<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 MARCH 31, 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 1933 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 -- 10,543,609 as of April 30, 1996
<PAGE> 2
INDEX
RIDE, INC.
PART I. FINANCIAL INFORMATION
Item 1. Financial Statements (Unaudited)
Condensed consolidated balance sheets -- March 31, 1996 and December
31, 1995
Condensed consolidated statements of operations -- Three months ended
March 31, 1996 and 1995
Condensed consolidated statements of cash flows -- Three months ended
March 31, 1996 and 1995
Notes to condensed consolidated financial statements -- March 31, 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>
March 31, December 31,
1996 1995
(Unaudited)
----------- ------------
<S> <C> <C>
ASSETS
Current assets:
Cash and cash equivalents $11,775 $14,271
Securities available for sale 1,711 3,840
Receivables, less allowance for doubtful accounts of
$431 at March 31, 1996 and $359 at
December 31, 1995 9,404 13,556
Inventories 6,153 4,409
Prepaid expenses and other current assets 534 782
Income taxes receivable 475 --
Deferred tax assets 281 281
------- -------
Total current assets 30,333 37,139
Plant and equipment, net of accumulated depreciation 5,230 3,649
Goodwill, net of accumulated amortization 16,398 16,489
Other assets 389 322
======= =======
Total assets $52,350 $57,599
======= =======
LIABILITIES AND SHAREHOLDERS' EQUITY
Current liabilities:
Accounts payable $ 4,170 $ 7,696
Commissions payable 116 132
Accrued expenses 1,281 1,761
Notes payable 938 938
Customer deposits 244 279
Income taxes payable -- 229
------- -------
Total current liabilities 6,749 11,035
Deferred income taxes 69 69
Shareholders' equity:
Preferred stock 500 500
Common stock 38,272 38,244
Retained earnings 6,760 7,751
------- -------
Total shareholders' equity 45,532 46,495
======= =======
Total liabilities and shareholders' equity $52,350 $57,599
======= =======
</TABLE>
See accompanying notes
2
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RIDE, INC.
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
(UNAUDITED)
(IN THOUSANDS, EXCEPT PER SHARE AMOUNTS)
<TABLE>
<CAPTION>
Three months ended March 31,
----------------------------
1996 1995
----------- -----------
<S> <C> <C>
Net sales $ 12,777 $ 4,985
Cost of goods sold 9,390 4,161
-------- -------
Gross profit 3,387 824
Selling, general and administrative expenses 5,076 1,522
-------- -------
Operating loss (1,689) (698)
Interest income, net 175 80
-------- -------
Loss before income taxes (1,514) (618)
Income tax benefit (532) (209)
======== =======
Net loss $ (982) $ (409)
======== =======
Per share:
Primary $ (0.09) $ (0.05)
Fully diluted $ (0.09) $ (0.05)
Weighted average common shares outstanding:
Primary 10,522 7,735
Fully diluted 10,522 7,735
</TABLE>
See accompanying notes
3
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RIDE, INC.
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
(UNAUDITED)
(IN THOUSANDS)
<TABLE>
<CAPTION>
Three months ended March 31,
----------------------------
1996 1995
---------- ---------
<S> <C> <C>
Net cash provided by (used in) operating activities $ (2,919) $ 280
INVESTING ACTIVITIES:
Purchase of plant and equipment (1,705) (256)
Sale of securities available for sale 2,129 --
Other (8) 13
-------- -------
Net cash provided by (used in) investing activities 416 (243)
Financing Activities:
Proceeds from exercise of common stock options 16 --
Proceeds from exercise of common stock warrants -- 150
Dividends paid on preferred stock (9) (9)
-------- -------
Net cash provided by financing activities 7 141
-------- -------
Net increase (decrease) in cash and cash equivalents (2,496) 178
Cash and cash equivalents at beginning of period 14,271 5,830
======== =======
Cash and cash equivalents at end of period $ 11,775 $ 6,008
======== =======
SUPPLEMENTAL DISCLOSURE:
Cash paid for income taxes $ 172 $ 454
Cash paid for interest $ 5 --
NONCASH FINANCING ACTIVITIES:
Tax benefit of stock option exercises $ 12 --
Preferred stock dividends declared but not paid $ 9 $ 9
</TABLE>
See accompanying notes
4
<PAGE> 6
RIDE, INC.
