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EXHIBIT 4.3
THIS WARRANT AND THE SHARES OF COMMON STOCK OF RIDE, INC. TO BE ISSUED UPON ANY
EXERCISE OF THE WARRANT HAVE NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF
1933, AS AMENDED (THE "SECURITIES ACT"). THEY MAY NOT BE OFFERED OR TRANSFERRED
BY SALE, ASSIGNMENT, PLEDGE OR OTHERWISE UNLESS (I) A REGISTRATION STATEMENT FOR
THE SECURITIES UNDER THE SECURITIES ACT IS IN EFFECT OR (II) THE CORPORATION HAS
RECEIVED AN OPINION OF COUNSEL, WHICH OPINION IS SATISFACTORY TO THE
CORPORATION, TO THE EFFECT THAT SUCH REGISTRATION IS NOT REQUIRED UNDER THE
SECURITIES ACT.
WARRANT
TO PURCHASE SHARES
OF
COMMON STOCK
OF
RIDE, INC.
DECEMBER 19, 1997
This certifies that, for value received, Advantage Fund II Ltd.
("Advantage") and any subsequent transferee pursuant to the terms of the
Agreement (as defined below) of even date and this Warrant (each, a "Holder") is
entitled to purchase, subject to the provisions of this Warrant, from Ride,
Inc., a Washington corporation (the "Issuer"), at any time or from time to time
on or after the date hereof and on or before 5:00 p.m., P.S.T. on December 19,
2002 (the "Expiration Date"), Two Hundred Thousand (200,000) fully paid and
nonassessable shares of common stock (the "Common Stock"), of the Issuer at an
exercise price equal to $2.6813 (the "Exercise Price") (such shares of Common
Stock and other securities issued and issuable upon exercise of this Warrant,
the "Warrant Shares").
Section 1. Definitions. Except as otherwise specified herein, terms
defined herein shall have the meanings assigned to them in the Subscription
Agreement of even date herewith by and between Advantage and the Issuer (the
"Agreement").
Section 2. Exercise of Warrant.
(a) Subject to the provisions hereof, this Warrant may be
exercised, in whole or in part, but not as to a fractional share, at any
time or from time to time on
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or after the date hereof and on or before the Expiration Date, by
presentation and surrender hereof to the Issuer or the Issuer's Transfer
Agent for this Warrant which, in accordance with the provisions of
Section 9 hereof, is then effective for notices to the Issuer or its
Transfer Agent, with the Subscription Form annexed hereto as SCHEDULE
ONE, duly executed and accompanied by payment to the Issuer as further
set forth below in this Section 2, for the account of the Issuer, of the
Exercise Price for the number of Warrant Shares specified in such form.
If this Warrant should be exercised in part only, the Issuer shall, upon
surrender of this Warrant, execute and deliver a new Warrant evidencing
the rights of the Holder hereof to purchase the balance of the Warrant
Shares purchasable hereunder. The Issuer shall maintain at its principal
place of business a register for the registration of this Warrant and
registration of transfer of this Warrant. The Exercise Price for the
number of Warrant Shares specified in the Subscription Form shall be
payable in United States Dollars by certified or official bank check
payable to the order of the Issuer or by wire transfer of immediately
available funds to an account specified by the Issuer for that purpose.
(b) Certificates representing Warrant Shares shall bear the
following restrictive legend:
"The shares represented by this certificate have not been
registered under the Securities Act of 1933, as amended (the
"Securities Act"). They may not be offered or transferred by
sale, assignment, pledge or otherwise unless (i) a registration
statement for the securities under the Securities Act is in
effect or (ii) the corporation has received an opinion of counsel
to the effect that such registration is not required under the
Securities Act."
