Document:

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EXHIBIT 10.8

Execution Copy

AGREEMENT

     AGREEMENT made and entered into by and between Easton-Bell Sports, Inc. (the
“Company”) and Richard Tipton (the “Executive”), effective as of the 12th day of
July, 2006 (the “Effective Date”).

     For good and valuable consideration, the receipt and sufficiency of which is hereby
acknowledged, the Company and the Executive agree as follows:

     1. Employment. Subject to the terms and conditions set forth in this Agreement, the
Company hereby offers, and the Executive hereby accepts, employment.

     2. Term. Subject to earlier termination as hereafter provided, the Executive’s
employment hereunder shall be for a term of eighteen (18) months, commencing as of the Effective
Date, and shall automatically renew thereafter for successive terms of one year each. The term of
this Agreement, as from time to time renewed, is hereafter referred to as “the term of this
Agreement” or “the term hereof.”

     3. Capacity and Performance.

          (a) Commencing on the Effective Date, the Executive shall serve the Company as Senior Vice
President, General Counsel and Secretary. In addition, and without further compensation, the
Executive shall serve as a director and/or officer of one or more of the Company’s Affiliates (as
defined in Section 13 hereof), if so elected or appointed from time to time. The Executive shall
report to the Chief Executive Officer of the Company (the “CEO”) and to its Board of
Directors (the “Board”). He shall serve as the most senior legal officer of the Company,
subject to customary oversight by the Board.

          (b) During the term hereof, the Executive shall be employed by the Company on a full-time
basis and shall have the duties and responsibilities of his positions as Senior Vice President,
General Counsel and Secretary and other duties and responsibilities, reasonably consistent
therewith, with respect to the Company and its Affiliates, as assigned by the CEO or the Board of
Directors of the Company (the “Board”) from time to time. Without limiting the foregoing,
the Executive shall be responsible for helping the Company maintain its legal and ethical
requirements in every business transaction, for helping create and maximize value for shareholders
through a combination of business acumen and effective contracts, for protecting the Company’s
intellectual property, for facilitating successful mergers and acquisitions and for maintaining
required compliance and reporting activities, including without limitation compliance with the
requirements of the U.S. Securities and Exchange Commission and the Sarbanes-Oxley Act.

          (c) Subject to business travel as necessary or desirable for the performance of the
Executive’s duties and responsibilities hereunder, the Executive’s primary worksite during the term
hereof shall be at the location of the Company’s offices in Van Nuys,

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California as of the Effective Date (the “Van Nuys Location”) or such other site as
the Company may select from time to time, provided such site is no more than thirty-five (35) miles
from the Van Nuys Location unless the Executive has expressly consented in writing thereto.

          (d) During the term hereof, the Executive shall perform his duties hereunder faithfully,
diligently and to the best of his ability and shall devote his full business time and his best
efforts, business judgment, skill and knowledge exclusively to the advancement of the business and
interests of the Company and its Affiliates and to the discharge of his duties and responsibilities
hereunder. During the term of this Agreement, the Executive may engage in passive management of
his personal investments and in such community and charitable activities as do not individually or
in the aggregate give rise to a conflict of interest or otherwise interfere with his performance of
his duties and responsibilities hereunder. The Executive shall not engage in any other business
activity except with the express prior written approval of the Board, it also being agreed that if
the Board subsequently determines that any previously approved activity does detract from the
Executive’s performance or give rise to a conflict of interest, the Executive shall cease such
activity promptly following notice from the Company.

     4. Compensation and Benefits. As compensation for all services performed by the
Executive under and during the term hereof and subject to performance of the Executive’s duties and
of the obligations of the Executive to the Company and its Affiliates, pursuant to this Agreement
or otherwise:

          (a) Base Salary. Initially during the term hereof, the Company shall pay the
Executive a base salary at the rate of Two Hundred and Fifty Thousand Dollars ($250,000) per annum,
payable in accordance with the payroll practices of the Company for its executives and subject to
annual review by the compensation committee of the Board and to increase, but not decrease, in the
discretion of such committee or the Board. At the time that executive base salary adjustments are
made in 2007, the Executive shall be treated for that purpose as if the Executive had been employed
with the Company for the entirety of FY 2006. The Executive’s base salary, as from time to time
increased, is hereafter referred to as the “Base Salary.”

          (b) Bonus Compensation. For each fiscal year completed during the term hereof, the
Executive shall have the opportunity to earn an annual bonus (“Annual Bonus”) under the
Company’s executive incentive plan in accordance with the terms thereof. The Executive’s target
bonus under the executive incentive plan shall be fifty percent (50%) of the Base Salary for
achievement of the consolidated annual business plan for the Company and its Affiliates (the
“Business Plan”), with a potential for the Annual Bonus to exceed target if achievement
exceeds the Business Plan, all as approved by the compensation committee of the Board after
consultation with the CEO. For FY 2006, any Annual Bonus payable to the Executive shall be
pro-rated for his partial year of service by multiplying the applicable percent by the amount of
Base Salary paid to him for FY 2006. Except as otherwise provided in Section 5 hereof, the
Executive must be employed on the last day of a fiscal year in order to be eligible to earn an
Annual Bonus for that fiscal year.

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          (c) Equity Participation. The Executive will be eligible to participate in the
Easton-Bell Sports, LLC 2006 Equity Incentive Plan as amended from time to time (the
“Plan”) and, to that effect, following the Effective Date, but prior to the date this
Agreement was signed, the Executive was awarded Class B Common Units (the “Initial Grant”)
under the Plan. Additional awards, if any, granted the Executive under the Plan shall be at the
discretion of the Board of Managers of Easton-Bell Sports, LLC. The Initial Grant and any
subsequent award granted the Executive under the Plan shall be subject to the terms of the
agreement captioned “Easton-Bell Sports, LLC Class B Common Unit Certificate” (the “Unit
Certificate”), which the Executive must execute in order to be eligible for the award, to the
terms of the Plan, and to the terms of the Easton-Bell Sports, LLC Second and Restated Limited
Liability Company Agreement as amended from time to time (the “LLC Agreement”), including
without limitation any vesting requirements under any of the foregoing.

          (d) Employee Benefit Plans. During the term hereof, the Executive shall be entitled
to participate in all “Employee Benefit Plans,” as that term is defined in Section 3(3) of
ERISA, including both health and welfare plans and retirement plans, from time to time in effect
for executives of the Company generally, except to the extent any of the Employee Benefit Plans is
duplicative of a benefit otherwise provided to the Executive under this Agreement (e.g., a
severance pay plan). The Executive’s participation shall be subject to the terms of the applicable
Employee Benefit Plan documents and generally applicable Company policies.

          (e) Vacations. During the term hereof, the Executive shall be entitled to three (3)
weeks of vacation per year, to be taken at such times and intervals as shall be determined by the
Executive, subject to the reasonable business needs of the Company and with the approval of the
CEO. Vacation shall be governed by the policies of the Company, as in effect from time to time.

          (f) Business Expenses. The Company shall pay or reimburse the Executive for all
reasonable, customary and necessary business expenses incurred or paid by the Executive in the
performance of his duties and responsibilities hereunder, subject to any maximum annual limit and
other restrictions on such expenses set by the Board and to such reasonable substantiation and
documentation as may be specified by the Company from time to time.

          (g) Relocation. It is agreed that the Executive is not required to relocate as of the
Effective Date. If within two years of the Effective Date the Company requires the Executive to
relocate his residence to Van Nuys, California, the Company will reimburse the Executive for all
reasonable packing, moving, home-purchase real estate and related expenses associated with the
relocation of one household from Carlsbad, California to Van Nuys, California. For the avoidance
of doubt, reimbursable expenses will not include points paid to buy down the Executive’s mortgage
rate. A gross-up for taxes paid by the Executive on such reimbursement of relocation costs will be
made to the Executive.

          (h) Directors & Officers Insurance Coverage. The Company, at its sole cost and
expense, shall obtain and maintain in effect directors and officers (“D&O”) liability

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insurance under which the Executive will be a named insured. The Company will maintain such
insurance throughout the term hereof and for at least four (4) years thereafter.

