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EXHIBIT 10.77
RIDE, INC.
AND
XXXXXX CAPITAL GROUP, LTD.
WARRANT AGREEMENT
DATED AS OF DECEMBER 18, 1997
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WARRANT AGREEMENT (the "Agreement"), dated as of December 18,
1997 by and between RIDE, INC., a Washington corporation (the "Company"), and
XXXXXX CAPITAL GROUP, LTD., a California corporation (the "Placement Agent").
The Company proposes to issue to the Placement Agent the warrants
as hereinafter described (the "Warrants") to purchase 83,720 shares of common
stock of the Company, no par value per share ("Common Stock"), subject to
adjustment as provided in Section 8 hereof (such number of shares, as adjusted,
being hereinafter referred to as the "Shares"), each Warrant entitling the
holder ("Holder") thereof to purchase one share of Common Stock. All capitalized
terms used herein and not otherwise defined herein shall have the same meanings
as assigned thereto in that certain Placement Agency Agreement, dated as of
December 18, 1997, by and between the Company and the Placement Agent.
NOW, THEREFORE, in consideration of the premises and the mutual
agreements set forth herein and for other good and valuable consideration, the
receipt and sufficiency of which is hereby acknowledged, the parties hereto
agree as follows:
1. Issuance of Warrants; Form of Warrant. On December 19, 1997
(the "Issue Date") the Company shall issue, sell and deliver the
Warrants to the Placement Agent or its bona fide officers or principals.
The form of the Warrant and of the form of Election to Purchase to be
attached thereto shall be substantially as set forth on Exhibit A
attached hereto. The Warrants shall be executed on behalf of the Company
by the manual or facsimile signature of the present or any future
Chairman or Co-Chairman, President or any Vice President of the Company,
under its corporate seal, affixed or in facsimile, and attested by the
manual or facsimile signature of the present or any future Secretary or
Assistant Secretary of the Company.
2. Registration. The Warrants shall be numbered and shall be
registered in a Warrant register (the "Warrant Register"). The Company
shall be entitled to treat the registered holder of any Warrant on the
Warrant Register as the owner in fact thereof for all purposes and shall
not be bound to recognize any equitable or other claim to or interest in
such Warrant on the part of any other person, and shall not be liable
for any registration or transfer of Warrants which are registered or are
to be registered in the name of a fiduciary or the nominee of a
fiduciary unless made with the actual knowledge that a fiduciary or
nominee is committing a breach of trust in requesting such registration
or transfer, or with such knowledge of such facts that its participation
therein amounts to bad faith. The Warrants shall be registered initially
in the name of the Placement Agent in such denominations as the
Placement Agent may request in writing to the Company; provided,
however, that the Placement Agent may designate that all or a portion of
the Warrants be issued in varying amounts directly to its bona fide
officers, principals or employees and not to itself. Such designation
will only be made by the Placement Agent if it determines that such
issuances would not violate the interpretation of the Board of Governors
of the National Association of Securities Dealers, Inc. (the "NASD"),
relating to the review of corporate financing arrangements.
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3. Transfer of Warrants. The Holder of a Warrant Certificate, by
its acceptance thereof, acknowledges that the Warrants are "restricted
securities" which have not been registered under the Securities Act of
1933, as amended (the "Securities Act"), and represents that the
Warrants are being acquired as an investment and not with a view to the
distribution thereof and will not transfer such Warrants, except to bona
fide officers, directors, shareholders, principals, employees or
registered representatives of the Holder upon written request to the
Company delivered in accordance with Section 12 hereof and upon delivery
of the Warrant Certificate duly endorsed by the Holder or by his duly
authorized attorney or representative, or accompanied by proper evidence
of succession, assignment or authority to transfer. In all cases of
transfer by an attorney, the original power of attorney, duly approved,
or an official copy thereof, duly certified, shall be deposited with the
Company. In case of transfer by executors, administrators, guardians or
other legal representatives, duly authenticated evidence of their
authority shall be produced, and may be required to be deposited with
the Company in its discretion. Upon any registration of transfer, the
Company shall deliver a new Warrant or Warrants to the persons entitled
thereto. The Warrants may be exchanged at the option of the Holder
thereof for other Warrants of different denominations, of like tenor and
representing in the aggregate the right to purchase a like number of
shares of Common Stock upon surrender to the Company or its duly
authorized agent. The Company may require payment of a sum sufficient to
cover all taxes and other governmental charges that may be imposed in
connection with any voluntary transfer, exchange or other disposition of
the Warrants. Notwithstanding the foregoing, the Company shall have no
obligation to cause Warrants to be transferred on its books to any
person, if such transfer would violate the Securities Act or applicable
state securities laws.