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(c) Notwithstanding any provisions herein to the contrary, if the
Fair Market Value (hereinafter defined) of one share of Common Stock is
greater than the Exercise Price (at the date of calculation as set forth
below), in lieu of exercising this Warrant for cash, the Holder may
elect to receive shares equal to the value (as determined below) of this
Warrant (or the portion thereof being) by surrender of this Warrant at
the principal office of the Issuer or its Transfer Agent, together with
the properly endorsed Subscription Form in which event the Issuer shall
issue to the Holder a number of shares of Common Stock computed using
the following formula:
Y (A-B)
X = ----
A
Where X = the number of shares of Common
Stock to be issued to the Holder
Y = the number of shares of Common
Stock purchasable under the Warrant or, if only a portion
of the Warrant is being exercised, the portion of the
Warrant being exercised (at the date of such calculation)
A = the Fair Market Value of one share
of the Issuer's Common Stock (at the date of such
calculation)
B = Exercise Price (as adjusted to the
date of such calculation)
For purposes of the above calculation, Fair Market Value of one share of
Common Stock shall be the average closing bid price (as reported by The
Nasdaq Stock Market) of the Issuer's Common Stock for the five (5)
consecutive trading days ending on the trading day immediately preceding
the date of the Election to Purchase.
(d) Notwithstanding any other provision of this Warrant, in no
event shall the holder of this Warrant be entitled at any time to
purchase a number of shares of Common Stock on exercise of this Warrant
in excess of that number of shares upon purchase of which the sum of (1)
the number of shares of Common Stock beneficially owned by such holder
and any person whose beneficial ownership of shares of Common Stock
would be aggregated with such holder's beneficial ownership of shares of
Common Stock for purposes of Section 13(d) of the Securities Exchange
Act of 1934, as amended (the "Exchange Act"), and Rule 13d-3 thereunder
(each an "Aggregated Person" and collectively, the "Aggregated Persons")
(other than shares of Common Stock deemed beneficially owned
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through the ownership of the unexercised portion of this Warrant, any
warrant containing a restriction similar to this Section 2(d) and shares
of Series B Cumulative Convertible Preferred Stock, no par value per
share, of the Company (the "Series B Convertible Preferred Stock")
beneficially owned by all such Aggregated Persons) and (2) the number of
shares of Common Stock issuable upon exercise of the portion of this
Warrant with respect to which the determination in this sentence is
being made, would result in beneficial ownership by any Aggregated
Person of more than 4.9% of the outstanding shares of Common Stock. For
purposes of the immediately preceding sentence, beneficial ownership
shall be determined in accordance with Section 13(d) of the Exchange Act
and Rule 13d-3 thereunder, except as otherwise provided in clause (1) of
the immediately preceding sentence.
Section 3. Reservation of Shares; Preservation of Rights of Holder. The
Issuer hereby agrees that there shall be reserved for issuance and/or delivery
upon exercise of this Warrant, such number of Warrant Shares as shall be
required for issuance or delivery upon exercise of this Warrant. The Warrant
surrendered upon exercise shall be canceled by the Issuer. After the Expiration
Date, no shares of Common Stock shall be subject to reservation in respect of
this Warrant. The Issuer further agrees (i) that it will not, by amendment of
its Articles of Incorporation or through reorganization, consolidation, merger,
dissolution or sale of assets, or by any other voluntary act, avoid or seek to
avoid the observation or performance of any of the covenants, stipulations or
conditions to be observed or performed hereunder by the Issuer, (ii) promptly to
take such action as may be required of the Issuer to permit the Holder to
exercise this Warrant and the Issuer duly and effectively to issue shares of its
Common Stock or other securities as provided herein upon the exercise hereof,
and (iii) promptly to take all action required or provided herein to protect the
rights of the Holder granted hereunder against dilution. Without limiting the
generality of the foregoing, should the Warrant Shares at any time consist in
whole or in part of shares of capital stock having a par value, the Issuer
agrees that before taking any action which would cause an adjustment of the
Exercise Price so that the same would be less than the then par value of such
Warrant Shares, the Issuer shall take any corporate action which may, in the
opinion of its counsel, be necessary in order that the Issuer may validly and
legally issue fully paid and nonassessable shares of such Common Stock at the
Exercise Price as so adjusted. The Issuer further agrees that it will not
establish a par value for its Common Stock while this Warrant is outstanding in
an amount greater than the Exercise Price.