     5. Termination of Employment and Post-Employment Payments. Notwithstanding the
provisions of Section 2 hereof, the Executive’s employment hereunder shall terminate during the
term hereof under the following circumstances:

          (a) Death. In the event of the Executive’s death during the term hereof, the
Executive’s employment hereunder shall immediately and automatically terminate. In such event, the
Company shall pay promptly to the beneficiary designated by the Executive in writing on the form
attached to this Agreement as Exhibit B or, if none has been so designated, to his estate,
(i) Base Salary earned but not paid through the date of termination of the Executive’s employment
with the Company (hereafter, the “Date of Termination”), (ii) pay at the rate of the Base
Salary for any vacation earned but not used through the Date of Termination and (iii) any business
expenses incurred by the Executive but un-reimbursed on the Date of Termination, provided that such
expenses and required substantiation and documentation are submitted prior to or within sixty (60)
days after the Date of Termination and that such expenses are reimbursable under Company policy
(all of the foregoing, “Final Compensation”). In addition to Final Compensation, (A) the
Company shall pay to the beneficiary designated by the Executive in writing or, if none, his
estate, an Annual Bonus for the fiscal year in which the Date of Termination occurs, determined by
multiplying the Annual Bonus the Executive would have received had he continued employment through
the last day of the fiscal year by a fraction, the numerator of which is the number of days he was
employed during the fiscal year, through the Date of Termination, and the denominator of which is
365 (a “Final Pro-Rated Bonus”), which Final Pro-Rated Bonus will be payable at the time
annual bonuses are paid to Company executives generally under its executive incentive plan and (B)
the Company will pay the full premium cost of health and dental plan coverage for each of
Executive’s qualified beneficiaries until the earlier to occur of the conclusion of twelve (12)
months from the Date of Termination or the date the qualified beneficiary ceases to be eligible for
coverage continuation under COBRA; provided, however, that in order to be eligible
for the Company’s payments hereunder the qualified beneficiary must elect in a timely manner to
continue coverage under the Company’s health and dental plans under COBRA. Any equity in the LLC
held by the Executive on the Date of Termination shall be governed by the terms of the Unit
Certificate, the Plan and the LLC Agreement, as applicable. The Executive’s rights with respect to
indemnification shall be in accordance with Section 12 hereof.

          (b) Disability.

               (i) The Company may terminate the Executive’s employment hereunder, upon notice to the
Executive, in the event that the Executive becomes disabled during his employment through
any illness, injury, accident or condition of either a physical or psychological nature and,
as a result, is unable to perform, in any material respect, his duties and responsibilities
hereunder, notwithstanding the provision of any reasonable accommodation (exclusive of the
leave of absence provided hereunder), for one hundred and eighty (180) days during any
period of three hundred and sixty-five (365) consecutive calendar days. In the event of
such termination, and provided that the

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Executive satisfies in full all of the conditions set forth in Section 5(h) hereof,
then, in addition to Final Compensation, the Company will pay the Executive the following:
(A) The Company will pay the Executive a Final Pro-Rated Bonus for the fiscal year in which
the Date of Termination occurs, payable at the time annual bonuses are paid to Company
executives generally under its executive incentive plan or, if later, on the tenth (10th)
business day following the later of the effective date of the Release of Claims, as defined
in Section 5(h) below, or the date the Release of Claims is received by the Chair of the
Board on behalf of the Company; (B) the Company will pay the full premium cost of health and
dental plan coverage for Executive and his qualified beneficiaries until the earlier to
occur of the conclusion of twelve (12) months or the date the Executive and his qualified
beneficiaries cease to be eligible for coverage continuation under COBRA; provided,
however, that in order to be eligible for the Company’s payments hereunder the
Executive and each qualified beneficiary must elect in a timely manner to continue coverage
under the Company’s health and dental plans under COBRA and (C) in the event that the
Company had not provided the Executive the opportunity to participate in a long-term
disability insurance plan paid or provided by the Company, the Company shall continue to pay
the Executive the Base Salary from the Date of Termination until the expiration of six (6)
months thereafter or, if earlier, until the date the Executive recovers sufficiently from
his illness or injury to resume work on a substantially full-time basis (the “Recovery
Date”), with payments commencing at the next regular Company payday for executives which is
at least five (5) business days following the later of the effective date of the Release of
Claims or the date the Release of Claims signed by the Executive is received by the Chair of
the Board, but with the first payment retroactive to the day immediately following the Date
of Termination or, in the event that any long-term disability insurance plan paid or
provided by the Company fails to provide the Executive income replacement benefits equal to
the Base Salary (or income replacement benefits not subject to federal income tax which are
equal to the Base Salary net of federal income tax), the Company will pay the Executive the
difference between the Base Salary and income replacement benefits received (after giving
effect to any tax savings of the Executive if such benefits are not subject to federal or
state income tax) until the earlier of the expiration of six (6) months following the Date
of Termination or the Recovery Date. Any equity in the LLC held by the Executive on the
Date of Termination shall be governed by the terms of the Unit Certificate, the Plan and the
LLC Agreement, as applicable. The Executive’s rights with respect to indemnification shall
be in accordance with Section 12 hereof.

               (ii) The Board may designate another employee to act in the Executive’s place during
any period of the Executive’s disability. Notwithstanding any such designation, the
Executive shall continue to receive compensation and benefits in accordance with Sections
4(a) through 4(e) of this Agreement and the terms and conditions of any plans, policies,
agreements and other documents to which reference is made therein (collectively, the
“Plan Documents”) until the Executive becomes eligible for disability income
benefits under any disability plan in which he is a participant as a result of his
employment with the Company or until he recovers sufficiently to resume his duties and
responsibilities hereunder (provided he does so within the aforesaid one

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hundred and eighty (180) days or such longer period as the Board in its discretion may
provide) or until the termination of his employment, whichever shall first occur. If, while
his employment hereunder continues, the Executive is receiving disability income benefits
under any such disability plan, the Executive shall continue to be eligible for benefits in
accordance with Section 4(d) of this Agreement and the terms and conditions of the Plan
Documents, until the earlier to occur of his recovery or the termination of his employment
under this Agreement.

               (iii) If any question shall arise as to whether during any period the Executive is
disabled through any illness, injury, accident or condition of either a physical or
psychological nature so as to be unable to perform in any material respect his duties and
responsibilities hereunder, the Executive may, and at the request of the Company shall,
submit to a medical examination by a physician selected by the Company to whom the Executive
or his duly appointed guardian, if any, has no reasonable objection to determine whether the
Executive is so disabled and such determination shall for the purposes of this Agreement be
conclusive of the issue. If such question shall arise and the Executive shall fail to
submit to such medical examination, the Company’s determination of the issue shall be
binding on the Executive.

