Exhibit 10.1

ASSET PURCHASE AGREEMENT

by and among
Fox Factory, Inc.
RFE Holding (Canada) Corp.,
RFE Holding (US) Corp.,
Fox Factory IP Holding Corp.,
1021039 B.C. Ltd.
and
Easton Cycling (USA), Inc.
and
Fox Factory Holding Corp.
(for the purposes of Section 10.1 only)
and
Chris Tutton, Derek Wills, Darren Mabbot and Stanley Fuller
(for the purposes of Section 10.2 only)

Dated as of December 5, 2014

    

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Table of Contents
 
 
 
 
Page

1.0
DEFINITIONS AND USAGE.
1

1.1
Definitions
1

1.2
Additional Definitions
8

1.3
Usage.
11

2.0
SALE AND TRANSFER OF ASSETS; CLOSING.
12

2.1
Assets to be Sold.
12

2.2
Excluded Assets
14

2.3
Consideration
15

2.4
Liabilities.
15

2.5
Allocation.
16

2.6
Closing
18

2.7
Closing Deliveries
18

2.8
Adjustment Procedure.
19

2.9
Escrow of Indemnification Escrow Amount
20

2.10
Earn-Out.
21

2.11
Third Party Consents
27

3.0
REPRESENTATIONS AND WARRANTIES OF SELLERS.
27

3.1
Organization and Good Standing.
27

3.2
Enforceability; Authority; No Conflict.
27

3.3
Ownership of Sellers
27

3.4
Residency
28

3.5
Financial Statements
28

3.6
Books and Records
28

3.7
Sufficiency of Assets
27

3.8
Owned Real Property
27

3.9
Leased Real Property
27

3.10
Title to Assets; Encumbrances
27

3.11
Condition of Facilities.
27

3.12
Accounts Receivable
30

3.13
Inventories
30

3.14
No Undisclosed Liabilities
30

3.15
Taxes.
30

3.16
No Material Adverse Effect
31

3.17
Employee Benefits.
31

3.18
Compliance With Laws.
33

3.19
Legal Proceedings
33

3.20
Absence of Certain Changes and Events
33

3.21
Contracts; No Defaults.
34

3.22
Insurance
35

3.23
Environmental Matters.
35

3.24
Employees.
36

3.25
Labor Disputes; Compliance.
37

3.26
Intellectual Property Assets.
38

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3.27
No Options
39

3.28
Certain Payments
39

3.29
Customers and Suppliers
39

3.30
Relationships with Related Persons
40

3.31
Brokers or Finders
40

3.32
Warranties
40

3.33
Competition Act
40

3.34
Limitation of Sellers’ Representation and Warranties
40

3.35
Disclosure
40

4.0
REPRESENTATIONS AND WARRANTIES OF BUYER.
41

4.1
Organization and Good Standing
41

4.2
Authority; No Conflict.
41

4.3
Certain Proceedings
41

4.4
Brokers or Finders
41

4.5
GST/HST Registration
41

5.0
CONDITIONS TO CLOSE
42

5.1
Conditions Precedent to the Obligations of Sellers
42

5.2
Conditions Precedent to the Obligations of Buyer
42

5.3
Conditions Precedent to the Obligations of Buyer and Sellers
42

6.0

PRE-CLOSING COVENANTS
43

6.1
Pre-Closing Covenants of Sellers
43

6.2
Pre-Closing Covenants of Buyer
44

7.0
COVENANTS.
44

7.1
Employees.
44

7.2
Tax Matters.
45

7.3
Payment of Other Retained Liabilities
45

7.4
Restrictions on Seller’s Dissolution
45

7.5
Removing Excluded Assets
45

7.6
Assistance in Proceedings
46

7.7
Non-competition, Non-solicitation, Non-disparagement and Confidentiality.
46

7.8
Customer and Other Business Relationships
47

7.9
Change of Name
47

7.10
Bulk Sales
47

7.11
Collection of Accounts Receivable.
47

7.12
Waiver and Release
48

7.13
Operation of the Business During the Earn-Out Period.
48

7.14
Individual Non-Competition Agreements
50

7.15
Certain Intellectual Property Matters.
50

7.16
Post-Closing Obligations
50

7.17
Sellers Insurance Policies
51

7.18
Further Assurances
51

8.0
INDEMNIFICATION; REMEDIES.
51

8.1
Survival
51

8.2
Indemnification and Reimbursement by Sellers.
51

8.3
Indemnification and Reimbursement by Buyers
52

8.4
Limitations on Amount – Sellers
52

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8.5
Limitations on Amount – Buyers
52

8.6
Time Limitations.
52

8.7
Third-Party Claims.
53

8.8
Procedures for Direct Claims
54

8.9
Calculation of Damages; Treatment of Indemnity Payments.
54

8.10
No Double Recovery
55

8.11
Exclusion of Other Remedies
55

9.0
SELLER REPRESENTATIVE
55

9.1
Seller Representative
55

10.0
GUARANTY.
56

10.1
Buyer Guaranty
56

10.2
Owner Guaranty
56

11.0
Termination
57

11.1
Termination Events
57

11.2
Effect of Termination
57

12.0
GENERAL PROVISIONS.
57

12.1
Expenses
57

12.2
Public Announcements
57

12.3
Notices
57

12.4
Enforcement of Agreement
58

12.5
Waiver; Remedies Cumulative
58

12.6
Entire Agreement
58

12.7
Assignments, Successors and No Third-Party Rights
58

12.8
Severability
59

12.9
Construction
59

12.10
Time of Essence
59

12.11
Governing Law
59

12.12
Exhibits and Schedules
59

12.13
Amendments and Waivers
59

12.14
Time Periods
59

12.15
Execution of Agreement
59

12.16
Appointment of Buyer Representative
60

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LIST OF SCHEDULES

Schedule 1.1(a)        Price Allocation Principles
Schedule 1.1(b)        Agreed Upon Accounting Procedures
Schedule 1.1(c)        Permitted Encumbrances
Schedule 1.1(d)        Working Capital Calculation
Schedule 2.1(a)(ii)     Tangible Personal Property in Taiwan
Schedule 2.1(b)(ii)     Tangible Personal Property in US    
Schedule 2.1(d)(ii)     Tangible Personal Property in Canada
Schedule 2.2(j)         Other Excluded Assets
Schedule 2.4(a)(viii)     Capital Leases
Schedule 2.4(b)(xvi)     Retained Liabilities Arising Out of Prior Acquisitions
or Dispositions of Seller
Schedule 2.7(a)(ix)     Consents and Governmental Authorizations
Schedule 3.1(a)         Jurisdictions of Incorporation and Qualification
Schedule 3.1(b)     Subsidiaries
Schedule 3.2(c)        Required Notices and Consents
Schedule 3.3         Ownership of Seller    
Schedule 3.5        Accounting Deviations
Schedule 3.7         Sufficiency of Assets
Schedule 3.9         Leased Real Property
Schedule 3.11(b)     Tangible Property Outside the Possession of Seller
Schedule 3.12         Accounts Receivable
Schedule 3.17(a)     Company Benefit Plans
Schedule 3.17(b)(i)     CA Seller Company Benefit Plans Legal Compliance
Schedule 3.17(c)(i)     US Seller Company Benefit Plans Legal Compliance
Schedule 3.17(c)(ii)     US Seller COBRA Compliance of Company Benefit Plans
Schedule 3.18(a)     Government Authorizations
Schedule 3.18(b)     Legal Requirements
Schedule 3.19         Legal Proceedings
Schedule 3.20         Absence of Certain Changes and Events
Schedule 3.21(a)     Contracts
Schedule 3.21(b)     Related Party Contracts
Schedule 3.22         Insurance
Schedule 3.23(a)     Environmental Matters not in Taiwan
Schedule 3.23(b)     Environmental Matters in Taiwan
Schedule 3.24(a)     Current Employees
Schedule 3.24(b)     Employment Agreements
Schedule 3.24(c)     Contracts with Current Employees
Schedule 3.24(d)     Legal Requirement Damages
Schedule 3.26(a)     Intellectual Property Rights and Licensed Rights
Schedule 3.26(b)    Infringement Actions
Schedule 3.26(c)     IP Perfection Actions
Schedule 3.26(d)     Confidentiality of Intellectual Property
Schedule 3.26(e)     Owned Computer Software
Schedule 3.26(f)     License Agreements
Schedule 3.29         Customers and Suppliers
Schedule 3.30        Related Party Relationships
Schedule 3.31         Brokers or Finders
Schedule 3.32        Warranties/Products
Schedule 8.2(a)(vii)     Indemnification by Seller

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ASSET PURCHASE AGREEMENT
This Asset Purchase Agreement (“Agreement”), dated as of December 5, 2014, is
made by and among Fox Factory, Inc., a California corporation (“Fox”), RFE
Holding (Canada) Corp., a corporation organized under the laws of British
Columbia (“CA Buyer”), RFE Holding (US) Corp., a Delaware corporation (“US
Buyer”), Fox Factory IP Holding Corp., an exempted company incorporated under
the laws of the Cayman Islands (“KY Buyer” and together with the Fox, CA Buyer
and US Buyer, each individually a “Buyer” and collectively the “Buyers”),
1021039 B.C. Ltd., a corporation amalgamated under the laws of British Columbia
(“CA Seller”), and Easton Cycling (USA), Inc., a Delaware corporation (“US
Seller” and together with CA Seller, each individually a “Seller” and
collectively the “Sellers”). Each of Buyers and Sellers are sometimes
individually referred to herein as a “Party” and collectively as the “Parties”.
Fox Factory Holding Corp., a Delaware corporation (“Buyer Guarantor”), and each
of Chris Tutton, Derek Wills, Darren Mabbot and Stanley Fuller (collectively,
the “Owner Guarantors”) are executing this Agreement solely for purposes of
their respective guaranties set forth in Sections 10.1 and 10.2.
RECITALS
WHEREAS, Sellers are engaged in the business of designing and manufacturing
cycling wheels, components, clothing, protective equipment and other bicycle
accessories (together, the “Business”);
WHEREAS, prior to the date hereof, Race Face Performance Products Inc., a
corporation organized under the laws of British Columbia (“RF Canada”), Easton
Cycling Canada Inc., a corporation organized under the laws of British Columbia
(“Easton Canada”), and 0999324 B.C. Ltd., a corporation organized under the laws
of British Columbia (together with RF Canada and Easton Canada, the “Legacy
Sellers”), amalgamated pursuant to the Business Corporations Act (British
Columbia) and continued under the name of CA Seller as the lawful successor to
the Business as operated by the Legacy Sellers (the “Amalgamation”).
WHEREAS, as a result of the Amalgamation, the CA Seller (i) is the sole parent
of the US Seller and (ii) owns two Taiwanese branch offices (the “TW Branches”).
WHEREAS, Buyers desire to purchase from Sellers, and Sellers desire to sell,
assign, transfer and convey to Buyers, the Acquired Assets (as defined herein)
for the consideration and upon the terms and conditions set forth herein (the
“Acquisition”).
The Parties, intending to be legally bound, hereby agree as follows:

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1.
DEFINITIONS AND USAGE.

1.1Definitions
. For purposes of this Agreement, the following terms and variations thereof
have the meanings specified to in this Section 1.1:
“Accounts Receivable” means (i) all trade accounts receivable of Sellers and
other rights of Sellers to payments from its customers and the full benefit of
all security for such accounts or rights to payment, including all trade
accounts receivable representing amounts receivable in respect of goods shipped
or products sold or services rendered, (ii) all other accounts or notes
receivable of Sellers and the full benefit of all security for such accounts or
notes, and (iii) any claim, remedy or other right related to any of the
foregoing.
“Agreed Value” shall mean the value of an Acquired Asset as agreed upon by Buyer
Representative and Seller Representative, or in the event such agreement is not
reached within thirty (30) calendar days following the Closing Date, the value
of the Acquired Asset as determined by or at the direction of the Independent
Accountant. The Parties agree to, and to cause the Independent Accountant to,
use the principals set forth on Schedule 1.1(a) when determining Agreed Value.
All costs relating to the Independent Accountant shall be shared equally by
Buyers, on one hand, and Sellers, on the other, and the results of the
determination shall be deemed conclusive in the absence of fraud, malfeasance,
or gross negligence.
“Agreed Upon Accounting Principles” means the accounting practices and
methodologies as set forth on Schedule 1.1(b); provided, that Seller
Representative and Buyer Representative may agree in writing to deviate from the
Agreed Upon Accounting Principles; provided, further, that if either Seller
Representative or Buyer Representative desires to amend or deviate from the
Agreed Upon Accounting Principles and the other Party does not agree with such
proposed amendment or deviation, then the Party desiring the amendment or
deviation shall instruct the Independent Accountants to (A) make a determination
of whether such proposed amendment or deviation from the Agreed Upon Accounting
Principles is more reasonable than not making the proposed amendment or
deviation (or the other Party’s proposed deviation or amendment) based upon
their independent review (which will be in accordance with the guidelines and
procedures set forth in this Agreement) and, at the Independent Accountants
discretion, a one-day conference concerning the amount in dispute, at which
conference each of Buyer Representative and Seller Representative shall have the
right to present its respective position with respect to such dispute and have
present its respective advisors, counsel and accountants, (B) render a final
resolution in writing to Buyer Representative and Seller Representative (which
final resolution shall be requested by Buyer Representative and Seller
Representative to be delivered not more than 30 days following submission of
such disputed matters), which shall be final, conclusive and binding on the
Parties with respect to the Agreed Upon Accounting Principles as finally
determined by the Independent Accountants, and (C) provide a written report to
Buyer Representative and Seller Representative, if requested by either of them,
which sets forth in reasonable detail the basis for the Independent Accountants’
final determination.
“Breach” means any breach of, or any inaccuracy in, any representation or
warranty or any breach of, or failure to perform or comply with, any covenant or
obligation, or any event which with the passing of time or the giving of notice,
or both, would constitute such a breach, inaccuracy or failure.
“BRG Sublicense” means that certain Agreement for the Sublicense and License of
Trademarks between BRG Sports, Inc. and 0999324 BC Ltd. dated as of June 17,
2014.
“BRG Payoff Amount” means $1,636,000, which is the aggregate amount outstanding
under that certain non-interest bearing promissory note made by 999324 B.C. Ltd.
in favor of BRG Sports, Inc.
“Business Day” means any day other than Saturday or Sunday, or any other day on
which banks in New York, New York are permitted or required to be closed.
“COBRA” means Part 6 of Subtitle B of Title 1 of ERISA, Section 4980B of the
Code and similar state Legal Requirements.

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“Code” means the Internal Revenue Code of 1986, as amended.
“Company Benefit Plans” means all of the following maintained by each Seller or
any ERISA Affiliate, or to which each Seller or any ERISA Affiliate contributes
or has any obligation to contribute, for the benefit of any current or former
employee, officer, director, consultant or independent contractor (or any
dependent of any such person) of such Seller or any ERISA Affiliate: (i) any
“employee benefit plan” within the meaning of Section 3(3) of ERISA; (ii) all
plans, agreements, policies, programs, or understandings providing for fringe
benefits or perquisites, and all bonus, incentive compensation, deferred
compensation, retention, change in control, profit sharing, stock, severance,
retirement, health, life, disability, sick leave, group insurance, employment,
stock option, stock purchase, stock appreciation right, performance share,
supplemental unemployment, layoff, vacation, holiday, or any other similar
plans, agreements, policies, programs or understandings (whether written or
oral, qualified or nonqualified), and (iii) any benefit plan administered for
the benefit of and/or covering the Current Employees or former employees
providing services to the Business, including, without limitation, all employee
benefit plans provided by a Professional Employer Organization.
“Consent” means any approval, consent, ratification, waiver, notice or other
authorization.
“Contract” means any agreement, contract, lease, consensual obligation, promise
or undertaking (whether written or oral and whether express or implied) pursuant
to which any Seller is a party or any of the Acquired Assets are legally bound,
including any and all amendments and modifications thereto.
“Current Assets” means all current assets of Sellers as of the Effective Time,
including Accounts Receivable and Inventories, to the extent included in the
Acquired Assets.
“Current Liabilities” means all current liabilities of Sellers as of the
Effective Time to the extent included in Assumed Liabilities.
“Disclosure Schedules” means the disclosure schedules of Sellers delivered by
Seller Representative to Buyer Representative concurrently with the execution
and delivery of this Agreement.
“Easton Product Liability Excess Insurance Policy” means that certain policy no.
B080116151U14 with Lloyds of London - UK (June 17, 2014 to June, 17, 2015)
regarding excess transition protection liability insurance for Easton
operational and product liability claims covered by the Easton Product Liability
Insurance Policy.
“Easton Product Liability Insurance Policy” means that certain policy no.
C444668414 with Lloyds c/o Ironshore Canada Ltd. (June 17, 2014 to June 17,
2019) regarding transition protection liability insurance for Easton operational
and product liability claims from March 16, 2006 to June 17, 2014.
“Easton Product Liability Premium Amount” means an amount equal to $687,069.64,
which represents the outstanding premiums due under the Easton Product Liability
Insurance Policy and the Easton Product Liability Excess Insurance Policy.
“EBITDA” means, with respect to a specified period, earnings for such period
before interest, taxes, depreciation and amortization calculated in accordance
with US GAAP and applied on a consistent basis; provided, however, that for
purpose of calculating Earn-Out Amounts, EBITDA shall be adjusted in accordance
with Section 2.10(g).
“Effective Time” means 12:01 A.M. (Pacific Standard Time) on the Closing Date.
“Encumbrance” means any charge, claim, community or other marital property
interest, condition, equitable interest, lien, option, pledge, security
interest, mortgage, hypothec, right of way, easement, encroachment, servitude,
right of first option, right of first refusal or similar restriction.

2

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“Environment” means soil, land surface or subsurface strata, surface waters
(including navigable waters and ocean waters), groundwaters, drinking water
supply, stream sediments, ambient air (including indoor air), plant and animal
life and any other environmental medium or natural resource.
“Environmental, Health and Safety Liabilities” means any cost (including
attorneys’ fees), damages, expense, fines, penalties, Proceeding, Orders,
claims, demands, judgment, Liability or other responsibility (collectively,
“EH&S Losses”) arising from or under any Environmental Law or Occupational
Safety and Health Law, including those EH&S Losses consisting or arising out of,
or relating to:
(i)The Release of Hazardous Material on, in, under, to or from the Facilities;
(ii)The operation of the Business or actions or omissions of each Seller in
violation of Environmental Law or Occupational Safety and Health Laws, including
any related Governmental Authorization;
(iii)Any (a) “removal,” “remedial” or “response action” (as defined in the
Comprehensive Environmental Response, Compensation and Liability Act of 1980, as
amended (“CERCLA”); and (b) corrective action, monitoring, containment,
prevention of Release or other cleanup activity (the preceding (a) and (b) are
collectively defined as, “Cleanup”) required by or under, or necessary to comply
with, any Environmental Law or Occupational Safety and Health Law (whether or
not such Cleanup has been required or requested by any Governmental Body or any
other Person) and for any natural resource damages, whether such Cleanup or
damages are at the Facilities, real property at which Seller conducted the
Business, or other properties to which Hazardous Materials have migrated from
the Facilities;
(iv)the investigation, Cleanup, remediation or prevention of the Release of
Hazardous Materials arising from the presence of Hazardous Materials at any
place other than the Facilities and real property at which the Business is or
has been conducted, as a result of the shipment, transfer or other movement of
such Hazardous Materials to that place by each Seller or anyone acting at its
instigation or on its behalf; and/or arising from the existence of any Hazardous
Materials in, on or under any Facilities or real property at which the Business
is or has been conducted, including groundwater; or
(v)any other compliance, corrective or remedial measure required under any
Environmental Law or Occupational Safety and Health Law.
“Environmental Law” means any current or future Legal Requirements relating to
the protection of the Environment, human health and safety or the use, storage,
treatment, generation, transportation, processing, handling, Release,
production, distribution, Remedial Action, Cleanup, purchase, sale or disposal
of Hazardous Materials, including but not limited to CERCLA, the Resource
Conservation and Recovery Act of 1976, 42 U.S.C. §6901 et seq., Federal Water
Pollution Control Act, 33 U.S. C. § 1251, et seq., and the Toxic Substance
Control Act, 15 U.S.C. § 2601 et seq., Environmental Management Act (British
Columbia), Environmental Assessment Act (British Columbia), Water Act (British
Columbia), Drinking Water Protection Act (British Columbia), Fish Protection Act
(British Columbia), Greenhouse Gas Reduction (Cap & Trade) Act (British
Columbia) and Carbon Tax Act (British Columbia) and similar state statutes, and
the rules, regulations and Orders of any Governmental Body relating to the
Environment.
“ERISA” means the Employee Retirement Income Security Act of 1974, as amended.
“ERISA Affiliate” means any Person that at any relevant time is or was
considered a single employer with a Seller under Section 414 of the Code or
under ERISA Section 4001(b) or part of the same “controlled group” as such
Seller for purposes of ERISA Section 302(d)(8)(C).
“Escrow Agent” means Computershare Trust Company.
“ETA” means Part IX of the Excise Tax Act (Canada).
“Facilities” means any real property, leasehold or other interest in real
property currently or formerly owned or operated by each Seller, together with
the Tangible Personal Property used or operated by such Seller at the respective
locations of the Leased Real Property set forth in Schedule 3.9.

3

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“Fundamental Representations” means the representations and warranties contained
in Sections 3.1 (only as to due organization), 3.2 (Enforceability; Authority;
No Conflict), 3.3 (Ownership of Seller), 3.10 (Title to Assets) and 3.27 (No
Options).
“Governing Documents” means, with respect to CA Buyer, its notice of articles
and by-laws, with respect to US Buyer, its certificate of incorporation and
by-laws, and, with respect to each Seller, its certificate of incorporation and
articles or by-laws and, in each case to the extent applicable, all
equityholders’ agreements, voting agreements, voting trust agreements, joint
venture agreements, registration rights agreements or other agreements or
documents relating to the organization, management or operation of such Buyer or
such Seller, as the case may be, relating to the rights, duties and obligations
of the equityholders of such Person, together with any amendment or supplement
to any of the foregoing.
“Governmental Authorization” means any Consent, license, registration or permit
issued, granted, given or otherwise made available by or under the authority of
any Governmental Body or pursuant to any Legal Requirement.
“Governmental Body” means any:
(vi)nation, state, province, county, city, town, borough, village, district or
other jurisdiction;
(vii)federal, state, provincial, local, municipal, foreign or other government;
(viii)governmental or quasi-governmental authority of any nature (including any
agency, branch, department, board, commission, court, tribunal or other entity
exercising governmental or quasi-governmental powers);
(ix)multinational organization or body;
(x)body exercising, or entitled or purporting to exercise, any administrative,
executive, judicial, legislative, police, regulatory or taxing authority or
power; or
(xi)official of any of the foregoing.
“GST/HST” means the goods and services tax and the harmonized sales tax imposed
under the ETA.
“Hazardous Material” means any substance, material, pollutant or waste which is
or will foreseeably be regulated by any Governmental Body, including, without
limitation, any material, substance, pollutant or waste which is defined as a
“hazardous waste,” “hazardous material,” “hazardous substance,” “extremely
hazardous waste,” “restricted hazardous waste,” “contaminant,” “pollutant,”
“toxic waste” or “toxic substance” under any provision of Environmental Law, and
including petroleum, petroleum products, asbestos, presumed asbestos-containing
material or asbestos-containing material, urea formaldehyde and polychlorinated
biphenyls.
“IFRS” means the international financial reporting standards as adopted by the
Canadian Institute of Chartered Professional Accountants.
“Improvements” means all buildings, structures, fixtures and improvements
located on real property, including those under construction.
“Indebtedness” means, with respect to each Seller, (i) all indebtedness of such
Seller, whether or not contingent, for borrowed money, (ii) all obligations of
such Seller evidenced by notes, bonds or debentures, (iii) all indebtedness
created or arising under any conditional sale or other title retention agreement
with respect to property acquired by such Seller, (iv) all obligations,
contingent or otherwise, of such Seller under acceptance, letter of credit or
similar facilities, (v) all obligations of such Seller to purchase, redeem,
retire, defease or otherwise acquire for value any capital stock or equity
interest of such Seller or any warrants, rights or options to acquire such
capital stock or equity interest, valued, in the case of redeemable preferred
stock, at the greater of its voluntary or involuntary liquidation preference
plus accrued and unpaid dividends, (vi) any Liabilities of such Seller arising
from or related to securitized or factored accounts receivable arrangements, and
(vii) all Indebtedness of others referred to in clauses (i) through (vii) above
guaranteed directly or indirectly in any manner by such Seller or in effect
guaranteed directly or indirectly by such Seller.
“Indemnification Escrow Amount” means $3,321,100.

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“Intellectual Property” means (i) all United States, Canadian and foreign
patents, patent applications and statutory invention registrations, including
but not limited to all United States and foreign design patents, industrial
and/or community designs, utility models, petty patents, and applications
therefor, (ii) all unpatented inventions (whether patentable or not) that have
not yet been the subject of a patent application, (iii) all United States,
Canadian and foreign trademark, trade name, service mark, collective mark,
distinguishing guise, and certification mark registrations and applications
therefor at the federal, state/provincial or local level, (iv) all trademarks,
trade names, service marks, collective marks, distinguishing guises, examples of
trade dress, and certification marks that have been used in commerce at any time
in the last five years, (v) all United States, Canadian and foreign copyright
registrations and applications therefor, (vi) all copyrightable works of
authorship that have not been the subject of a copyright registration or
application therefor, including but not limited to all moral rights therein and
to software code, manuals and other text works, photographs, video recordings,
and audio recordings, (vii) all trade secrets, know how, technical expertise and
research data and other proprietary and/or confidential information, databases
and data (collectively, “Trade Secrets”) as recorded in written or electronic
materials, including, without limitation, employee notebooks or other notes or
documents prepared or maintained by employees or independent contractors that
describe the Trade Secrets, (viii) industrial designs and all variants of
industrial designs, whether or not registered or the subject of an application
for registration and whether or not registrable, (ix) all mask works and
integrated circuit topographies, (x) all proprietary data formulae, (xi) all
rights in internet web sites and internet domain names, (xii) all other
intangible property and (xiii) registrations and applications for registration
of any of the foregoing.
“Intellectual Property Rights” means all right in and to any and all
Intellectual Property that each Seller owns in whole or in part and/or in which
such Seller has a valid claim of ownership in whole or in part (such as a
contractual right of assignment from an employee or independent contractor)
subsisting as of the Closing Date.
“Inventories” means all inventories, wherever located, including all finished
goods, work in process, raw materials, spare parts and all other materials and
supplies, to be used or consumed, or intended to be used or consumed, by each
Seller in the production of finished goods.
“IRS” means the United States Internal Revenue Service and, to the extent
relevant, the United States Department of the Treasury.
“ITA” means the Income Tax Act (Canada).
“Knowledge” means, with respect to any Seller, the actual knowledge of Chris
Tutton, David Banks and David Murray, each of whom will be deemed to have actual
knowledge of a fact or other matter if: (a) such Person is actually aware of
such fact or other matter; or (b) a prudent individual could be expected to
discover or otherwise become aware of such fact or other matter after reasonable
inquiry.
“Legal Requirement” means any federal, provincial, state, local, municipal,
foreign, international, multinational or other constitution, law, ordinance,
principle of common law, code, regulation, statute, treaty, resolution, Order or
directive.
“Liability” means, with respect to any Person, any liability or obligation of
such Person of any kind, character or description, whether known or unknown,
absolute or contingent, accrued or unaccrued, disputed or undisputed, liquidated
or unliquidated, secured or unsecured, joint or several, due or to become due,
vested or unvested, executory, determined, determinable or otherwise, and
whether or not the same is required to be accrued on the financial statements of
such Person.
“Licensed Rights” means all Intellectual Property in which each Seller has been
granted a license or sublicense or has other valid rights of use, other than
Intellectual Property Rights.
“Material Adverse Effect” means any change in, effect on or set of circumstances
(regardless of whether foreseeable at the time of the Parties’ execution and
delivery of this Agreement) that, individually or in the aggregate with any
other changes in, effects on or set of circumstances relating to, the Business,
the Acquired Assets or a relationship with a Material Customer or Material
Supplier, is, or could reasonably be expected to be, materially adverse

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to the Business, the results of operations or condition (financial or otherwise)
of the Business or the Acquired Assets; provided, however, that none of the
following shall be taken into account in determining whether there has been a
Material Adverse Effect: (i) the effects of changes that are generally
applicable to the industry and markets in which the Business operates, (ii) the
effects of changes that are generally applicable to the United States or
Canadian economy or securities markets or the world economy or international
securities markets, (iii) any effects on the employees, suppliers, licensors or
customers of the Business directly resulting from the public announcement of
this Agreement, the Acquisition or the consummation of the Acquisition, (iv) the
effects of changes in Legal Requirements, (v) the effects of acts of war,
terrorism, earthquakes, hurricanes, or other unavoidable disasters; provided
further, however, that any change in, effect on or set of circumstances
referenced in clauses (i) through (v) immediately above shall be taken into
account in determining whether a “Material Adverse Effect” has occurred or could
reasonably be expected to occur to the extent that such change in, effect on or
set of circumstances has a disproportionate effect on the Business or the
Acquired Assets compared to other participants in the industries in which the
Business operates. Without limiting the generality of the foregoing, a “Material
Adverse Effect” shall be deemed to have occurred if the applicable change,
effect or set of circumstances (or aggregation of changes, effects or sets of
circumstances) would be reasonably likely to result in liability to Buyers or
any of their Related Persons or the diminution in the value of the Business or
the Acquired Assets, of an amount equal to or greater than 10% of the Purchase
Price in the aggregate.
“Occupational Safety and Health Law” means any Legal Requirement designed to
provide safe and healthful working conditions and to reduce occupational safety
and health hazards, including the Occupational Safety and Health Act, Workers
Compensation Act (British Columbia) and the regulations thereunder and any
program, whether governmental or private (such as those promulgated or sponsored
by industry associations and insurance companies), designed to provide safe and
healthful working conditions.
“Order” means any order, injunction, judgment, decree, ruling, assessment or
arbitration award of any Governmental Body or arbitrator.
“Originating Persons” means all Current Employees and former employees, and all
current and former officers, directors and consultants of the Seller, including,
in the case of a consultant that is not an individual, all employees, officers,
directors, shareholders and partners of the consultant.
“Permitted Encumbrances” means such of the following as to which no enforcement,
collection, execution, levy or foreclosure Proceeding shall have been commenced:
(a) Encumbrances imposed by Legal Requirement, such as materialmen’s,
mechanics’, carriers’, workmen’s and repairmen’s liens and other similar liens
arising in the ordinary course of business, consistent with past practice,
securing obligations that are not overdue and will be paid or discharged in the
ordinary course of business; and (b) minor survey exceptions, reciprocal or
utility easement agreements and other customary Encumbrances on title to real
property that (i) were not incurred in connection with any indebtedness, (ii) do
not render title to the property encumbered thereby unmarketable and (iii) do
not, individually or in the aggregate, materially adversely affect the value or
use of such property for its current purposes; and (c) Encumbrances, if any, set
forth on Schedule 1.1(c).
“Person” means an individual, partnership, corporation, business trust, limited
liability company, limited liability partnership, joint stock company, trust,
unincorporated association, joint venture or other entity or a Governmental
Body.
“Proceeding” means any action, arbitration, audit, hearing, litigation or suit
(whether civil, criminal, administrative, judicial or investigative, and whether
public or private) commenced, brought, conducted or heard by or before, any
Governmental Body or arbitrator.
“Record” means information that is inscribed on a tangible medium or that is
stored in an electronic or other medium and is retrievable in perceivable form.