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
MARCH 31, 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 months ended March
31, 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 U.S. dollars.
2. NET LOSS PER SHARE
Net loss per share has been calculated based upon the weighted average number of
shares of common stock outstanding. Common equivalent shares from stock options
and warrants have been excluded from the weighted average number of shares
outstanding because their effects are antidilutive.
3. INVENTORIES
Inventories at March 31, 1996 and December 31, 1995 consisted of the following:
<TABLE>
<CAPTION>
March 31, December 31,
1996 1995
--------- ------------
(In thousands)
<S> <C> <C>
Finished goods $3,576 $2,812
Work in process 317 98
Raw materials and supplies 2,260 1,499
====== ======
$6,153 $4,409
====== ======
</TABLE>
4. LINE OF CREDIT
In April 1996, the Company's CAS Sports International, Inc. ("CAS") subsidiary
obtained a renewed commitment from a Canadian bank for three credit facilities.
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.
5
<PAGE> 7
RIDE, INC.
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
(UNAUDITED)
5. FOREIGN CURRENCY TRANSACTIONS
The Company enters into foreign currency forward contracts to hedge firm
purchase and sales orders denominated in foreign currencies. At March 31, 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 8,950 $6,232 April - September 1996
Canadian Dollars Sell 1,700 $1,248 September 1996
</TABLE>
The net loss on these forward contracts as of March 31, 1996 of approximately
$175,000 has been deferred and will be recognized when the related commitments
are settled.
6. SHAREHOLDERS' EQUITY
In May 1996, the shareholders of the Company voted to increase the number of
shares available for grant under the Company's stock option plans from 2,000,000
shares to 2,500,000 shares.
7. RECLASSIFICATIONS
Certain reclassifications have been made to prior period amounts to conform with
current period presentation.
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"), CAS Sports International, Inc. ("CAS"), Thermal Snowboards, Inc.
("Thermal") 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.*
Historically, there is a backlog of orders beginning in February of each year as
a result of preseason orders placed in connection with winter sports trade
shows. The backlog decreases beginning in late summer and is usually
insignificant by the end of the year.* Backlog in the snowboarding industry is
subject to delay or cancellation. The Company's backlog of orders at April 17,
1996 was approximately $56 million, compared to a backlog of $51 million at
April 17, 1995, an increase of approximately 10%. The change in order backlog
was positively affected by increases in orders in North America and Europe from
the Ride Snowboards subsidiary (including the "5150" snowboard brand) and the
addition of orders from SMP which was acquired in October 1995. These increases
were offset in part by a decrease in orders at CAS, attributable primarily to a
reduction in OEM orders from other snowboard marketers. The decrease in OEM
orders is due in part to a purposeful move by the Company away from this
business, which has relatively higher credit risk and lower gross margins, and
in part to what management believes is a consolidation trend in the industry
whereby retailers are purchasing a higher percentage of products from the larger
suppliers.* Management believes that this consolidation trend will have an
overall favorable effect on the Company as a whole, particularly on the brands
marketed by the Ride Snowboards subsidiary.*
During the first quarter of 1996, the Company's principal Japanese distributor
requested a decrease in its contractual purchase commitment due to excess
inventory conditions in the Japanese market. The Company agreed to accept the
lower order from this distributor in exchange for that distributor releasing its
exclusive rights in Japan for certain brands. Subsequently, the Company entered
into a new agreement with the Company's Japanese distributor for SMP for
exclusive distribution of the "5150" brand and non-exclusive distribution of
"Preston" brand boots and bindings. Historically, a significant percentage of
the Company's sales have been to the Japanese market. Given the excess inventory
conditions in this market, management expects this percentage to decrease during
the next one to two years.*
7
<PAGE> 9
RESULTS OF OPERATIONS
QUARTER ENDED MARCH 31, 1996 COMPARED WITH QUARTER ENDED MARCH 31, 1995
Net sales increased 156% to $12.8 million in the first quarter of 1996 from $5.0
million in the first quarter of 1995. Approximately $2.3 million of the 1996
amount was generated by SMP, Thermal and the "5150" brand. The remaining
increase was due primarily to increased shipments of current year products
during the 1996 quarter to the Company's principal Japanese distributor.