4. Exercise of Warrants.
(a) Term of Warrants; Exercise of Warrants. Each Warrant
entitles the registered owner thereof to purchase one Share at a
purchase price equal to $2.6875 per Share (as adjusted from time to time
pursuant to the provisions hereof, the "Exercise Price"). The Exercise
Price and the Shares issuable upon exercise of Warrants are subject to
adjustment upon the occurrence of certain events, pursuant to the
provisions of Section 8 of this Agreement. Subject to the provisions of
this Agreement, each Holder shall have the right, which may be exercised
for a period commencing on the Issue Date and ending three years from
the Issue Date, to purchase from the Company (and the Company shall
issue and sell to such Holder) the number of fully paid and
nonassessable shares (rounded up to the nearest full share) specified in
such Warrants, upon surrender to the Company, or its duly authorized
agent, of such Warrants, with the form of Election to Purchase attached
thereto duly completed and signed, with signatures guaranteed by a
member firm of a national securities exchange, a commercial bank (not a
savings bank or savings and loan association) or trust company located
in the United States or a member of the NASD and upon payment to the
Company of the Exercise Price, as adjusted in accordance with the
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provisions of Section 8 of this Agreement, for the number of Shares in
respect of which such Warrants are then exercised. Payment of such
Exercise Price may be made in cash or by certified check or official
bank check payable to the order of the Company. No adjustment shall be
made for any dividends on any Shares issuable upon exercise of a
Warrant. Upon each surrender of Warrants and payment of the Exercise
Price as aforesaid, the Company shall issue and cause to be delivered
with all reasonable dispatch (and in no event more than three business
days from the date of each such surrender and payment) to or upon the
written order of the Holder of such Warrants and in such name or names
as such Holder may designate, a certificate or certificates for the
number of full Shares so purchased upon the exercise of such Warrants.
Such certificate or certificates shall be deemed to have been issued and
any person so designated to be named therein shall be deemed to have
become a holder of record of such Shares as of the date of the surrender
of Warrants and payment of the Exercise Price as aforesaid; provided,
however, that if, at the date of surrender of such Warrants and payment
of such Exercise Price, the transfer books for the Common Stock or other
class of securities issuable upon the exercise of such Warrants shall be
closed, the certificates for the Shares shall be issuable as of the date
on which such books shall next be opened and until such date the Company
shall be under no duty to deliver any certificate for such Shares;
provided, further, however, that the transfer books of record, unless
otherwise required by law, shall not be closed at any one time for a
period longer than twenty (20) days. The rights of purchase represented
by the Warrants shall be exercisable, at the election of the Holder(s)
thereof, either in full or from time to time in part and, in the event
that any Warrant is exercised in respect of less than all of the Shares
issuable upon such exercise, a new Warrant or Warrants will be issued
for the remaining number of Shares specified in the Warrant so
surrendered.
(b) Exercise by Surrender of Warrant. In addition to the
method of payment set forth in subsection (a) above and in lieu of any
cash payment required thereunder, the Holder of the Warrants shall have
the right at any time and from time to time to exercise the Warrants in
full or in part by surrendering the Warrant in the manner specified in
the Warrant in exchange for the number of Shares equal to the product of
(x) the number of shares as to which the Warrants are being exercised
multiplied by (y) a fraction, the numerator of which is the Market Price
(as defined below) of the Shares less the Exercise Price and the
denominator of which is such Market Price. Solely for the purposes of
this paragraph, Market Price shall be the closing price of the Common
Stock on the day preceding the date on which the Election to Purchase is
sent to the Company. Upon each surrender of Warrants, the Company shall
issue and cause to be delivered with all reasonable dispatch (and in no
event more than three business days from the date of each such
surrender) to or upon the written order of the Holder of such Warrants
and in such name or names as such Holder may designate, a certificate or
certificates for the number of full Shares due such
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Holder as calculated pursuant to the foregoing formula. The rights of
purchase represented by the Warrants shall be exercisable, at the
election of the Holder(s) thereof, either in full or from time to time
in part and, in the event that any Warrant is exercised in respect of
less than all of the Shares issuable upon such exercise, a new Warrant
or Warrants will be issued for the remaining number of Shares specified
in the Warrant so surrendered.
5. Payment of Taxes. The Company will pay all documentary stamp
taxes, if any, attributable to the issuance of Shares upon the exercise
of Warrants; provided, however, that the Company shall not be required
to pay any tax or taxes which may be payable in respect of any transfer
involved in the issue or delivery of any certificates for Shares in a
name other than that of the Holder of Warrants in respect of which such
Shares are issued.
6. Mutilated or Missing Warrants. In case any of the Warrants
shall be mutilated, lost, stolen or destroyed, the Company shall issue
and deliver in exchange and substitution for and upon cancellation of
the mutilated Warrant, or in lieu of and substitution for the Warrant
lost, stolen or destroyed, a new Warrant of like tenor and representing
an equivalent right or interest, but only upon receipt of evidence
reasonably satisfactory to the Company of such mutilation, loss, theft
or destruction of such Warrant and indemnity, if requested, reasonably
satisfactory to the Company. An applicant for such substitute Warrants
shall also comply with such other reasonable regulations and pay such
other reasonable charges and expenses as the Company may prescribe.