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“Related Person” means, with respect to any Person:
(xii)any other Person that directly or indirectly controls, or is directly or
indirectly controlled by, such Person;
(xiii)each other member of such Person’s Family (as defined below), if such
Person is an individual;
(xiv)any other Person (and if such Person is an individual, such individual’s
Family, individually or in the aggregate with such Person) that holds a Material
Interest in such Person;
(xv)any other Person that serves as a director, officer, partner, executor or
trustee (or in a similar capacity) of such Person;
(xvi)any other Person in which such Person holds a Material Interest.
For purposes of this definition, (A) “control” (including “controlling,”
“controlled by,” and “under common control with”) means the possession, direct
or indirect, of the power to direct or cause the direction of the management and
policies of a Person, whether through the ownership of voting securities, by
contract or otherwise, and shall be construed as such term is used in the rules
promulgated under the Securities Act; (B) the “Family” of an individual includes
(i) the individual, (ii) the individual’s spouse, and (iii) any other immediate
family members of the individual or the individual’s spouse; and (C) “Material
Interest” means direct or indirect beneficial ownership of voting securities or
other voting interests representing at least five percent (5%) of the
outstanding voting power of a Person or equity securities or other equity
interests representing at least five percent (5%) of the outstanding equity
securities or equity interests in a Person.
“Release” means any release, spill, emission, leaking, pumping, pouring,
dumping, emptying, escaping, injection, deposit, disposal, discharge, dispersal,
leaching or migration on or into the Environment or into or out of any property.
“Remedial Action” means all actions, including any capital expenditures,
required or voluntarily undertaken (a) to Cleanup, remove, treat or in any other
way address any Hazardous Material or other substance; (b) to prevent the
Release or Threat of Release or to minimize the further Release of any Hazardous
Material or other substance so it does not migrate or endanger or threaten to
endanger public health or welfare or the Environment; (c) to perform
pre-remedial studies and investigations or post-remedial monitoring and care; or
(d) to bring all Facilities and the operations conducted thereon into compliance
with Environmental Laws and environmental Governmental Authorizations.
“Representative” means, with respect to a particular Person, any director,
officer, manager, employee, agent, consultant, advisor, accountant, financial
advisor, legal counsel or other representative of that Person.
“Specified Claims” has the meaning set forth on item no. 1 of Schedule
8.2(a)(vii).
“Subsidiary” means, with respect to any Person (the “Owner”), each other Person
that is a corporation, joint venture, trust, partnership, limited liability
company or any other entity (i) of which the securities or other interests
having the power to elect a majority of that other Person’s board of directors
or similar governing body are held by the Owner or one or more of its
Subsidiaries (other than securities or other interests having such power only
upon the happening of a contingency that has not occurred), or (ii) over which
the Owner has, directly or indirectly, the power to direct its business and
policies.
“Tangible Personal Property” means all machinery, equipment, tools, furniture,
office equipment, computer hardware, supplies, materials, vehicles and other
items of tangible personal property (other than Inventories) of every kind owned
or leased by each Seller or used in the Business (wherever located and whether
or not carried on such Seller’s books), together with any express or implied
warranty by the manufacturers or such vendors or lessors of any item or
component part thereof and all maintenance records and other documents relating
thereto.
“Tax” means any income, gross receipts, license, payroll, employment, excise,
severance, stamp, occupation, premium, property, environmental, windfall profit,
customs, vehicle, airplane, boat, vessel or other title or registration, capital
stock, franchise, employees’ income withholding, foreign or domestic
withholding, social security, unemployment, disability, real property, personal
property, consumption, sales, provincial sales, use, transfer, GST/

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HST, Quebec sales value added, alternative, add-on minimum and any other tax,
fee, assessment, levy, tariff, unclaimed property or other charges, duty,
premiums, assessments, imposts, rates, withholdings, dues or government
contributions of any kind whatsoever, direct or indirect, and any interest,
penalty, addition or additional amount thereon imposed, assessed or collected by
or under the authority of any Governmental Body or payable under any tax-sharing
agreement or any other Contract.
“Tax Legal Requirement” means any laws, statutes, codes, ordinances, decrees,
rules, regulations, by-laws, statutory rules, principles of law, published
policies and guidelines, judicial or arbitral or administrative or ministerial
or departmental or regulatory judgments, orders, decisions, rulings or awards,
including general principles of common and civil law, and the terms and
conditions of any grant of approval, permission, authority or license of any
Governmental Body, that imposes Taxes or that deals with the administration or
enforcement of liabilities for Taxes.
“Tax Return” means any return (including any information return), report,
statement, schedule, notice, form, declaration, claim for refund or other
document or information filed with or submitted to, or required to be filed with
or submitted to, any Governmental Body in connection with the determination,
assessment, collection or payment of any Tax or in connection with the
administration, implementation or enforcement of or compliance with any Legal
Requirement relating to any Tax.
“Third Party” means any Person other than the Parties.
“Threat of Release” means a reasonable likelihood of a Release that would
reasonably be expected to require action in order to prevent or mitigate damage
to the Environment that may result from such Release.
“Treasury Regulations” shall mean the regulations of the United States Treasury
Department, as amended, and any successor provisions thereto.
“US GAAP” means United States generally accepted accounting principles, as in
effect from time to time, consistently applied in accordance with past
practices.
“Working Capital” means the excess of the aggregate Current Assets (reduced by
all applicable reserves in respect thereof as determined in a manner consistent
with each Seller’s historical practices) over the aggregate Current Liabilities,
prepared in accordance with the methodology contained in the example Working
Capital calculation set forth on Schedule 1.1(d) for illustrative purposes only.
1.2Additional Definitions
. In addition, the meanings of the following terms and variations thereof are
specified in the Section set forth opposite such term:
Term
Section
“2015 Earn-Out”
2.10(a)
“2015 Actual EBITDA”
2.10(a)
“2015 EBITDA Maximum”
2.10(d)
“2015 EBITDA Minimum”
2.10(b)
“2015 EBITDA Threshold”
2.10(c)
“2016 Earn-Out”
2.10(a)
“2016 Actual EBITDA”
2.10(a)
“2016 EBITDA Maximum”
2.10(d)
“2016 EBITDA Minimum”
2.10(b)
“2016 EBITDA Threshold”
2.10(c)
“Acquired Assets”
2.1(e)
“Acquisition”
Recitals

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“Adjustment Amount”
2.8(a)
“Allocation”
2.5(b)(i)
“Allocation Statement”
2.5(c)
“Amount in Controversy”
2.10(j)
“Arbitration Panel”
2.10(j)(ii)
“Agreement”
Introductory Paragraph
“Amalgamation”
Recitals
“Assumed Liabilities”
2.4(a)
“Audited EBITDA Statement”
2.10(h)
“Balance Sheet”
3.5
“Base Purchase Price”
2.3
“Bill of Sale and Assignment and Assumption Agreements”
2.7(a)(i)
“Breach Acceleration Payment”
7.13(e)
“Business”
Recitals
“Buyer” or “Buyers”
Introductory Paragraph
“Buyer Closing Documents”
4.2(a)
“Buyer Group”
6.1(a)
“Buyer Guarantor”
Introductory Paragraph
“Buyer Indemnified Persons”
8.2(a)
“Buyer Representative”
12.16
“CA Allocation”
2.5(a)
“CA Tax Purchase Price”
2.5(a)
“CA Assets”
2.1(d)
“CA Buyer”
Introductory Paragraph
“CA IP Asset”
2.1(c)(iv)
“CA Seller”
Introductory Paragraph
“CERCLA”
1.1
“Change of Control Acceleration Payment”
7.13(c)
“Cleanup”
1.1
“Closing”
2.6
“Closing Date”
2.6
“Closing Financial Statements”
2.8(b)
“Collective Agreement”
3.25(d)
“Competing Business”
7.7(a)
“Control Notice”
8.7(b)
“Covenants”
7.14
“Current Employees”
3.24(a)
“Damages”
8.2
“Deductible”
8.4
“Earn-Out Amounts”
2.10(a)
“Earn-Out Period”
7.13(b)
“Easton Canada”
Recitals
“EBITDA Statement”
2.10(h)
“EH&S Losses”
1.1
“Electing Party’s Earn-Out Statement”
2.10(j)
“Employment Agreement”
2.7(a)(iv)

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“Employee Grantees”
7.14
“Escrow Agreement”
2.7(a)(vii)
“Estimated Adjustment Amount”
2.3
“Estimated Working Capital”
2.3
“Excluded Assets”
2.2
“Fox”
Introductory Paragraph
“Grantees”
7.14
“Indemnified Person”
8.7(a)
“Indemnifying Person”
8.7(a)
“Independent Accountants”
2.5(c)
“Interim Balance Sheet”
3.5
“Installment Sale Payment”
2.10(n)(i)
“Inventory Assets”
2.1(e)
“IP Assets”
2.1(c)(iv)
“KY Buyer”
Introductory Paragraph
“Leased Real Property”
3.9
“Legacy Sellers”
Recitals
“License Agreements”
3.26(f)
“Loan Payoff Amount”
2.7(a)(vi)
“Material Customer”
3.29
“Material Supplier”
3.29
“Narrow-Wide Rings”
7.15(b)
“Noted IP”
3.26(a)
“One-Year Non-US IP License”
2.1(c)(ii)
“Owner”
1.1
“Owner Guarantors”
Introductory Paragraph
“Party” or “Parties”
Introductory Paragraph
“Perpetual Non-US IP License”
2.1(c)(i)
“Products”
3.32
“Proprietary Information”
7.7(d)
“Purchase Price”
2.3
“Real Property Lease”
3.9
“Reference Working Capital”
2.8(a)
“Registered IP Rights”
3.26(a)
“Releasee” or “Releasees”
7.12
“Retained Liabilities”
2.4(b)
“Restricted Period”
7.7(a)
“RF Canada”
Recitals
“Schedule Supplement”
6.1(f)
“Securities Act”
3.3
“Seller” or “Sellers”
Introductory Paragraph
“Seller Closing Documents”
3.2(a)
“Seller Indemnified Persons”
8.3
“Seller Representative”
9.1
“Sellers Insurance Policies”
7.17
“Shareholder Grantees”
7.14

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“Survival Period”
8.6(a)
“Tax Purchase Price”
2.5(b)(i)
“Third Party Claim”
8.7(a)
“Trade Secrets”
1.1
“Transfer Taxes”
7.2(b)
“TW Assets”
2.1(a)
“TW Branches”
Recitals
“US Allocation”
2.5(b)(i)
“US Assets”
2.1(b)
“US Buyer”
Introductory Paragraph
“US IP Assets”
2.1(c)(iii)
“US Seller”
Introductory Paragraph
“US Tax Purchase Price”
2.5(b)(i)

1.3Usage.
(a)Interpretation. In this Agreement, unless a clear contrary intention appears:
(i) the singular number includes the plural number and vice versa; (ii)
reference to any Person includes such Person’s successors and assigns but, if
applicable, only if such successors and assigns are not prohibited by this
Agreement, and reference to a Person in a particular capacity excludes such
Person in any other capacity or individually; (iii) reference to any gender
includes each other gender; (iv) reference to any agreement, document or
instrument means such agreement, document or instrument as amended or modified
and in effect from time to time in accordance with the terms thereof; (v)
reference to any Legal Requirement means such Legal Requirement as amended,
modified, codified, replaced or re-enacted, in whole or in part, and in effect
from time to time, including rules and regulations promulgated thereunder, and
reference to any section or other provision of any Legal Requirement means that
provision of such Legal Requirement from time to time in effect and constituting
the substantive amendment, modification, codification, replacement or
re-enactment of such section or other provision; (vi) ”hereunder,” “hereof,”
“hereto,” and words of similar import shall be deemed references to this
Agreement as a whole and not to any particular Section or other provision
hereof; (vii) “including” (and with correlative meaning “include”) means
including without limiting the generality of any description preceding such
term; (viii) “or” is used in the inclusive sense of “and/or”; (ix) with respect
to the determination of any period of time, “from” means “from and including”
and “to” means “to but excluding”; and (x) references to documents, instruments
or agreements shall be deemed to refer as well to all addenda, exhibits,
schedules or amendments thereto.
(b)Accounting Terms and Determinations. Unless otherwise specified herein, all
accounting terms used herein shall be interpreted and all accounting
determinations hereunder shall be made in accordance with US GAAP.
(c)Legal Representation of the Parties. This Agreement was negotiated by the
Parties with the benefit of legal representation, and any rule of construction
or interpretation otherwise requiring this Agreement to be construed or
interpreted against any Party shall not apply to any construction or
interpretation hereof.
(d)Currency. Except as otherwise expressly set forth herein, all references to
“dollars” or “$” in this Agreement shall mean Canadian Dollars.

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2.
SALE AND TRANSFER OF ASSETS; CLOSING.

2.1Assets to be Sold.
(a)Sale of Taiwanese Operating Assets (excluding Inventory and Intellectual
Property). Upon the terms and subject to the conditions set forth in this
Agreement and to the extent not transferred pursuant to Sections 2.1(c), 2.1(d)
and 2.1(e), deemed effective as of the Effective Time, CA Seller hereby agrees
to sell, convey, assign, transfer and deliver to Fox, and Fox hereby agrees to
purchase and acquire from CA Seller, free and clear of any Encumbrances other
than Permitted Encumbrances, all rights, title and interests in and to all
property and assets (real, personal or mixed, tangible and intangible) of every
kind and description, owned, held or used in the conduct of the Business by CA
Seller through its TW Branches and being conducted in Taiwan, but excluding the
Excluded Assets (all such assets to be transferred to Fox hereunder being herein
referred to collectively as the “TW Assets”), including, except to the extent
constituting Excluded Assets, the following:
(i)all interests of CA Seller in real property located in the Taiwan, including
any Leased Real Property located in Taiwan;
(ii)all Tangible Personal Property located in Taiwan, including those items
described in Schedule 2.1(a)(ii);
(iii)all Contracts listed in Schedule 3.21(a) (notated as “TW Contracts”) and
all outstanding bids, offers or solicitations made by or to CA Seller to enter
into any Contract;
(iv)all Taiwanese Governmental Authorizations and all pending applications
therefor or renewals thereof, in each case to the extent transferable to Fox
(but if any Governmental Authorization cannot be transferred, CA Seller agrees
to cooperate with and reasonably assist Buyer in obtaining such Governmental
Authorization), including those listed in Schedule 3.18(a) (notated as “TW
Authorizations”);
(v)all data and Records related to the Taiwan operations of CA Seller, including
client and customer lists and Records, referral sources, research and
development reports and Records, production reports and Records, service and
warranty Records, equipment logs, operating guides and manuals, financial and
accounting Records, creative materials, advertising materials, promotional
materials, studies, reports, correspondence and other similar documents and
Records and, subject to Legal Requirements, copies of all personnel Records and
other Records described in Section 2.2(g); and
(vi)any other rights, wither tangible or intangible (but excluding any Inventory
or Intellectual Property Rights), related to the TW Branches.
(b)Sale of United States Operating Assets (excluding Inventory and Intellectual
Property). Upon the terms and subject to the conditions set forth in this
Agreement and to the extent not transferred pursuant to Sections 2.1(c) and
2.1(e), deemed effective as of the Effective Time plus one (1) minute, US Seller
hereby agrees to sell, convey, assign, transfer and deliver to US Buyer, and US
Buyer hereby agrees to purchase and acquire from US Seller, free and clear of
any Encumbrances other than Permitted Encumbrances, all rights, title and
interests in and to all property and assets (real, personal or mixed, tangible
and intangible) of every kind and description, wherever located, owned, held or
used in the conduct of the Business by US Seller, but excluding the Excluded
Assets (all such assets to be transferred to US Buyer hereunder being herein
referred to collectively as the “US Assets”), including, except to the extent
constituting Excluded Assets, the following:
(i)all interests of US Seller in real property located in the United States,
including any Leased Real Property located in the United States;
(ii)all Tangible Personal Property located in the United States, including those
items described in Schedule 2.1(b)(ii);
(iii)all Accounts Receivable of the US Seller;
(iv)all Contracts listed in Schedule 3.21(a) (notated as “US Contracts”) and all
outstanding bids, offers or solicitations made by or to US Seller to enter into
any Contract;
(v)all Governmental Authorizations and all pending applications therefor or
renewals thereof, in each case to the extent transferable to Buyer (but if any
Governmental Authorization cannot be transferred, US Seller agrees to cooperate
with and reasonably assist Buyer in obtaining such Governmental Authorization),
including those listed in Schedule 3.18(a) (notated as “US Authorizations”);
(vi)all data and Records related to the United States operations of US Seller,
including client and customer lists and Records, referral sources, research and
development reports and Records, production reports and Records, service and
warranty Records, equipment logs, operating guides and manuals, financial and
accounting Records, creative materials, advertising materials, promotional
materials, studies, reports,

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correspondence and other similar documents and Records and, subject to Legal
Requirements, copies of all personnel Records and other Records described in
Section 2.2(g);
(vii)all insurance benefits, including rights and proceeds, arising from or
relating to the US Assets or the Assumed Liabilities prior to the Effective
Time, unless expended in accordance with this Agreement;
(viii)all claims of US Seller against any other Person and relating to the
Business or the US Assets, whether choate or inchoate, known or unknown,
contingent or non-contingent; and
(ix)all rights of US Seller relating to deposits and prepaid expenses, claims
for refunds and rights to offset in respect thereof.
(c)Licenses and Sale of Intellectual Property Rights.
(i)Prior to the Effective Time, CA Seller shall enter into an Intellectual
Property License and Sublicense Agreement in favor of KY Buyer, in form and
substance reasonably acceptable by Buyer Representative and Seller
Representative, whereby the CA Seller licensed its Intellectual Property Rights
as more particularly set forth therein (the “Perpetual Non-US IP License”).
(ii)Immediately after the execution of the Perpetual Non-US IP License but
immediately prior to the Effective Time, KY Buyer shall enter into an
Intellectual Property License Agreement in favor of CA Seller, in form and
substance reasonably acceptable by Buyer Representative and Seller
Representative, whereby the KY Buyer licensed its Intellectual Property Rights
as more particularly set forth therein (the “One-Year Non-US IP License”).
(iii)Upon the terms and subject to the conditions set forth in this Agreement,
deemed effective as of the Effective Time plus two (2) minutes, each Seller
hereby agrees to, and hereby sells, conveys, assigns, transfers and delivers to
US Buyer, and US Buyer hereby agrees to, and hereby purchases and acquires from
such Seller, free and clear of any Encumbrances other than Permitted
Encumbrances, all rights, title and interests in and to all of the Intellectual
Property Rights, all Contracts governing the Licensed Rights, the going concern
value, goodwill, telephone, telecopy and e-mail addresses and listings and those
items listed in Schedules 3.26(a) and (e)¸including without limitation, the
Perpetual Non-US IP License and the BRG Sublicense, but excluding the One-Year
Non-US IP License and the Excluded Assets (all such assets to be transferred to
US Buyer hereunder being herein referred to collectively as the “US IP Assets”).
(iv)Upon the terms and subject to the conditions set forth in this Agreement,
deemed effective as of the Effective Time plus two (2) minutes, CA Seller hereby
agrees to sell, convey, assign, transfer and deliver to CA Buyer, and CA Buyer
hereby agrees to purchase and acquire from CA Seller, free and clear of any
Encumbrances other than Permitted Encumbrances, all rights, title and interests
in and to the One-Year Non-US IP License (the “CA IP Asset,” and together with
the US IP Assets, the “IP Assets”).
(v)If Buyers desires to register a change in ownership of an IP Asset from the
name as registered at the Closing Date, all cost of such registrations are to be
borne equally by Buyers and Sellers. Sellers shall co-operate by executing any
necessary documents, as requested by Buyer Representative.
(d)Sale of Canadian Assets (excluding Inventory and Intellectual Property). Upon
the terms and subject to the conditions set forth in this Agreement and to the
extent not transferred pursuant to Sections 2.1(a), 2.1(c) or 2.1(d), deemed
effective as of the Effective Time plus three (3) minutes, CA Seller hereby
agrees to sell, convey, assign, transfer and deliver to CA Buyer, and CA Buyer
hereby agrees to purchase and acquire from CA Seller, free and clear of any
Encumbrances other than Permitted Encumbrances, all rights, title and interests
in and to all property and assets (real, personal or mixed, tangible and
intangible) of every kind and description, wherever located, owned, held or used
in the conduct of the Business by CA Seller, but excluding the Excluded Assets
(all such assets to be transferred to CA Buyer hereunder being herein referred
to collectively as the “CA Assets”), including, except to the extent
constituting Excluded Assets, the following:
(i)all interests of such Seller in real property located in Canada, including
any Leased Real Property located in Canada;
(ii)all Tangible Personal Property located in Canada, including those items
described in Schedule 2.1(d)(ii);
(iii)all Accounts Receivable of the CA Seller;
(iv)all Contracts listed in Schedule 3.21(a) (notated as “CA Contracts”) and all
outstanding bids, offers or solicitations made by or to such Seller to enter
into any Contract;
(v)all non-Taiwanese Governmental Authorizations and all pending applications
therefor or renewals thereof, in each case to the extent transferable to Buyer
(but if any Governmental Authorization

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cannot be transferred, such Seller agrees to cooperate with and reasonably
assist Buyer in obtaining such Governmental Authorization), including those
listed in Schedule 3.18(a) (notated as “CA Authorizations”);
(vi)all data and Records related to the Canadian operations of such Seller,
including client and customer lists and Records, referral sources, research and
development reports and Records, production reports and Records, service and
warranty Records, equipment logs, operating guides and manuals, financial and
accounting Records, creative materials, advertising materials, promotional
materials, studies, reports, correspondence and other similar documents and
Records and, subject to Legal Requirements, copies of all personnel Records and
other Records described in Section 2.2(g);
(vii)all insurance benefits, including rights and proceeds, arising from or
relating to the CA Assets or the Assumed Liabilities prior to the Effective
Time, unless expended in accordance with this Agreement;
(viii)all claims of such Seller against any other Person and relating to the
Business or the CA Assets, whether choate or inchoate, known or unknown,
contingent or non-contingent; and
(ix)all rights of such Seller relating to deposits and prepaid expenses, claims
for refunds and rights to offset in respect thereof.
(e)Sale of Inventory. Upon the terms and subject to the conditions set forth in
this Agreement, deemed effective as of the Effective Time plus four (4) minutes,
each Seller hereby agrees to sell, convey, assign, transfer and deliver to CA
Buyer, and CA Buyer hereby agrees to purchase and acquire from such Seller, free
and clear of any Encumbrances other than Permitted Encumbrances, all rights,
title and interests in and to all Inventories of such Seller, wherever located,
owned, held or used in the conduct of the Business by such Seller, but excluding
the Excluded Assets (all such assets to be transferred to US Buyer hereunder
being herein referred to collectively as the “Inventory Assets” and collectively
the TW Assets, US Assets, IP Assets and the CA Assets shall be referred to as
the “Acquired Assets”).
Notwithstanding the foregoing, the transfer of the Acquired Assets pursuant to
this Agreement shall not include the assumption of any Liability related to the
Business or any of the Acquired Assets unless a Buyer expressly assumes that
Liability pursuant to Section 2.4(a).
2.2Excluded Assets
. Notwithstanding anything to the contrary contained in Section 2.1 or elsewhere
in this Agreement, the following assets of each Seller at the Effective Time
(collectively, the “Excluded Assets”) are not part of the sale and purchase
contemplated hereunder, are excluded from the Acquired Assets and shall remain
the property of such Seller after the Closing:
(a)all cash, cash equivalents and short-term investments and deferred Tax
assets;
(b)all minute books, stock Records and corporate seals of Seller;
(c)the shares of capital stock or other equity securities of Seller held in
treasury;
(d)all insurance policies and rights thereunder (except to the extent specified
in Sections 2.1(a)(vii) and (viii) , Sections 2.1(b)(vii) and (viii) and
Sections 2.1(c)(vii) and (viii));
(e)all Contracts that are not listed in Schedule 3.21(a) and the Contracts noted
as “to be paid off at Closing by Buyer” on Schedule 3.21(a);
(f)all personnel Records and other Records that Seller is required by Legal
Requirement to retain in its possession;
(g)all claims for refund of Taxes and other governmental charges of whatever
nature, in each case, paid by Seller with respect to Pre-Closing Tax Periods;
(h)all Company Benefit Plans (other than (i) that certain Client Services
Agreement with Insperity dated June 18, 2014 with PEO Services, L.P.; (ii)
Policy No. 85598, effective June 1, 2011, for life insurance and long term
disability insurance from RBC Insurance, (iii) Policy No. 10012/11-006,
effective June 1, 2011, for accidental death and dismemberment insurance from
Lloyds of London and (iv) Policy No. 37993, effective June 1, 2011, for extended
health insurance and dental insurance from Pacific Blue Cross.) all assets held
in trust or otherwise relating to any Company Benefit Plan or the funding
thereof; any insurance policy, Contract, trust, third party administrator
Contract, or other funding arrangement for any Company Benefit Plan; any monies
held by Seller in any account dedicated to the payment of benefits or insurance
premiums relating to any Company Benefit Plan; and the rights of Seller to any
such assets, Contracts, or monies;

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(i)all rights of Seller under this Agreement, the Bill of Sale and Assignment
and Assumption Agreements and the Escrow Agreement; and
(j)the assets, if any, expressly designated in Schedule 2.2(j).
2.3Consideration
. The consideration for the Acquired Assets (the “Purchase Price”) will be (a)
$33,211,000 (the “Base Purchase Price”) (i) plus the Easton Product Liability
Premium Amount, (ii) plus the Adjustment Amount, if any, and (iii) plus the
Earn-Out Amounts, if earned, and (b) the assumption of the Assumed Liabilities,
other than Liabilities already included in the Adjustment Amount, without
duplication. Seller Representative shall determine, in good faith and deliver to
Buyer Representative on or before the third (3rd) Business Day prior to Closing
a statement evidencing Seller Representative’s estimation of Working Capital
reasonably acceptable to Buyer (the “Estimated Working Capital”) and, based
thereon, a written estimate of the Adjustment Amount (the “Estimated Adjustment
Amount”). The final Adjustment Amount shall be determined and paid in accordance
with the provisions of Section 2.8.
2.4Liabilities.
(a)Assumed Liabilities. Effective as of the Effective Time, Buyers hereby agree
to assume and discharge only the following Liabilities of each Seller (the
“Assumed Liabilities”) to the extent such Liabilities relate to an Acquired
Asset purchased by such Buyer, or, in any case, as otherwise determined by Buyer
Guarantor:
(i)any trade account payable to the extent reflected on the Interim Balance
Sheet or incurred by such Seller in the ordinary course of business, consistent
with past practice, between the date of the Interim Balance Sheet and the
Effective Time that (A) is not payable to a Related Person of such Seller, and
(B) remains unpaid as of the Effective Time;
(ii)those accrued expenses of such Seller to the extent reflected on the Interim
Balance Sheet or incurred by such Seller in the ordinary course of business,
consistent with past practice, between the date of the Interim Balance Sheet and
the Effective Time and, in each case, that remain unpaid as of the Effective
Time;
(iii)any Liability to such Seller’s customers incurred by such Seller in the
ordinary course of business, consistent with past practice, for orders
outstanding as of the Effective Time to the extent reflected on such Seller’s
books (other than any Liability arising out of or relating to a Breach that
occurred prior to the Effective Time);
(iv)any Liability arising from or in connection with product liability claims
relating to the Business, in relation to products to the extent manufactured by
the Sellers prior to the Effective Time, but sold by the Buyers after the
Effective Time;
(v)any Liability to such Seller’s customers incurred by such Seller in the
ordinary course of business, consistent with past practice, for customer
warranties outstanding as of the Effective Time to the extent reflected on the
Interim Balance Sheet (other than any Liability arising out of or relating to a
Breach that occurred prior to the Effective Time);
(vi)any Liability arising after the Effective Time under the Contracts described
in Schedule 3.21(a) (except to the extent any such Liability is the result of a
Breach that occurred prior to the Effective Time);
(vii)any Liability in respect of Transfer Taxes for with each Buyer is liable
pursuant to Section 7.2(b);
(viii)any Liability with respect to those certain capital leases as set forth
more particularly on Schedule 2.4(a)(viii); and
(ix)any other Liabilities included in the calculation of Working Capital,
without duplication.
(b)Retained Liabilities. Each Seller hereby acknowledges and agrees that all
Liabilities of such Seller other than the Assumed Liabilities (collectively, the
“Retained Liabilities”) shall remain the sole responsibility of and shall be
retained, paid, performed and discharged solely by such Seller. Without limiting
the foregoing, Retained Liabilities include the following Liabilities of such
Seller, except to the extent included in Working Capital, without duplication:
(i)any Liability arising out of or relating to products of such Seller to the
extent manufactured and sold, or services of such Seller provided, in each case,
prior to the Effective Time other than to the extent assumed by a Buyer under
Section 2.4(a)(iii), (iv) or (v);

