EASTON-BELL SPORTS, INC. Form 10-K Annual Report Filed 2012-03-27

SECURITIES AND EXCHANGE COMMISSION

FORM 10-K Annual report pursuant to section 13 and 15(d)

Filing Date: 2012-03-27 | Period of Report: 2011-12-31 SEC Accession No. 0001193125-12-134545

(HTML Version on secdatabase.com)

FILER EASTON-BELL SPORTS, INC. Mailing Address Business Address 7855 HASKELL AVENUE, 7855 HASKELL AVENUE, CIK:1322739| IRS No.: 201636283 | State of Incorp.:DE | Fiscal Year End: 1231 SUITE 200 SUITE 200 Type: 10-K | Act: 34 | File No.: 333-123927 | Film No.: 12717670 VAN NUYS CA 91406 VAN NUYS CA 91406 SIC: 3949 Sporting & athletic goods, nec 818-781-1587

Form 10-K

¨ ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the fiscal year ended December 31, 2011 OR ¨ TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the transition period from to Commission file number: 333-123927

EASTON-BELL SPORTS, INC. (Exact name of registrant as specified in its certificate of incorporation)

Delaware 20-1636283 (State or other jurisdiction of (IRS Employer incorporation or organization) Identification No.)

7855 Haskell Avenue, Suite 200 Van Nuys, California 91406 (Address of principal executive offices) (Zip Code)

(818) 902-5800 (Registrants telephone number, including area code)

Securities registered pursuant to Section 12(b) of the Act: None

Securities registered pursuant to Section 12(g) of the Act: None

Indicate by check mark if the registrant is a well-known seasoned issuer, as defined in Rule 405 of the Securities Act. Yes ¨ No x

Indicate by check mark if the registrant is not required to file reports pursuant to Section 13 or Section 15(d) of the Act Yes x No ¨

Copyright © 2013 www.secdatabase.com. All Rights Reserved. Please Consider the Environment Before Printing This Document Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes ¨ No x

Indicate by check mark whether the registrant has submitted electronically and posted on its corporate Web site, if any, every Interactive Data File required to be submitted and posted pursuant to Rule 405 of Regulation S-T during the preceding 12 months (or for such shorter period that the registrant was required to submit and post such files). Yes ¨ No ¨

Indicate by check mark if disclosure of delinquent filers pursuant to Item 405 of Regulation S-K is not contained herein, and will not be contained, to the best of registrants knowledge, in definitive proxy or information statements incorporated by reference in Part III of this Form 10-K or any amendment to this Form 10-K. x

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, or a smaller reporting company. See the definitions of large accelerated filer, accelerated filer and smaller reporting company in Rule 12b-2 of the Exchange Act. (Check one):

Large accelerated filer ¨ Accelerated filer ¨

Non-accelerated filer x (Do not check if a smaller reporting company) Smaller reporting company ¨

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). Yes ¨ No x

The aggregate market value of voting and non-voting common equity held by non-affiliates of Easton-Bell Sports, Inc. is $0.

At March 27, 2012, 100 shares of Easton-Bell Sports, Inc. were outstanding.

PART I Item 1 Business 2 Item 1A Risk Factors 13 Item 1B. Unresolved Staff Comments 36 Item 2. Properties 37 Item 3. Legal Proceedings 37 Item 4. [Reserved] 37 PART II Item 5. Market For Registrants Common Equity, Related Stockholder Matters and Issuer Purchases of Equity Securities 37 Item 6. Selected Financial Data 38 Item 7. Managements Discussion and Analysis of Financial Condition and Results of Operations 39 Item 7A. Quantitative and Qualitative Disclosures about Market Risk 55 Item 8. Financial Statements and Supplementary Data 57 Item 9. Changes in and Disagreements with Accountants on Accounting and Financial Disclosure 91 Item 9A. Controls and Procedures 91 Item 9B. Other Information 91 PART III Item 10. Directors, Executive Officers and Corporate Governance 92 Item 11. Executive Compensation 95 Item 12. Security Ownership of Certain Beneficial Owners and Management and Related Stockholder Matters 109 Item 13. Certain Relationships and Related Transactions, and Director Independence 112 Item 14. Principal Accountant Fees and Services 115 PART IV Item 15. Exhibits, Financial Statement Schedules 116 SIGNATURES 118

Item 1. Business

Easton-Bell Sports, Inc. was incorporated in Delaware in April 2003. Our executive offices are located at 7855 Haskell Avenue, Suite 200, Van Nuys, California 91406, and our telephone number is 818-902-5800. Easton-Bell Sports, Inc. is a wholly-owned subsidiary of RBG Holdings Corp., or RBG, which, in turn, is a wholly-owned subsidiary of EB Sports Corp., or EB Sports, of which 100% of the issued and outstanding voting common stock is owned by Easton-Bell Sports, LLC, the ultimate parent company, or our Parent. Unless otherwise indicated, all references in this Form 10-K to Easton-Bell, we, us, our, and the Company refer to Easton-Bell Sports, Inc. and its consolidated subsidiaries. References to Easton, Bell and Riddell refer to Easton Sports, Inc. and its consolidated subsidiaries, Bell Sports Corp. and its consolidated subsidiaries and Riddell Sports Group, Inc. and its consolidated subsidiaries, respectively.

Overview

We are a leading designer, developer and marketer of branded sports equipment, protective products and related accessories. We offer products that are used in baseball, softball, ice hockey, football, lacrosse and other team sports, and in various action sports, including cycling, snowsports, powersports and skateboarding. Sports enthusiasts at all levels, from recreational participants to professional athletes, choose our products for their innovative designs and advanced materials, which provide a performance or protective advantage. Throughout our history, our focus on research and development has enabled us to introduce attractive and innovative products, many of which have set new standards for performance in their respective sports. As a result, we are able to consistently enter new product categories and expand and improve our existing product lines.

We currently sell a broad range of products primarily under four well-known brandsEaston® (baseball, softball, ice hockey and lacrosse equipment, apparel and cycling components), Bell® (cycling and action sports helmets and accessories), Giro® (cycling and snowsports helmets and accessories) and Riddell® (football equipment and reconditioning services). Together, these brands represent the vast majority of our revenues. We believe that our brands are among the most recognized in the sporting goods industry as demonstrated by our leading market share in many of our core categories.

We sell our products through diverse channels of distribution including: (1) specialty retailers that cater to sports enthusiasts who typically seek premium products at the highest performance levels, (2) national and regional full-line sporting goods retailers and distributors, (3) institutional buyers such as educational institutions and athletic leagues and (4) mass retailers that offer a focused selection of products at entry-level and mid-level price points. As a function of our flexible, low fixed-cost production model, we are able to leverage the expertise of our vendor partners to reduce the overhead and capital intensity generally associated with manufacturing.

Industry Overview

Sporting Goods Industry

We compete in the sporting goods industry, which includes sports equipment, athletic footwear and apparel. According to NPD Group, a consumer research firm, the worldwide retail sporting goods market was estimated at $315.0 billion in 2010. According to the Sporting Goods Manufacturers Association, or SGMA, manufacturers sales of sporting goods in the United States, our largest market, has grown from $48.4 billion in 2000 to $67.1 billion in 2010. The SGMA also reported that sales of sporting goods in the United States increased by 3.3% in 2010. Although sales figures for 2011 are not yet available, we believe that sales in both sports equipment and the sporting goods market increased slightly in 2011 as the markets continue to recover from the 2008-2009 recessionary period. We believe that, in the long-term, avid participants will continue to be willing to pay premium prices for high performance and enhanced-protection equipment, which should contribute to future market growth.

Copyright © 2013 www.secdatabase.com. All Rights Reserved. Please Consider the Environment Before Printing This Document The sporting goods equipment industry has undergone a period of consolidation. Certain equipment manufacturers have chosen to assemble a multitude of brands offering a wide range of commodity-like products often competing primarily on price. Others, including us, primarily focus on creating a portfolio of sporting goods products that are differentiated by high performance and compete on product quality, enhanced features, technology, styling, price and customer service.

Baseball and Softball

According to the SGMA, in 2010 in the United States baseball and softball (including both fast-pitch and slow-pitch) attracted approximately 14.6 million participants and 10.8 million participants, respectively. The SGMA reports that baseball participation had increased 5.2% since 2009, while participation rates in 2010 for both fast-pitch and slow-pitch softball have decreased 9.4% and 1.1%, respectively. Wholesale shipments of baseball and softball equipment were approximately $488.0 million in 2010, as compared to $487.0 million in 2009. The SGMA estimates that about 37.1% of the expenditures in baseball and softball are related to the purchase of bats. We believe the enthusiast base in these sports will experience continued growth, driven by increasing popularity of travel ball, club baseball and more frequent play.

Ice Hockey

According to the SGMA, ice hockey attracted 2.1 million participants in the United States in 2010 and United States wholesale shipments of ice hockey equipment was approximately $239.0 million in 2010, representing a 7.7% increase compared to the $222.0 million of ice hockey equipment sold in 2009. We estimate that the Canadian ice hockey market is at least as large as the United States market in terms of participants and dollars spent.

Football Helmets

According to the SGMA, tackle football attracted approximately 6.9 million United States participants and total United States manufacturers sales of football equipment were estimated at $520.0 million in 2010, representing a 4.6% increase compared to the $497.0 million of football equipment sold in 2009. As the largest and most popular sport for high school and college males, the football market is expected to continue to grow. Competitive tackle football leagues, such as the NCAA, high school leagues and Pop Warner, have increasingly emphasized the safety of participants by enforcing exacting equipment standards with an increased focus on the protective characteristics of helmets. As a result, football helmets have typically commanded higher price points, as well as faster equipment replacement and reconditioning rates. Due to the prevalence of dedicated organizations and players that demand a high level of safety without sacrificing performance, we believe that growth in sales of high performance, technologically advanced football equipment, including helmets and shoulder pads, as well as reconditioning services resulting from this trend will continue to provide a growth opportunity.

Cycling Helmets and Related Accessories

According to the SGMA, cycling (including bicycle motocross, or BMX, road and mountain biking) attracted approximately 48.9 million participants in 2010, as compared to approximately 49.1 million in 2009. As estimated by SGMA, wholesale shipments of bicycles were approximately $1.8 billion in 2010, as compared to $1.7 billion in 2009. Cycling has become one of the most popular physical activities in the United States and many states have laws mandating the use of helmets while riding a bicycle for those under the age of 18. Cycling continues to be influenced by increased television coverage of major events such as the Tour de France. In addition, many observers believe that cycling sales and participation rates have increased as a result of higher costs of gasoline in recent years and an increasing presence of the green movement.

The accessory segment of the United States bicycle industry is larger than the helmet segment and is driven by highly technical products that command premium prices. As the mix of riders has shifted towards high-end road cyclists, the demand for such accessories has increased significantly.

Participation in action sports, such as snowboarding has grown recently. According to the SGMA, snowboarding attracted approximately 8.2 million participants in the 2009/2010 season, as compared to approximately 7.4 million in the 2008/2009 season. The SGMA estimates that United States manufacturers sales of snowboarding equipment were estimated at $182.0 million in 2010, representing a 5.8% increase compared to $172.0 million in 2009. Events such as the ESPN X Games, the inclusion of snowboarding as a medal event in the Winter Olympics and the national recognition of leading board sport athletes have broadened general awareness of the action sports lifestyle. In addition, we believe that use of motor and other electric scooters is increasing. Growth in these sports should drive overall helmet sales as participants become more aware of the risk of head injuries.

Sports Apparel

According to the SGMA, wholesale spending for consumer sports apparel in the United States increased 4.8% in 2010, to approximately $29.6 billion in annual sales. The sports apparel segment is benefiting from consumers preference toward casual, comfortable clothing. Recent performance driven innovations, such as advanced features and highly technical fabrics, have fueled demand and increased price points for performance athletic apparel in recent years.

Our Brands

We currently sell a broad range of products, primarily under four well-known brandsEaston, Bell, Giro and Riddellwhich represent the vast majority of our sales. We believe that our brands are among the most recognized and respected in the sporting goods industry, as demonstrated by our leading market share in many of our core categories. As a result of the high-performance nature of our products, we have been able to build and maintain relationships with professional and college sports teams, leagues and organizations and high-profile athletes. The visibility provided by these relationships reinforces the authenticity of our brands and drives demand for our products among retailers and consumers.

Our four primary brands include:

Easton. Under the Easton brand, founded in 1922, we offer baseball, softball, ice hockey and lacrosse equipment and cycling components. We believe Easton is recognized as one of the most innovative brands in the baseball, softball and ice hockey equipment industry. In Major League Baseball, or MLB, All-Star players Andre Ethier, Matt Kemp and David Ortiz wear and use the Easton brand. We believe our hockey sticks are used by more National Hockey League, or NHL, players than any other brand and that consumers choose Easton branded products due to their combination of performance, quality and value. As a result, we have been able to build and maintain relationships with some of the most visible professional athletes in the NHL, which includes Mike Cammalleri, Taylor Hall, Zach Parise and Brad Richards who wear and use Easton hockey equipment.

Bell. Under the Bell brand, founded in 1954, we offer helmets for cycling, motorcycles (street and motorcross), skateboarding and other action sports, as well as various cycling and fitness accessories. We believe Bell is the number one brand in the United States by sales in cycling helmets and accessories. Bell branded products are used by cycling enthusiasts ranging from competitive athletes to recreational users. Consumers choose Bell branded cycling helmets due to design, fit, quality, durability and value. The Bell brand image of toughness, dependability and performance is supported through the use of Bell products by, and sponsorship of, such high-profile athletes and professional cycling teams as U.S. National Road Champion George Hincapie, Tour de France winner Cadel Evans, U.S. National Time Trial Champion Taylor Phinney and Motocross Champion James Stewart.

Copyright © 2013 www.secdatabase.com. All Rights Reserved. Please Consider the Environment Before Printing This Document Giro. Under the Giro brand, founded in 1986, we offer premium helmets for cycling and various snowsports (including skiing and snowboarding), as well as various accessories, including snow goggles and cycling footwear and gloves. We believe the Giro brand is the number two brand in the United States by sales in cycling helmets (second only to Bell) and the number one brand in the United States by sales in ski and snowboard helmets. We believe that consumers are willing to pay premium prices for our Giro helmets due to Giros reputation for innovation as well as sleek, stylish and speed-oriented designs. The Giro brand image is reinforced through the use of Giro products by, and sponsorship of, leading professional athletes, including Tour de France winner Lance Armstrong and Winter X Games gold medal winners Gretchen Bleiler and Simon Dumont.

Riddell. The Riddell brand, founded in 1929, is one of the most recognized brands in tackle football. The Riddell branded helmet is used by numerous Division I NCAA football teams and has been the Official Helmet of the National Football League, or NFL, since 1989, resulting in significant awareness of the Riddell brand with the general public, as well as with youth leagues and high schools. Under the Riddell brand, we sell football helmets, shoulder pads and related equipment, uniforms and reconditioning services for our football and other team sports products. We also sell branded collectible products, such as replica football helmets which reflect NFL and popular collegiate team logos.

In addition to the above products, we also sell a variety of accessories, including (1) bicycle pumps, headlights, safety lights and reflectors under the Blackburn® brand (founded in 1975), (2) bicycle trailers and child carrier seats under the CoPilot® brand (founded in 2000), and (3) a full line of mats, resistance bands, kits and other fitness accessories designed primarily for strength training, yoga and pilates under the Bell and Savasa® (launched in 2004) brands. Additionally, we own the rights to use the widely recognized MacGregor® brand (exclusive of golf products), which we license to select third parties to manufacture and market footwear and other sports equipment.

Products and Services

For the period ended December 31, 2011, we had two reportable segments: Team Sports and Action Sports. Our Team Sports segment primarily consists of football, baseball, softball, ice hockey and other team sports products and reconditioning services related to certain subcategories of these products. Our Action Sports segment primarily consists of helmets, equipment, components and accessories for cycling, snowsports and powersports and fitness related products. For financial information on each segment, see Item 7. Managements Discussion and Analysis of Financial Condition and Results of Operation and Note 6 to our Consolidated Financial Statements contained herein.

Team Sports

Our Team Sports segment produces technologically advanced equipment and apparel for baseball, softball, ice hockey and football and also provides reconditioning services for various sporting goods.

Baseball and Softball

We offer a broad line of baseball and softball (both slow-pitch and fast pitch) equipment and accessories (bats, gloves, protective equipment and apparel) for athletes and enthusiasts at all levels of competition. Substantially all of our baseball and softball products are currently sold under the Easton brand name. Since our first aluminum bat produced in 1969, our bats have featured advanced designs and materials to optimize hitting performance, feel and durability. Baseball and softball products accounted for approximately 21.1%, 19.6% and 19.2% of our net sales in 2011, 2010 and 2009, respectively.

Ice Hockey

We offer a broad line of ice hockey equipment and accessories (sticks, blades, skates, protective equipment and apparel) for athletes and enthusiasts at all levels of competition. All of our ice hockey products are sold under the Easton brand name. We believe our sticks are used by more NHL players than any other brand. Ice hockey products accounted for approximately 13.4%, 14.4% and 15.0% of our net sales in 2011, 2010 and 2009, respectively.

Football Helmets Substantially all of our football products and services are currently sold under the Riddell brand name. We believe we are the worlds leading designer, developer and marketer of football helmets. Our football helmets are designed to provide excellent on-field performance while meeting or exceeding all relevant safety standards.

Reconditioning Services We believe we are the leading reconditioner of football equipment in the United States. We recondition football helmets and shoulder pads, baseball and lacrosse helmets, catchers equipment, baseball gloves and hockey helmets and shoulder pads. Most of our reconditioning volume is comprised of football helmets and shoulder pads as reconditioning typically includes the cleaning, sanitizing, buffing and/or painting of helmets. Face guards, interior pads, chin straps and other helmet components are inspected and replaced as necessary. Helmets are recertified to conform to the standards set by the National Operating Committee on Standards for Athletic Equipment, or NOCSAE, which is the leading standard-setting organization for athletic equipment.

Football equipment and reconditioning services accounted for approximately 14.5%, 12.7% and 11.4% of our net sales in 2011, 2010 and 2009, respectively.

Other Products and Licensing

We sell collectible football helmets that primarily reflect licensed NFL and major collegiate trademarks. Our collectible helmets are available in a variety of sizes and forms, including authentic helmets that are identical to competitive helmets used on-field by professional players, replica helmets that have a similar appearance to the authentic helmet but are constructed with less advanced materials, mini helmets that are half-scale versions of full-size helmets and pocket size helmets that appeal to both collectors and the mass market.

In addition to the team sports products described above, we offer a range of practice wear, apparel, footwear and game uniforms under the Riddell and Easton brand names that are used on and off the field by football, baseball, softball and ice hockey athletes. These functional products incorporate advanced technical materials and innovative designs, such as our Bio-Dri® fabrics, which effectively wick moisture away from the body, keeping athletes cooler, drier and lighter.

We also have entered into selective licensing agreements that allow third parties to manufacture and market products under the Riddell, Easton and MacGregor brand names. Products currently licensed include Riddell footwear, Easton footwear, Easton table and outdoor games and MacGregor footwear and team sports equipment. We receive royalty income from sales of these products.

Other team sports products and licensing accounted for approximately 7.6%, 8.6% and 8.5% of our net sales in 2011, 2010 and 2009, respectively.

Action Sports

Our Action Sports segment encompasses a number of individual sports, such as cycling, extreme sports, snowsports, powersports and fitness activities. Within many of these sports, we are primarily focused on the helmet market. Within cycling, we are also focused on the accessories, footwear and premium components markets.

Cycling and Extreme Sports

Substantially all of our recreational cycling and extreme sports helmets are sold under the Bell brand name and our premium cycling helmets are sold under the Bell and Giro brand names. We sell premium cycling components under the Easton brand name and high-performance accessories under the Blackburn brand name. We also sell other accessories under the Bell and CoPilot brand names and certain recreational youth cycling helmets and accessories under various licensed brands, including Barbie, Hot Wheels, Sesame Street and X Games.

Copyright © 2013 www.secdatabase.com. All Rights Reserved. Please Consider the Environment Before Printing This Document Helmets We offer helmets designed for cycling and action sports, including skateboarding and BMX biking. These helmets incorporate many proprietary technologies and feature styling designed to appeal to sports enthusiasts. Cycling and action sports helmets accounted for approximately 16.4%, 17.3% and 19.2% of our net sales in 2011, 2010 and 2009, respectively.

Premium Cycling Components and Accessories We offer premium cycling components, including handlebars, tubing and wheels that are sold through specialty retailers and directly to original equipment manufacturers, or OEM. Our cycling components incorporate advanced designs and materials for optimal weight, strength and shock-absorbing characteristics and are frequently used by professional racing teams. Under the Blackburn brand name, we offer a broad range of high-performance accessories, including air pumps and CO2 inflators, aluminum racks, lights, cyclometers and tools. In 2010, we introduced a line of performance cycling footwear. Premium cycling components and accessories accounted for approximately 7.7%, 6.1% and 5.9% of our net sales in 2011, 2010 and 2009, respectively.

Cycling Accessories We offer a wide selection of cycling accessories, including lights, mirrors, reflectors, locks, pumps, pedals, tires, protective pads, gloves and bags under our Bell and CoPilot brands that are sold primarily through mass retailers. Cycling accessories accounted for approximately 9.9%, 10.4% and 10.6% of our net sales in 2011, 2010 and 2009, respectively.

Snowsports

We offer helmets for various snowsports, including snowboarding and skiing, as well as various snowsports accessories. Our snowsports helmets and accessories are sold under the Giro brand name. We have consistently been a leader in comfort and fit, as well as performance, from our first snow helmet with adjustable vents to wireless audio helmets, which feature specially designed headphones that are built seamlessly into the helmet ear pads and can be used with MP3 players or other portable audio devices. Snowsports helmets accounted for approximately 5.8%, 7.3% and 6.4% of our net sales in 2011, 2010 and 2009, respectively.

Powersports

We offer helmets for various powersports, including motocross, as well as various powersports accessories under the Bell brand name. Our powersports helmets are designed for motorcycles, both street and motocross and snowmobiles. Powersports helmets and accessories accounted for approximately 1.3%, 1.2% and 1.3% of our net sales in 2011, 2010 and 2009, respectively.

Fitness Accessories

We offer a broad line of fitness accessories, including mats, resistance bands, weights and other fitness products designed primarily for strength training, yoga and pilates. All of our fitness accessories are sold under the Bell and Savasa brands. Fitness accessories accounted for approximately 2.3%, 2.4% and 2.5% of our net sales in 2011, 2010 and 2009, respectively.

Competition

Although we have no competitors which challenge us across all of our product lines, the markets for our products are highly competitive and we face competition from a number of sources in many of our individual product lines.

In baseball and softball, we compete with numerous national and international competitors including Rawlings Sporting Goods, Worth Sports, Wilson Sporting Goods, Hillerich & Bradsby and Mizuno Corp. In ice hockey, we primarily compete with Bauer Hockey and Reebok-CCM Hockey. In football, we compete with several companies, such as Schutt Sports, Douglas Protective Equipment and Rawlings Sporting Goods and our reconditioning business competes with many regional companies. Our uniform and practice wear business also competes with national businesses such as Adidas, Nike, Russell Athletic and Under Armour. We believe that we compete in each of these team sports markets on the basis of brand name recognition, product features, quality and customer service.

Action Sports

In cycling helmets and components, we compete with several national and regional competitors. Within the mass retail channel, our main competitor is Dorel Industries, Inc., or DI, which markets its products under such well-known brand names as Schwinn, Mongoose and GT. DI competes with us primarily on brand name recognition and price. In the specialty retail channel, our primary competitors are Trek Bicycle Corporation and Specialized Bicycle Components, both of whom compete with us mostly on a combination of performance, price, style, quality, design and focus on cycling enthusiasts.

We primarily compete in the snowsports and powersports markets with a number of smaller companies and a few multinationals, which compete mostly on a combination of performance, price and design. In the snowsports helmet market, we compete with several domestic and international brands, including Boeri, Carrera, Leedom, Marker, Pro-Tec, R.E.D., which is owned by The Burton Corporation, Salomon, which is owned by Amer Sports and Smith. In the powersports helmet market, we compete against such well- known brands as Arai, Shoei, HJC and KBC.

Sales

We utilize separate sales forces and a variety of distribution channels for the various products in our segments, enabling us to design specific marketing strategies for each brand and product.

Sales of Team Sports Products

Retail Sales

We sell a broad selection of our team sports products, including our baseball, softball and ice hockey products, to both national and regional full-line sporting goods retailers in North America. We believe that our leading brands and the breadth and depth of our product portfolio match well with sporting goods chains marketing strategies, product selections and service capabilities, which generally fall between those of mass merchants and specialty retail accounts. Our extensive product selection allows sporting goods retailers to tailor their mix of our products to their individual selling strategies. In addition, we believe that sporting goods retailers benefit from consumer recognition and demand for our brands through increased foot traffic in their stores. We also sell team sports products to approximately 2,900 independent specialty retail accounts in North America. These retailers cater their marketing and product selections to sports enthusiasts who often seek premium products having the highest level of performance. We work with specialty customers to improve sales and profits by providing highly visible product displays and point-of-purchase signage.

Our team sports products that are sold to retail customers are sold through our network of approximately 50 in-house and independent sales representatives in the United States and Canada and through various third party distributors in other regions of the world. Our in-house sales team provides sales and support services to key retail accounts. Sales efforts to these customers are led by a national account manager, supported by other members of the sales team. These sales teams visit frequently with our larger customers to assist them with in-store merchandising, signage and market guidance, as well as to receive feedback and to anticipate future needs.

We primarily sell football helmets, shoulder pads, certain other team sports equipment, uniforms, accessories and reconditioning services to educational institutions and athletic leagues. We have a direct sales force and marketing team of approximately 240 individuals, which focus on sales to the NFL and approximately 17,000 high schools, 1,100 colleges and numerous youth leagues across the United States. We believe our institutional sales force, made up primarily of former players, former coaches and experienced industry sales professionals, is the largest national direct sales force for football products and services in the institutional sporting goods industry and provides us with a significant competitive advantage. Their experience helps us understand the needs, budgetary and timing constraints and other concerns of our customers and also facilitates education on new product offerings. Additionally, this approach allows us to sell equipment and reconditioning services directly to our customers, which enables us to more readily explore add-on sales opportunities. Our ability to actively manage the requirements of thousands of schools, leagues and professional teams with timely and expert service has aided us in establishing a reputation as a leader in customer service with a loyal customer base.

Sales of Action Sports Products

We primarily sell our broad selection of action sports products, including cycling, snowsports, powersports and skateboarding helmets and accessories through independent specialty retail accounts, sporting goods stores and mass retailers. We also sell premium aftermarket cycling components and accessories to distributors who supply the specialty retail channel and directly to bicycle manufacturers.

We utilize approximately 110 in-house and independent sales professionals across North America and a network of approximately 130 third-party distributors in other regions of the world to distribute our action sports products. Similar to our in-house sales team for team sports products, our in-house sales team for action sports products provides sales and support services to key retail accounts, including category management services for certain of our mass retail customers. These efforts are led by a national account manager, who is supported by other members of the sales team. These sales teams work with large sporting goods and mass retail customers to assist them with in-store merchandising, signage and market guidance, as well as to receive feedback and to anticipate future needs.

Marketing

Relationships with Athletes, Teams and Organizations

Our Easton, Bell, Giro and Riddell brands have enjoyed high visibility around the world due to use of our products by leading athletes. Many high-profile athletes choose to use our products even though they are not sponsored by us, which gives our products increased exposure to consumer audiences, strengthens the perceived authenticity of our brands and drives demand for our products among retailers and consumers. Our brands have a strong presence in professional (MLB, the NHL and the NFL), collegiate and youth leagues, the Summer and Winter Olympics, the Tour de France and X Games.

We sponsor several hundred individuals, including teams across baseball, softball, ice hockey, cycling, snowboarding, skiing, motocross, and other sports around the world. In addition, we have an exclusive contract with the NFL under which our football helmets are designated the Official Helmet of the NFL. Our agreement with the NFL permits our Riddell brand mark to appear on the front and on the chin strap of each Riddell helmet used during NFL play and provides that there be no indicia of any other brand on any other helmet worn during a game. We believe that Riddell helmets are used by approximately 72% of the players in the NFL. At the youth level, Riddell is the Official Football Helmet & Protective Equipment Partner of USA Football and the Official Hardgoods Supplier of American Youth Football, which are associated with a combined 3.5 million youth football players. Within hockey, we believe that approximately 40% of NHL players use Easton hockey sticks and in baseball, Easton is the official equipment supplier of the Little League World Series.

As a result of the foregoing relationships, we receive a significant amount of media exposure. We augment this exposure with advertisements highlighting the distinctive design, quality and features of our products in various media outlets, including industry periodicals, magazines, newspapers and television media. To further reinforce and build our brand recognition, we conduct a variety of marketing and promotional events in support of our products. For example, we participate in coaches clinics and equipment shows throughout the year where our product lines are displayed and promoted along with our reconditioning services. In addition, we dedicate resources to educate customers on the importance of helmet safety and proper fit and invest in initiatives designed to increase awareness of the importance of head protection in preventing brain injury.

Design and Product Development

Investment in research and development has been and continues to be a critical component of our business strategy. We are committed to the design and development of new products utilizing new technologies that provide athletes and other sports enthusiasts with performance or protective advantage over existing products. We believe that innovation drives consumer demand and often leads to higher selling prices. We have a track record for innovation in each of the markets in which we compete.