7. Reservation of Shares, etc. There have been reserved, and the
Company shall at all times keep reserved, out of the authorized and
unissued Common Stock of the Company, a number of shares of Common Stock
sufficient to provide for the exercise of the rights of purchase
represented by the outstanding Warrants. ChaseMellon Shareholder
Services, transfer agent for the Common Stock (the "Transfer Agent"),
and every subsequent transfer agent, if any, for the Company's
securities issuable upon the exercise of the Warrants will be
irrevocably authorized and directed at all times to reserve such number
of authorized and unissued shares as shall be required for such purpose.
The Company will keep a copy of this Agreement on file with the Transfer
Agent and with every subsequent transfer agent for any shares of the
Company's securities issuable upon the exercise of the Warrants. The
Company will supply the Transfer Agent or any subsequent transfer agent
with duly executed certificates for such purpose. All Warrants
surrendered in the exercise of the rights thereby evidenced shall be
canceled, and such canceled Warrants shall constitute sufficient
evidence of the number of Shares that have been issued upon the exercise
of such Warrants.
8. Adjustments of Exercise Price and Number of Shares. The
Exercise Price and the number and kind of securities issuable upon
exercise of each Warrant shall be subject to adjustment from time to
time upon the happening of certain events, as follows:
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(a) In case the Company shall (i) declare a dividend on
its Common Stock in shares of Common Stock or make a distribution in
shares of Common Stock, (ii) subdivide its outstanding shares of Common
Stock, (iii) combine its outstanding shares of Common Stock into a
smaller number of shares of Common Stock or (iv) issue by
reclassification of its shares of Common Stock other securities of the
Company (including any such reclassification in connection with a
consolidation or merger in which the Company is the continuing
corporation), the number of Shares purchasable upon exercise of each
Warrant immediately prior thereto shall be adjusted so that the Holder
of each Warrant shall be entitled to receive the kind and number of
Shares or other securities of the Company which he would have owned or
have been entitled to receive after the happening of any of the events
described above, had such Warrant been exercised immediately prior to
the happening of such event or any record date with respect thereto. An
adjustment made pursuant to this paragraph (a) shall become effective
immediately after the effective date of such event retroactive to
immediately after the record date, if any, for such event.
(b) In case the Company shall issue rights, options or
warrants to all holders of its shares of Common Stock, without any
charge to such holders, entitling them (for a period expiring within 45
days after the record date mentioned below in this paragraph (b)) to
subscribe for or to purchase shares of Common Stock at a price per share
that is lower at the record date mentioned below than the then current
market price per share of Common Stock (as defined in paragraph (d)
below), the number of Shares thereafter purchasable upon exercise of
each Warrant shall be determined by multiplying the number of Shares
theretofore purchasable upon exercise of each Warrant by a fraction, of
which the numerator shall be the number of shares of Common Stock
outstanding on such record date plus the number of additional shares of
Common Stock offered for subscription or purchase, and of which the
denominator shall be the number of shares of Common Stock outstanding on
such record date plus the number of shares which the aggregate offering
price of the total number of shares of Common Stock so offered would
purchase at the then current market price per share of Common Stock.
Such adjustment shall be made whenever such rights, options or warrants
are issued, and shall become effective retroactively to immediately
after the record date for the determination of shareholders entitled to
receive such rights, options or warrants.
(c) In case the Company shall distribute to all holders of
its shares of Common Stock shares of stock other than Common Stock or
evidences of its indebtedness or assets (excluding cash dividends
payable out of consolidated earnings or retained earnings and dividends
or distributions referred to in paragraph (a) above) or rights, options
or warrants or convertible or exchangeable securities containing the
right to subscribe for or purchase shares of Common Stock (excluding
those referred to in paragraph (b) above), then in each case the number
of Shares thereafter issuable upon the exercise of each Warrant shall be
determined by multiplying the number of Shares theretofore issuable upon
the exercise of each Warrant, by a fraction, of which the numerator
shall be the current market price per share of Common Stock (as defined
in
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paragraph (d) below) on the record date mentioned below in this
paragraph (c), and of which the denominator shall be the current market
price per share of Common Stock on such record date, less the then fair
value (as determined in good faith by the Board of Directors of the
Company, whose determination shall be conclusive) of the portion of the
shares of stock other than Common Stock or assets or evidences of
indebtedness so distributed or of such subscription rights, options or
warrants, or of such convertible or exchangeable securities applicable
to one share of Common Stock. Such adjustment shall be made whenever any
such distribution is made, and shall become effective on the date of
distribution retroactive to immediately after the record date for the
determination of shareholders entitled to receive such distribution.
(d) For the purpose of any computation under paragraphs
(b) and (c) of this Section 8, the current market price per share of
Common Stock at any date (the "Current Market Price") shall be the
average of the daily closing bid prices for the five (5) consecutive
trading days before the date of such computation. The closing price for
each day shall be the last reported sale price or, in case no such
reported sale takes place on such day, the average of the closing bid
and asked prices for such day, in either case on the principal national
securities exchange on which the shares are listed or admitted to
trading, or if they are not listed or admitted to trading on any
national securities exchange, but are traded in the over-the-counter
market, the closing sale price of the Common Stock or, in case no sale
is publicly reported, the average of the representative closing bid and
asked quotations for the Common Stock on the Nasdaq system or any
comparable system, or if the Common Stock is not listed on the Nasdaq
system or a comparable system, the closing sale price of the Common
Stock or, in case no sale is publicly reported, the average of the
closing bid and asked prices as furnished by two members of the NASD
selected from time to time by the Company for that purpose.
