters, as snowboard retailers time their purchases to meet expected
retail demand.* Because relatively lower net sales are generated in the first
and second quarters of the year, the Company expects to incur operating losses
in the first half of the year for the foreseeable future.*
RESULTS OF OPERATIONS
QUARTER ENDED JUNE 30, 1996 COMPARED WITH QUARTER ENDED JUNE 30, 1995
Net sales increased 10% to $13.5 million in the second quarter of 1996 from
$12.3 million in the second quarter of 1995. Approximately $3.6 million of the
1996 amount was generated by SMP, Ride Manufacturing and the "5150" brand. Sales
in the CAS and Ride Snowboards divisions (exclusive of sales of the "5150"
brand) were down $2.4 million over the same period in 1995 due primarily to
acceleration of sales from the second quarter of 1996 into the first quarter of
1996. In addition, OEM shipments from the CAS division decreased relative to the
second quarter of 1995.
Gross margins increased to 31% for the second quarter of 1996 from 26% for the
second quarter of 1995. The increase in gross margins in the 1996 period is
attributable primarily to the in-house production of the majority of the
Company's high-end "Ride" and "5150" brand snowboards at Ride Manufacturing.
Margins were also positively affected by the higher gross margins contributed by
SMP and by a smaller percentage of total sales being contributed by the CAS
division, which has relatively lower gross margins.
Selling, general and administrative expenses increased to $3.6 million for the
second quarter of 1996 from $1.9 million for the second quarter of 1995. This
increase was due to the increased scope of the Company's operations in 1996,
including increased research and development expenditures, increased occupancy
expenses associated with the expansion of the Ride Snowboards division
warehouse, office and manufacturing facilities as well as the additional
operating expenses associated with SMP, Ride Manufacturing and the "5150" brand,
which were acquired in the second half of 1995.
7
<PAGE> 9
Interest income, net of interest expense, decreased to $76,000 in the second
quarter of 1996 compared with $81,000 for the second quarter of 1995. The
decrease was due to overall lower cash balances on hand during the 1996 quarter
resulting primarily from seasonably higher cash needs to fund the Company's
in-house manufacturing operations.
The second quarter 1996 income tax provision of $233,000 is based upon the
expected overall effective rate for the year.
SIX MONTHS ENDED JUNE 30, 1996 COMPARED WITH SIX MONTHS ENDED JUNE 30, 1995
Net sales increased 52% to $26.3 million for the first six months of 1996 from
$17.3 million in the first six months of 1995. Approximately $5.9 million of the
1996 amount was generated by SMP, Ride Manufacturing and the "5150" brand. Sales
in the CAS and Ride Snowboards divisions (exclusive of sales of the "5150"
brand) increased 18% or $3.1 million over the same period in 1995 reflecting the
continued growth across all of Ride Snowboards' brands and accelerated timing of
international product shipments during the first half of 1996 that otherwise
would have occurred in the second half of the year.
Gross margins increased to 29% for the first six months of 1996 from 24% for the
first six months of 1995. The increase in gross margins in the 1996 period is
attributable primarily to the in-house production of the majority of the
Company's high-end "Ride" and "5150" brand snowboards at Ride Manufacturing.
Gross margins were also positively affected by the higher gross margins
contributed by SMP and by a smaller percentage of total sales being contributed
by the CAS division, which has relatively lower gross margins.
Selling, general and administrative expenses increased to $8.7 million for the
first six months of 1996 from $3.4 million for the same period of 1995. This
increase was due to the increased scope of the Company's operations in 1996,
including increased marketing expenses in the first quarter associated with the
major industry trade shows and new product introductions, increased research and
development expenditures, increased occupancy expenses associated with the
expansion of the Ride Snowboards division warehouse, office and manufacturing
facilities as well as the additional operating expenses associated with SMP,
Ride Manufacturing and the "5150" brand, which were acquired in the second half
of 1995.
Interest income, net of interest expense, increased to $251,000 for the first
six months of 1996 compared with $161,000 for the first six months of 1995. The
increase was due to overall higher cash balances on hand in the first quarter of
1996 stemming from the increased scope of the business as well as capital
supplied by the Company's August 1995 public stock offering.
The income tax benefit of $298,000 for the first six months of 1996 is based
upon the expected overall effective rate for the year.
LIQUIDITY AND CAPITAL RESOURCES
During the first six months of 1996, the Company financed its operations
primarily through cash balances on hand. Net cash used in operating activities
totaled approximately $13.0 million in the first half of 1996 compared with $3.7
million in the comparable period of 1995. This change was due primarily to
increases in inventories associated with the larger scope of the Company's
business and the addition of internal manufacturing through its September 1995
acquisition of Ride Manufacturing. Because the Company now manufactures a
significant portion of its own snowboards, there is a greater need for cash in
the first part of the year to fund raw material purchases and production.
Net cash provided by investing activities totaled $134,000 during the first six
months of 1996 compared to net cash used in investing activities of $453,000 in
the first six months of 1995. The 1996 period includes approximately $3.8
million in proceeds from the sale of short term investments, offset by capital
expenditures of approximately $3.3 million. The 1996 capital expenditures
include molds and tooling for snowboards and snowboard bindings,
8
<PAGE> 10
leasehold improvements related to the expansion of the Company's Preston,
Washington office, warehouse and manufacturing operations, and additional
manufacturing equipment.
Net cash provided by financing activities totaled $130,000 in the first half of
1996 compared with $2.1 million in the comparable period of 1995. First half
1996 financing activities included the retirement of $938,000 in notes payable
to the sellers of SMP and $420,000 in proceeds from the exercise of stock
options and sale of common stock through the Company's employee stock purchase
plan. In addition, the Company's landlord has agreed to loan the Company
$750,000 to fund a portion of the expansion and improvement of the Company's
Preston, Washington office, warehouse and manufacturing facilities. The loan has
an annual effective interest rate of approximately 4.3% and is due in monthly
payments of principal and interest through December 2003. At June 30, 1996,
$675,000 of the total loan amount had been drawn. The 1995 period included
approximately $2.1 million in proceeds from the exercise of common stock
warrants. These warrants were all exercised or redeemed by the end of the third
quarter of 1995.
The Company has credit facilities with two banks. In June 1996, the Company
replaced its line of credit with a U.S. bank with a new facility with the same
bank. The new facility provides $30 million in borrowings either for direct
advances or for letters of credit for all of the Company's U.S. subsidiaries.
Borrowings under this facility bear interest at the bank's prime U.S. lending
rate or at a LIBOR option plus 1.5%. The facility expires March 31, 1997 and
contains various financial covenants including working capital, tangible net
worth and quick ratio requirements. The facility is collateralized by
substantially all of the U.S.-based assets of the Company. At July 31, 1996, the
Company had outstanding letters of credit aggregating $3.6 million under this
facility and direct advances totaling $3.7 million.
CAS has three credit facilities from a Canadian bank. The first facility
provides a $5.3 million line of credit for direct borrowings and usance letters
of credit. The second facility provides for a $10.5 million line for no control
and sight letters of credit. The third facility provides for a $1.1 million
foreign exchange forward contract line. Borrowings under these facilities will
bear interest at the bank's prime U.S. lending rate plus 0.5%. The credit
facilities contain certain operating covenants including tangible net worth and
ownership requirements for CAS and are collateralized by substantially all of
CAS's assets. At July 31, 1996, CAS had outstanding import letters of credit
aggregating $2.3 million and direct advances totaling $1.7 million.
The Company believes that cash on hand, collection of receivables and borrowings
under its existing credit facilities will be sufficient to meet its operating
needs for the next 12 months.*
Certain of the Company's purchase commitments and sales are denominated in
foreign currencies. Because a change in the value of such currencies relative to
the U.S. dollar will affect the Company's gross profit and net income, the
Company enters into forward currency contracts to hedge against adverse currency
fluctuations. Although the Company believes that these contracts decrease the
overall exposure to gains and losses from currency fluctuations, such exposure
cannot be entirely eliminated.
Although the Company cannot accurately anticipate the effects of inflation, the
Company does not believe inflation has had or is likely to have a material
effect on its results of operations or liquidity.*
9
<PAGE> 11
PART II - OTHER INFORMATION
ITEM 1. LEGAL PROCEEDINGS
On April 2, 1996, the Company's Preston Binding Company subsidiary
("Preston"), together with Mark A. Raines and Gregory A. Deeney,
commenced an action in the United States District Court for the
Southern District of New York (docket no. 96-CIV-2361-JFK) against
Switch Manufacturing Co. ("Switch") for patent infringement. Preston,
Raines and Deeney allege that Switch's Autolock(TM) step-in snowboard
binding infringes U.S. Patent No. 4,973,073 (the "Raines Patent") for a
step-in binding held by Raines and Deeney. Preston is a plaintiff in
the case because Preston has signed a letter agreement with Raines and
Deeney to acquire the Raines Patent. In response, Switch commenced an
action on April 15, 1996 against Preston and the Company in the United
States District Court for the Northern District of California (docket
No. 96-CIV-1376-WHO) seeking a declaratory judgment that the
Autolock(TM) binding does not infringe the Raines Patent. On July 24,
1996, the judge in the action in the Southern District of New York
granted Switch's motion to transfer the case to the Northern District
of California. The Company expects that the two cases will be
consolidated into a single case in the Northern District of California.
ITEM 2. CHANGES IN SECURITIES
None.
ITEM 3. DEFAULTS UPON SENIOR SECURITIES
None.
ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS
The Company's Annual Meeting of Shareholders was held on May 6, 1996. The
following members were elected to the Company's Board of Directors to hold
office for the ensuing year.
<TABLE>
<CAPTION>
Nominee For Withheld
------- --- --------
<S> <C> <C>
James J. Salter 9,051,780 196,565
Mark M. Salter 9,052,477 195,868
Roger B. Madison, Jr. 9,047,417 200,928
Timothy G. Pogue 9,052,851 195,494
Kenneth J. Finkelstein 9,051,942 196,403
Corey J. Hechler 9,051,398 196,947
Gerald B. Wasserman 9,050,743 197,602
</TABLE>
The results of the voting on additional items are lised below. All such
proposals were approved.
(a) Increase in the number of shares of Common Stock available under the
Company's 1994 Stock Option Plan and 1994 Directors' Nonqualified Stock
Option Plan by 500,000.
<TABLE>
<CAPTION>
In Favor Opposed Abstained Broker Non-Vote
-------- ------- --------- ---------------
<S> <C> <C> <C>
7,817,597 1,351,605 43,943 35,200
</TABLE>
10
<PAGE> 12
(b) Adoption of various amendments to the 1994 Directors Nonqualified Stock
Option Plan.
<TABLE>
<CAPTION>
In Favor Opposed Withheld Broker Non-Vote
-------- ------- -------- ---------------
<S> <C> <C> <C>
7,849,932 566,616 193,599 638,198
</TABLE>
(c) Ratification of Ernst & Young LLP as the Company's independent public
accountants for the fiscal year ending December 31, 1996.
<TABLE>
<CAPTION>
In Favor Opposed Withheld
-------- ------- --------
<S> <C> <C>
9,162,833 23,951 61,561
</TABLE>
None.
ITEM 5. OTHER INFORMATION
None.
ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K
(a) Exhibits
Exhibit No. Description
3.1 Restated Articles of Incorporation and Certificate of
Designation of Relative Rights and Preferences of the Series A
7% Cumulative Nonvoting Preferred Stock (1)
3.2 Bylaws of the Company (1)
3.3 Articles of Amendment to Articles of Incorporation (11)
3.4 Articles of Amendment to Articles of Incorporation (12)
3.5 Articles of Correction (14)
4.1 Article VI of the Articles of Incorporation regarding
Shareholder Rights (See Exhibit 3.1) (1)
4.2 Article VIII of the Articles of Incorporation regarding Voting
Rights (See Exhibit 3.1) (1)
4.4 Specimen Stock Certificate (2)
10.10 Exclusive Distributorship Agreement dated December 7, 1992, by
and between Ride Snowboard Company and Far East Trading Co.,
Ltd. (4)
10.23 Exclusive Patent, Trademark and Know-How Licensing Agreement
dated September 29, 1993 by and between Ride Snowboard Company,
Jacob Blattner and David Hubatch (3)
10.25 Employment Agreement, dated August 18, 1994, by and between Ride
Snowboard Company and James J. Salter (5)
10.26 Form of Employment Agreement between Ride Snowboard Company and
Roger B. Madison, Jr. (1)
10.27 Employment Agreement, dated January 1, 1995, by and between Ride
Snowboard Company and Timothy G. Pogue (9)
11
<PAGE> 13
10.28 Form of Ride Snowboard Company 1994 Stock Option Plan (1)
10.29 Form of Ride Snowboard Company 1994 Directors' Nonqualified
Stock Option Plan (1)
10.30 Lease Agreement with Teachers Insurance & Annuity Association
dated January 10, 1994 (1)
10.32 Amended Form of Underwriting Agreement (6)
10.34 Standard Form Multiple Occupancy Lease, dated November 29, 1994,
by and between Ride Snowboard Company and BDC Preston Properties
One Limited Partnership (8)
10.35 Business Loan Agreement, dated June 10, 1996, by and between
Ride, Inc. and U.S. Bank of Washington, N.A., expiring March 31,
1997
10.36 Stock Purchase Agreement, dated August 18, 1994, between Ride
Snowboard Company and James J. Salter, the James Salter Family
Trust, Kenneth Finkelstein Family Trust, The Snow Trust, Robert
Marcovitch, Kerry Wasserman, Rick Clarfield, Howard Cohen, Gary
Kell, Sandra Pelegrin, Alan Langer, Dan Opyc, C.A.S. Sports
International, Inc. and C.A.S. Sports Agency, Inc. (10)
10.37 Retail Section Lease, dated January 14, 1994, by and between
Dufferin Business Centre Inc. and C.A.S. Sports International,
Inc. (8)
10.38 Retail Section Lease, dated January 11, 1995, by and between
Dufferin Business Centre Inc. and C.A.S. Sports International,
Inc. (8)
10.39 Lease Agreement, dated September 21, 1994, by and between
Westlake-Village Green Associates and C.A.S. Sports
International, Inc. (8)
10.40 Letter agreement for commitment of credit facilities, dated
April 5, 1995, by and between Hongkong Bank of Canada and C.A.S.
Sports International, Inc. (9)
10.41 Agreement, dated January 14, 1994, by and between C.A.S. Sports
International, Inc. and Limited Snowboards, Inc. (8)
10.42 Agreement, dated March 17, 1994, by and between C.A.S. Sports
International, Inc. and NXT Distribution (8)
10.43 Agreement, dated March 30, 1994, by and between C.A.S. Sports
International, Inc. and Staple Snowboards Inc. (8)
10.44 Sublease dated March 23, 1995, by and between Ride Snowboard
Company and E. Kent Halvorson, Inc. (9)
10.45 Ride Snowboard Company 1995 Employee Stock Purchase Plan (11)
10.46 Ride Snowboard Company 1995 Foreign Subsidiary Employee Stock
Purchase Plan (11)
10.47* Exclusive OEM Agreement, dated July 26, 1995, by and between
Ride Snowboard Company and Straight Line Water Sports, Inc. (13)
10.48 Employment Agreement, dated September 1, 1995, between the
Company and David A. Janes, Jr. (15)
10.49 Employment Agreement, dated September 1, 1995, between the
Company and Bernard Gervasoni (15)
12
<PAGE> 14
10.50 Employment Agreement, dated October 19, 1995, between the
Company and David Milo Myers (16)
10.51 Registration Rights Agreement dated October 19, 1995, between
the Company and David Milo Myers, Lawrence Kraus and Michael
Wise (16)
10.52 Stock Purchase Agreement, dated September 1, 1995, between the
Company and the shareholders and option holders of 5150
Snowboards, Inc. and Thermal Snowboards, Inc. (17)
10.53 Asset Purchase Agreement, dated October 19, 1995, among the
Company, Sex Money Power Clothing, Inc., David Milo Myers,
Lawrence Kraus and Michael Wise (18)
10.54 Form of Underwriting Agreement by and between the Company and
Hambrecht & Quist LLC and Dain Bosworth Incorporated (19)
10.55* Amendment No.1 to Exclusive Distributorship Agreement, dated
October 24, 1995, by and between Ride Snowboard Company, 5150
Snowboards, Inc., SMP Clothing, Inc. and Far East Trading
Company Ltd. (20)
10.56 Employment Agreement, dated October 14, 1995, by and between the
Company and Kenneth J. Finkelstein (21)
10.57 Employment Agreement, dated January 1, 1996, by and between
C.A.S. Sports International, Inc. and Robert F. Marcovitch (21)
10.58 First Amendment, dated August 4, 1995, to Lease Agreement by and
between Ride Snowboard Company and BDC Preston Properties One
Limited Partnership (21)
10.59 Second Amendment, dated November 21, 1995, to Lease Agreement by
and between Ride Snowboard Company and BDC Preston Properties
One Limited Partnership (21)
10.60 Third Amendment, dated March 26, 1996, to Lease Agreement by and
between Ride Snowboard Company and BDC Preston Properties One
Limited Partnership (21)
10.61 Amendment No. 2 to Exclusive Distributorship Agreement, dated
October 24, 1995, by and between Ride Snowboard Company, 5150
Snowboards, Inc., SMP Clothing, Inc. and Far East Trading
Company Ltd.
10.62 Letter agreement for commitment of credit facilities, dated
April 30, 1996, by and between Hongkong Bank of Canada and
C.A.S. Sports International, Inc. (22)
10.63 Agreement, dated May 7, 1996, by and between Ride, Inc. and
James J. Salter
10.64 Agreement, dated August 2, 1996, by and between Ride, Inc. and
Kenneth J. Finkelstein
10.65 Agreement, dated August 7, 1996, by and between Ride, Inc. and
Robert E. Hall
11.1 Computation of earnings per share
27.1 Financial Data Schedule
- ------------------------------
13
<PAGE> 15
(1) Exhibit is incorporated by reference to an identically numbered exhibit
to the Company's Registration Statement on Form SB-2, file no.
33-75770-LA.
(2) Exhibit is incorporated by reference to an identically numbered exhibit
to the Company's Amendment No. 1 to Registration Statement on Form SB-2,
file no. 33-75770-LA.
(3) Exhibit is incorporated by reference to an identically numbered exhibit
to the Company's Amendment No. 1 to Registration Statement on Form
SB-2, file no. 33-75770-LA, with confidential portions omitted and
filed separately with the Commission pursuant to a Request of
Confidential Treatment under Rule 406 of the Securities Act of 1933.
(4) Exhibit is incorporated by reference to an identically numbered exhibit
to the Company's Registration Statement on Form SB-2, file no.
33-75770-LA, with confidential portions omitted and filed separately
with the Commission pursuant to a Request of Confidential Treatment
under Rule 406 of the Securities Act of 1933.
(5) Exhibit is incorporated by reference to Exhibit No. 10.1 to the Company's
Current Report on Form 8-K, dated August 31, 1994.
(6) Exhibit is incorporated by reference to Exhibit No. 1.1A to the Company's
Amendment No. 1 to Registration Statement on Form SB-2, file no.
33-75770-LA.
(7) Exhibit is incorporated by reference to Exhibit No. 1.2A to the Company's
Amendment No. 1 to Registration Statement on Form SB-2, file no.
33-75770-LA.
(8) Exhibit is incorporated by reference to an identically numbered exhibit
to the Company's Annual Report on Form 10-K for the fiscal year ended
December 31, 1994.
(9) Exhibit is incorporated by reference to an identically numbered exhibit
to the Company's Post-Effective Amendment No. 1 to the Registration
Statement on Form SB-2, file no. 33-75770-LA.
(10) Exhibit is incorporated by reference to an identically numbered exhibit
to the Company's Post-Effective Amendment No. 2 to the Registration
Statement on Form SB-2, file no. 33-75770-LA.
(11) Exhibit is incorporated by reference to an identically numbered exhibit
to the Company's Registration Statement on Form S-1, file no. 33-94814.
(12) Exhibit is incorporated by reference to an identically numbered exhibit
to Amendment No. 1 to the Company's Registration Statement on Form S-1,
file no. 33-94814.
(13) Exhibit is incorporated by reference to an identically numbered exhibit
to Amendment No. 1 to the Company's Registration Statement on Form S-1,
file no. 33-94814, with confidential portions omitted and filed
separately with the Commission pursuant to a Request of Confidential
Treatment under Rule 406 of the Securities Act of 1933.
(14) Exhibit is incorporated by reference to an identically numbered exhibit
to Amendment No. 2 to the Company's Registration Statement on Form S-1,
file no. 33-94814.
(15) Exhibit is incorporated by reference to an identically numbered exhibit
to the Company's Current Report on Form 8-K, dated September 1, 1995.
(16) Exhibit is incorporated by reference to an identically numbered exhibit
to the Company's Current Report on Form 8-K, dated October 20, 1995.
14
<PAGE> 16
(17) Exhibit is incorporated by reference to Exhibit No. 2.1 to the Company's
Current Report on Form 8-K, dated September 1, 1995.
(18) Exhibit is incorporated by reference to Exhibit No. 2.2 to the Company's
Current Report on Form 8-K, dated October 20, 1995.
(19) Exhibit is incorporated by reference to Exhibit No. 1.1 to the Company's
Registration Statement on Form S-1, file no. 33-94814.
(20) Exhibit is incorporated by reference to an identically numbered exhibit
to the Company's Quarterly Report on Form 10-Q, for the fiscal quarter
ended September 30, 1995.
(21) Exhibit is incorporated by reference to an identically numbered exhibit
to the Company's Annual Report on Form 10-K for the fiscal year ended
December 31, 1995.
(22) Exhibit is incorporated by reference to an identically numbered
exhibit to the Company's Quarterly Report on Form 10-Q for the fiscal
quarter ended March 31, 1996.
* Certain portions of this exhibit have been omitted and filed separately
with the Commission pursuant to an Application for Confidential
Treatment.
(b) Reports on Form 8-K
The Company filed no reports on Form 8-K during the quarter ended June 30, 1996.
15
<PAGE> 17
EXHIBIT INDEX
<TABLE>
<CAPTION>
Manual
Exhibit No. Description Page No.
- ----------- ----------- --------
<S> <C> <C>
10.35 Business Loan Agreement, dated June 10, 1996, by and between Ride, Inc.
and U.S. Bank of Washington, N.A., expiring March 31, 1997
10.63 Agreement, dated May 7, 1996, by and between Ride, Inc. and James J. Salter
10.64 Agreement, dated August 2, 1996, by and between Ride, Inc. and Kenneth J.
Finkelstein
10.65 Agreement, dated August 7, 1996, by and between Ride, Inc. and Robert E. Hall
11.1 Computation of earnings per share
27.1 Financial Data Schedule
</TABLE>
16
<PAGE> 18
SIGNATURES
In accordance with the requirements of the Securities and Exchange Act of 1934,
the registrant has duly caused this report to be signed on its behalf by the
undersigned thereunto duly authorized.
RIDE, INC.
--------------------------
(Registrant)
Dated: August 13, 1996 By /s/ G. Scott Stewart
---------------------------------
G. Scott Stewart
Vice President & Chief Financial Officer
17
<PAGE> 1
Exhibit 10.35
BUSINESS LOAN AGREEMENT
Borrower: Ride, Inc.
8160 304TH AVE SE
Preston, WA 98050
Lender: US Bank of Washington National Association
East King County Corporate Banking
C/O 1420 5TH AVE
WWH 470
Seattle, WA 98101
THIS BUSINESS LOAN AGREEMENT between RIDE, INC. ("Borrower") and U.S. BANK OF
WASHINGTON, NATIONAL ASSOCIATION ("Lender") is made and executed on the
following terms and conditions. Borrower has received prior commercial loans
from Lender or has applied to Lender for a commercial loan or loans and other
financial accommodations, including those which may be described on any exhibit
or schedule attached to this Agreement. All such loans and financial
accommodations, together with all future loans and financial accommodations from
Lender to Borrower, are referred to in this Agreement individually as the "Loan"
and collectively as the "Loans." Borrower understands and agrees that: (a) in
granting, renewing, or extending any Loan, Lender is relying upon Borrower's
representations, warranties and agreements, as set forth in this Agreement; (b)
the granting, renewing, or extending of any Loan by Lender at all times shall be
subject to Lender's sole judgment and discretion; and (c) all such Loans shall
be and shall remain subject to the following terms and conditions of this
Agreement.