We also actively work with several organizations that set safety or performance standards for the sporting goods we sell. Our products meet or exceed the standards established by the most important regulatory and testing bodies, including the Department of Transportation, the Consumer Product Safety Commission, or CPSC, the Hockey Equipment Certification Council, or HECC, and Canadian Standards Association, or CSA, and various private organizations, including NOCSAE, which is the leading standard-setting organization for athletic equipment (including football, baseball and softball helmets, as well as other equipment) and the Snell Memorial Foundation, which is a leading organization that tests and certifies helmets for cycling, snowsports, powersports and other action sports. We also work with various athletic leagues, including the NFL, the NHL, MLB, the NCAA and Little League Baseball and Softball, that set standards for equipment used in competition and various conferences within these athletic organizations that have their own standards. We believe that we have regularly been among the first to adopt new safety or performance standards.

We invest in engineering and applied research to improve both the quality and performance of our current products and to develop new products. Our in-house product design, engineering, research and development and testing group includes approximately 200 employees. Our product development personnel work with top athletes to understand the latest industry trends and to develop new products or features that respond to their needs as well as set new industry standards. This team is augmented by additional product development, engineering and quality control personnel in the United States and Hong Kong who assist with the engineering and design of our products. We regularly test products throughout the development and manufacturing processes and all of our products are subjected throughout the manufacturing process to various quality control procedures that often exceed those mandated by law.

Production, Sourcing and Distribution

We currently maintain manufacturing, assembly and distribution facilities in the United States, Canada, Mexico, China and Taiwan. We also generally employ a dual strategy for sourcing goods from third parties. For certain of our products that involve our proprietary design and materials technologies, we negotiate exclusive agreements with a limited number of manufacturing partners. For our products that are less complex to produce, we maintain relationships with a broader base of suppliers to purchase goods as needed without contractual obligation.

Our aluminum and composite baseball and softball bats are manufactured in Asia. We manufacture a portion of our composite ice hockey sticks and blades and certain cycling components at our facility in Tijuana, Mexico and the balance of these products are sourced from various domestic and international suppliers. Custom ice hockey pants, gloves and skates are manufactured at our facility in Quebec, Canada. We assemble and package a portion of our cycling, football, snowsports, powersports and other helmets at our Elyria, Ohio and Rantoul, Illinois facilities, while the balance of our helmets are sourced from outside of the United States. Reconditioning services are performed at facilities strategically located throughout the United States, Canada and Mexico. In addition, we maintain a silk screening operation at our Elk Grove Village, Illinois facility to customize our football practice wear and uniform products with almost any logo, team name or other design that our customer requests.

Copyright © 2013 www.secdatabase.com. All Rights Reserved. Please Consider the Environment Before Printing This Document We complement our manufacturing infrastructure with overseas sourcing and leverage our purchasing volumes to receive lower prices. We have exclusive agreements with various third-party vendors in Asia to produce a portion of our aluminum and composite products. These agreements provide us with additional flexibility and manufacturing capacity. To protect the integrity of our brands, we actively inspect products purchased from third-party vendors to confirm that they meet our high-quality standards. We have a product development team in Hong Kong that supports our Asian sourcing efforts. In addition to handling product design, this team visits and works with many of our suppliers to verify product specifications, logistics and quality control. We require our suppliers to perform factory tests periodically to confirm the material and functional integrity of our products.

We operate distribution facilities in Illinois, Pennsylvania, Utah, Canada and Taiwan, which allow us to maintain high service levels for our customers across all distribution channels. We also use a third party distributor in Tennessee to provide distribution services for apparel.

Seasonality

Our business is subject to seasonal fluctuation. Sales of cycling products and accessories occur primarily during the warm weather months. Sales of baseball and softball products occur primarily in the late fall and winter months in preparation for the spring baseball and softball season. Sales of football equipment and reconditioning services are driven primarily by football buying patterns, where orders begin at the end of the school football season (December) and run through to the start of the next season (August). Shipments of football products and performance of reconditioning services reach a low point during the football season. Sales of ice hockey equipment are driven by ice hockey buying patterns with orders shipping in late spring for fall play. Seasonal impacts are increasingly mitigated by the increase in snowsports and powersports sales which, to a certain extent, counter the cycling, baseball, softball and football seasons.

Intellectual Property

We have a portfolio of approximately 173 patents along with approximately 84 pending patent applications. While we believe certain of these patents are material to the success of our products based on currently competing technology, we also believe that experience, reputation, brand recognition and our distribution network provide significant benefits to our business.

We believe our well-known brandsEaston, Bell, Giro and Riddellare a core asset of our business and are of great value to us. We maintain a portfolio of active registered trademarks in support of our brands, including registration of certain trademarks in the United States and in certain other countries. We have also obtained licenses to use certain popular brands on select youth cycling helmets and accessories from several companies including Mattel Inc., to use the Barbie and Hot Wheels brands, ESPN, Inc., to use the X Games brand and the Sesame Workshop, to use the Sesame Street brand.

In connection with our purchase of Easton Sports, Inc., or Easton, in March 2006, we licensed the Easton trademark to certain affiliates of James L. Easton solely in connection with specific products or services, none of which currently compete with us. For a discussion of this license and other related technology licenses to such James L. Easton affiliates, see Item 13 Certain Relationships and Related Transactions, and Director Independence. We also license the Easton trademark to third parties with respect to the production and marketing of footwear and certain recreational games, the Riddell trademark for footwear and the MacGregor trademark primarily for athletic footwear and sports equipment. In addition, the Bell trademark is currently licensed to a third party for the production of auto racing helmets sold worldwide, as well as motorcycle helmets and accessories sold outside of the United States, Canada and Mexico.

We believe that our relationships with our employees are good. As of December 31, 2011 we had 2,460 employees, including 202 in product design, engineering, research and development and testing, 1,578 in operations, including manufacturing and distribution, 362 in sales and marketing and 318 in administration. Approximately 50 of our employees are represented by unions. Our collective bargaining agreement with a union in York, Pennsylvania, expires in December 2012, and an agreement with a union in Mount Vernon, New York is in the renewal process.

Insurance and Risk Management

Our business exposes us to claims for product liability and warranty claims in the event our products actually or allegedly fail to perform as expected, or the use of our products results, or is alleged to result, in personal injury or death. We have various pending product liability cases against us. We vigorously defend product liability cases brought against us and actively manage our product liability exposure through research and testing, active case management and insurance. We maintain levels of insurance which we believe to be adequate. Our primary product liability insurance policies expire in January 2013.

Governmental Regulation

Our products and accessories are subject to the Federal Consumer Product Safety Act, which authorizes the CPSC to protect consumers from hazardous sporting goods and other products. The CPSC has the authority to exclude from the market certain articles which are found to be hazardous and can require a manufacturer to repurchase such goods. We maintain a quality control program for our protective equipment operations and retail products that is designed to comply with applicable laws. To date, none of our products have been deemed to be hazardous by any governmental agency. Operations at all of our facilities are subject to regulation by the Occupational Safety and Health Administration, and various other regulatory agencies. Our operations are also subject to environmental regulations and controls. While some of the raw materials used in our operations may be potentially hazardous, we have not received any material environmental citations or violations and we have not been required to spend significant amounts to comply with applicable law or to remediate conditions created by releases or disposal of hazardous materials.

Financial Information on Geographical Areas

For financial information on geographic areas, see Note 6 to our Consolidated Financial Statements contained herein.

Available Information

The Companys Annual Report on Form 10-K, Quarterly Reports on Form 10-Q, Current Reports on Form 8-K, and amendments to reports filed pursuant to Sections 13(a) and 15(d) of the Securities Exchange Act of 1934, as amended, the Exchange Act, are filed with the U.S. Securities and Exchange Commission, the SEC. Such reports and other information filed by the Company with the SEC are available free of charge on the SEC website. The public may obtain information on the operation of the Public Reference Room by calling the SEC at 1-800-SEC-0330. The SEC maintains an Internet site that contains reports, proxy and information statements and other information regarding issuers that file electronically with the SEC at www.sec.gov. The contents of these websites are not incorporated into this filing. Further, the Companys references to the URLs for these websites are intended to be inactive textual references only.

Economic conditions could adversely affect the profitability of some or all of our businesses.

Recent turmoil in the financial markets has adversely affected economic activity in the United States and other regions of the world in which we do business. Our operations and performance depend significantly on worldwide economic conditions. Many of our products are discretionary items and the purchase of these items may be easily deferrable by consumers should the financial wherewithal of consumers not justify such purchases. Uncertainty about current global economic conditions could pose a risk as some consumers and businesses could postpone spending in response to tighter credit, negative financial news and/or declines in income or asset values, which could have a material negative effect on the demand for our products and services. A decrease in the budgets of our institutional customers, such as schools could also lead to decreased spending by such customers on our products which could have a material adverse impact on our operations.

Collectability of receivables from our customers may also be adversely affected, causing an increase in aged receivables and/or a reduced collection rate. If we are forced to write off uncollectible accounts as a result, our profitability would be adversely affected. These conditions could also impair the ability of those with whom we do business to satisfy their obligations to us. A sustained decline in economic conditions could further reduce demand for our products, driving down their prices. In addition, an economic downturn could adversely affect the fiscal health of key customers or impair their ability to continue to operate during a recessionary period, which would decrease our revenues unless we are able to replace any lost business. Other factors that could influence demand include increases in fuel and other energy costs, conditions in the residential real estate and mortgage markets, labor and healthcare costs, access to credit, consumer confidence, and other macroeconomic factors affecting consumer spending behavior.

The uncertain worldwide economic environment could cause the reported financial information not to be necessarily indicative of future operating results or of future financial condition. The current economic environment continues to affect our business in a number of direct and indirect ways including: tighter inventory management by retailers; the potential for reduced profit margins due to pricing pressures and an unfavorable sales mix due to a higher concentration of sales of mid to lower price point products; changes in currency exchange rates; tightening of credit markets; and business disruptions due to difficulties experienced by suppliers and customers. In addition, slowing consumer demand for our products has caused lower net sales in the past, and this could potentially recur in the future.

Our products face intense competition, and if we cannot compete successfully in our industry, and within our product lines, we could lose market share and our business could be adversely affected.

Although we believe that we have no competitors that challenge us across all of our product lines, the markets for our products are highly competitive and we face competition from a number of sources in many of our individual product lines. Competition is primarily based on brand name recognition, product features, style, quality, price and customer service. Our baseball and softball equipment business has numerous national and international competitors, including Rawlings Sporting Goods, Worth Sports, Wilson Sporting Goods, Hillerich & Bradsby and Mizuno Corp. Our ice hockey equipment business principally competes with Bauer Hockey and Reebok-CCM Hockey. Our football equipment business competes with several companies, including Schutt Sports, Douglas Protective Equipment and Rawlings Sporting Goods and our reconditioning business competes with many regional companies. Our uniform and practice wear business also competes with national businesses such as Adidas, Nike, Russell Athletic and Under Armour. Our cycling helmet, accessories and component business competes with several national and regional competitors, including Dorel Industries, Trek Bicycle Corporation and Specialized Bicycle Components, as well as with several other international companies. In the snowsports helmet market, we compete with several domestic and international brands, including, Boeri, Carrera, Leedom, Marker, Pro-Tec, R.E.D., which is owned by The Burton Corporation, Salomon, which is owned by Amer Sports and Smith. In the powersports helmet market, we compete against such well-known brands as Arai, Shoei, HJC and KBC. Many of these competitors are significantly larger and have greater financial resources than we do.

Copyright © 2013 www.secdatabase.com. All Rights Reserved. Please Consider the Environment Before Printing This Document In order to compete effectively, we must (1) maintain the image of our brands and our reputation for quality and performance in our core markets; (2) be flexible and innovative in responding to changing market demands on the basis of brand image, style, performance and quality; (3) keep pace with rapid changes in marketing strategies; and (4) offer consumers a wide variety of high quality products at competitive prices. The purchasing decisions of consumers are highly subjective and can be influenced by many factors, such as brand image, marketing programs and product design. Several of our competitors enjoy substantial competitive advantages, including greater financial resources for competitive activities, such as sales and marketing and strategic acquisitions. The number of our direct competitors and the intensity of competition may increase as we expand into other product lines or as other companies expand into our product lines. Our ability to expand into other product lines may be inhibited by the risk of infringing intellectual property held by our competitors and, if we hold intellectual property rights in an area that competitors are expanding into, we cannot assure that we will successfully challenge such expansion. Furthermore, our inability to maintain or expand our intellectual property assets may inhibit our ability to comply with license terms concerning intellectual property assets. Our competitors may enter into business combinations or alliances that strengthen their competitive positions or prevent us from taking advantage of such combinations or alliances. Our competitors also may be able to respond more quickly and effectively than we can to new or changing opportunities, standards or consumer preferences. Our results of operations and market position may be adversely impacted by our competitors and the competitive pressures in the apparel, sporting goods and footwear industries.

Increased competition in the markets for our products may cause us to reduce our prices to retailers and customers, which would cause our gross margin to decline if we are unable to offset price reductions with comparable reductions in our product costs. If our gross margin declines, our profitability could decline and we could incur operating losses that we may be unable to fund or sustain for extended periods of time, if at all. We cannot assure you that additional competitors will not enter our existing markets or that we will be able to compete successfully against existing or new competition.

Sales of our products may be adversely affected if we cannot effectively introduce new and innovative products.

The sporting goods industry is subject to constantly and rapidly changing consumer demands based on performance features. Our success depends, in part, on our ability to anticipate, gauge and respond to these changing consumer preferences in a timely manner while preserving the authenticity and quality of our brands. We believe the historical success of our business has been attributable, in part, to the introduction of products, which represent an improvement in performance over products then available in the market. Our future success will depend, in part, upon our continued ability to adapt to new materials, and to develop and introduce innovative products in the sports equipment and accessories markets in which we compete. Our success is also dependent on our ability to prevent competitors from copying our innovative products. We may not be able to obtain intellectual property protection for an innovative product and, even if we do, we cannot assure that we would be successful in challenging a competitors attempt to copy that product. Furthermore, successful product designs can be displaced by other product designs introduced by competitors which shift market preferences in their favor. Our competitors may obtain intellectual property protection for superior products that would preclude us from offering the same or similar features. Our competitive position could be particularly harmed if a competitors proprietary product feature became the industry standard. If we do not introduce successful new products or our competitors introduce products that are superior to ours, our customers may purchase products from our competitors, which will result in a decrease in our net sales and excess inventory levels, and will adversely affect our business.

As is typical with new products, market acceptance of new designs and products we may introduce is subject to uncertainty. In addition, we generally make decisions regarding product designs significantly in advance of the time when consumer acceptance can be measured. If trends shift away from our products, or if we misjudge the market for our product lines, we may be faced with significant amounts of finished goods inventory or other conditions which could have a material adverse effect on our results of operations.

Copyright © 2013 www.secdatabase.com. All Rights Reserved. Please Consider the Environment Before Printing This Document The failure of new product designs or new product lines to gain market acceptance could also adversely affect our business and the image of our brands. Achieving market acceptance for new products may also require substantial marketing efforts and expenditures to expand consumer demand. These requirements could strain our management, financial and operational resources. If we do not continue to develop innovative products that provide better design and performance attributes than the products of our competitors and that are accepted by consumers, or if our future product lines misjudge consumer demands, we may lose consumer loyalty, which could result in a decline in our revenues and market share.

The success of our business is dependent on our affiliation with athletes, athletic associations and leagues.

We sponsor numerous professional athletes in baseball, cycling, ice hockey, action sports, snowsports and powersports who endorse and use our products, including our Easton branded baseball equipment and ice hockey sticks and our Bell and Giro branded helmets. We believe these sponsorships contribute to the authenticity and image of our brands. In addition, under our agreement with the NFL, the Riddell name may appear on the front of and on the chin strap of all of our football helmets used in NFL play, and no other brand name may appear on a football helmet, face mask or chin strap used in NFL play. Also, our equipment is used by numerous Division I NCAA sports teams. We believe that these relationships increase sales of our products by enhancing the visibility of our brands and related trademarks and exposure of our branded products to other customers and, in certain instances, provide us with a significant competitive advantage. If we were to lose the benefits of these relationships, or if they were to deteriorate in a material way, our business and results of operations, financial condition and cash flow could be adversely affected.

We cannot assure you that we will be able to maintain our existing relationships with these professional athletes or leagues in the future or that we will be able to attract new athletes or leagues to endorse our products. Larger companies with greater access to capital for athlete or league sponsorship may in the future increase the cost of sponsorship to levels we may choose not to match. If this were to occur, our sponsored athletes or leagues may terminate their relationships with us and endorse the products of our competitors and we may be unable to obtain endorsements from other, comparable athletes or leagues.

Sales of our products will be adversely affected if we cannot satisfy the standards established by testing and athletic governing bodies.

Our products are designed to satisfy the standards established by a number of regulatory and testing bodies, including the Department of Transportation, the CPSC, HECC, CSA, NOCSAE and the Snell Memorial Foundation, as well as by athletic organizations and governing bodies, including the NFL, NHL, MLB, NCAA and Little League Baseball and Softball. In addition, conferences within these athletic organizations have their own standards that can be stricter than the standards promulgated by the organizations themselves. For certain products, we rely on our in-house testing equipment to ensure that such products comply with these standards. We cannot assure you that our future products will satisfy these standards, that our in-house testing equipment will produce the same results as the equipment used by the applicable testing bodies, athletic organizations and governing bodies or that existing standards will not be altered in ways that adversely affect our brands and the sales of our products, which has occurred in the past. Any failure to comply with applicable standards could have a material adverse effect on our business.

The loss of one or more key customers could result in a material loss of revenues.

Our customers do not have any contractual obligations to purchase our products in the future. For the fiscal year ended December 31, 2011, our top 10 customers collectively accounted for approximately 34.8% of our net sales, and Wal-Mart, our largest customer, accounted for approximately 13.9% of our net sales. We face the risk that one or more of these key customers may not increase their business with us as we expect, may significantly decrease their business with us, may negotiate lower prices or may terminate their relationship with us altogether. The failure to increase our sales to these customers would have a negative impact on our growth prospects and any decrease or loss of these key customers business could result in a material decrease in our net sales and net income. In addition, some of our customers in the retail industry are experiencing consolidation, contractions and financial difficulties. A large portion of our sales are to sporting goods retailers. Of these, many of our smaller retailers and some larger retailers are not strongly capitalized. Adverse conditions in the sporting goods retail industry can adversely impact the ability of retailers to purchase our products, or could lead retailers to request credit terms that would adversely affect our cash flow and involve significant risks of nonpayment. As a result, we may experience a loss of customers or the uncollectability of accounts receivable in excess of amounts against which we have reserved.

The materials used by us, our suppliers and our manufacturers involve raw materials, including carbon-fiber, aluminum and petroleum-based products. Significant price fluctuations or shortages in petroleum or other raw materials, or the introduction of new and expensive raw materials, could have a material adverse effect on our cost of goods sold, operations and financial condition.

The seasonality of our sales may have an adverse effect on our operations and our ability to service our debt.

Our business is subject to seasonal fluctuations. This seasonality requires that we effectively manage our cash flows over the course of the year. If our sales were to fall substantially below what we would normally expect during particular periods, our annual financial results would be adversely impacted and our ability to service our debt may also be adversely affected. In addition, quarterly results may vary from year to year due to the timing of new product introductions, major customer shipments, inventory holdings of significant customers, adverse weather conditions and the sales mix of products sold. Accordingly, comparisons of quarterly information from our results of operations may not be indicative of our ongoing performance.

Our success is dependent on our ability to protect our worldwide intellectual property rights and if we are unable to enforce and protect our intellectual property rights, our competitive position may be harmed.

We rely on a combination of patent, trademark, and trade secret laws in the United States and other jurisdictions and contractual restrictions, such as confidentiality agreements, to protect certain aspects of our business. We also enter into invention assignment agreements with our employees and consultants. However, while we have selectively pursued patent and trademark protection in the United States, Europe, and Canada; in some countries we have not perfected important patent and trademark rights. Our success depends in part on our ability to protect our trademarks and patents from unauthorized use by others. If substantial unauthorized use of our intellectual property rights occurs, we may incur significant financial costs in prosecuting actions for infringement of our rights, as well as the loss of efforts by engineers and managers who must devote attention to these matters. We cannot be sure that our patents and trademarks, or other protections such as confidentiality, will be adequate to prevent imitation of our products and technology by others. We may be unable to prevent third parties from using our intellectual property without our authorization, particularly in countries where we have not perfected our proprietary rights, where the laws or law enforcement practices do not protect our proprietary rights as fully as in the United States, or where intellectual property protection is otherwise limited or unavailable. In some foreign countries where intellectual property laws or law enforcement practices do not protect our proprietary rights as fully as in the United States, third-party manufacturers may be able to manufacture and sell imitation products and diminish the value of our brands. If we fail to obtain patent and trademark protection, maintain our existing patent and trademark rights, or prevent substantial unauthorized use of our technology and brands, we risk the loss of our intellectual property rights and competitive advantages we have developed, causing us to lose net sales and harm our business. Accordingly, we devote substantial resources to the establishment and protection of our trademarks, and patents and continue to evaluate the registration of additional trademarks, patents and service marks, as appropriate. We cannot guarantee that any of our pending applications will be approved by the applicable governmental authorities. Moreover, even if the applications will be approved, third parties may seek to oppose or otherwise challenge these registrations.

We cannot assure that any third party patents and trademarks for which we have obtained licenses are adequately protected to prevent imitation by others. If those third party owners fail to obtain or maintain adequate patent and trademark protection or prevent substantial unauthorized use of the licensed intellectual property, we risk the loss of our rights under the third party intellectual property and competitive advantages we have developed based on those rights.

We cannot assure that our actions taken to establish and protect our technology and brands will be adequate to prevent others from seeking to block sales of our products or to obtain monetary damages, based on alleged violation of their patents, trademarks or other proprietary rights. In addition, our competitors have obtained and may continue to obtain patents on certain features of their products, which may prevent us from offering such features on our products, may subject us to patent litigation, and in turn, could result in a competitive disadvantage to us. Moreover, third parties may independently develop technology or other intellectual property that is comparable with or similar to our own, and we may not be able to prevent their use of it.

Copyright © 2013 www.secdatabase.com. All Rights Reserved. Please Consider the Environment Before Printing This Document Our best known brands and branded products include Easton, Bell, Giro and Riddell. We believe that these trademarked brands are a core asset of our business and are of great value to us. If we lose the use of a product name, our efforts spent building that brand will be lost and we will have to rebuild a brand for that product, which we may or may not be able to do. We also note that in connection with our acquisition of Easton, we agreed that certain affiliates of one of Parents members, Jas. D. Easton, Inc., have the right to continue to use the Easton brand name in certain product areas, although we retain ownership of the Easton mark. Although we do not intend to compete with these entities in such product areas, we also do not control such entities and therefore can make no assurances as to how they will conduct business under the Easton brand name.

Our products may infringe the intellectual property rights of others, which may cause us to incur unexpected costs or prevent us from selling our products.

From time to time, third parties have challenged our patents, trademark rights and branding practices, or asserted intellectual property rights that relate to our products and product features. We may be required to defend such claims in the future, which, whether or not meritorious, could result in substantial costs and diversion of resources and could negatively affect our results of operations or competitive position. Should we be found liable for infringement of the intellectual property rights of others, we may be required to enter into licensing agreements (if available on acceptable terms or at all), pay damages, or cease making certain of our products. We may also need to redesign or rename some of our products to avoid future infringement liability. For example, in 2010 we received an unfavorable judgment against us in relation to infringement of a hockey skate patent, which is currently in the damages phase of the proceedings. However, we do not expect that any infringement damages award will have a material adverse effect on our financial results. Moreover, our involvement in litigation against third parties based on infringement of our intellectual property rights presents some risk that our intellectual property rights could be challenged and invalidated. Any of the foregoing could cause us to incur significant costs and prevent us from manufacturing or selling certain of our products.

We are subject to product liability, warranty and recall claims and our insurance coverage may not cover such claims.

Our business exposes us to warranty claims and claims for product liability in the event products manufactured, designed or reconditioned by us actually or allegedly fail to perform as expected, or the use of these products results, or is alleged to result, in personal injury or death. We have various pending product liability cases against us. We vigorously defend or attempt to settle product liability cases brought against us. However, there is no assurance that we can successfully defend or settle all such cases. We believe that we are not currently subject to any material product liability claims not covered by insurance, although the ultimate outcome of these and future claims cannot presently be determined. Management obtains an actuarial analysis and has established an accrual for probable losses based on this analysis, which considers, among other factors, our Companys previous claims history and available information on alleged claims. However, due to the uncertainty involved with estimates, actual results could vary substantially from those estimates. Because product liability claims are part of the ordinary course of our business, we maintain product liability insurance, which we believe is adequate. Our insurance policies provide coverage against claims resulting from alleged injuries arising from our products sustained during the respective policy periods, subject to policy terms and conditions. The primary portion of our product liability coverage is written under a policy expiring in January 2013 with a $2,000 limit per occurrence excess of a $1,000, $50 and $500 self-insured retention for helmets, soft goods and all other products, respectively. Our first layer excess policy is written under a liability policy with a limit of $25,000 excess of $3,000 expiring in January 2013. We also carry a second layer excess liability policy providing an additional limit of $15,000 excess of $28,000 expiring January 2013, and a third layer excess liability policy providing an additional limit of $10,000 excess of $43,000 expiring January 2013, for a total limit of $53,000. We cannot assure you that this coverage will remain available in the future, that our insurers will be financially viable when payment of a claim is required, that the cost of such insurance will not increase, or that this insurance will ultimately prove to be adequate under our various policies. Furthermore, future rate increases might make insurance uneconomical for us to maintain. These potential insurance problems or any adverse outcome in any liability suit could create increased expenses which could harm our business. We are unable to predict the nature of product liability claims that may be made against us in the future with respect to injuries, diseases or other illnesses resulting from the use of our products or the materials incorporated in our products.

Copyright © 2013 www.secdatabase.com. All Rights Reserved. Please Consider the Environment Before Printing This Document With regard to warranty claims, our actual product warranty obligation could materially differ from historical rates, which would oblige us to revise our estimated warranty liability accordingly. Adverse determinations of material product liability and warranty claims made against us could have a material adverse effect on our financial condition and could harm our reputation, reducing the success of our business.

In addition, if any of our products are, or are alleged to be defective, we may be required to or voluntarily participate in a recall of that product. For example, in 2010 we conducted a voluntary recall of a single bicycle stem product line as a preventative measure. Although we have never had a material recall, if we were to recall one or more of our material products, it would be a substantial cost to us and our relationships with our customers could be irreparably harmed and could materially and adversely affect our business.

In addition to the matters discussed in the preceding paragraphs, our Company is, from time to time, a party to various other legal claims and actions incidental to its business, including, without limitation, employment-related and intellectual property infringement claims. Management believes that none of these claims or actions, either individually or in the aggregate, is material to its business or financial condition.

Our international sourcing and sales network subjects us to additional risks and costs, which may differ in each country in which we do business and may cause our profitability to decline.

During the fiscal year ended December 31, 2011, we purchased approximately $314.8 million of finished goods and raw materials from international third-party suppliers. A significant amount of these purchases were from vendors in Asia, the majority of which were located in mainland China. Most of what we purchase in Asia is finished goods rather than raw materials. We expect to increase our international sourcing in the future. In addition, a significant percentage of our net sales are to customers outside the United States, including Canada and Europe. Consequently, our business is subject to the risks generally associated with doing business abroad. We cannot predict the effect of various factors in the countries in which we sell our products or where our suppliers are located, including, among others: (1) recessionary trends in international markets; (2) legal and regulatory changes and the burdens and costs of our compliance with a variety of laws, including trade restrictions and tariffs; (3) difficulties in enforcing intellectual property rights; (4) increases in transportation costs or delays; (5) work stoppages and labor strikes; (6) fluctuations in exchange rates; (7) political unrest, terrorism and economic instability, and (8) limitations on repatriation of earnings. If any of these or other factors were to render the conduct of our business in a particular country undesirable or impractical, our business and financial condition could be adversely affected.

Our business is also subject to the risks associated with the enactment of additional United States or foreign legislation and regulations relating to exports or imports, including quotas, duties, taxes or other charges or restrictions. If imposed, such legislation and regulations could have a material adverse effect on our net sales and profitability.

We also may be adversely affected by significant fluctuations in the value of the United States dollar relative to other currencies. We generally purchase goods made by foreign manufacturers in United States dollars, and therefore, changes in the value of the United States dollar can have an immediate effect on the cost of our purchases. If we experience increased costs as a result of exchange rate fluctuations and we are unable to increase our prices to a level sufficient to compensate for such increased costs, our gross margins would decline and we could become less price-competitive with companies who manufacture their products in the United States.

Copyright © 2013 www.secdatabase.com. All Rights Reserved. Please Consider the Environment Before Printing This Document Changes in foreign currency exchange or interest rates could affect our revenues and costs.