Section 4. Exchange, Transfer, Assignment or Loss of Warrant. Any
attempted transfer of this Warrant, the Warrant Shares or any new Warrant not in
accordance with this Section shall be null and void, and the Issuer shall not in
any way be required to give effect to such transfer. No transfer of this Warrant
shall be effective for any purpose hereunder until (i) written notice of such
transfer and of the name and address of the transferee has been received by the
Issuer, and (ii) the transferee shall first agree in a writing deposited with
the Secretary of the Issuer to be bound by all the provisions of this Warrant
and the Agreement. Upon surrender of this Warrant to the Issuer by any
transferee authorized under the provisions of this Section 4, the Issuer shall,
without charge, execute and deliver a new Warrant registered in the name of such
transferee at the address specified by such transferee, and this Warrant shall
promptly be canceled. The Issuer may deem and treat the registered
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holder of any Warrant as the absolute owner thereof for all purposes, and the
Issuer shall not be affected by any notice to the contrary. Any Warrant, if
presented by an authorized transferee, may be exercised by such transferee
without prior delivery of a new Warrant issued in the name of the transferee.
Upon receipt by the Issuer of evidence reasonably satisfactory to it of
the loss, theft, destruction or mutilation of this Warrant, and (in the case of
loss, theft or destruction) of reasonably satisfactory indemnification, and upon
surrender and cancellation of this Warrant, if mutilated, the Issuer will
execute and deliver a new Warrant of like tenor and date. Any such new Warrant
executed and delivered shall constitute a separate contractual obligation on the
part of the Issuer, whether or not the Warrant so lost, stolen, destroyed or
mutilated shall be at any time enforceable by anyone.
Section 5. Rights of Holder. Neither a Holder nor his transferee by
devise or the laws of descent and distribution or otherwise shall be, or have
any rights or privileges of, a shareholder of the Issuer with respect to any
Warrant Shares, unless and until certificates representing such Warrant Shares
shall have been issued and delivered thereto.
Section 6. Adjustments in Exercise Price and Warrant Shares. The
Exercise Price and Warrant Shares shall be subject to adjustment from time to
time as provided in this Section 6.
(a) If the Issuer is recapitalized through the subdivision or
combination of its outstanding shares of Common Stock into a larger or
smaller number of shares, the number of shares of Common Stock for which
this Warrant may be exercised shall be increased or reduced, as of the
record date for such recapitalization, in the same proportion as the
increase or decrease in the outstanding shares of Common Stock, and the
Exercise Price shall be adjusted so that the aggregate amount payable
for the purchase of all Warrant Shares issuable hereunder immediately
after the record date for such recapitalization shall equal the
aggregate amount so payable immediately before such record date.
(b) If the Issuer declares a dividend on Common Stock, or makes a
distribution to holders of Common Stock, and such dividend or
distribution is payable or made in Common Stock or securities
convertible into or exchangeable for Common Stock, or rights to purchase
Common Stock or securities convertible into or exchangeable for Common
Stock, the number of shares of Common Stock for which this Warrant may
be exercised shall be increased, as of the record date for determining
which holders of Common Stock shall be entitled to receive such dividend
or distribution, in proportion to the increase in the number of
outstanding shares (and shares of Common Stock issuable upon conversion
of all such securities convertible into Common Stock) of Common Stock as
a result of such dividend or distribution, and the Exercise Price shall
be adjusted so that the aggregate amount payable for the purchase of all
the Warrant Shares issuable hereunder immediately after the record date
for such dividend or distribution shall equal the aggregate amount so
payable immediately before such record date.
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(c) If the Issuer declares a dividend on Common Stock (other than
a dividend covered by subsection (b) above) or distributes to holders of
its Common Stock, other than as part of its dissolution or liquidation
or the winding up of its affairs, any shares of its capital stock, any
evidence of indebtedness or any cash or other of its assets (other than
Common Stock or securities convertible into or exchangeable for Common
Stock), the Holder shall receive notice of such event as set forth in
Section 8 below.