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(ii)any Liability under any Contract assumed by a Buyer pursuant to
Section 2.4(a)(v), that either arose at or prior to the Effective Time or, to
the extent that such Liability is the result of a Breach that occurred prior to
the Effective Time, arises after the Effective Time;
(iii)any Liability for Taxes, including (A) any Taxes arising as a result of
such Seller’s operation of the Business, restructuring activities or ownership
of the Acquired Assets prior to the Effective Time, (B) any Taxes that will
arise as a result of the sale of the Acquired Assets pursuant to this Agreement
and (C) any deferred Taxes of any nature, except to the extent assumed by a
Buyer pursuant to Section 2.4(a)(vi);
(iv)any Liability under any Contract not assumed by a Buyer under
Section 2.4(a), including any Liability arising out of or relating to any
Indebtedness or any security interest or Encumbrance related thereto;
(v)any Environmental, Health and Safety Liabilities arising out of or relating
to the operation of the Business prior to the Effective Time or such Seller’s
leasing, ownership or operation of real property or the Facilities;
(vi)any Liability under or that relates to the Company Benefit Plans or relating
to payroll, vacation, sick leave, workers’ compensation, unemployment benefits,
pension benefits, employee stock option or profit-sharing plans, health care
plans or benefits or any other employee plans or benefits of any kind for such
Seller’s current or former employees, officers, directors or other Persons;
(vii)any Liability under any employment, severance, retention or termination
agreement with any current or former employee of such Seller or any of their
Related Persons;
(viii)any Liability arising out of or relating to any current or former employee
grievance with respect to an event or occurrence at or prior to the Effective
Time whether or not the affected employees are hired by a Buyer;
(ix)any Liability with respect to severance obligations payable under the
Employment Standards Act (British Columbia), as amended, and any other
applicable Legal Requirement with respect to any Current Employee of such
Seller;
(x)any Liability to any Related Person of such Seller;
(xi)any Liability to indemnify, reimburse or advance amounts to any current or
former officer, director, employee or agent of such Seller;
(xii)any Liability to distribute to any equity holders of such Seller or
otherwise apply all or any part of the consideration received hereunder;
(xiii)any Liability arising out of any Proceeding by or against such Seller
whether pending as of or commenced after the Effective Time;
(xiv)any Liability arising out of or resulting from such Seller’s compliance or
noncompliance with any Legal Requirement or Order of any Governmental Body;
(xv)any Liability under this Agreement or any other document executed in
connection with the Acquisition;
(xvi)all Liabilities, if any, arising out of or relating to any prior
acquisition or disposition by such Seller or set forth on Schedule 2.4(b)(xvi);
(xvii)any Liability for brokerage or finder’s fees or commissions or similar
payments based upon any agreement or understanding made, or alleged to have been
made, by any Person with such Seller or any of its Related Persons (or any
Person acting on behalf of any of them) in connection with any of the
Acquisition;
(xviii)any Liability related to or flowing from the Specified Claims; and
(xix)any other Liability of such Seller or its Related Persons arising after the
Effective Time.
2.5Allocation.
(a)Canadian Allocation. The portion of the Base Purchase Price (plus the
Adjustment Amount Purchase Price) that is attributable to the sale and purchase
of CA Assets and CA IP Assets (the “CA Tax Purchase Price”) will be allocated at
the Agreed Value for each CA Asset and CA IP Asset (the “CA Allocation”).
Earn-Out Amounts, if earned, will be allocated to goodwill. Sellers, Seller
Representative, CA Buyers and Buyer Representative will cooperate in the filing
of any elections under the ITA and any other applicable Tax Legal Requirement as
may be necessary or desirable to give effect to that allocation for Tax
purposes. Sellers and CA Buyers will prepare and file their respective Tax
returns in a manner consistent with the CA allocation and those elections.
(b)United States Allocation.
(i)The Purchase Price and any Liability or other amount that is properly
included in the amount realized by Sellers or cost basis to Fox and US Buyer
with respect to the sale and purchase of the US Assets

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and US IP Assets (the “US Tax Purchase Price” and together with the CA Tax
Purchase Price, the “Tax Purchase Price”) shall be allocated among the US Assets
and US IP Assets at the Agreed Value and in accordance with Treasury Regulations
§ 1.1060-1(c). The final allocation of US Tax Purchase Price as agreed upon by
Buyer Representative and Seller Representative or as determined by the
Independent Accountants pursuant to Section 2.5(c) is hereinafter referred to as
the “US Allocation” and the US Allocation together with the CA Allocation shall
be referred to collectively as the “Allocation.”
(ii)Buyer Representative shall be entitled to revise the US Allocation, in
accordance with Code Section 1060 and the Treasury Regulations, with the consent
of the Seller Representative, not to be unreasonably withheld, to appropriately
take into account any payments made under this Agreement treated as an
adjustment to the consideration for federal, state and local income tax
purposes, including, without limitation, to implement the Adjustment Amount (to
the extent the Adjustment Amount has not been finally determined as of the time
the US Allocation has been determined) and to account for the payment of any
Earn-Out Amounts and shall promptly provide Seller Representative with such
revisions to the US Allocation.
(iii)The Parties agree that the US Allocation is reasonable and covenant and
agree that they will (i) report, act and file Tax Returns, and any other
filings, declarations or reports with the IRS and/or other taxing authorities in
respect thereof including the reports required to be filed under Code Section
1060, in all respects and for all purposes consistent with the Allocation
(including any adjustment thereto made pursuant to Section 2.5(b) of this
Agreement) unless otherwise required pursuant to a final determination (within
the meaning of Code Section 1313(a) or corresponding provision of state, local
or foreign Tax law); and (ii) promptly advise each other regarding the existence
of any Tax audit, controversy or litigation related to the Allocation.
(c)Delivery of Allocation Statements; Allocation Dispute Mechanism. Within
ninety (90) days after the Closing Date, Buyer Representative shall prepare and
deliver to Seller Representative (i) a draft IRS Form 8594 reflecting the
allocation of the US Tax Purchase Price and (ii) a statement reflecting the
allocation of the CA Tax Purchase Price (each, an “Allocation Statement”), in
each case, consistent with the principles of this Section 2.5 and taking into
account any allocation of the Purchase Price made pursuant to Section 7.2(b). If
Seller Representative does not give written notice to Buyer Representative
within 15 days after receipt from Buyer Representative of any such Allocation
Statement that Seller Representative disagrees with any part or all of such
allocation, then such allocation as so proposed by Buyer Representative shall be
deemed agreed by Seller Representative and Buyer Representative for purposes of
this Section 2.5. If Seller Representative does so give notice of any such
objection, then from that time until the expiration of 120 days after the
Closing Date, Buyer Representative and Seller Representative shall negotiate in
good faith to reach mutual agreement regarding any matters subject to such
objection and the allocation of the applicable Tax Purchase Price consistent
with the requirements of this Section 2.5, and if Buyer Representative and
Seller Representative do reach such agreement within such period, then the
allocation so agreed upon shall be deemed agreed by the Parties for purposes of
this Section 2.5. In the event that Seller Representative does give notice of
any such objection and Buyer Representative and Seller Representative are unable
to reach agreement on all such matters, then the allocation of the Tax Purchase
Price, to the extent not so agreed, shall be determined by Deloitte & Touche
LLP, independent public accountants (the “Independent Accountants”) or, in the
event Deloitte & Touche LLP is unable or unwilling to serve as the Independent
Account, Seller Representative and Buyer Representative shall mutually agree
upon another independent public accountant. The Parties agree that they shall
jointly instruct the Independent Accountants to (A) make their determination of
the allocation of the Tax Purchase Price based on their independent review
(which will be in accordance with the guidelines and procedures set forth in
this Agreement) and, at the Independent Accountants discretion, a one-day
conference concerning the amount in dispute, at which conference each of Buyer
Representative and Seller Representative shall have the right to present its
respective position with respect to such dispute and have present its respective
advisors, counsel and accountants, (B) render a final resolution in writing to
Buyer Representative and Seller Representative (which final resolution shall be
requested by Buyer Representative and Seller Representative to be delivered not
more than 30 days following submission of such disputed matters), which shall be
final, conclusive and binding on the Parties with respect to the allocation of
the Tax Purchase Price as finally determined by the Independent Accountants, and
(C) provide a written report to Buyer Representative and Seller Representative,
if requested by either of them, which sets forth in reasonable detail the basis
for the Independent Accountants’ final determination. No appeal from such
determination shall be permitted. The fees and expenses of the Independent
Accountants shall be borne 50% by each of Buyers and Sellers. Judgment upon any
decision by the Independent Accountants may be enforced by any court having
jurisdiction thereof.

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2.6Closing
. The closing of the Acquisition (the “Closing”) will be held by electronic
exchange of documents and the Acquired Assets shall be sold and purchased in the
order more particularly set forth in Section 2.1 on (a) two (2) Business Days
after the conditions set forth in Section  5 are satisfied (other than those
conditions that by their nature are normally satisfied at the Closing, but
subject to the satisfaction of such conditions at the Closing) or waived or (b)
such other time and place as the Parties may agree (the “Closing Date”).
2.7Closing Deliveries
. In addition to any other documents to be delivered or other conditions to be
satisfied or obligations to be performed under other provisions of this
Agreement, at or prior to Closing:
(a)Each Seller shall have delivered or otherwise provided (or caused to have
been delivered or otherwise provided) to Buyer Representative, together with, if
and to the extent applicable, funds sufficient to pay all Taxes necessary for
the transfer, filing or recording thereof:
(i)(1) a Bill of Sale for the (a) TW Assets sold to Fox, (b) Inventory Assets
sold to CA Buyer and (c) balance of the Acquired Assets sold to CA Buyer and US
Buyer and (2) an Assignment and Assumption Agreement for the Assumed Liabilities
in form and substance reasonably satisfactory to Sellers and Buyer
Representative (collectively, the “Bill of Sale and Assignment and Assumption
Agreements”), duly executed by each applicable Seller;
(ii)assignments of all Intellectual Property Rights and Licensed Rights, if any,
together with the Perpetual Non-US IP License and One-Year Non-US IP License,
and separate assignments of all registered Intellectual Property Rights, if any,
in form and substance satisfactory to Buyer Representative, duly executed by CA
Seller;
(iii)for each interest in the Leased Real Property, an assignment and assumption
of lease or such other appropriate document or instrument of transfer, as the
case may require, each in form and substance satisfactory to Buyer
Representative and its legal counsel and executed by such Seller;
(iv)such other deeds, bills of sale, assignments, certificates of title,
documents and other instruments of transfer and conveyance as may reasonably be
requested by Buyer Representative, each in form and substance satisfactory to
Buyer Representative and its legal counsel and executed by such Seller;
(v)an employment agreement executed by each of Chris Tutton and David Murray in
form and substance reasonably satisfactory to Sellers and Buyer Representative
(the “Employment Agreements”);
(vi)a customary pay-off letter or letters for all Indebtedness secured by any
Encumbrance on the Acquired Assets, evidencing the total pay-off amount thereof
(the “Loan Payoff Amount”) and indicating the release, upon payment of the Loan
Payoff Amount, of all such Encumbrances and otherwise in form and substance
reasonably satisfactory to Buyer Representative and its legal counsel;
(vii)an escrow agreement in in form and substance reasonably satisfactory to
Sellers and Buyer Representative (the “Escrow Agreement”), executed by such
Seller, Seller Representative, Buyer Representative and the Escrow Agent;
(viii)a certificate of the Secretary (or equivalent thereof) of such Seller
certifying, as complete and accurate as of the Closing, attached copies of the
Governing Documents of such Seller, certifying and attaching all requisite
resolutions or actions of such Seller’s board of directors and equity holders
approving the execution and delivery of this Agreement, including special
resolutions of equity holders, the documents delivered hereby, the consummation
of the Acquisition and the change of name contemplated by Section 7.9, and
certifying to the incumbency and signatures of the officers of such Seller
executing this Agreement and any other document relating to the Acquisition,
accompanied by the requisite documents for amending the relevant Governing
Documents of such Seller required to effect such change of name in form
sufficient for filing with the appropriate Governmental Body;
(ix)the Consents and Governmental Authorizations set forth in
Schedule 2.7(a)(ix), duly executed by the applicable Governmental Body or other
Third Party;
(x)if requested by Buyer Representative, any Consents or other instruments that
may be required to permit each applicable Buyer’s qualification in each
jurisdiction in which such Seller is licensed or qualified to do business as a
foreign corporation or entity under the name “Easton Cycling,” “Race Face” or
any derivative thereof;

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(xi)releases of all Encumbrances on the Acquired Assets (other than Permitted
Encumbrances), including all Encumbrances in favor of Royal Bank of Canada (with
respect to that certain (1) agreement dated February 19, 2013 with RF Canada, as
amended, or (2) agreement dated May 28, 2014 with Easton Canada, as amended)
pursuant to release documents satisfactory to Buyer Representative;
(xii)certificates of status or good standing, as applicable, dated as of a date
not earlier than seven calendar days prior to the Closing as to the status or
good standing, as applicable, of such Seller and payment of all applicable state
Taxes by such Seller, executed by the appropriate officials of the state where
such Seller is organized and each jurisdiction in which such Seller is licensed
or qualified to do business as a foreign corporation or entity as specified in
Schedule 3.1(a);
(xiii)evidence satisfactory to Buyer Representative that such Seller has,
effective as of the Closing, terminated all Current Employees and provided
notice of the Buyer’s intentions to offer continuing employment;
(xiv)an anticorruption certificate in form and substance reasonably satisfactory
to Sellers and Buyer Representative, dated as of the Closing Date, signed by
each Seller and Owner Guarantor;
(xv)evidence reasonably satisfactory to Buyer Representative that CA Seller has
registered for the purposes of the GST/HST under the ETA, including the
registration number received thereunder;
(xvi)certificates, duly executed and acknowledged and made in accordance with
applicable Treasury Regulations, certifying that none of the Acquired Assets are
US real property interests within the meaning of the Foreign Investment in Real
Property Tax Act and thus Sellers are exempt from withholding thereunder; and
(xvii)a certificate, dated the Closing Date and signed by a duly authorized
officer of such Seller, that each of the conditions set forth in Sections 5.2(a)
and 5.2(b) have been satisfied.
(b)Buyers shall have delivered (or caused to have been delivered):
(i)to Seller Representative, on behalf of Sellers, the Base Purchase Price plus
the Estimated Working Capital less the Indemnification Escrow Amount less the
Loan Payoff Amount less the BRG Payoff Amount by wire transfer by Buyers or
their lender to an account or accounts and in such amounts specified by Seller
Representative in writing;
(ii)to Seller Representative, the Escrow Agreement, the Bill of Sale and
Assignment and Assumption Agreement, and the Employment Agreements, each duly
executed by Buyer;
(iii)to the Escrow Agent in accordance with the Escrow Agreement, the
Indemnification Escrow Amount;
(iv)to FIRST Insurance Funding of Canada Inc, the financier of the Easton
Product Liability Excess Insurance Policy and Easton Product Liability Insurance
Policy, the Easton Product Liability Amount;
(v)to Seller Representative, a certificate of the Secretary of each Buyer
certifying, as complete and accurate as of the Closing, attached copies of the
Governing Documents of Buyer and certifying and attaching all requisite
resolutions or actions of Buyer’s board of directors approving the execution and
delivery of this Agreement and the consummation of the Acquisition and
certifying to the incumbency and signatures of the officers of Buyer executing
this Agreement and any other document relating to the Acquisition; and
(vi)to Seller Representative, a certificate, dated the Closing Date and signed
by a duly authorized officer of each Buyer, that each of the conditions set
forth in Sections 5.1(a) and 5.1(b) has been satisfied.
2.8Adjustment Procedure.
(a)The “Adjustment Amount” (which may be a positive or negative number) will be
equal to the amount determined by subtracting the Reference Working Capital from
the Working Capital. For purposes of computing the Adjustment Amount, the
“Reference Working Capital” shall be $4,300,000.
(b)Buyer Representative shall prepare financial statements (the “Closing
Financial Statements”) of the Acquired Assets and Assumed Liabilities as of the
Effective Time. Buyer Representative shall then, using the same methodology as
was used to calculate the Estimated Working Capital, determine the Working
Capital based upon the Closing Financial Statements. Buyer Representative shall
deliver the Closing Financial Statements and its determination of Working
Capital and the Adjustment Amount to Seller Representative within 90 days
following the Closing Date.
(c)If, within 30 days following delivery to Seller Representative of the Closing
Financial Statements and, based thereon, Buyer Representative’s determination of
Working Capital and the Adjustment Amount, Seller Representative has not given
Buyer Representative written notice of Sellers’ objection to Buyer
Representative’s

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determination of Working Capital and the Adjustment Amount (which notice shall
state the basis of Seller Representative’s objection in reasonable detail), then
Working Capital and the Adjustment Amount as so determined by Buyer
Representative shall be binding and conclusive on the Parties.
(d)If Seller Representative duly gives Buyer Representative such notice of
objection, and if Seller Representative and Buyer Representative fail to agree
on the Adjustment Amount within 30 days of Buyer Representative’s receipt of the
objection notice from Seller Representative, either Seller Representative or
Buyer Representative may at any time thereafter elect, by written notice to the
other Party, to have the Adjustment Amount determined by the Independent
Accountants. Upon delivery of such written notice, each of Seller Representative
and Buyer Representative shall promptly (and, in any case, no later than 10 days
thereafter) deliver to the Independent Accountants and to the other Party its
proposed Closing Financial Statements and, based thereon, its determination of
Working Capital and the Adjustment Amount. The Parties agree that they shall
jointly instruct the Independent Accountants to (A) make their determination of
the Working Capital and the Adjustment Amount based on their independent review
(which will be in accordance with the guidelines and procedures set forth in
this Agreement) and, at the Independent Accountants discretion, a one-day
conference concerning the amount in dispute, at which conference each of Buyer
Representative and Seller Representative shall have the right to present its
respective position with respect to such dispute and have present its respective
advisors, counsel and accountants, (B) render a final resolution in writing to
Buyer Representative and Seller Representative (which final resolution shall be
requested by Buyer Representative and Seller Representative to be delivered not
more than 30 days following submission of such disputed matters), which shall be
final, conclusive and binding on the Parties with respect to the Working Capital
and the Adjustment Amount as finally determined by the Independent Accountants,
and (C) provide a written report to Buyer Representative and Seller
Representative, if requested by either of them, which sets forth in reasonable
detail the basis for the Independent Accountants’ final determination. No appeal
from such determination shall be permitted. The fees and expenses of the
Independent Accountants shall be allocated between Buyers, on the one hand, and
Sellers on the other hand, based upon the percentage which (x) the portion of
the Working Capital and Adjustment Amount in dispute not awarded to the Buyers
bears to (y) the amount actually contested by the Sellers. For example, if
Sellers claim the appropriate adjustment to the Working Capital is $100,000
greater than the amount determined by Buyer, and if the Independent Accountants
ultimately resolve the objection by awarding to Sellers $20,000 of the $100,000
contested, then the fees and expenses of the Independent Accountants will be
allocated 20% (i.e., 20,000/100,000 X 100) to Buyer and 80% to Sellers. Judgment
upon any decision by the Independent Accountants may be enforced by any court
having jurisdiction thereof.
(e)If the Adjustment Amount as finally determined is:
(i)less than the Estimated Adjustment Amount by an amount that is greater than
$215,000, then: (1) the Purchase Price shall be decreased by the amount of such
shortfall and (2) within three Business Days after such determination, at Buyer
Representative’s sole discretion, either (a) Seller Representative and Buyer
Representative shall issue joint written instructions to cause the Escrow Agent
to distribute the amount of such shortfall to or as directed by Buyer
Representative, on behalf of Buyers, in accordance with the Escrow Agreement or
(b) Sellers shall pay or cause to be paid such deficiency to or as directed by
Buyer Representative, on behalf of Buyers, by wire transfer of immediately
available funds to such bank account(s) as Buyer Representative shall specify to
Seller Representative in writing;
(ii)an amount that is not greater or less than the Estimated Adjustment Amount
by an amount of $215,000, then (1) the Purchase Price shall not be decreased or
increased by any amount and (2) no payment shall be made to or on behalf of
Buyers or Sellers pursuant to this Section 2.8 or otherwise on account of the
Adjustment Amount; or
(iii)greater than the Estimated Adjustment Amount by an amount that is greater
than $215,000, then (1) the Purchase Price shall be increased by the amount of
such excess and (2) Buyers shall, within three Business Days after such
determination, pay to or as directed by Seller Representative the amount of such
excess by wire transfer of immediately available funds to such bank account or
accounts as Seller Representative shall specify to Buyer Representative in
writing.
2.9Escrow of Indemnification Escrow Amount
. The Indemnification Escrow Amount shall be deposited with the Escrow Agent in
accordance with Section 2.7(b)(iii) of this Agreement and will be maintained and
distributed by the Escrow Agent in accordance with this Agreement and the Escrow
Agreement. The Escrow Agreement will provide for, among other things, deposit of
the

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Indemnification Escrow Amount with the Escrow Agent and the maintenance and
distribution thereof by the Escrow Agent for, in respect of the Indemnification
Escrow Amount a period of 24 months from and after the Closing.
2.10Earn-Out.
(a)Subject to Section 7.13, Article 8 and the terms and conditions set forth in
this Section 2.10, Buyers will pay to CA Seller, on behalf of the Sellers, up to
an aggregate of $19,500,000 as additional consideration for the Acquired Assets
based on EBITDA attributable to the Acquired Assets for the twelve (12) month
period ending October 31, 2015 (“2015 Actual EBITDA”) and 2016 (“2016 Actual
EBITDA”); provided, however, that in no event shall such additional
consideration exceed $9,000,000 for the twelve (12) month period ending October
31, 2015, and $10,500,000 for the twelve (12) month period ending October 31,
2016. The amount of the additional consideration actually earned by Sellers for
each of the twelve (12) month period ending October 31, 2015 and October 31,
2016 (respectively, the “2015 Earn-Out” and “2016 Earn-Out” and, collectively,
the “Earn-Out Amounts”) shall be that amount which is determined as set forth in
the table below in the column titled “2015 Earn-Out” or “2016 Earn-Out,” as
applicable, for each such twelve (12) month period (each of which is mutually
exclusive and not cumulative) and falls within the following ranges:
Applicable Year
Earn-Out Range
2015 Earn-Out
2016 Earn-Out
2015
2015 Actual EBITDA is less than the 2015 EBITDA Minimum.
$0.00
N/A
2015 Actual EBITDA of equal to or greater than the 2015 EBITDA Minimum but less
than the 2015 EBITDA Maximum.
An amount equal to three times the excess of 2015 Actual EBITDA over the 2015
EBITDA Threshold
N/A
2015 Actual EBITDA equal to or greater than the 2015 EBITDA Maximum.
Total 2015 Earn-Out of $9,000,000.
N/A
2016
2016 Actual EBITDA is less than 2016 EBITDA Minimum
N/A
$0.00
2016 Actual EBITDA of equal to or greater than the 2016 EBITDA Minimum but less
than the 2016 EBITDA Maximum.
N/A
An amount equal to three times the excess of 2016 Actual EBITDA over the 2016
EBITDA Threshold
2016 Actual EBITDA equal to or greater than 2016 EBITDA Maximum.
N/A
Total 2016 Earn-Out of $10,500,000.

(b)For purposes of this Section 2.10, “2015 EBITDA Minimum” means $5,500,000 and
“2016 EBITDA Minimum” means $8,000,000.
(c)For purposes of this Section 2.10, “2015 EBITDA Threshold” means $4,500,000
and “2016 EBITDA Threshold” means $6,500,000.
(d)For purposes of this Section 2.10, “2015 EBITDA Maximum” means $7,500,000 and
“2016 EBITDA Maximum” means $10,000,000.
(e)The 2015 Earn-Out shall be determined by comparing 2015 Actual EBITDA (as
determined by Buyer Representative based on Buyers’ audited financial statements
for the period ending October 31, 2015) to the 2015 EBITDA Threshold in the
above table, identifying where 2015 Actual EBITDA falls in the specified range,
and determining the corresponding 2015 Earn-Out. The 2016 Earn-Out shall be
determined by comparing 2016 Actual EBITDA (as determined from Buyers’ audited
financial statements for such period ending October 31, 2015) to the 2016 EBITDA
Threshold in the above table, identifying where 2016 Actual EBITDA falls in the
specified range, and determining the corresponding 2016 Earn-Out. Furthermore,
in order to avoid any doubt, if 2015 Actual EBITDA or 2016 Actual EBITDA is less
than the 2015 EBITDA Minimum or 2016 EBITDA Minimum, respectively, then no
Seller shall be entitled to any 2015 Earn-Out or 2016 Earn-Out, as applicable.

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(f)To illustrate the determination of the 2015 Earn-Out, if 2015 Actual EBITDA
of the Business is $6,500,000, then the 2015 Earn-Out would be equal to
$6,000,000 (($6,500,000 - $4,500,000 [2015 Earn-Out Threshold])) x 3 =
$6,000,000. Two further illustrations are as follows:
2015 Illustration
Illustration of Earnout Calculation Assuming 2015 EBITDA Minimum is achieved
Illustration of Earnout Calculation Assuming 2015 EBITDA Maximum is achieved
2015 EBITDA
$5.5 Million
$7.5 Million
2015 Threshold EBITDA
$4.5 Million
$4.5 Million
2015 Eligible EBITDA less 2015 Threshold EBITDA
$1.0 Million
$3.0 Million
Earnout Amount (Difference Multiplied by Three)
$3.0 Million
$9.0 Million

2016 Illustration
Illustration of Earnout Calculation Assuming 2016 EBITDA Minimum is achieved
Illustration of Earnout Calculation Assuming 2016 EBITDA Maximum is achieved
2016 EBITDA
$8.0 Million
$10.0 Million
2016 Threshold EBITDA
$6.5 Million
$6.5 Million
2016 Eligible EBITDA less 2016 Threshold EBITDA
$1.5 Million
$3.5 Million
Earnout Amount (Difference Multiplied by Three)
$4.5 Million
$10.5 Million

(g)Notwithstanding anything to the contrary in this Section 2.10, the EBITDA of
the Business shall be determined: (1) in accordance with the Agreed Upon
Accounting Principles, (2) with respect to periods prior to the Effective Time
based on the EBITDA of Sellers from November 1, 2014 until the Effective Time,
and (3) with respect to periods beginning on the Effective Time based on the
EBITDA of the Business as operated by Buyers after the Effective Time. For
purposes of this Section 2.10, “EBITDA” for any applicable period shall mean the
EBITDA attributable to the Acquired Assets calculated as if the Business were
being operated as an independent, standalone corporation, regardless of physical
location of the operation and the Acquired Assets. For the periods after the
Effective Time, EBITDA shall be derived from the net income as set forth in the
financial records of Buyers for the applicable period, subject to any
adjustments that are required by Sections 2.10(g)(i) through (xiv) and as more
particularly discuss in Section 2.10(h). In determining the EBITDA of the
Business (for both before and after the Effective time) for purposes of this
Section 2.10, the following adjustments shall be made, without duplication:
(i)EBITDA shall be computed without any deduction made for legal, audit,
accounting or other out-of-pocket fees and expenses arising out of this
Agreement, the Acquisition or for any regulatory compliance requirements of the
Buyers, to the extent they exceed the costs incurred by the Business in the
ordinary course for similar services in the fiscal year of the Business ended
2014;
(ii)EBITDA shall be computed without regard to extraordinary items of gain or
loss as defined under US GAAP;
(iii)2015 Actual EBITDA and 2016 Actual EBITDA shall be increased to account for
$41,000 in lost EBITDA related to the stoppage of sales of Narrow-Wide Rings in
Germany pursuant to Section 7.15(b) and any additional adjustments that may be
necessary for the stoppages of sales of Narrow-Wide Rings in other jurisdictions
as may be agreed pursuant to Section 7.15(b), provided that such amounts
added-back to 2015 Actual EBITDA or 2016 Actual EBITDA shall be reduced by any
actual EBITDA generated on account of any sales of Narrow-Wide Rings in
jurisdictions previously subject to any stoppages for the relevant twelve (12)
month period;
(iv)EBITDA shall not include any gains, losses or profits realized from the sale
of any assets other than Inventories in the ordinary course of business or any
impairment charges related to assets other than Inventories;