TERM. This Agreement shall be effective as of June 10, 1996, and shall continue
thereafter until all Indebtedness of Borrower to Lender has been performed in
full and the parties terminate this Agreement in writing.
DEFINITIONS. The following words shall have the following meanings when used in
this Agreement. Terms not otherwise defined in this Agreement shall have the
meanings attributed to such terms in the Uniform Commercial Code. All references
to dollar amounts shall mean amounts in lawful money of the United States of
America.
Agreement. The word "Agreement" means this Business Loan Agreement, as
this Business Loan Agreement may be amended or modified from time to time,
together with all exhibits and schedules attached to this Business Loan
Agreement from time to time.
Borrower. The word "Borrower" means RIDE, INC. The word "Borrower" also
includes, as applicable, all subsidiaries and affiliates of Borrower as
provided below in the paragraph filed "Subsidiaries and Affiliates."
CERCLA. The word "CERCLA" means the Comprehensive Environmental Response,
Compensation, and Liability Act of 1980, as amended.
Collateral. The word "Collateral" means and includes without limitation
all property and assets granted as collateral security for a Loan, whether
real or personal property, whether granted directly or indirectly, whether
granted now or in the future, and whether granted in the form of a
security interest, mortgage, deed of trust, assignment, pledge, chattel
mortgage, chattel trust, factor's lien, equipment trust, conditional sale,
trust receipt lien, charge, lien or title retention contract, lease or
consignment intended as a security device, or any other security or lien
interest whatsoever, whether created by law, contract, or otherwise.
ERISA. The word "ERISA" means the Employee Retirement Income Security Act
of 1974, as amended.
Event of Default. The words "Event of Default" mean and include without
limitation any of the Events of Default set forth below in the section
titled "EVENTS OF DEFAULT".
Grantor. The word "Grantor" means and includes without limitation each and
all of the persons or entities granting a Security Interest in any
Collateral for the Indebtedness, including without limitation all
Borrowers granting such a Security Interest.
Guarantor. The word "Guarantor" means and includes without limitation each
and all of the guarantors, sureties, and accommodation parties in
connection with any Indebtedness.
Indebtedness. The word "Indebtedness" means and includes without
limitations all Loans, together with all other obligations, debts and
liabilities of Borrower to Lender, or any one or more of them, as well as
all claims by Lender against Borrower, or any one or more of them; whether
now or hereafter existing, voluntary or involuntary, due or not due,
absolute or contingent, liquidated or unliquidated; whether Borrower may
be liable individually or jointly with others; whether Borrower may be
obligated as a guarantor, surety, or otherwise; whether recovery upon such
Indebtedness may be or hereafter may become barred by any statute of
limitations; and whether such Indebtedness may be or hereafter may become
otherwise unenforceable.
Lender. The word "Lender" means U.S. BANK OF WASHINGTON, NATIONAL
ASSOCIATION, its successors and assigns.
Loan. The word "Loan" or "Loans" means and includes without limitation any
and all commercial loans and financial accommodations from Lender to
Borrower, whether now or hereafter existing, and however evidenced,
including without limitation those loans and financial accommodations
described herein or described on any exhibit or schedule attached to this
Agreement from time to time.
Note. The word "Note" means and includes without limitation Borrowers
promissory note or notes, if any, evidencing Borrower's Loan obligations
in favor of Lender, as well as any substitute, replacement or refinancing
note or notes therefor.
<PAGE> 2
Permitted Liens. The words "Permitted Liens" mean: (a) liens and security
interests securing Indebtedness owed by Borrower to Lender; (b) liens for
taxes, assessments, or similar charges either not yet due or being
contested in good faith; (c) liens of materialmen, mechanics,
warehousemen, or carriers, or other like liens arising in the ordinary
course of business and securing obligations which are not yet delinquent;
(d) purchase money liens or purchase money security interests upon or in
any property acquired or held by Borrower in the ordinary course of
business to secure Indebtedness outstanding on the date of this Agreement
or permitted to be incurred under the paragraph of this Agreement titled
"Indebtedness and Liens"; (e) liens and security interests which, as of
the date of this Agreement, have been disclosed to and approved by the
Lender in writing; and (f) those liens and security interests which in the
aggregate constitute an immaterial and insignificant monetary amount with
respect to the net value of Borrower's assets.
Related Documents. The words "Related Documents" mean and include without
limitation all promissory notes, credit agreements, loan agreements,
environmental agreements, guaranties, security agreements, mortgages,
deeds of trust, and all other instruments, agreements and documents,
whether now or hereafter existing, executed in connection with the
Indebtedness.
Security Agreement. The words "Security Agreement" mean and include
without limitation any agreements, promises, covenants, arrangements,
understandings or other agreements, whether created by law, contract, or
otherwise, evidencing, governing, representing, or creating a Security
Interest.
Security Interest. The words "Security Interest" mean and include without
limitation any type of collateral security, whether in the form of a lien,
charge, mortgage, deed of trust, assignment, pledge, chattel mortgage,
chattel trust, factor's lien, equipment trust, conditional sale, trust
receipt, lien or title retention contract, lease or consignment intended
as a security device, or any other security or lien interest whatsoever,
whether created by law, contract, or otherwise.
SARA. The word "SARA" means the Superfund Amendments and Reauthorization
Act of 1986 as now or hereafter amended.
CONDITIONS PRECEDENT TO EACH ADVANCE. Lender's obligation to make the initial
Loan Advance and each subsequent Loan Advance under this Agreement shall be
subject to the fulfillment to Lender's satisfaction of all of the conditions set
forth in this Agreement and in the Related Documents.
Loan Documents. Borrower shall provide to Lender in form satisfactory to
Lender the following documents for the Loan: (a) the Note, (b) Security
Agreements granting to Lender security interests in the Collateral, (c)
Financing Statements perfecting Lender's Security Interests; (d) evidence
of insurance as required below; and (e) any other documents required under
this Agreement or by Lender or its counsel, including without limitation
any guaranties described below.
Borrower's Authorization. Borrower shall have provided in form and
substance satisfactory to Lender properly certified resolutions, duly
authorizing the execution and delivery of this Agreement, the Note and the
Related Documents, and such other authorizations and other documents and
instruments as Lender or its counsel, in their sole discretion, may
require.
Payment of Fees and Expenses. Borrower shall have paid to Lender all fees,
charges, and other expenses which are then due and payable as specified in
this Agreement or any Related Document.
Representations and Warranties. The representations and warranties set
forth in this Agreement, in the Related Documents, and in any document or
certificate delivered to Lender under this Agreement are true and correct.
No Event of Default. There shall not exist at the time of any advance a
condition which would constitute an Event of Default under this Agreement.
REPRESENTATIONS AND WARRANTIES. Borrower represents and warrants to Lender, as
of the date of this Agreement, as of the date of each disbursement of Loan
proceeds, as of the date of any renewal, extension or modification of any Loan,
and at all times any Indebtedness exists:
Organization. Borrower is a corporation which is duly organized, validly
existing, and in good standing under the laws of the State of Washington
and is validly existing and in good standing in all states in which
Borrower is doing business. Borrower has the full power and authority to
own its properties and to transact the businesses in which it is presently
engaged or presently proposes to engage. Borrower also is duly qualified
as a foreign corporation and is in good standing in all states in which
the failure to so qualify would have a material adverse effect on its
businesses or financial condition.
Authorization. The execution, delivery, and performance of this Agreement
and all Related Documents by Borrower, to the extent to be executed,
delivered or performed by Borrower, have been duly authorized by all
necessary action by Borrower; do not require the consent or approval of
any other person, regulatory authority or governmental body; and do not
conflict with, result in a violation of, or constitute a default under (a)
any provision of its articles of incorporation or organization, or bylaws,
or any agreement or other instrument binding upon Borrower or (b) any law,
governmental regulation, court decree, or order applicable to Borrower.
Financial information. Each financial statement of Borrower supplied to
Lender truly and completely disclosed Borrower's financial condition as of
the date of the statement, and there has been no material adverse change
in Borrower's financial condition subsequent to the date of the most
recent financial statement supplied to Lender. Borrower has no material
contingent obligations except as disclosed in such financial statements.
Legal Effect. This Agreement constitutes, and any instrument or agreement
required hereunder to be given by Borrower when delivered will constitute,
legal, valid and binding obligations of Borrower enforceable against
Borrower in accordance with their respective terms.
Properties. Except as contemplated by this Agreement or as previously
disclosed in Borrower's financial statements or in writing to Lender and as
accepted by Lender, and except for property tax liens for taxes not
presently due and payable, Borrower owns and has good title to all of
Borrowers properties free and clear of all Security Interests, and has not
executed any security documents or financing statements relating to such
properties. All of Borrower's properties are titled in Borrower's legal
name, and Borrower has not used, or filed a financing statement under, any
other name for at least five (5) years.
Hazardous Substances. The terms "hazardous waste," "hazardous substance,"
"disposal," "release," and "threatened release," as used in this
Agreement, shall have the same meanings as set forth in the "CERCLA,"
"SARA," the Hazardous Materials Transportation Act, 49 U.S.C. Section
1801, et seq., the Resource Conservation and Recovery Act, 42 U.S.C.
Section 6901, et seq., or other applicable state or Federal laws, rules,
or regulations adopted pursuant to any of the foregoing. Except as
disclosed to and acknowledged by Lender in writing, Borrower represents
and warrants that other than the use of certain materials in connection
with the manufacture of snowboards, (a) During the period of Borrower's
ownership of the properties, there has been no use, generation,
manufacture, storage, treatment, disposal, release or threatened release
of any hazardous waste or substance by any person on, under, about or from
any of the properties. (b) Borrower has no knowledge of, or reason to
believe that there has been; (i) any use, generation, manufacture,
storage, treatment, disposal, release, or threatened release of any
hazardous waste or substance on, under, about or from the properties by
any prior owners or occupants of any of the properties, or
<PAGE> 3
(ii) any actual or threatened litigation or claims of any kind by any
person relating to such matters. (c) Neither Borrower nor any tenant,
contractor, agent or other authorized user of any of the properties shall
use, generate, manufacture, store, treat, dispose of, or release any
hazardous waste or substance on, under, about or from any of the
properties; and any such activity shall be conducted in compliance with
all applicable federal, state, and local laws, regulations, and
ordinances, including without limitation those laws, regulations and
ordinances described above. Borrower authorizes Lender and its agents to,
upon reasonable notice to Borrower, to enter upon the properties to make
such inspections and tests as Lender may deem appropriate to determine
compliance of the properties with this section of the Agreement. Any
inspections or tests made by Lender shall be at Borrower's expense and for
Lender's purposes only and shall not be construed to create any
responsibility or liability on the part of Lender to Borrower or to any
other person. The representations and warranties contained herein are
based on Borrower's due diligence in investigating the properties for
hazardous waste and hazardous substances. Borrower hereby (a) releases and
waives any future claims against Lender for indemnity or contribution in
the event Borrower becomes liable for cleanup or other costs under any
such laws, and (b) agrees to indemnify and hold harmless Lender against
any and all claims, losses, liabilities, damages, penalties, and expenses
which Lender may directly or indirectly sustain or suffer resulting from a
breach of this section of the Agreement or as a consequence of any use,
generation, manufacture, storage, disposal, release or threatened release
occurring prior to Borrower's ownership or interest in the properties,
whether or not the same was or should have been known to Borrower. The
provisions of this section of the Agreement, including the obligation to
indemnify, shall survive the payment of the Indebtedness and the
termination or expiration of this Agreement and shall not be affected by
Lender's acquisition of any interest in any of the properties, whether by
foreclosure or otherwise.
Litigation and Claims. No litigation, claim, investigation, administrative
proceeding or similar action (including those for unpaid taxes) against
Borrower is pending or threatened, and no other event has occurred which
may materially adversely affect Borrower's financial condition or
properties, other than litigation, claims, or other events, if any, that
have been disclosed to and acknowledged by Lender in writing.
Taxes. To the best of Borrower's knowledge, all tax returns and reports of
Borrower that are or were required to be filed, have been filed, and all
taxes, assessments and other governmental charges have been paid in full,
except those presently being or to be contested by Borrower in good faith
in the ordinary course of business and for which adequate reserves have
been provided.