(d) In case of any consolidation of the Issuer with, or merger of
the Issuer into, any other corporation (other than a consolidation or
merger in which the Issuer is the continuing corporation and in which no
change, other than the issuance of Common Stock in connection with (i)
the merger of a third corporation into the Issuer or (ii) the
acquisition of all or substantially all of the assets or equity
securities of a third corporation, occurs in its outstanding Common
Stock), or in case of any sale or transfer of all or substantially all
of the assets of the Issuer, or in the case of any statutory exchange of
securities with another corporation (including any exchange effected in
connection with a merger of a third corporation into the Issuer, except
where the Issuer is the surviving entity and no change occurs in its
outstanding Common Stock), the corporation formed by such consolidation
or the corporation resulting from such merger or the corporation which
shall have acquired such assets or securities of the Issuer, as the case
may be, shall execute and deliver to the Holder simultaneously therewith
a new Warrant, satisfactory in form and substance to the Holder,
together with such other documents as the Holder may reasonably request,
entitling the Holder thereof to receive upon exercise of such Warrant
the kind and amount of shares of stock and other securities and property
receivable upon such consolidation, merger, sale, transfer, or exchange
of securities, or upon the dissolution following such sale or other
transfer, by a holder of the number of shares of Common Stock
purchasable upon exercise of this Warrant immediately prior to such
consolidation, merger, sale, transfer, or exchange. Such new Warrant
shall contain the same basic other terms and conditions as this Warrant
and shall provide for adjustments which, for events subsequent to the
effective date of such written instrument, shall be as nearly equivalent
as may be practicable to the adjustments provided for in this Section 6.
The above provisions of this paragraph (d) shall similarly apply to
successive consolidations, mergers, exchanges, sales or other transfers
covered hereby.
(e) If the Issuer shall, at any time before the expiration of
this Warrant, sell all or substantially all of its assets and distribute
the proceeds thereof to the Issuer's shareholders, the Holder shall,
upon exercise of this Warrant have the right to receive, in lieu of the
shares of Common Stock of the Issuer that the Holder otherwise would
have been entitled to receive, the same kind and amount of assets as
would have been issued, less the Exercise Price, distributed or paid to
the Holder upon any such distribution with respect to such shares of
Common Stock of the Issuer had the Holder been the holder of record of
such shares of Common Stock receivable upon exercise of this Warrant on
the date for determining those entitled to receive any such
distribution. If any such distribution results in any cash distribution
in excess of the Exercise Price provided by this Warrant for the shares
of Common
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Stock receivable upon exercise of this Warrant, the Holder may, at the
Holder's option, exercise this Warrant without making payment of the
Exercise Price and, in such case, the Issuer shall, upon distribution to
the Holder, consider the Exercise Price to have been paid in full and,
in making settlement to the Holder, shall obtain receipt of the Exercise
Price by deducting an amount equal to the Exercise Price for the shares
of Common Stock receivable upon exercise of this Warrant from the amount
payable to the Holder.
(f) If an event occurs which is similar in nature to the events
described in this Section 6, but is not expressly covered hereby, the
Board of Directors of the Issuer shall make or arrange for an equitable
adjustment to the number of Warrant Shares and the Exercise Price.
(g) The term "Common Stock" shall mean the Common Stock of the
Issuer as the same exists at the Closing Date or as such stock may be
constituted from time to time, except that for the purpose of this
Section 6, the term "Common Stock" shall only include any stock of any
class of the Issuer which has no preference in respect of dividends or
of amounts payable in the event of any voluntary or involuntary
liquidation, dissolution or winding up of the Issuer and which is not
subject to redemption by the Issuer.
(h) If required by the Holder, the Issuer shall retain a firm of
independent public accountants of recognized standing (who may be any
such firm regularly employed by the Issuer) to make any computation
required under this Section 6, and a certificate signed by such firm
shall be conclusive evidence of the correctness of any computation made
under this Section 6.