We are exposed to gains and losses resulting from fluctuations in foreign currency exchange rates relating to certain sales, royalty income, and product purchases of our international subsidiaries that are denominated in currencies other than their functional currencies. We are also exposed to foreign currency gains and losses resulting from domestic transactions that are not denominated in United States dollars, and to fluctuations in interest rates related to our variable rate debt. In some cases, as part of our risk management strategies, we may choose not to hedge our exposure to foreign currency exchange rate changes, or we may choose to maintain variable interest rate debt. If we misjudge these risks, there could be a material adverse effect on our operating results and financial position. Furthermore, we are exposed to gains and losses resulting from the effect that fluctuations in foreign currency exchange rates have on the reported results in our consolidated financial statements due to the translation of the statements of income and balance sheets of our international subsidiaries into United States dollars. Approximately 12.3% of our net sales in the fiscal year ended December 31, 2011 were denominated in foreign currencies and subject to exchange rate fluctuation risk. The reported revenues and expenses of our international subsidiaries would decrease if the United States dollar increased in value in relation to other currencies, including, the Canadian dollar, British pound, Euro and Taiwan dollar. Finally, changes in exchange rates for foreign currencies may reduce international demand for our products, increase our labor or supply costs in non-United States markets, or reduce the United States dollar value of revenue we receive from other markets. These and other economic factors could have an adverse effect on demand for our products and services and on our financial condition and operating results.

Our results of operations may suffer if we are not able to adequately forecast demand for our products.

To reduce purchasing costs and ensure supply, we place orders with our suppliers far in advance of the time period we expect to deliver our products. However, a large portion of our products are sold into consumer markets that are difficult to accurately forecast. If we fail to accurately forecast demand for our products, we may experience excess inventory levels or inventory shortages. Factors that could affect our ability to accurately forecast demand for our products include:

changes in consumer demand for our products or the products of our competitors;

new product introductions by our competitors;

failure to accurately forecast consumer acceptance of our products;

adverse weather during key sporting seasons;

unanticipated changes in general market conditions or other factors, which may result in cancellations of advance orders or a reduction or increase in the rate of reorders placed by retailers;

weakening of economic conditions or consumer confidence in future economic conditions, which could reduce demand for discretionary items, such as our products;

terrorism or acts of war, or the threat thereof, which could adversely affect consumer confidence and spending or interrupt production and distribution of products and raw materials; and

general economic conditions.

Inventory levels in excess of consumer demand may result in inventory write-downs and the sale of excess inventory at discounted prices, which could significantly harm our operating results and impair the value of our brands. Inventory shortages may result in unfulfilled orders, negatively impact customer relationships, diminish brand loyalty and result in lost net sales, any of which could harm our business.

Copyright © 2013 www.secdatabase.com. All Rights Reserved. Please Consider the Environment Before Printing This Document Many of our products or components of our products are provided by a limited number of third-party suppliers and manufacturers and, because we have limited control over these parties, we may not be able to obtain quality products on a timely basis or in sufficient quantities.

We rely on a limited number of suppliers and manufacturers for many of our products and for many of the components in our products. During the fiscal year ended December 31, 2011, approximately 28.3% of our raw materials for the products we manufacture were sourced from international suppliers. In addition, a substantial portion of our products are manufactured by third-party manufacturers, and during the fiscal year ended December 31, 2011, approximately 180 international manufacturers produced approximately 92.8% of our purchased finished goods. We do not generally maintain long-term contracts with our third-party suppliers and manufacturers, and we compete with other businesses for raw materials, production capacity and capacity within applicable import quotas.

Should our current third-party manufacturers become incapable of meeting our manufacturing requirements in a timely manner or cease doing business with us for any reason, our business and financial condition could be adversely affected. If we experience significant increased demand, or need to replace an existing manufacturer, there can be no assurance that additional supplies of raw materials or additional manufacturing capacity will be available when required on terms that are acceptable to us, or at all, or that any supplier or manufacturer would allocate sufficient capacity to us in order to meet our requirements. In addition, should we decide to transition existing in-house manufacturing to third-party manufacturers, the risk of such a problem could increase. Even if we are able to expand existing or find new manufacturing sources, we may encounter delays in production and added costs as a result of the time it takes to train our suppliers and manufacturers in our methods, products and quality control standards. For example, we experienced quality issues when the manufacturing of composite baseball and softball bats was outsourced, which led to an increase in returns of defective bats in 2008. The issue was successfully addressed by working with the supplier in Asia to improve process controls to allow for the identification and resolution of quality issues prior to products being sold into the marketplace. Any material delays, interruption or increased costs in the supply of raw materials or manufacture of our products could have an adverse effect on our ability to meet customer demand for our products and result in lower revenues and net income both in the short and long term.

In addition, there can be no assurance that our suppliers and manufacturers will continue to provide raw materials and to manufacture products that are consistent with our standards and that comply with all applicable laws and regulations. We have occasionally received, and may in the future receive shipments of products that fail to conform to our quality control standards. In that event, unless we are able to obtain replacement products in a timely manner, we risk the loss of net sales resulting from the inability to sell those products and could incur related increased administrative and shipping costs. If we are unable to sell products, we could lose trademark registrations applicable to those products for failure to make use of the mark. Any violation of our policies or any applicable laws and regulations by our suppliers or manufacturers could interrupt or otherwise disrupt our sourcing, adversely affect our reputation or damage our brand image. While we do not control these suppliers, manufacturers or licensees or their labor practices, negative publicity regarding the production methods of any of our suppliers, manufacturers or licensees could adversely affect our reputation and sales and force us to locate alternative suppliers, manufacturing sources or licensees.

The success of our business is dependent upon our information systems.

Our ability to effectively manage and maintain our inventory, process transactions, ship products to our customers on a timely basis and maintain cost-efficient operations is dependent on information technology and on our information systems. We continue to plan for our long-term growth by investing in operations management and infrastructure. We may experience difficulties in operating our business under our current ERP system, any of which could disrupt our operations, including our ability to timely ship and track product orders to customers, project inventory requirements, manage our supply chain and otherwise adequately service our customers.

Copyright © 2013 www.secdatabase.com. All Rights Reserved. Please Consider the Environment Before Printing This Document If we fail to maintain an effective system of internal controls, we may not be able to accurately report our financial results. As a result, current and potential investors could lose confidence in our financial reporting.

Effective internal controls are necessary for us to provide reliable financial reports. If we cannot provide reliable financial reports, our business and operating results could be harmed. We have in the past discovered, and may in the future discover, areas of our internal controls that need improvement.

Any failure to implement and maintain the improvements in the controls over our financial reporting, or difficulties encountered in the implementation of these improvements in our controls, could cause us to fail to meet our reporting obligations. Any failure to improve our internal controls to address an identified weakness could also cause investors to lose confidence in our reported financial information, which could have a negative impact on our Company. There can be no assurance that we will not discover weaknesses in our internal control over financial reporting in the future.

Our current executive officers, management and key employees are critical to our success, and the loss of any of these individuals could harm our business, brands and image.

The success of our business is dependent upon the management and leadership skills of Paul Harrington, our President and Chief Executive Officer, members of our senior management team and other key personnel, including certain members of our product development team. Competition for these individuals talents is intense, and we may not be able to attract and retain a sufficient number of qualified personnel in the future. Our Company does not currently maintain any key man insurance coverage, and the loss of any such personnel or the inability to attract and retain key personnel could delay the development and introduction of new products, harm our ability to sell our products, damage the image of our brands and prevent us from executing our business strategy.

We may not succeed in integrating an acquisition into our operations, which could have a material adverse effect on our operations, results of operations and financial condition.

We may continue to expand our business and operations through strategic acquisitions. The value of our Company will be affected by our ability to achieve the benefits expected from any strategic acquisitions we may undertake in the future. Achieving these benefits will depend in part upon meeting the challenges inherent in the successful combination of these enterprises. In particular, we may have difficulty and may incur unanticipated expenses related to integrating management, personnel and operations generally. Such an acquisition may also cause a substantial diversion of our managements attention from day-to-day operations, and the assumption of liabilities of an acquired business, including unforeseen liabilities. Additionally, we may not be able to achieve any anticipated cost savings for many reasons, including an inability to take advantage of expected tax savings. Failure to integrate these acquisitions successfully may have a material adverse effect on our business, results of operations and financial condition.

Employment related matters, such as unionization, may affect our profitability.

As of December 31, 2011, approximately 50 of our 2,460 employees were unionized. Although we have good labor relations with these unionized employees, we have little control over union activities and could face difficulties in the future. Our collective bargaining agreement with a union in York, Pennsylvania covering approximately 40 employees expires in December 2012. Our collective bargaining agreement with a union in Mount Vernon, New York covering approximately 10 employees is in the renewal process. Labor organizing activities could result in additional employees becoming unionized. We cannot assure you that we will be able to negotiate new collective bargaining agreements on similar or more favorable terms or that we will not experience work stoppages or other labor problems in the future at our unionized and non-union facilities. We could experience a disruption of our operations or higher ongoing labor costs, which could have an adverse effect on our business and financial condition.

In addition, labor disputes at our suppliers or manufacturers create significant risks for our business, particularly if these disputes result in work slowdowns, lockouts, strikes or other disruptions during our peak importing or manufacturing seasons, and could have an adverse effect on our business, potentially resulting in cancelled orders by customers, unanticipated inventory accumulation or shortages and reduced net revenues and net income.

Acts of war, terrorism or epidemics may have an adverse effect on the economy generally, and more specifically on our business. Among various other risks, such occurrences have the potential to significantly decrease consumer spending on leisure products and activities, adversely impact our ability to consummate future debt or equity financings and negatively affect our ability to manufacture, source and deliver our products in a timely manner.

We may be subject to potential environmental liability.

We are subject to many federal, state and local requirements relating to the protection of the environment, and we have made and will continue to make expenditures to comply with such requirements. Past and present manufacturing operations subject us to environmental laws that regulate the use, handling and contracting for disposal or recycling of hazardous or toxic substances, the discharge of particles into the air and the discharge of processed wastewaters into sewers. We believe that our operations are in substantial compliance with these laws and regulations and we do not believe that future compliance with such laws and regulations will have a material adverse effect on our results of operations, financial condition and cash flow. If environmental laws become more stringent, our capital expenditures and costs for environmental compliance could increase. Under applicable environmental laws we may also become liable for the remediation of contaminated properties, including properties currently or previously owned, operated or acquired by us and properties where wastes generated by our operations were disposed. Such liability can be imposed regardless of whether we were responsible for creating the contamination. We do not believe that any of our existing remediation obligations, including at third-party sites, will have a material adverse effect on our financial results. However, due to the possibility of unanticipated factual or regulatory developments, the amount and timing of future environmental expenditures could vary substantially from those currently anticipated and could have a material adverse effect on our financial results.

Our failure to comply with trade and other regulations could lead to investigations or actions by government regulators and negative publicity.

The labeling, distribution, importation and sale of our products are subject to extensive regulation by various federal agencies, including the Federal Trade Commission, or FTC, CPSC, and state attorneys general in the United States, as well as by various other federal, state, provincial, local and international regulatory authorities in the countries in which our products are manufactured, distributed or sold. If we fail to comply with those regulations, we could become subject to significant penalties or claims, which could harm our results of operations or our ability to conduct our business. In addition, the adoption of new regulations or changes in the interpretation of existing regulations may result in significant compliance costs or discontinuation of product sales and may impair the marketing of our products, resulting in significant loss of net sales. In 2011, a U.S. Senator requested that the FTC investigate football helmet manufacturers alleged misleading safety claims and deceptive practices in the selling of new football helmets and reconditioning of used ones. While our Riddell brand is specifically mentioned in the investigation request, we believe any allegations against us are unfounded and unfair. If such FTC investigations are initiated, they remain confidential. In all circumstances, we will work with the FTC and the Senators office to respond to their concerns.

Copyright © 2013 www.secdatabase.com. All Rights Reserved. Please Consider the Environment Before Printing This Document The value of our brand and sales of our products could be diminished if we, the athletes who use our products or the sport categories in which we compete, are associated with negative publicity.

We sponsor a variety of athletes and feature those athletes in our advertising and marketing materials, and many athletes and teams use our products, including those teams or leagues for which we are an official supplier. Actions taken by athletes, teams or leagues associated with our products that harm the reputations of those athletes, teams or leagues could also harm our brand image and result in a material decrease in our net sales, net income, and cash flows which could have a material adverse effect on our financial condition and liquidity. We may also select athletes who are unable to perform at expected levels or who are not sufficiently marketable, which could also have an adverse effect on our business. If we are unable in the future to secure prominent athletes and arrange athlete endorsements of our products on terms we deem to be reasonable, we may be required to modify our marketing platform and to rely more heavily on other forms of marketing and promotion, which may not prove to be as effective or may result in additional costs. Also, union strikes or lock-outs affecting play could negatively impact the popularity of a sport, which could have a material adverse effect on our net sales of products used in that sport. Furthermore, negative publicity resulting from severe injuries or death occurring in the sports in which our products are used could negatively affect our reputation and result in restrictions or bans on the use of our products. For example, national media recently reported on the results of several scientific studies suggesting that concussive injuries associated with football may increase rates of various physical and mental disabilities among players. In response to these reports, the House Judiciary Committee held hearings to discuss the NFLs efforts to protect players from head injury. If the popularity of football among players and fans were to decrease due to these risks or the associated negative publicity, sales of certain of our products could decrease and it could have a negative impact on our net sales, profitability and operating results. In addition, we could become exposed to additional claims and litigation relating to the use of our products and our reputation may be adversely affected by such claims, whether or not successful, including potential negative publicity about our products.

In addition, in response to injuries or death caused by balls hit off different types of non-wood bats, some state legislatures and other national and local governing bodies have introduced bills and rules to ban certain types of non-wood bats from use in youth and adult sports. If we are unable to adapt our products to the standards that may or have already been developed, it could have a negative impact on our operating results.

Recent turmoil in the financial markets could increase our cost of borrowing and impede access to or increase the cost of financing our operations and investments.

United States and global credit and equity markets have recently undergone significant disruption, making it difficult for many businesses to obtain financing on acceptable terms. In addition, equity markets are continuing to experience rapid and wide fluctuations in value. If these conditions continue or worsen, our cost of borrowing may increase and it may be more difficult to obtain financing for our operations or investments. In addition, our borrowing costs can be affected by short and long-term debt ratings assigned by independent rating agencies which are based, in significant part, on our performance as measured by credit metrics such as interest coverage and leverage ratios. A decrease in these ratings could increase our cost of borrowing and/or make it more difficult for us to obtain financing in the future. The disruption in the global financial markets has also impacted some of the financial institutions with which we do business and may impair the ability of banks to honor draws on the ABL Facility (as defined below). A sustained decline in the financial stability of financial institutions could affect our ability to secure credit-worthy counterparties for our interest rate and foreign currency hedging programs and could affect our ability to settle existing contracts.

There could be a number of other effects from the disruption of the credit markets on our business, including insolvency of key suppliers resulting in product delays; inability of customers, including channel partners, to obtain credit to finance purchases of our products; potential insolvencies of such customers or channel partners; and failure of derivative counterparties and other financial institutions negatively impacting our treasury operations.

We have a significant amount of indebtedness. As of December 31, 2011, we had total indebtedness of approximately $392.1 million (including $350.0 million of our 9.750% senior secured notes due 2016, or the Notes, $42.0 million under our senior secured asset-based revolving credit facility, or ABL Facility, and $0.1 million of capital lease obligations). For more information on our indebtedness, see Item 7 Managements Discussion and Analysis of Financial Condition and Results of Operations Liquidity and Capital Resources.

Subject to the limits that are contained in certain of the documents governing our indebtedness, we may be able to incur substantial additional debt from time to time to finance working capital, capital expenditures, investments or acquisitions, or for other purposes. If we do so, the risks related to our high level of debt could intensify. Specifically, our high level of debt could have important consequences, including the following:

making it more difficult for us to satisfy our obligations with respect to the Notes and our other debt;

limiting our ability to obtain additional financing to fund future working capital, capital expenditures, acquisitions or other general corporate requirements;

requiring a substantial portion of our cash flows to be dedicated to debt service payments instead of other purposes, thereby reducing the amount of cash flows available for working capital, capital expenditures, acquisitions and other general corporate purposes;

increasing our vulnerability to general adverse economic and industry conditions;

exposing us to the risk of increased interest rates as certain of our borrowings are at variable rates of interest;

limiting our flexibility in planning for and reacting to changes in the industry in which we compete;

inhibiting our ability to pay fees and invest resources to maintain or expand our portfolio of intellectual property assets or to comply with license terms concerning intellectual property assets;

placing us at a disadvantage compared to other less leveraged competitors; and

increasing our cost of borrowing.

Certain of the documents governing our indebtedness contain financial and other restrictive covenants that limit our ability to engage in activities that may be in our long-term best interests. Our failure to comply with those covenants could result in an event of default which, if not cured or waived, could result in the acceleration of all of our debt. In addition, our indirect parent company, EB Sports, has entered into the New Holdco Facility (as defined below) pursuant to which it has borrowed $108.3 million. Neither our Company nor any of our subsidiaries have guaranteed or are otherwise obligated to repay such indebtedness or any interest that accrues thereon. However, given that EB Sports controls RGB, our direct parent, EB Sports has the ability, subject to the terms of the ABL Facility and any other agreements which limit our ability to declare and pay dividends, to obtain money from us and our subsidiaries to fund its obligations under such loan. Borrowings under the New Holdco Facility are secured by a pledge of all capital stock of RBG and our Company. This credit agreement is more fully described in Item 13 Certain Relationships and Related Transactions, and Director Independence.

Copyright © 2013 www.secdatabase.com. All Rights Reserved. Please Consider the Environment Before Printing This Document Despite current indebtedness levels, we may still be able to incur substantially more debt. This could further exacerbate the risks associated with our substantial leverage.

We may be able to incur significant additional indebtedness in the future. Although certain of the documents governing our indebtedness contain restrictions on the incurrence of additional indebtedness, these restrictions are subject to a number of qualifications and exceptions and the additional indebtedness incurred in compliance with the documents governing our indebtedness could be substantial. These restrictions do not prevent us from incurring obligations that do not constitute indebtedness under the terms of the documents governing our indebtedness. In addition, the ABL Facility provided for unused commitments of approximately $190.9 million as of December 31, 2011. Furthermore, subject to availability under a borrowing base and certain other conditions, we may increase our borrowing availability under the ABL Facility by up to an additional $50.0 million. See Item 7 Managements Discussion and Analysis of Financial Condition and Results of Operations Liquidity and Capital Resources. To the extent new debt is added to our and our subsidiaries current debt levels, the substantial leverage risks described above would increase.

The terms of certain of the documents governing our indebtedness, may restrict our current and future operations, particularly our ability to respond to changes or to take certain actions.

Certain of the documents governing our indebtedness contain a number of restrictive covenants that impose significant operating and financial restrictions on us and may limit our ability to engage in activities that may be in our long-term best interests, including, among other things, restrictions in the ABL Facility and the other documents governing our indebtedness on our ability to:

incur additional indebtedness and issue capital stock;

pay dividends or make other distributions or repurchase or redeem our capital stock;

make certain loans and investments;

enter into sale and leaseback transactions;

transfer or sell assets;

incur certain liens;

enter into transactions with affiliates;

alter the businesses we conduct;

enter into agreements restricting our subsidiaries ability to pay dividends; and

consolidate, merge or sell all or substantially all of our assets.

Under the ABL Facility, there are limitations on our ability to incur the full $250.0 million of commitments. Our availability is limited to the lesser of a borrowing base and $250.0 million (and, in the case of the Canadian borrowers, the lesser of a Canadian based borrowing base and $30.0 million, the size of the Canadian sub-facility). The borrowing base for our and our Canadian borrowers is and will be calculated on a monthly (or more frequent under certain circumstances) valuation of our inventory, accounts receivable and certain cash balances. As a result, our access to credit under the ABL Facility will potentially be subject to significant fluctuation, depending on the value of the applicable borrowing base eligible assets as of any measurement date. In addition, if our excess gross availability falls below a specified percentage of our gross borrowing base, we will be required to satisfy and maintain on a monthly basis, a minimum fixed charge coverage ratio test. Our ability to meet the required minimum fixed charge coverage ratio can be affected by events beyond our control, and we cannot assure you that we will meet this ratio. Moreover, the ABL Facility provides the administrative agent considerable discretion to impose reserves or availability blocks, which could materially impair the amount of borrowings that would otherwise be available to us and the Canadian borrowers. There can be no assurance that the administrative agent under the ABL Facility will not impose such actions during the term of the ABL Facility and further, was it to do so, the resulting

Copyright © 2013 www.secdatabase.com. All Rights Reserved. Please Consider the Environment Before Printing This Document impact of this action could materially and adversely impair our ability to make interest payments on the Notes. The inability to borrow under the ABL Facility may adversely affect our and our Canadian subsidiaries liquidity, financial position and results of operations. As of December 31, 2011, we estimated our borrowing capacity under the ABL Facility would have been approximately $190.9 million, after giving effect to outstanding borrowings of $42.0 million, other customary reserves and $3.3 million of outstanding letters of credit. Because the borrowing capacity under the ABL Facility depends, in part, on inventory, accounts receivable and other assets that fluctuate from time to time, such amount may not reflect actual borrowing capacity.

A breach of the covenants under certain of the documents governing our indebtedness could result in an event of default under the applicable documents governing our indebtedness. Such default may allow the creditors to accelerate the related debt and may result in the acceleration of any other debt to which a cross-acceleration or cross-default provision applies. In addition, an event of default under the ABL Facility would permit the lenders under the ABL Facility to terminate all commitments to extend further credit under that facility. Furthermore, if we were unable to repay the amounts due and payable under the ABL Facility, those lenders could proceed against the collateral granted to them to secure that indebtedness. In the event our lenders or noteholders accelerate the repayment of our borrowings, we cannot assure that we and our subsidiaries would have sufficient assets to repay such indebtedness. As a result of these restrictions, we may be:

limited in how we conduct our business;

unable to raise additional debt or equity financing to operate during general economic or business downturns; or

unable to compete effectively or to take advantage of new business opportunities.

These restrictions may affect our ability to grow in accordance with our plans.

Our variable rate indebtedness will subject us to interest rate risk, which could cause our indebtedness service obligations to increase significantly.

Borrowings under the ABL Facility are at variable rates of interest and expose us to interest rate risk. If interest rates increase, our debt service obligations on the variable rate indebtedness would increase even though the amount borrowed remained the same, and our net income and cash flows, including cash available for servicing our indebtedness, would correspondingly decrease.

We may not be able to generate sufficient cash to service all of our indebtedness and may be forced to take other actions to satisfy our obligations under our indebtedness, which may not be successful.

Our ability to make scheduled payments on or to refinance our debt obligations depends on our financial condition and operating performance, which are subject to prevailing economic and competitive conditions and to certain financial, business and other factors beyond our control. We may be unable to maintain a level of cash flows from operating activities sufficient to permit us to pay the principal, premium, if any, and interest on our indebtedness.

If our cash flows and capital resources are insufficient to fund our debt service obligations, we could face substantial liquidity problems and could be forced to reduce or delay investments and capital expenditures or to dispose of material assets or operations, seek additional debt or equity capital or restructure or refinance our indebtedness. We may not be able to effect any such alternative measures, if necessary, on commercially reasonable terms or at all and, even if successful, such alternative actions may not allow us to meet our scheduled debt service obligations. Certain of the documents governing our indebtedness restrict our ability to dispose of assets and use the proceeds from any such dispositions and also restrict our ability to raise debt or equity capital to be used to repay other indebtedness when it becomes due. We may not be able to consummate those dispositions or to obtain proceeds in an amount sufficient to meet any debt service obligations then due. See Item 7 Managements Discussion and Analysis of Financial Condition and Results of Operations Liquidity and Capital Resources.

Copyright © 2013 www.secdatabase.com. All Rights Reserved. Please Consider the Environment Before Printing This Document In addition, we hold a substantial portion of our assets and conduct substantially all of our operations through our subsidiaries, certain of which are not guarantors of our indebtedness. Accordingly, repayment of our indebtedness is dependent on the generation of cash flow by our subsidiaries and their ability to make such cash available to us, by dividend, debt repayment or otherwise. Unless they are guarantors of our indebtedness, our subsidiaries do not have any obligation to pay amounts due on our indebtedness or to make funds available for that purpose. Our subsidiaries may not be able to, or may not be permitted to, make distributions to enable us to make payments in respect of our indebtedness. Each subsidiary is a distinct legal entity and, under certain circumstances, legal and contractual restrictions may limit our ability to obtain cash from our subsidiaries. While the agreements governing certain of our existing indebtedness limit the ability of certain of our subsidiaries to incur consensual restrictions on their ability to pay dividends or make other intercompany payments to us, these limitations are subject to certain qualifications and exceptions. In the event that we do not receive distributions from our subsidiaries, we may be unable to make required principal and interest payments on our indebtedness.

Our inability to generate sufficient cash flows to satisfy our debt obligations, or to refinance our indebtedness on commercially reasonable terms or at all, would materially and adversely affect our financial position and results of operations and our ability to satisfy our obligations under the Notes.

If we cannot make scheduled payments on our debt, we will be in default and, as a result, holders of any of our debt could declare all outstanding principal and interest to be due and payable, the lenders under the ABL Facility could terminate their commitments to loan money, our secured lenders could foreclose against the assets securing such borrowings and we could be forced into bankruptcy or liquidation, in each case, which could result in you losing your investment.

In addition to our obligations on our indebtedness discussed above, we expect to make distributions to EB Sports to fund cash payments under the New Holdco Facility. On December 3, 2009, EB Sports refinanced its senior unsecured credit agreement, or the Previous Holdco Facility, with Wachovia Investment Holdings, LLC and the lenders named therein, pursuant to which EB Sports had borrowed $175.0 million, through a new senior secured credit agreement with Wachovia Bank, N.A. and the existing lenders under the Previous Holdco Facility, the New Holdco Facility, with Wachovia Investment Holdings, LLC and the existing lenders under the Previous Holdco Facility and an equity investment from Fenway Easton-Bell Sports Holding, LLC and Fenway Partners Capital Fund III, L.P., or together the Fenway Investors, each an affiliate of Fenway Partners, LLC, and certain existing investors and their affiliates. As of December 31, 2011, the amount of loans issued under the New Holdco Facility was approximately $137.0 million, including accrued interest. EB Sports depends on us and our subsidiaries, who conduct the operations of the business, for dividends and other payments to generate the funds necessary to meet its financial obligations, including payments of principal and interest on the New Holdco Facility. The borrowings under the New Holdco Facility are scheduled to mature on December 31, 2015. See Item 7 Managements Discussion and Analysis of Financial Condition and Results of Operations Liquidity and Capital Resources.

The New Holdco Facility is secured by a pledge of all of the capital stock of RBG and Easton-Bell. The New Holdco Facility is guaranteed by RBG and any subsidiary of EB Sports that in the future guarantees other indebtedness of EB Sports or RBG. Borrowings under the New Holdco Facility through May 1, 2012 will bear interest at 11.5% per annum and EB Sports may elect to pay interest in cash or defer interest by adding it to the aggregate amount of principal due under the loan. Interest after May 1, 2012 will be paid in cash; provided, that if prior to maturity EB Sports does not have sufficient cash on hand and we are either prohibited from distributing sufficient cash to EB Sports to make such interest payments or we do not have sufficient liquidity (in the reasonable determination of our management) to permit us to distribute cash in an amount sufficient to allow such payment, then EB Sports will pay cash to the extent it is able to do so using cash on hand after giving effect to permitted and available distributions, and the remainder of the interest due shall be added to the principal amount of the loan at a rate of 13.5% per annum for the then ending interest period.

Copyright © 2013 www.secdatabase.com. All Rights Reserved. Please Consider the Environment Before Printing This Document Certain of the documents governing our indebtedness restrict us and certain of our subsidiaries from, in each case, paying dividends or otherwise transferring assets to EB Sports. Such restrictions include, among others, prohibitions on payment of dividends in the event of default and limitations on the amount of dividends and other restricted payments to our parent entities, although certain of the documents, include exceptions to permit the payment of dividends and other distributions to service interest and refinance principal under the New Holdco Facility, provided that certain financial conditions have been satisfied. In addition, legal and contractual restrictions in agreements governing current and future indebtedness, as well as the financial condition and operating requirements of EB Sports subsidiaries, currently limit and may in the future limit EB Sports ability to obtain cash from us. Our earnings or available assets may not be sufficient to meet our payment obligations under the New Holdco Facility.

Our ability to make restricted payments (including payments to EB Sports to service its obligations) is limited by the terms of certain of the documents governing our indebtedness. Delaware law also requires that we be solvent both at the time, and immediately following, a restricted payment to EB Sports. Because EB Sports will rely on dividends from us to fund all cash payments under the New Holdco Facility, in the event that such restrictions prevent us from paying such a dividend, EB Sports would be unable to make payments which would result in an event of default under the New Holdco Facility.

If EB Sports is unable to pay borrowings under the New Holdco Facility, when due at maturity, an event of default will occur, which would permit the lenders to enforce their rights under the pledge agreement entered into in connection with the New Holdco Facility. If the lenders were to foreclose on collateral or exercise voting rights with respect to the pledged stock under the pledge agreement this would also result in a change of control under the terms of certain of the documents governing our indebtedness, which would require us to repay all loans outstanding under certain of the documents governing our indebtedness and/or to offer to repurchase all of the outstanding Notes.

The Notes are effectively subordinated to our and our subsidiary guarantors indebtedness under the ABL Facility and our other secured indebtedness to the extent of the value of the property securing such indebtedness on a basis senior to the Notes.