Lien Priority. Unless otherwise previously disclosed to Lender in writing,
Borrower has not entered into or granted any Security Agreements, or
permitted the filing or attachment of any Security Interests on or
affecting any of the Collateral directly or indirectly securing repayment
of Borrower's Loan and Note, that would be prior or that may in any way be
superior to Lender's Security Interests and rights in and to such
Collateral.
Binding Effect. This Agreement, the Note, all Security Agreements directly
or indirectly securing repayment of Borrower's Loan and Note and all of
the Related Documents are binding upon Borrower as well as upon Borrower's
successors, representatives and assigns, and are legally enforceable in
accordance with their respective terms.
Commercial Purposes. Borrower intends to use the Loan proceeds solely for
business or commercial related purposes.
Employee Benefit Plans. Each employee benefit plan as to which Borrower
may have any liability complies in all material respects with all
applicable requirements of law and regulations, and (i) no Reportable
Event nor Prohibited Transaction (as defined in ERISA) has occurred with
respect to any such plan, (ii) Borrower has not withdrawn from any such
plan or initiated steps to do so, (iii) no steps have been taken to
terminate any such plan, and (iv) there are no unfunded liabilities other
than those previously disclosed to Lender in writing.
Location of Borrower's Offices and Records. Borrower's place of business,
or Borrower's Chief executive office, if Borrower has more than one place
of business, is located at 8160 304TH AVE SE, PRESTON, WA 98050. Unless
Borrower has designated otherwise in writing this location is also the
office or offices where Borrower keeps its records concerning the
Collateral.
Information. All information heretofore or contemporaneously herewith
furnished by Borrower to Lender for the purposes of or in connection with
this Agreement or any transaction contemplated hereby is, and all
information hereafter furnished by or on behalf of Borrower to Lender will
be, true and accurate in every material respect on the date as of which
such information is dated or certified; and none of such information is or
will be incomplete by omitting to state any material fact necessary to
make such information not misleading.
Survival of Representations and Warranties. Borrower understands and
agrees that Lender, without independent investigation, is relying upon the
above representations and warranties in extending Loan Advances to
Borrower. Borrower further agrees that the foregoing representations and
warranties shall be continuing in nature and shall remain in full force
and effect until such time as Borrower's Indebtedness shall be paid in
full, or until this Agreement shall be terminated in the manner provided
above, whichever is the last to occur.
AFFIRMATIVE COVENANTS. Borrower covenants and agrees with Lender that, while
this Agreement is in effect, Borrower will:
Litigation. Promptly inform Lender in writing of (a) all material adverse
changes in Borrower's financial condition, and (b) all existing and all
threatened litigation, claims, investigations, administrative proceedings
or similar actions affecting Borrower or any Guarantor which could
materially affect the financial condition of Borrower or the financial
condition of any Guarantor.
Financial Records. Maintain its books and records in accordance with
generally accepted accounting principles, applied on a consistent basis,
and permit Lender to examine and audit Borrowers books and records at all
reasonable times.
Financial Statements. Furnish Lender with, as soon as available, but in no
event later than one hundred twenty (120) days after the end of each
fiscal year, Borrower's balance sheet and income statement for the year
ended, audited by a certified public accountant satisfactory to Lender,
and, as soon as available, but in no event later than forty five (45) days
after the end of each fiscal quarter, Borrower's balance sheet and profit
and loss statement for the period ended, prepared and certified as correct
to the best knowledge and belief by Borrower's chief financial officer or
other officer or person acceptable to Lender. AlI financial reports
required to be provided under this Agreement shall be prepared in
accordance with generally accepted accounting principles, applied on a
consistent basis, and certified by Borrower as being true and correct.
Additional Information. Furnish such additional information and
statements, lists of assets and liabilities, agings of receivables and
payables, inventory schedules, budgets, forecasts, tax returns, and other
reports with respect to Borrower's financial condition and business
operations as Lender may request from time to time.
<PAGE> 4
Insurance. Maintain fire and other risk insurance, public liability
insurance, as Lender may require with respect to Borrower's properties and
operations, in form, amounts, coverages and with insurance companies
reasonably acceptable to Lender. Borrower, upon request of Lender, will
deliver to Lender from time to time the policies or certificates of
insurance in form satisfactory to Lender, including stipulations that
coverages will not be canceled or diminished without at least ten (10)
days prior written notice to Lender. Each insurance policy also shall
include an endorsement providing that coverage in favor of Lender will not
be impaired in any way by any act, omission or default of Borrower or any
other person. In connection with all policies covering assets in which
Lender holds or is offered a security interest for the Loans, Borrower
will provide Lender with such loss payable or other endorsements as Lender
may require.
Insurance Reports. Furnish to Lender, upon request of Lender, reports on
each existing insurance policy showing such information as Lender may
reasonably request, including without limitation the following: (a) the
name of the insurer, (b) the risks insured; (c) the amount of the policy,
(d) the properties insured; (e) the then current property values on the
basis of which insurance has been obtained, and the manner of determining
those values; and (f) the expiration date of the policy. In addition, upon
request of Lender (however not more often than annually), Borrower will
have an independent appraiser satisfactory to Lender determine, as
applicable, the actual cash value or replacement cost of any Collateral.
The cost of such appraisal shall be paid by Borrower.
Guaranties. Prior to disbursement of any Loan proceeds, furnish executed
guaranties of the Loans in favor of Lender, on Lender's forms, and in the
amounts and by the guarantors named below:
<TABLE>
<CAPTION>
Guarantors Amounts
---------- -------
<S> <C>
RIDE INTERNATIONAL, INC. Unlimited
PRESTON BINDING COMPANY Unlimited
THERMAL SNOWBOARDS, INC. Unlimited
SMP CLOTHING, INC. Unlimited
RIDE SNOWBOARD COMPANY Unlimited
</TABLE>
Other Agreements. Comply with all terms and conditions of all other
agreements, whether now or hereafter existing, between Borrower and any
other party and notify Lender immediately in writing of any default in
connection with any other such agreements.
Loan Proceeds. Use all Loan proceeds solely for Borrower's business
operations, unless specifically consented to the contrary by Lender in
writing.
Taxes, Charges and Liens. Pay and discharge when due all of its
Indebtedness and obligations, including without limitation all
assessments, taxes, governmental charges, levies and liens, of every kind
and nature, imposed upon Borrower or its properties, income, or profits,
prior to the date on which penalties would attach, and all lawful claims
that, if unpaid, might become a lien or charge upon any of Borrower's
properties, income, or profit. Provided however, Borrower will not be
required to pay and discharge any such assessment, tax, charge, levy, lien
or claim so long as (a) the legality of the same shall be contested in
good faith by appropriate proceedings, and (b) Borrower shall have
established on its books adequate reserves with respect to such contested
assessment, tax, charge, levy, lien, or claim in accordance with generally
accepted accounting practices. Borrower, upon demand of Lender, will
furnish to Lender evidence of payment of the assessments, taxes, charges,
levies, liens and claims and will authorize the appropriate governmental
official to deliver to Lender at any time a written statement of any
assessments, taxes, charges, levies, liens and claims against Borrower's
properties, income, or profits.
Performance. Perform and comply with all terms, conditions, and provisions
set forth in this Agreement and in the Related Documents in a timely
manner, and promptly notify Lender if Borrower learns of the occurrence of
any event which constitutes an Event of Default under this Agreement or
under any of the Related Documents.
Operations. Maintain executive and management personnel with substantially
the same qualifications and experience as the present executive and
management personnel; provide written notice to Lender of any change in
executive and management personnel; conduct its business affairs in a
reasonable and prudent manner and in compliance with all applicable
federal, state and municipal laws, ordinances, rules and regulations
respecting its properties, charters, businesses and operations, including
without limitations, compliance with the Americans With Disabilities Act
and with all minimum funding standards and other requirements of ERISA and
other laws applicable to Borrower's employee benefit plans.
Inspection. Permit employees or agents of Lender at any reasonable time to
inspect any and all collateral for the Loan or Loans and Borrower's other
properties and to examine or audit Borrower's books, accounts, and records
and to make copies and memoranda of Borrower's books, accounts, and
records. If Borrower now or at any time hereafter maintains any records
(including without limitation computer generated records and computer
software programs for the generation of such records) in the possession of
a third party, Borrower, upon request of Lender, shall notify such party
to permit Lender free access to such records at all reasonable times and
to provide Lender with copies of any records it may request, all at
Borrower's expense.
Compliance Certificate. Unless waived in writing by Lender, provide Lender
QUARTERLY and at the time of each disbursement of Loan proceeds with a
certificate executed by Borrower's chief financial officer, or other
officer or person acceptable to Lender, certifying that the
representations and warranties set forth in this Agreement are true and
correct as of the date of the certificate and further certifying that, as
of the date of the certificate, no Event of Default exists under this
Agreement.
Environmental Compliance and Reports. Borrower shall comply in all
respects with all environmental protection federal, state and local laws,
statutes, regulations and ordinances; not cause or permit to exist, as a
result of an intentional or unintentional action or omission on its part
or on the part of any third party, on property owned and/or occupied by
Borrower, any environmental activity where damage may result to the
environment unless such environmental activity is pursuant to and in
compliance with the conditions of a permit issued by the appropriate
federal, state or local governmental authorities; shall furnish to Lender
promptly and in any event within thirty (30) days after receipt thereof a
copy of any notice, summons, lien, citation, directive, letter or other
communication from any governmental agency or instrumentality concerning
any intentional or unintentional action or omission on Borrower's part in
connection with any environmental activity whether or not there is damage
to the environment and/or other natural resources.
Additional Assurances. Make, execute and deliver to Lender such promissory
notes, mortgages, deeds of trust, security agreements, financing
statements, instruments, documents and other agreements as Lender or its
attorneys may reasonably request to evidence and secure the Loans and to
perfect all Security Interests.
NEGATIVE COVENANTS. Borrower covenants and agrees with Lender that while this
Agreement is in effect, Borrower shall not, without the prior written consent of
Lender:
<PAGE> 5
Indebtedness and Liens. (a) Except for trade debt incurred in the normal
course of business and Indebtedness to Lender contemplated by this
Agreement, create, incur or assume Indebtedness for borrowed money,
including capital leases greater that $500,000 per transaction or
$1,000,000 in the aggregate, (b) except as allowed as a Permitted Lien,
sell, transfer, mortgage, assign, pledge, lease, grant a security interest
in, or encumber any of Borrower's assets, or (c) sell with recourse any of
the Borrower's accounts, except to Lender.
Continuity of Operations. (a) Engage in any material business activities
substantially different than those in which Borrower is presently engaged,
(b) cease operations, liquidate, merge, transfer, acquire materials or
consolidate with any other entity, change ownership, change its name,
dissolve or transfer or sell Collateral out of the ordinary course of
business, (c) pay any dividends on Borrower's stock (other than dividends
payable in its stock or dividends payable on Class A Preferred Stock
)provided, however that notwithstanding the foregoing, but only so long as
no Event of Default has occurred and is continuing or would result from
the payment of dividends, if Borrower is a "Subchapter S Corporation" (as
defined in the Internal Revenue Code of 1986, as amended), Borrower may
pay cash dividends on its stock to its shareholders from time to time in
amounts necessary to enable the shareholders to pay income taxes and make
estimated income tax payments to satisfy their liabilities under federal
and state law which arise solely from their status as Shareholders of a
Subchapter S Corporation because of their ownership of shares of stock of
Borrower, or (d) purchase or retire any of Borrower's outstanding shares
or alter or amend Borrower's capital structure.
Loans, Acquisitions and Guaranties. (a) other than in the ordinary course
of business, loan, invest in or advance money or assets, (b) purchase,
create or acquire any interest in any other enterprise or entity, other
than transactions which in the aggregate result in the transfer of assets
having a value of $1,000,000 or less, or (c) incur any obligation as
surety or guarantor other than in the ordinary course of business.