Gross margins increased to 27% for the first quarter of 1996 from 17% for the
first quarter of 1995. Gross margins in the 1996 period were positively affected
by relatively higher gross margins contributed by SMP, Thermal and the "5150"
brand, as well as increased shipments of current year products to its Japanese
distributors.
Selling, general and administrative expenses increased to $5.1 million for the
first quarter of 1996 from $1.5 million for the first quarter of 1995. This
increase was due to the increased scope of the Company's operations in the first
quarter of 1996 and the additional operating expenses associated with SMP,
Thermal and the "5150" brand. Selling, general and administrative expenses in
the first quarter of the year include significant seasonal amounts associated
with the major industry trade shows and new product introductions.
Interest income increased to $175,000 in the first quarter of 1996 compared with
$80,000 for the first quarter of 1995. The increase was due to overall higher
cash balances on hand in 1996 stemming from the increased scope of the business
as well as capital supplied by the Company's August 1995 public stock offering.
The first quarter 1996 income tax benefit of $532,000 was based upon the
expected overall effective rate for the year.
LIQUIDITY AND CAPITAL RESOURCES
During the first quarter of 1996, the Company financed its operations primarily
through cash balances on hand. Net cash used in operating activities totaled
approximately $2.9 million in the first quarter of 1996 compared with net cash
provided by operating activities of $280,000 in the comparable period of 1995.
This change was due primarily to the addition of internal manufacturing through
the Company's September 1995 acquisition of Thermal and to increases in
inventories associated with the larger scope of the Company's business. Because
the Company now manufactures a significant portion of its own snowboards, there
is a higher need for cash in the first part of the year to fund raw material
purchases and production.
Net cash provided by investing activities totaled $416,000 during the first
quarter of 1996, compared to net cash used in investing activities of $204,000
in the first quarter of 1995. The 1996 quarter includes approximately $2.1
million in proceeds from the sale of short term investments, offset by capital
expenditures of approximately $1.7 million. A significant portion of the first
quarter capital expenditures are associated with molds and tooling for
snowboards and snowboard bindings. Net cash provided by financing activities
totaled $7,000 in the first quarter of 1996, compared with $141,000 in the
comparable period of 1995. The 1995 period included $150,000 in proceeds from
the exercise of common stock warrants. All of these warrants were exercised or
redeemed by the end of the third quarter of 1995.
The Company has credit facilities with two banks. Ride Snowboards has a credit
facility with a U.S. bank totaling $7.5 million. This facility allows the
Company to take advances under a revolving line of credit and to establish
import letters of credit for inventory purchases. Advances under the line bear
interest at the bank's prime rate and are collateralized by inventory and
accounts receivable. At April 30, 1996, the Company had outstanding letters of
credit aggregating $5.5 million under this facility. No advances have been taken
on the revolving line of credit. The line of credit has certain operating
covenants, including financial ratios, working capital restrictions and
restrictions on payment of dividends on Common Stock. The line of credit expires
May 15, 1996. The Company is currently in the process of renewing and expanding
this facility to cover all of its U.S. operations.
8
<PAGE> 10
In April 1996, the Company's CAS Sports International, Inc. ("CAS") subsidiary
obtained a renewed commitment from a Canadian bank for three credit facilities.
The first facility provides a $5.3 million line of credit for direct borrowings
and issuance of 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. At April 30, 1996, CAS
had outstanding import letters of credit aggregating $1.5 million. No direct
advances have been taken.
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.
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..
ITEM 2. CHANGES IN SECURITIES
None.
ITEM 3. DEFAULTS UPON SENIOR SECURITIES
None.
ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS
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
<PAGE> 12
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)
10.24 Exchange Agreement, dated December 31, 1993, between Ride
Snowboard Company and Mark M. Salter (1)
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)
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)
10.31 Form of Shareholders Agreement Allocating Distribution (2)
10.32 Amended Form of Underwriting Agreement (6)
10.33 Amended Form of Representative's Stock Purchase Option or
Warrant Agreement (7)
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 March 6, 1995, by and between
Ride Snowboard Company and U.S. Bank of Washington, N.A.,
and $7,500,000 Promissory Note, due March 29, 1996 (8)
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
11
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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)
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)
12
<PAGE> 14
10.61 Amendment No. 2 to Exclusive Distributorship Agreement,
dated March 1996, by and between Ride Snowboard Company, 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.