          (c) By the Company for Cause. The Company may terminate the Executive’s employment
hereunder for Cause at any time upon notice to the Executive setting forth in reasonable detail the
nature of such Cause. For purposes of this Agreement, “Cause” shall be limited to: (i) the
Executive’s indictment, charge or conviction of, or plea of nolo contendere to, (A) a felony or any
crime involving fraud or material dishonesty or (B) any felony or crime involving moral turpitude
that might be reasonably expected to, or does, adversely effect the Company or any of its
Affiliates; (ii) the Executive’s gross negligence or willful misconduct with regard to the Company
or any of its Affiliates, which has a material adverse impact on the Company or its Affiliates,
whether economic or to reputation or otherwise; (iii) the Executive’s refusal or willful failure to
substantially perform his duties or to follow a lawful written directive of the Board or its
designee within the scope of the Executive’s duties hereunder which in either case remains uncured
or continues after twenty (20) days’ written notice from the Board which references the potential
for a “for Cause” termination and specifies in reasonable detail the nature of the refusal or
willful failure which must be cured; (iv) the Executive’s theft, fraud or any material act of
dishonesty related to the Company or any of its Affiliates; (v) any representations or warranties
of the Executive under this Agreement that there is no legal impediment to employment, no
disclosure of third party confidential information and no breach of any existing employment
agreement proven false in a material respect; provided that the Executive has been provided with
written notification of any of the foregoing and has been given five (5) days to present any
mitigating, corrective or clarifying information to the Board; (vi) the Executive’s breach of a
fiduciary duty owed to the Company or any of its Affiliates, including but not limited to any
breach or violation of those provisions of this Agreement setting forth the Executive’s obligations
with respect to confidentiality, non-competition and non-solicitation; (vii) the Executive’s breach
of any other material provision of this Agreement unless corrected by the Executive within twenty
(20) days of the Company’s written notification to the Executive of such breach or (viii) the
Executive’s

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failure to remain in good standing with the California State Bar Association. In the event of
such termination, the Company shall have no obligation to the Executive under this Agreement other
than provision of Final Compensation. Any equity in the LLC held by the Executive on the Date of
Termination shall be governed by the terms of the Unit Certificate, the Plan and the LLC Agreement,
as applicable. The definition of “Cause” set forth in this Section 5(c) shall supersede the
definition of “Cause” in the 2006 Equity Incentive Plan if the 2006 Equity Incentive Plan expressly
provides for such supersession.

          (d) By the Company other than for Cause. The Company may terminate the Executive’s
employment hereunder other than for Cause at any time upon notice to the Executive. In the event
of such termination, and provided that the Executive satisfies in full all of the conditions set
forth in Section 5(h) hereof, then, in addition to Final Compensation, the Executive, as
compensation for his satisfying of those conditions, shall be entitled to the following: (i) the
Company shall pay the Executive a Final Pro-Rated Bonus for the fiscal year in which the Date of
Termination occurs, payable at the time annual bonuses are paid to Company executives generally
under its executive incentive plan or, if later, on the tenth (10th) business day
following the later of the effective date of the Release of Claims or the date the Release of
Claims, signed by the Executive, is received by the Chair of the Board on behalf of the Company;
(ii) the Company shall provide the Executive compensation for the period of twelve (12) months
following the Date of Termination at the rate of one-twelfth of the Base Salary per month,
commencing on the next regular Company payday for its executives that is at least five (5) business
days following the later of the effective date of the Release of Claims or the date the Release of
Claims, signed by the Executive, is received by the Chair of the Board, but with the first payment
being retroactive to the day immediately following the Date of Termination; (iii) the Company will
pay the full premium cost of health and dental plan coverage for Executive and his qualified
beneficiaries until the earliest to occur of the conclusion of the period defined in clause (ii)
immediately above or the date the Executive becomes eligible for participation in health and dental
plans of another employer or the date the Executive ceases to be eligible for participation under
the Company’s health and dental plans under COBRA; provided, however, that in order
to be eligible for the Company’s payments hereunder the Executive and each of his qualified
beneficiary must elect in a timely manner to continue coverage under the Company’s health and
dental plans under COBRA and (iv) the Company will continue, and will pay the premium cost of, the
Executive’s participation in its group life insurance plan for the period of twelve (12) months
following the date of termination or, if coverage is unavailable to the Executive and provided that
he is insurable at normal rates, the Company, for twelve (12) months following the date of
termination, will pay the premium cost of term life insurance for the Executive with the same face
amount as his coverage under the Company ’s group life insurance plan at the time his employment
terminated. Any equity in the LLC held by the Executive on the Date of Termination shall be
governed by the terms of the Unit Certificate, the Plan and the LLC Agreement, as applicable. The
Executive’s rights with respect to indemnification shall be in accordance with Section 12 hereof.

          (e) By the Executive for Good Reason. The Executive may terminate his employment
hereunder for Good Reason upon notice to the Company setting forth in reasonable detail the nature
of such Good Reason. For purposes of this Agreement, “Good Reason” shall mean, without the
Executive’s consent, the occurrence of any one or more of the

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following events: (i) the material breach of this Agreement by the Company which is not
cured, if curable, within twenty (20) days after written notice to the Company specifying in
reasonable detail the nature of such breach; (ii) a material diminution of any of the Executive’s
significant duties or the assignment to the Executive of material duties inconsistent with his
position or the material impairment of the Executive’s ability to function in his position, in each
case only after the Company shall have had an opportunity and failed to cure (any cure to be
effected within twenty (20) days after written notice to the Company by the Executive specifying in
reasonable detail the nature of such Good Reason); (iii) any reduction in or failure to pay the
Base Salary or any failure to pay any Annual Bonus to which the Executive is entitled hereunder or
any failure to provide benefits in accordance with this Agreement, in each case only after the
Company has been given an opportunity, and has failed, to cure any such event within twenty (20)
days following the Executive’s written notice to the Company specifying in reasonable detail the
nature of the reduction or failure; (iv) any relocation of the Executive’s primary worksite to a
site that is more than thirty-five (35) miles from the Van Nuys Location; or (v) subjection of the
Executive to a working environment sufficiently hostile or otherwise adverse as to satisfy the
general legal standard for a constructive discharge, provided that the Executive provides the
Company written notice specifying in reasonable detail the circumstances rendering the working
environment hostile or otherwise adverse and the Company fails within twenty (20) days of that
notice to take remedial action to mitigate those circumstances. For the avoidance of doubt,
neither an assignment of the Executive to serve as a director or officer of one or more of the
Company’s Affiliates nor any termination of such service shall constitute Good Reason for
termination. In the event of termination in accordance with this Section 5(e), and provided that
the Executive satisfies in full all of the conditions set forth in Section 5(h) hereof, then, in
addition to Final Compensation, the Company shall provide the Executive the same payments he would
have received under clauses (i), (ii), (iii) and (iv) of Section 5(d) had his employment been
terminated by the Company other than for Cause. Any equity in the LLC held by the Executive on the
Date of Termination shall be governed by the terms of the Unit Certificate, the Plan and the LLC
Agreement, as applicable. The Executive’s rights with respect to indemnification shall be in
accordance with Section 12 hereof.

          (f) By the Executive Other than for Good Reason. The Executive may terminate his
employment hereunder at any time upon sixty (60) days’ notice to the Company. In the event of
termination of the Executive pursuant to this Section 5(f), the Board may elect to waive the period
of notice, or any portion thereof, and, if the Board so elects, the Company will pay the Executive
his Base Salary for the initial sixty (60) days of the notice period (or for any remaining portion
thereof). The Company’s only other obligation to the Executive hereunder shall be for Final
Compensation, if any. Any equity in the LLC held by the Executive on the Date of Termination shall
be governed by the terms of the Unit Certificate, the Plan and the LLC Agreement, as applicable.

          (g) Termination Following a Change of Control

               (i) In the event that there occurs a Change of Control, as defined in clause (g)(ii)
immediately below, and during the period commencing on the day immediately following the occurrence
of a Change of Control and ending twenty-four (24) months thereafter

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the Company terminates the Executive’s employment hereunder other than for Cause in accordance
with Section 5(d) or the Executive terminates his employment hereunder for Good Reason in
accordance with Section 5(e) and provided that the Executive satisfies in full all of the
conditions set forth in Section 5(h) hereof, then, in addition to Final Compensation, the
Executive, in lieu of any payment for which he would have been eligible under Section 5(d) or
Section 5(e) hereof, will be eligible for (A) a single lump sum payment equal to twelve (12) months
of Base Salary, without offset for other earnings; (B) a Final Pro-Rated Bonus for the fiscal year
in which the Date of Termination occurs, payable at the time bonuses are paid generally; and (C)
health and dental plan premium payments (or, as applicable, reimbursements) on the same terms and
conditions applicable in the event of a termination other than for Cause or for Good Reason prior
to a Change of Control. Notwithstanding anything to the contrary herein, however, no payments shall
be due hereunder until five (5) business days following the later of the effective date of the
Release of Claims or the date the Release of Claims, signed by the Executive, is received by the
Chair of the Board. The Executive’s rights with respect to indemnification shall be in accordance
with Section 12 hereof.