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(v)EBITDA shall not include any realized or unrealized currency exchange gains
or losses;
(vi)Any costs of stock options granted to employees of the Business or any other
compensation arrangements that lead to an overall increase in costs (other than
those (i) incurred in the ordinary course of business, (ii) approved or
recommended by the Seller’s Representative or (iii) in respect of stock options
granted to Chris Tutton) shall be excluded for purposes of the calculation of
EBITDA;
(vii)Any amounts that arise as a result of any compliance changes made as a
result of any Legal Requirement imposed on Buyers or any Affiliate of any of
them (including any amounts imposed regarding the matters covered by item no. 2
in Schedule 8.2(a)(vii)) that would not have been required or incurred by
Sellers if the Business had not been sold to the Buyers, shall be excluded for
the purposes of the calculation of EBITDA; provided, however, that amounts or
costs imposed (i) with respect to any violations of any Legal Requirement as a
direct result of the operation of the Business after the Effective Date pursuant
to a decision by Chris Tutton or (ii) with respect to any violations of any
Legal Requirement as a result of the operation of the Business prior to the
Effective Date, in each case, shall be included for the purposes of the
calculation of EBITDA;
(viii)Without limiting the generality of clause (vii) above, any amounts for
corporate overhead of Buyers in each of the fiscal years attributable to
initiatives not driven by any Legal Requirement, including inter-company and
intra-company allocation such as audit and accounting fees, legal fees,
insurance, head office charges, internal service charges, financing charges, and
other like charges, in each case, related thereto, shall be excluded for
purposes of the calculation of EBITDA to the extent they exceed the costs
incurred by the Business in the ordinary course for the similar services in the
fiscal year of the Business ended 2014; provided, however, that, unless
otherwise mutually agreed to by Buyer Representative and Seller Representative
in writing, any inter-company or intra-company arrangements shall not be
included in this exclusion to the extent that such arrangements are on terms
substantially the same as terms that would otherwise be available from an
unaffiliated party;
(ix)Any costs incurred that arise as a result of any relocation of a current
Facility to any facility other than a current Facility shall be excluded for the
purposes of the calculation of EBITDA;
(x)EBITDA shall not include any royalties, fees or other charges paid pursuant
to the Perpetual Non-US IP License, or any inter-corporate management or
services fees of the Buyers, the Buyer Guarantor, or any of their Related
Persons to the extent they exceed the costs incurred by the Business in the
ordinary course for the similar services in the fiscal year of the Business
ended 2014; provided, however, that, unless otherwise mutually agreed to by
Buyer Representative and Seller Representative in writing, any inter-company or
intra-company arrangements shall not be included in this exclusion to the extent
that such arrangements are on terms substantially the same as terms that would
otherwise be available from an unaffiliated party;
(xi)EBITDA shall not include the impact of the required adoption of new
standards under US GAAP by the Buyers or any impact for the accounting of the
acquisition of the Business by the Buyers under US GAAP;
(xii)EBITDA shall not include any start-up costs relating to expansion of the
Business or new initiatives incurred to generate benefits beyond the Earn-Out
Period;
(xiii)Any other adjustments which the Seller or the Buyer believe are required
to reflect the results of the Business on the same basis as it was operated by
the Sellers prior to the Effective Time and which are agreed upon in writing by
Buyer Representative and Seller Representative; and
(xiv)The purchase and sales prices of goods and services sold by the Business to
Buyers or its Related Persons or purchased by the Business from Buyers or its
Related Persons shall be at prices that reflect amounts that the Business would
have received or paid if dealing with an independent party in an arm’s-length
commercial transaction.
(h)Buyer Representative shall prepare, and deliver to Seller Representative, (1)
on or before December 31 of each applicable year, a statement (the “EBITDA
Statement”) evidencing in reasonable detail the calculation of each of (i) 2015
Actual EBITDA and the 2015 Earn-Out based thereon, and (ii) 2016 Actual EBITDA
and the 2016 Earn-Out based thereon (it being understood that 2015 Actual EBITDA
and 2016 Actual EBITDA will be based on Buyers’ internal financial records for
the twelve (12) month period ended October 31 of such applicable period), and
such EBITDA Statement must be accompanied by a certificate of the Chief
Financial Officer of the Buyer Guarantor certifying that the calculation of
EBITDA and all adjustments were prepared in accordance with the provisions of
this Agreement to the best of his knowledge, and (2) within 60 days of Buyer
Representative’s receipt

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of its audited financial statements for the applicable twelve (12) month period
ending December 31, a statement (the “Audited EBITDA Statement”) evidencing in
reasonable detail the impact on (i) 2015 Actual EBITDA and the 2015 Earn-Out
based thereon, and (ii) 2016 Actual EBITDA and the 2016 Earn-Out based thereon,
in each case, based on any adjustments resulting from such audited financial
statements (it being understood that (I)  2015 Actual EBITDA shall be derived
from (A) the January 1 through October 31 period from such fiscal audited
financial statements ended December 31, 2015 and (B) the preceding November 1
through and December 31 period from Buyer’s internal financial records of the
Business and (II) 2016 Actual EBITDA shall be derived from (A) the January 1
through October 31 period from such fiscal audited financial statements ended
December 31, 2016 and (B) the preceding November 1 through December 31 period
from Buyer’s fiscal audited financial statements ended December 31, 2015), and
such Audited EBITDA Statement must be accompanied by a certificate of the Chief
Financial Officer of the Buyer Guarantor certifying that the calculation of the
impact on EBITDA (and the changes to EBITDA vis-à-vis the EBITDA as reported on
the EBITDA Statement) and all adjustments were prepared in accordance with the
provisions of this Agreement to the best of his knowledge; provided, that if an
Earn-Out Amount delivered pursuant to an EBITDA Statement is subject to an
objection pursuant to Sections 2.10(i) and (j), the required delivery date of
the subsequent Audited EBITDA Statement shall be delayed to a date that is 45
days after the resolution of such dispute.
(i)If within 30 days following delivery of either an EBITDA Statement or an
Audited EBITDA Statement, Seller Representative has not given Buyer
Representative written notice of its objection as to the calculations or
adjustments set forth therein (which notice shall state the basis of Sellers’
objection in reasonable detail), then the applicable Earn-Out Amount, in the
case of a delivered EBITDA Statement, or the impact on the Earn-Out Amount, in
the case of a delivered Audited EBITDA Statement, in each case, as calculated
therein by Buyer Representative (including any portion of the calculation to
which Seller does not object) shall be binding and conclusive on the Parties (it
being understood that the EBITDA calculation contained in a EBITDA Statement
shall be subject to the dispute procedures set forth in Sections 2.10(i) and (j)
upon delivery of the Audited EBITDA Statement evidencing the audited
calculations of such EBITDA amount). Upon each of the 2015 Earn-Out or 2016
Earn-Out becoming binding and conclusive upon the Parties (whether pursuant to
this Section 2.10(i) or pursuant to a final determination or resolution pursuant
to Section 2.10(j)), if:
(i)such Earn-Out Amount was based on an EBITDA Statement, then Buyer
Representative shall deliver, by wire transfer to an account or accounts and in
such amounts specified by Seller Representative in a writing delivered to Buyer
Representative, the 2015 Earn-Out and/or 2016 Earn-Out, as applicable; or
(ii)such Earn-Out Amount was impacted based on an Audited EBITDA Statement, then
either:
(1)in the event the applicable Earn-Out Amount was increased pursuant to the
Audited EBITDA Statement, Buyer Representative shall deliver, by wire transfer
to an account or accounts and in such amounts specified by Seller Representative
in a writing delivered to Buyer Representative, an amount equal to the
difference between (x) the applicable Earn-Out Amount as delivered pursuant to
the Audited EBITDA Statement and (y) the applicable Earn-Out Amount as delivered
pursuant to the EBITDA Statement; or
(2)in the event the applicable Earn-Out Amount was decreased pursuant to the
Audited EBITDA Statement, at Buyer Representative’s sole discretion, either (A)
Seller Representative shall deliver, by wire transfer to an account or accounts
and in such amounts specified by Buyer Representative in a writing delivered to
Buyer Representative or (B) Buyer Representative and Seller Representative shall
direct Escrow Agent to deliver to Buyer Representative from the Indemnification
Escrow Amount, in either case, an amount equal to the difference between (x) the
applicable Earn-Out Amount as delivered pursuant to the Audited EBITDA Statement
and (y) the applicable Earn-Out Amount as delivered pursuant to the EBITDA
Statement.
(j)If Seller Representative timely gives Buyer Representative such notice of
objection described in Section 2.10(i), above, and if Seller Representative and
Buyer Representative fail to resolve the issues outstanding with respect to the
calculation of the applicable Earn-Out Amount within 30 days of Buyer
Representative’s receipt of such objection notice, either Seller Representative
or Buyer Representative may elect, by written notice to the other Party, which
written notice shall be accompanied by a statement (the “Electing Party’s
Earn-Out Statement”) evidencing in reasonable detail such electing Party’s (1)
basis of objection to the other Party’s calculation of the applicable Earn-Out
Amount and (2) calculation of the applicable Earn-Out Amount, to have the
applicable Earn-Out Amount determined by the either the Independent Accountants
or the Arbitration Panel, depending upon the Amount in Controversy. For purposes
of this Section 2.10(j), the “Amount in Controversy” means amount of the
discrepancy

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between Buyer Representative’s calculation of the applicable Earn-Out Amount and
Seller Representative’s calculation of the applicable Earn-Out Amount.
(i)In the event the Amount in Controversy is less than or equal to $500,000, the
electing Party shall provide the Electing Party’s Earn-Out Statement to the
Independent Accountants contemporaneously with the provision of such statement
to the other Party as set forth in Section 2.10(j). Upon receipt by the
non-electing Party of the Electing Party’s Earn-Out Statement, such non-electing
Party shall promptly (but in no event later than 10 days thereafter) submit to
the electing Party and the Independent Accountants a statement evidencing in
reasonable detail its (1) basis of objection to the electing Party’s calculation
of the applicable Earn-Out Amount and (2) calculation of the applicable Earn-Out
Amount; provided, however, that if the non-electing Party fails to timely submit
such statement, then the applicable Earn-Out Amount shall be such amount as is
reflected in the Electing Party’s Earn-Out Statement. The Parties agree that
they shall jointly instruct the Independent Accountants to (A) make their
determination of the actual applicable Earn-Out Amount based on their
independent review (which will be in accordance with the guidelines and
procedures set forth in this Agreement) and, at the Independent Accountants
discretion, a one-day conference concerning the Amount in Controversy, at which
conference each of Buyer Representative and Seller Representative shall have the
right to present its respective position with respect to such dispute and have
present its respective advisors, counsel and accountants, (B) render a final
resolution in writing to Buyer Representative and Seller Representative (which
final resolution shall be requested by Buyer Representative and Seller
Representative to be delivered not more than 30 days following submission of
such disputed matters), which shall be final, conclusive and binding on the
Parties with respect to the actual Earn-Out Amount as finally determined by the
Independent Accountants, and (C) provide a written report to Buyer
Representative and Seller Representative, if requested by either of them, which
sets forth in reasonable detail the basis for the Independent Accountants’ final
determination. No appeal from such determination shall be permitted. The fees
and expenses of the Independent Accountants shall be allocated between Buyers,
on the one hand, and Sellers on the other hand, based upon the percentage which
(x) the difference between the Actual Earn-Out Amount finally determined by the
Independent Accountants and the Buyers’ calculation bears to (y) the Earn-Out
Amount contested by the Sellers. For example, if Sellers claim the applicable
Earn-Out Amount is $100,000 greater than the amount determined by Buyer, and if
the Independent Accountants ultimately resolve the objection by awarding to
Sellers $20,000 of the $100,000 contested, then the fees and expenses of the
Independent Accountants will be allocated 20% (i.e., 20,000/100,000 X 100) to
Buyer and 80% to Sellers.
(ii)In the event the Amount in Controversy is greater than $500,000, the
electing Party shall seek resolution of the applicable Earn-Out Amount through
binding arbitration administered at the British Columbia International
Commercial Arbitration Centre in Vancouver, British Columbia in accordance with
the International Commercial Arbitration Act of British Columbia by three
arbitrators, of whom each of Buyer, on the one hand, and Sellers, on the other
hand, shall designate one, and the third arbitrator shall be designated jointly
by the two appointed arbitrators (collectively, the “Arbitration Panel”). Each
member of the Arbitration Panel shall be a chartered professional accountant.
Each of Buyer Representative and Seller Representative shall submit to the
Arbitration Panel within ten (10) days after the appointment of the third
arbitrator its respective determination of the Earn-Out Amount, and a hearing
before the arbitrators so appointed shall be held within 90 days after the
appointment of the third arbitrator. Post-hearing briefs shall be submitted by
the Parties within 10 days after the end of such hearing. The Parties agree that
they shall jointly instruct the Arbitration Panel to (A) make its determination
based on an independent review (which will be in accordance with the guidelines
and procedures set forth in this Agreement), (B) render a final resolution in
writing to Buyer Representative and Seller Representative (which final
resolution shall be requested by Buyer Representative and Seller Representative
to be delivered not more than 30 days following the end of the hearing), which
shall be final, conclusive and binding on the Parties with respect to the actual
applicable Earn-Out Amount as finally determined by the Arbitration Panel and
(C) provide a written decision to Buyer Representative and Seller
Representative, if requested by either of them, which sets forth in reasonable
detail the basis for the Arbitration Panel’s final determination. In the event
of a conflict between this Section 2.10(j)(ii) and the rules or procedures under
the International Commercial Arbitration Act of British Columbia, this
Section 2.10(j)(ii) shall govern. Disputes about arbitration procedure shall be
resolved by the Arbitration Panel or, failing resolution, the International
Commercial Arbitration Act of British Columbia. The Arbitration Panel may render
a final resolution notwithstanding the failure of any Party to participate in
the Proceedings.

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The fees and expenses of the Arbitration Panel shall be allocated between
Buyers, on the one hand, and Sellers on the other hand, based upon the
percentage which (x) the difference between the Actual Earn-Out Amount finally
determined by the Arbitration Panel and the Buyers’ calculation bears to (y) the
Earn-Out Amount contested by the Sellers. For example, if Sellers claim the
applicable Earn-Out Amount is $100,000 greater than the amount determined by
Buyer, and if the Independent Accountants ultimately resolve the objection by
awarding to Sellers $20,000 of the $100,000 contested, then the fees and
expenses of the Independent Accountants will be allocated 20% (i.e.,
20,000/100,000 X 100) to Buyer and 80% to Sellers.
(k)Buyers’ obligation to pay each of the Earn-Out Amounts to or at the direction
of Seller Representative, on behalf of Sellers, in accordance with this Section
2.10 is an independent obligation of Buyers and is not otherwise conditioned or
contingent upon the satisfaction of any conditions precedent to any preceding or
subsequent Earn-Out Amount and the obligation to pay an Earn-Out Amount to or at
the direction of Seller Representative, on behalf of Sellers, shall not obligate
Buyers to pay any preceding or subsequent Earn-Out Amount. For the avoidance of
doubt and by way of example, if the conditions precedent to the payment of the
2015 Earn-Out are not satisfied, but the conditions precedent to the payment of
the 2016 Earn-Out are satisfied, Buyers would be obligated to pay the 2016
Earn-Out but not the 2015 Earn-Out.
(l)Buyers shall have the right to withhold and set off against any amount due to
be paid pursuant to this Section 2.10 the amount of any Damages to which any
Buyer Indemnified Persons may be entitled under Article 8 hereof and which (for
greater certainty) have been finally determined by a court of competent
jurisdiction or mutually agreed between the Buyer Representative and the Seller
Representative.
(m)The Parties understand and agree that (i) the contingent rights to receive
any Earn-Out Amount shall not be represented by any form of certificate or other
instrument, are not transferable, except by operation of Legal Requirement and
do not constitute an equity ownership interest in any Buyer, (ii) no Seller
shall have any rights as a security holder of any Buyer as a result of such
Seller’s contingent right to receive any Earn-Out Amount hereunder, and (iii) no
interest is payable with respect to any Earn-Out Amount.
(n)Each Seller acknowledges that (i) there are no assurances that such Seller
will receive any Earn-Out Amount and Buyer has not promised or projected any
Earn-Out Amount and (ii) the parties intend the express provisions of this
Agreement to govern their contractual relationships.
(o)The Earn-Out Amounts will be allocated to goodwill in a manner consistent
with the Tax Purchase Price Allocation in Section 2.5 and paid by the applicable
Buyer to the appropriate Seller.
(p)U.S. Tax Treatment of Earn-Out.
(i)US Buyer and US Seller agree that the sale and purchase of the Acquired
Assets pursuant to the terms of this Agreement represents a contingent payment
sale with a stated maximum selling price as contemplated by Treasury Regulations
Sections 15A.453-1(c)(1) - (2). As a result, any payment of the Earn-Out Amounts
allocable to the Acquired Assets purchased by the US Buyer (each an “Installment
Sale Payment”) will constitute an installment sale for purposes of Code Section
453.
(ii)In calculating the portion of each Installment Sale Payment that constitutes
interest, each Buyer and each Seller agree that each applicable Buyer shall
impute interest to the Installment Sale Payment by applying the mid-term
applicable federal rate, as determined by Code Section 1274(d), for interest
compounding annually for the month in which the Closing Date occurs, and shall
in writing inform Seller Representative of the amount of the imputed interest in
each tax year.
(iii)Each Buyer and each Seller agree that, for United States federal income tax
purposes, each Installment Sale Payment shall be treated as additional purchase
price paid to or on account of such Seller for the Acquired Assets except to the
extent a portion of an Installment Sale Payment constitutes interest for United
States tax purposes pursuant to this Section 2.10(m).
(q)Canadian Tax Treatment of Earn-Out. Earn-Out Amounts allocated to the
Acquired Assets purchased by the CA Seller will be taxed in accordance with the
provisions of the ITA. To the extent any Earn-Out Amounts are subject to
Canadian withholding tax under the ITA, subject to a reduction in the applicable
rate of withholding tax under the Canada-U.S. Income Tax Convention, such
withholding tax will be withheld from such Earn-Out Amounts and remitted to the
Canadian government.
(r)Forfeiture of Earn-Out Amounts. Subject to Section 7.13(e), if Chris Tutton’s
employment with RFE Holding (Canada) Corp. is (i) terminated for Just Cause (as
such term is defined in his Employment Agreement), or (ii) if Mr. Tutton
terminates his employment without Good Reason (as such term is defined in his
Employment Agreement), then Sellers shall forfeit all rights to the 2015
Earn-Out Amount and the 2016 Earn-Out

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Amount to the extent such amounts have not yet been earned. The Sellers will not
forfeit any rights to the 2015 Earn-Out Amount or the 2016 Earn-Out Amount by
reason of Mr. Tutton’s (i) death or (ii) his disability or incapacitation.
2.11Third Party Consents
. To the extent that any Seller’s rights under any Contract or Governmental
Authorization constituting an Acquired Asset, or any other Acquired Asset, may
not be assigned to the applicable Buyer without the consent of another Person
which has not been obtained, this Agreement shall not constitute an agreement to
assign the same if an attempted assignment would constitute a breach thereof or
be unlawful, and the applicable Seller, at its expense, shall use its reasonable
best efforts to obtain any such required consent(s) as promptly as possible. If
any such consent shall not be obtained or if any attempted assignment would be
ineffective or would impair the applicable Buyer’s rights under the Acquired
Asset in question so that such Buyer would not in effect acquire the benefit of
all such rights, the applicable Seller, to the maximum extent permitted by law
and the Acquired Asset, shall act after Closing as such Buyer’s agent in order
to preserve and obtain for it the benefits thereunder (including the economic
benefit) and shall cooperate, to the maximum extent permitted by Legal
Requirement and the Acquired Asset, with such Buyer in any other reasonable
arrangement designed to provide such benefits to such Buyer. Notwithstanding any
provision in this Section 2.11 to the contrary, no Buyer shall be deemed to have
waived its rights under Section 5.2 hereof unless and until such Buyer either
provides written waivers thereof or elects to proceed to consummate the
Acquisition.

3.
REPRESENTATIONS AND WARRANTIES OF SELLERS.

Each Seller (unless otherwise specified below) represents and warrants to each
Buyer as follows:
3.1Organization and Good Standing.
(a)Schedule 3.1(a) contains a complete and accurate list of such Seller’s
jurisdictions of incorporation and any other jurisdictions in which it is
qualified to do business as a foreign entity. Such Seller is duly incorporated,
validly existing and in good standing under the laws of its jurisdiction of
incorporation or organization, with full power and authority to conduct the
Business, to own or use the assets or property that it purports to own or use,
and to perform all its obligations under the Contracts. Such Seller is duly
qualified to do business as a foreign entity and is in good standing under the
laws of each state or other jurisdiction in which either the ownership or use of
the assets or properties owned or used by it, or the nature of the activities
conducted by it, requires such qualification.
(b)(i) The US Seller is the only Subsidiary of the CA Seller, (ii) the US Seller
has no Subsidiaries and (iii) except as disclosed in Schedule 3.1(b), no Seller
owns any capital stock or other securities of any other Person.
(c)Such Seller has made available to Buyer complete and accurate copies of the
Governing Documents of such Seller, each as currently in effect.
3.2Enforceability; Authority; No Conflict.
(a)This Agreement constitutes the legal, valid and binding obligation of such
Seller, enforceable against it in accordance with its terms. Upon the execution
and delivery by such Seller of the Escrow Agreement, and each other agreement to
be executed or delivered by such Seller at the Closing (collectively, the
“Seller Closing Documents”), each such Seller Closing Document will constitute
the legal, valid and binding obligation of such Seller, enforceable against it
in accordance with its terms. Such Seller has the full right, power and
authority to execute and deliver this Agreement and each Seller Closing Document
to which it is a party and to perform its respective obligations under this
Agreement and Seller Closing Documents, and such action has been duly authorized
by all necessary action such Seller’s respective board of directors (or
equivalent thereof) and equity holders.
(b)Assuming that all consents, approvals, authorizations and other actions
described in Section 3.2(c) are obtained, neither the execution and delivery of
this Agreement nor the consummation or performance of any of the Acquisition
will, directly or indirectly (with or without notice or lapse of time): (i)
contravene or conflict with the Governing Documents of such Seller or any
resolution adopted by such Seller’s board of directors (or equivalent thereof)
or equity holders; (ii) contravene or conflict with or constitute a violation of
any provision of any Legal Requirement, judgment, injunction, Order or decree
binding upon or applicable to such Seller, the Acquired Assets or the Business;
(iii) give any Governmental Body or other Person the right to challenge any of
the Acquisition or to exercise any remedy or obtain any relief under any Legal
Requirement or any Order to which such Seller or any of the Acquired Assets may
be subject; (iv) contravene, conflict with or result in a violation or breach of
any of the terms or requirements of, or give any Governmental Body the right to
revoke, withdraw, suspend, cancel, terminate or modify,

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any Governmental Authorization that is held by such Seller or that otherwise
relates to the Acquired Assets or to the Business; (v) Breach any provision of,
or give any Person the right to declare a default or exercise any remedy under,
or to accelerate the maturity or performance of, or payment under, or to cancel,
terminate or modify, any Contract; or (vi) result in the imposition or creation
of any Encumbrance upon or with respect to any of the Acquired Assets.
(c)Except as set forth in Schedule 3.2(c), such Seller is not required to give
any notice to or obtain any Consent from any Person, whether pursuant to a
Contract, Governmental Authorization or Legal Requirement, in connection with
the execution and delivery of this Agreement and the Seller Closing Documents or
the consummation or performance of any of the Acquisition.
3.3Ownership of Sellers
. Schedule 3.3 contains a complete and correct list of each owner of record and
beneficially 100% of the issued and outstanding shares of capital stock of each
Seller. There are no Contracts relating to the issuance, sale or transfer of any
equity securities or other securities of such Seller. None of the outstanding
equity securities of such Seller was issued in violation of the Securities Act
of 1933, as amended, or the Securities Act (British Columbia), as amended (in
each case as the context may require, the “Securities Act”), or any other Legal
Requirement.
3.4Residency
. CA Seller is not a non-resident for purposes of Section 116 of the ITA.
3.5Financial Statements
. The Legacy Sellers have delivered to Buyer: (a) an unaudited balance sheet of
RF Canada as at October 31, 2013 (including the notes thereto, the “Balance
Sheet”), and the related unaudited statements of income, changes in owners’
equity and cash flows for the fiscal year then ended, including in each case the
notes thereto, together with the review engagement report thereon of Leed
Advisors Inc., chartered professional accountants; (b) unaudited balance sheets
of such Seller as at October 31, 2011 and 2012, and the related statements of
income, changes in owners’ equity and cash flows for the fiscal years then
ended, including in each case the notes thereto together with, in the case of
the 2011 financial statements, a notice to reader report, or, in the case of the
2012 financial statements, a review engagement report thereon, in each case,
prepared by Leed Advisors Inc., chartered professional accountants; (c) an
unaudited balance sheet of such Seller as at October 31, 2014 (the “Interim
Balance Sheet”) and the related unaudited statement of income, for the 12 months
then ended, including in each case the notes thereto certified by such Seller’s
chief financial officer (or equivalent thereof) and (d) unaudited consolidated
internal financial statements of Easton Canada and US Seller through October 31,
2014. Such financial statements fairly present the financial condition and the
results of operations, changes in owners’ equity and cash flows of such Legacy
Seller as at the respective dates of and for the periods referred to in such
financial statements, all in accordance with IFRS. To the Knowledge of Sellers
and as set forth in Schedule 3.5, there are no divergences or departures from US
GAAP contained or reflected in the Interim Balance Sheet and the related
unaudited statement of income for the 12 months then ended. The financial
statements referred to in this Section 3.5 reflect the consistent application of
such accounting principles throughout the periods involved, except as disclosed
in the notes to such financial statements. The financial statements have been
prepared from and are in accordance with the accounting Records of such Seller.
The Interim Balance Sheet and the related unaudited statement of income for the
12 months calculated then ended do not reflect any profit or losses recognized
or calculated with respect to any intercompany transactions recorded thereon
with respect to transactions between the Legacy Sellers recorded thereon, if
any. Such Seller has delivered to Buyer all letters from such Seller’s
independent accountants to such Seller during the 24 months preceding the
execution of this Agreement, together with copies of all responses thereto.
3.6Books and Records
. The books of account and other financial Records of such Seller, all of which
have been made available to Buyer, are complete and correct in all material
respects and represent actual, bona fide transactions and have been maintained
in accordance with sound business practices. The minute books of such Seller,
all of which have been made available to Buyer, contain accurate and complete
Records of all meetings held, and corporate action taken, by the equity holders,
the boards of directors and committees thereof (and any similar governing bodies
and committees) of such Seller, and no meeting of any of such equity holders,
the boards of directors and committees thereof (and any similar governing bodies
and committees) has at any time since May 5, 2011 been held for which minutes
have not been prepared or are not contained in such minute books.

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3.7Sufficiency of Assets
. Except as set forth in Schedule 3.7, the Acquired Assets (i) constitute all of
the property and assets (real, personal or mixed, tangible and intangible) of
every kind and description, necessary for or at any time used in the conduct of
the Business, and are adequate to conduct the Business as currently conducted,
and (ii) include all of the operating assets and properties of such Seller.
3.8Owned Real Property
. No Seller owns, and has not at any time owned, any parcel of real property or
other interest in real property. CA Seller is not a foreign person within the
meaning of Code Sections 1445 and 897. None of the assets of US Seller is a
“United States real property interest” within the meaning of Section 897 of the
Code.
3.9Leased Real Property
. Schedule 3.9 contains a complete and correct list of each parcel of real
property or interest in real property (collectively, “Leased Real Property”)
held under lease, sublease, license or any other occupancy arrangement in which
such Seller holds an interest (each, a “Real Property Lease”), together with a
true, correct and complete list of all such Real Property Leases and all
amendments and supplements thereto. Such Seller has good and valid leasehold
title in all Real Property Leases, and, in each case, to the Knowledge of such
Seller, free and clear of all Encumbrances other than Permitted Encumbrances.
The Leased Real Property includes all real property necessary for the conduct of
the Business and is adequate to conduct such Seller’s operations as currently
conducted and as currently proposed to be conducted after Closing. Such Seller
has not assigned its interest under any Real Property Lease, or leased,
subleased or sublicensed all or any part of the space demised thereby, to any
Person (other than Buyer). No option has been exercised under any of the Real
Property Leases, except options whose exercise has been evidenced by a written
document, a true, correct and complete copy of which has been delivered to Buyer
with the corresponding Real Property Lease. Each Real Property Lease is valid
and binding in all material respects upon such Seller and, to the Knowledge of
such Seller, each other party thereto, and is in full force and effect and
modified as of the date hereof. Such Seller is in compliance in all material
respects with the terms of each Real Property Lease and to the Knowledge of such
Seller, no event has occurred and no condition exists which, with the giving of
notice or the lapse of time or both, would give rise to a right on the part of
the landlord thereunder to terminate a Real Property Lease.
3.10Title to Assets; Encumbrances
. Such Seller has good and marketable title to, or valid and subsisting
leasehold interests in the Acquired Assets free and clear of all Encumbrances,
except for Permitted Encumbrances. The Acquired Assets purchased from Grant
Thornton Limited, in its capacity as receiver of the assets of Race Face
Components Inc. and Race Face Holdings Inc., pursuant to that certain Purchase
and Sale Agreement dated April 28, 2011 were purchased in good faith for value
and RF Canada took possession of such Acquired Assets. Upon consummation of the
Acquisition, Buyer will have acquired good and marketable title to, or a valid
and subsisting leasehold interest in and to, each of the Acquired Assets,
including the Leased Real Property, free and clear of all Encumbrances, except
for Permitted Encumbrances.
3.11Condition of Facilities.
(a)Use of the Leased Real Property for the various purposes for which used is
and at all times since May 5, 2011 has been permitted as of right under all
applicable zoning Legal Requirements. The Leased Real Property and all
Improvements thereon are, and at all times since May 5, 2011 have been, in
compliance with all applicable Legal Requirements in all material respects,
including those pertaining to zoning, building and the disabled, are in good
repair and in good condition, ordinary wear and tear excepted, and are free from
latent and patent defects. No part of any of such Improvements encroaches on any
real property not included in the Leased Real Property. All utility systems
serving the Leased Real Property are adequate for the conduct of the Business.
Each Leased Real Property has adequate access for ingress from and egress to a
public way. There is no pending or, to the Knowledge of such Seller, threatened
condemnation, eminent domain or similar proceeding with respect to any of the
Leased Real Property. No Leased Real Property is located within any flood plain
or area subject to wetlands regulation or any similar restriction.
(b)Each item of Tangible Personal Property is in good repair and good operating
condition, ordinary wear and tear excepted, is suitable for immediate use in the
ordinary course of business, consistent with past practice, and is free from
latent and patent defects. No item of Tangible Personal Property is in need of
repair or replacement other than as part of routine maintenance in the ordinary
course of business, consistent with past practice.