27.1 Financial Data Schedule
- - ------------------------------------
(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.
13
<PAGE> 15
(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.
(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.
* 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
Not applicable.
14
<PAGE> 16
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.
Dated: May 14, 1996 By /s/ G. Scott Stewart
--------------------------
G. Scott Stewart
Chief Financial Officer
15
<PAGE> 17
EXHIBIT INDEX
<TABLE>
<CAPTION>
Manual
Exhibit No. Description Page No.
<S> <C> <C>
10.61 Amendment No. 2 to Exclusive Distributorship Agreement, dated
March, 1996, by and between Ride Snowboard Company, 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.
27.1 Financial Data Schedule
</TABLE>
16
<PAGE> 1
EXHIBIT 10.61
AMENDMENT NO. 2
TO
EXCLUSIVE DISTRIBUTORSHIP AGREEMENT
THIS AMENDMENT is made this __ day of March 1996 by and among RIDE
SNOWBOARD COMPANY, a Washington corporation ("Ride"), SMP CLOTHING, INC., a
Washington corporation ("SMP") and FAR EAST TRADING COMPANY LTD., a corporation
organized under the laws of Japan ("FET").
Ride, SMP and FET are parties to an Exclusive Distributorship
Agreement, dated December 7, 1992, as amended by Amendment No. 1, dated October
24, 1995 (the "Agreement").
The parties wish to amend the Agreement to remove FET's right and
obligation to distribute products under the SMP brand.
NOW, THEREFORE, the parties hereby agree that "SMP" shall no longer be
considered a "Brand" under the Agreement and FET shall have no right or
obligation to purchase or distribute "Products" bearing the "SMP" mark in Japan.
IN WITNESS WHEREOF, the parties have executed this Amendment as of the
date written above.
RIDE SNOWBOARD COMPANY SMP CLOTHING, INC.
By: /S/ Timothy G. Pogue By: /S/ Kenneth J. Finkelstein
--------------------------- ---------------------------
Timothy G. Pogue, President Kenneth J. Finkelstein
Senior Vice President
FAR EAST TRADING COMPANY LTD.
By: /S/ Akio Koyama
----------------------------
Akio Koyama, President
<PAGE> 1
April 30, 1996
C.A.S. Sports International Inc.
2700 Dufferin Street, Unit #3
Toronto, Ontario
M6B 4J3
Attention: Mr. James Salter
Dear Sirs:
Re: Credit Facilities
We are pleased to confirm that Hongkong Bank of Canada (the "Bank") is prepared
to make available to C.A.S. Sports International Inc. the following loan
facilities, subject to and in accordance with the terms and conditions outlined
herein.
BORROWER: C.A.S. Sports International Inc. (the "Borrower")
AMOUNT: TOTAL FACILITY CAD$14,500,000 WITH THE FOLLOWING SUB LIMITS:
Facility 1 - $7,250,000 CAD or USD equivalent for
direct borrowing, usance Documentary
Credits (DC's).
Facility 2 - $14,500,000 CAD or USD equivalent for
no control and Sight DC's.
Facility 3 - $1,500,000 CAD or USD equivalent Foreign
Exchange Forward Contract line.
PURPOSE: Facility 1 - General operating requirements including
direct advances under a revolving loan
facility by way of overdraft and usance
documentary credits.
Facility 2 - Sight DC's (both on a control & no
control basis) not to exceed 12 months in
length.
<PAGE> 2
- 2 -
Facility 3 - Foreign exchange forward contract line.
20% of the notional risk is not to exceed
the facility limit.
INTEREST RATE: (a) Direct Advances
Hongkong Bank of Canada U.S. base
rate plus .50% per annum calculated
and payable monthly in arrears on
the last day of each month.
(b) Documentary Credits
Refer to attached Schedule "A".
REPAYMENT: Facility 1 (a) Direct Advances
Repayable in full upon demand.
Facility 2 (b) Documentary Credits
Repayable in full upon presentation
of documents in conformity with the
documentary credit and as per the
payment terms of the documentary
credit.
Facility 3 Repayable in full at maturity.
FEES: In consideration of the continuance of the loan facilities in
favour of the Borrower, the Borrower agrees to pay to the Bank
the following fees:
1. Monthly loan administration of USD220.00 per month
including Hexagon, the Bank's electronic banking product.