               (ii) For purposes of this Agreement, “Change of Control” shall mean the occurrence, after the
Closing Date, of (a) any change in the ownership of the capital equity of Easton-Bell Sports, LLC,
if, immediately after giving effect thereto, (A) the Investors (as defined below) and their
Affiliates will hold, directly or indirectly, less than 50% of the number of Common Units held by
the Investors and their Affiliates as of the Closing Date or (ii) any Person (as defined in this
paragraph, below) other than the Investors and their Affiliates will hold, directly or indirectly,
greater than 50% of the number of outstanding Common Units of Easton-Bell Sports, LLC; or (b) any
sale or other disposition of all or substantially all of the assets of Easton-Bell Sports, LLC
(including, without limitation, by way of a merger or consolidation or through the sale of all or
substantially all of the stock or membership interests of its subsidiaries or sale of all or
substantially all of the assets of Easton-Bell Sports, LLC and its direct and indirect
subsidiaries, taken as a whole) to another Person (the “Change of Control Transferee”) if,
immediately after giving effect thereto, any Person (or group of Persons acting in concert) other
than the Investors and their Affiliates will have the power to elect a majority of the members of
the board of managers or board of directors (or other similar governing body) of the Change of
Control Transferee. For purposes of this Section 5(g): A “Person” shall have the meaning
ascribed to that term in section 13(d)(3) or 14(d)(2) of the Securities Exchange Act of 1934 and
“Investors” shall mean all Unit-holders of Easton-Bell Sports, LLC as of the date of this
Agreement, including without limitation Fenway Partners, Inc., Teachers Private Capital, York
Street Capital Partners, American Capital Strategies Ltd., Antares Capital Corporation, Bell Sports
Holdings, LLC, Bell Sports 2001, LLC, Bell Sports 2001 Coinvestors, LLC and Bell Sports 2001
Investments, LLC.

          (h) Conditions. The Executive’s eligibility to receive and retain any
“Post-Employment Payments” (meaning any and all payments provided under this Agreement in
connection with or following termination of employment, exclusive of Final Compensation) is subject
to full satisfaction of all of the following as well as the covenant of confidentiality set forth
in Section 7 below and the assignment of rights to Intellectual Property (as hereafter defined),
but with the express understanding and agreement of the parties that the Executive is

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free to elect not to comply with clause (i) below and is free not to forbear from competition or
solicitation as set forth in clauses (ii), (iii) and (iv) immediately below, but that his right to
any Post-Employment Payments under this Agreement is expressly conditioned on compliance with said
clause (i) and the forbearance required under all of said clauses (ii), (iii) and (iv), as well as
his full satisfaction of the covenant of confidentiality and assignment of rights to Intellectual
Property set forth below. The conditions to receipt of the Post Employment Payments are as
follows:

               (i) The Executive’s execution and return, to the Chair of the Board, of a timely and
effective release of claims in the form attached hereto and marked Exhibit A
(“Release of Claims”). The Release of Claims creates legally binding obligations
and the Company therefore advises the Executive to consult an attorney before signing it.

               (ii) Forbearance by the Executive for twelve (12) months following termination of the
Executive’s employment with the Company from competition with the Company or any of its
Affiliates anywhere in the world where the Company or any of those Affiliates is doing
business, whether as owner, partner, investor, consultant, agent, employee, co-venturer or
otherwise. Specifically, but without limiting the foregoing, the Executive shall not engage
in any activity that is competitive, or is in preparation to engage in competition, with the
business of the Company or any of its Affiliates as conducted or under consideration at any
time during the Executive’s employment and further the Executive shall not work or provide
services, in any capacity, whether as an employee, independent contractor or otherwise,
whether with or without compensation, to any person or entity engaged in, or in preparation
to engage in, any business that is competitive with the business of the Company or any of
its Affiliates, as conducted or in planning during his employment. The foregoing, however,
shall not be breached solely by the Executive’s passive ownership of less than 3% of the
equity securities of any publicly traded company. The foregoing also will not prevent the
Executive’s practice of law during the twelve-month period following termination of the
Executive’s employment, it being expressly understood, however, that this exception does not
permit the Executive during that twelve-month period to provide non-legal services,
including without limitation executive, managerial or administrative services, for any
person or entity engaged in, or in preparation to engage in, any business that is
competitive with the business of the Company or any of its Affiliates, as conducted or in
planning during his employment.

               (iii) Forbearance by the Executive for twelve (12) months following termination of his
employment from any solicitation, directly or indirectly, of any of the Customers of the
Company or any of its Affiliates to terminate or diminish their relationship with the
Company or any of its Affiliates and from any direct or indirect solicitation of any of the
Customers or Prospective Customers of the Company or any of its Affiliates to conduct with
himself or any other Person (as defined in Section 13 hereof) any business or activity which
such Customer or Prospective Customer conducts or could conduct with the Company or any of
its Affiliates. For purposes of this Section 5(h), a Customer is a person or entity which
was such at any time during

-10-

 

the twelve (12) months prior to the Date of Termination and a Potential Customer is a
person or entity contacted by the Company or any of its Affiliates to become such at any
time within twelve (12) months prior to the Date of Termination other than by general
advertisement, provided, in each case, that the Executive had contact with such Customer or
Potential Customer through his employment or other associations with the Company or had
access to Confidential Information that would assist in his solicitation of such Customer or
Potential Customer in competition with the Company or any of its Affiliates.

               (iv) Forbearance by the Executive for twelve (12) months following termination of his
employment with the Company from directly or indirectly hiring or otherwise engaging the
services of any employee, independent contractor or other agent providing services to the
Company or any of its Affiliates and from soliciting any such employee, independent
contractor or agent to terminate or diminish his/her/its relationship with the Company or
any of its Affiliates. For purposes of this Section 5(h), an employee, independent
contractor or agent means any Person who was performing services for the Company or any of
its Affiliates in such capacity at any time during the twelve (12) months immediately
preceding the Date of Termination.

          (i) Timing of Payments. If at the time of the Executive’s separation from service,
the Executive is a “specified employee,” as hereinafter defined, any and all amounts payable under
this Section 5 in connection with such separation from service that constitute deferred
compensation subject to Section 409A of the Internal Revenue Code of 1986, as amended, (“Section
409A”), as determined by the Company in its sole discretion, and that would (but for this sentence)
be payable within six months following such separation from service, shall instead be paid on the
date that follows the date of such separation from service by six (6) months. For purposes of the
preceding sentence, “separation from service” shall be determined in a manner consistent with
subsection (a)(2)(A)(i) of Section 409A and the term “specified employee” shall mean an individual
determined by the Company to be a specified employee as defined in subsection (a)(2)(B)(i) of
Section 409A.

     6. Effect of Termination. The provisions of this Section 6 shall apply to any
termination of the Executive’s employment under this Agreement, whether pursuant to Section 5 or
otherwise.

          (a) Provision by the Company of Final Compensation and Post Employment Payments, if any, to
which the Executive is entitled under the applicable termination provision of Section 5 shall
constitute the entire obligation of the Company to the Executive hereunder following termination of
his employment by the Company. The Executive shall promptly give the Company notice of all facts
necessary for the Company to determine the amount and duration of its obligations in connection
with any termination pursuant to Section 5 hereof.

          (b) The Executive and his qualified beneficiaries may have a right to continue participation
in the Company’s health and dental plans in accordance with COBRA following termination of the
Executive’s employment with the Company. In addition, the Executive may have a right to coverage
under the Company’s group life insurance plan in

-11-

 

accordance with the terms of Section 5(d) following a termination of employment in accordance
with Section 5(d) or Section 5(e) hereof. The Executive’s participation in all other Employee
Benefit Plans shall terminate pursuant to the terms of the applicable Plan Documents based on the
Date of Termination and, for the avoidance of doubt, no continuation of Base Salary or other
payment to the Executive following the Date of Termination shall serve to extend the Executive’s
employment with the Company or his eligibility, or that of his qualified beneficiaries, to
participate in any Employee Benefit Plans.