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Except as disclosed in Schedule 3.11(b), as of Closing, all Tangible Personal
Property used in the Business is in the possession of such Seller.
3.12Accounts Receivable
. Except as disclosed in Schedule 3.12: (a) the Accounts Receivable reflected on
the Interim Balance Sheet or, if arising since the date of the Interim Balance
Sheet, the books of account of such Seller are bona fide, represent valid
obligations owing to such Seller, and have arisen or were acquired in the
ordinary course of business, and in a manner substantially consistent with past
practice and with the regular credit practices of such Seller; (b) such Seller’s
provision for doubtful accounts reflected on the Interim Balance Sheet has been
determined in accordance with IFRS consistently applied; and (c) since the date
of the Interim Balance Sheet, such Seller has not canceled, reduced, discounted,
credited or rebated or agreed to cancel, reduce, discount, credit or rebate, in
whole or in part, any Accounts Receivables, except in the ordinary course of
business, consistent with past practice. Schedule 3.12 contains a complete and
accurate list of all Accounts Receivable as of the date of the Interim Balance
Sheet, which list sets forth the aging of each such Account Receivable.
3.13Inventories
. Except for reserves reflected on the Interim Balance Sheet, the Inventories of
such Seller (including that reflected on the Interim Balance Sheet), taken as a
whole, are in merchantable condition, are suitable and usable or, in the case of
finished goods, salable in the ordinary course of business, consistent with past
practice, for the purposes for which such Inventories were intended, and have
been reflected on the Interim Balance Sheet and carried on the books of account
of such Seller at the lower of cost or market value.
3.14No Undisclosed Liabilities
. Except for (a) Liabilities reflected, or reserved or accrued against or
otherwise disclosed in or on the Interim Balance Sheet or the Balance Sheet and
Current Liabilities that were incurred in the ordinary course of business,
consistent with past practice, since the date of the Interim Balance Sheet, (b)
Liabilities of future performance under executory Contracts, (c) obligations
incurred pursuant to this Agreement and (d) Retained Liabilities, such Seller
has no other material Liabilities.
3.15Taxes.
(a)All Tax Returns required to be filed and relating in any manner to any of the
Acquired Assets or the Business have been timely filed. All such Tax Returns (i)
were prepared in the manner required by the applicable Legal Requirement and
(ii) are true, correct and complete in all material respects.
(b)Such Seller has paid, or caused to be paid, all Taxes due with respect to all
of the Acquired Assets or the Business whether or not shown (or required to be
shown) on a Tax Return; and such Taxes paid include those for which such Seller
may be liable in their own right, or as the transferee of the assets of, or as
successor to, any other entity.
(c)There has been no notice of a deficiency or assessment or other claim
relating in any manner to any of the Acquired Assets or the Business from any
Governmental Body which has not been fully paid or finally settled. There is no
audit examination, Proceeding, claim assessment, or deficiency pending or
threatened that relates to any of the Acquired Assets or the Business. Such
Seller has not given nor has there been given on such Seller’s behalf a waiver
or extension of any statute of limitations relating to the payment of Taxes
relating to any of the Acquired Assets or the Business.
(d)Such Seller has complied with all Tax Legal Requirements relating to the
withholding of Taxes and the payment thereof to the appropriate Governmental
Body, including, without limitation, Taxes required to have been withheld, paid
or otherwise remitted to a Governmental Body in connection with amounts paid or
owing to, or received or deemed to be received as a benefit by, any current of
former employee or independent contractor, creditor, shareholder or other third
party, and (i) all IRS Forms W-2 and 1099 forms, in the case of US Seller have
been properly completed and filed and (ii) all prescribed information returns in
respect of all such amounts, in the case of CA Seller, have been properly
completed and filed.
(e)No claim has ever been made by any Governmental Body with respect to any of
the Acquired Assets or the Business in a jurisdiction where such Seller does not
file Tax Returns that such Seller may be subject to taxation in that
jurisdiction nor, to the Knowledge of such Seller, is there any material factual
or legal basis for such claim.

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(f)There are no Encumbrances on any of the Acquired Assets that arose in
connection with any failure (or alleged failure) to pay any Taxes and there are
no Encumbrances for any Tax upon any Acquired Asset. Buyer will not be liable
for, and none of the Acquired Assets will be subject to an Encumbrance with
respect to any Taxes arising out of, relating to or in respect of the Business
or any of the Acquired Assets for any Tax period or portion thereof ending on or
before the Closing Date.
(g)None of the Acquired Assets being sold by US Seller is (i) “tax-exempt use
property” within the meaning of Section 168(h) of the Code, (ii) “tax-exempt
bond financed property” within the meaning of Section 168(g)(5) of the Code or
(iii) property that is required to be treated as owned by another Person
pursuant to the provisions of Section 168(f)(8) of the Internal Revenue Code of
1954, as amended and in effect immediately prior to the enactment of the Tax
Reform Act of 1986.
(h)US Seller will not be required to include any item of income in, or exclude
any item of deduction from, taxable income for any taxable period (or portion
thereof) ending after the Closing Date as a result of any “closing agreement” as
described in Code Section 7121 (or any corresponding provision of state, local
or non-U.S. income Tax law).
(i)None of the Assumed Liabilities transferred by the US Seller is an obligation
to make a payment that is not deductible under Code Section 280G. No Seller is a
party to any Tax indemnity, allocation or sharing agreement. No Seller (i) has
been a member of an affiliated group filing a consolidated federal income Tax
Return; and (ii) has liability for Taxes of any Person under Treasury
Regulations 1.1502-6 (or any similar provision of state, local or non-U.S. law)
as a transferee or successor, by contract or otherwise.
(j)US Seller has not distributed stock of another Person, or has had its stock
distributed by another Person, in a transaction that was purported or intended
to be governed in whole or in part by Code Section 355 or Code Section 361.
(k)US Seller has not been a party to any “reportable transaction” as defined in
Code Section 6707A(c)(1) and Treasury Regulation Section 1.6011-4(b) or any
“listed transaction,” as defined in Code Section 6707A(c)(2) and Treasury
Regulation Section 1.6011-4(b)(2).
(l)The Acquired Assets do not include any shares of capital stock of, or any
other interest in, any other Person.
3.16No Material Adverse Effect
. Since the date of the Balance Sheet, there has not been any Material Adverse
Effect, and no event has occurred or circumstance exists that would reasonably
be expected to have a Material Adverse Effect.
3.17Employee Benefits.
(a)Schedule 3.17(a) sets forth a list of each Company Benefit Plan.
(b)CA Seller Company Benefit Plans. With respect to each Company Benefit Plan of
CA Seller:
(i)The list and description of the Company Benefit Plans contained in
Schedule 3.17(b)(i) is a complete, correct, up-to-date and accurate list and
description of all Company Benefit Plans together with all amendments which have
been made to such plans since their inception and all of the employee benefit
booklets relating thereto. All Company Benefit Plans have been properly adopted
or made and comply in all material respects with all applicable Legal
Requirements. All Company Benefit Plans have been registered or filed with or
accepted by the appropriate authorities where required. All Company Benefit
Plans under which contributions by the CA Seller are intended to be deductible
for income tax purposes have been filed with and accepted by Canada Revenue
Agency and satisfy the registration requirements of Canada Revenue Agency in all
respects (if applicable). The CA Seller has made all contributions required to
be made to the Company Benefit Plans, including those required under the Company
Benefit Plans or otherwise by Legal Requirement or by contract and are not in
breach of any obligations under any Company Benefit Plans. The CA Seller has
paid in full all contributions and premiums due for the period up to the Closing
Date even though not otherwise required to be paid until a later date or has
made full adequate disclosure of and provision for such contributions and
premiums in the Interim Balance Sheet or the Balance Sheet. No taxes, penalties
or fees are owing or exigible under or in respect of any Company Benefit Plan.
(ii)The CA Seller has furnished to the Purchaser true, correct, up-to-date and
complete copies of all the Company Benefit Plans (or, where oral, written
summaries thereof) as amended as of the date hereof together with all related
documentation including current and past documents and all amendments thereto,
including any insurance policies, plan summaries, employee booklets and
personnel manuals. The booklets,

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brochures, summaries, descriptions and manuals prepared for and circulated to
the Current Employees and former employees and their beneficiaries concerning
each Company Benefit Plan, together with all written communications of a general
nature provided to such Current Employees and former employees and their
beneficiaries, accurately describe the benefits provided under each such Company
Benefit Plan referred to therein.
(iii)No provision of any Company Benefit Plan or of any agreement, and no act or
omission of the CA Seller in any way limits, impairs, modifies or otherwise
affects the rights of the CA Seller to unilaterally amend or terminate any
Company Benefit Plan.
(iv)All liabilities of the CA Seller (whether accrued, absolute, contingent or
otherwise) related to all Company Benefit Plans have been fully disclosed in
accordance with IFRS in the financial statements of the CA Seller delivered
pursuant to Section 3.5.
(v)No amendments have been made to any Company Benefit Plan and no improvement
to any Company Benefit Plan have been promised and no amendments or improvements
to any Company Benefit Plan will be made or promised by the CA Seller prior to
Closing.
(vi)No Company Benefit Plan is a “registered pension plan”, a “deferred profit
sharing plan”, a “retirement compensation arrangement” or a “registered
retirement savings plan” each as such term is defined in the ITA.
(vii)No Company Benefit Plan provides post-retirement benefits to or in respect
of the Current Employees or any former employees or to or in respect of the
beneficiaries of such Current Employees and former employees and the CA Seller
has never sponsored or participated in such plan.
(viii)The execution of this Agreement and the completion of the Acquisition will
not (either alone or in conjunction with any additional or subsequent events)
constitute an event under any Company Benefit Plan that will or may result in
any payment (whether of severance pay or otherwise), acceleration of payment or
vesting of benefits, forgiveness of indebtedness, vesting, distribution,
restriction on funds, increase in benefits or obligation to fund benefits with
respect to any Current Employee.
(c)US Seller Company Benefit Plans. With respect to each Company Benefit Plan of
US Seller:
(i)Except as set forth in Schedule 3.17(c)(i), (i) such Company Benefit Plan
(and any related trust, insurance Contract or fund) complies in form and in
operation in all material respects with all applicable Legal Requirements,
including, but not limited to, ERISA and the Code, and may by their terms be
amended and/or terminated at any time without the consents of any other Person,
subject to applicable Legal Requirements; and (ii) all required contributions
to, payments to be made from, or premiums owing with respect to, such Company
Benefit Plan for all periods ending prior to the Effective Time have been paid
or accrued in accordance with US GAAP. To the Knowledge of US Seller, no
litigation or governmental administrative Proceeding (or investigation) or other
Proceeding (other than those relating to routine claims for benefits) is pending
or threatened with respect to any such Company Benefit Plan. US Seller has not
and none of its ERISA Affiliates has any Liability under such Company Benefit
Plan or any other “employee benefit plan” (within the meaning of Section 3(3) of
ERISA) maintained by or contributed to by US Seller or any ERISA Affiliate that
will become a Liability of any Buyer or result in any lien or Encumbrance on the
Acquired Assets. No event has occurred, and there exists no condition or set of
circumstances in connection with such Company Benefit Plan, under which any
Buyer could be subject to such Company Benefit Plan Liability under ERISA, the
Code, or otherwise.
(ii)Except as set forth in Schedule 3.17(c)(ii), US Seller has complied with
COBRA, and US Seller has no obligation under such Company Benefit Plan or
otherwise to provide life or health insurance benefits to current or future
terminated or retired employees of such Seller, or any other Person, except as
specifically provided by COBRA.
(iii)With respect to such Company Benefit Plan, complete and correct copies of
the following documents (if applicable to such Company Benefit Plan) have
previously been delivered or made available to Buyer Representative: (i) all
documents embodying or governing such Company Benefit Plan, and any funding
medium for such Company Benefit Plan, trust agreement or insurance Contract, as
they may have been amended to the date hereof and (ii) the most recent IRS
determination or approval letter with respect to such Company Benefit Plan that
is qualified under Code Section 401(a).
(iv)Such Company Benefit Plan is not a “multiemployer plan,” as such term is
defined in Section 3(37) of ERISA, “multiple employer welfare association,”
within the meaning of Section 3(40) of ERISA, or

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any plan of the type described in Sections 4063 and 4064 of ERISA or in Section
413 of the Code (and any regulations promulgated thereunder).
(v)No party in interest or disqualified person (as defined in Section 3(14) of
ERISA and Section 4975 of the Code) has engaged in a transaction with respect to
such Company Benefit Plan which could subject US Seller or any ERISA Affiliates,
directly or indirectly, to a material Tax, penalty, or other Liability for
prohibited transactions under ERISA or the Code.
(vi)No fiduciary of such Company Benefit Plan has breached any of the
responsibilities or obligations imposed upon fiduciaries under Title I of ERISA,
which breach would reasonably be expected to have a Material Adverse Effect on
US Seller.
(vii)No facts or circumstances exist with respect to such Company Benefit Plan,
that is subject to Title IV of ERISA, which could or would give rise to an
Encumbrance on the Acquired Assets under Section 4068 of ERISA or otherwise.
3.18Compliance With Laws.
(a)Such Seller has, and the Acquired Assets include, all Governmental
Authorizations necessary to lawfully carry on the Business as it is currently
being conducted, to own or hold under lease the properties and assets it owns or
holds under lease and to perform all of its obligations under the Contracts, and
Schedule 3.18(a) correctly describes each such Governmental Authorization,
together with the name of the Governmental Body issuing such Governmental
Authorization. Except as set forth on the Schedule 3.18(a), each such
Governmental Authorization is valid and in full force and effect, and none of
the Governmental Authorizations will be terminated or impaired or become
terminable as a result of the Acquisition. Such Seller has not received notice
that any Governmental Body intends to cancel or terminate any such Governmental
Authorizations. Upon consummation of the Acquisition, Buyer will have all of
such Seller’s rights, title and interests in and to all of the Governmental
Authorizations listed on Schedule 3.18(a).
(b)Except as set forth on Schedule 3.18(b), (i) the Business is being and has at
all times been conducted in compliance in all material respects with all
applicable Legal Requirements and all Governmental Authorizations required to be
set forth on Schedule 3.18(a), and (ii) such Seller has not received any notice
or other communication (whether oral or written) from any Governmental Body
regarding (A) any actual, alleged, possible or potential violation of, or
failure of such Seller or the Business to comply with, any applicable Legal
Requirement or Governmental Authorizations required to be set forth on Schedule
3.18(a) or (B) any actual, alleged, possible or potential obligation on the part
of such Seller to undertake, or to bear all or any portion of the cost of, any
remedial action of any nature.
3.19Legal Proceedings
. Except as set forth in Schedule 3.19, there is no Proceeding pending or, to
such Seller’s Knowledge, threatened, that relates to, or that may affect the
Acquired Assets, the Assumed Liabilities or the Business, or that challenges or
may have the effect of preventing, delaying, making illegal or otherwise
interfering with this Agreement or any agreement to be delivered hereby or any
action taken or to be taken in connection with this Agreement or the
Acquisition. There are no outstanding Orders, writs, decrees or settlements that
apply, in whole or in part, to the Acquired Assets or the Business that restrict
the ownership or use of the Acquired Assets or the Business. To the Knowledge of
such Seller, no event has occurred or circumstance exists that would reasonably
be expected to give rise to or serve as a basis for the commencement of any such
Proceeding.
3.20Absence of Certain Changes and Events
. Except as set forth in Schedule 3.20, since the date of the Balance Sheet,
such Seller has conducted the Business only in the ordinary course, consistent
with past practice, and there has not been any:
(a)Issuance, sale, or entry into any agreements or commitments to issue or sell
any equity securities or securities convertible into or exchangeable for equity;
(b)amendment to the Governing Documents of such Seller;
(c)(i) increase (whether in cash, equity or property) in the base salary or
other compensation payable by such Seller to any of its officers, directors or
Current Employees (other than such increases to Current Employees of less than
three percent (3%) of such Current Employee’s current base salary), (ii)
adoption of, increase in the payments to or benefits under, any savings,
insurance, pension, retirement or other employee benefit plan or
(iii) declaration, payment or commitment or obligation of any kind by such
Seller for any severance or termination

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payment or any bonus, profit sharing, deferred compensation or other additional
salary or compensation to any such person, other than pursuant to the terms of
any existing written agreement, policy or plan of such Seller;
(d)damage to or destruction or loss of any asset or property of such Seller,
whether or not covered by insurance;
(e)entry into, termination of, or receipt of notice of termination of any
license, distributorship, dealer, sales representative, joint venture, credit,
or similar agreement;
(f)entry into, termination of, or receipt of notice of termination of any
Contract or transaction other than in the ordinary course of business consistent
with past practice;
(g)sale (other than sales of inventory in the ordinary course of business,
consistent with past practice), lease or other disposition of, or mortgage,
pledge or imposition of any Encumbrance on, any asset or property of such
Seller, including any of the Intellectual Property Rights;
(h)material change in the accounting methods used by such Seller;
(i)commencement, settlement or agreement to settle any litigation or Proceeding;
or
(j)agreement or commitment by such Seller to do any of the foregoing.
3.21Contracts; No Defaults.
(a)Schedule 3.21(a) contains an accurate and complete list, and such Seller has
delivered to Buyer accurate and complete copies, of:
(i)each Contract or commitment that involves performance of services or delivery
of goods or materials by such Seller;
(ii)each Contract or commitment that involves performance of services or
delivery of goods or materials to such Seller;
(iii)each Contract that was not entered into in the ordinary course of business,
consistent with past practice;
(iv)each lease, rental, occupancy, license, installment, conditional sale or
other Contract or arrangement affecting the ownership of, leasing of, title to,
use of, or any leasehold or other interest in, any real property providing for
future monthly rental payments;
(v)each lease, rental, license, installment, conditional sale or other Contract
or arrangement affecting the ownership of, leasing of, title to, use of, or any
leasehold or other interest in, any Tangible Personal Property providing for
future monthly rental payments;
(vi)each licensing agreement or other applicable Contract with respect to such
Seller’s Intellectual Property Rights and Licensed Rights (whether inbound or
outbound), including agreements with current or former employees, consultants,
or contractors regarding the appropriation or the nondisclosure of any of the
Intellectual Property Rights or Licensed Rights;
(vii)each Employee Benefit Plan, collective bargaining, employment, deferred
compensation, severance and other agreement, or any other type of Contract or
understanding with any of such Seller’s officers, directors or employees;
(viii)each franchise, joint venture, partnership, strategic alliance,
co-marketing, co-promotion, co-packaging or joint development Contract or other
Contract involving a sharing of profits, losses, costs or liabilities by such
Seller with any other Person;
(ix)each Contract containing covenants that in any way purport to restrict the
business activity of such Seller or limit the freedom of such Seller to engage
in any line of business or to compete with any Person or which contain any
exclusivity, non-competition, non-solicitation or no-hire provisions;
(x)each Contract providing for payments to or by any Person based on sales,
purchases, or profits, other than direct payments for goods;
(xi)each Contract for capital expenditures;
(xii)each written warranty, guaranty, and or other similar undertaking with
respect to contractual performance by such Seller extended by such Seller;
(xiii)each Contract with a Government Body;
(xiv)each other Contract, if any, with outstanding obligations owing to or from
such Seller in an amount in excess of $25,000; and
(xv)each amendment, supplement, and modification (whether oral or written) in
respect of any of the foregoing.

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Schedule 3.21(a) sets forth reasonably complete details concerning such
Contracts, including the parties to the Contracts, the amount of the remaining
commitment of or to such Seller under the Contracts.
(b)Except as set forth in Schedule 3.21(b), no Related Person of such Seller has
or may acquire any rights under, or has or may become subject to any Liability
under, any Contract.
(c)(i) Each Contract included in the Acquired Assets or the Assumed Liabilities
is legal, valid, binding and enforceable against such Seller, and to the
Knowledge of such Seller, against each other party thereto, is in full force and
effect and will continue to be so legal, valid, binding and enforceable and in
full force and effect following the assignment of such Contract at the Closing
or pursuant to other arrangements in accordance with this Agreement, as the case
may be, and (ii) such Seller is not and, to such Seller’s Knowledge, no other
party is, in breach or default, and, to the Knowledge of such Seller, no event
has occurred which would constitute (with or without notice or lapse of time or
both) a Breach (or give rise to any right of termination, modification,
cancellation or acceleration) under any such Contract.
(d)There are no renegotiations of, attempts to renegotiate or outstanding rights
to renegotiate any material amounts paid or payable to such Seller under current
or completed Contracts with any Person having the contractual or statutory right
to demand or require such renegotiation and no such Person has made written
demand for such renegotiation.
(e)Each Contract relating to the sale, design, manufacture or provision of
products or services by such Seller has been entered into in the ordinary course
of business, consistent with past practice, of such Seller and has been entered
into without the commission of any act alone or in concert with any other
Person, or any consideration having been paid or promised, that is or would be
in violation of any Legal Requirement.
3.22Insurance
. Such Seller has in place insurance policies with respect to the Acquired
Assets and the Business in amounts and types that are customary in the industry
for similar assets and sufficient to cover the full value of the Acquired Assets
and the Business, and all such policies are valid and in full force and effect.
Schedule 3.22 contains a complete and accurate list of all insurance policies
currently maintained relating to the Acquired Assets or the Business. Such
Seller has delivered to Buyer complete and accurate copies of all such policies
together with (a) all riders and amendments thereto and (b) if completed, the
applications for each of such policies. Such policies, as are current, are valid
and in full force and effect, and such Seller and, if applicable, its Related
Persons, have complied in all material respects with the provisions of such
policies, and all such policies either specifically include such Seller as named
insured or include omnibus named insured language which generally includes such
Seller. All premiums due to date under such policies have been paid, no default
exists thereunder and, with respect to any material claims made under such
policies, no insurer has made any “reservation of rights” or refused to cover
all or any portion of such claims. Such Seller has not received any notice of
any proposed material increase in the premiums payable for coverage, or proposed
reduction in the scope (or discontinuation) of coverage, under any insurance
policy.
3.23Environmental Matters.
(a)With respect to the Facilities not located in Taiwan and except as set forth
on Schedule 3.23(a):
(i)Such Seller’s operation of the Business and such Facilities is and at all
times has been in compliance with all applicable Environmental Laws.
(ii)Such Seller has obtained and complied with, and is and at all times has been
in compliance with all Governmental Authorizations that are required pursuant to
Environmental Laws for the occupation of such Facilities and the operation of
its Business, and has timely filed all permit applications and renewals
necessary for the occupation of such Facilities and the operation of the
Business, each of which Governmental Authorizations is set forth on
Schedule 3.18(a).
(iii)There is no existing, pending or, to the Knowledge of such Seller,
threatened Proceeding or Order under any Environmental Law with respect to such
Seller, the Acquired Assets or any of such Facilities, and such Seller has not
received written notice from any Person, including a Governmental Body, alleging
such Seller is or was in violation of, or otherwise may be liable under, any
Environmental Law.
(iv)None of the following exists at any of such Facilities: (i) underground
storage tanks, (ii) asbestos containing material in any form or condition, (iii)
materials or equipment containing polychlorinated

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biphenyls, or (iv) landfills, surface impoundments, or disposal areas, other
than disposal areas used in the ordinary course of Business in compliance with
Environmental Laws.
(v)There have been no Releases of Hazardous Materials on or underneath any of
such Facilities, or to the Knowledge of such Seller, at any other location, in
amounts that would require or give rise to Remedial Action obligations on the
part of such Seller or any Related Persons of such Seller under any applicable
Environmental Laws.
(vi)Such Seller has not in violation of Environmental Laws or Occupational
Health and Safety Laws: (i) disposed of, emitted, discharged, handled, treated,
recycled, stored, transported, used or Released any Hazardous Materials, (ii)
arranged for the disposal, transportation, discharge, storage or Release of any
Hazardous Materials or (iii) exposed any current or former employee or other
individual to any Hazardous Materials.
(vii)No Seller has commissioned, obtained or received any environmental audits
and environmental assessments, including “Phase I,” “Phase II” and “Baseline”
environmental assessments, Governmental Authorizations required under
Environmental Laws, or any Order, judgment, decree, consent agreement, contract
or similar document imposing obligations under Environmental Laws relating to
such Facilities and the Business.
(viii)To the Knowledge of such Seller, no event, condition, circumstance,
activity, practice, action or plan of such Seller has occurred or exists which
could reasonably be expected to prevent continued compliance of such Seller or
Buyer, as applicable, in conducting the Business or operating any of such
Facilities under applicable Environmental Law.
(ix)Such Seller has no Knowledge or information that any Release of Hazardous
Materials has occurred at such Facilities, or that any land or resource use
restrictions may apply to such Facilities, requiring notification to Buyer
pursuant to any applicable Legal Requirement.
(b)With respect to the Facilities located in Taiwan and except as set forth on
Schedule 3.23(b):
(i)CA Seller’s operation of the Business applicable to Taiwan and such
Facilities is and at all times has been in compliance in all material respects
with all applicable Environmental Laws.
(ii)There is no existing, pending or, to the Knowledge of CA Seller, threatened
Proceeding or Order under any Environmental Law with respect to CA Seller, the
Acquired Assets located in Taiwan or any of such Facilities, and CA Seller has
not received written notice from any Person, including a Governmental Body,
alleging CA Seller is or was in violation of, or otherwise may be liable under,
any Environmental Law.
3.24Employees.
(a)Schedule 3.24(a) sets forth a true and complete list of (i) the names,
titles, annual salaries (or, for non-salaried employees, wage rates), date of
hire, annual vacation entitlement and other compensation and material terms and
conditions of their employment or engagement of all current employees and
independent contractors providing services to the Business, whether employed
directly or through a Professional Employer Organization or staffing company
(the “Current Employees”), (ii) in respect of any Current Employees on leave,
particulars of the last date worked and reasons for and expected duration of
such leave, and (iii) the names, titles and general duties of any former
employee providing services to such Seller whose employment was terminated
(whether voluntarily by such employee or otherwise) at any time since the date
of the Balance Sheet. To such Seller’s Knowledge and except as set forth on
Schedule 3.24(a), none of the Current Employees has indicated to such Seller
that he or she intends to not accept employment with Buyer or, upon accepting
employment with Buyer, to discontinue such employment within the one year period
beginning on Closing Date.
(b)Except as set forth on Schedule 3.24(b), all Current Employees are employed
for an indefinite term, in the case of employees working in Canada, and none are
party to or bound by any employment agreements, consulting agreements or
termination, severance, retention or continuation of benefits agreements. In
respect of any Current Employee listed on Schedule 3.24(b) as being subject to
such an agreement, Seller has provided or made available to Buyer true, correct
and complete copies of any such agreements. Except as set forth on Schedule
3.24(b), all employees of the Business working in the United States are
“employees at will” and employed by such Seller or a Professional Employer
Organization.
(c)Except as set forth on Schedule 3.24(c), there are no Contracts with respect
to Current Employees that would (i) restrict restructuring or outsourcing or
require any severance payment to which Buyer, after the Closing Date, would be
bound or (ii) trigger a change of control or a similar provision. Neither the
execution and

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delivery of this Agreement nor the completion of the transactions contemplated
by this Agreement will result in any cash or other compensation or benefits
becoming payable to any Current Employees.
(d)Except as disclosed in Schedule 3.24(d), there are no employment Legal
Requirement related Damages or outstanding Orders, awards, rulings or, to the
Knowledge of the Sellers, discussions relating to the Business, pending or
threatened, which have resulted in or might reasonably be expected to result in
a Material Adverse Effect.
(e)No officer, director, Current Employee, or, to the Knowledge of such Seller,
agent, consultant, or contractor of such Seller is bound by any contract that
purports to limit the ability of such officer, director, agent, Current
Employee, consultant, or contractor to engage in or continue or perform any
conduct, activity, duties or practice relating to the Business. To the Knowledge
of such Seller, no Current Employee is a party to, or is otherwise bound by, any
Contract that in any way adversely affected, affects, or will affect the ability
of Buyer to conduct the Business as heretofore carried on by such Seller.
3.25Labor Disputes; Compliance.
(a)Such Seller and any applicable Professional Employer Organization or staffing
company employing individuals providing services to the Business has complied in
all material respects with all Legal Requirements relating to employment
practices, terms and conditions of employment, equal employment opportunity,
nondiscrimination, immigration, wages (including, without limitation, liability
for overtime pay and vacation pay), hours, human rights, employee equity
benefits and collective bargaining, the payment of social security, if
applicable, deduction from wages and similar Taxes and occupational safety and
health. Such Seller is not liable for the payment of any Taxes, fines,
penalties, or other amounts, however designated, for failure to comply with any
of the foregoing Legal Requirements. No written charge or complaint of
employment discrimination, wrongful dismissal, employment standards claims,
breach of occupational health and safety Legal Requirement or other employment
law violation or claim has been made against such Seller or applicable
Professional Employer Organziation or staffing company during the last year, or
is pending or, to the Knowledge of such Seller, overtly threatened relating the
employees of the Business. CA Sellers are registered with WorkSafe BC, US Seller
carries workers compensation, and each have paid all workers compensation
premiums due and owing in respect of employees working in Canada and the US, and
have complied with all applicable occupational health and safety Legal
Requirements.
(b)No Current Employees are on strike or threatening any strike or work
stoppage, and there is no pending or threatened union representation election or
negotiation of a collective bargaining agreement. Such Seller is not involved in
any controversy with any of its employees or any organization representing any
of its employees.
(c)All wages and benefits due to or earned by the Current Employees, including,
without limitation, overtime and vacation pay, have been paid in the ordinary
course of business up to and including Closing and all statutory deductions
(including for income tax) and employee and employer contributions to social
security (including, in Canada, Employment Insurance and Canada Pension Plan)
arising out of payment of such wages have been remitted when due to the
applicable Governmental Body. There are no other monies due from to any
employees (whether arising out of any formal or informal arrangement) in
connection with their employment or services to the Business.
(d)There are no apparent or, to the Knowledge of the Sellers, threatened union
organizing activities involving Current Employees. No Seller has any labor
problems that might result in a Material Adverse Effect, or lead to any
interruption of operations at any location. No Seller has engaged in any lay-off
or other activities within the last 12 months in respect of the Business that
would violate or in any way subject such Seller to the group termination or
lay-off requirements of the Legal Requirements of any jurisdictions where such
Seller operates. No Seller or applicable Professional Employer Organization is
bound by or a party to, either directly or by operation of law, any collective
bargaining agreement (a “Collective Agreement”) with any trade union or
association which might qualify as a trade union, and no trade union,
association, council of trade unions, employee bargaining agency or affiliated
bargaining agent::
(i)holds bargaining rights with respect to any of the Current Employees by way
of certification, interim certification, voluntary recognition, designation or
successor rights;
(ii)has, to the Knowledge of the Seller, applied to be certified or requested to
be voluntarily recognized as the bargaining agent of any of the Current
Employees;
(iii)has, to the Knowledge of the Seller, applied to have the Buyer declared a
related or successor employer under applicable provincial labour or employment
Legal Requirements; or
(iv)has, to the Knowledge of the Seller, filed a complaint or charge, including
an unfair labour practise complaint, under applicable provincial labour or
employment Legal Requirements.