CESSATION OF ADVANCES. If Lender has made any commitment to make any Loan to
Borrower, whether under this Agreement or under any other agreement, Lender
shall have no obligation to make Loan Advances or to disburse Loan proceeds if:
(a) Borrower or any Guarantor is in default under the terms of this Agreement or
any of the Related Documents or any other agreement that Borrower or any
Guarantor has with Lender; (b) Borrower or any Guarantor becomes insolvent,
files a petition in bankruptcy or similar proceedings, or is adjudged a
bankrupt; (c) there occurs a material adverse change in Borrower's financial
condition, in the financial condition of any Guarantor, or in the value of any
Collateral securing any Loan; (d) any Guarantor seeks, claims or otherwise
attempts to limit, modify or revoke such Guarantor's guaranty of the Loan or any
other loan with Lender.
ACCESS LAWS. Without limiting the generality of any provision of this agreement
requiring Borrower to comply with applicable laws, rules, and regulations,
Borrower agrees that it will at all times comply with applicable laws relating
to disabled access including, but not limited to, all applicable titles of the
Americans with Disabilities Act of 1990.
STATUTE OF FRAUDS DISCLOSURE. ORAL AGREEMENTS OR ORAL COMMITMENTS TO LOAN MONEY,
EXTEND CREDIT, OR TO FORBEAR FROM ENFORCING REPAYMENT OF A DEBT ARE NOT
ENFORCEABLE UNDER WASHINGTON LAW.
ADDITIONAL FINANCIAL RATIOS AND COVENANTS.
WORKING CAPITAL
Minimum Working Capital: $21,000,000.00 at 6/30/96. $25,000,000.00 at all other
quarters.
Ratio of Total Liabilities to Tangible Net Worth: 1.00 to 1.00 at 9/30/96. .75
to 1.00 at all other quarters. Maintain a minimum Tangible Net Worth of not less
than $25,000,000.00. Except as provided above, all computations made to
determine compliance with the requirements contained in this paragraph shall be
made in accordance with generally accepted accounting principles, applied on a
consistent basis, and certified by Borrower as being true and correct.
INCOME AND CASH FLOW
Cash Flow Requirements: Cash Flow coverage 1.20 to 1.00 only if term features of
line is used. Defined as (Net Income plus Depreciation Expense plus Amortization
Expense plus Interest Expense less Dividends less Unfunded Capital Expenditures)
divided by (Current Portion of Long Term Debt plus Current Portion of
Capitalized Leases plus Interest Expense.) Based on a Trailing four quarters of
activity. Quick Ratio: 1.25 to 1.00 Defined as (Cash and Equivalents plus
Accounts Receivable plus Inventory) divided by (Current Liabilities plus all
open L/Cs, B/As and other short-term off- balance sheet commitments). Compliance
will be certified monthly by Borrower in a form acceptable to Lender.
ADDITIONAL COVENANTS.
Foreign Subsidiary/Affiliate advances limited to a maximum of $2,000,000.00.
This does not apply to trade receivables and advances with anticipated durations
of less than one year.
Line to zero for 30 consecutive days each year excluding
L/Cs or term loans under the Line of Credit.
RIGHT OF SETOFF. Borrower grants to Lender a contractual possessory security
interest in, and hereby assigns, conveys, delivers, pledges, and transfers to
Lender all Borrower's right, title and interest in and to, Borrower's accounts
with Lender (whether checking, savings, or some other account), including
without limitation all accounts held jointly with someone else and all accounts
Borrower may open in the future, excluding however all IRA and Keogh accounts,
and all trust accounts for which the grant of a security interest would be
prohibited by law. Borrower authorizes Lender, to the extent permitted by
applicable law, to charge or setoff all sums owing on the Indebtedness against
any and all such accounts.
EVENTS OF DEFAULT. Each of the following shall constitute an Event of Default
under this Agreement:
Default on Indebtedness. Failure of Borrower to make any payment when due
on the Loans.
Other Defaults. Failure of Borrower or any Grantor to comply with or to
perform when due any other term, obligation, covenant or condition
contained in this Agreement or in any of the Related Documents, or failure
of Borrower to comply with or to perform any other term, obligation,
covenant or condition contained in any other agreement between Lender and
Borrower.
Default In Favor of Third Parties. Should Borrower or any Grantor default
under any loan, extension of credit, security agreement, purchase or sales
agreement, or any other agreement, in favor of any other creditor or
person that may materially affect any of Borrower's property or Borrower's
or any Grantor's ability to repay the Loans or perform their respective
obligations under this Agreement or any of the Related Documents.
<PAGE> 6
False Statements. Any warranty, representation or statement made or
furnished to Lender by or on behalf of Borrower or any Grantor under this
Agreement or the Related Documents is false or misleading in any material
respect at the time made or furnished, or becomes false or misleading at
any time thereafter.
Defective Collateralization. This Agreement or any of the Related
Documents ceases to be in full force and effect (including failure of any
Security Agreement to create a valid and perfected Security Interest) at
any time and for any reason.
Insolvency. The dissolution or termination of Borrower's existence as a
going business, the insolvency of Borrower, the appointment of a receiver
for any part of Borrower's property, any assignment for the benefit of
creditors, any type of creditor workout, or the commencement of any
proceeding under any bankruptcy or insolvency laws by or against Borrower.
Creditor or Forfeiture Proceedings. Commencement of foreclosure or
forfeiture proceedings, whether by judicial proceeding, self-help,
repossession or any other method, by any creditor of Borrower, any
creditor of any Grantor against any collateral securing the Indebtedness,
or by any governmental agency. This includes a garnishment, attachment, or
levy on or of any of Borrower's deposit accounts with Lender.
Events Affecting Guarantor. Any of the preceding events occurs with
respect to any Guarantor of any of the Indebtedness or any Guarantor dies
or becomes incompetent, or revokes or disputes the validity of, or
liability under, any Guaranty of the Indebtedness.
Change in Ownership. The acquisition by any one person of a majority of
Borrower's outstanding Common Stock.
Adverse Change. A material adverse change occurs in Borrower's financial
condition, or Lender believes the prospect of payment or performance of
the Indebtedness is impaired.
EFFECT OF AN EVENT OF DEFAULT. If any Event of Default shall occur, except where
otherwise provided in this Agreement or the Related Documents, all commitments
and obligations of Lender under this Agreement or the Related Documents or any
other agreement immediately will terminate (including any obligation to make
Loan Advances or disbursements), and, at Lender's option, all Indebtedness
immediately will become due and payable, all without notice of any kind to
Borrower, except that in the case of an Event of Default of the type described
in the "Insolvency" subsection above, such acceleration shall be automatic and
not optional. In addition, Lender shall have all the rights and remedies
provided in the Related Documents or available at law, in equity, or otherwise.
Except as may be prohibited by applicable law, all of Lenders rights and
remedies shall be cumulative and may be exercised singularly or concurrently.
Election by Lender to pursue any remedy shall not exclude pursuit of any other
remedy, and an election to make expenditures or to take action to perform an
obligation of Borrower or of any Grantor shall not affect Lender's right to
declare a default and to exercise is rights and remedies.
MISCELLANEOUS PROVISIONS. The following miscellaneous provisions are a part of
this Agreement:
Amendments. This Agreement, together with any Related Documents,
constitutes the entire understanding and agreement of the parties as to
the matters set forth in this Agreement. No alteration of or amendment to
this Agreement shall be effective unless given in writing and signed by
the party or parties sought to be charged or bound by the alteration or
amendment.
Applicable Law. This Agreement has been delivered to Lender and accepted
by Lender in the State of Washington. If there is a lawsuit Borrower
agrees upon Lender's request to submit to the jurisdiction of the courts
of King County, the State of Washington Subject to the provisions on
arbitration, this Agreement shall be governed by and construed in
accordance with the laws of the State of Washington.
Arbitration. Lender and Borrower agree that all disputes, claims and
controversies between them, whether individual joint or class in nature,
arising from this Agreement or otherwise, including without limitation
contract and tort dispute, shall be arbitrated pursuant to the Rules of
the American Arbitration Association, upon request of either party. No act
to take or dispose of any Collateral shall constitute a waiver of this
arbitration agreement or be prohibited by this arbitration agreement. This
includes, without limitations obtaining injunctive relief or a temporary
restraining order, invoking a power of sale under any deed of trust or
mortgage; obtaining a writ of attachment or imposition of a receiver; or
exercising any rights relating to personal property, including taking or
disposing of such property with or without judicial process pursuant to
Article 9 of the Uniform Commercial Code. Any disputes, claims, or
controversies concerning the lawfulness or reasonableness of any act, or
exercise of any right concerning any Collateral, including any claim to
rescind, reform, or otherwise modify any agreement relating to the
Collateral, shall also be arbitrated, provided however that no arbitrator
shall have the right or the power to enjoin or restrain any act of any
party. Judgment upon any award rendered by any arbitrator may be entered
in any court having jurisdiction. Nothing in this Agreement shall preclude
any party from seeking equitable relief from a court of competent
jurisdiction. The statute of limitations, estoppel, waiver, laches, and
similar doctrines which would otherwise be applicable in an action brought
by a party shall be applicable in any arbitration proceeding, and the
commencement of an arbitration proceeding shall be deemed the commencement
of an action for these purposes. The Federal Arbitration Act shall apply
to the construction, interpretation, and enforcement of this arbitration
provision.
Caption Headings. Caption headings in this Agreement are for convenience
purposes only and are not to be used to interpret or define the provisions
of this Agreement.
Multiple Parties; Corporate Authority. All obligations of Borrower under
this Agreement shall be joint and several, and all references to Borrower
shall mean each and every Borrower. This means that each of the Borrowers
signing below is responsible for all obligations in this Agreement.
Consent to Loan Participation. Borrower agrees and consents to Lender's
sale or transfer, whether now or later, of one or more participation
interests in the Loans to one or more purchasers, whether related or
unrelated to Lender. Lender may provide, without any limitation
whatsoever, to any one or more purchasers, or potential purchasers, any
information or knowledge Lender may have about Borrower or about any other
matter relating to the Loan, and Borrower hereby waives any rights to
privacy it may have with respect to such matters. Borrower additionally
waives any and all notices of sale of participation interests, as well as
all notices of any repurchase of such participation interests. Borrower
also agrees that the purchasers of any such participation interest will be
considered as the absolute owners of such interests in the Loans and will
have all the rights granted under the participation agreement or
agreements governing the sale of such participation interests. Borrower
further waives all rights of offset or counterclaim that it may have now
or later against Lender or against any purchaser of such a participation
interest and unconditionally agrees that either Lender or such purchaser
may enforce Borrower's obligation under the Loans irrespective of the
failure or insolvency of any holder of any interest in the Loans. Borrower
further agrees that the purchaser of any such participation interests may
enforce its interests irrespective of any personal claims or defenses that
Borrower may have against Lender.
<PAGE> 7
Costs and Expenses. Borrower agrees to pay upon demand all of Lender's
expenses, including without limitation attorneys' fees, incurred in
connection with the enforcement, modification and collection of this
Agreement or in connection with the Loans made pursuant to this Agreement.
Lender may pay someone else to help collect the Loans and to enforce this
Agreement, and Borrower will pay that amount. This includes, subject to
any limits under applicable law, Lender's attorneys' fees and Lender's
legal expenses, whether or not there is a lawsuit, including attorneys'
fees for bankruptcy proceedings (including efforts to modify or vacate any
automatic stay or injunction), appeals, and any anticipated post-judgment
collection services. Borrower also will pay any court costs, in addition
to all other sums provided by law.
Notices. All notices required to be given under this Agreement shall be
given in writing, may be sent by telefacsimilie, and shall be effective
when actually delivered or when deposited with a nationally recognized
overnight courier or deposited in the United States mail, first class,
postage prepaid, addressed to the party to whom the notice is to be given
at the address shown above. Any party may change its address for notices
under this Agreement by giving formal written notice to the other parties,
specifying that the purpose of the notice is to change the party's
address. To the extent permitted by applicable law, if there is more than
one Borrower, notice to any Borrower will constitute notice to all
Borrower's. For notice purposes, Borrower will keep Lender informed at all
times of Borrower's current address(es).
Severability. If a court of competent jurisdiction finds any provision of
this Agreement to be invalid or unenforceable as to any person or
circumstance, such finding shall not render that provision invalid or
unenforceable as to any other persons or circumstances. If feasible, any
such offending provision shall be deemed to be modified to be within the
limits of enforceability or validity; however, if the offending provision
cannot be so modified, it shall be stricken and all other provisions of
this Agreement in all other respects shall remain valid and enforceable.