(e) No adjustment in the number of Shares purchasable
hereunder shall be required unless such adjustment would require an
increase or decrease of at least one percent (1%) in the number of
Shares purchasable upon the exercise of each Warrant; provided, however,
that any adjustments which by reason of this paragraph (e) are not
required to be made shall be carried forward and taken into account in
any subsequent adjustment but not later than three years after the
happening of the specified event or events. All calculations shall be
made to the nearest one thousandth of a share.
(f) Whenever the number of Shares purchasable upon the
exercise of each Warrant is adjusted, as herein provided, the Exercise
Price shall be adjusted by multiplying the Exercise Price in effect
immediately prior to such adjustment by a fraction, of which the
numerator shall be the number of Shares purchasable upon the exercise of
each Warrant immediately prior to such adjustment, and of which the
denominator shall be the number of Shares so purchasable immediately
thereafter.
(g) For the purpose of this Section 8, the term "shares of
Common Stock" shall mean (i) the class of stock designated as the Common
Stock of the Company
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at the date of this Agreement or (ii) any other class of stock resulting
from successive changes or reclassifications of such shares consisting
solely of changes in par value, or from no par value to par value, or
from par value to no par value. In the event that at any time, as a
result of an adjustment made pursuant to paragraph (a) above, the
Holders shall become entitled to purchase any shares of capital stock of
the Company other than shares of Common Stock, thereafter the number of
such other shares so purchasable upon exercise of each Warrant and the
Exercise Price of such shares shall be subject to adjustment from time
to time in a manner and on terms as nearly equivalent as practicable to
the provisions with respect to the Shares contained in paragraphs (a)
through (f), inclusive, and paragraphs (h) through (m), inclusive, of
this Section 8, and the provisions of Sections 4, 5, 7 and 10, with
respect to the Shares, shall apply on like terms to any such other
shares.
(h) Upon the expiration of any rights, options, warrants
or conversion rights or exchange privileges, if any thereof shall not
have been exercised, the Exercise Price and the number of shares of
Common Stock purchasable upon the exercise of each Warrant shall, upon
such expiration, be readjusted and shall thereafter be such as it would
have been had it originally been adjusted (or had the original
adjustment not been required, as the case may be) as if (i) the only
shares of Common Stock so issued were the shares of Common Stock, if
any, actually issued or sold upon the exercise of such rights, options,
warrants or conversion rights or exchange privileges and (ii) such
shares of Common Stock, if any, were issued or sold for the
consideration actually received by the Company upon such exercise plus
the aggregate consideration, if any, actually received by the Company
for the issuance, sale or grant of all of such rights, options, warrants
or conversion rights or exchange privileges whether or not exercised;
provided, however, that no such readjustment shall have the effect of
decreasing the number of shares issuable upon the exercise of each
Warrant or increasing the Exercise Price by an amount in excess of the
amount of the adjustment initially made in respect of the issuance, sale
or grant of such rights, options, warrants or conversion rights or
exchange privileges.
(i) The Company may, at its option at any time during the
term of the Warrants, reduce the then current Exercise Price to any
amount deemed appropriate by the Board of Directors of the Company.
(j) Whenever the number of Shares issuable upon the
exercise of each Warrant or the Exercise Price of such Shares is
adjusted, as herein provided, the Company shall promptly mail by first
class mail, postage prepaid, to each Holder, notice of such adjustment
or adjustments. The Company shall retain a firm of independent public
accountants (who may be the regular accountants employed by the Company)
to make any computation required by this Section 8 and shall cause such
accountants to prepare a certificate setting forth the number of Shares
issuable upon the exercise of each Warrant and the Exercise Price of
such Shares after such adjustment, setting forth a brief statement of
the facts requiring such adjustment and setting forth the computation by
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which such adjustment was made. Such certificate shall be conclusive as
to the correctness of such adjustment and each Holder shall have the
right to inspect such certificate during reasonable business hours.
(k) Except as provided in this Section 8, no adjustment in
respect of any dividends shall be made during the term of a Warrant or
upon the exercise of a Warrant.
(l) In case of any consolidation of the Company with or
merger of the Company with or into another corporation or in case of any
sale or conveyance to another corporation of the property of the Company
as an entirety or substantially as an entirety, the Company or such
successor or purchasing corporation (or an affiliate of such successor
or purchasing corporation), as the case may be, agrees that each Holder
shall have the right thereafter upon payment of the Exercise Price in
effect immediately prior to such action to purchase upon exercise of
each Warrant the kind and amount of shares and other securities and
property (including cash) which he would have owned or have been
entitled to receive after the happening of such consolidation, merger,
sale or conveyance had such Warrant been exercised immediately prior to
such action except as may be necessary to account for such a transaction
as a "pooling of interests," in which case the Warrant may be exchanged
for or converted into a warrant to purchase common stock of the
surviving corporation on economically equivalent terms. The provisions
of this paragraph (l) shall similarly apply to successive
consolidations, mergers, sales or conveyances.