The Notes and the guarantees are effectively subordinated to our and our subsidiary guarantors indebtedness under the ABL Facility with respect to the assets that secure the indebtedness under the ABL Facility on a first-priority basis. The effect of this subordination is that upon a default in payment on, or the acceleration of, any indebtedness under the ABL Facility or other indebtedness secured by such assets on a first-priority basis, or in the event of bankruptcy, insolvency, liquidation, dissolution, reorganization or similar proceeding of us or any of the subsidiary guarantors of the ABL Facility or of such other secured debt, the proceeds from the sale of assets securing the ABL Facility and/or such other secured indebtedness on a first-priority basis will be available to pay obligations on the Notes only after all indebtedness under the ABL Facility and such other secured debt has been paid in full.

The Notes are structurally subordinated to all indebtedness of those of our existing or future subsidiaries that are not, or do not become, guarantors of the Notes.

The Notes are guaranteed by each of our existing and subsequently acquired or organized domestic subsidiaries that guarantee the ABL Facility or that, in the future, guarantee other debt issued by our Company or the subsidiary guarantors of the Notes. Except for such subsidiary guarantors of the Notes, our subsidiaries, including all of our non-domestic subsidiaries, will have no obligation, contingent or otherwise, to pay amounts due under the Notes or to make any funds available to pay those amounts, whether by dividend, distribution, loan or other payment. The Notes are structurally subordinated to all indebtedness and other obligations of any non- guarantor subsidiary such that, in the event of insolvency, liquidation, reorganization, dissolution or other winding up of any subsidiary that is not a guarantor, all of such subsidiarys creditors (including trade creditors and preferred stockholders, if any) would be entitled to payment in full out of such subsidiarys assets before we would be entitled to any payment.

Copyright © 2013 www.secdatabase.com. All Rights Reserved. Please Consider the Environment Before Printing This Document In addition, the indenture governing the Notes, subject to some limitations, permit these subsidiaries to incur additional indebtedness and does not contain any limitation on the amount of other liabilities, such as trade payables, that may be incurred by these subsidiaries.

For the twelve months ended December 31, 2011, our non-guarantor subsidiaries represented approximately 10.0% of our net sales, 4.4% of operating income and 3.3% of EBITDA. As of December 31, 2011, our non-guarantor subsidiaries represented $132.2 million of our assets and had $59.8 million of total liabilities, including debt and trade payables.

In addition, our subsidiaries that provide guarantees of the Notes will be automatically released from such guarantees upon the occurrence of certain events, including the following:

the designation of such subsidiary guarantor as an unrestricted subsidiary;

the release or discharge of all guarantees or indebtedness that resulted in the creation of the guarantee of the Notes by such subsidiary guarantor; or

the sale or other disposition, including the sale of substantially all the assets, of such subsidiary guarantor.

If any such subsidiary guarantee is released, no holder of the Notes will have a claim as a creditor against any such subsidiary and the indebtedness and other liabilities, including trade payables and preferred stock, if any, whether secured or unsecured, of such subsidiary will be effectively senior to the claim of any holders of the Notes.

Because each guarantors liability under its guarantees may be reduced to zero, avoided or released under certain circumstances, you may not receive any payments from some or all of the guarantors.

The Notes have the benefit of the guarantees of the guarantors. However, the guarantees by the guarantors are limited to the maximum amount that the guarantors are permitted to guarantee under applicable law. As a result, a guarantors liability under its guarantee could be reduced to zero, depending upon the amount of other obligations of such guarantor. Further, under certain circumstances, a court under federal and state fraudulent conveyance and transfer statutes could void the obligations under a guarantee or further subordinate it to all other obligations of the guarantor. In addition, you will lose the benefit of a particular guarantee if it is released under certain circumstances.

The value of the collateral in the event of liquidation will depend on market and economic conditions, the availability of buyers and other factors. Consequently, liquidating the collateral securing the Notes may not produce proceeds in an amount sufficient to pay any amounts due on the Notes.

A portion of the collateral securing the Notes is subject to first-priority liens in favor of the lenders under the ABL Facility. As a result, upon any distribution to our creditors, liquidation, reorganization or similar proceedings, or following acceleration of our indebtedness or an event of default under our indebtedness, the lenders under the ABL Facility will be entitled to be repaid in full from the proceeds of the assets securing the ABL Facility on a first-priority basis before any payment is made to you from the proceeds of that collateral. In addition, the terms of the indenture relating to the Notes will permit the incurrence of additional debt that may be secured by these or other assets on a first-priority basis. The incurrence of such debt would dilute the value of the liens on such collateral securing the Notes.

Copyright © 2013 www.secdatabase.com. All Rights Reserved. Please Consider the Environment Before Printing This Document As of December 31, 2011, the book values of the real estate, intellectual property, customer relationships and plant and equipment assets included in the first-priority collateral were $0.1 million, $244.4 million, $20.6 million and $53.4 million, respectively. The fair market value of the collateral securing the Notes is subject to fluctuations based on factors that include, among others, the condition of the markets for various forms of collateral, the ability to sell the collateral in an orderly sale, general economic conditions, the availability of buyers and similar factors. The amount to be received upon a sale of the collateral would be dependent on numerous factors, including but not limited to the actual fair market value of the collateral at such time and the timing and the manner of the sale. By their nature, portions of the collateral may be illiquid and may have no readily ascertainable market value. Likewise, we cannot assure holders of the Notes that the collateral will be saleable or, if saleable, that there will not be substantial delays in their liquidation. To the extent that liens, rights and easements granted to third parties encumber assets located on property owned by us or constitute subordinate liens on the collateral, those third parties may have or may exercise rights and remedies with respect to the property subject to such encumbrances (including rights to require marshalling of assets) that could adversely affect the value of the collateral located at that site and the ability of the collateral agent to realize or foreclose on the collateral at that site. In the event of a foreclosure, liquidation, bankruptcy or similar proceeding, we cannot assure you that the proceeds from any sale or liquidation of the collateral will be sufficient to pay our obligations under the Notes. In addition, the asset sale covenant and the definition of asset sale in the indenture governing the Notes, have a number of significant exceptions pursuant to which we may be able to sell assets securing the Notes without being required to reinvest the proceeds of such sale into assets that will comprise collateral securing the Notes or to make an offer to the holders of the Notes to repurchase the Notes.

In the event of a bankruptcy of us or any of the guarantors, holders of the Notes may be deemed to have an unsecured claim to the extent that our obligations in respect of the Notes exceed the fair market value of the collateral securing the Notes.

In any bankruptcy proceeding with respect to us or any of the guarantors, it is possible that the bankruptcy trustee, the debtor-in- possession or competing creditors will assert that the fair market value of the collateral with respect to the Notes on the date of the bankruptcy filing was less than the then-current principal amount of the Notes. Upon a finding by the bankruptcy court that the Notes are under-collateralized, the claims in the bankruptcy proceeding with respect to the Notes would be bifurcated between a secured claim and an unsecured claim, and the unsecured claim would not be entitled to the benefits of security in the collateral. Other consequences of a finding of under-collateralization would be, among other things, a lack of entitlement on the part of the Notes to receive post- petition interest and a lack of entitlement on the part of the unsecured portion of the Notes to receive other adequate protection under federal bankruptcy laws. In addition, if any payments of post-petition interest had been made at the time of such a finding of under- collateralization, those payments could be recharacterized by the bankruptcy court as a reduction of the principal amount of the secured claim with respect to the Notes.

The collateral securing the Notes may be diluted under certain circumstances.

The collateral that secures the Notes also secures our obligations under the ABL Facility. This collateral may also secure additional senior indebtedness, including additional Notes, that we incur in the future, subject to restrictions on our ability to incur debt and liens under certain of the documents governing our indebtedness. Your rights to the collateral would be diluted by any increase in the indebtedness secured by this collateral.

The rights of holders of the Notes to the collateral securing the ABL Facility, in which such holders have a second-priority lien, are materially limited by the intercreditor agreement.

The rights of the holders of the Notes with respect to the collateral securing the ABL Facility, which secures the Notes on a second-priority basis, are limited pursuant to the terms of an intercreditor agreement with the lenders under the ABL Facility.

Copyright © 2013 www.secdatabase.com. All Rights Reserved. Please Consider the Environment Before Printing This Document Under the intercreditor agreement, any actions that may be taken in respect of that collateral (including the ability to commence enforcement proceedings against that collateral and to control the conduct of such proceedings, and to approve amendments to, releases of that collateral from the lien of, and waivers of past defaults under, the collateral documents) will be at the direction of the lenders under the ABL Facility. Under those circumstances, the collateral agent on behalf of the holders of the Notes, with limited exceptions, will not have the ability to control or direct such actions, even if the rights of the holders of the Notes are adversely affected. Any release by the lenders under the ABL Facility of their collateral that secures the ABL Facility (other than a termination of the ABL Facility or a release of all the collateral securing the ABL Facility) on a first-priority basis will also release the second-priority lien securing the Notes on the same collateral (subject to the interest of the holders of the Notes in the proceeds of that collateral), and holders of the Notes will have no control over such release. In addition, because the holders of the indebtedness secured by first-priority liens control the disposition of such collateral, such holders could decide not to proceed against such collateral, regardless of whether there is a default under the documents governing such indebtedness or under the indenture governing the Notes. In such event, the only remedy available to the holders of the Notes would be recourse to collateral for the Notes which is secured on a first-priority basis and to sue for payment on the Notes and the related guarantees. In addition, the intercreditor agreement gives the holders of first-priority liens on the collateral securing the ABL Facility the right to access and use such collateral securing the Notes on a first lien basis to allow those holders to protect such collateral and to process, store and dispose of the collateral securing the ABL Facility.

The waiver in the intercreditor agreement of rights of marshaling may adversely affect the recovery rates of holders of the Notes in a bankruptcy or foreclosure scenario.

The Notes and the guarantees are secured on a second-priority lien basis by the collateral securing the ABL Facility. The intercreditor agreement provides that, at any time holders of the Notes hold a second-priority lien on the collateral where a first-priority lien on such collateral exists, the trustee under the indenture governing the Notes and the Notes collateral agent may not assert or enforce any right of marshaling accorded to a junior lienholder, as against the holders of such indebtedness secured by first-priority liens in the collateral securing the ABL Facility. Without this waiver of the right of marshaling, holders of such indebtedness secured by first- priority liens in the collateral securing the ABL Facility would likely be required to liquidate collateral on which the Notes did not have a lien, if any, prior to liquidating the collateral, thereby maximizing the proceeds of the collateral that would be available to repay our obligations under the Notes. As a result of this waiver, the proceeds of sales of the collateral securing the ABL Facility could be applied to repay any indebtedness secured by first-priority liens in the collateral securing the ABL Facility before applying proceeds of other collateral securing indebtedness, and the holders of Notes may recover less than they would have if such proceeds were applied in the order most favorable to the holders of the Notes.

Certain assets are excluded from the collateral securing the Notes.

Certain assets are excluded from the collateral securing the Notes including, among other things, any assets held by foreign subsidiaries, any assets in real property other than fee interests (including leaseholds), as well as other typical exclusions, such as capital stock of non-wholly owned subsidiaries if the pledge of such capital stock would violate a contractual obligation, letters of credit for identified purposes or a contract or license if the grant of a lien would violate a contract, license or agreement. In addition, the collateral does not include any capital stock of a subsidiary to the extent that the pledge of such capital stock results in our being required to file separate financial statements of such subsidiary with the SEC, and any such capital stock that triggers such a requirement to file financial statements of such subsidiary with the SEC would be automatically released from the collateral. However, the liens on such capital stock will continue to secure obligations under the ABL Facility. Further, the collateral does not include a pledge of our capital stock, which is pledged as collateral under the New Holdco Facility.

Copyright © 2013 www.secdatabase.com. All Rights Reserved. Please Consider the Environment Before Printing This Document Your rights in the collateral may be adversely affected by the failure to perfect security interests in certain collateral acquired in the future.

Applicable law requires that certain property and rights acquired after the grant of a general security interest, such as rights in real property, can only be perfected at the time such property and rights are acquired and identified. Likewise, any rights acquired in a pending, unpublished intellectual property application may be unrecordable until after the application, or resulting registration, is published. There can be no assurance that the trustee or the collateral agent will monitor, or that we will inform the trustee or the collateral agent of, the future acquisition of property and rights that constitute collateral, and that the necessary action will be taken to properly perfect the security interest in such after-acquired collateral. The collateral agent for the Notes has no obligation to monitor the acquisition of additional property or rights that constitute collateral or the perfection of any security interest in favor of the Notes against third parties. Failure to perfect any such security interest could result in the loss of such security interest or the priority of the security interest in favor of the Notes against third parties.

Rights of holders of the Notes in the collateral may be adversely affected by the failure to create or perfect security interests in certain collateral on a timely basis, and a failure to create or perfect such security interests on a timely basis or at all may result in a default under the indenture and other agreements governing the Notes.

The Notes and the guarantees are secured by first-priority liens, subject to permitted liens, on certain of our and the subsidiary guarantors principal United States assets, other than assets pledged under the ABL Facility which secure the Notes and the subsidiary guarantees on a second-priority basis.

If we, or any subsidiary guarantor, were to become subject to a bankruptcy proceeding, any liens recorded or perfected after the issue date would face a greater risk of being invalidated than if they had been recorded or perfected on the issue date. Liens recorded or perfected after the issue date may be treated under bankruptcy law as if they were delivered to secure previously existing indebtedness. In bankruptcy proceedings commenced within 90 days of lien perfection, a lien given to secure previously existing debt is materially more likely to be avoided as a preference by the bankruptcy court than if delivered and promptly recorded on the issue date. Accordingly, if we or a subsidiary guarantor were to file for bankruptcy protection after the issue date of the outstanding Notes and the liens had been perfected less than 90 days before commencement of such bankruptcy proceeding, or not yet perfected at all, the liens securing the Notes may be especially subject to challenge as a result of having not been perfected before the issue date. To the extent that such challenge succeeded, you would lose the benefit of the security that the collateral was intended to provide.

Additionally, a failure, for any reason that is not permitted or contemplated under the security agreement and related documents, to perfect the security interest in the properties included in the collateral package may result in a default under the indenture and other agreements governing the Notes.

There are circumstances other than repayment or discharge of the Notes under which the collateral securing the Notes and guarantees will be released automatically, without your consent or the consent of the trustee.

Under various circumstances, collateral securing the Notes will be released automatically, including:

a sale, transfer or other disposal of such collateral in a transaction not prohibited under the indenture;

with respect to collateral held by a guarantor, upon the release of such guarantor from its guarantee;

with respect to collateral that is capital stock, upon the dissolution of the issuer of such capital stock in accordance with the indenture; and

with respect to collateral that secures the ABL Facility on a first-priority basis, upon any release, sale or disposition (other than in connection with a cancellation or termination of the ABL Facility) of such collateral pursuant to the terms of the ABL Facility resulting in the release of the lien on such collateral securing the ABL Facility.

Copyright © 2013 www.secdatabase.com. All Rights Reserved. Please Consider the Environment Before Printing This Document In addition, the guarantee of a subsidiary guarantor will be automatically released in connection with a sale of such subsidiary guarantor in a transaction permitted under the indenture.

The indenture governing the Notes also permits us to designate one or more of our restricted subsidiaries that is a guarantor of the Notes as an unrestricted subsidiary. If we designate a subsidiary guarantor as an unrestricted subsidiary for purposes of the indenture governing the Notes, all of the liens on any collateral owned by such subsidiary or any of its subsidiaries and any guarantees of the Notes by such subsidiary or any of its subsidiaries will be released under the indenture but not necessarily under the ABL Facility. Designation of an unrestricted subsidiary will reduce the aggregate value of the collateral securing the Notes to the extent that liens on the assets of the unrestricted subsidiary and its subsidiaries are released. In addition, the creditors of the unrestricted subsidiary and its subsidiaries will have a senior claim on the assets of such unrestricted subsidiary and its subsidiaries.

The collateral securing the Notes is subject to casualty risks and potential environmental liabilities.

We intend to maintain insurance or otherwise insure against hazards in a manner appropriate and customary for our business. There are, however, certain losses that may be either uninsurable or not economically insurable, in whole or in part. For example, we cannot assure that we will obtain or maintain insurance against potential losses related to our intellectual property assets. Insurance proceeds may not compensate us fully for our losses. If there is a complete or partial loss of any of the pledged collateral, the insurance proceeds may not be sufficient to satisfy all of the secured obligations.

Moreover, the collateral agent for the Notes may need to evaluate the impact of potential liabilities before determining to foreclose on collateral consisting of real property because secured creditors that hold a security interest in real property may be held liable under environmental laws for the costs of remediating or preventing the release or threatened release of hazardous substances at such real property. Consequently, the collateral agent may decline to foreclose on such collateral or exercise remedies available in respect thereof if it does not receive indemnification to its satisfaction from the holders of the Notes.

We may not be able to repurchase the Notes upon a change of control.

Upon the occurrence of specific kinds of change of control events, we will be required to offer to repurchase all of the outstanding Notes at 101% of their principal amount, plus accrued and unpaid interest to the purchase date. Additionally, under the ABL Facility, a change of control (as defined therein) constitutes an event of default that permits the lenders to accelerate the maturity of borrowings under that agreement and the commitments to lend will terminate. The source of funds for any purchase of the Notes and repayment of our other credit facilities will be our available cash or cash generated from our subsidiaries operations or other sources, including borrowings, sales of assets or sales of equity. We may not be able to repurchase the Notes upon a change of control because we may not have sufficient financial resources to purchase all of the debt securities that are tendered upon a change of control and to repay our other indebtedness that will become due. We may require additional financing from third parties to fund any such purchases, and we cannot assure you that we would be able to obtain financing on satisfactory terms or at all. Further, our ability to repurchase the Notes may be limited by law. In order to avoid the obligations to repurchase the Notes and events of default and potential breaches of the credit agreement governing the ABL Facility, we may have to avoid certain change of control transactions that would otherwise be beneficial to our Company.

In addition, certain important corporate events, such as leveraged recapitalizations, may not, under the indenture governing the Notes, constitute a change of control that would require us to repurchase the Notes, notwithstanding the fact that such corporate events could increase the level of our indebtedness or otherwise adversely affect our capital structure, credit ratings or the value of the Notes.

In addition, in a recent decision, the Chancery Court of Delaware raised the possibility that a change of control put right occurring as a result of a failure to have continuing directors comprising a majority of a board of directors might be unenforceable on public policy grounds.

Copyright © 2013 www.secdatabase.com. All Rights Reserved. Please Consider the Environment Before Printing This Document Holders of the Notes may not be able to determine when a change of control giving rise to their right to have the Notes repurchased has occurred following a sale of substantially all of our assets.

The definition of change of control in the indenture governing the Notes includes a phrase relating to the sale of all or substantially all of our assets. There is no precise established definition of the phrase substantially all under applicable law. Accordingly, the ability of a holder of Notes to require us to repurchase its Notes as a result of a sale of less than all our assets to another person may be uncertain.

In the event of our bankruptcy, the ability of the holders of the Notes to realize upon the collateral will be subject to certain bankruptcy law limitations.

The ability of holders of the Notes to realize upon the collateral are subject to certain bankruptcy law limitations in the event of our bankruptcy. Under applicable federal bankruptcy laws, upon the commencement of a bankruptcy case, an automatic stay goes into effect which, among other things, stays:

the commencement or continuation of any action or proceeding against the debtor that was or could have been commenced before the commencement of the bankruptcy case to recover a claim against the debtor that arose before the commencement of the bankruptcy case;

any act to obtain possession of, or control over, property of the bankruptcy estate or the debtor;

any act to create, perfect or enforce any lien against property of the bankruptcy estate; and

any act to collect or recover a claim against the debtor that arose before the commencement of the bankruptcy case.

Thus, upon the commencement of a bankruptcy case, secured creditors are prohibited from, among other things, repossessing their collateral from a debtor, or from disposing of such collateral repossessed from such a debtor, without bankruptcy court approval. Moreover, applicable federal bankruptcy laws generally permit the debtor to continue to use, sell or lease collateral in the ordinary course of its business even though the debtor is in default under the applicable debt instruments. Upon request from a secured creditor, the bankruptcy court will prohibit or condition such use, sale or lease of collateral as is necessary to provide adequate protection of the secured creditors interest in the collateral. The meaning of the term adequate protection may vary according to the circumstances, but is intended generally to protect the value of the secured creditors interest in the collateral at the commencement of the bankruptcy case and may include cash payments or the granting of additional security, if and at such times as the court in its discretion determines any diminution in the value of the collateral occurs as a result of the debtors use, sale or lease of the collateral during the pendency of the bankruptcy case. In view of the lack of a precise definition of the term adequate protection and the broad discretionary powers of a United States bankruptcy court, we cannot predict whether payments under the Notes would be made following commencement of and during a bankruptcy case, whether or when the trustee or collateral agent under the indenture for the Notes could foreclose upon or sell the collateral or whether or to what extent holders of Notes would be compensated for any delay in payment or loss of value as a result of the use, sale or lease of their collateral through the requirement of adequate protection. A creditor may seek relief from the stay from the bankruptcy court to take any of the acts described above that would otherwise be prohibited by the automatic stay. The United States bankruptcy court has broad discretionary powers in determining whether to grant a creditor relief from the stay.

The value of the collateral securing the Notes may not be sufficient to secure post-petition interest.

In the event of a bankruptcy, liquidation, dissolution, reorganization or similar proceeding against us, holders of the Notes will only be entitled to post-petition interest under the bankruptcy code to the extent that the value of their security interest in the collateral is greater than their pre-bankruptcy claim. Holders of the Notes that have a security interest in the collateral with a value equal to or less than their pre-bankruptcy claim will not be entitled to post-petition interest under the bankruptcy code. No appraisal of the fair market value of the collateral has been prepared in connection with this offering and we therefore cannot assure you that the value of the holders interest in the collateral equals or exceeds the principal amount of the Notes.

An investor group led by Fenway Partners Capital Fund II, L.P. (investing through Fenway Easton-Bell Sports Holding, LLC) and Fenway Partners Capital Fund III, L.P., each an affiliate of Fenway Partners, LLC, owns a majority of our Parents outstanding equity interests. As a result, these investors are in a position to control all matters affecting us, including decisions made by our board of directors, such as the appointment of members of our management and the approval of mergers or sales of substantially all of our assets. The Fenway Investors interests in exercising control over our business may conflict with your interests as a holder of the Notes.

Federal and state fraudulent transfer laws may permit a court to void the Notes, the guarantees and/or the grant of collateral and, if that occurs, you may not receive any payments on the Notes.

Federal and state fraudulent transfer and conveyance statutes may apply to the issuance of the Notes and the incurrence of the guarantees of such Notes. Under federal bankruptcy law and comparable provisions of state fraudulent transfer or conveyance laws, which may vary from state to state, the Notes or the guarantees thereof (or the grant of collateral securing any such obligations) could be voided as a fraudulent transfer or conveyance if we or any of the guarantors, as applicable, (a) issued the Notes or incurred the guarantees with the intent of hindering, delaying or defrauding creditors, or (b) received less than reasonably equivalent value or fair consideration in return for either issuing the Notes or incurring the guarantees and, in the case of (b) only, one of the following is also true at the time thereof:

we or any of the guarantors, as applicable, were insolvent or rendered insolvent by reason of the issuance of the Notes or the incurrence of the guarantees;

the issuance of the Notes or the incurrence of the guarantees left us or any of the guarantors, as applicable, with an unreasonably small amount of capital or assets to carry on the business;

we or any of the guarantors intended to, or believed that we or such guarantor would, incur debts beyond our or such guarantors ability to pay as they mature; or

we or any of the guarantors were a defendant in an action for money damages, or had a judgment for money damages docketed against us or such guarantor if, in either case, after final judgment, the judgment is unsatisfied.

As a general matter, value is given for a transfer or an obligation if, in exchange for the transfer or obligation, property is transferred or a valid antecedent debt is secured or satisfied. A court would likely find that a subsidiary guarantor did not receive reasonably equivalent value or fair consideration for its guarantee, to the extent such guarantor did not obtain a reasonably equivalent benefit directly or indirectly from the issuance of the Notes.

We cannot be certain as to the standards a court would use to determine whether or not we or the guarantors were insolvent at the relevant time or, regardless of the standard that a court uses, whether the Notes or the guarantees would be subordinated to our or any of our guarantors other debt. In general, however, a court would deem an entity insolvent if:

the sum of its debts, including contingent and unliquidated liabilities, was greater than the fair saleable value of all of its assets;

the present fair saleable value of its assets was less than the amount that would be required to pay its probable liability on its existing debts, including contingent liabilities, as they become absolute and mature; or

it could not pay its debts as they became due.

Copyright © 2013 www.secdatabase.com. All Rights Reserved. Please Consider the Environment Before Printing This Document If a court were to find that the issuance of the Notes, the incurrence of a guarantee or the grant of security was a fraudulent transfer or conveyance, the court could void the payment obligations under the Notes or such guarantee or void the grant of collateral or subordinate the Notes or such guarantee to presently existing and future indebtedness of ours or of the related guarantor, or require the holders of the Notes to repay any amounts received with respect to such guarantee. In the event of a finding that a fraudulent transfer or conveyance occurred, you may not receive any repayment on the Notes. Further, the avoidance of the Notes could result in an event of default with respect to our and our subsidiaries other debt that could result in acceleration of such debt.

Finally, as a court of equity, the bankruptcy court may subordinate the claims in respect of the Notes to other claims against us under the principle of equitable subordination, if the court determines that: (1) the holder of Notes engaged in some type of inequitable conduct; (2) such inequitable conduct resulted in injury to our other creditors or conferred an unfair advantage upon the holder of Notes; and (3) equitable subordination is not inconsistent with the provisions of the bankruptcy code.

Your ability to transfer the Notes is limited by the absence of an active trading market and an active trading market may not develop for the Notes.

The Notes were new issues of securities for which there is no established trading market. We do not intend to list the Notes on any national securities exchange or include the Notes in any automated quotation system. The initial purchasers of the Notes have advised us that they intend to make a market in the Notes, as permitted by applicable laws and regulations; however, the initial purchasers are not obligated to make a market in the Notes and, if commenced, they may discontinue their market-making activities at any time without notice.

Therefore, an active market for the Notes may not develop or be maintained, which would adversely affect the market price and liquidity of the Notes. In such case, the holders of the Notes may not be able to sell their Notes at a particular time or at a favorable price.

Even if an active trading market for the Notes does develop, there is no guarantee that it will continue. Historically, and particularly in recent months, the market for non-investment grade debt has been subject to severe disruptions that have caused substantial volatility in the prices of securities similar to the Notes. The market, if any, for the Notes may experience similar disruptions and any such disruptions may adversely affect the liquidity in such market and/or the prices at which you may sell your Notes. In addition, subsequent to their initial issuance, the Notes may trade at a discount from their initial offering price, depending upon prevailing interest rates, the market for similar notes, our performance and other factors.

A lowering or withdrawal of the ratings assigned to our debt securities by rating agencies may increase our future borrowing costs and reduce our access to capital.

Our debt currently has a non-investment grade rating, and there can be no assurances that any rating assigned will remain for any given period of time or that a rating will not be lowered or withdrawn entirely by a rating agency if, in that rating agencys judgment, future circumstances relating to the basis of the rating, such as adverse changes, so warrant. Credit ratings are not recommendations to purchase, hold or sell the Notes, and may be revised or withdrawn at any time. Additionally, credit ratings may not reflect the potential effect of risks relating to the structure or marketing of the Notes. If any credit rating initially assigned to the Notes is subsequently lowered or withdrawn for any reason, you may not be able to resell your Notes without a substantial discount.

Item 1B. Unresolved Staff Comments

None.

As of December 31, 2011 we operated 19 facilities in the United States, three in Canada, two in Mexico, two in Europe and six in Asia. Our corporate headquarters is located in Van Nuys, California. Set forth below is information regarding our principal properties:

Leased Owned Location Primary Use Business Segment Sq. Ft. Sq. Ft. Van Nuys, CA Corporate Headquarters and Offices Team and Action Sports 56,647 Scotts Valley, CA Offices and Research and Development Team and Action Sports 55,320 Irving, TX Offices Team and Action Sports 27,197 Rosemont, IL Offices and Research and Development Team Sports 20,531 Rantoul, IL Offices, Manufacturing and Warehouse Team and Action Sports 753,696 York, PA Warehouse Team and Action Sports 465,000 Salt Lake City, UT Warehouse Team Sports 133,000 Elyria, OH Offices, Reconditioning and Warehouse Team Sports 134,788 Monterrey, Mexico Reconditioning and Warehouse Team Sports 117,328 Kirkland, Canada Offices and Warehouse Team Sports 97,935 Tijuana, Mexico Offices, Manufacturing and Warehouse Team and Action Sports 112,403

In addition to the primary facilities listed above, we operate other offices and facilities around the world totaling approximately 236,300 square feet. We consider each of our facilities to be in good condition and adequate for its present use. We believe that we have sufficient capacity to meet our current and anticipated manufacturing requirements.

Item 3. Legal Proceedings

We are subject to various product liability claims and lawsuits brought against us for claims involving damages for personal injuries or deaths. Allegedly, these injuries or deaths relate to the use by claimants of products manufactured, designed or reconditioned by us and, in certain cases, products manufactured by others. The ultimate outcome of these claims, or potential future claims, cannot presently be determined. Our management obtains an actuarial analysis and has established an accrual for probable losses based on this analysis which considers, among other factors, our Companys previous claims history and available information on alleged claims. We maintain primary and excess product liability insurance coverage under various policies. Our primary and excess product liability insurance policies expire in January 2013. We are also party to various non-product liability claims and actions, including without limitation, claims relating to infringement of intellectual property rights of others. We do not believe that any of these claims or actions, either individually or in the aggregate, is material to our business or financial condition.