          (c) Provisions of this Agreement shall survive any termination if so provided herein or if
necessary or desirable to accomplish the purposes of other surviving provisions, including without
limitation the conditions to receipt of Post Employment Payments set forth in Section 5(h) and the
obligations of the Executive under Section 7. The Executive recognizes that, except as expressly
provided in Section 5(d), Section 5(e) or Section 5(f) (with respect to Base Salary for any notice
period waived) or Section 5(g), no compensation is earned after termination of employment.

     7. Confidential Information.

          (a) The Executive acknowledges that the Company and its Affiliates continually develop
Confidential Information (as defined in Section 13 hereof); that the Executive may develop
Confidential Information for the Company or its Affiliates; and that the Executive may learn of
Confidential Information during the course of employment. The Executive will comply with the
policies and procedures of the Company and its Affiliates for protecting Confidential Information
and shall not disclose to any Person or use, other than as required by applicable law or for the
proper performance of his duties and responsibilities to the Company and its Affiliates, any
Confidential Information obtained by the Executive incident to his employment or other association
with the Company or any of its Affiliates. The Executive understands that this restriction shall
continue to apply after his employment terminates, regardless of the reason for such termination.

          (b) All documents, records, tapes and other media of every kind and description relating to
the business, present or otherwise, of the Company or any of its Affiliates and any copies, in
whole or in part, thereof (the “Documents”), whether or not prepared by the Executive, shall be the
sole and exclusive property of the Company and its Affiliates. The Executive shall safeguard all
Documents and shall surrender to the Company at the time his employment terminates, or at such
earlier time or times as the Board or its designee may specify, all Documents and all other
property of the Company and its Affiliates then in the Executive’s possession or control.

     8. Assignment of Rights to Intellectual Property. The Executive shall promptly and
fully disclose all Intellectual Property (as defined in Section 13 hereof) to the Company. The
Executive hereby assigns and agrees to assign to the Company (or as otherwise directed by the
Company) the Executive’s full right, title and interest in and to all Intellectual Property. The
Executive agrees to execute any and all applications for domestic and foreign patents, copyrights
or other proprietary rights and to do such other acts (including without limitation the execution
and delivery of instruments of further assurance or confirmation) requested by the

-12-

 

Company to assign the Intellectual Property to the Company and to permit the Company to
enforce any patents, copyrights or other proprietary rights to the Intellectual Property. The
Executive will not charge the Company for time spent in complying with these obligations. All
copyrightable works that the Executive creates during the course of his employment by the Company
and which pertains to the business of the Company or any of its Affiliates or is suggested by any
work performed by the Executive for the Company or any of its Affiliates or makes use of
Confidential Information shall be considered “work made for hire” and, upon creation, shall be
owned exclusively by the Company or its applicable Affiliate.

     9. Restricted Activities. The Executive agrees that certain restrictions on his
activities during his employment are necessary to protect the goodwill, Confidential Information
and other legitimate interests of the Company and its Affiliates:

          (a) While the Executive is employed by the Company, the Executive shall not, directly or
indirectly, whether as owner, partner, investor, consultant, agent, employee, co-venturer or
otherwise, compete with the Company or any of its Affiliates anywhere in the world or undertake any
planning for competition with the Company or any of its Affiliates. Specifically, but without
limiting the foregoing, the Executive agrees not to engage in any manner in any activity that is
directly or indirectly competitive or potentially competitive with the business of the Company or
any of its Affiliates as conducted or under consideration at any time during the Executive’s
employment or to provide services in any capacity to a Person which is a competitor of the Company
or any of its Affiliates.

          (b) The Executive further agrees that, while he is employed by the Company, and excluding any
activities undertaken on behalf of the Company or any of its Affiliates in the course of his
duties, he will not hire or attempt to hire any employee of the Company or any of its Affiliates;
assist in such hiring by any Person; encourage any such employee to terminate his or her
relationship with the Company or any of its Affiliates; or solicit or encourage any customer of the
Company or any of its Affiliates to terminate or diminish its relationship with them; or solicit or
encourage any customer or potential customer or the Company or any of its Affiliates to conduct
with any Person any business or activity which such customer or potential customer conducts or
could conduct with the Company or any of its Affiliates.

          (c) The Executive agrees that during his employment by the Company he shall not publish any
work that disparages the Company or any of its Affiliates, their management or their business or
the Products.

     10. Enforcement of Covenants. The Executive acknowledges that he has carefully read
and considered all the terms and conditions of this Agreement, including the restraints imposed
upon him pursuant to Sections 7, 8 and 9 hereof. The Executive agrees that those restraints are
necessary for the reasonable and proper protection of the Company and its Affiliates and that each
and every one of the restraints is reasonable in respect to subject matter, length of time and
geographic area. The Executive further acknowledges that, were he to breach any of the covenants
contained in Sections 7, 8 or 9 hereof, the damage to the Company and its Affiliates would be
irreparable. The Executive therefore agrees that the Company, in

-13-

 

addition to any other remedies available to it, shall be entitled to preliminary and permanent
injunctive relief against any breach or threatened breach by the Executive of any of said
covenants, without having to post bond. The parties further agree that, in the event that any
provision of Section 7, 8 or 9 hereof shall be determined by any court of competent jurisdiction to
be unenforceable by reason of its being extended over too great a time, too large a geographic area
or too great a range of activities, such provision shall be deemed to be modified to permit its
enforcement to the maximum extent permitted by law.

     11. Conflicting Agreements. The Executive hereby represents and warrants that the
execution of this Agreement and the performance of his obligations hereunder will not breach or be
in conflict with any other agreement to which the Executive is a party or is bound and that the
Executive is not now subject to any covenants against competition or similar covenants or any court
order or other legal obligation that would affect the performance of his obligations hereunder.
The Executive will not disclose to or use on behalf of the Company any proprietary information of a
third party without such party’s consent.

     12. Indemnification. The Company shall indemnify the Executive to the fullest extent
permitted by applicable law. Executive’s right to indemnification shall include the right to be
paid by the Company the expenses incurred in defending any covered proceeding in advance of its
final disposition, provided that Executive shall repay any advanced amounts if it shall be
ultimately determined that the Executive is not entitled to be indemnified for such expenses under
this Agreement or otherwise. The Executive agrees promptly to notify the Company of any actual or
threatened claim arising out of or as a result of his employment or offices with the Company or any
of its Affiliates.

     13. Definitions. Words or phrases which are initially capitalized or are within
quotation marks shall have the meanings provided in this Section and as provided elsewhere herein.
For purposes of this Agreement, the following definitions apply:

          (a) “Affiliates” means all persons and entities directly or indirectly controlling, controlled
by or under common control with the entity specified, where control may be by management authority
or equity interest.

          (b) “Closing Date” means the date of the closing of the transaction described in the Stock
Purchase Agreement dated as of February 1, 2006, by and between Riddell Bell Holdings, Inc. and
Jas. D. Easton, Inc. (the “Stock Purchase Agreement”), which closing occurred on March 16,
2006.

          (c) “Confidential Information” shall mean any and all information of the Company and its
Affiliates that is not generally known by those with whom the Company or any of its Affiliates
competes or does business, or with whom the Company or any of its Affiliates plans to compete or do
business, including without limitation (i) information related to the Products, technical data,
methods, processes, know-how and inventions of the Company and its Affiliates, (ii) the
development, research, testing, marketing and financial activities and strategic plans of the
Company and its Affiliates, (iii) the manner in which they operate, (iv)

-14-

 

their costs and sources of supply, (v) the identity and special needs of the customers and
prospective customers of the Company and its Affiliates and (vi) the persons and entities with whom
the Company and its Affiliates have business relationships and the nature and substance of those
relationships. Confidential Information also includes any information that the Company or any of
its Affiliates may receive or has received from customers, subcontractors, suppliers or others,
with any understanding, express or implied, that the information would not be disclosed.
Confidential Information does not include information that enters the public domain, other than
through a breach by the Executive or another Person of an obligation of confidentiality to the
Company or one of its Affiliates.