(m) Notwithstanding any adjustment in the Exercise Price
or the number or kind of shares purchasable upon the exercise of the
Warrants pursuant to this Agreement, certificates for Warrants issued
prior or subsequent to such adjustment may continue to express the same
price and number and kind of Shares as are initially issuable pursuant
to this Agreement.
9. Reserved.
10. Registration Rights.
(a) Demand Registration Rights. The Company covenants and
agrees with the Placement Agent and any other or subsequent Holders of
the Registrable Securities (as defined in paragraph (f) of this Section
10) that, subject to the availability of audited financial statements
which would comply with Regulation S-X under the Securities Act, upon
written request of the then Holder(s) of at least a majority of the
Warrants or the Registrable Securities, or both, which were originally
issued to the Placement Agent or its designees, made at any time within
the period commencing on the Issue Date and ending five years after the
Issue Date, the Company will file as promptly as practicable and, in any
event, within 60 days after receipt of such written request, at its
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expense (other than the fees of counsel and sales commissions for such
Holders), no more than once, a post-effective amendment (the
"Amendment") to a registration statement, or a new registration
statement which shall be on Form S-3 if the Company is then eligible to
use Form S-3, or a Regulation A Offering Statement (an "Offering
Statement") under the Securities Act, registering or qualifying the
Registrable Securities for sale. Within fifteen (15) days after
receiving any such notice, the Company shall give notice to the other
Holders of the Registrable Securities advising that the Company is
proceeding with such Amendment, registration statement or Offering
Statement and offering to include therein the Registrable Securities of
such Holders. The Company shall not be obligated to any such other
Holder unless such other Holder shall accept such offer by notice in
writing to the Company within ten (10) days thereafter. The Company will
use its best efforts, through its officers, directors, auditors and
counsel in all matters necessary or advisable, to file and cause to
become effective such Amendment, registration statement or Offering
Statement as promptly as practicable and for a period of nine months
thereafter to reflect in the Amendment, registration statement or
Offering Statement financial statements which are prepared in accordance
with Section 10(a)(3) of the Securities Act and any facts or events
arising that, individually, or in the aggregate, represent a fundamental
and/or material change in the information set forth in the Amendment,
registration statement or Offering Statement to enable any Holders of
the Warrants to either sell such Warrants or to exercise such Warrants
and sell Shares, or to enable any holders of Shares to sell such Shares,
during said nine-month period. If any registration pursuant to this
paragraph (a) is an underwritten offering, the Holders of a majority of
the Registrable Securities to be included in such registration shall be
entitled to select the underwriter or managing underwriter (in the case
of a syndicated offering) of such offering, subject to the Company's
approval which shall not be unreasonably withheld.
(b) Piggyback Registration Rights. The Company covenants
and agrees with the Placement Agent and any other Holders or subsequent
Holders of the Registrable Securities that if, at any time within the
period commencing on the Issue Date and ending five years after the
Issue Date, it proposes to file a registration statement or Offering
Statement with respect to any class of equity or equity-related security
under the Securities Act in a primary registration on behalf of the
Company and/or in a secondary registration on behalf of holders of such
securities and the registration form or Offering Statement to be used
may be used for registration of the Registrable Securities, the Company
will give prompt written notice (which, in the case of a registration
statement or notification pursuant to the exercise of demand
registration rights other than those provided in Section 10(a) of this
Agreement, shall be within ten (10) business days after the Company's
receipt of notice of such exercise and, in any event, shall be at least
30 days prior to such filing) to the Holders of Registrable Securities
(regardless of whether some of the Holders shall have theretofore
availed themselves of the right provided in Section 10(a) of this
Agreement) at the addresses appearing on the records of the Company of
its intention to file a registration statement or Offering Statement and
will offer to include in such registration statement or Offering
Statement all but not less than
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20% of the Registrable Securities and limited, in the case of a
Regulation A offering, to the amount of the available exemption, subject
to paragraphs (i) and (ii) of this paragraph (b), such number of
Registrable Securities with respect to which the Company has received
written requests for inclusion therein within ten (10) days after the
giving of notice by the Company. All registrations requested pursuant to
this paragraph (b) are referred to herein as "Piggyback Registrations".
All Piggyback Registrations pursuant to this paragraph (b) will be made
solely at the Company's expense. This paragraph is not applicable to a
registration statement filed by the Company with the Commission on Form
S-4 or any successor form.
(i) Priority on Primary Registrations. If a
Piggyback Registration includes an underwritten primary
registration on behalf of such Company and the underwriter(s) for
such offering determines in good faith and advises the Company in
writing that in its/their opinion the number of Registrable
Securities requested to be included in such registration exceeds
the number that can be sold in such offering without materially
adversely affecting the distribution of such securities by the
Company, the Company will include in such registration (A) first,
the securities that the Company proposes to sell and (B) second,
securities of the holders of other securities requesting
registration, including the Registrable Securities requested to
be included in such registration, apportioned pro rata.