Item 4. [Reserved] PART II

Item 5. Market For Registrants Common Equity, Related Stockholder Matters and Issuer Purchases of Equity Securities

There is no established public trading market for our equity securities.

Set forth below is our selected historical consolidated financial and other operating data. Certain reclassifications of previously reported financial information were made to conform to the current presentation. We follow a 52/53 week fiscal year, which ends on the Saturday closest to December 31. Our selected historical consolidated financial data and other data set forth below as of December 31, 2011, January 1, 2011, January 2, 2010, January 3, 2009 and December 29, 2007 and for the fiscal years ended December 31, 2011, January 1, 2011, January 2, 2010, January 3, 2009 and December 29, 2007, have been derived from our audited consolidated financial statements. The selected historical consolidated financial and other data presented below should be read in conjunction with Item 7 Managements Discussion and Analysis of Financial Condition and Results of Operations and the consolidated financial statements and the related notes thereto appearing elsewhere herein.

Fiscal Year Fiscal Year Fiscal Year Fiscal Year Fiscal Year Ended Ended Ended Ended Ended December 31, January 1, January 2, January 3, December 29, 2011 2011 2010 2009 2007 (Dollars in millions) Statement of Operations Data: Net sales $834.9 $772.8 $716.3 $775.5 $724.6 Cost of sales 551.4 510.4 482.4 509.1 475.6 Gross profit 283.5 262.4 233.9 266.4 249.0 Selling, general and administrative expenses 211.3 191.3 175.0 179.2 170.0 Restructuring and other infrequent expenses(1) 0.5 0.6 Amortization of intangibles 9.6 11.8 13.4 13.4 13.2 Gain on sale of property, plant and equipment(2) (2.3 ) Income from operations 62.6 59.3 45.5 73.3 67.5 Interest expense, net 42.9 44.6 44.9 41.9 41.6 Income before taxes 19.7 14.7 0.6 31.4 25.9 Income tax expense 9.7 6.6 4.7 18.0 11.4 Net income (loss) $10.0 $8.1 $(4.1 ) $13.4 $14.5 Cash flow data: Net cash provided by (used in): Operating activities $29.8 $47.6 $53.8 $67.7 $16.3 Investing activities (25.7 ) (22.5 ) (16.1 ) (17.6 ) (10.1 ) Financing activities 1.8 (35.0 ) (47.4 ) (19.7 ) (0.6 ) Other Financial Data: Capital expenditures 23.8 20.7 15.7 17.6 16.8

As of As of As of As of As of December 31, January 1, January 2, January 3, December 29, 2011 2011 2010 2009 2007 (Dollars in millions) Balance Sheet Data: Cash and cash equivalents $29.5 $24.0 $33.3 $41.3 $16.9 Working capital 265.9 242.6 211.2 282.9 262.8 Total assets 1,007.6 964.6 960.6 997.6 956.5 Total debt 388.7 385.2 415.8 455.9 475.6 Total stockholders equity 389.6 377.6 363.8 347.0 341.0

Copyright © 2013 www.secdatabase.com. All Rights Reserved. Please Consider the Environment Before Printing This Document (1) Restructuring expenses in fiscal 2008 and 2007 are primarily related to the closure of our Van Nuys, California manufacturing facility.

(2) Represents gains on the sale of land and building located in Chicago, Illinois in May 2007 and the sale of machinery located in Van Nuys, California in September 2007.

Copyright © 2013 www.secdatabase.com. All Rights Reserved. Please Consider the Environment Before Printing This Document Item 7. Managements Discussion and Analysis of Financial Condition and Results of Operations

The following discussion and analysis of our financial condition and results of operations should be read in conjunction with Selected Financial Data, as well as the consolidated financial statements and notes included elsewhere in this annual report.

Uncertainty of Forward-Looking Statements and Information

This annual report includes forward-looking statements. All statements other than statements of historical fact included in this report that address activities, events or developments that we expect, believe or anticipate will or may occur in the future are forward- looking statements. Forward-looking statements give our current expectations and projections relating to the financial condition, results of operations, plans, objectives, future performance and business of our Company. You can identify these statements by the fact that they do not relate strictly to historical or current facts. Forward-looking statements may include words such as anticipate, estimate, expect, project, intend, plan, believe and other words and terms of similar meaning in connection with any discussion of the timing or nature of future operating or financial performance or other events. Although we believe that the expectations reflected in our forward-looking statements are reasonable, we do not know whether our expectations will prove correct. Many factors mentioned in our discussion in this annual report, including the risks outlined under Item 1A Risk Factors, will be important in determining future results.

These forward-looking statements are expressed in good faith and we believe there is a reasonable basis for them. However, there can be no assurance that the events, results or trends identified in these forward-looking statements will occur or be achieved. Investors should not place undue reliance on any of our forward-looking statements because they are subject to a variety of risks, uncertainties and other factors that could cause actual results to differ materially from our expectations. Furthermore, any forward-looking statement speaks only as of the date on which it is made and except as required by law, we undertake no obligation to update any forward-looking statement to reflect events or circumstances after the date on which it is made or to reflect the occurrence of anticipated or unanticipated events or circumstances.

Overview

Copyright © 2013 www.secdatabase.com. All Rights Reserved. Please Consider the Environment Before Printing This Document We have two reportable segments: Team Sports and Action Sports. Our Team Sports segment primarily consists of football, baseball, softball, ice hockey, lacrosse and other team sports products and reconditioning services related to certain of these products. Our Action Sports segment primarily consists of helmets, equipment, components and accessories for cycling, snowsports and powersports and fitness related products.

How We Assess the Performance of Our Business

In assessing the performance of our business, we consider a variety of performance and financial measures. The key measures for determining how our business is performing are net sales growth by segment, gross profit and selling, general and administrative expenses.

Net Sales

Net sales reflect our revenues from the sale of our products and services less returns, discounts and allowances. It also includes licensing income that we collect. Substantially all of Eastons activity and all of Riddells activity is reflected in our Team Sports segment, which primarily consists of football, baseball, softball, ice hockey, lacrosse and other team sports products and reconditioning services related to certain of these products. All of Bells activity, including the Bell brand and the Giro brand and the Easton branded cycling products, are reflected in our Action Sports segment, which primarily consists of helmets, equipment, components and accessories for cycling, snowsports and powersports and fitness related products.

Cost of Sales

Cost of sales includes the direct cost of purchased merchandise, inbound freight, factory operating costs (including depreciation), warranty costs, distribution and shipping expenses, including outbound freight. Cost of sales generally changes as we incur higher or lower costs from our vendors, experience better or worse productivity in our factories and increase or decrease inventory levels as certain fixed overhead is included in inventory. A shift in the composition of our net sales can also result in higher or lower cost of sales as our gross profit margins differ by product. We review our inventory levels on an ongoing basis to identify slow-moving materials and products and generally reserve for excess and obsolete inventory. If we misjudge the market for our products, we may be faced with significant excess inventory and need to allow for higher charges for excess and obsolete inventory. Such charges have reduced our gross profit in some prior periods and may have a material adverse impact depending on the amount of the charge.

Gross Profit

Gross profit is equal to our net sales minus our cost of sales. Gross profit margin measures gross profit as a percentage of our net sales. We state inventories at the lower of cost (determined on a first-in, first-out basis) or market and include material, labor and factory overhead costs. Our gross profit may not be fully comparable to other sporting goods companies, as we include costs related to distribution and freight in cost of sales.

Selling, General and Administrative Expenses

Selling, general and administrative, or SG&A, expenses include all operating expenses not included in cost of sales, primarily, selling, marketing, administrative payroll, research and development, product liability, insurance and non-manufacturing lease expense, as well as certain depreciation and amortization. Other than selling expenses, these expenses generally do not vary proportionally with net sales. As a result, SG&A expenses as a percentage of net sales are usually higher in the winter season than the summer season due to the seasonality of net sales.

Results of Operations

Our Company follows a 52/53 week fiscal year, which ends on the Saturday closest to December 31. Fiscal year 2011 was comprised of 52 weeks and ended on December 31, 2011. Fiscal year 2010 was comprised of 52 weeks and ended on January 1, 2011. Fiscal year 2009 was comprised of 52 weeks and ended on January 2, 2010. Also set forth below are the percentage relationships to net sales of certain items included in our consolidated statements of operations.

Copyright © 2013 www.secdatabase.com. All Rights Reserved. Please Consider the Environment Before Printing This Document Inflationary factors such as increases in the cost of our product and overhead costs may adversely affect our operating results. Although we do not believe that inflation has had a material impact on our financial position or results of operations to date, a high rate of inflation in the future may have an adverse effect on our ability to maintain current levels of gross margin and selling, general and administrative expenses as a percentage of net revenues if the selling prices of our products do not increase with these increased costs.

% of Net % of Net % of Net 2011 Sales 2010 Sales 2009 Sales (Dollars in millions) Net sales $834.9 100.0 % $772.8 100.0 % $716.3 100.0 % Cost of sales 551.4 66.0 510.4 66.0 482.4 67.3 Gross profit 283.5 34.0 262.4 34.0 233.9 32.7 Selling, general and administrative expenses 211.3 25.3 191.3 24.8 175.0 24.4 Amortization of intangibles 9.6 1.2 11.8 1.5 13.4 1.9 Income from operations 62.6 7.5 59.3 7.7 45.5 6.4 Interest expense, net 42.9 5.1 44.6 5.8 44.9 6.3 Income before income taxes 19.7 2.4 14.7 1.9 0.6 0.1 Income tax expense 9.7 1.2 6.6 0.9 4.7 0.7 Net income (loss) 10.0 1.2 8.1 1.0 (4.1 ) (0.6 ) Other comprehensive income: Foreign currency translation adjustment (1.5 ) (0.2 ) 2.3 0.3 5.3 0.8 Comprehensive income $8.5 1.0 % $10.4 1.3 % $1.2 0.2 %

2011 compared to 2010

Our results for 2011 and 2010 include the following items:

2011 2010 (Dollars in millions) Provision for excess and obsolete inventory write-offs $7.4 $8.4 Research and development expenses 16.9 13.2 Product liability settlement and litigation expenses 6.4 5.4 Provision for allowance for doubtful accounts 4.0 3.4 Incentive compensation expense 8.6 7.8 Equity compensation expense 3.5 3.4 Depreciation expense 19.2 17.1

Net Sales

The following table sets forth net sales for each of our segments for the years indicated:

Change 2011 2010 $ % (Dollars in millions) Team Sports $472.3 $426.8 $45.5 10.7 % Action Sports 362.6 346.0 16.6 4.8 % $834.9 $772.8 $62.1 8.0 %

Net sales in both Team Sports and Action Sports were positively impacted by improving economic conditions and by favorable foreign currency exchange rate movements in 2011. Team Sports and Action Sports benefitted from favorable foreign currency

Copyright © 2013 www.secdatabase.com. All Rights Reserved. Please Consider the Environment Before Printing This Document movements of $2.1 million and $2.0 million, respectively. On a constant currency basis, net sales in Team Sports and Action Sports were up $43.4 million or 10.2%, and $14.5 million or 4.2%, respectively.

Copyright © 2013 www.secdatabase.com. All Rights Reserved. Please Consider the Environment Before Printing This Document The Team Sports net sales increase was due primarily to higher sales of baseball bats resulting from new products and rule changes by governing bodies of certain baseball leagues, growth in sales of football helmets due to continued market share gains, higher sales of ice hockey sticks due to the success of new product offerings, higher sales of baseball and softball batting helmets due to the popularity of new product offerings, increased sales of apparel and higher sales of reconditioning services resulting from market share gains, all of which were partially offset by lower revenue for hockey helmets and skates due to close out sales.

Action Sports net sales increased due to fiscal 2011 being the first full year of sales of Giro branded cycling footwear, increased sales of powersports helmets to specialty dealers due to enhanced product offerings, growth in sales of cycling wheels and components sold in the aftermarket and to OEM customers and increased sales of cycling accessories in the specialty and mass channels, all of which were partially offset by reduced demand for snow helmets in the global market due to high retail inventory levels, reduced sales of auto racing helmets and accessories due to the decision to license the Bell brand to a third-party for these products, and lower sales of licensed cycling products in the mass channel.

Cost of Sales

The following table sets forth cost of sales for each of our segments for the years indicated:

% of % of 2011 Net Sales 2010 Net Sales (Dollars in millions) Team Sports $303.5 64.3 % $268.6 62.9 % Action Sports 247.9 68.4 % 241.8 69.9 % $551.4 66.0 % $510.4 66.0 %

The increase in Team Sports cost of sales as a percentage of net sales primarily relates to close out sales of ice hockey products at lower margins, which was partially offset by improved baseball bat and football helmet sales mix, reduced inventory write-offs and favorable foreign currency exchange rates.

The decrease in Action Sports cost of sales as a percentage of net sales primarily relates to higher volumes and improved mix of cycling helmets sold to the Specialty channel, increased sales and improved mix of cycling components sold in the aftermarket and to OEM customers, increased sales and improved mix of cycling accessories sold in the specialty and mass channels, higher volumes and lower closeout sales of powersports helmets, reduced inventory write-offs and favorable foreign currency exchange rates, all of which were partially offset by reduced sales of higher-margin snow helmets due to softness in the global market.

Gross Profit

The following table sets forth gross profit for each of our segments for the years indicated:

% of % of 2011 Net Sales 2010 Net Sales (Dollars in millions) Team Sports $168.8 35.7 % $158.2 37.1 % Action Sports 114.7 31.6 % 104.2 30.1 % $283.5 34.0 % $262.4 34.0 %

The decrease in Team Sports gross margin is primarily due to close out sales of ice hockey products at lower margins, which was partially offset by improved baseball bat and football helmet sales mix, reduced inventory write-offs and favorable foreign currency exchange rates.

Copyright © 2013 www.secdatabase.com. All Rights Reserved. Please Consider the Environment Before Printing This Document The increase in Action Sports gross margin relates primarily to higher volumes and improved mix of cycling helmets sold to the Specialty Channel, increased sales and improved mix of cycling components sold in the aftermarket and to OEM customers, increased sales and improved mix of cycling accessories sold in the specialty and mass channels, and higher volumes and lower closeout sales of powersports helmets, reduced inventory write-offs and favorable foreign currency exchange rates, all of which were partially offset by reduced sales of higher-margin snow helmets due to softness in the global market.

Selling, General and Administrative Expenses

During 2011, SG&A expenses increased $20.0 million or 10.5%, as compared to 2010. The increase primarily relates to:

increased variable selling expenses of $2.2 million related to the increase in net sales;

increased sales, marketing, promotion and sponsorship program spending by $7.7 million;

increased research and development expense of $3.7 million due to the investment in new products;

increased legal fees of $1.4 million resulting from legal settlements, reserve adjustments and increased litigation fees;

higher depreciation expense of $2.7 million primarily related to capital expenditures for information technology, facilities and molds and tooling.

Amortization of Intangibles

Amortization of intangibles decreased $2.2 million or 18.3%, as compared to 2010 due to certain intangible assets becoming fully amortized. Intangibles are composed of finite-lived trademarks and tradenames, customer relationships, patents and licensing and other agreements.

Interest Expense, Net

Net interest expense decreased $1.7 million to $42.9 million for 2011 from $44.6 million in 2010. The decrease relates to a decrease in interest rates in 2011 for the revolving credit facility, partially offset by costs incurred related to the Amendment to the ABL Facility. In addition, 2010 interest expense reflected a greater benefit from the change in the fair value of an interest rate swap.

Income Tax Expense

We recorded an income tax expense of $9.7 million in 2011, an effective tax rate of 49.2%, as compared to an income tax expense of $6.6 million in 2010, an effective tax rate of 44.9%. The difference between the effective rate and the statutory rate for 2011 is primarily attributable to the permanent difference for equity compensation expense and state income taxes; and for 2010 is primarily attributable to the permanent difference for equity compensation expense, state income taxes, changes to the reserve for uncertain tax positions and the permanent difference for income recognition under Section 956 of the United States Internal Revenue Code relating to Canadas investment in United States property.

Our results for 2010 and 2009 include the following items:

2010 2009 (Dollars in millions) Provision for excess and obsolete inventory write-offs $8.4 $6.8 Research and development expenses 13.2 13.5 Product liability settlement and litigation expenses 5.4 3.5 Provision for allowance for doubtful accounts 3.4 3.8 Incentive compensation expense 7.8 1.9 Equity compensation expense 3.4 5.3 Severance and other reorganizing activities 3.7 1.3 Depreciation expense 17.1 15.1 Licensing fees 4.0 2.4 New lacrosse business expenses 1.8

Net Sales

The following table sets forth net sales for each of our segments for the years indicated:

Change 2010 2009 $ % (Dollars in millions) Team Sports $426.8 $387.0 $39.8 10.3 % Action Sports 346.0 329.3 16.7 5.1 % $772.8 $716.3 $56.5 7.9 %

Net sales in both Team Sports and Action Sports were favorably impacted by the improving economic conditions and by favorable foreign currency exchange rate movements. We believe consumers began making more discretionary purchases after delaying them in 2009 and as a result retailers increased their inventory positions.

Net sales in both segments were positively impacted by favorable foreign currency exchange rate movements of $7.2 million and $1.7 million in Team Sports and Action Sports, respectively. On a constant currency basis, net sales in Team Sports and Action Sports were up $32.6 million or 8.4%, and $15.0 million or 4.6%, respectively. The Team Sports net sales increase resulted primarily from increased sales of football helmets and shoulder pads (resulting from gaining market share and selling into new channels), increased sales of baseball and softball equipment (due to increased bat, bag and protective sales, as new products and designs gained momentum), increased sales of hockey helmets and protective equipment (introduction of Z Shock helmet) and increased sales of collectible football helmets, all of which were partially offset by decreased sales of hockey skates. Performance of reconditioning services also increased during the year primarily due to the acquisition of an equipment reconditioner early in the year. Action Sports net sales increased due to higher sales of cycling accessories, snowsports helmets and goggles and cycling wheels, partially offset by reduced sales of cycling helmets. Sales of fitness-related products were relatively flat for the year.

Cost of Sales

The following table sets forth cost of sales for each of our segments for the years indicated:

% of % of 2010 Net Sales 2009 Net Sales (Dollars in millions) Team Sports $268.6 62.9 % $246.1 63.6 % Action Sports 241.8 69.9 % 236.3 71.8 %

Copyright © 2013 www.secdatabase.com. All Rights Reserved. Please Consider the Environment Before Printing This Document The decrease in Team Sports cost of sales as a percentage of net sales primarily relates to favorable foreign currency exchange rates on sales of hockey products in Canada and Europe, lower sourced product costs benefitting the sale of certain baseball and softball products, and improved mix on sales of football products, all of which were partially offset by unfavorable mix on sales of hockey products, higher licensing fees on sales of certain football products and close out sales on certain hockey products.

The decrease in Action Sports cost of sales as a percentage of net sales primarily relates to favorable mix on sales of cycling helmets and accessories, and snowsports helmets and goggles and favorable foreign currency exchange rates, which were partially offset by unfavorable mix on sales of cycling components and a write down in the value of auto racing inventory.

Gross Profit

The following table sets forth gross profit for each of our segments for the years indicated:

% of % of 2010 Net Sales 2009 Net Sales (Dollars in millions) Team Sports $158.2 37.1 % $140.9 36.4 % Action Sports 104.2 30.1 % 93.0 28.2 % $262.4 34.0 % $233.9 32.7 %

The increase in Team Sports gross margin primarily relates to favorable foreign currency exchange rates on sales of hockey products in Canada and Europe, lower sourced product costs benefitting the sale of certain baseball and softball products, and improved mix on sales of football products, all of which were partially offset by unfavorable mix on sales of hockey products, higher licensing fees on sales of certain football products and close out sales on certain hockey products.

The increase in Action Sports gross margin primarily relates to favorable mix on sales of cycling helmets and accessories, and snowsports helmets and goggles and favorable foreign currency exchange rates, which were partially offset by unfavorable mix on sales of cycling components and a write down in the value of auto racing inventory.

Selling, General and Administrative Expenses

During 2010, SG&A expenses increased $16.3 million or 9.3%, as compared to 2009. The increase primarily relates to:

increased incentive compensation expense of $5.9 million due to the improvement in profitability;

an increase in product liability settlement and defense costs of $1.9 million resulting from reserve adjustments and increased litigation costs;

increased variable selling expenses of $2.3 million related to the increase in net sales;

increased marketing, promotion and sponsorship program spending by $6.1 million;

higher depreciation expense of $3.3 million primarily related to capital expenditures for information technology and office expansion/renovation;

expenses of $1.8 million related to the new lacrosse business;

translation of foreign subsidiary expenses from local currency into United States dollars of $1.8 million;

a decrease in bad debt expense of $0.4 million resulting from improved collections experience and related reserve requirements;

mark-to-market adjustment in relation to foreign currency exchange forward contracts of $1.7 million;

decreased equity compensation expense of $1.9 million primarily related to a plan modification occurring in 2009.

Amortization of Intangibles

Amortization of intangibles decreased $1.6 million or 12.3%, as compared to 2009 due to certain intangible assets becoming fully amortized. Intangibles are composed of finite-lived trademarks and tradenames, customer relationships, patents and licensing and other agreements.

Interest Expense, Net

Net interest expense decreased $0.3 million to $44.6 million for 2010 from $44.9 million in 2009. The decrease was due to a lower average debt balance in 2010, the 2009 write-off of deferred financing fees of $8.8 million and the 2009 payment of $2.9 million of premium/tender fees in relation to redeeming the senior subordinated notes, and a favorable adjustment of $1.1 million to interest expense to reflect the change in the fair value of the interest rate swap during 2010. These reductions to interest expense were partially offset by a higher interest rate on outstanding debt. Changes in the fair value of the interest rate swap, which is not designated as a hedge, are recorded through earnings as part of interest expense throughout the term of the swap.

Income Tax Expense

We recorded an income tax expense of $6.6 million in 2010, an effective tax rate of 44.9%, as compared to an income tax expense of $4.7 million in 2009, an effective tax rate of 847.8%. The difference between the effective rate and the statutory rate for both 2010 and 2009 is primarily attributable to the permanent difference for equity compensation expense, state income taxes, changes to the reserve for uncertain tax positions and the permanent difference for Section 956 of the United States Internal Revenue Code relating to Canadas investment in United States property.

Quarterly Results

The following table presents unaudited interim operating results. We believe that the following information includes all adjustments, consisting only of normal recurring adjustments, necessary to present fairly our results of operations for the periods presented. Each quarter is comprised of 13 weeks and in 2011, the quarters ended on April 2, July 2, October 1 and December 31, 2011. The operating results for any period are not necessarily indicative of results for any future period.

For the Following Quarterly Periods First Second Third Fourth (Dollars in millions) (Unaudited) 2011: Net sales $203.4 $211.9 $212.5 $207.1 Gross profit 64.0 71.0 75.7 72.8 Income from operations 11.0 16.7 19.0 15.9 Net (loss) income (0.1 ) 2.9 4.7 2.5 2010: Net sales $194.1 $202.8 $198.8 $177.1 Gross profit 64.8 68.9 69.6 59.1 Income from operations 11.7 20.1 18.0 9.5 Net income 0.1 5.0 3.0

Our financing requirements are subject to variations due to seasonal changes in working capital levels. Internally generated funds are supplemented when necessary from external sources, primarily from the ABL Facility. The cash generated from operating activities, the issuance of the Notes offered on December 3, 2009, and the availability under the ABL Facility are our principal sources of liquidity. Each are described below. Based on our current level of operations and anticipated cost savings and operational improvements, we believe our cash flow from operations, available cash and available borrowings under the ABL Facility will be adequate to meet our liquidity needs for at least the next twelve months. We cannot guarantee that the business will generate sufficient cash flow from operations, that currently anticipated cost savings and operating improvements will be realized on schedule or that future borrowings will be available to us under the ABL Facility in an amount sufficient to enable us to repay our indebtedness, including our senior secured notes, or to fund our other liquidity needs. In addition, upon the occurrence of certain events, such as a change of control of our Company, we could be required to repay or refinance our indebtedness. We cannot assure you that we will be able to refinance any of our indebtedness, including the ABL Facility or our Notes, on commercially reasonable terms or at all.

Our ability to make payments to fund working capital, capital expenditures, debt service, strategic acquisitions, joint ventures and investments will depend on our ability to generate cash in the future, which is subject to general economic, financial, competitive, regulatory and other factors that are beyond our control. Future indebtedness may impose various restrictions and covenants on us which could limit our ability to respond to market conditions, to provide for unanticipated capital investments or to take advantage of business opportunities.

Our debt to capitalization ratio, which is total debt divided by the sum of total debt and stockholders equity, was 49.9% at December 31, 2011, as compared to 50.5% at January 1, 2011. The decrease was primarily attributable to the increase in 2011 shareholders equity as a result of earnings for the fiscal year ended December 31, 2011.

From time to time, we review and will continue to review acquisition opportunities as well as changes in the capital markets. If we were to consummate a significant acquisition or elect to take advantage of favorable opportunities in the capital markets, we may supplement availability or revise the terms under the ABL Facility or complete public or private offerings of debt securities. If the capital markets present favorable opportunities to purchase our own debt, we may do so.

9.750% Senior Secured Notes

In December 2009, in connection with the refinancing of our Companys then-existing indebtedness, or the Refinancing, we issued $350.0 million of 9.750% Senior Secured Notes, due December 2016, or the Notes. Interest is payable on the Notes semi- annually on June 1 and December 1 of each year. We may redeem some or all of the Notes prior to December 1, 2012 at a price equal to 100.00% of the principal amount, plus accrued and unpaid interest and a make-whole premium. We may redeem all or any of the Notes on or after December 1, 2012 and prior to December 1, 2013 at 107.313% of the principal amount of the Notes, plus accrued and unpaid interest. Then we may redeem all or any of the Notes on or after December 1, 2013 and prior to December 1, 2014 at 104.875% of the principal amount of the Notes, plus accrued and unpaid interest. Then we may redeem all or any of the Notes on or after December 1, 2014 and prior to December 1, 2015 at 102.438% of the principal amount of the Notes, plus accrued and unpaid interest. At any time on or after December 1, 2015, our Company may redeem all or any of the Notes at 100.00% of the principal amount of the Notes, plus accrued and unpaid interest. In addition, during any twelve month period commencing on the issue date prior to December 1, 2012, we may redeem up to 10% of aggregate principal amount of the Notes at a price equal to 103.00% of their principal amount, plus accrued and unpaid interest. At any time prior to December 1, 2012, we may also redeem up to 35.00% of the aggregate principal amount of the Notes at a price equal to 109.750% of the principal amount of the Notes, plus accrued and unpaid interest, with the net cash proceeds of one or more equity offerings of our Company. We are not required to make mandatory redemption or sinking fund payments with respect to the Notes. However, the Notes will become due and payable on October 1, 2015 unless on or prior to August 28, 2015, the indebtedness of EB Sports under its senior secured credit agreement with Wachovia Bank, N.A. and the lenders party thereto, or the New Holdco Facility, has been either repaid or refinanced with indebtedness with a stated maturity that is at least 91 days after the maturity date of the Notes.

Copyright © 2013 www.secdatabase.com. All Rights Reserved. Please Consider the Environment Before Printing This Document Among other provisions, the indenture governing the Notes contains certain restrictions that limit our Companys ability to (1) incur, assume or guarantee additional debt, (2) pay dividends and make other restricted payments, (3) create liens, (4) use the proceeds from sales of assets and subsidiary stock, (5) enter into sale and leaseback transactions, (6) enter into agreements that restrict dividends from subsidiaries, (7) change our business, (8) enter into transactions with affiliates and (9) transfer all or substantially all of our assets or enter into merger or consolidation transactions. The indenture governing the Notes also requires us to make an offer to repurchase the Notes at 101.00% of the principal amount following a change of control of our Company, and at 100.00% of the principal amount with the proceeds of certain sales of assets and subsidiary stock.

Subject to certain exceptions, the indenture governing the Notes permits our Company and our restricted subsidiaries to incur additional indebtedness, including senior indebtedness and secured indebtedness. In addition, the indenture will not limit the amount of indebtedness that our direct or indirect parent entities, including EB Sports and RBG, may incur.

ABL Credit Facility

Concurrently with the issuance of the Notes on December 3, 2009, our Company, together with certain of our subsidiaries as Canadian Borrowers (as defined therein) or Guarantors (as defined therein), entered into a senior secured asset based revolving credit facility with JPMorgan Chase Bank, N.A., as administrative agent and collateral agent, the other agents party thereto and the lenders party thereto, or the ABL Facility, under which our Company and the Canadian Borrowers may borrow, subject to availability under each of a United States and Canadian borrowing base, up to $250.0 million which amount, subject to certain conditions, may be increased to allow borrowings of up to $300.0 million. The unused portion of the ABL Facility (subject to borrowing base availability) is to be drawn from time to time for general corporate purposes (including permitted acquisitions) and working capital needs. At December 31, 2011, we had $42.0 million outstanding under the ABL facility and $190.9 million in availability.