2. Standard service charges and fees as charged by the Bank
from time to time.
AVAILABILITY: DIRECT ADVANCES. Available on a revolving loan basis evidenced
by the Borrower's overdraft agreement.
DOCUMENTARY CREDITS. Import documentary credits will be
available on a transaction by transaction basis evidenced by the
Borrower's Hexagon application for documentary credits.
<PAGE> 3
- 3 -
FOREIGN EXCHANGE. Foreign exchange transactions will
be available on a per contract basis, at a 20% risk
factor, upon such quotations made by the Bank and
accepted by the Borrower.
MARGIN REQUIREMENTS: 1. Advances are at all times to be
maintained within the lesser of the loan
limit OR
85% of insured USD accounts receivable or 75%
of uninsured USD accounts receivable,
domiciled in the United States, less those
accounts 90 days past due, in dispute,
inter-company accounts, and/or subject to
offset PLUS
75% of other Canadian accounts receivable,
less those accounts 90 days past due, in
dispute, inter-company accounts and/or
subject to offset PLUS
50% of inventory charged by the Bank to a
maximum of CAD700,000 PLUS
100% of any cash on deposit with the Bank and
specifically assigned to the Bank.
NOTE: Financial statements or Q10 reports
are required on US accounts receivable
in excess of CAD50,000 which are
benefiting from dating terms to be
included in the margin formula.
Favourable bankers reports are
required on Canadian accounts
receivable in excess of CAD50,000
which are accorded dating terms in
order to be included in the margin
formula.
2. "Advances" for margin purposes are defined as:
(a) 100% of direct advances PLUS
(b) 50% of no control documentary credits
issued PLUS
(c) 20% of sight control documentary
credits issued
(d) 20% of the notional value of
foreign exchange forward contract
<PAGE> 4
- 4 -
3. DC advances for snow boards and snow
board accessories, in excess of the
initial 25% of the order, are to be
supported by firm purchase orders.
4. Trade reports, on new suppliers,
satisfactory to the Bank are to be
obtained prior to the issuance of
DC's.
5. All advances will be converted to
Canadian dollars for margin and
limit purposes.
SECURITY: The Loan shall be secured by the following
documents completed and, where necessary,
registered, in a form and manner
satisfactory to the Bank's solicitors:
Now Held
1. Line of Credit by way of Current
Account Overdraft Agreement.
2. General Assignment of Book Debts of
the Borrower registered in Ontario,
and such other jurisdictions as the
Bank may require.
3. General Security Agreement providing
a first floating charge over all the
assets of the Borrower.
4. General Security Agreement relating
to goods in regard to documentary
credits.
5. Shareholder's Postponement of Claim
executed by Ride Inc. previously
Ride Snow Board Company.
6. Assignment of credit/cash balances.
7. Assignment by the Borrower to the
Bank of all risk insurance
(including extended coverage
endorsements), showing the Bank as
first loss payee, the said policy to
include business interruption and
public liability insurance.
8. Such supporting certificates and
opinions as the Bank shall
reasonably require.
<PAGE> 5
- 5 -
9. Guarantee in the amount of
CAD$3,500,000 signed by
Ride Snow Board Company (name
changed to Ride Inc.).
To Be Obtained
10. Line of Credit by way of current
account overdraft agreement to
reflect amended credit limits.
11. Section 427 security charging
security in Canada.
12. Additional documentation as required
to charge inventory in the USA.
13. Trade Financing General Agreement.
CONDITIONS: The following covenants of the Borrower
shall apply so long as the Borrower is
indebted to the Bank.
The Borrower shall not, without the prior
written consent of the Bank:
1. change the ownership structure of
the Borrower;
2. permit tangible net worth of the
Borrower to be less than
USD3,000,000.
3. permit debt:TNW to exceed 2.25:1 at
any time.
DEFINITION: Tangible Net Worth
Capital, plus retained earnings, plus
postponed shareholder loans, less
inter-company loans and investments and
other intangibles such as goodwill and
organization costs.
FINANCIAL The Borrower shall form time to time
REPORTING: deliver to the Bank the following:
1. Monthly, within 25 business days of
each calendar month-end:
(a) signed aged list of USD
accounts receivable.
(b) signed aged list of Canadian
accounts receivable.