(ii) Priority on Secondary Registrations. If
a Piggyback Registration consists only of an underwritten
secondary registration on behalf of holders of securities of the
Company (other than pursuant to Section 10(a)), and the
underwriter(s) for such offering advises the Company in writing
that in its/their opinion the number of Registrable Securities
requested to be included in such registration exceeds the number
which can be sold in such offering without materially adversely
affecting the distribution of such securities by the Company, the
Company will include in such registration the securities
requested to be included therein by the holders requesting such
registration (including the Registrable Securities requested to
be included in such registration) pro rata among all such
holders.
Notwithstanding the foregoing, if any such
underwriter shall determine in good faith and advise the Company
in writing that the distribution of the Registrable Securities
requested to be included in the registration concurrently with
the securities being registered by the Company would materially
adversely affect the distribution of such securities by the
Company, then the Holders of such Registrable Securities shall
delay their offering and sale for such period ending on the
earliest of (1) 90 days following the effective date of the
Company's registration statement, (2) the day upon which the
underwriting syndicate, if any, for such offering shall have been
disbanded or, (3) such date as the Company, managing underwriter
and Holders of Registrable Securities shall otherwise agree. In
the event of such delay, the Company shall file such
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supplements, post-effective amendments and take any such other
steps as may be necessary to permit such Holders to make their
proposed offering and sale for a period of 120 days immediately
following the end of such period of delay. If any party
disapproves of the terms of any such underwriting, it may elect
to withdraw therefrom by written notice to the Company, the
underwriter, and the Placement Agent. Notwithstanding the
foregoing, the Company shall not be required to file a
registration statement to include Shares pursuant to Sections
10(a) or 10(b) if independent counsel, reasonably satisfactory to
counsel for the Company and counsel for the Placement Agent,
renders an opinion to the Company that the Shares proposed to be
disposed of may be transferred pursuant to the provisions of Rule
144 under the Securities Act or otherwise without registration
under the Securities Act.
(c) Other Registration Rights. In addition to the rights
above provided, the Company will cooperate with the then Holders of the
Registrable Securities in preparing and signing any registration
statement or Offering Statement, in addition to the registration
statements and Offering Statements discussed above, required in order to
sell or transfer the Registrable Securities and will supply all
information required therefor, but such additional registration
statement or Offering Statement, shall be at the then Holders' cost and
expense; provided, however, that if the Company elects to register or
qualify additional shares of Common Stock, the cost and expense of such
registration statement or Offering Statement will be pro rated between
the Company and the Holders of the Registrable Securities according to
the aggregate sales price of the securities being issued.
Notwithstanding the foregoing, the Company will not be required to file
a registration statement or Offering Statement pursuant to this
paragraph (c), (i) at a time when the audited financial statements
required to be included therein are not available, which time shall be
limited to the period commencing 45 days after the end of the Company's
last fiscal year and ending 90 days after the end of such fiscal year,
(ii) within 60 days after completion of a public offering by the Company
of any of its Common Stock or equity-related securities or (iii) if, in
the written opinion of an investment bank selected by the Company and
reasonably satisfactory to the Holders, it would adversely impact the
Company in its capital raising plans or otherwise (in which latter case
filing may be delayed no longer than 60 days).
(d) Action to be Taken by the Company. In connection with
the registration of Registrable Securities in accordance with paragraphs
(a), (b) or (c) of this Section 10, the Company agrees to:
(i) Bear the expenses of any registration or
qualification under paragraphs (a) or (b) of this Section 10,
including, but not limited to, legal, accounting and printing
fees; provided, however, that in no event shall the Company be
obligated to pay (A) any fees and disbursements of special
counsel for Holders of Registrable Securities, or (B) any
underwriters' discount or commission in respect of such
Registrable Securities, (C) any stock transfer taxes
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attributable to the sale of the Registrable Securities, or (D)
upon the exercise of any demand registration right provided for
in paragraph (a) of this Section 10, the cost of any liability or
similar insurance required by an underwriter, to the extent that
such costs are attributable solely to the offering of such
Registrable Securities, payment of which shall, in each case, be
the sole responsibility of the Holders of the Registrable
Securities.
(ii) Use its best efforts to register or
qualify the Registrable Securities for offer or sale under state
securities or Blue Sky laws of such jurisdictions in which the
Placement Agent or such Holders shall reasonably request,
provided, however, that no qualification shall be required in any
jurisdiction where, as a result thereof, the Company would be
subject to service of general process or to taxation as a foreign
corporation doing business in such jurisdiction to which it is
not then subject, and to do any and all other acts and things
which may be necessary or advisable to enable the holders to
consummate the proposed sale, transfer or other disposition of
such securities in any jurisdiction; and
(iii) Enter into a cross-indemnity agreement,
in customary form, with each underwriter, if any, and each holder
of securities included in such Amendment, registration statement
or Offering Statement.