Certain of our Companys wholly-owned domestic subsidiaries, and all subsidiaries that guarantee the Notes (currently only our wholly-owned domestic subsidiaries) guarantee all of our obligations (both United States and Canadian) under the ABL Facility. In addition, our wholly-owned Canadian subsidiaries guarantee the obligations of the Canadian borrowings under the Canadian sub-facility of the ABL Facility. Furthermore, we and our wholly-owned domestic subsidiaries, subject to certain exceptions, grant security with respect to substantially all of our personal property as collateral for our obligations (and related guarantees) under the ABL Facility, including a first-priority security interest in cash and cash equivalents, lockbox and deposit accounts, accounts receivable, inventory, other personal property relating to such inventory and accounts receivable and all proceeds therefrom and a second-priority security interest in substantially all of our equipment and all assets that secure the Notes on a first-priority basis. The obligations of our Canadian subsidiaries that are borrowers under the Canadian sub-facility of the ABL Facility are secured, subject to certain exceptions and permitted liens, on a first-priority lien basis, by substantially all of the assets of our wholly-owned Canadian subsidiaries and by our and our domestic subsidiaries assets on the same basis as borrowings under the ABL Facility. At December 31, 2011, we had a zero balance outstanding under the Canadian sub-facility of the ABL Facility.

On May 13, 2011, our Company entered into an Amendment and Restatement Agreement, or the Amendment, among our Company, the Canadian Borrowers (as defined therein), the subsidiary guarantors party thereto, the lenders party thereto, JPMorgan Chase Bank, N.A., as collateral agent and administrative agent and the other agents party thereto, which amended the ABL Facility. The Amendment, among other things, reduced the interest rate applicable to loans made under the ABL Facility and amended certain covenants thereunder applicable to our Company and our subsidiaries. In addition, the Amendment extended the maturity date of loans under the ABL Facility from December 3, 2013 to May 13, 2016; provided that if the Credit and Guaranty Agreement, dated as of December 3, 2009 among EB Sports Corp., as borrower, RBG Holdings Corp., as guarantor, Wachovia Bank, N.A., as administrative agent and collateral agent and the lenders from time to time party thereto has not been repaid or refinanced prior to July 1, 2015 with a new credit agreement that meets certain criteria set forth in the ABL Facility, the loans under the ABL Facility will mature on July 1, 2015.

Copyright © 2013 www.secdatabase.com. All Rights Reserved. Please Consider the Environment Before Printing This Document The interest rates per annum applicable to the loans under the ABL Facility, other than swingline loans and protective advances, equal an applicable margin percentage plus, at our option, (1) in the case of U.S. dollar denominated loans, a U.S. base rate or LIBOR, and (2) in the case of Canadian dollar denominated loans, a Canadian base rate or CDOR. Swingline loans and protective advances bear interest at the U.S. base rate for U.S. dollar denominated loans and the Canadian base rate for Canadian dollar denominated loans, in each case, plus an applicable margin (and plus an additional 2.0% in the case of protective advances). The applicable margin percentage for the ABL Facility, as amended by the Amendment, ranges between 1.5% and 2.5% for LIBOR or CDOR and 0.5% and 1.5% for the base rate, based upon our total leverage ratio as calculated under the ABL Facility. In addition to paying interest on outstanding principal under the ABL Facility, we are required to pay a commitment fee, in relation to the unutilized commitments, which ranges from 0.375% to 0.5% based upon our utilization of the ABL Facility (increasing when utilization is lower and decreasing when utilization is higher). We are also required to pay customary letter of credit fees.

The ABL Facility requires that if excess gross availability is less than the greater of a specified percentage of the gross borrowing base and a specified dollar amount, we must comply with a minimum fixed charge coverage ratio test. In addition, the ABL Facility includes negative covenants that, subject to significant exceptions, limit our ability and the ability of our subsidiaries, to, among other things (1) incur additional debt, (2) create liens, (3) transfer all or substantially all of our assets or enter into merger or consolidation transactions, (4) change our business, (5) make investments, loans, advances, guarantees and acquisitions, (6) transfer or sell assets, (7) enter into sale and leaseback transactions, (8) enter into swap agreements, (9) enter into transactions with affiliates and (10) enter into agreements that restrict dividends from subsidiaries.

Holdco Facility Obligations

Borrowings under the New Holdco Facility are not guaranteed by our Company or any of our subsidiaries and are senior unsecured obligations of EB Sports. However, EB Sports depends on us and our subsidiaries, who conduct the operations of the business, for dividends and other payments to generate the funds necessary to meet its financial obligations, including payments of principal and interest on the New Holdco Facility. Given that EB Sports controls our Companys direct parent, EB Sports has the ability, subject to the terms of our Companys existing senior secured credit facility and any other agreements which limit our ability to declare and pay dividends, to obtain money from our Company and our subsidiaries in order to fund its obligations under such loan.

As of December 31, 2011, the amount of loans issued under the New Holdco Facility was approximately $137.0 million, including accrued interest.

Sources and Uses of our Cash

Cash provided by operating activities was $29.8 million for 2011, as compared to $47.6 million of cash provided in 2010. The net decrease in cash provided by operating activities as compared to 2010 primarily reflects higher accounts receivable due to the increase in net sales in 2011 and a smaller increase in accrued expenses as compared to 2010, partially offset by a smaller increase in inventory in 2011 versus 2010 and a larger increase in accounts payable as compared to 2010.

Copyright © 2013 www.secdatabase.com. All Rights Reserved. Please Consider the Environment Before Printing This Document Cash provided by operating activities was $47.6 million for 2010, as compared to $53.8 million of cash provided in 2009. The net decrease in cash provided by operating activities as compared to 2009 primarily reflects (1) inventory increases in 2010 resulting from purchases made to support sales anticipated or scheduled in the early part of 2011, and (2) higher accounts receivable due to the increase in net sales in 2010, partially offset by (a) higher net income, (b) higher accounts payable, (c) higher accrued expenses due to increased interest accruals and increased incentive compensation accruals (d) lower current and noncurrent assets.

Operating activities provided $53.8 million of cash for 2009, as compared to $67.7 million of cash provided in 2008. The net decrease in cash provided by operating activities as compared to 2008 primarily reflects (1) lower net income, (2) lower accounts payable, (3) lower accrued expenses due to the payment in 2009 for incentive compensation related to 2008 and the decrease in the accrual for incentive compensation in 2009 and (4) lower noncurrent liabilities due to a reduction in the notional amount of our interest rate swap contracts related to our Refinancing, partially offset by (a) incremental inventory reductions in 2009, (b) the receipt of a deposit for insurance in 2009 and (c) lower accounts receivable due to the decline in net sales in 2009.

The Team Sports business is seasonal and driven primarily by baseball and softball, football and ice hockey buying patterns. Sales of baseball and softball products occur primarily in the late fall and winter months in preparation for the spring baseball season. Sales of football equipment and reconditioning services are driven primarily by football buying patterns, where orders begin at the end of the school football season (December) and run through to the start of the next season (August). Shipments of football products and performance of reconditioning services reach a low point during the football season. Sales of ice hockey equipment are driven primarily by hockey buying patterns with orders shipping in late spring for fall play.

Working capital typically experiences a buildup in the first half of the year as Team Sports seeks to balance its manufacturing and reconditioning facilities, and therefore, increases inventory. This pattern is magnified by the preference of many school districts to pay for items in the budget year in which they will be used. As July 1st often marks the start of the budget year for these customers, receivable balances generated during the first half of the year are historically reduced as collections are made in the second half of the year.

The Action Sports business is also seasonal and driven primarily by the warm weather months conducive to cycling. As such, Action Sports sales are lowest during the fourth calendar quarter. The seasonal impacts have been partially mitigated by the rise in snowsports sales which are sold primarily during the last two quarters of the year.

Action Sports typically experiences an increase in working capital in the first two fiscal quarters of the year as it builds inventory for the late spring and summer selling seasons for cycling products and ships preseason cycling helmet and accessory orders. Inventories of snowsports products increase in the second and third fiscal quarters in preparation for the upcoming fall-winter selling season. Working capital decreases in the third and fourth fiscal quarters as cycling and snowsports product inventories are reduced through the summer and fall-winter selling seasons, respectively and accounts receivable are collected.

We had $265.9 million in working capital as of December 31, 2011, as compared to $242.6 million at January 1, 2011. The $23.3 million increase in working capital primarily results from the increase in cash, higher accounts receivable, inventories and deferred taxes, partially offset by higher borrowings under the ABL Facility, and increases in accounts payable and accrued expenses. We had $242.6 million in working capital as of January 1, 2011, as compared to $211.2 million at January 2, 2010. The $31.4 million increase in working capital primarily results from higher accounts receivable, inventories and deferred taxes and lower borrowings under the ABL Facility, partially offset by decreases in cash, prepaid expenses and other current assets, and increases in accounts payable and accrued expenses.

Cash used in investing activities was $25.7 million in 2011, as compared to $22.5 million used in 2010. For both 2011 and 2010, the amount was related to capital expenditures for the purchase of property, plant and equipment and the purchase of businesses. Capital expenditures for 2011 were $23.8 million, as compared to $20.7 million in 2010. Capital expenditures made in both 2011 and 2010 were primarily related to the enhancement of our ERP system, facilities, and molds and tooling.

Copyright © 2013 www.secdatabase.com. All Rights Reserved. Please Consider the Environment Before Printing This Document Cash provided by financing activities was $1.8 million in 2011, as compared to $35.0 million used in 2010. In 2011 the net cash provided relates primarily to net proceeds on the ABL Facility and payment of debt issuance costs related to the Amendment of the ABL Facility, while in 2010 the net cash used related primarily to net paydowns on the ABL Facility.

Outlook

Although other factors will likely impact us, including some we do not foresee, we believe our performance for 2012 may be affected by the following:

Economic Climate. The uncertain worldwide economic environment could cause the reported financial information not to be necessarily indicative of future operating results or of future financial condition. The current economic environment continues to affect our business in a number of direct and indirect ways including: reduced consumer demand for our products; tighter inventory management by retailers; reduced profit margins due to pricing pressures and an unfavorable sales mix due to a higher concentration of sales of mid to lower price point products; changes in currency exchange rates; lack of credit availability, particularly for specialty retailers; inflation; and business disruptions due to difficulties experienced by suppliers and customers.

Retail Market Conditions. The retail market for sports equipment is extremely competitive, with strong pressure from retailers for lower prices. Also, we have experienced the effect of consumers trading down price points and delaying certain discretionary purchases, which has resulted in retailers reluctance to place orders for inventory in advance of selling seasons. Further, institutional customers have reduced or deferred purchases due to budget constraints. These trends may continue to have a negative impact on our businesses. We continue to address the retail environment through our focus on innovation and product development and emphasis on multiple price points.

Operations and Manufacturing. We intend to continue to streamline distribution, logistics and manufacturing operations, bring uniform methodologies to inventory management, optimize transportation, improve manufacturing efficiencies and provide a high level of service to our customers. Over a several year period we have transitioned production of certain products from our facilities to third party suppliers in Asia and other cost efficient sources of labor. However, as a result of our transition of the production of products from our own facilities to third party suppliers, we may become more vulnerable to higher levels of product defects, as well as increased sourced product costs, and our ability to mitigate such cost increases may be reduced.

Interest Expense and Debt Repayment. In connection with the Refinancing, we entered into a $250.0 million ABL Facility. As of December 31, 2011, the outstanding principal balance under the ABL Facility was $42.0 million. In addition, we have $350.0 million of outstanding principal amount of our Notes due in December 2016. Because our existing indebtedness requires that we use a substantial portion of our cash flows to service interest payments, the amount of available cash flows we will have for working capital, capital expenditures, acquisitions and other general corporate purposes could be limited.

Seasonality. Our business is subject to seasonal fluctuation. Sales of cycling products and accessories occur primarily during the warm weather months. Sales of baseball and softball products occur primarily in the late fall and winter months in preparation for the spring baseball season. Sales of football equipment and reconditioning services are driven primarily by football buying patterns, where orders begin at the end of the school football season (December) and run through to the start of the next season (August). Shipments of football products and performance of reconditioning services reach a low point during the football season. Sales of ice hockey equipment are driven by ice hockey buying patterns with orders shipping in late spring for fall play. Seasonal impacts are increasingly mitigated by the increase in snowsports and powersports sales which, to a certain extent, counter the cycling, baseball, softball and football seasons.

Future payments required under our significant contractual obligations as of December 31, 2011 are as follows:

Payments Due by Period Total 2012 2013 to 2014 2015 to 2016 2017 and Beyond (Dollars in thousands) Long-term debt(1) $392,000 $42,000 $ $350,000 $ Interest payments related to long-term debt(2) 167,781 34,125 68,250 65,406 Capital lease obligations(3) 88 32 56 Operating lease obligations 31,571 9,643 9,614 5,485 6,829 Sponsorship/royalty agreements 14,274 6,866 5,874 1,534 Total contractual cash obligations $605,714 $92,666 $83,794 $422,425 $6,829

Amount of Commitment Expiration per Period Total 2012 2013 to 2014 2015 to 2016 2017 and Beyond (Dollars in thousands) Standby letters of credit and similar instruments $3,256 $3,256 $ $ $ Total commercial commitments and letters of credit $3,256 $3,256 $ $ $

(1) Amounts include obligations pursuant to the ABL Facility and Notes that were outstanding on December 31, 2011. See Liquidity and Capital Resources.

(2) Estimated interest payments are calculated assuming current interest rates over minimum maturity periods specified in long-term debt agreements, not including the ABL Facility. Debt may be repaid sooner or later than such minimum maturity periods.

(3) Amounts include interest on capital lease obligations.

Off-Balance Sheet Arrangements

We do not have any off-balance sheet arrangements.

Critical Accounting Policies

We prepare our consolidated financial statements in conformity with accounting principles generally accepted in the United States. In the preparation of these financial statements, we make judgments, estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of revenues and expenses during the reporting period. The significant accounting policies followed in the preparation of the financial statements are detailed in Note 1 in the Notes to Consolidated Financial Statements. We believe that our application of the policies discussed below involve significant levels of judgments, estimates and complexity. These estimates are reviewed from time to time and are subject to change if the circumstances so indicate. The effect of any such change is reflected in results of operations for the period in which the change is made.

Revenue Recognition. Sales of products are recognized when title passes and risks of ownership have been transferred to our customer, which usually is upon shipment. Title generally passes to the dealer or distributor upon shipment from our facilities and the risk of loss upon damage, theft or destruction of the product in transit is the responsibility of the dealer, distributor or third party carrier. Reconditioning revenue is recognized upon the completion of services. Allowances for sales returns, discounts and allowances, including volume-based customer incentives, are estimated and recorded concurrent with the recognition of the sale. Royalty income, which is not material, is recorded when earned based upon contract terms with licensees which provide for royalties.

Copyright © 2013 www.secdatabase.com. All Rights Reserved. Please Consider the Environment Before Printing This Document Accounts Receivable and Allowances. We review the financial condition and creditworthiness of potential customers prior to contracting for sales and record accounts receivable at their face value upon completion of the sale to our customers. We record an allowance for doubtful accounts based upon managements estimate of the amount of uncollectible receivables. This estimate is based upon prior experience including historic losses as well as current economic conditions. The estimates can be affected by changes in the retail industry, customer credit issues and customer bankruptcies. Since we cannot predict future changes in the retail industry and financial stability of our customers, actual future losses from uncollectible accounts may differ from our estimates. If the financial condition of our customers were to deteriorate, resulting in their inability to make payments, a larger allowance might be required. In the event we determine that a smaller or larger allowance is appropriate, we would record a credit or a charge to selling, general and administrative expense in the period in which such a determination is made. Uncollectible receivables are written-off once management has determined that further collection efforts will not be successful. We generally do not require collateral from our customers.

Inventories. Inventories are stated at the lower of cost (determined on a first-in, first-out basis) or market and include material, labor and factory overhead. Provisions for excess and obsolete inventories are based on managements assessment of slow-moving and obsolete inventory on a product-by-product basis. We record adjustments to our inventory for estimated obsolescence or a decrease in market value equal to the difference between the cost of the inventory and the estimated market value, based on market conditions. These adjustments are estimates, which could vary significantly, either favorably or unfavorably, from actual experience if future economic conditions, levels of consumer demand, customer inventory levels or competitive conditions differ from our expectations.

Long-lived and intangible assets. We follow the current accounting guidance relating to goodwill and trademarks, which have indefinite lives and are not amortized. The carrying values of all long-lived assets, excluding goodwill and indefinite lived intangibles, are reviewed for impairment whenever events or changes in circumstances indicate the carrying amount of an asset or group of assets may not be recoverable (such as a significant decline in sales, earnings or cash flows or material adverse changes in the business climate) in accordance with current accounting guidelines. An impairment loss is recognized when the undiscounted future cash flows estimated to be generated by the asset to be held and used are not sufficient to recover the unamortized balance of the asset. The impairment review includes a comparison of future cash flows expected to be generated by the asset or group of assets with their associated carrying value. If the carrying value of the asset or group of assets exceeds expected cash flows (undiscounted and without interest charges), an impairment loss would be recognized to the extent that the carrying value exceeds the fair value. The estimate of future cash flows is based upon, among other things, certain assumptions about expected future operating performance. These estimates of undiscounted cash flows may differ from actual cash flows due to, among other things, changes in general economic conditions, customer requirements and our business model.

For goodwill, on an annual basis or more frequently if certain conditions exist, the fair values of our reporting units are compared with their carrying values and an impairment loss is recognized if the carrying value exceeds fair value to the extent that the carrying value of goodwill exceeds its fair value. We generally base our measurement of the fair value of a reporting unit on the present value of future discounted cash flows. The discounted cash flows model indicates the fair value of each reporting unit based on the present value of the cash flows that we expect each reporting unit to generate in the future. Our significant estimates in the discounted cash flows model include our discount rate, long-term rate of growth and profitability of each reporting unit and working capital effects. The growth and profitability rates are based on our expectations for the markets in which we operate and cost increases that are reflective of anticipated inflation (deflation) adjusted for any anticipated future cost savings and our discount rate is based on our weighted average cost of capital. In our most recent impairment analysis, we used a weighted average long-term cash flow growth rate of 5.1%, and a discount rate of 9.7%. Our weighted average long-term growth rate reflects our expectation that our future cash flows will increase. The fair value of the reporting units could change significantly due to changes in estimates of future cash flows as a result of changing economic conditions, our business environment and as a result of changes in the discount rate used.

Copyright © 2013 www.secdatabase.com. All Rights Reserved. Please Consider the Environment Before Printing This Document The Companys goodwill impairment analysis performed as of December 31, 2011 indicated that none of the reporting units were at risk of failing the goodwill impairment test, and the fair values of each of the reporting units would have to decline at a minimum in excess of 20% depending on the specific reporting unit in order for the carrying value of a particular reporting unit to exceed the fair value. If reductions in estimated undiscounted or discounted cash flows occur in the future, and such reductions indicate that an impairment loss has occurred, an impairment loss will be recorded in the period that such a determination is made.

We amortize certain definite-lived acquired intangible assets on a straight-line basis over estimated useful lives of seven to nineteen years for patents, seven to twenty years for customer relationships, four to five years for licensing and other agreements and seven years for finite-lived trademarks and tradenames. Deferred financing costs are being amortized by the straight-line method over the term of the related debt, which does not vary significantly from an effective interest method.

Income Taxes. We follow the provisions of Accounting Standards Codification (ASC) Topic 740, Income Taxes. Deferred tax liabilities and assets are recognized for the expected future tax consequences of events that have been included in the financial statements or tax returns. Deferred tax liabilities and assets are determined based on the difference between the financial statement and tax bases of assets and liabilities (excluding non-deductible goodwill) using enacted tax rates in effect for the years in which the differences are expected to become recoverable or payable. A portion of our deferred tax assets relate to net operating loss carryforwards. The realization of these assets is based upon estimates of future taxable income. Changes in economic conditions and the business environment and our assumptions regarding realization of deferred tax assets can have a significant effect on income tax expense.

Product Liability Litigation Matters and Contingencies. We are subject to various product liability claims and/or suits brought against us for claims involving damages for personal injuries or deaths. Allegedly, these injuries or deaths relate to the use by claimants of products manufactured or reconditioned by us or our subsidiaries and, in certain cases, products manufactured by others. The ultimate outcome of these claims, or potential future claims, cannot currently be determined. We estimate the uninsured portion of probable future costs and expenses related to claims, as well as incurred but not reported claims and record an accrual in this amount on our consolidated balance sheets. These accruals are based on managements best estimate of probable losses and defense costs anticipated to result from such claims, from within a range of potential outcomes, based on available information, including an analysis provided by an independent actuarial services firm, previous claims history and available information on alleged claims. However, due to the uncertainty involved with estimates, actual results could vary substantially from these estimates.

Derivative Instruments and Hedging Activity. We enter into foreign currency exchange forward contracts to reduce our risk related to inventory purchases. These contracts are not designated as hedges, and therefore, they are recorded at fair value at each balance sheet date, with the resulting change charged or credited to SG&A in the Consolidated Statements of Operations and Comprehensive Income.

Warranty Liability. We record a warranty obligation at the time of sale based on our historical experience. We estimate our warranty obligation by reference to historical product warranty return rates, material usage and service delivery costs incurred in correcting the product. Should actual product warranty return rates, material usage or service delivery costs differ from the historical rates, revisions to the estimated warranty liability would be required.

Stock-Based Compensation. Effective January 1, 2006, we adopted accounting standards which requires us to expense Class B Common Units of our Parent, or Units, granted under our Parents Incentive Plan based upon the fair market value of the Units on the date of grant. We are amortizing the fair market value of Units granted over the vesting period of the Units and we are using the prospective method of adoption. For Units issued prior to January 1, 2006, we accounted for these Units using the intrinsic value method in accordance with previous accounting standards.

In June 2011, the Financial Accounting Standards Board, the FASB, issued a new standard which revises the manner in which entities present comprehensive income in their financial statements. The new standard removes the presentation options and requires entities to report components of other comprehensive income in either (1) a continuous statement of comprehensive income or (2) two separate but consecutive statements. The new standard does not change the items that must be reported in other comprehensive income and based on an update issued by the FASB, the effective date is pending and there may be a future modification to the standard. The adoption of the new standard will not have a material impact on our Companys consolidated financial statements as we currently show comprehensive income as a continuous statement with our Statement of Income.

In September 2011, the FASB issued an amendment to simplify how an entity is required to test goodwill for impairment. Under this amendment, an entity has the option to first assess qualitative factors to determine whether it is more likely than not, that the fair value of a reporting unit is less than its carrying amount. If, after assessing the totality of events or circumstances, an entity determines it is more likely than not, that the fair value of a reporting unit is less than its carrying amount, then performing the two-step quantitative impairment test is necessary; otherwise no further testing is necessary. The amendment is effective for annual and interim goodwill impairment tests performed for fiscal years beginning after December 15, 2011. The adoption of these amendments will not have a material impact on our Companys consolidated financial statements.

Item 7A. Quantitative and Qualitative Disclosures about Market Risk

Foreign Currency Risk

Our net sales and expenses are predominantly denominated in United States dollars. During the fiscal years ended December 31, 2011, January 1, 2011 and January 2, 2010, approximately 87.7%, 85.2% and 86.8% of our net sales were in United States dollars, respectively, with substantially all of the remaining sales in Canadian dollars, British pounds, Euros and Taiwan dollars. In addition, we purchase a number of materials abroad, including finished goods and raw materials from third parties. A significant amount of these purchases were from vendors in Asia, the majority of which were located in mainland China. We may decide to increase our international sourcing in the future. As a result, we have exposure to currency exchange risks.

Most of what we purchase in Asia are finished goods rather than raw materials. Because we generally purchase these goods in United States dollars, changes in the value of the United States dollar can have a more immediate effect on the cost of our purchases. If we are unable to increase our prices to a level sufficient to cover any increased costs, it could adversely affect our margins.

We enter into foreign currency exchange forward contracts to reduce the risks related to inventory purchases and foreign currency based accounts receivable denominated in foreign currencies. At December 31, 2011, there were no foreign currency forward contracts in place. In the future, if we feel our foreign currency exposure has increased, we may consider entering into additional hedging transactions to help mitigate that risk.

Considering both the anticipated cash flows from firm purchase commitments and anticipated purchases for the next quarter, a hypothetical 10% weakening of the United States dollar relative to other currencies would not have a material adverse effect on our expected first quarter 2012 earnings or cash flows. This analysis is dependent on actual purchases during the next quarter occurring within 90% of budgeted forecasts. In addition, the effect of the hypothetical change in exchange rates ignores the effect this movement may have on other variables, including competitive risk. If it were possible to quantify this competitive impact, the results could well be different than the sensitivity effects analysis described. In addition, it is unlikely currencies would uniformly strengthen or weaken relative to the United States dollar. In reality, some currencies may weaken while others may strengthen. Moreover, any movement of the United States dollar relative to other currencies and its impact on materials costs would likely be partially offset by the impact on net sales due to our sales internationally and the conversion of those international sales into United States dollars.

We are exposed to market risk from changes in interest rates that can affect our operating results and overall financial condition. In connection with our refinancing in December 2009, we entered into a new $250.0 million ABL Facility. As of December 31, 2011, the outstanding principal balance under this facility was $42.0 million. The interest rates on the ABL Facility are based on (1) the prime rate or LIBOR in the case of U.S. dollar denominated loans and (2) the prime rate or CDOR in the case of Canadian dollar denominated loans, in each case plus an applicable margin percentage. A hypothetical 10% increase from the average interest rate of 3.6% for fiscal 2011, based on the average ABL Facility balance of $50.3 million would result in approximately a $0.2 million increase in interest expense for the fiscal year ended December 31, 2011.

The following Consolidated Financial Statements of Easton-Bell Sports, Inc. and its subsidiaries for each of the years in the three- year period ended December 31, 2011 are included in this Item:

Page Report of Independent Registered Public Accounting Firm 58

Consolidated Balance Sheets as of December 31, 2011 and January 1, 2011 59

Consolidated Statements of Operations and Comprehensive Income for the fiscal years ended December 31, 2011, January 1, 2011 and January 2, 2010 60

Consolidated Statements of Stockholders Equity for the fiscal years ended December 31, 2011, January 1, 2011 and January 2, 2010 61

Consolidated Statements of Cash Flows for the fiscal years ended December 31, 2011, January 1, 2011 and January 2, 2010 62

Notes to Consolidated Financial Statements 63

The information under the heading Quarterly Results of Item 7 on page 46 of this Form 10-K is incorporated herein by reference.

The Board of Directors and Stockholder of Easton-Bell Sports, Inc.

We have audited the accompanying consolidated balance sheets of Easton-Bell Sports, Inc. and subsidiaries as of December 31, 2011 and January 1, 2011, and the related consolidated statements of operations and comprehensive income, stockholders equity, and cash flows for each of the three years in the period ended December 31, 2011. Our audits also included the financial statement schedule listed in the Index at Item 15(a)(2). These financial statements and schedule are the responsibility of the Companys management. Our responsibility is to express an opinion on these financial statements and schedule based on our audits.

We conducted our audits in accordance with the standards of the Public Company Accounting Oversight Board (United States). Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement. We were not engaged to perform an audit of the Companys internal control over financial reporting. Our audits included consideration of internal control over financial reporting as a basis for designing audit procedures that are appropriate in the circumstances, but not for the purpose of expressing an opinion on the effectiveness of the Companys internal control over financial reporting. Accordingly we express no such opinion. An audit also includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements, assessing the accounting principles used and significant estimates made by management, and evaluating the overall financial statement presentation. We believe that our audits provide a reasonable basis for our opinion.

In our opinion, the financial statements referred to above present fairly, in all material respects, the consolidated financial position of the Company and its subsidiaries at December 31, 2011 and January 1, 2011, and the consolidated results of their operations and their cash flows for each of the three years in the period ended December 31, 2011, in conformity with U.S. generally accepted accounting principles. Also, in our opinion, the related financial statement schedule, when considered in relation to the basic financial statements taken as a whole, presents fairly, in all material respects, the information set forth therein.

/s/ Ernst & Young LLP

Los Angeles, California March 27, 2012

December 31, January 1, 2011 2011 (Amounts in thousands, except share and per share amounts)

ASSETS Current assets: Cash and cash equivalents $29,505 $24,024 Accounts receivable, net 250,183 216,166 Inventories, net 145,815 141,093 Prepaid expenses 6,942 7,080 Deferred taxes, net 17,798 16,254 Other current assets 9,645 8,483 Total current assets 459,888 413,100 Property, plant and equipment, net 54,329 49,736 Deferred financing fees, net 12,622 14,248 Intangible assets, net 270,458 279,047 Goodwill 208,697 206,928 Other assets 1,617 1,495 Total assets $1,007,611 $964,554

LIABILITIES AND STOCKHOLDERS EQUITY Current liabilities: Revolving credit facility $42,000 $38,893 Current portion of capital lease obligations 26 24 Accounts payable 88,689 73,148 Accrued expenses 63,291 58,452 Total current liabilities 194,006 170,517 Long-term debt, less current portion 346,670 346,168 Capital lease obligations, less current portion 52 78 Deferred taxes 58,928 49,379 Other noncurrent liabilities 18,330 20,774 Total liabilities 617,986 586,916 Stockholders equity: Common stock: $0.01 par value, 100 shares authorized, 100 shares issued and outstanding at December 31, 2011 and January 1, 2011 Additional paid-in capital 363,730 360,223 Retained earnings 25,429 15,401 Accumulated other comprehensive income 466 2,014 Total stockholders equity 389,625 377,638 Total liabilities and stockholders equity $1,007,611 $964,554

See accompanying notes to consolidated financial statements.