          (d) “Intellectual Property” means any invention, formula, process, discovery, development,
design, innovation or improvement (whether or not patentable or registrable under copyright
statutes) made, conceived, or first actually reduced to practice by the Executive solely or jointly
with others, during his employment by the Company; provided, however, that, as used in this
Agreement, the term “Intellectual Property” shall not apply to any invention that the Executive
develops on his own time, without using the equipment, supplies, facilities or trade secret
information of the Company or any of the Sports Affiliates to which the Executive has access as a
result of his employment, unless such invention relates at the time of conception or reduction to
practice of the invention (i) to the business of the Company or such Sports Affiliate, (ii) to the
actual or demonstrably anticipated research or development of the Company or of any Sports
Affiliates to which the Executive has access as a result of his employment or (iii) results from
any work performed by the Executive for the Company.

          (e) “Person” means an individual, a corporation, a limited liability company, an association,
a partnership, an estate, a trust and any other entity or organization, other than the Company or
any of its Affiliates.

          (f) “Products” means all products planned, researched, developed, tested, manufactured, sold,
licensed, leased or otherwise distributed or put into use by the Company or any of its Affiliates,
together with all services provided or planned by the Company or any of its Affiliates, during the
Executive’s employment.

     14. Withholding. All payments made by the Company under this Agreement shall be
reduced by any tax or other amounts required to be withheld by the Company under applicable law.

     15. Assignment. Neither the Company nor the Executive may make any assignment of this
Agreement or any interest herein, by operation of law or otherwise, without the prior written
consent of the other; provided, however, that the Company may assign its rights and obligations
under this Agreement without the consent of the Executive in the event the Company shall hereafter
effect a corporate reorganization, consolidate with, or merge into, any Person or transfer all or
substantially all of its properties or assets to any Person. This Agreement shall inure to the
benefit of and be binding upon the Company and the Executive, their respective successors,
executors, administrators, heirs and permitted assigns.

-15-

 

     16. Severability. If any portion or provision of this Agreement shall to any extent
be declared illegal or unenforceable by a court of competent jurisdiction, then the remainder of
this Agreement, or the application of such portion or provision in circumstances other than those
as to which it is so declared illegal or unenforceable, shall not be affected thereby, and each
portion and provision of this Agreement shall be valid and enforceable to the fullest extent
permitted by law.

     17. Waiver. No waiver of any provision hereof shall be effective unless made in
writing and signed by the waiving party. The failure of either party to require the performance of
any term or obligation of this Agreement, or the waiver by either party of any breach of this
Agreement, shall not prevent any subsequent enforcement of such term or obligation or be deemed a
waiver of any subsequent breach.

     18. Notices. Any and all notices, requests, demands and other communications provided
for by this Agreement shall be in writing and shall be effective when delivered in person,
consigned to a reputable national courier or deposited in the United States mail, postage prepaid,
registered or certified, and addressed to the Executive at his last known address on the books of
the Company or, in the case of the Company, to it c/o Mark R. Genender, Fenway Partners, Inc.,
11111 Santa Monica Boulevard, Suite 1470, Los Angeles, CA 90025, with a copy to Aron Schwartz,
Fenway Partners, Inc., 152 W. 57th St., 59th Floor, New York, NY 10019 or to such other address as
either party may specify by notice to the other actually received.

     19. Entire Agreement. This Agreement contains the entire agreement of the parties,
and supersedes all prior agreements whether written or oral, with respect to the Executive’s
employment and all related matters, including without limitation the term sheet between the parties
that preceded this Agreement.

     20. Amendment. This Agreement may be amended or modified only by a written instrument
signed by the Executive and by an expressly authorized representative of the Board.

     21. Headings. The headings and captions in this Agreement are for convenience only
and in no way define or describe the scope or content of any provision of this Agreement.

     22. Counterparts. This Agreement may be executed in two or more counterparts, each of
which shall be an original and all of which together shall constitute one and the same instrument.

     23. Governing Law. This is a California contract and shall be construed and enforced
under and be governed in all respects by the laws of the State of California, without regard to the
conflict of laws principles thereof, and, for the avoidance of doubt, shall include both the
statutory and common law of California, except to the extent preempted by federal law.

[Remainder of page intentionally left blank]

-16-

 

     IN WITNESS WHEREOF, this Agreement has been executed by the Company, by its duly authorized
representative, and by the Executive, as of the date first above written.

	 	 	 	 	 	 	 	 	 
	THE EXECUTIVE:	 	 	 	THE COMPANY:
EASTON-BELL SPORTS, INC.	 	 
	 
	 	 	 	 	 	 	 	 
	/s/ RICHARD TIPTON

	 	 	 	 	 	/s/ MARK GENENDER	 	 
	 
	 	 	 	 	 	 	 	 
	 

	 	 	 	By:	 	 	 	 
	 

Richard Tipton

	 	 
	 	 	 	 

	 	 
	 

	 	 	 	Title:
	 	 Vice President	 	 
	 

	 	 	 	 	 	 

	 	 
	 
	 	 	 	 	 	 	 	 
	Easton Bell Sports, LLC shall be a party to this Agreement, but solely for the purposes of
Section 4(c) hereof.
	 
	 	 	 	 	 	 	 	 
	 	 	 	 	EASTON BELL SPORTS, LLC	 	 
	 
	 	 	 	 	 	 	 	 
	 

	 	 	 	 	 	/s/ MARK GENENDER	 	 
	 
	 	 	 	 	 	 	 	 
	 

	 	 	 	By:	 	 	 	 
	 

	 	 	 	 	 	 

	 	 
	 
	 	 	 	 	 	 	 	 
	 

	 	 	 	Name:
	 	Mark Genender	 	 
	 

	 	 	 	 	 	 	 	 
	 
	 	 	 	 	 	 	 	 
	 

	 	 	 	Title:
	 	Vice President	 	 
	 

	 	 	 	 	 	 	 	 

-17-

 

EXHIBIT A

RELEASE OF CLAIMS

     FOR AND IN CONSIDERATION OF the benefits to be provided me in connection with the termination
of my employment, as set forth in the agreement between me and Easton-Bell Sports, Inc. (the
“Company”) dated as of July 12, 2006 (the “Agreement”), which are conditioned,
inter alia, on my signing this Release of Claims and to which I am not otherwise entitled, and for
other good and valuable consideration, the receipt and sufficiency of which is hereby acknowledged,
I, on my own behalf and on behalf of my heirs, executors, administrators, beneficiaries,
representatives and assigns, and all others connected with me, hereby release and forever discharge
the Company and its Affiliates (as that term is defined in the Agreement) and all of their
respective past, present and future officers, directors, trustees, shareholders, employees, agents,
general and limited partners, members, managers, joint venturers, representatives, successors and
assigns, and all others connected with any of them (all of the foregoing, collectively, the
“Released”), both individually and in their official capacities, from any and all causes of
action, rights and claims of any type or description, known or unknown, which I have had in the
past, now have, or might now have, through the date of my signing of this Release of Claims,
including without limitation any causes of action, rights or claims in any way resulting from,
arising out of or connected with my employment by the Company or any of its Affiliates or the
termination of that employment or pursuant to any federal, state or local law, regulation or other
requirement, including without limitation Title VII of the Civil Rights Act of 1964, the Age
Discrimination in Employment Act, the Americans with Disabilities Act and the fair employment
practices laws of the state or states in which I have been employed by the Company or any of its
Affiliates, each as amended from time to time, (all of the foregoing, in the aggregate,
“Claims”)

In signing this Release of Claims, I expressly waive and relinquish all rights and benefits
afforded by Section 1542 of the Civil Code of the State of California, and do so understanding and
acknowledging the significance of such specific waiver of Section 1542, which Section states as
follows:

     A general release does not extend to claims which the creditor does not know or
suspect to exist in his favor at the time of executing the release, which if
known by him must have materially affected his settlement with the debtor.