<PAGE> 6
- 6 -
(c) signed internally prepared
income statement and
balance sheet.
(d) signed aged list of accounts
payable.
(e) inventory lists in format
satisfactory to the Bank
detailing description,
location and book value.
2. Annually within 90 days of the
Borrower's fiscal year-end:
(a) audited financial statements
for Ride Inc.
(b) audited financial statements
for the Borrower.
(c) projections and forecasts
for the Borrower.
VISITS: The Bank shall have the right to inspect the Borrower's
business premises and premises where inventory is housed at
any time, and in any event not less than quarterly.
REVIEW: The Bank reserves its usual right to review the account at
any time and not less frequently than annually. In this
regard, the Borrower is required to provide the Bank for
the upcoming year, with such information as the Bank may
reasonably require to adequately assess the Borrower's
financial progress.
LEGAL & OTHER The Borrower shall pay all legal fees and disbursements
EXPENSES: with respect to the Loan, the preparation and the issue of
security documents, the enforcement and remedies, all
insurance, consultation and similar fees, as well as all
fees relating to the disbursement of funds whether or not
any funds are advanced under the Loan. Legal work and
documentation is to be performed by the Bank's solicitors.
CREDIT REPORTING: The Borrower and the Guarantor consent to
the obtaining from any credit reporting agency or from any
person such information as the Bank may require at any
time, and consent to the disclosure at any time of any
information concerning the Borrower and the Guarantor have
financial relations or to any credit reporting agency.
NON-MERGER & NON- This Facility Letter shall, on execution by the Borrower
ASSIGNMENT: and each Guarantor, replace all previous facility letters
from the Bank to the Borrower with respect to the Loan. Any
existing loan to the Borrower shall be modified, not
refinanced, without
<PAGE> 7
- 7 -
novation of the Borrower's existing facilities or
obligations, by virtue of the Facility Letter unless
otherwise provided in the Facility Letter. The terms and
conditions of the Facility Letter shall not be merged by
and shall survive the execution of the Security Documents.
In the event of a conflict between the terms of this
Facility Letter and the terms of the Security Documents the
terms of this Facility Letter shall prevail. The Facility
Letter shall enure to the benefit of the Bank and its
successors and assigns, and may not be assigned by the
Borrower.
OTHER CONDITIONS: Without limiting the Bank's right to make demand for
payment at any time, the line of credit is subject to
review from time to time at the Bank's discretion and at
least annually. The Bank reserves the right to withdraw its
support at any time should there be, in the Bank's opinion:
1. a material adverse change in the financial condition
of the Borrower;
2. an unacceptable change in ownership;
3. legal implications detrimental to the affairs of the
Borrower.
REPRESENTATIONS If a corporation, the Borrower and each Guarantor represents
AND WARRANTIES: and warrants, as at the time of drawing under or other
utilization of the Loan, that:
(a) it has been duly incorporated and organized, is
properly constituted, is in good standing and is
entitled to conduct its business in all jurisdictions
in which it carries on business or has assets;
(b) the execution of the Facility Letter and the Security
Documents and the incurring of liability and
indebtedness to the bank does not and will not
contravene:
(i) any Legal Requirement applicable to the Borrower
and each Guarantor, respectively; or
<PAGE> 8
- 8 -
(ii) any provision contained in any other loan or
credit agreement or borrowing instrument or
contract to which the Borrower and each
Guarantor, respectively, is a party;
(c) the Facility Letter and the Security Documents to
which it is a party have been duly authorized,
executed and delivered by the Borrower and each
Guarantor, and constitute valid and binding
obligations of the Borrower and each Guarantor, as the
case may be, and are enforceable in accordance with
their respective terms;
(d) all necessary Legal Requirements have been met and all
other authorizations, approvals, consents and orders
have been obtained with respect to the Loan and the
execution and delivery of the Security Documents.
Each of the Borrower and the Guarantor also represents and
warrants to the Bank that all financial and other
information provided to the Bank in connection with the
Loan is true and accurate, and acknowledges that the offer
of credit contained in the Facility Letter is made in
reliance on the truth and accuracy of this information and
the above representations and warranties.
BANK'S SOLICITORS: Legal work and documentation is to be performed on behalf
of the Bank by Gardiner Roberts, Barristers and Solicitors.