(e) Action to be Taken by the Holders. In connection with
the registration of Registrable Securities in accordance with paragraphs
(a), (b) or (c) of this Section 10, the Company's obligation shall be
conditioned as to each such public offering upon a timely receipt by the
Company in writing of:
(i) Information as to the terms of such
public offering furnished by or on behalf of each Holder
intending to make a public offering of his, her or its
Registrable Securities; and
(ii) Such other information as the Company
may reasonably require from such Holders, or any underwriter for
any of them, for inclusion in such registration statement or
Notification on Form 1-A.
(f) For purposes of this Section 10, (i) the term "Holder"
shall include holders of Shares, and (ii) the term "Registrable
Securities" shall mean the Shares, if issued.
(g) Without limiting or qualifying any section or
provision of this Warrant Agreement, or any Holder's rights hereunder,
the Company hereby agrees to file a registration statement registering
for resale all of the Shares as soon as practicable after the Issue
Date, and further agrees that such registration will occur without
further notice on the part of the Company and without further action on
the part of the original Holder
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of the Warrants.
11. Notices to Holders.
(a) Nothing contained in this Agreement or in any of the
Warrants shall be construed as conferring upon the Holders thereof the
right to vote or to receive dividends or to consent or to receive notice
as shareholders in respect of the meetings of shareholders or the
election of directors of the Company or any other matter, or any rights
whatsoever as shareholders of the Company; provided, however, that in
the event that a meeting of shareholders shall be called to consider and
take action on a proposal for the voluntary dissolution of the Company,
other than in connection with a consolidation, merger or sale of all, or
substantially all, of its property, assets, business and good will as an
entirety, then and in that event the Company shall cause a notice
thereof to be sent by first-class mail, postage prepaid, at least twenty
(20) days prior to the date fixed as a record date or the date of
closing the transfer books in relation to such meeting, to each
registered Holder of Warrants at such Holder's address appearing on the
Warrant Register; but failure to mail or to receive such notice or any
defect therein or in the mailing thereof shall not affect the validity
of any action taken in connection with such voluntary dissolution.
(b) In the event the Company intends to make any
distribution on its Common Stock (or other securities which may be
issuable in lieu thereof upon the exercise of Warrants), including,
without limitation, any such distribution to be made in connection with
a consolidation or merger in which the Company is the continuing
corporation, or to issue subscription rights or warrants to holders of
its Common Stock, the Company shall cause a notice of its intention to
make such distribution to be sent by first-class mail, postage prepaid,
at least twenty (20) days prior to the date fixed as a record date or
the date of closing the transfer books in relation to such distribution,
to each registered Holder of Warrants at such Holder's address appearing
on the Warrant Register, but failure to mail or to receive such notice
or any defect therein or in the mailing thereof shall not affect the
validity of any action taken in connection with such distribution.
12. Notices. Any notice pursuant to this Agreement to be given or
made by the Holder of any Warrant and/or the holder of any Share to or
on the Company shall be sufficiently given or made if sent by
first-class mail, postage prepaid, addressed as follows or to such other
address as the Company may designate by notice given in accordance with
this Section 12, to the Holders of Warrants and/or the holders of
Shares:
RIDE, INC.
0000 000xx Xxxxxx Xxxxxxxxx
Xxxxxxx, Xxxxxxxxxx 00000
Attention: Chief Financial Officer
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Notices or demands authorized by this Agreement to be given or
made by the Company to or on the Holder of any Warrant and/or the holder
of any Share shall be sufficiently given or made (except as otherwise
provided in this Agreement) if sent by first-class mail, postage
prepaid, addressed to such Holder or such holder of Shares at the
address of such Holder or such holder of Shares as shown on the Warrant
Register or the books of the Company, as the case may be.
13. Governing Law. This Agreement and each Warrant issued
hereunder shall be governed by and construed in accordance with the
substantive laws of the State of California. The Company hereby agrees
to accept service of process by notice given to it pursuant to the
provisions of Section 12.
14. Counterparts. This Agreement may be executed in any number of
counterparts, each of which so executed shall be deemed to be an
original; but such counterparts together shall constitute but one and
the same instrument.
IN WITNESS WHEREOF, the parties hereto have caused this Agreement
to be duly executed as of the day, month and year first above written.
RIDE, INC.
By:
-------------------------------
Name: G. Xxxxx Xxxxxxx
Title: Senior Vice President and CFO
XXXXXX CAPITAL GROUP, LTD.
By:
-------------------------------
Name: Xxxxxxx X. Xxxxxx
Title: President
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EXHIBIT A
No. 1 83,720 Warrants
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
COMPANY HAS RECEIVED AN OPINION OF COUNSEL, WHICH OPINION IS SATISFACTORY TO THE
COMPANY, TO THE EFFECT THAT SUCH REGISTRATION IS NOT REQUIRED UNDER THE
SECURITIES ACT.
RIDE, INC.