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3.26Intellectual Property Assets.
(a)Schedule 3.26(a) sets forth a true and complete list of all of such Seller’s
Intellectual Property Rights and Licensed Rights, including all registered
Intellectual Property Rights (“Registered IP Rights”), and descriptions of all
Trade Secrets included among the Intellectual Property Rights being sold to
Buyer hereunder. Such Seller owns all right, title and interest in and to all
such Intellectual Property Rights free and clear of any Encumbrances; provided,
however, that for the Registered IP Rights that are noted in Schedule 3.26(a) as
being “Abandoned” or “Expired,” or for certain historical patents when it is
noted on Schedule 3.26(a) that the Sellers have no description available
(collectively, the “Noted IP”), then such Registered IP Rights will be
transferred to the Buyer to the full extent that the Sellers own any legal or
other rights in such Registered IP Rights.
(i)The Intellectual Property Rights and the Licensed Rights included in the
Acquired Assets constitute all of the rights to Intellectual Property necessary
to or used in the conduct of the Business as presently conducted.
(ii)No consent of any Person is necessary to make, construct, use, reproduce,
translate, license, sell, modify, update, enhance or otherwise exploit any
Intellectual Property Rights.
(iii)All Originating Persons have, by irrevocable written assignments,
transferred to the Seller all intellectual property rights, and waived all moral
rights, which waiver extends to the Buyer, that any of them may have enjoyed
with respect to any Intellectual Property Rights to which they contributed.
(iv)Neither the validity of the Intellectual Property Rights and such Seller’s
title thereto nor the validity of such Seller’s use of the Licensed Rights (x)
have been questioned in any prior Proceeding; (y) are being questioned in any
Proceeding; or (z) are the subject(s) of any threatened or proposed Proceeding.
(v)To the Seller’s Knowledge, none of the Business, as presently conducted, the
Intellectual Property Rights or the Licensed Rights conflict with or have been
alleged to conflict with, or otherwise infringe, misappropriate or violate, any
patents, trademarks, trade names, service marks, copyrights or other
intellectual property rights of any other Person, other than as set forth in
Schedule 3.19.
(vi)To the Seller’s Knowledge, the consummation of the Acquisition will not
result in the loss or impairment of any of the Intellectual Property Rights or
the right to use any of the Licensed Rights in the Business. Except for those
licensees set forth on Schedule 3.21(a), there are no third parties authorized
by such Seller to use any of the Intellectual Property Rights, and, to the
Knowledge of such Seller, there are no third parties using any of the
Intellectual Property Rights without authorization from such Seller.
(b)Other than as set forth on Schedule 3.26(b), there are no infringement or
misappropriation Proceedings pending or, to such Seller’s Knowledge, threatened
against such Seller with respect to any Intellectual Property Rights or Licensed
Rights.
(c)Schedule 3.26(a) indicates for each item of Registered IP Rights the
application or registration number and the applicable filing jurisdiction.
(i)Other than the prior art referenced in the patent applications or the prior
art that such Seller and its patent counsel may have, during the ordinary course
of prosecuting patents, become aware, such Seller has no Knowledge of any facts,
circumstances or information that would render any IP Rights that is not an
application invalid or unenforceable or would adversely affect any pending
application for any Registered IP Rights.
(ii)To the Seller’s Knowledge, all Registered IP Rights have been filed and
prosecuted in compliance with all applicable laws and regulations. Except for
the Noted IP, all necessary registration, maintenance and renewal fees in
connection with each Registered IP Right have been paid and all necessary
documents and certificates in connection with such Registered IP Right have been
filed with the relevant patent, copyright, trademark or other authorities in the
United States or foreign jurisdictions, as the case may be, for the purposes of
maintaining such Registered IP Right. Schedule 3.26(c) sets forth any actions
that must be taken in respect of such Registered IP Right, including the payment
of any registration, maintenance or renewal fees or the filing of any responses
to office actions, documents, applications or certificates, for the purposes of
obtaining, maintaining, perfecting, preserving or renewing any Registered IP
Right. Except for the Noted IP, all Registered IP Rights are subsisting, valid
and enforceable.
(d)Such Seller has instituted, maintained and enforced appropriate measures
(including the entering into of appropriate written agreements with present
employees and consultants of the Business) to maintain the ownership and
confidentiality of the Intellectual Property Rights and other Intellectual
Property of the Business, and all such Contracts are identified on Schedule
3.21(a). Without limiting the generality of the foregoing, except as

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set forth in Schedule 3.26(d), all current and former employees, consultants and
independent contractors of such Seller having access to confidential information
of such Seller or are involved in the creation of Intellectual Property for such
Seller have executed and delivered to such Seller an agreement regarding the
protection of such confidential information and the assignment of such
Intellectual Property to such Seller (in the case of confidential information of
such Seller’s customer and business partners, to the extent required by such
customers and business partners); and the form(s) of such agreements have been
provided or made available to Buyer. Such Seller has secured valid written
assignments from all of its employees, consultants and independent contractors
who were involved in, or who contributed to, the creation or development of any
Intellectual Property for such Seller, of all right, title and interest in and
to such Intellectual Property. Except as set forth in Schedule 3.26(d), no
current or former director, officer, employee, consultant or independent
contractor of such Seller has any right, license, claim or interest whatsoever
in or with respect to any Intellectual Property Rights.
(e)Schedule 3.26(e) identifies each computer software program owned, held or
used in the conduct of the Business that assists with or relates to computer
aided engineering, design, manufacturing or other analysis, archival or
retrieval of technical information. To the Seller’s Knowledge, such Seller owns,
or possesses sufficiently broad and valid rights to use, all computer software
programs that are material to the conduct of, used or held for use in the
Business. There are no infringement Proceedings pending or, to such Seller’s
Knowledge, threatened against such Seller with respect to any software owned or
licensed by such Seller or used by such Seller in the Business.
(f)Each Seller has entered into valid and enforceable written agreements
pursuant to which such Seller has been granted all licenses, rights and
permissions to use, reproduce, translate, sub-license, sell, modify, update,
enhance or otherwise exploit the Licensed Rights to the extent required to
conduct all aspects of its Business as it is currently conducted (including, if
required, the right to incorporate the Licensed Rights into the Intellectual
Property Rights and to create and own derivatives and modifications of the
Licensed Rights) (the “License Agreements”). Except as disclosed in
Schedule 3.26(f):
(i)all License Agreements are in full force and effect and neither the Seller
nor any licensor is in default of its obligations under any License Agreement;
(ii)to the Seller’s Knowledge, no licensor of any Licensed Rights is involved in
an insolvency, bankruptcy or similar proceeding or has had a receiver appointed;
(iii)all License Agreements for Licensed Rights material to the Business are
irrevocable licenses granted in perpetuity and worldwide in nature;
(iv)the rights licensed under each License Agreement will be enforceable by each
Seller on and after the Closing to the same extent as prior to the Closing;
(v)to the Seller’s Knowledge, no Person has infringed or misappropriated, or is
infringing or misappropriating, any intellectual property right of any licensor
in or to any Licensed Rights of which it is the exclusive licensee; and
(g)no Intellectual Property Rights and no Licensed Rights contain any open
source code.
3.27No Options
. There are no existing agreements, options, commitments or rights with, of or
to any Person to acquire any of such Seller’s assets or properties (including
the Acquired Assets) or any rights or any interest in such assets or properties.
3.28Certain Payments
. Such Seller has not, and none of its Representatives has, whether directly or
indirectly, offered, paid, promised to pay or authorized the payment of any
contribution, gift, bribe, rebate, payoff, influence payment, kick back or other
payment to any Person, private or public, regardless of form, whether in money,
property, or services, in violation of any Legal Requirement, including the
United States Foreign Corrupt Practices Act of 1977, as amended, or the
Corruption of Foreign Public Official Act (Canada) in order to (a) to further
the Business or (b) to assist such Seller in connection with any actual or
proposed transaction in connection with the operations of such Seller.
3.29Customers and Suppliers
. Schedule 3.29 sets forth a complete and accurate list, (a) for each of the
fiscal years ended on October 31, 2013 and for the year-to-date period ending
October 31, 2014, each customer of such Seller with aggregate purchases from
such Seller of $100,000 or more during such periods (each, a “Material
Customer”), and (b) for the year-to-date period ending October 31, 2014, each
supplier or vendor of materials, products or services to such Seller with
aggregate

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sales to such Seller of $100,000 for such periods (each, a “Material Supplier”).
To the Knowledge of such Seller, the relationship of such Seller with each of
its material current customers and suppliers is a good commercial working
relationship and none of such customers or suppliers has cancelled, terminated
or otherwise materially altered (including any material reduction in the rate or
amount of sales or purchases, material increase in the prices charged or
material reduction in the prices paid, as the case may be) or notified such
Seller of any intention to do any of the foregoing or otherwise threatened to
cancel, terminate or materially alter (including any of the forgoing) its
relationship with such Seller. To the Knowledge of such Seller, there exists no
condition or state of facts or circumstances involving existing or prospective
customers or suppliers that would reasonably be expected to materially impair
the conduct of the Business after the Closing.
3.30Relationships with Related Persons
. Schedule 3.30 contains a complete and correct list (and if oral, an accurate
and complete description of all material terms) of all Contracts pursuant to
which any loans, leases, goods, services, materials or supplies are, or at any
time since May 5, 2011 have been, provided (a) by any Related Person of such
Seller to such Seller or (b) by such Seller to any Related Person of such
Seller.
3.31Brokers or Finders
. Except as set forth in Schedule 3.31, such Seller has not and none of its
Related Persons or Representatives has incurred any Liability, contingent or
otherwise, for brokerage or finders’ fees or agents’ commissions or other
similar payments in connection with the sale of the Business or the Acquired
Assets or consummation of the Acquisition.
3.32Warranties
. Except as set forth in Schedule 3.32 (and except for other liabilities for
which there is a reserve which meets the standards described in the following
sentence), each product manufactured, sold, leased, licensed, delivered or
installed by such Seller (collectively, the “Products”) is, and at all times
since May 5, 2011 has been, (a) fit for the ordinary purposes for which it is
intended to be used and (b) in conformity in all material respects with any and
all contractual obligations, and express and implied warranties made by such
Seller. Such Seller does not have any liability (and, to the Knowledge of such
Seller, there is no basis for any present or future action giving rise to any
such liability) for replacement or repair of any Products or other damages in
connection with any products, in excess of the reserve for product warranty
claims set forth, as applicable, on the face of the Balance Sheet or the Interim
Balance Sheet, as adjusted for the passage of time in accordance with IFRS,
applied on a consistent basis. Each Product contains adequate warnings, the
content and display of which conform to applicable Legal Requirements and
current industry practice.
3.33Competition Act
. The Sellers have assets in Canada with an aggregate value of $7,423,867, and
annual gross revenues from sales in, from or into Canada with an aggregate value
of $25,686,212, as determined in accordance with the Competition Act (Canada).
The annual gross revenue from sales in or from Canada generated from the
Purchased Assets is $25,686,212.
3.34Limitation of Sellers’ Representation and Warranties
. The Sellers do not make and have not made any representations and warranties,
express or implied, in respect of the Sellers, the Acquired Assets or the
Business other than those expressly set forth in this Agreement, and the Sellers
expressly disclaim all liability and responsibility for any other
representation, warranty or statement made (orally or in writing) to the Buyers
or the Buyer’s Related Persons, including any opinion, information or advice
that may have been provided to the Buyers or the Buyer’s Related Persons by any
Seller or any director, officer, employee, accounting firm, legal counsel,
financial advisor or other agent of a Seller. It is also understood that any
cost estimates, projections, forecasts or other predictions, any data, any
financial information or any memoranda or presentations made by the Sellers to
the Buyers or their Related Persons are not and will not be deemed to be or to
include representations and warranties of the Sellers, except to the extent
otherwise expressly covered by the representations and warranties of the Sellers
hereunder. Notwithstanding anything to the contrary contained in this Agreement
or in any of the Disclosure Schedules, any information disclosed in any Schedule
will be deemed to be disclosed for all purposes of this Agreement, where the
relevance of such matter is or should be reasonably apparent.
3.35Disclosure

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. To the Knowledge of Sellers, the representations, warranties and other
statements of such Seller contained in this Agreement, the Disclosure Schedules
and the other documents, certificates and written statements delivered to Buyers
pursuant to Section 2.7(a) do not contain any untrue statement of material fact
or omit to state a material fact or any fact necessary to make any of them, in
light of the circumstances in which they were made, not misleading.

4.
REPRESENTATIONS AND WARRANTIES OF BUYER.

Each Buyer represents and warrants to each Seller as follows:
4.1Organization and Good Standing
. Fox is a corporation duly organized, validly existing and in good standing
under the laws of the State of California with full corporate power and
authority to conduct its business. CA Buyer is a corporation duly organized,
validly existing and in good standing under the laws of the province of British
Columbia with full corporate power and authority to conduct its business. US
Buyer is a corporation duly organized, validly existing and in good standing
under the laws of the State of Delaware with full corporate power and authority
to conduct its business. KY Buyer is an exempted company duly incorporated,
validly existing and in good standing under the laws of the Cayman Islands with
full corporate power and authority to conduct its business
4.2Authority; No Conflict.
(a)This Agreement constitutes the legal, valid and binding obligation of such
Buyer, enforceable against such Buyer in accordance with its terms. Upon the
execution and delivery by such Buyer of the Escrow Agreement (if applicable),
the Employment Agreement (if applicable), the Noncompetition Agreements (if
applicable) and each other agreement to be executed or delivered by such Buyer
at the Closing (collectively, the “Buyer Closing Documents”), each of the Buyer
Closing Documents will constitute the legal, valid and binding obligation of
such Buyer, enforceable against such Buyer in accordance with its terms. Such
Buyer has the full power and authority to execute and deliver this Agreement and
each Buyer Closing Document to which it is a party and to perform its
obligations under this Agreement and the Buyer Closing Documents, and such
action has been duly authorized by all necessary action by such Buyer’s board of
directors.
(b)Neither the execution and delivery of this Agreement nor the consummation or
performance of any of the Acquisition will, directly or indirectly (with or
without notice or lapse of time): (i) contravene or conflict with the Governing
Documents of such Buyer or any resolution adopted by such Buyer’s board of
directors or stockholders; (ii) contravene or conflict with or constitute a
violation of any provision of any Legal Requirement, judgment, injunction, Order
or decree binding upon or applicable to such Buyer; (iii) give any Governmental
Body or other Person the right to challenge any of the Acquisition or to
exercise any remedy or obtain any relief under any Legal Requirement or any
Order to which such Buyer may be subject; (iv) contravene, conflict with or
result in a violation or breach of any of the terms or requirements of, or give
any Governmental Body the right to revoke, withdraw, suspend, cancel, terminate
or modify, any Governmental Authorization that is held by such Buyer; or (v)
breach any provision of, or give any Person the right to declare a default or
exercise any remedy under, or to accelerate the maturity or performance of, or
payment under, or to cancel, terminate or modify, any contract or agreement to
which such Buyer is a party or pursuant to which such Buyer’s assets are bound;
except with respect to the occurrences set forth in clauses (iii) through (v),
where any such occurrence would not materially and adversely affect the ability
of such Buyer to consummate the Acquisition.
4.3Certain Proceedings
. There is no pending Proceeding that has been commenced against such Buyer and
that challenges, or may have the effect of preventing, delaying, making illegal
or otherwise interfering with, any of the Acquisition. To such Buyer’s
knowledge, no such Proceeding has been threatened.
4.4Brokers or Finders
. Neither such Buyer nor any of its Related Persons or Representatives has
incurred any Liability, contingent or otherwise, for brokerage or finders’ fees
or agents’ commissions or other similar payment in connection with the
consummation of the Acquisition.
4.5GST/HST Registration

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. The CA Buyer is registered for GST/HST purposes under the ETA and its
registration number thereunder is 82339 6585 RT0001.
5.
CONDITIONS TO CLOSE

5.1Conditions Precedent to the Obligations of Sellers
. All obligations of each Seller under this Agreement are subject to the
fulfillment, at or prior to the Closing Date, of each of the following
conditions, which conditions may be waived only by Seller Representative and, if
not fulfilled, shall be deemed waived upon Closing:
(a)The representations and warranties of Buyers herein contained shall have been
true and correct as of the date hereof in all material respects and shall
continue to be true and correct as of the Closing Date in all material respects
with the same force and effect as though made as of the Closing Date (except
those representations and warranties that address matters only as of a specified
date, the accuracy of which shall be determined as of that date in all
respects); provided, however, that with respect to any representation or
warranty that contains an express materiality limitation, such representation or
warranty shall be true and correct in all respects.
(b)Each Buyer shall have performed or complied with all the obligations,
agreements and covenants of such Buyer herein contained to be performed by it
prior to or as of the Closing Date.
(c)All deliveries and payments required to be made by each Buyer under
Section 2.7(b) of this Agreement on or before the Closing Date, shall have been
received by Seller Representative or Sellers, as applicable, and, in the case of
document deliveries, in form and substance reasonably satisfactory to Seller
Representative.
5.2Conditions Precedent to the Obligations of Buyer
. All obligations of each Buyer under this Agreement are subject to the
fulfillment, at or prior to the Closing Date, of each of the following
conditions, which conditions may be waived only by Buyer Representative and, if
not fulfilled, shall be deemed waived upon Closing:
(a)The representations and warranties of Sellers herein contained shall have
been true and correct as of the date hereof in all material respects and shall
continue to be true and correct as of the Closing Date in all material respects
with the same force and effect as though made as of the Closing Date (except
those representations and warranties that address matters only as of a specified
date, the accuracy of which shall be determined as of that date in all
respects), in each case without giving effect to any supplement to the
Disclosure Schedules; provided, however, that with respect to any representation
or warranty that contains an express materiality limitation, such representation
or warranty shall be true and correct in all respects.
(b)Each Seller shall have performed or complied with all the obligations,
agreements and covenants of such Seller herein contained to be performed by it
prior to or as of the Closing Date.
(c)No event or events shall have occurred since October 31, 2013 which
individually or in the aggregate has had a Material Adverse Effect.
(d)All deliveries required to be made by Seller Representative or a Seller, as
applicable, under Section 2.7(a) of this Agreement on or before the Closing Date
shall have been received by Buyer, and, in the case of document deliveries, in
form and substance reasonably satisfactory to Buyer.
(e)Buyers shall have consummated an amendment to their amended and restated
credit facility with SunTrust Bank, as referenced in that certain engagement
letter dated November 24, 2014.
5.3Conditions Precedent to the Obligations of Buyer and Sellers
. All obligations of both Buyer and Sellers under this Agreement are subject to
the fulfillment, at or prior to the Closing Date, of each of the following
conditions, which conditions may be waived only by both Buyer and Seller
Representative and, if not fulfilled, shall be deemed waived upon Closing:
(a)No Proceeding by or before any court or any Governmental Body shall have been
commenced or threatened, and no investigation by any Governmental Body shall
have been commenced or threatened, seeking to restrain, prevent or change the
transactions contemplated by this Agreement or seeking judgments against any
party hereto or awarding substantial damages in respect of the transactions
contemplated by this Agreement.

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(b)With respect to the Easton Product Liability Insurance Policy, an arrangement
that limits, or otherwise manages the potential liability for deductible
payments required by such policy shall have been entered into and shall have
been agreed upon by the Parties.

6.
PRE-CLOSING COVENANTS

6.1Pre-Closing Covenants of Sellers
. Each Seller covenants and agrees that, prior to the Closing Date, except as
otherwise consented to in writing by Buyer Representative or as permitted by
this Agreement:
(a)Access and Investigation. Between the date of this Agreement and the Closing
Date, and upon reasonable advance notice received from Buyer Representative,
such Seller shall (i) afford each Buyer and its Representatives and prospective
lenders and their Representatives (collectively, “Buyer Group”) full and free
access, during regular business hours, to such Seller’s personnel, properties
(including subsurface testing), Contracts, Governmental Authorizations, books
and Records and other documents and data, such rights of access to be exercised
in a manner that does not unreasonably interfere with the operations of Seller
and (ii) otherwise cooperate and assist, to the extent reasonably requested by
Buyer Representative, with Buyer Representative’s investigation of the Acquired
Assets and financial condition related to such Seller.
(b)Operation of the Business of Seller. Between the date of this Agreement and
the Closing, such Seller shall:
(i)conduct the Business only in the ordinary course consistent with past
practice;
(ii)except as otherwise directed by Buyer Representative in writing, and without
making any commitment on any Buyer’s behalf, use its best efforts to preserve
intact its current business organization, keep available the services of its
officers, employees and agents and maintain its relations and good will with
suppliers, customers, landlords, creditors, employees, agents and others having
business relationships with it;
(iii)confer with Buyer Representative prior to implementing operational
decisions of a material nature;
(iv)otherwise report periodically to Buyer Representative concerning the status
of the Business, including the operations thereof and finances related thereto;
(v)make no material changes in management personnel without the prior written
consent of Buyer Representative;
(vi)maintain the Acquired Assets in a state of repair and condition that
complies with applicable Legal Requirements and is consistent with the
requirements and normal conduct of the Business;
(vii)keep in full force and effect, without amendment, all material rights
relating to the Business;
(viii)comply with all Legal Requirements and contractual obligations applicable
to the operations of the Business;
(ix)continue in full force and effect the insurance coverage under the policies
set forth in Schedule 3.22;
(x)except as required to comply with any applicable Legal Requirement, not
amend, modify or terminate any Company Benefit Plan without the express written
consent of Buyer Representative, and except as required under the provisions of
any Company Benefit Plan, not make any contributions to or with respect to any
Company Benefit Plan without the express written consent of Buyer
Representative, provided that Seller shall contribute that amount of cash to
each Company Benefit Plan necessary to fully fund all of the benefit liabilities
of such Company Benefit Plan on a plan-termination basis as of the Closing Date;
and
(xi)maintain all books and Records of such Seller relating to the Business in
the ordinary course consistent with past practice.
(c)Co-operation. Such Seller shall cooperate with each Buyer as necessary to
obtain all consents and authorizations of third parties and to make all filings
with and give all notices to third parties which may be necessary or reasonably
required in order to effect the consummation of the Acquisition.
(d)Required Approvals. As promptly as practicable after the date of this
Agreement (but, in any event, no later than the 3rd Business Day thereafter),
such Seller shall (i) take all actions necessary to approve the Acquisition for
themselves and (ii) make, or cause to be made, all filings, if any, required by
Legal Requirements to be made by it to consummate the Acquisition.

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(e)Best Efforts. Such Seller shall use its best efforts to cause the conditions
in Section 5.1 to be satisfied.
(f)Further Disclosure. Prior to the Closing, Seller Representative may
supplement or amend the Disclosure Schedules attached hereto with respect to any
matter arising from facts or circumstances occurring after the date hereof,
which, if existing or occurring at the date of this Agreement, would have been
required to be set forth or described in the Disclosure Schedules (each a
“Schedule Supplement”), and each such Schedule Supplement shall be deemed to be
incorporated into and to supplement and amend the Disclosure Schedules as of the
Closing Date. For purposes of determining the accuracy of the representations
and warranties regarding Sellers in Article 3, but not for purposes of
determining the satisfaction of the condition set forth in Section 5.2(a), the
Disclosure Schedules delivered by Seller Representative pursuant to this Section
shall be deemed to include that information contained therein on the date of
this Agreement and also any information contained in any Schedule Supplement.
6.2Pre-Closing Covenants of Buyer
. Each Buyer covenants and agrees that, prior to the Closing Date, except as
otherwise consented to in writing by Seller Representative or as permitted by
this Agreement:
(a)Co-operation. Such Buyer shall cooperate with Sellers as necessary to obtain
all consents and authorizations of third parties and to make all filings with
and give all notices to third parties which may be necessary or reasonably
required in order to effect the consummation of the Acquisition.
(b)Required Approvals. As promptly as practicable after the date of this
Agreement, such Buyer shall make, or cause to be made, all filings, if any,
required by Legal Requirements to be made by it to consummate the Acquisition.
(c)Best Efforts. Such Buyer shall use its best efforts to cause the conditions
in Section 5.2 to be satisfied.

7.
COVENANTS.

7.1Employees.
(a)In order to effectuate the transition of employment to the applicable Buyer
or one of its Related Persons, each Seller will give notice or cause termination
notices to be delivered to all of its Current Employees of the sale of the
Business and ensure the employment termination all of the respective employees
employed in connection with the Business contemporaneous with the Closing and,
subject to the timing set forth in Section 7.16(d), the Buyers will offer to
employ the Current Employees commencing after Closing on substantially the same
terms and conditions, including:
(i)At least the same remuneration that each Current Employee received
immediately prior to the Effective Time as set out in Schedule 3.24(a);
(ii)providing each Current Employee with benefits substantially similar to the
benefits set out in Schedule 3.17(a) applicable to such employee; and
(iii)Recognition of each Current Employee’s respective length of service with
the Business as set out in Schedule 3.24(a).
Each Seller shall use best efforts to encourage such employees to accept such
offer of employment from applicable Buyer.
(b)Each Seller shall also ensure that the employees are paid out any bonuses,
vacation pay, wages, commissions, or other compensation earned as of the Closing
in accordance with Legal Requirements, to the extent not included in Working
Capital, and such Seller shall be solely liable for any severance or other
payments required to be made to any Current Employees who do not accept new
employment with a Buyer as contemplated under this Section 7.1.
(c)Each Seller shall be solely responsible to the extent not included in Working
Capital for (i) all Company Benefit Plans; (ii) all assets held in trust or
otherwise relating to any Company Benefit Plan or the funding thereof; (iii) any
insurance policy, contract, trust, Third Party administrator contract, or other
funding arrangement, and all obligations thereunder, for any Company Benefit
Plan; (iv) any monies held by or for the benefit of such Seller in any account
dedicated to the payment of benefits or insurance premiums relating to any
Company Benefit Plan; and all severance payments and other Liabilities arising
out of the employment and termination of its employees and for all accrued
compensation, vacation pay, sick pay and other benefits with respect to such
employees, whether or not such employees become employees of a Buyer or one of
its Related Person on or immediately after the Closing Date.

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(d)US Seller shall be solely responsible to provide COBRA continuation coverage
with respect to each “M&A qualified beneficiary” within the meaning of Treasury
Regulation Section 54.4980B-9, Q&A-4(a) due to a qualifying event occurring on
or before the Closing Date, and such Seller shall take all actions necessary to
ensure that Buyer (and its Related Persons) do not become legally obligated to
provide COBRA continuation coverage to any M&A qualified beneficiary.
7.2Tax Matters.
(a)Seller Tax Records. To the extent relevant to the Business or the Acquired
Assets, Sellers shall provide Buyers with such assistance as may reasonably be
required in connection with the preparation of any Tax return and the conduct of
any audit or other examination by any taxing authority or in connection with the
judicial or administrative proceedings relating to any liability for Taxes.
Sellers shall provide Buyers and their advisors with reasonable access during
normal business hours to all books of account, papers and records transferred to
Buyers hereunder relating to accounting or Tax matters. Sellers will not destroy
any such records for the longer of the seventh (7th) anniversary of the Closing
Date or the applicable statute of limitations plus ninety (90) calendar days,
and thereafter only after first providing Buyer or its successor with notice and
the opportunity to retain copies of such records.
(b)Sales, Use and Other Taxes. Buyer Representative, Buyers, Seller
Representative and Sellers shall cooperate in preparing, executing and filing
Tax Returns relating to any Taxes levied on or measured by, or referred to as
transfer, land transfer, registration charges, gross receipt, sales, provincial
sales, use, consumption, GST/HST, Quebec sales, value-added, turnover, excise or
stamp or other similar Taxes (“Transfer Taxes”) relating to the purchase and
sale of the Acquired Assets, and also shall cooperate to minimize or avoid any
Transfer Taxes that might be imposed, to the extent permitted by Legal
Requirements. Specifically, CA Buyer and CA Seller will complete and sign a
joint election under section 167 of the ETA to permit the purchase and sale of
the Acquired Assets without incurring GST/HST in accordance with Section
7.16(b). Buyer Representative will duly file the election with the appropriate
Governmental Body within the time permitted under the ETA. Notwithstanding
anything to the contrary in this Agreement, Sellers will be responsible for the
payment of any Transfer Taxes, other than GST/HST, incurred in connection with
the purchase and sale of the Acquired Assets. Within thirty (30) days after the
Closing Date, Seller Representative and Buyer Representative shall execute and
deliver an agreement between them regarding the allocation of Purchase Price
(and any other consideration required to be taken into account for purposes of
determining the amounts of such Transfer Taxes) with respect to Acquired Assets
subject to such Transfer Taxes consistent with the principles and requirements
as for allocating the Tax Purchase Price.
(c)Accounts Receivable Tax Election. CA Seller and CA Buyer will execute and
file, within the prescribed time limits, a joint election with respect to the
Accounts Receivable under section 22 of the ITA and any corresponding provisions
of any other applicable Tax Legal Requirement and will designate in that joint
election the portion of the Purchase Price allocated to the Accounts Receivable
as the consideration paid by the Buyer to the Seller for the Accounts Receivable
for the purposes of the election.
(d)Assumed Liabilities Election. To the extent that CA Seller has received any
amount in respect of an obligation to deliver goods or services, and CA Buyer
has agreed to assume that obligation under this Agreement, Acquired Assets
having a fair market value equal to that amount are being transferred to CA
Buyer under this Agreement as payment by such CA Seller for CA Buyer’s agreement
to assume that obligation, and the Parties will file an election pursuant to the
provisions of subsections 20(24) and 20(25) of the ITA, and any corresponding
provisions of any other applicable Tax Legal Requirement, within the prescribed
time period.
7.3Payment of Other Retained Liabilities
. In addition to payment of Taxes pursuant to Section 7.2, Sellers shall pay or
otherwise satisfy, or make adequate provision for the payment or satisfaction,
in full of all of the Retained Liabilities and other Liabilities of any Seller
under this Agreement. If any such Liabilities are not so paid, satisfied or
provided for, or if Buyer Representative reasonably determines that failure to
make any payments will impair any Buyer’s use or enjoyment of the Acquired
Assets or conduct of the Business, Buyer Representative may, at any time after
the Closing Date, elect to make or direct the making of all such payments
directly (but shall have no obligation to do so) and set off and deduct the full
amount of all such payments from any payments due to any Seller pursuant to this
Agreement or may give notice of a claim in such amount under the Escrow
Agreement.
7.4Restrictions on Seller’s Dissolution
. No Seller shall dissolve prior to 36 months after the Closing Date.