LAPSE, PERIODIC At the option of the Bank, this Facility Letter shall lapse
REVIEW AND and the obligations of the Bank shall end if there has, in
CANCELLATION: the opinion of the Bank, been a material adverse change in
the financial condition of the Borrower, or if the
conditions precedent have not been met and initial
disbursement made, within three months of the date of the
Facility Letter. The Loan shall be subject to periodic
review by the Bank not less frequently than annually, with
corporate and, if applicable, land registry searches to be
conducted annually at the Borrower's cost. Any unadvanced
portion of the Loan shall be cancelled upon demand being
made by the bank for repayment of the amount outstanding
under the Loan.
<PAGE> 9
- 9 -
This Facility letter may be accepted by the Borrower by signing, dating and
returning to the Bank by 5:00 p.m. on May 31, 1996, the enclosed copy of this
letter executed by the Borrower and the Guarantor as set out below. Failing such
acceptance, this offer shall be of no further force or effect.
Yours truly,
HONGKONG BANK OF CANADA
Robert R. Gannon Rick Arnone
Manager, Commercial Banking Branch Manager
ACCEPTANCE:
We hereby accept the above offer and we shall be bound by the terms and
conditions as set out above.
DATED this day of , 1996.
C.A.S. SPORTS INTERNATIONAL INC.
/S/ James J. Salter
Per ________________________________
THE GUARANTOR
RIDE INC.
/S/ James J. Salter
Per: _______________________________
<PAGE> 10
C.A.S. SPORTS INTERNATIONAL INC.
PRICING FOR COLLECTIONS & DOCUMENTARY CREDITS
BC = Bill for Collection = Clean or Documentary Collection
DC = Documentary Credit = Letter of Credit
<TABLE>
<CAPTION>
COLLECTIONS (BC'S) CHARGES
- - ------------------ -------
<S> <C>
Inward BC (fees due upon receipt of 0.1000% (minimum CAD50.00 and
BC) maximum CAD250.00 on clean
collections) - no maximum on
documentary collections (plus out-of-
pocket).
DOCUMENTARY CREDITS (DC'S)
- - --------------------------
Sight, No Control
.25% for the first 90 days, 0.75%
per month or part thereafter payable
upon issuance.
Usance .10% per month.
Paying under DC (fees due upon CAD50.00 plus CAD50.00 for
payment - includes partial drawings) discrepancies (payable by beneficiary)
plus out-of-pocket.
Accepting under usance DC (fees due 0.125% per month, or part thereof, of
upon acceptance of documents - usance period (minimum is the higher
additional to issuing and paying fees - of .125% or CAD100.00) plus out-of-
period from acceptance to payment after pocket.
DC expiry date)
Amending DC (fees due upon issuance CAD50.00 flat except for those
of amendment) involving changes to amount or
validity (term) which attract same as
issuing charges, plus out-of-pocket.
</TABLE>
<PAGE> 11
<TABLE>
<CAPTION>
STANDARD OUT-OF-POCKET CHARGES
- - ------------------------------
<S> <C>
Cable for opening DC CAD50.00 for full DC
CAD40.00 for DC pre-advice plus
CAD20.00 airmail charge
Cable for amending DC CAD40.00 minimum
Airmail for opening DC CAD20.00
DC & BC Remittance CAD30.00 cable
(payable by beneficiary) CAD20.00 airmail
DC & BC Fate Enquiries CAD30.00 cable
(Chasers) CAD20.00 airmail
EXAMPLES OF GENERAL OUT-OF-POCKET EXPENSES
- - ------------------------------------------
Airmail - postage
Courier
Telex
Long Distance Telephone
</TABLE>
<PAGE> 12
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, provided such
directions are 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> 13
(d) Upon any termination of the Employee's employment by the
Company and excluding termination for Cause, the Company shall continue to pay
the salary specified in paragraph 4(a) (as adjusted from time to time) for a
period of three (3) 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 30-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.