Thus, notwithstanding the provisions of Section 1542, and for the purpose of implementing a full
and complete release and discharge of the Released, I expressly acknowledge that this Release of
Claims is intended to include in its effect, without limitation, all Claims which I do not know or
suspect to exist in my favor at the time of execution hereof, and that this Release of Claims
contemplates the extinguishment of all such Claims.

Excluded from the scope of this Release of Claims is (i) any claim arising under the terms of the
Agreement after the effective date of this Release of Claim and (ii) any right of

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indemnification or contribution that I have pursuant to the Articles of Incorporation or By-Laws of
the Company or any of its Sports Affiliates (as defined in the Agreement).

In signing this Release of Claims, I acknowledge my understanding that I may not sign it prior to
the termination of my employment, but that I may consider the terms of this Release of Claims for
up to twenty-one (21) days (or such longer period as the Company may specify) from the date my
employment with the Company terminates. I also acknowledge that I am advised by the Company and
its Affiliates to seek the advice of an attorney prior to signing this Release of Claims; that I
have had sufficient time to consider this Release of Claims and to consult with an attorney, if I
wished to do so, or to consult with any other person of my choosing before signing; and that I am
signing this Release of Claims voluntarily and with a full understanding of its terms.

I further acknowledge that, in signing this Release of Claims, I have not relied on any promises or
representations, express or implied, that are not set forth expressly in the Agreement. I
understand that I may revoke this Release of Claims at any time within seven (7) days of the date
of my signing by written notice to the Company c/o Mark R. Genender, Fenway Partners, Inc., 11111
Santa Monica Boulevard, Suite 1470, Los Angeles, CA 90025, with a copy to Aron Schwartz, Fenway
Partners, Inc., 152 W. 57th St., 59th Floor, New York, NY 10019, or to such other address as the
Company party may specify and that this Release of Claims will take effect only upon the expiration
of such seven-day revocation period and only if I have not timely revoked it.

Intending to be legally bound, I have signed this Release of Claims as of the date written below.

	 	 	 	 	 
	Signature:
	 	 	 	 
	 

	 	 

Richard Tipton
	 	 
	 
	 	 	 	 
	Date Signed:
	 	 	 	 
	 

	 	 

	 	 

-19-

 

EXHIBIT B

Designation of Beneficiary

     Reference is made to the employment agreement between the undersigned and Easton-Bell Sports,
Inc. dated as of July 12, 2006 (the “Employment Agreement”). All capitalized terms not
defined on this form shall have the meaning ascribed to them in the Employment Agreement.

     I hereby designate the following person as my beneficiary to receive any Final Compensation
and any Final Pro-Rated Bonus under Section 5(a) of the Employment Agreement in the event of my
death during the term of the Employment Agreement:

Name of Beneficiary:

Social Security Number:

Date of Birth:

Relationship:

Current Address:

I understand that it is my obligation to inform the Company in writing of any change of address for
my designated beneficiary. I also understand that I may change my designated beneficiary at any
time by submission of a new form fully completed, signed by me and dated. The form with the latest
date shall govern in the event of my death.

	 	 	 	 	 
	Signature:
	 	 	 	 
	 

	 	 

Richard Tipton
	 	 
	 
	 	 	 	 
	Date:
	 	 	 	 
	 

	 	 

	 	 

-20-exv10w1

 

Exhibit 10.1

Schnitzer Steel Industries, Inc.

ANNUAL INCENTIVE COMPENSATION PLAN

Effective Date: September 1, 2006

The following are the terms of the Schnitzer Steel Industries, Inc. (the “Company,” “Schnitzer
Steel” or “SSI”) Annual Incentive Compensation Plan (the “Plan”) for certain employees of the
Company and its subsidiaries and affiliates. References to the “Company,” “Schnitzer Steel” or
“SSI” shall be deemed to refer instead to a subsidiary or affiliate as the context requires for a
particular employee, employed by such subsidiary or affiliate.

	 	1.	 	Purpose of the Plan

In order to align employee incentives with shareholder interests, incentive
compensation will reward the achievement of performance goals established under the
Plan.

	 	2.	 	Eligibility

Participation of the Company’s employees in the Plan will be determined by the Company
in its sole discretion, and employment by the Company does not automatically entitle
an employee to participate. Eligibility for the Plan is limited to regular, full time
and part time employees (as determined by the Human Resources Policy #250 Employee
Definition) and its subsidiaries and affiliates who have worked for the Company for a
minimum of 90 consecutive days, exclusive of the employees subject to a collective
bargaining agreement unless such agreement expressly provides otherwise (collectively,
the “Employees” or “Participants”). Newly hired regular, full time or part time
Employees who meet the criteria for participation are eligible to earn their first
bonus based under the Plan from their date of hire through the end of the applicable
fiscal year, provided they meet the minimum duration of employment as stated in this
Section 2.

	 	3.	 	Target Bonus

The Company will assign to each Participant a target bonus expressed as a
percentage of the Participant’s earnings in the fiscal year as calculated by the
Company. For this purpose, earnings include the items listed in Exhibit A. The
target bonus percentage varies by level of responsibility within the Company. The
Human Resources Department maintains the list of Participants and their target bonus
percentages. Target bonus percentages for executive officers of the Company will be
established by the Compensation Committee of the Company’s Board of Directors (the
“Compensation Committee”). The target bonus for each Participant is determined by
multiplying the employee’s earnings during the fiscal year by the target bonus
percentage.

	 	4.	 	Performance Targets

Payouts under the Plan will be based on the level of achievement of performance goals
established by the Compensation Committee. The Compensation Committee shall specify
the performance goals, levels of payouts and weight assigned to each performance
measure. For fiscal 2007, payouts under the Plan will be based on achievement of
performance goals relating to divisional economic profit (“Economic Profit,” as
defined in Section 4(a)), Company earnings per share growth (“EPS Growth,” as defined
in Section 4(b)) and individual performance. The Compensation Committee can specify
different payout levels based on the achievement of performance measures at various
levels, such as threshold performance, target performance and stretch performance.
Payouts for performance below a threshold level and additional payouts for performance
above a stretch level are at the discretion of the Compensation Committee considering
all relevant factors. Unless

-1-

 

otherwise determined by the Compensation Committee, each performance goal operates
independently, and payout is determined solely on that performance goal. A
Participant’s target bonus based on a particular performance measure is the target
bonus multiplied by the percentage weight assigned by the Compensation Committee to
that performance measure.

For fiscal year 2007, for Participants in each of the operating divisions (Auto Parts
Business, Metals Recycling Business, and Steel Manufacturing Business), the payout
formula will be weighted 70% on achieving divisional Economic Profit goals, 15% on
achieving EPS Growth goals, and 15% on achieving individual goals. The Plan
Administrator will designate the division for each Employee. For Participants in the
Shared Services Division, the Economic Profit payout will be calculated using the
weighted average of the payout multiples based on actual Economic Profit of the
operating divisions. In the event that any operating division records an Economic
Profit that is zero or negative, the percentage weighting for that division will be
based on that division’s target Economic Profit as a percentage of the sum of the
three divisions’ Economic Profit targets. The percentage weighting for any division
with positive Economic Profit will be calculated by dividing such actual Economic
Profit by the sum of the actual Economic Profit for all divisions in which such
amounts are positive, and multiplying that amount by the number equal to 100% less the
percentage weighting for each division with a zero or negative Economic Profit.

	 	(a)	 	Economic Profit. Economic Profit is defined as divisional net operating
profit after tax (NOPAT) minus the divisional capital charge. Net operating profit
after tax is defined as divisional operating income, as reported in the Company’s
financial statements, less an imputed charge for taxes based on the Company’s reported
consolidated effective tax rate. The divisional capital charge is defined as the
division’s invested capital multiplied by the weighted average cost of capital assigned
to that division by the Compensation Committee in its sole discretion. A division’s
invested capital is defined as total assets minus total liabilities plus long-term debt
and intercompany balances.