Subsidiaries and Affiliates of Borrower. To the extent the context of any
provisions of this Agreement makes it appropriate, including without
limitation any representation, warranty or covenant, the word "Borrower"
as used herein shall include all subsidiaries and affiliates of Borrower.
Notwithstanding the foregoing however, under no circumstances shall this
Agreement be construed to require Lender to make any Loan or other
financial accommodation to any subsidiary or affiliate of Borrower.
Successors and Assigns. All covenants and agreements contained by or on
behalf of Borrower shall bind its successors and assigns and shall inure
to the benefit of Lender, its successors and assigns. Borrower shall not,
however, have the right to assign its rights under this Agreement or any
interest therein, without the prior written consent of Lender.
Survival. All warranties, representations, and covenants made by Borrower
in this Agreement or in any certificate or other instrument delivered by
Borrower to Lender under this Agreement shall be considered to have been
relied upon by Lender and will survive the making of the Loan and delivery
to Lender of the Related Documents, regardless of any investigation made
by Lender or on Lender's behalf.
Waiver. Lender shall not be deemed to have waived any rights under this
Agreement unless such waiver is given in writing and signed by Lender. No
delay or omission on the part of Lender in exercising any right shall
operate as a waiver of such right or any other right. A waiver by Lender
of a provision of this Agreement shall not prejudice or constitute a
waiver of Lender's right otherwise to demand strict compliance with that
provision or any other provision of this Agreement. No prior waiver by
Lender, nor any course of dealing between Lender and Borrower, or between
Lender and any Grantor, shall constitute a waiver of any of Lender's
rights or of any obligations of Borrower or of any Grantor as to any
future transactions. Whenever the consent of Lender is required under this
Agreement, the granting of such consent by Lender in any instance shall
not constitute continuing consent in subsequent instances where such
consent is required, and in all cases such consent may be granted or
withheld in the sole discretion of Lender.
BORROWER ACKNOWLEDGES HAVING READ ALL THE PROVISIONS OF THIS BUSINESS LOAN
AGREEMENT, AND BORROWER AGREES TO ITS TERMS. THIS AGREEMENT IS DATED AS OF
JUNE 1O, 1996.
BORROWER:
RIDE, INC.
/S/ G. Scott Stewart, Vice President and Chief Financial Officer
- -----------------------------------------------------------------
Authorized Officer
LENDER:
U.S. BANK OF WASHINGTON, NATIONAL ASSOCIATION
By: /S/ Tony W. Chalfant, Vice President
-------------------------------------
Authorized Officer
<PAGE> 1
Exhibit 10.63
AGREEMENT
THIS AGREEMENT is made as of this 7th day of May 1996 by and between
RIDE, INC., a Washington corporation (the "Company"), and JAMES J. SALTER, an
individual ("Salter").
Recitals
The Company and Salter are parties to an Employment Agreement, dated
August 18, 1994 (the "Employment Agreement").
Pursuant to the Employment Agreement, Salter has served as the sole
Chief Executive Officer ("CEO") of the Company since August 18, 1994. Salter is
also a member of the Board of Directors (the "Board") of the Company and a
director and officer of each of C.A.S. Sports International, Inc., C.A.S. Sports
Agency, Inc. (collectively, "CAS"), Ride Snowboard Company, Preston Binding
Company, Thermal Snowboards, Inc., SMP Clothing, Inc. and Ride International,
Inc. (collectively, the "Subsidiaries").
Salter has determined and the Company agrees that it is in the best
interests of the Company and Salter that (i) Salter's tenure as CEO of the
Company and as an officer and director of each of the Subsidiaries should end
immediately; (ii) Salter should remain employed by the Company in other
capacities through December 31, 1996; (iii) Salter should remain as a director
of the Company and become Vice Chairman of the Board; (iv) the Company should
immediately engage an interim CEO; and (v) the Company should begin the process
of searching for a new, permanent CEO.
Salter and the Company desire to set forth the terms of this management
change in this Agreement.
Agreement
NOW, THEREFORE, in consideration of the foregoing recitals and the
terms set forth herein, the parties hereby agree as follows:
1. Departure from office; Duties. Salter hereby tenders his immediate
resignation from the office of CEO of the Company and as a director and officer
of each of the Subsidiaries, and the Company hereby accepts such resignations.
Approval of this Agreement by the Board shall constitute the election of Salter
as Vice Chairman of the Board. Salter's employment with the Company shall end on
December 31, 1996. Until such date, Salter's time is required by the Company to
be expended in the fashion described in paragraphs (a), (b) and (c) below.
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<PAGE> 2
(a) Salter shall consult with the interim CEO, the Board
and, if a new, permanent CEO is hired prior to
December 31, 1996, the new CEO regarding the
management of the Company.
(b) Salter shall participate in the selection of a new
CEO for the Company.
(c) Salter shall perform other roles and/or functions as
shall be mutually agreed by Salter and the Company.
Salter shall perform the foregoing duties faithfully, diligently and competently
and to the best of his ability. Until December 31, 1996, Salter shall devote his
work time, efforts and loyalties to the Company's business. Salter is under no
obligation to provide any employment services to the Company subsequent to
December 31, 1996. From January 1, 1997 through June 30, 1997, Salter shall
provide the consulting services described in Section 2(b) of this Agreement.
Except for the consulting services described in Section 2(b) hereof, any
personal services provided by Salter to the Company subsequent to December 31,
1996 shall be on a commissioned sales or consulting basis and pursuant to such
terms as the parties shall agree.
2. Continued Employment; Consulting Services.
(a) Salter shall continue to receive his salary of (U.S.)
$315,000 annually (the "Salary") and all Benefits (as defined below) through
December 31, 1996. The "Benefits" shall mean (i) medical and dental insurance
for Salter and his family as currently in effect or as is provided to the
Company's management from time to time and (ii) Salter's car allowance (as
currently in effect). If cash bonuses are paid to the officers of the Company or
any Subsidiary in connection with services rendered during calendar year 1996,
Salter shall receive a bonus equal to (U.S.) $200,000 multiplied by the highest
fraction obtained when the bonus paid to an officer is compared to such
officer's Budgeted Bonus (as defined below). "Budgeted Bonus" shall mean the
largest bonus that the Company or any Subsidiary is obligated to pay under a
written employment agreement with an officer if certain earnings targets are
met. For example, if the highest bonus paid to any other officer equaled 50% of
that officer's Budget Bonus, Salter would be entitled to a bonus equal to
$100,000.
(b) In exchange for Salter providing to the Company reasonable
and limited consulting services via telephone regarding the management of the
Company and its business during the period January 1, 1997 through June 30,
1997, the Company shall pay Salter a nonrefundable consulting fee of (U.S.)
$165,375, payable in six equal increments on the tenth day of each month
commencing on January 10, 1997, and shall continue to provide Salter with the
Benefits through June 30, 1997.
3. Acceleration of Stock Options. All options granted to Salter under
the Company's 1994 Stock Option Plan are hereby vested and are immediately
exercisable.
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<PAGE> 3
4. Director Compensation. Upon termination of Salter's employment with
the Company and for so long as Salter remains a non-employee director, Salter
shall be entitled to the compensation that is paid to the other non-employee
directors of the Company in connection with their attendance at meetings of the
Board and committees thereof.
5. Purchase of Office Furnishings and Equipment. Upon termination of
Salter's employment, Salter shall be entitled to purchase the furniture and
computer and electronic equipment in his office at CAS at the then book value
thereof. Salter shall be entitled to retain the cellular telephone that the
Company has previously provided to him.
6. Non-competition; Non-solicitation. Salter shall continue to be bound
by the terms of the non-competition and non-solicitation covenants set out in
Section 6 of the Employment Agreement, provided however, that nothing in those
covenants shall prohibit Salter and the Company from engaging in such business
transaction as the parties may agree. With respect to the purchase and resale of
excess inventories, Salter shall be prohibited from transacting only in the
following categories of sporting goods: snowboards; snowboard boots, bindings,
apparel and accessories; in-line skates; bicycles; ski equipment, and golf
clubs. Salter shall be permitted to conduct purchases and resales of excess
inventories of footwear.
7. Non-disparagement. Salter and the Company shall refrain from making
any derogatory comment to the press or any individual or entity regarding the
other that relates to their activities or relationship prior to the date of this
Agreement, which comment would likely cause material damage or harm to the
business interests or reputation of Salter or the Company.
8. General.
(a) Applicable Law. This Agreement, including all matters of
construction, validity and performance, shall be governed by and construed and
enforced in accordance with the laws of the State of Washington, as applied to
contracts executed and to be fully performed in such State by citizens of such
State. The federal and state courts situated in King County, Washington shall be
the exclusive forum for the litigation of any dispute relating to this
Agreement. Each party hereto hereby consents to the jurisdiction and venue of
such courts and waives any defense of inconvenient forum.
(b) Equitable Relief. The parties agree that any breach of any
term of this Agreement may cause irreparable harm or result in damages that are
difficult to quantify. The parties agree that in addition to any other remedy a
party may have under this Agreement or at law, in the event of any breach of
this Agreement, the nonbreaching party shall be entitled to injunctive and other
equitable relief.
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<PAGE> 4
(c) Entire Agreement. This Agreement constitutes the entire
agreement among the parties and supersedes all prior and contemporaneous
agreements and understandings, including without limitation the Employment
Agreement. No party shall be liable or bound to any other party in any manner by
any warranties, representations, or covenants except as specifically set forth
herein and no payments, promises, representations or inducements for or in
relation to the subject matter of this Agreement have been made to or in any way
relied upon by the parties in executing this Agreement. This Agreement has been
freely and voluntarily entered into by the parties; each party has been
represented by counsel of its or his own choosing in negotiation of this
Agreement or had the opportunity to have such counsel review this Agreement; and
each party has read this Agreement and is fully aware of its contents and its
legal effects.
(d) Amendments; Waivers. This Agreement may be amended only
pursuant to a writing signed by the parties specifically stating that it is an
amendment to this Agreement. No waiver of any term or waiver of any breach of
this Agreement shall be effective against either party unless the waiver is in
writing and signed by the party against whom the waiver is asserted. No such
waiver in any one instance shall be deemed to be a further or continuing waiver
of any such term or breach in any other instance.
(e) Severability; Invalidity. If any provision of this
Agreement is held to be invalid, such invalidity shall not render invalid the
remainder of this Agreement or the remainder of the provision of which such
invalid provision is a part. If any provision of this Agreement is so broad as
to be held unenforceable, such provision shall be interpreted to be only so
broad as is enforceable.
(f) Assignment. The rights and obligations of the parties
hereunder are personal to them and may not be assigned, delegated, or otherwise
transferred without the prior written consent of the other party, and any
attempted assignment or other transfer without such consent shall be null and
void and shall constitute a breach of this Agreement. Notwithstanding the
foregoing, this Agreement shall inure to the benefit of Salter's heirs and
legatees.
(g) Notices. Any notice required or permitted to be given
under this Agreement shall be personally delivered or given by certified mail,
return receipt requested and addressed as follows:
If to the Company:
Scott D. Benner
Ride, Inc.
8160 304th Avenue, S.E.
Preston, WA 98050
U.S.A.
4
<PAGE> 5
If to Salter:
James J. Salter
277 Glencairn Avenue
Toronto, Ontario M5N 1T8
CANADA
(h) Counterparts. This Agreement may be executed in
counterparts and via facsimile transmission. The parties agree that any
facsimile copy shall be considered an original and shall be admissible in any
proceeding arising under this Agreement.
IN WITNESS WHEREOF, the parties have executed this Agreement as of the
date first written above.
RIDE, INC., a Washington corporation
By: /s/ Roger B. Madison, Jr.
---------------------------------
Roger B. Madison, Jr., Chairman
/s/ James J. Salter
------------------------------------
James J. Salter, an individual
5
<PAGE> 1
Exhibit 10.64
AGREEMENT
THIS AGREEMENT is made as of this 2nd day of August 1996 by and between
RIDE, INC., a Washington corporation (the "Company"), and KENNETH J.
FINKELSTEIN, an individual ("Finkelstein").
Recitals
The Company and Finkelstein are parties to an Employment Agreement,
dated October 15, 1995 (the "Employment Agreement").