Warrant Certificate
THIS CERTIFIES THAT for value received Xxxxxx Capital Group,
Ltd., or registered assigns, is the owner of the number of Warrants set forth
above, each of which entitles the owner thereof to purchase one fully paid and
nonassessable share of common stock, no par value (the "Common Stock"), of RIDE,
INC., a Washington corporation (the "Company"), at the purchase price equal to
the Exercise Price, as defined in the Warrant Agreement, dated as of December
18, 1997 (the "Warrant Agreement"), between the Company and Xxxxxx Capital
Group, Ltd., upon presentation and surrender of this Warrant Certificate with
the Form of Election to Purchase duly executed. The number of Warrants evidenced
by this Warrant Certificate (and the number of shares which may be purchased
upon exercise thereof, rounded up to the nearest full share) set forth above,
and the Exercise Price per share set forth above, are the number and Exercise
Price as of the date of original issuance of the Warrants, based on the shares
of Common Stock of the Company as constituted at such date. As provided in the
Warrant Agreement, the Exercise Price and the number or kind of shares which may
be purchased upon the exercise of the Warrants evidenced by this Warrant
Certificate are, upon the happening of certain events, subject to modification
and adjustment.
This Warrant Certificate is subject to, and entitled to the
benefits of, all of the terms, provisions and conditions of the Warrant
Agreement, which Warrant Agreement is hereby incorporated herein by reference
and made a part hereof and to which Warrant Agreement reference is hereby made
for a full description of the rights, limitations of rights, duties and
immunities hereunder of the Company and the holders of the Warrant Certificates.
Copies of the Warrant Agreement are on file at the principal office of the
Company.
This Warrant Certificate, with or without other Warrant
Certificates, upon surrender at the principal office of the Company, may be
exchanged for another Warrant Certificate or Warrant Certificates of like tenor
and date evidencing Warrants entitling the holder to purchase a like aggregate
number of shares of Common Stock as the Warrants evidenced by the Warrant
Certificate or Warrant Certificates surrendered entitled such holder to
purchase. If
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this Warrant Certificate shall be exercised in part, the holder hereof shall
be entitled to receive upon surrender hereof another Warrant Certificate or
Warrant Certificates for the number of whole Warrants not exercised.
No holder of this Warrant Certificate shall be entitled to vote,
receive dividends, subscription rights or be deemed the holder of Common Stock
or any other securities of the Company which may at any time be issuable on the
exercise hereof for any purpose, nor shall anything contained in the Warrant
Agreement or herein be construed to confer upon the holder hereof, as such, any
of the rights of a stockholder of the Company or any right to vote for the
election of directors or upon any matter submitted to stockholders at any
meeting thereof, or to give or withhold consent to any corporate action (whether
upon any recapitalization, issue of stock, reclassification of stock, change of
par value or change of stock to no par value, consolidation, merger, conveyance,
or otherwise) or, except as provided in the Warrant Agreement, to receive notice
of meetings, until the Warrant or Warrants evidenced by this Warrant Certificate
shall have been exercised and the Shares shall have become deliverable as
provided in the Warrant Agreement.
If this Warrant shall be surrendered for exercise within any
period during which the transfer books for the Company's Common Stock or other
class of stock purchasable upon the exercise of this Warrant are closed for any
purpose, the Company shall not be required to make delivery of certificates for
shares purchasable upon such exercise until the date of the reopening of said
transfer books, provided, however, that such books shall not be closed for
longer than a 20-day period.
IN WITNESS WHEREOF, THE COMPANY has caused the signature (or
facsimile signature) of its President and its Secretary or Assistant Secretary
to be printed hereon and its corporate seal (or facsimile) to be printed hereon.
Dated: December 18, 1997
RIDE, INC.
By:
-------------------------------
Name: G. Xxxxx Xxxxxxx
Title: Senior Vice President and CFO
Attest:
By:
------------------------------
Name:
Title:
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FORM OF
ASSIGNMENT
(To be executed by the registered holder if such holder desires to transfer the
Warrant Certificates.)
FOR VALUE RECEIVED __________________ hereby sells, assigns and
transfers unto this Warrant Certificate, together with all right, title and
interest therein, and does hereby irrevocably constitute and appoint
____________________, to transfer the within Warrant Certificate on the books of
the within-named Company, with full power of substitution.
Dated: ______________________, _____
-----------------------------------
Signature
Signature Guaranteed:
NOTICE
The signature of the foregoing Assignment must correspond to the
name as written upon the face of this Warrant Certificate in every particular,
without alteration or enlargement or any change whatsoever.
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FORM OF
ELECTION TO PURCHASE
(To be executed if holder desires to exercise the Warrant Certificate).
TO: RIDE, INC.
The undersigned hereby irrevocably elects to exercise Warrants
represented by this Warrant Certificate to purchase ______ shares of Common
Stock issuable upon the exercise of such Warrants and requests that certificates
for such shares be issued in the name of:
(Please insert social security, tax identification or other
identifying number)
----------------------------------
----------------------------------
----------------------------------
(Please print name and address)
If such number of Warrants shall not be all the Warrants evidenced by this
Warrant Certificate, a new Warrant Certificate for the balance remaining of such
Warrants shall be registered in the name of and delivered to:
Please insert social security, tax identification or other identifying number
----------------------------------
----------------------------------
----------------------------------
(Please print name and address)
Dated: _______________, ____
------------------------------
Signature
(Signature must conform in all
respects to name of holder as
specified on the face of this
Warrant Certificate)
Signature Guaranteed:
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