(i) Whenever the number of Warrant Shares or the Exercise Price
shall be adjusted as required by the provisions of this Section 6, the
Issuer forthwith shall file in the custody of its secretary or an
assistant secretary, at its principal office, and furnish to each Holder
hereof, a certificate prepared in accordance with paragraph (h) above,
showing the adjusted number of Warrant Shares and the Exercise Price and
setting forth in reasonable detail the circumstances requiring the
adjustments.
(j) Notwithstanding any other provision, this Warrant shall be
binding upon and inure to the benefit of any successors and assigns of
the Issuer.
(k) No adjustment in the Exercise Price in accordance with the
provisions of this Section 6 need be made if such adjustment would
amount to a change in such Exercise Price of less than $.01; provided
however, that the amount by which any adjustment is not made by reason
of the provisions of this paragraph (k) shall be carried forward and
taken into account at the time of any subsequent adjustment in the
Exercise Price.
(l) If an adjustment is made under this Section 6 and the event
to which the adjustment relates does not occur, then any adjustments in
accordance with this
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Section 6 shall be readjusted to the Exercise Price and the number of
Warrant Shares which would be in effect had the earlier adjustment not
been made.
Section 7. Taxes on Issue or Transfer of Common Stock and Warrant. The
Issuer shall pay any and all documentary stamp or similar issue or transfer
taxes payable in respect of the issue or delivery of shares of Common Stock or
other securities on the exercise of this Warrant. The Issuer shall not be
required to pay any tax which may be payable in respect of any transfer of this
Warrant or in respect of any transfers involved in the issue or delivery of
shares or the exercise of this Warrant in a name other than that of the Holder
and the person requesting such transfer, issue or delivery shall be responsible
for the payment of any such tax (and the Issuer shall not be required to issue
or deliver said shares until such tax has been paid or provided for).
Section 8. Notice of Adjustment. So long as this Warrant shall be
outstanding, (a) if the Issuer shall propose to pay any dividends or make any
distribution upon the Common Stock, or (b) if the Issuer shall offer generally
to the holders of Common Stock the right to subscribe to or purchase any shares
of any class of Common Stock or securities convertible into Common Stock or any
other similar rights, or (c) if there shall be any proposed capital
reorganization of the Issuer in which the Issuer is not the surviving entity,
recapitalization of the capital stock of the Issuer, consolidation or merger of
the Issuer with or into another corporation, sale, lease or other transfer of
all or substantially all of the property and assets of the Issuer, or voluntary
or involuntary dissolution, liquidation or winding up of the Issuer, or (d) if
the Issuer shall give to its stockholders any notice, report or other
communication respecting any significant or special action or event, then in
such event, the Issuer shall give to the Holder, at least thirty (30) days prior
to the relevant date described below (or such shorter period as is reasonably
possible if thirty days is not reasonably possible), a notice containing a
description of the proposed action or event and stating the date or expected
date on which a record of the Issuer's stockholders is to be taken for any of
the foregoing purposes, and the date or expected date on which any such
dividend, distribution, subscription, reclassification, reorganization,
consolidation, combination, merger, conveyance, sale, lease or transfer,
dissolution, liquidation or winding up is to take place and the date or expected
date, if any is to be fixed, as of which the holders of Common Stock of record
shall be entitled to exchange their shares of Common Stock for securities or
other property deliverable upon such event.
Section 9. Notice. Any notice to be given or to be served upon any party
in connection with this Warrant must be in writing and will be deemed to have
been given and received upon confirmed receipt, if sent by facsimile, or two (2)
days after it has been submitted for delivery by Federal Express or an
equivalent carrier and five (5) days after it has been mailed by first class
mail, charges prepaid and addressed to the following addresses with a
confirmation of delivery:
If to the Issuer, to:
Ride, Inc.