Pursuant to the Employment Agreement, Finkelstein has served as Senior
Vice President and Director of Mergers & Acquisitions ("Senior VP") of the
Company since October 15, 1995. Finkelstein is also a member of the Board of
Directors (the "Board") of the Company and a director and officer of some or all
of the following: C.A.S. Sports International, Inc., C.A.S. Sports Agency, Inc.
(collectively, "CAS"), Ride Snowboard Company, Preston Binding Company, Thermal
Snowboards, Inc., SMP Clothing, Inc. and Ride International, Inc. (collectively,
the "Subsidiaries").
Finkelstein has determined and the Company agrees that it is in the
best interests of the Company and Finkelstein that (i) Finkelstein's tenure as
Senior VP of the Company and as an officer and director of each of the
Subsidiaries should end on December 31, 1996 or earlier at Finkelstein's option;
and (ii) Finkelstein should serve as a consultant to the Company for six months
following the cessation of his employment as Senior VP.
Finkelstein and the Company desire to set forth the terms of this
arrangement in this Agreement.
Agreement
NOW, THEREFORE, in consideration of the foregoing recitals and the
terms set forth herein, the parties hereby agree as follows:
1. Departure from office; Duties. Finkelstein hereby tenders his
resignation from the office of Senior VP of the Company and as a director and
officer of each of the Subsidiaries, effective upon the earlier of December 31,
1996 or such date as Finkelstein may select upon 60 days written notice to the
Company (in any case, the "Effective Date"), and the Company hereby accepts such
resignations. Until the Effective Date and in accordance with the Employment
Agreement, Finkelstein shall perform his duties faithfully, diligently and
competently and to the best of his ability and shall devote his work time,
efforts and loyalties to the Company's business. Finkelstein is under no
obligation to provide any employment services to the Company subsequent to the
Effective Date. Except for the consulting services to be provided pursuant to
Section 2(b)
1
<PAGE> 2
hereof, any personal services provided by Finkelstein to the Company subsequent
to the Effective Date shall be pursuant to such terms as the parties shall
agree.
2. Continued Employment; Consulting Agreement.
(a) Finkelstein shall continue to receive his salary of (U.S.)
$200,000 annually (the "Salary") and all Benefits (as defined below) through the
Effective Date. The "Benefits" shall mean (i) medical and dental insurance for
Finkelstein and his family as currently in effect or as is provided to the
Company's management from time to time and (ii) Finkelstein's car allowance (as
currently in effect). If cash bonuses are paid to the officers of the Company or
any Subsidiary in connection with services rendered during calendar year 1996,
Finkelstein shall receive a bonus equal to (U.S.) $50,000 multiplied by the
highest fraction obtained when the bonus paid to an officer is compared to such
officer's Budgeted Bonus (as defined below). "Budgeted Bonus" shall mean the
largest bonus that the Company or any Subsidiary is obligated to pay under a
written employment agreement with an officer if certain earnings targets are
met. For example, if the highest bonus paid to any other officer equaled 50% of
that officer's Budget Bonus, Finkelstein would be entitled to a bonus equal to
$25,000.
(b) In exchange for Finkelstein providing to the Company
reasonable and limited consulting services via telephone regarding the
management of the Company and its business during the six month period following
the Effective Date (the "Consulting Period"), the Company shall pay Finkelstein
(or a corporation to be named by him) a nonrefundable consulting fee of (U.S.)
$131,250, payable in six equal increments on the fifteenth (15th) day of each
month commencing with the first full calendar month following the Effective
Date, and shall continue to provide Finkelstein with the Benefits through the
Consulting Period.
3. Stock Options. All options granted to Finkelstein under the
Company's 1994 Stock Option Plan (the "Plan") are hereby amended insofar as such
options are now fully vested and immediately exercisable and shall remain
exercisable for the duration of the options (i.e. ten years). In addition, upon
execution of this Agreement, the Company shall grant to Finkelstein an option
under the Plan to purchase 10,000 shares of the Company's common stock, 50% of
which shall become exercisable on the third anniversary of the date of grant and
50% of which shall become exercisable on the fourth anniversary of the date of
grant. Once exercisable, the option shall remain exercisable for the duration of
the option (i.e. 10 years). The remaining terms of the option shall be those set
forth in the Plan.
4. Director Compensation. Upon termination of Finkelstein's employment
with the Company and for so long as Finkelstein remains a non-employee director,
Finkelstein shall be entitled to the compensation that is paid to the other
non-employee directors of the Company in connection with their attendance at
meetings of the Board and committees thereof.
2
<PAGE> 3
5. Purchase of Office Furnishings and Equipment. Upon cessation of
Finkelstein's employment, Finkelstein shall be entitled to purchase the
computer, electronic equipment and furniture in his office at CAS at the present
book value thereof Finkelstein shall be entitled to retain the cellular
telephone previously provided to him by the Company.
6. Non-competition; Non-solicitation. Finkelstein shall continue to be
bound by the terms of the non-competition and non-solicitation covenants set out
in Section 6 of the Employment Agreement, provided however, that nothing in
those covenants shall prohibit Finkelstein and the Company from engaging in such
business transaction as the parties may agree. For further clarity, Finkelstein
shall be prohibited from transacting only in the following categories of
sporting goods: snowboards; snowboard boots, bindings, apparel and accessories;
in-line skates; bicycles; ski equipment, and golf clubs.
7. Non-disparagement. Finkelstein and the Company shall refrain from
making any derogatory comment to the press or any individual or entity regarding
the other that relates to their activities or relationship prior to the date of
this Agreement, which comment would likely cause material damage or harm to the
business interests or reputation of Finkelstein or the Company.
8. General.
(a) Applicable Law. This Agreement, including all matters of
construction, validity and performance, shall be governed by and construed and
enforced in accordance with the laws of the State of Washington, as applied to
contracts executed and to be fully performed in such State by citizens of such
State. The federal and state courts situated in King County, Washington shall be
the exclusive forum for the litigation of any dispute relating to this
Agreement. Each party hereto hereby consents to the jurisdiction and venue of
such courts and waives any defense of inconvenient forum.
(b) Equitable Relief. The parties agree that any breach of any
term of this Agreement may cause irreparable harm or result in damages that are
difficult to quantify. The parties agree that in addition to any other remedy a
party may have under this Agreement or at law, in the event of any breach of
this Agreement, the nonbreaching party shall be entitled to injunctive and other
equitable relief.
(c) Entire Agreement. This Agreement constitutes the entire
agreement among the parties and supersedes all prior and contemporaneous
agreements and understandings, including without limitation the Employment
Agreement. No party shall be liable or bound to any other party in any manner by
any warranties, representations, or covenants except as specifically set forth
herein and no payments, promises, representations or inducements for or in
relation to the subject matter of this Agreement have been made to or in any way
relied upon by the parties in executing this Agreement. This Agreement has been
freely and voluntarily entered into by the parties; each party has been
represented by counsel of its or his own choosing in negotiation
3
<PAGE> 4
of this Agreement or had the opportunity to have such counsel review this
Agreement; and each party has read this Agreement and is fully aware of its
contents and its legal effects.
(d) Amendments; Waivers. This Agreement may be amended only
pursuant to a writing signed by the parties specifically stating that it is an
amendment to this Agreement. No waiver of any term or waiver of any breach of
this Agreement shall be effective against either party unless the waiver is in
writing and signed by the party against whom the waiver is asserted. No such
waiver in any one instance shall be deemed to be a further or continuing waiver
of any such term or breach in any other instance.
(e) Severability; Invalidity. If any provision of this
Agreement is held to be invalid, such invalidity shall not render invalid the
remainder of this Agreement or the remainder of the provision of which such
invalid provision is a part. If any provision of this Agreement is so broad as
to be held unenforceable, such provision shall be interpreted to be only so
broad as is enforceable.
(f) Assignment. The rights and obligations of the parties
hereunder are personal to them and may not be assigned, delegated, or otherwise
transferred without the prior written consent of the other party, and any
attempted assignment or other transfer without such consent shall be null and
void and shall constitute a breach of this Agreement. Notwithstanding the
foregoing, this Agreement shall inure to the benefit of Finkelstein's heirs and
legatees.
(g) Notices. Any notice required or permitted to be given
under this Agreement shall be personally delivered or given by certified mail,
return receipt requested and addressed as follows:
If to the Company:
Chief Executive Officer or
General Counsel
Ride, Inc.
8160 304th Avenue, S.E.
Preston, WA 98050
U.S.A.
If to Finkelstein:
Kenneth J. Finkelstein
25 Brandy Court
Don Mills, Ontario M3B 3L3
CANADA
4
<PAGE> 5
(h) Counterparts. This Agreement may be executed in
counterparts and via facsimile transmission. The parties agree that any
facsimile copy shall be considered an original and shall be admissible in any
proceeding arising under this Agreement.
IN WITNESS WHEREOF, the parties have executed this Agreement as of the
date first written above.
RIDE, INC., a Washington corporation
By: /s/ Roger B. Madison, Jr.
--------------------------------
Roger B. Madison, Jr., Chairman
/s/ Kenneth J. Finkelstein
------------------------------------
Kenneth J. Finkelstein, an individual
5
<PAGE> 1
Exhibit 10.65
EMPLOYMENT AGREEMENT
THIS AGREEMENT, dated as of August 7, 1996, is made and entered into by
and between RIDE, INC., a Washington corporation (the "Company"), and ROBERT E.
HALL, an individual (the "Employee").
AGREEMENT
1. Employment. The Company agrees to employ the Employee and the
Employee hereby agrees to be employed by the Company upon the terms and
conditions contained in this Agreement for the period (hereinafter called the
"Term of Employment") specified in Section 3 below.
2. Duties.
(a) Beginning on August 20, 1996 (the "Effective Date") and
continuing through the Term of Employment, the Employee shall serve the Company
under the direction of the Board of Directors of the Company, faithfully,
diligently and competently and to the best of his ability. The Employee shall
have the title and office of President and Chief Executive Officer. The Company
shall include the Employee's name among the nominees of the Board of Directors
for election to the Board of Director at any meeting of the shareholders of the
Company to be held during the Term of Employment.
(b) The Employee shall devote all of his business time,
attention, knowledge and skills to the business and interest of the Company, and
the Company shall be entitled to all of the benefits, arising from or incident
to all work, services and advice of the Employee. Employee shall report for work
at the Company's Preston, Washington facility by not later than the Effective
Date. The Employee shall be permitted to remain a director of ATEC, Inc. The
Company acknowledges that for a period not to exceed six (6) months the Employee
will need to devote a small portion of his time to the disposal of his existing
business, Galena Creek Trading Company, Inc. d/b/a "Smiley".
(c) The Employee shall execute the Company's standard
Proprietary Information Agreement in the form attached hereto as Exhibit A.
1
<PAGE> 2
3. Terms of Employment; Termination.
(a) The Company shall employ the Employee, and the Employee
shall serve the Company, for a period commencing on the Effective Date and
terminating on the earliest to occur of the following:
i) five (5) year(s) from the Effective Date; or
ii) the date on which the Company gives written
notice to the Employee of termination due to the Employee's being unable,
because of physical or mental illness or disability, to perform his duties
hereunder; provided, however, that such notice may not be given by the Company
unless the Employee has been unable, because of such illness or disability, to
perform his duties hereunder for an aggregate of one hundred twenty (120)
working days or ninety (90) consecutive working days during the twelve calendar
months preceding the month in which such notice is given;
iii) the death of the Employee;
iv) the date on which the Company gives written
notice to the Employee of termination with or without Cause; or
v) the date on which the Employee gives written
notice to the Company of termination with Cause.
(b) Where reference is made in this Agreement to termination
being by the Company for Cause, Cause shall be limited to the following:
i) Repeated failure or refusal by the Employee to
carry out the reasonable directions of the Board of Directors on matters of a
material nature, provided such directions are lawful and consistent with the
duties and obligations herein set forth to be performed by the Employee;
ii) Violation by the Employee of a state or federal
law involving the commission of a crime against the Company or a felony that
materially and adversely affects the Company; or
iii) Any material breach of this Agreement by the
Employee not corrected as provided in Section 3(d) hereof.
(c) Where reference is made in this Agreement to termination
being by the Employee for Cause, Cause shall mean any breach of this Agreement
by the Company not corrected as provided in Section 3(e) hereof.