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7.5Removing Excluded Assets
. Within 30 days after the Closing Date, each Seller shall, at its sole cost and
expense, remove all Excluded Assets from all Facilities and other Leased Real
Property to be occupied by a Buyer. Such removal shall be done in such manner as
to avoid any damage to the Facilities and other properties to be occupied by a
Buyer and any disruption of the business operations to be conducted by such
Buyer after the Closing. Any damage to the Acquired Assets or to the Facilities
resulting from such removal shall be paid by Sellers forthwith. Should any
Seller fail to remove the Excluded Assets as required by this Section, the
applicable Buyer shall have the right, but not the obligation, (a) to remove the
Excluded Assets at Sellers’ sole cost and expense; (b) to store the Excluded
Assets and to charge Sellers all storage costs associated therewith; (c) to
treat the Excluded Assets as unclaimed and to proceed to dispose of the same
under the laws governing unclaimed property; or (d) to exercise any other right
or remedy conferred by this Agreement or otherwise available at law or in
equity. Sellers shall promptly reimburse Buyers for all costs and expenses
incurred by any Buyer in connection with any Excluded Assets not removed by
Seller on or before the Closing Date.
7.6Assistance in Proceedings
. Each of the Parties will cooperate with the other Parties and their counsel in
the contest or defense of, and make available its personnel and provide any
testimony and access to its books and Records in connection with, any Proceeding
involving or relating to (a) the Acquisition or (b) the Business.
7.7Non-competition, Non-solicitation, Non-disparagement and Confidentiality.
(a)Non-competition. For a period of three (3) years after the Closing Date (the
“Restricted Period”), each Seller shall not, and shall not permit its Related
Persons (excluding any Person outside of such Related Person’s Family (which for
purposes of this Section 7.7(a) shall not include immediate family members of
such individual’s spouse)) to, anywhere in the United States or Canada, directly
or indirectly, invest in, own, manage, operate, finance, control, advise, render
services to or guarantee the obligations of any Person engaged in or planning to
become engaged in any business or enterprise which distributes, provides,
renders or sells products or services which compete with the Business in any
respect (“Competing Business”); provided that, for greater certainty, the
foregoing will not prohibit Darren Mabbott or Silverfish UK Limited from
continuing their cycling distributorship business based in the United Kingdom as
such business is currently conducted.
(b)Non-solicitation. During the Restricted Period, each Seller shall not, and
shall not permit its Related Persons (excluding any Person outside of such
Related Person’s Family (which for purposes of this Section 7.7(b) shall not
include immediate family members of such individual’s spouse)) to, directly or
indirectly, through another Person or entity:
(i)solicit the business of any Person who is a customer of any Buyer or its
Related Persons;
(ii)cause, induce or attempt to cause or induce any customer, supplier,
licensee, licensor, franchisee, employee, consultant or other business relation
of any Buyer or any of its Related Persons to cease doing business with Buyer or
any of its Related Persons, to deal with any competitor of such Buyer or any of
its Related Persons or in any way interfere with its relationship with such
Buyer or any of its Related Persons;
(iii)cause, induce or attempt to cause or induce any customer, supplier,
licensee, licensor, franchisee, employee, consultant or other business relation
of such Seller on the Closing Date or within the two years preceding the Closing
Date to cease doing business with any Buyer or its Related Persons, to deal with
any competitor of such Buyer or its Related Persons or in any way interfere with
its relationship with such Buyer or its Related Persons; or
(iv)hire, retain or attempt to hire or retain any employee or independent
contractor of any Buyer or its Related Persons or in any way interfere with the
relationship between such Buyer or its Related Persons and any of their
respective employees or independent contractors.
(c)Non-disparagement. After the Closing Date, each Seller shall not, and shall
not permit its Related Persons (excluding any Person outside of such Related
Person’s Family (which for purposes of this Section 7.7(c) shall not include
immediate family members of such individual’s spouse)) to disparage any Buyer or
any of its Related Persons, shareholders, directors, officers, employees, agents
or affiliates.
(d)Confidentiality. Each Seller understands and acknowledges that, during such
Seller’s affiliation with the Acquired Assets, such Seller and its Related
Persons had access to and learned (i) confidential and proprietary information
concerning the operation and methodology of the Business and (ii) other
information proprietary to the Business, including trade secrets, processes,
patent and trademark applications, product development,

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prices, customer and supply lists, pricing and marketing plans, policies and
strategies, details of customer Contracts, operations methods, product
development techniques, business acquisition plans, new personnel acquisition
plans and all other information generally known by the management of such Seller
as confidential information with respect to the Business of such Seller
(collectively, “Proprietary Information”). Each Seller agrees to keep
confidential and not disclose, directly or indirectly, any such Proprietary
Information or the existence of this Agreement or the terms hereof to any Third
Party (other than to its Representatives), except as required by applicable law,
both statutory and common. Each Seller agrees to not use or exploit, or misuse
or misappropriate such Proprietary Information in any way. The restrictions
contained herein shall not apply to any information which was already generally
available to the public at the time of disclosure, or subsequently became
available to the public, otherwise than by Breach of this Agreement.
(e)Modification of Covenant. If a final judgment of a court or tribunal of
competent jurisdiction determines that any term or provision contained in
Sections 7.7(a) through 7.7(d) is invalid or unenforceable, then the Parties
agree that the court or tribunal will have the power to reduce the scope,
duration or geographic area of the term or provision, to delete specific words
or phrases or to replace any invalid or unenforceable term or provision with a
term or provision that is valid and enforceable and that comes closest to
expressing the intention of the invalid or unenforceable term or provision. This
Section 7.7 will be enforceable as so modified after the expiration of the time
within which the judgment may be appealed. This Section 7.7 is reasonable and
necessary to protect and preserve each Buyer’s legitimate business interests and
the value of the applicable Acquired Assets and to prevent any unfair advantage
conferred on Sellers.
(f)The Parties agree that the non-competition agreement constitutes an
undertaking granted by Sellers not to provide, directly or indirectly, property
or services in competition with the property or services provided or to be
provided by the Buyers (or a person related to the Buyers) for purposes of
subsection 56.4(7) of the ITA. The Sellers and the Buyers deal at arm’s length.
No proceeds are receivable by the Sellers for granting this undertaking. Any
amount that can reasonably be regarded as being consideration received or
receivable by a Seller for this covenant is included by that Seller in computing
the goodwill amount of that Seller. Each Seller will make an election with Buyer
under subsection 56.4(7) of the ITA in the prescribed form, to apply subsection
56.4(5) of the ITA to such amount included by Seller in computing the goodwill
amount in respect of the sale of the Business. Each such election will be filed
by each Seller in accordance with subsection 56.4(13) of the ITA. Sellers will
indemnify and hold the Buyers harmless with respect to any liability of the
Buyers under the ITA for failure to withhold and remit under subsection 215(l)
of the ITA in respect of covenants of U.S. Seller or any non-Canadian resident
Grantee under the non-competition agreement or any other restrictive covenants
granted to the Buyers by U.S. Seller or non-Canadian resident Grantee or a
related non-resident person in respect of the transactions contemplated in this
Agreement.
7.8Customer and Other Business Relationships
. After the Closing, each Seller will cooperate with each applicable Buyer in
its efforts to continue and maintain for the benefit of such Buyer those
business relationships of such Seller existing prior to the Closing and relating
to the business to be operated by such Buyer after the Closing, including
relationships with lessors, employees, regulatory authorities, licensors,
customers, suppliers and others, and such Seller will satisfy the Retained
Liabilities in a manner that is not detrimental to any of such relationships.
Each Seller will refer to the applicable Buyer all inquiries relating to such
business. No Seller and none of its officers, employees, or agents shall take
any action that would tend to diminish the value of the Acquired Assets after
the Closing or that would interfere with the business of any applicable Buyer to
be engaged in after the Closing, including disparaging the name or business of
such Buyer.
7.9Change of Name
. Within 30 days after the Closing Date, each Seller shall (a) amend its
Governing Documents and take all other actions necessary to change its name to
one sufficiently dissimilar to such Seller’s present name, in Buyer
Representative’s judgment, to avoid confusion and (b) take all actions
reasonably requested by Buyer Representative to enable a Buyer to change its
name to such Seller’s present name.
7.10Bulk Sales
. US Buyer and US Seller hereby waive compliance with the bulk-transfer
provisions of any applicable Uniform Commercial Code (or any similar law) in
connection with the Acquisition.
7.11Collection of Accounts Receivable.
(a)Each Seller shall provide such assistance to each applicable Buyer as such
Buyer may reasonably request in connection with such Buyer’s efforts to collect
any Accounts Receivable, and shall promptly

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(but in no event later than three (3) Business Days after receipt thereof)
deliver to such Buyer (i) any cash, checks or other property that such Seller
receives following the Closing to the extent relating to the Accounts Receivable
or other Acquired Assets or the Business, and (ii) a true copy of any notice of
a dispute as to the validity or enforceability of any Accounts Receivable
received from the debtor thereof.
(b)Effective upon the Closing Date, each Seller hereby constitutes and appoints
Buyer Representative and its successors and assigns the true and lawful attorney
in fact of such Seller with full power of substitution, in the name of the
applicable Buyer, or the name of such Seller or any Legacy Seller, to collect
the Accounts Receivable, and to endorse, without recourse, checks, notes and
other instruments constituting or relating to the Accounts Receivable in the
name of such Seller or any Legacy Seller. The foregoing power is coupled with an
interest and shall be irrevocable by each Seller, directly or indirectly,
whether by the dissolution of such Seller or in any manner or for any reason.
7.12Waiver and Release
. Each Seller, on behalf of itself and each of its Related Persons, hereby
releases and forever discharges each Buyer and each of its respective
individual, joint or mutual, past, present and future subsidiaries, successors
and assigns and any of their respective officers, directors, managers, agents,
counsel or advisors (individually, a “Releasee” and collectively, “Releasees”)
from any and all actions, Orders, obligations, contracts, agreements, debts and
liabilities whatsoever, whether known or unknown, suspected or unsuspected, both
at law and in equity, which such Seller, or any of Related Persons now have,
have ever had or may hereafter have against the respective Releasees arising
contemporaneously with or prior to the Closing Date or on account of or arising
out of any matter, cause or event occurring contemporaneously with or prior to
the Closing Date; provided, however, that nothing contained herein shall operate
to release any obligations of any Buyer arising under this Agreement, the Escrow
Agreement or the other documents executed in connection herewith. Each of
Sellers hereby irrevocably covenants to refrain from, directly or indirectly,
asserting any claim or demand, or commencing, instituting or causing to be
commenced, any Proceeding of any kind against any Releasee, based upon any
matter purported to be released hereby.
7.13Operation of the Business During the Earn-Out Period.
(a)In General. Subject to the terms of this Section 7.13 and Section 7.15,
Buyers shall cooperate in good faith with Seller Representative with respect to
the management and operations of the Business during the Earn-Out Period in
order to realize the full potential of the Business; provided, however, that
Buyers shall ultimately have sole discretion with regard to all matters relating
to the operation of the applicable portion of the Business following the
Closing, subject to the EBITDA adjustments set forth in Section 2.10(g).
Notwithstanding the foregoing, no Buyer shall take any actions in bad faith that
would have the purpose of avoiding or reducing any such Earn-Out Amounts. Each
Seller and its respective Related Parties each acknowledges that (i) the
payments that may become due or payable (if any) under Section 2.10 are subject
to numerous factors outside the control of Buyers and their Affiliates, (ii)
there is no assurance that such Seller will receive any particular payment
described in Section 2.10 and no Buyer has promised or projected any such
payments, (iii) they are not relying on the past performance or financial
results, or assets, facilities or personnel, (iv) except for the duties
expressly set forth in this Agreement, no Buyer owes any express or implied duty
to such Seller, and in no case does such Buyer owe to such Seller any fiduciary
or other implied at law duties, and (v) each of the Parties intend the express
provisions of this Agreement solely to govern their contractual relationship.
(b)Affirmative Covenants. For the period beginning at the Effective Time and
continuing through October 31, 2016 (the “Earn-Out Period”), subject to
Section 7.13(f), each Buyer shall:
(i)operate the Business as a standalone business of such Buyer in accordance
with sound business practices;
(ii)maintain separate books and records for the Business and any additional
books and records necessary to calculate EBITDA of the Business and the other
components thereof, including the calculation of EBITDA attributable to RF
Canada and Easton Canada separately; and
(iii)allow the Business to retain working capital sufficient to satisfy the
reasonable business needs of the Business consistent with the operation of the
Business by Sellers prior to Closing.
(c)Acceleration Payments upon Change of Control. Without the prior consent of
Seller Representative (but subject to the last sentence of this paragraph),
promptly upon the consummation of (A) the sale, lease, exchange or other
transfer of substantially all of the Acquired Assets (on an aggregate basis and
in one transaction or in a series of related transactions) to a person or entity
that is not controlled, directly or indirectly, by Buyer Guarantor, (B) a direct
or indirect (whether by the sale of stock or merger of a Related Person, or
otherwise) sale, exchange, or

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other transfer of more than 50% of the capital stock of Buyers (excluding Fox)
(on an aggregate basis and in one transaction or in a series of related
transactions) to a person or entity that is not controlled by Buyer Guarantor,
or (C) a merger or consolidation to which any of the Buyers (excluding Fox) (on
an aggregate basis and in one transaction or in a series of related
transactions) are a party if the Buyer Guarantor or any of its Subsidiaries does
not have “beneficial ownership” (as defined in Rule 13d-3 under the Exchange
Act) immediately following the effective date of such merger or consolidation of
more than 50% of the combined voting power of the surviving corporation’s or
corporations’ outstanding securities (that in either case, as applicable,
directly or indirectly hold the Acquired Assets) ordinarily having the right to
vote at elections of directors, in each case during the Earn-Out Period, then
Buyers shall pay to Seller Representative, on behalf of Sellers: (x) if such
consummation occurs during the 2015 fiscal year, the greater of (i) $6,000,000
or (ii) the 2015 Earn-Out as determined, on a pro forma basis, as of the date
the proposed change of control is to be consummated; or (y) if such consummation
occurs during the 2016 fiscal year, the greater of (i) $7,500,000 or (ii) the
2016 Earn-Out as determined, on a pro forma basis, as of the date the proposed
change of control is to be consummated plus any unpaid 2015 Earn-Out Amount if
earned under Section 2.10 (such payment, as applicable, referred to herein as
the “Change of Control Acceleration Payment”). For the avoidance of doubt, an
Acceleration Payment shall not be triggered upon the consummation of any
transactions or series of related transactions pursuant to which there is a
change in control of either Buyer Guarantor or Fox or a sale or other transfer
by either Buyer Guarantor or Fox of substantially all of its assets.
(d)Restrictive Covenants. During the Earn-Out Period but subject to
Section 7.13(f), no Buyer shall make a material modification to the Business or
its operations (including taking any action that would reasonably be expected to
result in the diversion of any material portion of the customers or business of
the Business away from the Business, whether by the transfer of any customer
contract to Related Persons of Buyer or otherwise) with the effect of avoiding
or reducing the Earn-Out Amounts.
(e)Acceleration Payments upon Breach. Subject to Section 7.13(f), upon a
material Breach by a Buyer of the provisions of Section 7.13(d) during the
Earn-Out Period that is not capable of cure or is not cured within 90 days
following written notice from Seller Representative to Buyer Representative, or
in the event that Chris Tutton is terminated without Just Cause or resigns with
Good Reason pursuant to the terms of his Employment Agreement, then Buyers shall
pay to CA Seller, on behalf of Sellers: (x) if such material Breach occurs
during the 2015 fiscal year, $9,000,000; or (y) if such material Breach occurs
during the 2016 fiscal year, $10,500,000, plus any unpaid 2015 Earn-Out Amount
if earned under Section 2.10 (such payment, as applicable, referred to herein as
the “Breach Acceleration Payment”); provided, that in any event no Buyer shall
be required to pay to CA Seller both a Change of Control Acceleration Payment
and a Breach Acceleration Payment. For the avoidance of doubt, if Chris Tutton
terminates his employment solely due to a violation by a Buyer of
Section 7.13(d), the rights of Sellers under this Section 7.13(e) shall not be
limited by Section 2.10(r).
(f)Each Seller acknowledge on behalf of itself and on behalf its respective
Related Parties acknowledge that, except as otherwise set forth in this
Agreement, (i) no Buyer nor any of its Related Persons (A) shall have any
obligation to operate the Business in order to achieve or maximize EBITDA or
make any payment to be made under Section 2.10 and (B) makes any assurance that
such Seller will have any particular license, personnel, assets or support and
(ii) Buyer may make business decisions in the ordinary course of its business
and that such decisions may negatively impact EBITDA. Notwithstanding anything
in this Section 7.13 to the contrary, no Buyer or any of its Related Persons
shall be subject to or bound by, and none of them shall have any Liability to
Sellers or their Related Persons (or shall not be deemed to have breached
Section 7.13(e)) with respect to and only to the extent that any failure on its
part to comply with (excluding any obligation to pay a Change of Control
Acceleration Payment), any one or more of its agreements and restrictions in
clauses (a), (b), (d) and (e) of this Section 7.13 in the event such failure to
comply is required by any applicable Legal Requirement or securities exchange
rules or regulations.
(g)Buyers will retain all such books and records, including all sources of
primary records, for a period of at least two years after the Earn-Out Period,
and during such period, Sellers and their financial advisors will have access to
all books and records of the Buyers related to the preparation of the Closing
Financial Statements and the calculation of the Earn-Out Amounts during normal
business hours, provided, that any financial advisor shall be bound by a
confidentiality agreement prior to accessing such books and records.
(h)The provisions of this Section 7.13 shall be null and void, and all the
agreements and restrictions of Buyers and their Related Persons contained in
this Section 7.13 shall terminate, upon the earlier of (i) expiration of the
Earn-Out Period, (ii) a forfeiture of rights to the 2015 Earn-Out and/or 2016
Earn-Out pursuant to Section 2.10(q), or (iii) payment to Sellers of a Change of
Control Acceleration Payment or a Breach Acceleration Payment; provided

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that Buyers shall comply with Section 7.13(b)(i) until all Earn-Out Amounts have
been finally determined in accordance with Section 2.10.
7.14Individual Non-Competition Agreements
. Each of Chris Tutton, Derek Wills, Darren Mabbott and Stanley Fuller, directly
or indirectly through their respective holding corporations hold shares of CA
Seller (the “Shareholder Grantees”), Chris Tutton and Derek Wills are employees
of CA Seller (the “Employee Grantees”, and collectively, the “Grantees”) are, in
connection with the sale of the Business by Sellers to Buyers, entering into
non-competition agreements with the Buyers, undertaking not to provide, directly
or indirectly, property or services in competition with the property or services
provided or to be provided by the Buyers in the course of carrying on the
purchased Business to which the non-competition agreement relates (the
“Covenants”). Each of the Grantees is a resident of Canada, other than Darren
Mabbott who is a resident of the United Kingdom. Each of the Grantees deals at
arm’s length with the Buyers. No proceeds are received or receivable by any
Grantee for granting the Covenants. The Covenants are integral to this
Agreement. Any amount that can reasonably be regarded as being consideration for
the Covenants is included by the Sellers in computing a goodwill amount of the
Sellers in respect of the sale of the Business Buyers.
7.15Certain Intellectual Property Matters.
(a)German Utility Model Suit. Subject to Section 7.15(b), each Seller, on behalf
of itself and each of its Related Persons, agrees that it shall be responsible
for defending itself against the Specified Claims and that no Buyer shall be
responsible for any Liability arising therefrom, including any fees and expense
of attorneys or other professionals; provided, that, for the avoidance of doubt,
if a Buyer is subject to a Third-Party Claim with respect to a Specified Claim
for sales of Narrow-Wide Rings that occurred prior to the Closing Date, such
Buyer shall be afforded the rights and protections set forth in Section 8.7.
(b)Narrow-Wide Rings. Each Buyer and Seller acknowledge and agree that sales of
the “narrow-wide chain rings” (collectively, the “Narrow-Wide Rings”) shall (i)
cease in Germany to the extent not already ceased and (ii) at the Buyer
Representative’s sole discretion, cease in any other jurisdiction in which the
Buyer Representative believes in good faith that the sales of such Narrow-Wide
Rings would be reasonably likely to result in a threatened or actual Proceeding.
Further, each Buyer and Seller agree that the Buyers will, in the Buyers’ sole
discretion, work in good faith to either (i) design a work-around to allow for
the sales of Narrow-Wide Rings in Germany and any other impacted jurisdiction
pursuant to the foregoing clause or (ii) work with the Sellers, SRAM LLC and
their respective Related Persons to license the Intellectual Property that is
the subject of the Specified Claims or settle the Specified Claims.
7.16Post-Closing Obligations
. To the extent not previously delivered on or prior the Closing Date:
(a)Within ten (10) Business Days following the Closing Date, Seller
Representative will deliver to Buyer Representative certificates pursuant to
section 187 of the Provincial Sales Tax Act (British Columbia) and section 99 of
the Social Services Tax Act (British Columbia) and similar certificates under
other sales tax legislation which indicates that such Seller has paid all Taxes
collectible or payable under those statutes up to and including the Closing Date
or, where applicable, has entered into a satisfactory arrangement for the
payment of those Taxes;
(b)Within ten (10) Business Days following the Closing Date, Seller
Representative and Buyer Representative will jointly make an election under
section 167 of the ETA contemplated by Section 7.2(b) of this Agreement;
(c)Within ten (10) Business Days following the Closing Date, Seller
Representative will deliver to Buyer Representative copies of all current
documents or other materials that fully and accurately set forth, describe or
embody all Trade Secrets and that enable Buyers to use and otherwise exercise
its rights with respect to such Trade Secrets. Further, for a period of six (6)
months from such delivery, Sellers shall provide any reasonable assistance
requested by Buyers to enable Buyers to fully understand and efficiently use
such Trade Secrets for their intended purposes;
(d)Within ten (10) Business Days following the Closing Date, Seller
Representative together with Buyer Representative will deliver an Offer Letter
to the employees listed on Schedule 3.24(a) (excluding any employee that signed
an Employment Agreement pursuant to Section 2.7(a)); and

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(e)Within ten (10) Business Days following the Closing Date, Seller
Representative together with Buyer Representative will deliver to Rob More,
Douglas Chalmers, Jason Kennett, Glenn Dobson, Eric Behne, Todd Cummings,
Brendan Obrien and Eduardo Zepeda a Non-Disclosure and Inventions Agreement.
7.17Sellers Insurance Policies
. The parties acknowledge and agree that Sellers will continue to maintain the
insurance policies listed in Schedule 3.22 (the “Sellers Insurance Policies”)
following the Closing Date and the Buyers shall obtain substantially equivalent
insurance coverage through its own insurers effective upon Closing with coverage
on terms and conditions equal to the Sellers Insurance Policies.
7.18Further Assurances
. The Parties shall cooperate reasonably with each other and with their
respective Representatives in connection with any steps required to be taken as
part of their respective obligations under this Agreement, and shall (a) furnish
upon request to each other such further information; (b) execute and deliver to
each other such other documents (including, without limitation, any short-form
assignment agreements as may be necessary to record assignments of Intellectual
Property Rights under this Agreement in any particular territory or otherwise
comply with such recordation requirements); and (c) do such other acts and
things, all as any other Party may reasonably request for the purpose of
carrying out the intent of this Agreement and the Acquisition.

8.
INDEMNIFICATION; REMEDIES.

8.1Survival
. All representations, warranties, covenants and obligations in this Agreement,
the Disclosure Schedules, the certificates delivered pursuant to Section 2.7 and
any other certificate or document delivered pursuant to this Agreement shall
survive the Closing and the consummation of the Acquisition, subject to Section
8.6. The waiver of any condition based upon the accuracy of any representation
or warranty, or on the performance of or compliance with any covenant or
obligation, will not affect the right to indemnification, reimbursement or other
remedy based upon such representations, warranties, covenants and obligations.
8.2Indemnification and Reimbursement by Sellers.
(a)Subject to the limitations contained in Sections 8.4, 8.5 and 8.6, each
Seller shall, jointly and severally, indemnify and hold harmless each Buyer and
its Representatives, Subsidiaries and Related Persons (collectively, the “Buyer
Indemnified Persons”), and will reimburse the Buyer Indemnified Persons, for any
loss, Liability, claim, damage and expense (including costs of investigation and
defense and reasonable attorneys’ fees and expenses), including any diminution
of value which is reasonably foreseeable, whether or not involving a Third-Party
Claim (collectively, “Damages”), arising from or in connection with:
(i)any Breach of any representation or warranty made by a Seller in this
Agreement, the Disclosure Schedules or any certificate, document, writing or
instrument delivered by a Seller or Seller Representative pursuant to this
Agreement;
(ii)any Breach of any covenant or obligation of a Seller in this Agreement or in
any certificate, document, writing or instrument delivered by a Seller or Seller
Representative pursuant to this Agreement;
(iii)by reason of the non-compliance of US Seller with applicable US state bulk
sales or transfer in bulk laws in connection with the completion of the
Acquisition;
(iv)any Liability arising out of the ownership or operation of the Acquired
Assets or Business prior to the Effective Time other than the Assumed
Liabilities;
(v)any Retained Liabilities;
(vi)any Excluded Assets;
(vii)any matter set forth in Schedule 8.2(a)(vii).
(b)Subject to the limitations set forth in Sections 8.4, 8.5 and 8.6, for so
long as funds remain subject to the Escrow Agreement, Buyer Indemnified Persons
shall be entitled to recover all Damages from such escrowed funds in accordance
with the provisions of the Escrow Agreement and, to the extent Earn-Out Amounts
remain unpaid, Earn-Out Amounts as they become due and payable. All such Damages
shall be paid, first, from the remaining escrowed funds, second, by set off
against any Earn-Out Amount then due and payable (but not yet paid) and,
finally, directly from Sellers or Owner Guarantors in accordance with this
Agreement; provided, that Buyers shall

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be entitled to pursue payment on account of Damages arising from claims made
pursuant to Section 8.2(a)(ii) through (vii) from whatever source and in what
order the Buyer Representative decides in its sole discretion.
8.3Indemnification and Reimbursement by Buyers
. Subject to Section 8.5, each Buyer shall, jointly and severally, indemnify and
hold harmless each Seller, its Representatives and Related Persons
(collectively, the “Seller Indemnified Persons”) and will reimburse Seller
Indemnified Persons, for any Damages arising from or in connection with:
(a)any Breach of any representation or warranty made by a Buyer in this
Agreement or in any certificate, document, writing or instrument delivered by a
Buyer or Buyer Representative pursuant to this Agreement;
(b)any Breach of any covenant or obligation of a Buyer in this Agreement or in
any other certificate, document, writing or instrument delivered by a Buyer or
Buyer Representative pursuant to this Agreement;
(c)any claim by any Person for brokerage or finder’s fees or commissions or
similar payments based upon any agreement or understanding alleged to have been
made by such Person with Buyer (or any Person acting on Buyer’s behalf) in
connection with the Acquisition;
(d)any Assumed Liabilities; or
(e)any additional Tax Liability incurred by CA Seller as a result of its
entrance into the Perpetual Non-US IP License or the One-Year Non-US IP License.
8.4Limitations on Amount - Sellers
. No Seller shall have any Liability (for indemnification or otherwise) with
respect to claims under Section 8.2(a) until the total of all Damages with
respect to such matters exceeds $161,970 (the “Deductible”) and then, (a) with
respect to claims under Section 8.2(a)(i) (excluding claims under or to matters
arising in respect of Fundamental Representations), only for the amount by which
such Damages exceed the Deductible up to an aggregate amount equal to ten
percent (10%) of the Purchase Price, or (b) with respect to all other claims
under Section 8.2(a), only for the amount by which such Damages exceed the
Deductible up to the Purchase Price; provided, however, the Deductible shall not
apply to claims (1) arising out of the Retained Liabilities described in Section
2.4(b)(iii) or the representations and warranties set forth in Section 3.15
(Taxes) or Section 3.23 (Environmental Matters) or (2) under Sections 8.2(a)(ii)
through (vii) (including, for greater certainty, Specified Claims). However, the
limitations in this Section 8.4 will not apply to claims under or to matters
arising in respect of Fundamental Representations or to any Breach of any of any
Seller’s representations and warranties of which any Seller had Knowledge at any
time prior to the date on which such representation and warranty is made or any
intentional Breach by any Seller of any covenant or obligation, and Sellers will
be liable for all Damages with respect to such Breaches. However, in no event
shall such Liability of the Sellers hereunder exceed the Purchase Price.
8.5Limitations on Amount - Buyers
. No Buyer shall have any Liability (for indemnification or otherwise) with
respect to claims under Section 8.3(a) until the total of all Damages with
respect to such matters exceeds the Deductible and then only for the amount by
which such Damages exceed the Deductible; provided, however, the Deductible
shall not apply to claims under Sections 8.3(e). However, the limitations in
this Section 8.5 will not apply to any Breach of any of any Buyer’s
representations and warranties of which any Buyer had knowledge at any time
prior to the date on which such representation and warranty is made or any
intentional Breach by any Buyer of any covenant or obligation, and Buyers will
be liable for all Damages with respect to such Breaches. In no event shall such
Liability exceed the Purchase Price.
8.6Time Limitations.
(a)No claim under Section 3.23(b) (Taiwan Environmental), Section 8.2(a)(i),
Section 8.2(a)(iv) or Section 8.3(a) shall be brought after the date that is 24
months following the Closing Date, except for (i) claims arising out of any
Fundamental Warranties, which shall survive in perpetuity, (ii) claims under
Section 8.3(e) or arising out of the representations and warranties set forth in
Section 3.15 (Taxes), which shall survive until 90 days following the expiration
of the statute of limitations period (including all extensions thereof)
applicable to the underlying subject matter being represented, (iii) claims
arising out of item no. 1 of Section 8.2(a)(vii) (Specified Claims), which shall
survive for a period of three and one-half (3.5) years after the Closing Date,
(iv) claims arising out of the representations and warranties set forth in
Section 3.23(a) with respect to the Facilities located in the United States (US
Environmental Matters), which shall survive for a period of three (3) years
after the Closing Date, (v) claims arising out of the