Copyright © 2013 www.secdatabase.com. All Rights Reserved. Please Consider the Environment Before Printing This Document EASTON-BELL SPORTS, INC. AND SUBSIDIARIES CONSOLIDATED STATEMENTS OF OPERATIONS AND COMPREHENSIVE INCOME

Fiscal Year Ended Fiscal Year Ended Fiscal Year Ended December 31, January 1, January 2, 2011 2011 2010 (Amounts in thousands) Net sales $834,910 $772,843 $716,330 Cost of sales 551,409 510,446 482,428 Gross profit 283,501 262,397 233,902 Selling, general and administrative expenses 211,292 191,303 175,038 Amortization of intangibles 9,612 11,765 13,406 Income from operations 62,597 59,329 45,458 Interest expense, net 42,872 44,568 44,910 Income before income taxes 19,725 14,761 548 Income tax expense 9,697 6,635 4,646 Net income (loss) 10,028 8,126 (4,098 ) Other comprehensive income: Foreign currency translation adjustment (1,548 ) 2,240 5,320 Comprehensive income $8,480 $10,366 $1,222

See accompanying notes to consolidated financial statements.

Accumulated Additional Other Total Common Paid-in Retained Comprehensive Stockholders Shares Capital Earnings (Loss) Income Equity (Amounts in thousands, except share data) Balance as of January 3, 2009 100 $341,197 $11,373 $(5,546 ) $347,024 Equity compensation expense 5,327 5,327 Net loss in 2009 (4,098 ) (4,098 ) Capital contribution by RBG 12,858 12,858 Distribution to RBG (2,594 ) (2,594 ) Foreign currency translation adjustment 5,320 5,320 Balance as of January 2, 2010 100 356,788 7,275 (226 ) 363,837 Equity compensation expense 3,435 3,435 Net income in 2010 8,126 8,126 Foreign currency translation adjustment 2,240 2,240 Balance as of January 1, 2011 100 360,223 15,401 2,014 377,638 Equity compensation expense 3,507 3,507 Net income in 2011 10,028 10,028 Foreign currency translation adjustment (1,548 ) (1,548 ) Balance as of December 31, 2011 100 $363,730 $25,429 $466 $389,625

See accompanying notes to consolidated financial statements.

Fiscal Year Ended Fiscal Year Ended Fiscal Year Ended December 31, January 1, January 2, 2011 2011 2010 (Amounts in thousands) Cash flows from operating activities: Net income (loss) $10,028 $8,126 $(4,098 ) Adjustments to reconcile net income (loss) to net cash provided by operating activities: Depreciation and amortization 28,842 28,873 28,530 Amortization of deferred financing fees and debt discount 3,290 3,460 3,530 Deferred financing fees written-off 120 8,775 Equity compensation expense 3,507 3,435 5,327 Deferred income taxes 8,005 3,628 (1,169 ) Disposal of property, plant and equipment 53 299 3 Changes in operating assets and liabilities, net of effects from purchase of businesses: Accounts receivable, net (34,800 ) (6,116 ) 7,580 Inventories, net (5,345 ) (11,820 ) 21,344 Other current and noncurrent assets (2,053 ) 2,581 1,278 Accounts payable 15,512 2,158 (10,789 ) Accrued expenses 5,047 12,815 (2,002 ) Other current and noncurrent liabilities (2,454 ) 133 (4,515 ) Net cash provided by operating activities 29,752 47,572 53,794 Cash flows from investing activities: Purchase of property, plant and equipment (23,798 ) (20,724 ) (15,656 ) Purchase of intellectual property (400 ) Purchase of businesses, net of cash acquired (1,875 ) (1,750 ) Net cash used in investing activities (25,673 ) (22,474 ) (16,056 ) Cash flows from financing activities: Payments on capital lease obligations (24 ) (22 ) (21 ) Payments on revolving ABL credit facility (54,671 ) (61,000 ) (15,000 ) Proceeds from revolving ABL credit facility 57,778 26,000 85,000 Proceeds from old revolving credit facility 6,000 Payments on old revolving credit facility (6,000 ) Proceeds from issuance of senior secured notes 345,677 Payments on old senior term notes (315,788 ) Extinguishment of senior subordinated notes (140,000 ) Capital contribution by RBG 12,858 Distribution to RBG (2,594 ) Payment of debt issuance costs (1,282 ) (17,505 ) Net cash provided by (used in) financing activities 1,801 (35,022 ) (47,373 ) Effect of exchange rate changes on cash and cash equivalents (399 ) 630 1,652 Net change in cash and cash equivalents 5,481 (9,294 ) (7,983 ) Cash and cash equivalents, beginning of year 24,024 33,318 41,301

See accompanying notes to consolidated financial statements.

Copyright © 2013 www.secdatabase.com. All Rights Reserved. Please Consider the Environment Before Printing This Document EASTON-BELL SPORTS, INC. AND SUBSIDIARIES NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Amounts in thousands, except as specified)

1. Business and Summary of Significant Accounting Policies

Organization and Business

Easton-Bell Sports, Inc. is a wholly-owned subsidiary of RBG Holdings Corp., or RBG, which, in turn, is a wholly-owned subsidiary of EB Sports Corp., or EB Sports, of which 100% of the issued and outstanding voting common stock is owned by Easton- Bell Sports, LLC, the ultimate parent company, or our Parent. Unless otherwise indicated, all references in this Form 10-K to Easton- Bell, we, us, our, and the Company refer to Easton-Bell Sports, Inc. and its consolidated subsidiaries. References to Easton, Bell and Riddell refer to Easton Sports, Inc. and its consolidated subsidiaries, Bell Sports Corp. and its consolidated subsidiaries and Riddell Sports Group, Inc. and its consolidated subsidiaries, respectively.

Our Company is a designer, developer and marketer of sporting goods and related accessories under authentic brands. Our products are used in baseball, softball, ice hockey, football, lacrosse and other team sports, and in various action sports, including cycling, snowsports, powersports and skateboarding. We currently sell a broad range of products primarily under four brands Easton (baseball, softball, ice hockey, lacrosse and cycling equipment), Bell (cycling and action sports helmets and accessories), Giro (cycling and snowsports helmets and accessories) and Riddell (football and reconditioning services).

Reporting Period

Principles of Consolidation

The consolidated financial statements of our Company and subsidiaries have been prepared in accordance with accounting principles generally accepted in the United States. All significant intercompany accounts and transactions have been eliminated.

Cash and Cash Equivalents

Our Company considers all investments with an original maturity of three months or less to be cash equivalents. Cash equivalents at December 31, 2011 and January 1, 2011 were $29,505 and $24,024, respectively.

Accounts Receivable and Concentration of Credit Risk

Accounts receivable at December 31, 2011 and January 1, 2011 are net of allowances for doubtful accounts of $8,091 and $6,942, respectively. We sell our products to a wide range of customers. Our customers are not geographically concentrated. As of December 31, 2011 and January 1, 2011, 37.6% and 32.3%, respectively, of our gross accounts receivable were attributable to our top ten customers. In 2011, 2010 and 2009, one customer accounted for 13.9% of our net sales for each of the three years, but no other customer accounted for more than 10% of our net sales. Our Companys top ten customers accounted for approximately 34.8%, 33.6% and 34.1% of our net sales for 2011, 2010 and 2009, respectively. Ongoing credit evaluations of customers are performed and collateral on trade accounts receivable is generally not required. An allowance is determined based on the age of the accounts receivable balance and specific charge-off history. Trade accounts receivable are charged to the allowance when we determine that the receivable will not be collectable. Trade accounts receivable balances are determined to be delinquent when the amount is past due based on the payment terms with our customer.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS(Continued) (Amounts in thousands, except as specified)

Inventories

Inventories are stated at the lower of cost (determined on a first-in, first-out basis) or market and include material, labor and factory overhead. Provisions for excess and obsolete inventories are based on our assessment of excess and obsolete inventory on a product-by-product basis. At December 31, 2011 and January 1, 2011, we had a reserve for excess and obsolete inventories of $9,976 and $9,651, respectively. Inventories, which are net of excess and obsolete inventory, consisted of the following at December 31, 2011 and January 1, 2011:

2011 2010 Raw materials $20,990 $19,310 Work-in-process 2,647 2,364 Finished goods 122,178 119,419 $145,815 $141,093

Property, Plant and Equipment

Property, plant and equipment are stated at acquisition cost less accumulated depreciation. Property under capital lease is recorded at the lower of fair market value of the asset or the present value of future minimum lease payments. Repairs and maintenance costs that do not extend the lives of property and equipment are expensed as incurred. Depreciation, which includes amounts amortized under capital leases, is being computed using the straight-line method over the estimated useful lives of the related assets, except for leasehold improvements, which are depreciated over the lesser of the lease term or their useful life, as follows:

Buildings and leasehold improvements Ten to twenty years Machinery and equipment Three to seven years Office equipment and furniture Three to five years Computer equipment and software Three to five years

Property, plant and equipment consisted of the following at December 31, 2011 and January 1, 2011:

2011 2010 Land $105 $105 Building and leasehold improvements 14,294 12,230 Machinery and equipment 41,980 33,004 Office equipment and furniture 4,562 4,202 Computer equipment and software 49,596 39,780 Construction in progress 13,953 13,830 124,490 103,151 Less accumulated depreciation (70,161 ) (53,415 ) $54,329 $49,736

Depreciation expense relating to all property, plant and equipment amounted to $19,230, $17,108 and $15,124 for 2011, 2010 and 2009, respectively.

Capitalized costs of internal use software is amortized on a straight-line basis over the estimated useful life commencing from the date the software asset is ready for its intended use.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS(Continued) (Amounts in thousands, except as specified)

Goodwill and Intangible Assets

Goodwill and other indefinite-lived intangible assets resulting from acquisitions are not amortized. A fair value method of testing goodwill and other indefinite-lived intangible assets for impairment is completed on an annual basis, or on an interim basis if an event occurs or circumstances change that would indicate impairment or reduce the fair value of the indefinite-lived intangible asset or a reporting unit (for goodwill) below its carrying value. Our Companys annual impairment assessments are performed as of the fiscal year end date by determining an estimate of the fair value of our indefinite-lived intangible assets or, for goodwill, the fair value of the reporting units to evaluate whether an impairment exists. A reporting unit is an operating segment or one level below an operating segment (e.g., a component). A component of an operating segment is a reporting unit if the component constitutes a business for which discrete financial information is available and our executive management team regularly reviews the operating results of that component.

The results of our Companys annual analysis indicated that no impairment occurred in the carrying amount of goodwill and other indefinite-lived intangible assets in 2011, 2010 or 2009, and that none of the reporting units was at risk of failing the impairment test as of the date of each respective impairment assessment. We also reviewed our finite-lived intangible assets and noted no impairment occurred in the carrying amount in 2011, 2010 or 2009.

Our Companys acquired intangible assets were as follows at December 31, 2011 and January 1, 2011:

December 31, 2011 January 1, 2011 Gross Gross Carrying Accumulated Carrying Accumulated Amounts Amortization Amounts Amortization Amortized intangible assets: Trademarks and tradenames $1,702 $(1,702 ) $1,702 $(1,702 ) Customer relationships 59,180 (38,126 ) 59,180 (35,166 ) Patents 60,345 (42,714 ) 60,345 (36,275 ) Licensing and other 6,923 (5,934 ) 5,900 (5,721 ) Total $128,150 $(88,476 ) $127,127 $(78,864 ) Indefinite-lived intangible assets: Trademarks $230,784 $230,784

Our Company amortizes certain acquired intangible assets on a straight-line basis over estimated useful lives of 7 to 20 years for customer relationships, 7 to 19 years for patents and 4 to 5 years for licensing and other agreements. As of December 31, 2011, the weighted average life is 12.4 years for customer relationships, 10.2 years for patents, 4.7 years for licensing and other agreements and the overall weighted average life for acquired intangible assets is approximately 10.9 years. For 2011, 2010 and 2009 acquired intangible asset amortization was $9,612, $11,765 and $13,406, respectively. We estimate that amortization of existing intangible assets will be $9,351, $6,826, $6,063, $5,354 and $3,220 for 2012, 2013, 2014, 2015 and 2016, respectively.

Our Company does not amortize most of our trademarks, which are determined to have indefinite lives. The Riddell tradename has been in existence since 1929. The Riddell brand is currently one of the most widely recognized and sold football helmet brands in the world. This brand is one of the primary product lines of our Companys business and management plans to use the trademark for an indefinite period of time. We plan to continue to make investments in product development to enhance the value of the brand in the future. There are no legal, regulatory, contractual, competitive, economic or other factors that we are aware of that our Company believes would limit the useful life of the trademark. The Riddell trademark registration can be renewed in the countries in which we operate at a nominal cost.

Copyright © 2013 www.secdatabase.com. All Rights Reserved. Please Consider the Environment Before Printing This Document As a result of our Companys acquisition of Bell in September 2004, we identified the Bell, Giro and Blackburn trademarks as indefinite-lived assets. The Bell, Giro and Blackburn trademarks have been in existence since 1952, 1986 and 1988, respectively. We plan to use these trademarks for an indefinite period of time and will continue to make investments in product development to enhance the value of the brands in the future. There are no legal, regulatory, contractual, competitive, economic or other factors that we are aware of that our Company believes would limit the useful life of the trademarks. The Bell, Giro and Blackburn trademark registrations can be renewed in the countries in which we operate at a nominal cost.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS(Continued) (Amounts in thousands, except as specified)

As a result of our Companys acquisition of Easton in March 2006, we identified the Easton trademark as an indefinite-lived asset. The Easton brand has been in existence since 1922 and we plan to use this trademark for an indefinite period of time and will continue to make investments in product development to enhance the value of the brand in the future. There are no legal, regulatory, contractual, competitive, economic or other factors that we are aware of that our Company believes would limit the useful life of the Easton trademark.

Changes in the carrying amount of goodwill during the year ended December 31, 2011 and January 1, 2011 are summarized as follows:

Team Action Sports Sports Consolidated Balance at January 2, 2010 $142,077 $61,464 $203,541 Acquisitions 3,158 3,158 Additional purchase price 229 229 Balance at January 1, 2011 145,464 61,464 206,928 Acquisition 862 862 Opening balance sheet reclassification 907 907 Balance at December 31, 2011 $146,326 $62,371 $208,697

During the first fiscal quarter of 2010, our Company completed two small acquisitions and the carrying amount of goodwill related to our Team Sports segment increased by $3,158. In January 2010, Riddell acquired certain assets and assumed certain liabilities of an athletic equipment reconditioning company for a purchase price of approximately $2,700 consisting of cash and contingent consideration. In addition, during January 2010, Easton acquired certain assets and assumed certain liabilities of a company engaged in the production and sale of lacrosse equipment for approximately $1,000 in cash. Based on an allocation of purchase price, the carrying amount of goodwill related to our Team Sports segment was increased by $3,158 due these acquisitions.

The carrying amount of goodwill related to the Team Sports segment was increased in 2010 by $229 due to earn-out payments related to Riddell.

During the fourth fiscal quarter of 2011, our Company completed a small acquisition, as Easton acquired certain assets and assumed certain liabilities of an ice hockey skate design company for a purchase price of approximately $1,875 consisting of cash and contingent consideration. The carrying amounts of intangible assets and goodwill related to our Team Sports segment increased by $1,023 and $862, respectively.

In 2011, our Company determined that a non-current deferred tax liability related to the purchase of Bell was understated by approximately $907, and therefore, we have recorded an adjustment to increase goodwill by $907 in our Action Sports segment and increase non-current deferred tax liability by the same amount.

Long-Lived Assets

Copyright © 2013 www.secdatabase.com. All Rights Reserved. Please Consider the Environment Before Printing This Document on many factors, including current operating results, expected market trends and competitive influences. We also evaluate the amortization periods assigned to our intangible assets to determine whether events or changes in circumstances warrant revised estimates of useful lives. Assets to be disposed of by sale are reported at the lower of the carrying amount or fair value, less estimated costs to sell. During 2011, 2010 and 2009, we did not have any impairment of long-lived assets.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS(Continued) (Amounts in thousands, except as specified)

Deferred Financing Fees

Deferred financing fees are being amortized by the straight-line method over the term of the related debt, which does not vary significantly from the effective interest method. In connection with the Amendment in May 2011, $120 of debt issuance costs that were associated with a former syndicate member that did not participate in the Amendment were written-off. We also incurred bank fees and other costs of $1,282, which have been recorded as debt issuance costs. We amortized $2,788, $3,007 and $3,530 of debt issuance fees during 2011, 2010 and 2009, respectively, which is included in Interest expense, net.

Income Taxes

Deferred tax liabilities and assets are recognized for the expected future tax consequences of events that have been included in the financial statements or tax returns. Deferred tax liabilities and assets are determined based on the difference between the financial statement and tax bases of assets and liabilities (excluding non-deductible goodwill) using enacted tax rates in effect for the years in which the differences are expected to become recoverable or payable. Our Company is included in the consolidated tax return of our Parent.

Revenue Recognition

Sales of products are recognized when title passes and risks of ownership have been transferred to our customer, which usually is upon shipment. Title generally passes to our dealer or distributor upon shipment from our Companys facilities and the risk of loss upon damage, theft or destruction of the product in transit is the responsibility of our dealer or distributor. Reconditioning revenue is recognized upon the completion of services. Allowances for sales returns, discounts and allowances, including volume-based customer incentives, are estimated and recorded concurrent with the recognition of the sale. Royalty income, which historically has not been material, is recorded when earned based upon contract terms with licensees which provide for royalties.

Warranty Obligations

Our Company records a product warranty obligation at the time of sale based on our historical experience. We estimate our warranty obligation by reference to historical product warranty return rates, material usage and service delivery costs incurred in correcting the product. Should actual product warranty return rates, material usage or service delivery costs differ from the historical rates, revisions to the estimated warranty liability would be required.

The following is a reconciliation of the changes in our Companys product warranty liability for 2011 and 2010.

Year Ended 2011 2010 Beginning of year $2,434 $3,242 Warranty costs incurred during the period (5,646 ) (4,995 ) Warranty expense recorded during the period 5,452 4,187 End of year $2,240 $2,434

Advertising Costs

Our Company expenses all advertising costs as incurred. Cooperative advertising costs are recorded as a reduction of sales at the time the revenue is earned. Advertising costs were $5,846, $3,765 and $4,486, for 2011, 2010 and 2009, respectively.

Shipping and Handling

All shipping and handling fees billed to our customers are included as a component of net sales. Shipping and handling costs incurred by us are included in cost of sales.

Our Company expenses all research and development costs as incurred. Research and development expenses were approximately $16,881, $13,210 and $13,535 for 2011, 2010 and 2009, respectively, and are included in selling, general and administrative expenses.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS(Continued) (Amounts in thousands, except as specified)

Use of Estimates

The preparation of financial statements in conformity with accounting principles generally accepted in the United States requires our management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements and reported amount of revenues during the reporting period. Actual results could differ from those estimates. The estimates made by our management primarily relate to accounts receivable allowances, inventory reserves, product liability reserves, deferred income taxes, intangible assets, goodwill and certain other liabilities.

Foreign Currency Translation

The financial position and results of operations outside the United States are measured using the local currency as the functional currency. Revenues and expenses are translated into United States dollars at average exchange rates prevailing during the fiscal period, and assets and liabilities are translated using the exchange rates at the balance sheet date. Translation adjustments are included in accumulated other comprehensive income in stockholders equity. Gains and losses, which result from foreign currency transactions, are included in earnings.

Fair Values of Financial Instruments

The carrying amounts reported in our Companys Consolidated Balance Sheets for Cash and cash equivalents, Accounts receivable, net and Accounts payable approximate fair value because of the immediate or short-term maturity of these financial instruments. The fair value amount of long-term debt under our Companys Notes are based on quoted market prices for the same or similar issues on borrowing rates available to our Company for loans with similar terms and average maturities.

The estimated fair values of our Companys long-term debt including accrued interest were as follows:

December 31, 2011 January 1, 2011 Carrying Fair Carrying Fair Amount Value Amount Value Financial liability: 9.75% Senior Secured Notes $349,609 $384,439 $349,201 $387,158

Stock-Based Employee Compensation

Our Company expenses Class B Common Units, or Units, granted under our Parents equity incentive plan, or the Incentive Plan, based upon the fair market value calculation under the Black-Scholes Option Pricing Model of such Units on the date of grant. We amortize the fair market value of the Units granted over the vesting period of the Units.

Recent Accounting Pronouncements

In June 2011, the FASB issued a new standard which revises the manner in which entities present comprehensive income in their financial statements. The new standard removes the presentation options and requires entities to report components of other comprehensive income in either (1) a continuous statement of comprehensive income or (2) two separate but consecutive statements. The new standard does not change the items that must be reported in other comprehensive income and based on an update issued by the FASB, the effective date is pending and there may be a future modification to the standard. The adoption of the new standard will not have a material impact on our Companys consolidated financial statements as we currently show comprehensive income as a continuous statement with our Consolidated Statements of Operations and Comprehensive Income.

Copyright © 2013 www.secdatabase.com. All Rights Reserved. Please Consider the Environment Before Printing This Document is more likely than not, that the fair value of a reporting unit is less than its carrying amount, then performing the two-step quantitative impairment test is necessary; otherwise no further testing is necessary. The amendment is effective for annual and interim goodwill impairment tests performed for fiscal years beginning after December 15, 2011. The adoption of these amendments will not have a material impact on our Companys consolidated financial statements.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS(Continued) (Amounts in thousands, except as specified)

2. Long-term Debt

Long-term debt consisted of the following at December 31, 2011 and January 1, 2011:

2011 2010 9.750% Senior Secured Notes $350,000 $350,000 Senior Secured Credit ABL Facility 42,000 38,893 Capital lease obligations 78 102 Total long-term debt 392,078 388,995 Less unamortized debt discount on senior secured notes (3,330 ) (3,832 ) Less current maturities of long-term debt (42,026 ) (38,917 ) Long-term debt, less current portion(1) $346,722 $346,246

(1) Includes long-term portion of capital lease obligations.

9.750% Senior Secured Notes

In December 2009, in connection with the refinancing of our Companys then-existing indebtedness, or the Refinancing, we issued $350,000 of 9.750% Senior Secured Notes, due December 2016, or the Notes. Interest is payable on the Notes semi-annually on June 1 and December 1 of each year. We may redeem some or all of the Notes prior to December 1, 2012 at a price equal to 100.00% of the principal amount, plus accrued and unpaid interest and a make-whole premium. We may redeem all or any of the Notes on or after December 1, 2012 and prior to December 1, 2013 at 107.313% of the principal amount of the Notes, plus accrued and unpaid interest. Then we may redeem all or any of the Notes on or after December 1, 2013 and prior to December 1, 2014 at 104.875% of the principal amount of the Notes, plus accrued and unpaid interest. Then we may redeem all or any of the Notes on or after December 1, 2014 and prior to December 1, 2015 at 102.438% of the principal amount of the Notes, plus accrued and unpaid interest. At any time on or after December 1, 2015, our Company may redeem all or any of the Notes at 100.00% of the principal amount of the Notes, plus accrued and unpaid interest. In addition, during any twelve month period commencing on the issue date prior to December 1, 2012, we may redeem up to 10% of aggregate principal amount of the Notes at a price equal to 103.00% of their principal amount, plus accrued and unpaid interest. At any time prior to December 1, 2012, we may also redeem up to 35.00% of the aggregate principal amount of the Notes at a price equal to 109.750% of the principal amount of the Notes, plus accrued and unpaid interest, with the net cash proceeds of one or more equity offerings of our Company. We are not required to make mandatory redemption or sinking fund payments with respect to the Notes. However, the Notes will become due and payable on October 1, 2015 unless on or prior to August 28, 2015, the indebtedness of EB Sports under its senior secured credit agreement with Wachovia Bank, N.A. and the lenders party thereto, or the New Holdco Facility, has been either repaid or refinanced with indebtedness with a stated maturity that is at least 91 days after the maturity date of the Notes.

Among other provisions, the indenture governing the Notes contains certain restrictions that limit our Companys ability to (1) incur, assume or guarantee additional debt, (2) pay dividends and make other restricted payments, (3) create liens, (4) use the proceeds from sales of assets and subsidiary stock, (5) enter into sale and leaseback transactions, (6) enter into agreements that restrict dividends from subsidiaries, (7) change our business, (8) enter into transactions with affiliates and (9) transfer all or substantially all of our assets or enter into merger or consolidation transactions. The indenture governing the Notes also requires us to make an offer to repurchase the Notes at 101.00% of the principal amount following a change of control of our Company, and at 100.00% of the principal amount with the proceeds of certain sales of assets and subsidiary stock.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS(Continued) (Amounts in thousands, except as specified)

ABL Credit Facility

Concurrently with the issuance of the Notes on December 3, 2009, our Company, together with certain of our subsidiaries as Canadian Borrowers (as defined therein) or Guarantors (as defined therein), entered into a senior secured asset based revolving credit facility with JPMorgan Chase Bank, N.A., as administrative agent and collateral agent, the other agents party thereto and the lenders party thereto, or the ABL Facility, under which our Company and the Canadian Borrowers may borrow, subject to availability under each of a United States and Canadian borrowing base, up to $250,000 which amount, subject to certain conditions, may be increased to allow borrowings of up to $300,000. The unused portion of the ABL Facility (subject to borrowing base availability) is to be drawn from time to time for general corporate purposes (including permitted acquisitions) and working capital needs. At December 31, 2011, we had $42,000 outstanding under the ABL facility and $190,923 in availability.

The interest rates per annum applicable to the loans under the ABL Facility, other than swingline loans and protective advances, equal an applicable margin percentage plus, at our option, (1) in the case of U.S. dollar denominated loans, a U.S. base rate or LIBOR, and (2) in the case of Canadian dollar denominated loans, a Canadian base rate or CDOR. Swingline loans and protective advances bear interest at the U.S. base rate for U.S. dollar denominated loans and the Canadian base rate for Canadian dollar denominated loans, in each case, plus an applicable margin (and plus an additional 2.0% in the case of protective advances). The applicable margin percentage for the ABL Facility, as amended by the Amendment, ranges between 1.5% and 2.5% for LIBOR or CDOR and 0.5% and 1.5% for the base rate, based upon our total leverage ratio as calculated under the ABL Facility. In addition to paying interest on outstanding principal under the ABL Facility, we are required to pay a commitment fee, in relation to the unutilized commitments, which ranges from 0.375% to 0.5% based upon our utilization of the ABL Facility (increasing when utilization is lower and decreasing when utilization is higher). We are also required to pay customary letter of credit fees.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS(Continued) (Amounts in thousands, except as specified)

At December 31, 2011, the aggregate contractual maturities of long-term debt were as follows:

Senior Secured Capital Fiscal Year Ending Notes Leases Total 2012 $ $26 $26 2013 29 29 2014 23 23 2015 2016 350,000 350,000 Thereafter $350,000 $78 $350,078

Cash payments for interest were $40,543, $42,061 and $32,294 for 2011, 2010 and 2009, respectively.

Our Company has arrangements with various banks to issue standby letters of credit or similar instruments, which guarantee our obligations for the purchase of certain inventories and for potential claims exposure for insurance coverage. At December 31, 2011 and January 1, 2011, outstanding letters of credit issued under the revolving credit facilities totaled $3,256 and $3,306, respectively. The amount of unused lines of credit at December 31, 2011 and January 1, 2011, was $190,923 and $162,902, respectively. The average interest rate on short term borrowings under the credit facilities during 2011 and 2010 was approximately 3.6% and 5.9%, respectively.

In connection with the Amendment in May 2011, $120 of debt issuance costs that were associated with a former syndicate member that did not participate in the Amendment were written-off. We also incurred bank fees and other costs of $1,282, which have been recorded as debt issuance costs. We amortized $2,788, $3,007 and $3,530 of debt issuance fees during 2011, 2010 and 2009, respectively, which is included in Interest expense, net.

Holdco Facility Refinancing and Equity Investment

On December 3, 2009, EB Sports refinanced its previous senior unsecured credit agreement with Wachovia Investment Holdings, LLC and the lenders named therein pursuant to which EB Sports had borrowed $175,000, or the Previous Holdco Facility, through (1) a new senior secured credit agreement, or the New Holdco Facility, with Wachovia Investment Holdings, LLC and the existing lenders under the Previous Holdco Facility, (2) an equity investment from Fenway Easton-Bell Sports Holding, LLC and Fenway Partners Capital Fund III, L.P., or together the Fenway Investors, each an affiliate of Fenway Partners, LLC and certain existing investors of Parent and EB Sports and their respective affiliates of $1,725 in cash in exchange for Class C Common Units of our Parent (of which, $1,466 was contributed by Parent to EB Sports) and (3) an equity investment from the Fenway Investors and certain existing investors of EB Sports and their respective affiliates of $113,275 in cash in exchange for new non-voting (other than rights to designate one director of EB Sports), non-redeemable Series A Preferred Stock of EB Sports, or the Series A Preferred Stock. The Series A Preferred Stock accrues dividends quarterly at a rate of 17.5% per annum. In addition to the $13,200 invested by existing investors of Parent, their

Copyright © 2013 www.secdatabase.com. All Rights Reserved. Please Consider the Environment Before Printing This Document respective affiliates and Paul Harrington in August 2009, the issuance of new shares of Series A Preferred Stock on December 3, 2009 resulted in an aggregate of $126,475 invested in Series A Preferred Stock immediately after giving effect to the financing.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS(Continued) (Amounts in thousands, except as specified)

Under the terms of the refinancing transaction, the net proceeds from the equity issuance were used to repurchase loans under the Previous Holdco Facility at a price of 90% of the principal amount thereof, and the consenting lenders whose loans were repurchased exchanged their remaining principal and accrued interest into a new facility with a maturity date of December 31, 2015. The Previous Holdco Facility has been terminated. At closing, EB Sports had borrowed $108,268 under the New Holdco Facility. Borrowings under the New Holdco Facility are secured by a pledge of all capital stock of RBG and Easton-Bell. The New Holdco Facility is guaranteed by RBG and will, in the future, be guaranteed by any other subsidiary of EB Sports if such other subsidiary of EB Sports guarantees other indebtedness of either EB Sports or RBG. Borrowings under the New Holdco Facility through May 1, 2012 will bear interest at 11.5% per annum and EB Sports may elect to pay interest in cash or defer interest by adding it to the aggregate amount of principal due under the loan. Interest after May 1, 2012 will be paid in cash; provided, that prior to maturity if EB Sports does not have sufficient cash on hand and Easton-Bell is either prohibited from distributing sufficient cash to EB Sports to make such interest payments or does not have sufficient liquidity (in the reasonable determination of Easton-Bell management) to permit Easton-Bell to distribute cash in an amount sufficient to allow such payment, EB Sports will pay cash to the extent it is able to do so using cash on hand after giving effect to permitted and available distributions, and the remainder of the interest due shall be added to the principal amount of the loan at a rate of 13.5% per annum for the then ending interest period.