In calculating Economic Profit, the Compensation Committee shall have full authority
to take into account and make adjustments for significant non-recurring and
extraordinary items, including, but not limited to, certain expenditures, such as IT
and other infrastructure expenditures, which are incurred in order to produce benefits
in future periods. In addition, the Economic Profit goals for each division will be
adjusted at year end to reflect the actual effective tax rate recorded by the Company
in its year end financial statements.

	 	(b)	 	EPS Growth. The Company’s EPS Growth for the 2007 fiscal year shall be
equal to the EPS for fiscal 2007 minus the EPS for the fiscal 2006, with that difference
then divided by the EPS for fiscal 2006. For purposes of the Plan, the “EPS” for fiscal
2006 shall be deemed to be $3.97, reflecting the elimination of certain large
non-recurring items. “EPS” for fiscal 2007 shall mean the Company’s diluted earnings
per share for fiscal 2007, as set forth in the audited consolidated financial statements
of the Company and its subsidiaries for that fiscal year, as adjusted by the
Compensation Committee to appropriately take into account any non-recurring or
extraordinary items or transactions, including, but not limited to, certain
expenditures, such as IT and other infrastructure expenditures, and the effects of
changes in the accounting treatment of any items.

	 	(c)	 	Individual Goals. For fiscal year 2007, 15% of each Plan award shall be
based on the Participant achieving his or her individual goals. Written individual
goals (which may reflect team goals for more operationally based employees) will be
established for each Participant under procedures established by the Plan Administrator
and maintained by Human Resources.

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	 	5.	 	Determination of Achievement of Performance Targets. Following
completion of the Company’s audited financial statements, the Compensation Committee
will determine the level of achievement of Company and divisional performance goals and
the achievement of individual goals of executive officers. The achievement of
individual goals of other Participants will be determined under procedures established
by the Plan Administrator.

	 	6.	 	Payment Date. The payment of annual bonuses under the Plan will be made
in cash (net of withholding) on a date selected by the Company after the Company’s
financial statement audits are completed (each a “Payment Date”) to Participants who
remain employed by the Company on the Payment Date (other than those Participants whose
employment was terminated as a result of death, disability, retirement or involuntary
termination without cause).

	 	7.	 	Administration and Guidelines of the Plan

Administration of the Plan is at the sole discretion of the Company’s Chief Executive
Officer (the “Plan Administrator”) except with respect to the Company’s executive
officers, for whom the Plan shall be administered by the Compensation Committee, and
as otherwise provided in the Plan. The Compensation Committee shall have full
authority to interpret the Plan. Guidelines for the calculation of and adjustments to
certain items may be established at the direction of the Plan Administrator and will
be maintained by the Company’s Chief Financial Officer. The Plan may be amended in
whole or in part from time to time, or terminated in its entirety at any time, by the
Compensation Committee.

	 	8.	 	New Hires/Promotions

An individual who is hired or promoted into a position that participates in the Plan
may be eligible for a bonus award so long as he or she has been employed full or part
time for 90 consecutive days as provided in Section 2. Unless otherwise adjusted by
the Plan Administrator or, in the case of the Company’s executive officers, by the
Compensation Committee, mid-year promotions that change the Participants’ target bonus
will be weighted based on the number of days at each target bonus level.

	 	9.	 	Transfers

Unless otherwise adjusted by the Plan Administrator or, in the case of the Company’s
executive officers, by the Compensation Committee, a Participant who transfers his or
her employment from one division to another shall have his or her bonus weighted based
on the time spent in each division, and the Participant’s weighted bonus will be based
on each division’s full year performance, prorated based upon the period the
Participant was employed in each division.

	 	10.	 	Termination of Employment

	 	(a)	 	Death or Disability

For a Participant who dies or becomes permanently disabled, as defined by the
Company’s disability policy, while in the employment of the Company, the Participant
shall be paid his or her bonus based on the Participant’s earnings for the portion of
the year the Participant was employed. For this purpose the Participant shall be
deemed to have satisfied the Participant’s individual goals. In the event of death,
the payment will be made to the Employee’s designated beneficiary or estate. Such
bonus payment shall be made on the Payment Date for the Plan year in which the death
or disability occurs.

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	 	(b)	 	Retirement

For a Participant who retires from the Company, the Participant shall be paid his or
her bonus based on the Participant’s earnings for the portion of the year the
Participant was employed. In the case of retirement on other than the last day of the
Company’s fiscal year, the Plan Administrator or, in the case of the Company’s
executive officers, the Compensation Committee shall determine the extent to which the
Participant shall be deemed to have satisfied the Participant’s individual goals. For
the purposes of this Section 10(b), a person who is at least age 55 is deemed to be
“retired” when he or she would receive retirement benefits under any of the Company’s
retirement plans. Such bonus payment shall be made on the Payment Date for the Plan
year in which retirement occurs.

	 	(c)	 	Involuntary Termination without Cause

For a Participant who is involuntarily terminated by the Company without cause (as
determined by the Plan Administrator or the Compensation Committee, as applicable),
the Participant shall be paid his or her bonus based on the Participant’s earnings for
the portion of the year the Participant was employed. For this purpose the
Participant shall be deemed to have satisfied the Participant’s individual goals.
Such bonus payment shall be made on the Payment Date for the Plan year in which the
termination occurs.

	 	(d)	 	Voluntary Resignation or Termination with Cause

Except as expressly provided in this Section 10 above, termination of employment by a
Participant or termination of a Participant’s employment by the Company with cause (as
determined by the Plan Administrator or the Compensation Committee, as applicable)
shall result in no bonus payment for the fiscal year in which such termination occurs
and, if such termination occurs before the Payment Date for the prior Plan year,
forfeiture of any bonus for such year.

	 	11.	 	Termination of EVA Bonus Plans

The Economic Value Added (“EVA”) Bonus Plans of the Company and its subsidiaries (the
“EVA Plans”) have been terminated effective as of September 1, 2006, and no bonuses
will be declared or paid under the EVA Plans for fiscal 2007 or later years. The
Compensation Committee has approved the treatment of benefits under the terminated EVA
Plans, and information regarding these matters will be communicated to participants of
the EVA Plans. Acceptance of benefits under the Plan by a Participant shall
constitute agreement to such treatment of benefits under the terminated EVA Plans.

	 	12.	 	General Provisions
	 
	 	(a)	 	Withholding of Taxes. The Company shall have the right to withhold the
amount of taxes, which it determines is required to be withheld under law with respect
to any amount payable under this Plan.

	 
	 	(b)	 	No Prior Right or Offer. Except and until expressly granted pursuant
to the Plan, nothing in this Plan shall be deemed to give any Employee any contractual
or other right to participate in the benefits of the Plan. No award to any such
Participant in any Plan period shall be deemed to create a right to receive any award
or to participate in the benefits of the Plan in any subsequent year.

	 	13.	 	Limitations
	 
	 	(a)	 	No Continued Employment. Neither the establishment of the Plan nor
the grant of an award hereunder shall be deemed to constitute an express or implied
contract of employment with any Participant for any period of time, or change an
Employee’s “at will” status, or in any way abridge

-4-

 

the rights of the Company to determine the terms and conditions of employment or to
terminate the employment of any Employee with or without cause, at any time.

	 	(b)	 	Not Part of Other Benefits. The benefits provided in this Plan shall
not be deemed a part of any other benefit provided by the Company to its employees.
The Company assumes and shall have no obligation to Participants except as expressly
provided in this Plan.

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Exhibit A

Fiscal Year Earnings

Regular Pay (base salary)

Overtime (applies to non-exempt employees)

Double-time (applies to non-exempt employees)

Double-time and a half (applies to non-exempt employees)

Bereavement

Adjusted Wages

Holiday

Vacation (as applicable)

PTO (as applicable)

Sick (as applicable)

Disability Bank (“frozen” sick leave balances applicable only to those employees who were employed by the Company prior to the implementation of the PTO program)

Floating Holiday (as applicable)

Miscellaneous Fringe Benefits (pursuant to list maintained by the Company’s Human Resources Department)

Shift differential pay

Jury duty

Military leave

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