0000 000xx Xxxxxx Xxxxxxxxx
Xxxxxxx, Xxxxxxxxxx 00000
Attn.: Mr. G. Xxxxx Xxxxxxx
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Telephone: (000) 000-0000
Facsimile: (000) 000-0000
With a copy to:
Summit Law Group PLLC
0000 Xxxxxxxx Xxxxxx Xxxxx, Xxxxx 000
Xxxxxxx, Xxxxxxxxxx 00000
Attn.: Xxxxx Xxxxxxxx, Esq.
Telephone: (000) 000-0000
Facsimile: (000) 000-0000
If to the Holder, to:
Advantage Fund II Ltd.
x/x XXXXX
Xxxx Xxxxxxxxx 0
Xxxxxxx, Xxxxxxxxxxx Antilles
Attn.: X.X. xx Xxxxx
Telephone:000-000-0000-0000
Facsimile: 011-599-9732-2008
With a copy to:
Genesee International, Inc.
00000 X.X. 0xx Xxxxxx, Xxxxx 0000
Xxxxxxxx, Xxxxxxxxxx 00000
Attn.: Xxxxx Xxxxxxx
Telephone: (000) 000-0000
Facsimile: (000) 000-0000
With a copy to:
Xxxxxxxx & Xxxxxx
000 00xx Xxxxxx, Xxxxx 0000
Xxxxxx, Xxxxxxxx 00000
Attn.: Xxxxxxx X. Xxxx, Esq.
Telephone: (000) 000-0000
Facsimile: (000) 000-0000
If to the Transfer Agent, to:
Xxxxx Xxxxxx Shareholder Services
000 Xxxx Xxxxxx, Xxxxx 0000
Xxxxxxx, Xxxxxxxxxx 00000
Attn.: Xxx Xxxxxxxxx
Telephone: (000) 000-0000
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Facsimile: (000) 000-0000
Any party may, at any time by giving notice to the other party, designate any
other address in substitution of an address established pursuant to the
foregoing to which such notice will be given
Section 10. Choice of Law; Conflict of Law; Jurisdiction and Venue.
Except as otherwise expressly provided herein, the terms, conditions and
enforceability of this Warrant shall be governed by and interpreted under the
laws of the State of Washington. Any claim, dispute or disagreement relating to
the terms and conditions of this Warrant, or arising from this Warrant or the
subject matter of this Warrant, may be brought only in the courts of the State
of Washington or in any United States District Court located in the State of
Washington, which shall have exclusive jurisdiction thereof. The parties to this
Agreement consent to such jurisdiction and venue and hereby knowingly and
voluntarily waive all objections thereto on the basis of lack of personal
jurisdiction, venue or convenience.
[SIGNATURE PAGE FOLLOWS]
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Dated: December 19, 1997
RIDE, INC.
By:
Name:
Title:
ATTEST:
, Secretary
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SCHEDULE ONE
SUBSCRIPTION FORM
TO RIDE, INC.:
1. The undersigned Holder of the attached original, executed Warrant
hereby elects to exercise its purchase right under such Warrant with respect to
______________ shares of Common Stock, as defined in the Warrant, of Ride, Inc.,
a Washington corporation (the "Company").
2. The undersigned Holder (check one):
(a) elects to pay the aggregate purchase price for such shares of
Common Stock (the "Exercise Shares") (i) by lawful money of the United States or
the enclosed certified or official bank check payable in United States dollars
to the order of the Company in the amount of $___________, or (ii) by wire
transfer of United States funds to the account of the Company in the amount of
$____________, which transfer has been made before or simultaneously with the
delivery of this Subscription Form pursuant to the instructions of the Company;
or
(b) elects to receive shares of Common Stock having a value equal
to the value of the Warrant calculated in accordance with Section 2(c) of the
Warrant.
3. Please issue a stock certificate or certificates representing the
appropriate number of shares of Common Stock in the name of the undersigned or
in such other names as is specified below:
Name: _______________________________________
Address: _____________________________________
_____________________________________
Dated:____________ ___, _____ ____________________________
(Signature must conform to name of Holder as specified on the face of
the Warrant)
----------------------------
----------------------------
(Address)