2
<PAGE> 3
(d) Upon termination of the Employee's employment by the
Company without Cause, the Company shall continue to pay the salary specified in
paragraph 4(a) (as adjusted from time to time) for a period of six (6) months
from the date of termination.
(e) Whenever a breach of this Agreement or other action or
inaction by either party is relied upon as a justification for any action taken
by a party pursuant to any provision of this Agreement, before such action is
taken, the party asserting the breach or right to take certain actions based on
the action or inaction of the other party shall give the other party written
notice of the existence and nature of the breach or of the existence and nature
of such action or inaction and the opportunity to correct such breach or action
or inaction during the five (5) day period following such notice.
(f) No termination of the Term of Employment by the Company
for any reason will affect in any way any accrued rights to which the Employee
may be entitled as of the date of termination.
4. Compensation and Fringe Benefits.
(a) Salary. The Company shall pay to the Employee as
compensation for the performance of his duties and obligations hereunder a
salary of Two Hundred Thousand Dollars ($200,000) on an annualized basis until
December 31, 1997, which amount shall be reviewed on or about such date and
annually thereafter by the Company, provided however, that the salary shall
increase at least five percent (5%) per year beginning December 31, 1997. The
compensation payable pursuant to this Section 4(a) shall be payable twice
monthly in accordance with the Company's standard payroll practice, as such
practice may be amended from time to time.
(b) Stock Options. Upon execution of this Agreement, the
Company shall grant to the Employee an option under the Company's 1994 Stock
Option Plan (the "Plan") to purchase sixty-two thousand five hundred (62,500)
shares of the Company's Common Stock at a price per share equal to the closing
sale price of the Common Stock on the date of grant. Such options shall vest
twenty-five percent (25%) on each of the first four anniversaries of the date of
grant. The remaining terms of such options shall be governed by the Plan.
In addition, each full calendar year during the term of this
Agreement, the Employee shall be eligible to earn a bonus in the form of
additional options under the Plan. The amount of shares underlying the option to
be granted to the Employee in a particular year shall be equal to fifty thousand
(50,000)
3
<PAGE> 4
multiplied by the percentage by which actual consolidated net income of the
Company for the year in question exceeds budgeted consolidated net income, as
set forth in the budget for such year approved by the Company's Board of
Directors prior to the commencement of the year in question. For example, if in
December 1996, the Board of Directors approves a budget for 1997 of $1,000,000
in consolidated net income and the Company earns consolidated net income of
$1,300,000 during 1997, the Employee shall have earned a bonus in the form of an
option to purchase fifteen thousand (15,000) (or 30% multiplied by 50,000)
shares of Common Stock. Actual consolidated net income shall be the consolidated
net income as it appears in the Company's audited financial statements, as
adjusted to remove the effect of acquisitions completed during the calendar year
in question.
(c) Automobile. The Company will provide to the Employee the
use of a late model Chevrolet Suburban or, at Employee's option, will provide
Employee with a car allowance in an amount necessary to lease an automobile with
a purchase price of $40,000. The Employee shall be entitled to spend the car
allowance in such manner as he deems appropriate and shall not be responsible
for presenting to the Company evidence of automobile expenses. The Company shall
also reimburse the Employee for repairs and maintenance of said vehicle and for
the cost of fuel and insurance.
(d) Relocation Expenses. Upon the presentation of
documentation reasonably acceptable to the Company, the Company shall reimburse
the Employee for out-of-pocket costs incurred by the Employee for packaging and
shipping his possessions and traveling to his new residence in the Seattle
metropolitan area, subject to a maximum gross benefit of $6,000. The Company
shall also reimburse the Employee for the sales commission (up to 6% of the
gross selling price) on the sale of the Employee's residence in Lake Tahoe,
Nevada. The Company shall reimburse the Employee for the cost of up to six (6)
round-trip airline tickets for each of the Employee and his spouse for travel
between Seattle and Lake Tahoe during the period of the Employee's relocation.
The Company shall provide a furnished condominium for use by the Employee during
the period from the Effective Date until the sale of the Employee's residence in
Lake Tahoe, but not to exceed one hundred eighty (180) days. Other than the
condominium described in the preceding sentence, the benefits described in this
paragraph 4(d) shall not lapse due to the passage of time.
(e) Other Benefits. The Employee shall be enrolled and
participate in any stock option, stock purchase, retirement and group insurance
plans and arrangements which are applicable to the executive personnel of the
Company and in effect from time to time, if he is eligible therefor, in each
case in accordance with and subject to the provisions thereof. In addition, the
4
<PAGE> 5
Company shall pay the cost of insuring the Employee's spouse under the health
insurance plan carried by the Company. The Company shall pay the cost of up to
two thousand four hundred dollars ($2,400) annually for membership fees to the
Young Presidents Organization and up to three thousand six hundred dollars
($3,600) annually for fees relating to The Executive Committee.
5. Expenses. All travel and other reasonable expenses incident to the
rendering of services by the Employee hereunder will be paid by the Company. If
such expenses are paid in the first instance by the Employee, the Company will
reimburse him therefor on presentation of proper expense accounts.
6. Noncompetition.
(a) During the term of this Agreement and for a period of two
(2) years from the date he ceases to be an employee of the Company, Employee
shall not, unless released from such prohibition by the Company's Board of
Directors (and consistent with such conditions as the Board of Directors may
impose on any such release), anywhere in the world, directly or indirectly, be
employed by, own, manage, operate, join, control or participate in the
ownership, management, operation or control of or be connected in any manner
with any business engaged in the manufacture, design, marketing or distribution
of snowboards, snowboard boots, snowboard bindings or snowboard apparel. The
Employee shall be deemed to be connected with a business if such business is
carried on by partnership in which he is a general or limited partner,
consultant or employee or a corporation or association of which he is a
shareholder, officer, director, employee, member, consultant or agent; provided,
that nothing herein shall prevent the purchase or ownership by the Employee of
shares less than 1% of the outstanding shares in a publicly or privately held
corporation.
(b) The Employee acknowledges that this agreement not to
compete is essential to the Company and that the Company would not enter into
this Agreement if it did not include such agreement.
(c) The Employee acknowledges that any violation by him of
this Agreement may cause the Company irreparable injury. The Company
acknowledges that any violation by the Company of the Agreement may cause the
Employee irreparable injury. Therefore, each party separately agrees that the
injured party shall be entitled, in addition to any remedies it may have under
this Agreement or at law to injunctive and other equitable relief to prevent or
curtail any breach of this Agreement by the other party.
5
<PAGE> 6
(d) During the Term of Employment and for a period of two (2)
years after the employment of the Employee is terminated for any reason, he will
not directly or indirectly, either for his account or as representative or agent
for any other person, firm or corporation, solicit the services of, or entice
away, any employee of the Company, or the employee of any company affiliated
with the Company.
7. No Right of Assignment or Delegation. The Employee may not assign
his rights nor delegate his duties under this Agreement without the prior
written consent of the Company.
8. Binding Effect. This Agreement shall be binding upon and inure to
the benefit of the Company and the Employee and their respective heirs, legal or
personal representatives, successors and assigns.
9. Notices. Any notice required or desired to be given hereunder shall
be in writing and shall be deemed sufficiently given when delivered or when
mailed by first class certified or registered mail, postage prepaid, to the
party for whom intended at the following address:
The Company:
Chairman
Ride, Inc.
8160 304th Avenue, S.E.
Preston, WA 98050
The Employee:
Robert E. Hall
___________________
___________________
or to such other address, as to either party, as such party shall from time to
time designate by like notice to the other.
10. Prior Agreement. This Agreement will, upon the commencement of the
term of Employment, supersede all prior agreements between the Employee and the
Company, including any agreements with predecessors of the Company, and any such
prior agreements and the terms and conditions thereof shall thereafter be null,
void and of no effect.
11. General. The terms and provisions contained herein (i) constitute
the entire agreement between the Company and the Employee with respect to the
subject matter hereof and (ii) may be amended or modified only by written
agreement executed by the parties hereto.
6
<PAGE> 7
12. Governing Law. This Agreement shall be governed by and construed
according to the laws of the State of Washington without regard to the choice of
law principles of the State of Washington or any other jurisdiction. Any dispute
arising under this Agreement shall be litigated exclusively in the state and
federal courts situate in King County, Washington, and the parties hereby
irrevocably consent to the jurisdiction and venue of such courts and waive any
defense of inconvenient forum.
13. Counterparts. This Agreement may be executed in two or more
counterparts of like tenor and effect, each of which shall be deemed an original
but all of which together shall constitute one and the same instrument.
14. Severability. The provisions of this Agreement are severable and
the invalidity of any such provision in any jurisdiction shall not affect the
validity of any other such provision in such jurisdiction or in any other
jurisdiction.
IN WITNESS WHEREOF, the parties hereto have executed this Agreement as
of the First date written above.
RIDE, INC.
By: /s/ Roger B. Madison, Jr.
------------------------------
Roger B. Madison, Jr.
Chairman
EMPLOYEE:
/s/ Robert E. Hall
----------------------------------
Robert E. Hall, an individual
7
<PAGE> 1
EXHIBIT 11.1
COMPUTATION OF EARNINGS PER SHARE
(IN THOUSANDS, EXCEPT PER SHARE DATA)
<TABLE>
<CAPTION>
Three months ended Six months ended
June 30, June 30,
------------------------ ------------------------
1996 1995 1996 1995
------------------------ ------------------------
<S> <C> <C> <C> <C>
Primary:
Weighted average common shares outstanding 10,555 7,849 10,538 7,793
Net effect of dilutive stock equivalents based on
the treasury stock method using the average
market price of the common stock 667 1,456 -- 1,021
------------------------ ------------------------
Total weighted average shares outstanding 11,222 9,305 10,538 8,814
======================== ========================
Net income (loss) $ 410 $ 914 $ (572) $ 505
Less dividends on preferred stock (9) (9) (18) (18)
------------------------ ------------------------
Adjusted net income (loss) $ 401 $ 905 $ (590) $ 487
======================== ========================
Net income (loss) per share $ 0.04 $ 0.10 $ (0.06) $ 0.06
======================== ========================
Fully diluted:
Weighted average common shares outstanding 10,555 7,849 10,538 7,794
Net effect of dilutive stock equivalents based on
the treasury stock method using the the greater
of the average market price or the ending 667 1,724 -- 1,366
market price of the common stock
Assumed conversion of preferred stock 200 200 -- 200
------------------------ ------------------------
Total weighted average shares outstanding 11,422 9,773 10,538 9,360
======================== ========================
Net income (loss) $ 410 $ 914 $ (572) $ 505
Less dividends on preferred stock -- -- (18) --
------------------------ ------------------------
Adjusted net income (loss) $ 410 $ 914 $ (590) $ 505
======================== ========================
Net income (loss) per share $ 0.04 $ 0.09 $ (0.06) $ 0.05
======================== ========================
</TABLE>
18
<TABLE> <S> <C>
<ARTICLE> 5
<CIK> 0000917734
<NAME> RIDE INC.
<MULTIPLIER> 1000
<CURRENCY> US DOLLARS
<S> <C>
<PERIOD-TYPE> 6-MOS
<FISCAL-YEAR-END> DEC-31-1996
<PERIOD-START> JAN-01-1996
<PERIOD-END> JUN-30-1996
<EXCHANGE-RATE> 1
<CASH> 1,571
<SECURITIES> 0
<RECEIVABLES> 14,404
<ALLOWANCES> 411
<INVENTORY> 11,865
<CURRENT-ASSETS> 28,834
<PP&E> 7,686
<DEPRECIATION> 1,022
<TOTAL-ASSETS> 52,481
<CURRENT-LIABILITIES> 5,423
<BONDS> 0
0
500
<COMMON> 38,743
<OTHER-SE> 7,162
<TOTAL-LIABILITY-AND-EQUITY> 52,481
<SALES> 26,278
<TOTAL-REVENUES> 26,278
<CGS> 18,727
<TOTAL-COSTS> 18,727
<OTHER-EXPENSES> 8,540
<LOSS-PROVISION> 131
<INTEREST-EXPENSE> (251)
<INCOME-PRETAX> (869)
<INCOME-TAX> (298)
<INCOME-CONTINUING> (571)
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> (571)
<EPS-PRIMARY> (0.06)
<EPS-DILUTED> (0.06)
</TABLE>