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representations and warranties set forth in Section 3.23(a) with respect to the
Facilities located in Canada (CA Environmental Matters), which shall survive for
a period of five (5) years after the Closing Date, and (vi) claims of which
Seller Representative has been notified with reasonable specificity by Buyer
Representative, or claims of which Buyer Representative has been notified with
reasonable specificity by Seller Representative, within the aforesaid survival
period applicable to the underlying claim (as applicable, the “Survival
Period”).
(b)For greater clarity, nothing contained in the foregoing sentence shall
prevent recovery under this Article 8 after the expiration of the Survival
Period so long as the party making a claim or seeking recovery complies with the
provisions of clause (i) and (ii) of the following sentence. No party shall have
any claim or right of recovery for any Breach of a representation, warranty,
covenant or agreement unless (i) written notice is given in good faith by that
party to the other party of the Breach of the representation, warranty, covenant
or agreement pursuant to which the claim is made or right of recovery is sought
setting forth in reasonable detail the basis for the purported Breach, the
amount or nature of the claim being made, if then ascertainable, and the general
basis therefor and (ii) such notice is given prior to the expiration of the
Survival Period applicable to the underlying claim.
8.7Third-Party Claims.
(a)In the event that subsequent to the Closing, any Person that is or may be
entitled to indemnification under this Agreement (an “Indemnified Person”)
either receives notice of the assertion of any claim, issuance of any Order or
the commencement of any action or proceeding or otherwise learns of an assertion
of a potential claim, Order or action by any Third Party (a “Third-Party
Claim”), against such Indemnified Person, against which a Party to this
Agreement is or may be required to provide indemnification under this Agreement
(an “Indemnifying Person”), the Indemnified Person shall, as promptly as
practicable, give written notice thereof together with a statement of any
available information regarding such claim to the Indemnifying Person; provided,
however, that the failure to notify the Indemnifying Person will not relieve the
Indemnifying Person of any Liability that it may have to any Indemnified Person,
except to the extent that the Indemnifying Person demonstrates that the defense
of such claim, Order or action is prejudiced by the Indemnified Person’s failure
to give such notice.
(b)If any Third-Party Claim referred to in this Article 8 is brought against an
Indemnified Person and such Indemnified Person gives notice to the Indemnifying
Person of the commencement of such Third-Party Claim, the Indemnifying Person
will be entitled to participate in the defense of such Third-Party Claim and, to
the extent that it wishes (unless (i) the Indemnifying Person is also a party to
such Third-Party Claim and the Indemnified Person determines in good faith that
joint representation would be inappropriate, or (ii) the Indemnifying Person
fails to provide, upon request, reasonable assurance to the Indemnified Person
of its financial capacity to defend such Third-Party Claim and provide
indemnification with respect to such Third-Party Claim), to assume the defense
of such Third-Party Claim with counsel reasonably satisfactory to the
Indemnified Person and, after written notice (a “Control Notice”) from the
Indemnifying Person to the Indemnified Person of its election to assume the
defense of such Third-Party Claim, the Indemnifying Person will not, as long as
it diligently conducts such defense, be liable to the Indemnified Person under
this Article 8 for any fees of other counsel or any other expenses with respect
to the defense of such Third-Party Claim, in each case subsequently incurred by
the Indemnified Person in connection with the defense of such Third-Party Claim,
other than reasonable costs of investigation. The Indemnifying Person will have
ten (10) Business Days from receipt of a notice of a Third-Party Claim from an
Indemnified Person pursuant to Section 8.7(a) to assume the defense thereof. If
the Indemnifying Person does not, or is not pursuant to the preceding two
sentences permitted to, assume the defense of a Proceeding, the Indemnified
Person shall have the right to assume the defense and employ separate counsel to
represent such Indemnified Person and the reasonable fees and expenses of such
separate counsel shall be paid by such Indemnifying Person. If the Indemnifying
Person assumes the defense of a Third-Party Claim, (i) it will be conclusively
established for purposes of this Agreement that the claims made in that
Third-Party Claim are within the scope of and subject to indemnification under
this Article 8; (ii) no compromise or settlement of such claims may be effected
by the Indemnifying Person without the Indemnified Party’s consent unless (A)
there is no finding or admission of any violation of any Legal Requirement by or
any violation of the rights of any Person and no effect on any other claims that
may be made against the Indemnified Person, and (B) the sole relief provided is
monetary damages that are paid in full by the Indemnifying Person; and (iii) the
Indemnified Person will have no Liability with respect to any compromise or
settlement of such claims effected without its consent. If notice is given to an
Indemnifying Person of the commencement of any Third-Party Claim and the
Indemnifying Person does not, within ten (10) Business Days after the
Indemnified Person’s notice is given, deliver a Control Notice to the
Indemnified Person of its election to assume the defense of such Third-Party
Claim, the Indemnifying Person will be

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bound by any determination made in such Third-Party Claim or any compromise or
settlement effected by the Indemnified Person.
(c)Notwithstanding the foregoing, if an Indemnified Person determines in good
faith that there is a reasonable probability that a Third-Party Claim may
adversely affect it or its Related Persons other than as a result of monetary
damages for which it would be entitled to indemnification under this Agreement,
the Indemnified Person may, by notice to the Indemnifying Person, assume the
exclusive right to defend, compromise, or settle such Third-Party Claim, but the
Indemnifying Person will not be bound by any compromise or settlement effected
without its consent (which may not be unreasonably withheld).
8.8Procedures for Direct Claims
. In the event any Indemnified Person should have a claim for indemnity against
any Indemnifying Person that does not involve a Third Party Claim, the
Indemnified Person shall deliver notice of such claim with reasonable promptness
to the Indemnifying Person. The failure by any Indemnified Person to so notify
the Indemnifying Person shall not relieve the Indemnifying Person from any
Liability that it may have to such Indemnified Person with respect to any claim
made pursuant to Sections 8.2 or 8.3 and in accordance with this Section 8.8, it
being understood that notices for claims in respect of a breach of a
representation or warranty must be delivered prior to the expiration of the
applicable Survival Period for such representation or warranty under Section
8.6. If the Indemnifying Person does not notify the Indemnified Person within 60
calendar days following its receipt of such notice that the Indemnifying Person
disputes its Liability to the Indemnified Person under this Article 8, or the
amount thereof, the claim specified by the Indemnified Person in such notice
shall be conclusively deemed a Liability of the Indemnifying Person under this
Article 8, and the Indemnifying Person shall pay the amount of such Liability to
the Indemnified Person on demand or, in the case of any notice in which the
amount of the claim (or any portion of the claim) is estimated, on such later
date when the amount of such claim (or such portion of such claim) becomes
finally determined. If the Indemnifying Person has timely disputed its Liability
with respect to such claim as provided above, or the amount thereof, the
Indemnifying Person and the Indemnified Person shall resolve such dispute first
by negotiation among Representatives of Buyers and Sellers and then by
litigation, to the extent such dispute is not so resolved. Buyers may set off
any amount to which it is entitled under this Article 8, and provided such
amount is finally determined by a court of competent jurisdiction or mutual
agreement with the Seller Representative, against amounts otherwise payable to
Sellers after the Closing.
8.9Calculation of Damages; Treatment of Indemnity Payments.
(a)The amount of any Damages payable under this Article 8 by the Indemnifying
Person shall be net of any amounts actually received by the Indemnified Person
under applicable insurance policies or from any other Person alleged to be
responsible therefore or pursuant to any indemnity, contribution or other
similar payment by any Person with respect thereto, net of any expenses
reasonably incurred in connection with the collection thereof, including
deductibles and self-insured retentions. If the Indemnified Person receives any
amounts under applicable insurance policies, or from any other Person alleged to
be responsible for any Damages, subsequent to an indemnification payment by the
Indemnifying Person, then such Indemnified Person shall promptly reimburse the
Indemnifying Person for any payment made or expense incurred by such
Indemnifying Person in connection with providing such indemnification payment up
to the amount received by the Indemnified Person, net of any expenses reasonably
incurred by such Indemnified Person in collecting such amount (including
deductibles and self-insured retentions). The Indemnified Person shall use
reasonable efforts to collect any amounts available under such insurance
coverage or from such other Person alleged to have responsibility therefor;
provided, however, that (i) doing so is commercially reasonable and (ii) such
obligation shall not be a condition to, or a limitation on, indemnification
rights hereunder prior to making any claim for indemnification under this
Article 8.
(b)The Indemnifying Person shall not be liable under this Article 8 for any
(i) Damages to the extent that the amount thereof, if any, was reflected in the
calculation of the Adjustment Amount, as finally determined pursuant to Section
2.8, or (ii) Damages that are for special, punitive or exemplary damages, except
in the case of fraud or criminal misconduct and except to the extent such
Damages were actually awarded, paid or incurred in a Third Party Claim.
(c)Solely for purposes of calculating the amount of Damages incurred arising out
of or relating to any Breach of a representation or warranty (and not for
purposes of determining whether or not a Breach has occurred), the references to
“material” or “Material Adverse Effect” shall be disregarded.

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(d)The Indemnified Person shall take, and shall cause its respective Related
Persons to take, all reasonable steps to mitigate and otherwise minimize their
Damages to the maximum extent reasonably possible upon and after becoming aware
of any event which would reasonably be expected to give rise to any Damages and
an Indemnifying Person shall not be liable for any Damages to the extent that
such Damages are attributable to the Indemnified Person’s failure to mitigate.
(e)If the Indemnified Person receives any payment from an Indemnifying Person in
respect of any Damages and the Indemnified Person could have recovered all or a
part of such Damages from a Third Party based on the underlying claim asserted
against the Indemnified Person, the Indemnified Person shall assign such of its
rights to proceed against such Third Party as are necessary to permit the
Indemnifying Person to recover from such Third Party the amount of such
indemnification payment.
(f)The Parties agree to treat any indemnity payment under this Agreement as an
adjustment to the Purchase Price to the extent permitted by applicable Legal
Requirement.
8.10No Double Recovery
. Notwithstanding the fact that any party may have the right to assert claims
for indemnification under or in respect of more than one provision of this
Agreement or another agreement entered into in connection herewith in respect of
any fact, event, condition or circumstance, no Indemnified Person shall be
entitled to recover the amount of any Damages suffered by such Indemnified
Person more than once under all such agreements in respect of such fact, event,
condition or circumstance, and an Indemnifying Party shall not be liable for
indemnification to the extent the Indemnified Person has otherwise been fully
compensated on a dollar-for-dollar basis for such Damages pursuant to the
Purchase Price adjustments under Section 2.8.
8.11Exclusion of Other Remedies
. The Parties agree that, from and after the Closing, the sole and exclusive
remedies of the Parties for any Damages based upon, arising out of or otherwise
in respect of the matters set forth in this Agreement (including
representations, warranties, covenants and agreements) and the transactions
contemplated hereby, whether based in contract or tort, are the indemnification
and reimbursement obligations of the Parties set forth in this Article 8. The
provisions of this Section ý8.11 shall not, however, prevent or limit a cause of
action hereunder (a) with respect to fraud or criminal misconduct or (b) to
obtain an injunction or injunctions to prevent breaches of this Agreement, to
enforce specifically the terms and provisions hereof or to obtain other
equitable remedies with respect hereto.

9.
SELLER REPRESENTATIVE

9.1Seller Representative
. In order to administer efficiently the transactions and related matters
contemplated by this Agreement and the Escrow Agreement, including (i) the
waiver of any breach or default hereunder and (ii) the defense and/or settlement
of any claims that may be made by any Seller against the Indemnification Escrow
Amount, Seller hereby designates Chris Tutton as its representative (“Seller
Representative”).
(a)Each Seller hereby irrevocably grants Seller Representative full power and
authority to act as agent and attorney in fact for such Seller, (i) to execute
and deliver the Escrow Agreement on behalf of such Seller, (ii) to take all
action necessary in connection with the waiver of any breach or default
hereunder, the waiver of any condition to the obligations of such Seller to
consummate the transactions contemplated hereby, or the defense and/or
settlement of any claims that may be made by Buyers or Buyer Representative
following the Closing against the Indemnification Escrow Amount, (iii) to give
and receive all notices required to be given or received by such Seller under
this Agreement or the Escrow Agreement, (iv) to authorize payment to Buyers of
cash from the Indemnification Escrow Amount in satisfaction of claims by Buyers
or Buyer Representative, to object to such deliveries, to agree to negotiate,
enter into settlements and compromises of, and demand arbitration with respect
to such claims, and (v) to take any and all additional action necessary or
appropriate in the good faith judgment of Seller Representative for the
accomplishment of the foregoing or as is contemplated to be taken by or on
behalf of such Seller by the terms of this Agreement and the Escrow Agreement.
(b)Seller Representative may be changed from time to time by approval of a
majority (in amount, based on the Allocation) of Sellers upon written notice to
Buyer Representative. In the event that Seller Representative dies, dissolves,
liquidates, becomes unable or unwilling to perform his, her or its
responsibilities hereunder or resigns

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from such position, the other Sellers shall select another representative to
fill such vacancy within thirty (30) days after such event and such substituted
representative shall be deemed to be Seller Representative for all purposes of
this Agreement and the documents delivered pursuant hereto. No bond shall be
required of Seller Representative and Seller Representative shall not receive
compensation for his, her or its services. No provision of this Agreement shall
restrict in any way the ability or right of Seller Representative to voluntarily
resign from such position at any time, and any such resignation shall be done
without any Liability to the other Sellers.
(c)All decisions and actions by Seller Representative, including without
limitation any agreement between Seller Representative and Buyer Representative
relating to the defense and/or settlement of any claims that may be made by
Buyers or Buyer Representative following the Closing against the Indemnification
Escrow Amount shall be binding upon each Seller and no such Seller shall have
the right to object, dissent, protest or otherwise contest the same.
(d)By execution of this Agreement, each Seller agrees that:
(i)Each Buyer and Buyer Representative shall be able to rely conclusively on the
instructions and decisions of Seller Representative as to any matters set forth
in Article 2, the settlement of any claims for indemnification of Buyers
pursuant to the Escrow Agreement or Article 8 or any other actions required or
permitted to be taken by Seller Representative hereunder, and no party hereunder
shall have any cause of action against any Buyer or Buyer Representative to the
extent that such Parties have relied upon the instructions or decisions of
Seller Representative;
(ii)all actions and decisions of Seller Representative shall be conclusive and
binding upon such Seller and no such Seller shall have any cause of action
against Seller Representative for any action taken, decision made or instruction
given by Seller Representative under this Agreement, except for fraud or
criminal misconduct of this Agreement by Seller Representative;
(iii)notices or communications to or from Seller Representative shall constitute
notice to or from such Seller for purposes of this Agreement and the Escrow
Agreement;
(iv)Seller Representative shall have full power to determine all questions and
doubts arising in relation to any of the provisions of this Agreement and every
such determination made in good faith shall be conclusive and binding on such
Seller and Seller Representative may act on the opinion or advice of, or
information obtained from, any attorney, banker, broker, accountant or other
expert and shall not be responsible for any loss occasioned by so acting;
(v)each Seller shall, jointly and severally, indemnify Seller Representative
from and against any and all Liabilities, losses, damages, penalties, actions,
judgments, suits, costs, expenses or disbursements of any kind or nature
whatsoever that may be imposed on, incurred by, or asserted against Seller
Representative by Buyers or any other Person in connection with this Agreement
and in suing for and recovering any sum due to Buyers or any of them under this
Agreement; provided, that, such indemnity shall not extend to losses arising
from Seller Representative’s fraud or criminal misconduct;
(vi)in performing the functions specified in this Agreement and the Escrow
Agreement, Seller Representative shall not be liable to such Seller in the
absence of fraud or criminal misconduct on the part of Seller Representative;
and
(vii)the provisions of this Section 9.1 shall be binding upon the executors,
heirs, legal representatives, personal representatives, successor trustees and
successors of such Seller and any references in this Agreement to such Persons
shall mean and include the successors to each Person’s rights hereunder.
(e)Upon the final release of the remaining Indemnification Escrow Amount
pursuant to the Escrow Agreement, all fees and expenses incurred by Seller
Representative under this Agreement may be paid from such remaining amounts
after satisfaction of all claims of Buyers against the Indemnification Escrow
Amount. Nothing in this Section 9.1(e) shall limit the obligations of Sellers
under Section 9.1(d)(v).

10.
GUARANTY.

10.1Buyer Guaranty
. Subject to the limitations contained in Article 8, Buyer Guarantor hereby
guarantees the payment and performance of the obligations of each Buyer and its
Related Persons under this Agreement.
10.2Owner Guaranty

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. Subject to the limitations contained in Article 8, each Owner Guarantor,
jointly and severally up to such Owner Guarantor’s pro rata portion of the
proceeds received hereunder for the Purchase Price, hereby guarantees the
payment and performance of the obligations of each Seller and its Related
Persons under this Agreement.

11.
TERMINATION

11.1Termination Events
. By notice given prior to or at the Closing, subject to Section 11.2, this
Agreement may be terminated as follows:
(a)by the mutual written consent of Buyer Representative and Seller
Representative;
(b)by Buyer Representative, if there has been a material Breach by any Seller
(through no fault of a Buyer) of any covenant, representation or warranty
contained in this Agreement which has prevented the satisfaction of any
condition to the obligations of Buyers at the Closing and such Breach has not
been waived by Buyer Representative;
(c)by Seller Representative, if there has been a material Breach by any Buyer
(through no fault of a Seller) of any covenant, representation or warranty
contained in this Agreement which has prevented the satisfaction of any
condition to the obligations of Sellers at the Closing and such Breach has not
been waived by Seller Representative; or
(d)by either Buyer Representative or Seller Representative if the transactions
contemplated hereby have not been consummated by December 12, 2014, provided
that neither Buyer Representative nor Seller Representative shall be entitled to
terminate this Agreement pursuant to this Section 11.1(d) if such Party’s (or
its respective Related Parties’) willful Breach has prevented the consummation
of the Acquisition.
11.2Effect of Termination
. If this Agreement is terminated pursuant to Section 11.1, all obligations of
the Parties under this Agreement will terminate, except that the obligations of
the Parties in this Section 11.2 and Section 12 (except for those in Section
12.4) will survive.

12.
GENERAL PROVISIONS.

12.1Expenses
. Except as otherwise provided in this Agreement, each Party will bear its
respective fees and expenses incurred in connection with the preparation,
negotiation, execution and performance of this Agreement and the Acquisition,
including all fees and expense of its Representatives. Buyers will pay one-half
and Sellers will pay one-half of the fees and expenses of the Escrow Agent.
12.2Public Announcements
. Each Seller shall not, and shall not permit its Related Persons to, issue any
press release or other public statements with respect to the Acquisition. Each
Buyer and its Related Persons may issue, any press release or other public
statements with respect to the Acquisition as its deems appropriate in its sole
discretion including, without limitation (a) press releases issued or filings
made by such Buyer and/or its Related Persons, and (b) disclosures in
satisfaction of, or otherwise required by, applicable Legal Requirements or
securities exchange rules (including by making a public announcement through
issuance of a press release, filing of a Current Report on Form 8-K or
otherwise).
12.3Notices
. All notices, consents, waivers and other communications required or permitted
by this Agreement shall be in writing and shall be deemed given to a Party when
(a) delivered to the appropriate address by hand or by nationally recognized
overnight courier service (costs prepaid); (b) sent by facsimile or e-mail with
confirmation of transmission by the transmitting equipment; or (c) received or
rejected by the addressee, if sent by certified mail, return receipt requested,
in each case to the following addresses, facsimile numbers or e-mail addresses
and marked to the attention of the person (by name or title) designated below
(or to such other address, facsimile number, e-mail address or person as a Party
may designate by notice to the other Parties):

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If to any Buyer or Buyer Representative:
c/o Fox Factory, Inc.
915 Disc Drive
Scotts Valley, California 95066
Attention: David Haugen, General Counsel
Telephone No.: (831) 274-8336
Facsimile No.: (831) 768-7024

with a copy to:
Squire Patton Boggs (US) LLP
221 E. Fourth Street, Suite 2900
Cincinnati, OH 45202
Attention: Toby D. Merchant
Telephone No.: (513) 361-1200
Facsimile No.: (513) 361-1201
If to any Seller or Seller Representative:
c/o Chris Tutton
3145 Thunderbird Crescent
Burnaby, BC V5A 3G1
Telephone No.: (604) 415-2350
Facsimile No.: (604) 421-5332

with a copy to:
Salley Bowes Harwardt LC
1750-1185 West Georgia Street
Vancouver, BC V6E 4E6
Attention: Victor Harwardt
Telephone No.: 604-688-0788
Facsimile No.: 604-688-0778

12.4Enforcement of Agreement
. Each Seller acknowledges and agrees that Buyers would be irreparably damaged
if any of the provisions of this Agreement are not performed in accordance with
their specific terms and that any Breach of this Agreement by such Seller could
not be adequately compensated in all cases by monetary damages alone.
Accordingly, in addition to any other right or remedy to which Buyers may be
entitled, at law or in equity, it shall be entitled to enforce any provision of
this Agreement by a decree of specific performance and to temporary, preliminary
and permanent injunctive relief to prevent Breaches or threatened Breaches of
any of the provisions of this Agreement, without posting any bond or other
undertaking.
12.5Waiver; Remedies Cumulative
. The rights and remedies of the Parties to this Agreement are cumulative and
not alternative, except as limited herein. Neither any failure nor any delay by
any Party in exercising any right, power or privilege under this Agreement or
any of the documents referred to in this Agreement will operate as a waiver of
such right, power or privilege, and no single or partial exercise of any such
right, power or privilege will preclude any other or further exercise of such
right, power or privilege or the exercise of any other right, power or
privilege. To the maximum extent permitted by applicable law, (a) no claim or
right arising out of this Agreement or any of the documents referred to in this
Agreement can be discharged by one party, in whole or in part, by a waiver or
renunciation of the claim or right unless in writing signed by the other party;
(b) no waiver that may be given by a party will be applicable except in the
specific instance for which it is given; and (c) no notice to or demand on one
party will be deemed to be a waiver of any obligation of that party or of the
right of the party giving such notice or demand to take further action without
notice or demand as provided in this Agreement or the documents referred to in
this Agreement.
12.6Entire Agreement
. This Agreement supersedes all prior agreements, whether written or oral,
between the Parties with respect to its subject matter (including the letter of
intent between certain Affiliates of Buyers and Sellers dated October 22, 2014)
and constitutes (along with the Disclosure Schedules, Exhibits and other
documents delivered pursuant to this Agreement) a complete and exclusive
statement of the terms of the agreement between the Parties with respect to its
subject matter.
12.7Assignments, Successors and No Third-Party Rights

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. No Party may assign any of its rights or delegate any of its obligations under
this Agreement without the prior written consent of the other Parties, except
that each Buyer may assign its rights hereunder, without consent of any other
Party, for collateral security purposes to any lender or lenders providing
financing to such Buyer or any of its Related Persons in connection with the
Acquisition. Subject to the preceding sentence, this Agreement will apply to, be
binding in all respects upon and inure to the benefit of the successors and
permitted assigns of the Parties. Nothing expressed or referred to in this
Agreement will be construed to give any Person other than the Parties any legal
or equitable right, remedy or claim under or with respect to this Agreement or
any provision of this Agreement, except such rights as shall inure to a
successor or permitted assignee pursuant to this Section 12.7.
12.8Severability
. Whenever possible, each provision of this Agreement shall be interpreted in
such manner as to be effective and valid under applicable law, but if any
provision of this Agreement is held to be prohibited by or invalid under
applicable law, such provision shall be ineffective only to the extent of such
prohibition or invalidity, without invalidating the remainder of such provision
or the remaining provisions of this Agreement.
12.9Construction
. The headings of Sections or sub-Sections in this Agreement are provided for
convenience only and will not affect its construction or interpretation. All
references to “Sections” and “Schedules” refer to the corresponding Sections and
Schedules of this Agreement and the Disclosure Schedules. The Parties
acknowledge that they and their respective counsel have negotiated and drafted
this Agreement jointly agree that no rule of strict construction shall be
applied against any Person in the interpretation or construction of this
Agreement.
12.10Time of Essence
. With regard to all dates and time periods set forth or referred to in this
Agreement, time is of the essence.
12.11Governing Law
. All matters relating to the interpretation, construction, validity and
enforcement of this Agreement shall be governed by and construed in accordance
with the domestic laws of the province of British Columbia and the Federal laws
of Canada applicable therein without giving effect to any choice or conflict of
law provision or rule (whether of the province of British Columbia or any other
jurisdiction) that would cause the application of laws of any jurisdiction other
than the province of British Columbia and the Federal laws of Canada applicable
therein.
12.12Exhibits and Schedules
. The Exhibits and Schedules referred to in this Agreement shall be construed
with and as an integral part of this Agreement to the same extent as if the same
had been set forth in their entirety herein. It is understood and agreed that
the specification of any dollar amount in the representations and warranties
contained in this Agreement or the inclusion of any specific item in the
Exhibits or Schedules is not intended to imply that such amounts or higher or
lower amounts, or the items so included or other items, are or are not material.
All Schedules attached hereto or referred to herein are hereby incorporated in
and made a part of this Agreement as if set forth in full herein.
12.13Amendments and Waivers
. No amendment or waiver of any provision of this Agreement shall be valid
unless the same shall be in writing and signed by the Parties. Neither the
failure nor any delay by any Party in exercising any right, power or privilege
under this Agreement will operate as a waiver of such right, power or privilege.
No waiver of any provision hereunder or any Breach or default thereof shall
extend to or affect in any way any other provision or prior or subsequent Breach
or default.
12.14Time Periods
. Unless specified otherwise, any action required hereunder to be taken within a
certain number of days shall be taken within that number of calendar days (and
not Business Days); provided, however, that if the last day for taking such
action falls on a weekend or bank holiday in the United States, the period
during which such action may be taken shall be automatically extended to the
next Business Day.
12.15Execution of Agreement

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. This Agreement may be executed in one or more counterparts, each of which will
be deemed to be an original copy of this Agreement and all of which, when taken
together, will be deemed to constitute one and the same agreement. Any Party may
execute this Agreement by electronic signature (including facsimile or scanned
email), and the other Parties will be entitled to rely on such signature as
conclusive evidence that this Agreement has been duly executed by such Party.
12.16Appointment of Buyer Representative
. Each Buyer does hereby irrevocably appoint Fox as its true and lawful
attorney-in-fact and agent (the “Buyer Representative”), with full power of
substitution or resubstitution, to act solely and exclusivity on behalf of such
Buyer with respect to any matters relating to this Agreement and any related
agreements (such appointment being coupled with an interest and irrevocable).
Each Buyer shall, to the extent it elects to rely on such actions, if any, taken
or authorized by the Byer Representative, be entitled to rely on all such
actions as being the binding acts of such Buyer.

[Signature page immediately follows.]

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IN WITNESS WHEREOF, the Parties have executed and delivered this Agreement as of
the date first written above.

CA Buyer:

RFE HOLDING (CANADA) CORP.,
a British Columbia corporation
US BUYER:

RFE HOLDING (US) CORP.,
a Delaware corporation

By: /s/ David Haugen
Name:David Haugen
Title: Vice President

By: /s/ David Haugen
Name:David Haugen
Title: Vice President
 
 

FOX AND BUYER REPRESENTATIVE:

FOX FACTORY, INC.,
a California corporation

KY BUYER:

FOX FACTORY IP HOLDING CORP.,
a Cayman Island corporation

By:   /s/ Larry Enterline
Name:Larry Enterline
Title: CEO

By: /s/ David Haugen
Name:David Haugen
Title: Vice President
 
 
BUYER GUARANTOR:
 
FOX FACTORY HOLDING CORP.,
a Delaware corporation
 

By: /s/ John Boulton
Name:John Boulton
Title: Vice President

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SELLERS:
 
1021039 B.C. LTD.,
a British Columbia corporation
EASTON CYCLING USA, INC.,
a Delaware corporation

By:   /s/ Chris Tutton
Name:  Chris Tutton
Title:   President

By:  /s/ Chris Tutton
Name:   Chris Tutton
Title:   President
SELLER REPRESENTATIVE:
 

/s/ Chris Tutton
Chris Tutton, an individual residing in British Columbia
 
 
 
OWNER GUARANTORS:
 
/s/ Chris Tutton
Chris Tutton, an individual residing in British Columbia
/s/ Derek Wills
Derek Wills, an individual residing in British Columbia

/s/ Darren Mabbot
Darren Mabbot, an individual residing in England

/s/ Stanley Fuller
Stanley Fuller, an individual residing in British Columbia

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