(g) Following approval of this Agreement by the Compensation
Committee of the Board of Directors of Ride, Inc. ("Ride"), and upon termination
of the Employee's employment without Cause or in the event of a Change in
Control of Ride (as defined below), all options to purchase stock granted under
Ride's 1994 Stock Option Plan shall automatically vest and become exerciseable
for a period of ninety (90) days. For the purposes of this Agreement, a Change
in Control shall be deemed to occur upon:
i) the approval by the shareholders of Ride of the
merger or consolidation of Ride with or into any other entity upon the
conclusion of which merger or consolidation the shareholders of Ride immediately
prior to the merger or consolidation become the holders of fewer than a majority
of the outstanding equity securities of the consolidated or surviving entity
immediately after the merger or consolidation (or the later approval of such
merger or consolidation by the equity
3
<PAGE> 14
security holders of the other entity, if required by applicable law);
ii) the approval by the shareholders of Ride of the
sale, lease, exchange or other disposition of all or substantially all of the
assets of Ride; or
iii) the election to the Board of Directors at any
meeting of the shareholders of Ride of fewer than a majority of the persons
nominated by the Board of Directors for election to such board.
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 Twenty-Five Thousand Dollars ($225,000) (U.S.) on an
annualized basis until the first anniversary of the Effective Date, which amount
shall be reviewed thereafter annually by the Company in or about the anniversary
of the Effective Date for the initial term of this Agreement. 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. Upon the request of the Employee and the agreement of
the Company, the Company shall pay such portion of the foregoing salary (not to
exceed 50% thereof) as the Employee shall designate to a company to be
designated by the Employee. Such portion of the salary shall be considered a
consulting fee and the Company shall have no tax withholding obligation with
respect to such portion of the salary.
(b) 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.
5. Expenses. All travel and other reasonable expenses incident to the
rendering of services by the Employee hereunder
4
<PAGE> 15
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 with in any
manner any business engaged in any of the following activities: the design,
manufacture, marketing or distribution of snowboards, snowboard boots or
bindings or related accessories; or the purchase and resale of close-out or
overstocked sporting goods. 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. This Subsection 6(a) shall not prevent Employee from
engaging in the footwear and apparel trades.
(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
5
<PAGE> 16
prevent or curtail any breach of this Agreement by the other party.
(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:
James J. Salter
C.A.S. Sports International, Inc.
2700 Dufferin Street, Unit 3
Toronto, Ontario M6B 4J3
CANADA
With a copy to:
Scott Benner
General Counsel
Ride, Inc.
8160 304th Avenue, S.E.
Preston, WA 98050
6
<PAGE> 17
U.S.A.
The Employee:
Robert F. Marcovitch
94 Munroe Blvd.
North York, Ontario M2P 1C4
CANADA
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.
12. Governing Law. This Agreement shall be governed by and construed
according to the laws of the Province of Ontario without regard to the choice of
law principles of the Province of Ontario or any other jurisdiction. Any dispute
arising under this Agreement shall be litigated exclusively in the provincial
courts situated in the City of Toronto, Ontario, 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
7
<PAGE> 18
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.
C.A.S. SPORTS INTERNATIONAL, INC.
By: ______________________________
Title: ___________________________
Printed Name: ____________________
EMPLOYEE:
__________________________________
Robert F. Marcovitch
8
<TABLE> <S> <C>
<ARTICLE> 5
<MULTIPLIER> 1,000
<CURRENCY> U.S.
<S> <C>
<PERIOD-TYPE> 3-MOS
<FISCAL-YEAR-END> DEC-31-1996
<PERIOD-START> JAN-01-1996
<PERIOD-END> MAR-31-1996
<EXCHANGE-RATE> 1
<CASH> 11,775
<SECURITIES> 1,711
<RECEIVABLES> 9,835
<ALLOWANCES> 431
<INVENTORY> 6,153
<CURRENT-ASSETS> 30,333
<PP&E> 5,965
<DEPRECIATION> 735
<TOTAL-ASSETS> 52,350
<CURRENT-LIABILITIES> 6,749
<BONDS> 0
0
500
<COMMON> 38,272
<OTHER-SE> 6,760
<TOTAL-LIABILITY-AND-EQUITY> 52,350
<SALES> 12,777
<TOTAL-REVENUES> 12,777
<CGS> 9,390
<TOTAL-COSTS> 9,390
<OTHER-EXPENSES> 4,999
<LOSS-PROVISION> 77
<INTEREST-EXPENSE> (175)
<INCOME-PRETAX> (1,514)
<INCOME-TAX> (532)
<INCOME-CONTINUING> (982)
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> (982)
<EPS-PRIMARY> (0.09)
<EPS-DILUTED> (0.09)
</TABLE>