Borrowings under the New Holdco Facility are not guaranteed by us or any of our subsidiaries and are senior unsecured obligations of EB Sports. However, given that EB Sports controls our Companys direct parent, EB Sports has the ability, subject to the terms of the ABL Facility and any other agreements which limit our ability to declare and pay dividends, to obtain money from us and our subsidiaries in order to fund its obligations under such loan.

At December 31, 2011, the amount of loans issued under the New Holdco Facility was $137,034 including accrued interest.

3. Accrued Expenses

Accrued expenses consist of the following at December 31, 2011 and January 1, 2011:

2011 2010 Salaries, wages, commissions and bonuses $17,032 $14,675 Advertising 5,919 5,410 Rebates 6,111 6,044 Warranty 2,240 2,434 Product liability current portion 5,521 4,491 Royalties 1,703 1,830 Interest 3,092 3,689 Income taxes 1,504 1,192 Other 20,169 18,687 $63,291 $58,452

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS(Continued) (Amounts in thousands, except as specified)

4. Leases

Our Company leases various facilities and equipment under non-cancelable operating leases with terms ranging from 2 to 12 years. Most leases contain renewal options and may be subject to periodic adjustments for inflation and scheduled escalations. At December 31, 2011, future minimum commitments for capital leases and for operating leases with non-cancelable terms were as follows:

Capital Operating Fiscal Year Ending Leases Leases 2012 $32 $9,643 2013 32 5,617 2014 24 3,997 2015 2,766 2016 2,719 Thereafter 6,829 Total minimum lease payments 88 $31,571 Less amount representing interest (10 ) Present value of minimum lease payments, including current maturities of $26 $78

Property and equipment included the following amounts under capital leases at December 31, 2011 and January 1, 2011:

2011 2010 Leasehold improvements $247 $247 Less accumulated depreciation (199 ) (181 ) $48 $66

Rent expense for operating leases was approximately $10,317, $9,873 and $9,698 for 2011, 2010 and 2009, respectively.

5. Employee Benefit Plans

At December 31, 2011, our Company had two noncontributory defined benefit pension plans that cover certain unionized employees. Funding and administrative expense for these plans was approximately $9, $11 and $18 for 2011, 2010 and 2009, respectively. Further disclosures have not been made due to the immateriality of these plans.

At December 31, 2011, our Company had one defined contribution plan covering substantially all of our non-union employees. Through March 31, 2009, we contributed to each participant a matching contribution equal to 50.0% of the first 6.0% of the participants compensation that has been contributed to the plan, subject to applicable legal limits. Effective April 1, 2009, we contribute to each participant a matching contribution determined on a discretionary basis. No discretionary contributions were made to the plan for 2010 and 2009. Discretionary contributions were made in 2011. Expenses related to these plans amounted to approximately $1,344, $6 and $570 for 2011, 2010 and 2009, respectively.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS(Continued) (Amounts in thousands, except as specified)

6. Segment Information

Our Company has two reportable segments: Team Sports and Action Sports. The majority of Eastons activity is reflected in our Team Sports segment which primarily consists of football, baseball, softball, ice hockey, lacrosse and other team sports products and reconditioning services related to certain of these products. Our Action Sports segment consists primarily of helmets, equipment, components, footwear and accessories for cycling, snowsports and powersports and fitness related products. Following the acquisition of Easton, our Action Sports segment includes Eastons cycling business. Our Company evaluates segment performance primarily based on income from operations excluding equity compensation expense, management expenses, restructuring and other infrequent expenses, amortization of intangibles and corporate expenses. Our selling, general and administrative expenses, excluding corporate expenses, are charged to each segment based on where the expenses are incurred. Segment operating income as presented by our Company may not be comparable to similarly titled measures used by other companies. As a result, the components of operating income for one segment may not be comparable to another segment.

Segment results for 2011, 2010 and 2009 are as follows:

Team Action Sports Sports Consolidated Year ended December 31, 2011: Net sales $472,338 $362,572 $834,910 Income from operations 54,547 54,304 108,851 Depreciation 11,414 7,816 19,230 Capital expenditures 14,007 9,791 23,798 Year ended January 1, 2011: Net sales $426,816 $346,027 $772,843 Income from operations 58,569 48,600 107,169 Depreciation 10,001 7,107 17,108 Capital expenditures 9,982 10,742 20,724 Year ended January 2, 2010: Net sales $387,021 $329,309 $716,330 Income from operations 46,078 42,237 88,315 Depreciation 9,030 6,094 15,124 Capital expenditures 8,297 7,359 15,656

Team Action Sports Sports Consolidated Assets December 31, 2011 $640,109 $367,502 $1,007,611 January 1, 2011 599,980 364,574 964,554

A reconciliation from the segment information to the Consolidated Statements of Operations and Comprehensive Income is set forth below:

Fiscal Year 2011 2010 2009

Segment income from operations $108,851 $107,169 $88,315 Equity compensation expense (3,507 ) (3,435 ) (5,327 )

Copyright © 2013 www.secdatabase.com. All Rights Reserved. Please Consider the Environment Before Printing This Document Amortization of intangibles (9,612 ) (11,765 ) (13,406 ) Corporate expenses (33,135 ) (32,640 ) (24,124 ) Consolidated income from operations $62,597 $59,329 $45,458

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS(Continued) (Amounts in thousands, except as specified)

(a) The following table summarizes net sales by product line. The categorization of our Companys products into product lines is based on the characteristics of the individual products and is subject to judgment in some cases and can vary over time. In instances where products move between product lines, we reclassify the amounts in the product lines for all prior periods. Such reclassifications typically do not materially change the sizing of, or the underlying trends of results within each product line.

2011 2010 2009 % of % of % of Net Sales Net Sales Net Sales Net Sales Net Sales Net Sales Team Sports Baseball and softball products $175,826 21.1 % $151,097 19.6 % $136,924 19.2 % Ice hockey products 112,116 13.4 111,127 14.4 107,273 15.0 Football products and reconditioning 121,075 14.5 98,351 12.7 81,947 11.4 Other products and licensing 63,321 7.6 66,241 8.6 60,877 8.5 $472,338 56.6 % $426,816 55.3 % $387,021 54.1 %

Action Sports Cycling helmets $136,592 16.4 % $134,073 17.3 % $137,837 19.2 % Snowsports products 48,772 5.8 56,550 7.3 45,609 6.4 Powersports products 10,814 1.3 8,958 1.2 9,164 1.3 Premium cycling components, accessories, footwear and apparel 64,604 7.7 46,931 6.1 42,376 5.9 Fitness accessories 18,823 2.3 18,920 2.4 17,921 2.5 Cycling accessories 82,967 9.9 80,595 10.4 76,402 10.6 $362,572 43.4 % $346,027 44.7 % $329,309 45.9 % Total Net Sales $834,910 100.0 % $772,843 100.0 % $716,330 100.0 %

(b) Net sales by customer location for 2011, 2010 and 2009 were as follows:

2011 2010 2009 North America $712,007 $655,121 $602,367 Europe 100,254 101,714 100,137 Other 22,649 16,008 13,826 $834,910 $772,843 $716,330

2011 2010 North America $41,735 $38,299 Other 12,594 11,437 $54,329 $49,736

(d) Total assets by location at December 31, 2011 and January 1, 2011 were as follows:

2011 2010 North America $943,259 $912,619

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS(Continued) (Amounts in thousands, except as specified)

7. Product Liability, Litigation and Other Contingencies

Product Liability

Our Company is subject to various product liability claims and/or suits brought against us for claims involving damages for personal injuries or deaths. Allegedly, these injuries or deaths relate to the use by claimants of products manufactured by our Company and, in certain cases, products manufactured by others. The ultimate outcome of these claims, or potential future claims, cannot be determined. Our management obtains an actuarial analysis and has established an accrual for probable losses based on this analysis, which considers, among other factors, our previous claims history and available information on alleged claims. However, due to the uncertainty involved with estimates, actual results could vary substantially from those estimates.

In the opinion of management, amounts accrued for exposures relating to product liability claims and other legal proceedings are adequate and, accordingly, the ultimate resolution of these matters is not expected to have a material adverse effect on our Companys consolidated financial statements. As of December 31, 2011, our Company had no known probable but inestimable exposures relating to product liability or other legal proceedings that are expected to have a material adverse effect on our Company.

There can be no assurance, however, that unanticipated events will not require our Company to increase the amount it has accrued for any matter or accrue for a matter that has not been previously accrued because it was not considered probable.

Certain of our entities are named in seven suits by groups of retired NFL players. We believe these complaints are without merit and we are vigorously defending against them. These cases are at preliminary stages, and we are unable to predict outcomes, or reasonably estimate a range of possible losses, if any. In the event that we are determined to have any liability in these matters, we believe that the insurance policies that we had in place during the time periods covered by the allegations will adequately cover any liability. The claims are complex and span several years. During the time period of the factual allegations, we had product liability insurance from numerous carriers. Through insurance coverage counsel, we are aggressively identifying policies, putting carriers on notice and pursuing claims coverage with many insurance carriers. We expect that we will be afforded adequate coverage for defense costs and liability, if any.

Our Company maintains product liability insurance coverage under various policies. These policies provide coverage against claims resulting from alleged injuries sustained during the respective policy periods, subject to policy terms and conditions. The primary portion of our Companys product liability coverage is written under a policy expiring in January 2013 with a $2,000 limit per occurrence excess of a $1,000, $50 and $500 self-insured retention for helmets, soft goods and all other products, respectively. Our Companys first layer excess policy is written under a liability policy with a limit of $25,000 excess of $3,000 expiring in January 2013. We also carry a second layer excess liability policy providing an additional limit of $15,000 excess of $28,000 expiring January 2013, and a third layer excess liability policy providing an additional limit of $10,000 excess of $43,000 expiring January 2013, for a total limit of $53,000.

Litigation and Other Contingencies

Our Company is also involved in various non-product liability claims and actions, including employment related matters as well as claims relating to potential infringement of intellectual property rights of others. In 2002, one of our competitors sued us in Canadian Federal Court alleging infringement of a hockey skate patent. In 2010, we received an unfavorable judgment on the issue of liability in this suit. Liability and damages are bifurcated proceedings in Canada, and we are now in the damages phase of this proceeding. We do not believe that any resulting infringement damages award will have a material adverse effect on our financial results. We anticipate this matter will be resolved in approximately two years.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS(Continued) (Amounts in thousands, except as specified)

8. Income Taxes

Our Company applies FASB ASC topic 740, Income Taxes or ASC 740 which addresses the determination of whether tax benefits claimed, or expected to be claimed on a tax return should be recorded in the financial statements. Under ASC 740, our Company may recognize the tax benefit from an uncertain tax position only if it is more likely than not that the tax position will be sustained on examination by the taxing authorities, based on the technical merits of the position. The tax benefits recognized in the financial statements from such a position should be measured based on the largest benefit that has a greater than fifty percent likelihood of being realized upon ultimate settlement. ASC 740 also provides guidance on derecognition, classification, interest and penalties on income taxes, accounting in interim periods and requires increased disclosures.

Our Company recognizes interest and penalties related to uncertain tax positions in income tax expense. Changes in unrecognized benefits in any given year are recorded as a component of deferred tax expense. Interest accrued on unrecognized tax benefits at December 31, 2011 was $318. At December 31, 2011 and January 1, 2011, there were $3,357 and $3,258 of unrecognized tax benefits that if recognized would affect the annual effective tax rate.

A reconciliation of the total gross amount of unrecognized tax benefits at December 31, 2011 and January 1, 2011 is as follows:

2011 2010 Beginning balance $3,258 $2,690 Additions for tax positions of the current year Additions for tax positions of the prior year 99 568 Ending balance $3,357 $3,258

Our Company is generally subject to tax examination for a period of three years after tax returns are filed. Therefore, the statute of limitations remains open for tax years 2008 and forward. However, when a company has net operating loss carryovers, those tax years remain open until three years after the net operating losses are utilized. Therefore, the tax years for Bell Sports, Inc. remain open back to 1997. The tax years for Riddell remain open back to 2004.

Income tax expense (benefit) consisted of the following for December 31, 2011, January 1, 2011 and January 2, 2010:

2011 2010 2009 Current tax expense (benefit): Federal $413 $(929 ) $3 State 1,560 785 1,386 Foreign 627 2,582 1,919 2,600 2,438 3,308 Deferred tax expense (benefit): Federal 6,215 2,898 2,041 State 934 593 175 Foreign (52 ) 706 (878 ) 7,097 4,197 1,338 Income tax expense $9,697 $6,635 $4,646

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS(Continued) (Amounts in thousands, except as specified)

A reconciliation of income taxes computed at the United States federal statutory income tax rate (35%) to the provision for income taxes reflected in the Consolidated Statements of Operations and Comprehensive Income for the years ended December 31, 2011, January 1, 2011 and January 2, 2010 is as follows:

2011 2010 2009 Provision for income taxes at United States federal statutory rate of 35% $6,904 $5,167 $192 State and local income taxes, net of federal income tax effect 1,631 803 1,015 Taxes on foreign income which differ from the United States statutory rate (134 ) (137 ) (1,423 ) Non-deductible equity compensation expense 1,227 1,202 1,864 Tax effect of other permanent items 56 372 1,197 Unrecognized tax benefits activity 29 544 2,690 Other (16 ) (1,316 ) (889 ) $9,697 $6,635 $4,646

Deferred tax assets and liabilities are determined based on the differences between the financial reporting and tax bases of assets and liabilities. The significant components of deferred income tax assets and liabilities consist of the following at December 31, 2011 and January 1, 2011:

2011 2010 Deferred income tax assets: Receivable reserves $3,313 $2,830 Inventory 4,736 4,533 Accrued expenses and reserves 13,881 13,431 Net operating loss carryforwards 31,821 32,339 Hedging assets 170 Other 3,036 2,288

Total deferred tax assets 56,787 55,591 Deferred income tax liabilities: Property, plant and equipment 7,263 2,577 Intangible assets 83,481 79,626

Total deferred tax liabilities 90,744 82,203 Valuation allowance (7,173 ) (6,513 )

Total net deferred income tax liability $(41,130 ) $(33,125 )

At December 31, 2011, our Company had estimated net operating loss carryforwards available for U.S. federal income tax purposes of approximately $80,372. Based on Internal Revenue Code Section 382 relating to changes in ownership of our Company, utilization of the net operating loss carryforwards is limited to $61,826, which is the primary reason for $6,513 of the valuation allowance. These net operating loss carryforwards will begin to expire in 2021 through 2029. The additional $660 of valuation allowance established in the current year relates to net operating losses and capital loss carryforwards in foreign jurisdictions, including Canada and Sweden.

Copyright © 2013 www.secdatabase.com. All Rights Reserved. Please Consider the Environment Before Printing This Document filing our tax returns on a consolidated basis with EB Sports, there are additional net operating loss carryforwards that would be available to offset future income of our Company and EB Sports. To the extent these net operating losses are utilized to offset future income of our Company, a tax sharing agreement would be entered into providing that the tax benefit received by our Company ascribed to these net operating losses be recorded as either a payable to EB Sports or a contribution of capital by EB Sports to our Company.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS(Continued) (Amounts in thousands, except as specified)

Income (loss) before income taxes, consisted of the following:

2011 2010 2009 Domestic $16,475 $6,525 $(3,034 ) Foreign 3,250 8,236 3,582 Income before income taxes $19,725 $14,761 $548

Our Company has cumulative undistributed earnings of non-U.S. subsidiaries of $23,267 for which U.S. taxes have not been provided. These earnings are intended to be permanently reinvested outside the U.S. If future events necessitate that these earnings should be repatriated to the U.S., an additional tax expense and related liability may be required.

Cash paid for income taxes was $3,465, $3,362 and $6,251 for 2011, 2010 and 2009, respectively.

9. Derivative Instruments and Hedging Activity

Our Company accounts for all derivatives on the balance sheet as an asset or liability measured at fair value and changes in fair values are recognized in earnings unless specific hedge accounting criteria are met for cash flow or net investment hedges. If such hedge accounting criteria are met, the change is deferred in stockholders equity as a component of accumulated other comprehensive income. The deferred items are recognized in the period the derivative contract is settled. As of December 31, 2011, we had not designated any of our derivative instruments as hedges, and therefore, have recorded the changes in fair value in the Consolidated Statements of Operations and Comprehensive Income.

Our Company uses a fair value hierarchy that prioritizes observable and unobservable inputs used to measure fair value into three broad levels, which are described below:

Level 1: Quoted prices (unadjusted) in active markets that are accessible at the measurement date for assets or liabilities. The fair value hierarchy gives the highest priority to Level 1 inputs.

Level 2: Observable prices that are based on inputs not quoted on active markets, but corroborated by market data.

Level 3: Unobservable inputs are used when little or no market data is available. The fair value hierarchy gives the lowest priority to Level 3 inputs.

In determining fair value, our Company utilizes valuation techniques that maximize the use of observable inputs and minimize the use of unobservable inputs to the extent possible, as well as considers counterparty credit risk in its assessment of fair value.

In 2008, our Company entered an interest rate swap agreement with Wachovia Bank, N.A. The interest rate swap had an initial fixed USD LIBOR of 2.921%, and was subsequently revised to a fixed USD LIBOR of 2.811% for the period commencing October 15, 2008, through April 14, 2010 and thereafter a fixed USD LIBOR of 2.921% until the expiration of the agreement on April 15, 2011. The swap agreement was not designated as a hedge, and therefore, was recorded at fair value at each balance sheet date, with the resulting changes in fair value charged or credited to interest expense in the accompanying Consolidated Statements of Operations and Comprehensive Income each period.

The swap fair value was determined through the use of a model that considers various assumptions, including time value, yield curves, as well as other relevant economic measures, which are inputs that are classified as Level 2 from a third party bank. As the interest rate swap expired on April 15, 2011, the fair value of the swap was zero at December 31, 2011 and a liability of $453 at January 1, 2011, and was recorded in the current portion of other liabilities in the accompanying Consolidated Balance Sheets with the corresponding charge to interest expense. During 2011, interest expense reflected $796 related to the swap and a credit of $453 related to the change in the fair value of the swap.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS(Continued) (Amounts in thousands, except as specified)

Our Company utilizes foreign currency exchange forward contracts to reduce our risk related to inventory purchases and foreign currency based accounts receivable. These contracts are not designated as hedges, and therefore, under current accounting standards are recorded at fair value at each balance sheet date, with the resulting change charged or credited to selling, general and administrative expenses in the accompanying Consolidated Statements of Operations and Comprehensive Income.

No foreign currency exchange contracts were in place as of December 31, 2011. The foreign currency exchange contracts in aggregated notional amounts in place to exchange United States Dollars at January 1, 2011 were as follows:

December 31, 2011 January 1, 2011 Foreign Foreign U.S. Dollars Currency U.S. Dollars Currency Foreign Currency Exchange Forward Contracts: U.S. Dollars / Canadian Dollars $ Cdn$ $4,500 Cdn$4,476

As of January 1, 2011, the fair value of the foreign currency exchange forward contracts, using Level 2 inputs from a third party bank, represented a liability of $93. Changes in the fair value of the foreign currency exchange contracts are reflected in selling, general and administrative expenses each period.

10. Stock-Based Employee Compensation

On March 16, 2006, our Parent adopted the Incentive Plan. Our parent amended the Incentive Plan in December 2009 to allow for certain new grants. The Incentive Plan provides for the issuance of Class B Common Units of our Parent, which are intended to be profits interests. Such units qualify as equity instruments of our Parent. The holders of these units are entitled to share in the distribution of profits above a certain threshold, or the distribution threshold. For any particular such Unit, the distribution threshold is the fair value of a Class A Common Unit of our Parent on the date of grant. Our Parent has made grants of these units pursuant to the Incentive Plan since its adoption. Generally, so long as the Unit holder is employed or remains a member of the board of managers of our Parent, these units vest over time (generally a four-year period) or upon achievement of certain company performance goals. Subject to certain conditions, Units are also eligible to vest in the event of an initial public offering or change of control. In December 2009, our Parent issued new Class B Common Units and amended certain existing Class B Common Units, which, in each case, are eligible, subject to certain conditions, for additional distributions from our Parent in the event that certain company performance goals are met through 2012. In addition, in December 2009, our Parent agreed to amend and restate certain existing Class B Common Units to revise the distribution threshold of such units to an amount commensurate with the then fair market value of a Class A Common Unit. As of December 31, 2011, there were 110,152,750.854 Units authorized for grant pursuant to the Incentive Plan.

Our Company uses the Black-Scholes Option Pricing Model to determine the fair value of the Units granted, similar to an equity Stock Appreciation Right or SAR. This model uses such factors as the market price of the underlying Units at date of issuance, an exercise price of $1.32 for Units issued during fiscal years 2011, 2010 and 2009, and the expected term of the Unit, which is approximately two to four years, utilizing the simplified method. The weighted average grant date fair value of Units granted during 2011, 2010 and 2009 amounted to $0.23, $0.23 and $0.20, respectively.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS(Continued) (Amounts in thousands, except as specified)

In fiscal years 2011, 2010 and 2009, the weighted average assumptions used in the Black-Scholes Option Pricing Model were as follows:

2011 2010 2009 Expected term 1 to 4 years 2 to 4 years 4 years Dividend yield 0.0% 0.0% 0.0% Forfeiture rate 7.7% 7.7% 7.7% Risk-free interest rate 0.05 to 0.17% 0.15 to .22% 0.17% Expected volatility(1) 50.0% 49.4% 41.4%

(1) Expected volatility is based upon a peer group of companies given no historical data for the Units.

Accordingly, our Company records compensation expense using the fair value of the Units granted with time vesting over the vesting service period on a straight-line basis. Compensation expense for the performance based vesting Units is recognized when it becomes probable that the performance conditions will be met. As of December 31, 2011, we have not recognized any compensation expense for the performance based vesting Units as it is not probable that the performance conditions will be met.

Our Company recognized the following unit based compensation expense, included in selling, general and administrative expenses for its Units during 2011, 2010 and 2009:

2011 2010 2009 Equity compensation expense $3,507 $3,435 $5,327

As of December 31, 2011, there was $17,447 of unrecognized compensation costs, net of actual and estimated forfeitures related to the Units comprised of $3,117 related to time based vesting units and $14,330 related to the performance based vesting units. The unrecognized cost related to the time based vesting units is expected to be amortized over a weighted average service period of approximately 1.5 years. The unrecognized cost related to the performance based vesting units will be recognized when it becomes probable that the performance conditions will be met.

Our Companys Unit activity under the Incentive Plan is as follows:

Weighted Average Number of Grant Date Units Exercise Price Outstanding at January 1, 2011 96,169,675 $1.44 Granted 14,285,316 $1.32 Cancelled (646,642 ) $2.14 Forfeited (4,505,112 ) $1.34 Outstanding at December 31, 2011 105,303,237 $1.44 Vested Units at January 1, 2011 35,460,835 $1.60 Vested Units at December 31, 2011 48,971,258 $1.42

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS(Continued) (Amounts in thousands, except as specified)

11. Related Party Transactions

Our Company, certain of our subsidiaries, RBG and our Parent have management agreements with Fenway Partners, LLC and Fenway Partners Resources, Inc., each an affiliate of Fenway Partners Capital Fund II, L.P and Fenway Partners Capital Fund III, L.P., which are affiliates of our Parent, pursuant to which Fenway Partners, LLC and Fenway Partners Resources, Inc. agree to provide management and other advisory services to our Company, certain of our subsidiaries, RBG and our Parent. These management agreements provided for an annual management fee and a fee in connection with certain significant transactions. In connection with the Easton acquisition, the management agreements were amended to remove any obligation to pay an annual management fee, except for advisory services in connection with certain types of transactions and will be paid a fee equal to the greater of $1.0 million or 1.5% of the gross value of such transaction, plus reimbursement of fees and expenses incurred in connection with such transactions. No annual management fees have been paid under the management agreements since 2006.

In connection with the acquisition of Easton in 2006, Easton and various affiliates of James L. Easton (including Jas. D. Easton, Inc.) entered into various technology license and trademark license agreements with respect to certain intellectual property owned or licensed by Easton, including the Easton brand name. Pursuant to these agreements, Easton has granted each of Jas D. Easton, Inc., James L. Easton Foundation, Easton Development, Inc. and Easton Sports Development Foundation a name license for use of the Easton name solely as part of their respective company names. In addition, Easton has granted each of Easton Technical Products, Inc. and Hoyt Archery, Inc. a license to certain trademarks, including the Easton brand solely in connection with specific products or services, none of which are currently competitive with our Companys products or services. Easton has also granted each of these entities a license to certain technology solely in connection with specific products and fields. Easton has also entered into a patent license agreement with Easton Technical Products, Inc., which grants it a license to exploit the inventions disclosed in the patent solely within specific fields. Lastly, Easton entered into a trademark license agreement with Easton Technical Products, Inc., which grants Easton a license to use certain trademarks solely in connection with specific products or services.

Our Company has entered into a right of first offer agreement with Jas. D. Easton, Inc. and Easton Technical Products, Inc. pursuant to which our Company is to receive the opportunity to purchase Easton Technical Products, Inc. prior to any third party buyer. The term of the right of first offer agreement extends until the earliest of (1) March 16, 2016, (2) the date Easton Technical Products, Inc. no longer uses the name Easton, (3) the effectiveness of any initial public offering by Easton Technical Products, Inc. and (4) the consummation of any sale of such company or a controlling interest therein effectuated in accordance with the terms of the right of first offer agreement.

In connection with the Refinancing on December 3, 2009, our Company distributed $2,594 to RBG, which has been recorded as a distribution to RBG in Stockholders Equity.

On October 1, 2004, Bell entered into a consulting agreement with Terry Lee, a member of the board of managers of our Parent and the board of directors of our Company. Pursuant to the terms of the consulting agreement, Mr. Lee agreed to provide us and our affiliates with certain consulting services relating to Bell. In exchange for his services, Mr. Lee is entitled to annual compensation of $100. The term of Mr. Lees consulting agreement is for one year and will automatically extend for additional one-year terms until our Company elects not to extend the agreement.

Effective August 2008, our Parent has agreed to compensate Richard Wenz, a member of the board of managers of our Parent and the board of directors of our Company, for his services as Chair of our Companys Audit Committee. Mr. Wenz was paid a one-time fee of $50 for services previously rendered and will be paid an annual compensation of $50.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS(Continued) (Amounts in thousands, except as specified)

On November 28, 2011, our Company entered into a consulting agreement with Dimension Six Innovation, LLC or Dimension, an entity of which Michael Wilskey, a member of the board of managers of our Parent and the board of directors of our Company, is an owner. Pursuant to the terms of the consulting agreement, Dimension agreed to provide us with strategic and product innovation consulting services. In exchange for services, Dimension is entitled to a compensation of $80 for 2011, $265 for 2012 and $60 for the first three months of 2013, with the agreement expiring on March 31, 2013.

12. Supplemental Guarantor Condensed Financial Information

In December 2009, in connection with the Refinancing, we issued $350,000 of 9.750% Senior Secured Notes due 2016, or the Notes. The indenture governing the Notes contains certain restrictions on us, including restrictions on our ability to incur indebtedness, pay dividends, grant liens, sell assets and engage in certain other activities. The Notes are guaranteed by all of our domestic subsidiaries, or Guarantors. Each subsidiary guarantor is wholly owned and the guarantees are full and unconditional and joint and several. All other subsidiaries of our Company, or Non-Guarantors, do not guarantee the Notes.

The following condensed consolidating financial statements present the results of operations, financial position and cash flows of (1) Issuer, (2) Guarantors, (3) Non-Guarantors and (4) eliminations to arrive at the information for our Company on a consolidated basis for 2011 and 2010. In addition, condensed consolidating financial statements for the results of operations and cash flows for 2009 are presented. Separate financial statements and other disclosures concerning the Guarantors are not presented because our management does not believe such information is material to investors. Therefore, each of the Guarantors is combined in the following presentation.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS(Continued) (Amounts in thousands, except as specified)

Condensed Consolidating Balance Sheet December 31, 2011

Guarantor Non-Guarantor Issuer Subsidiaries Subsidiaries Eliminations Consolidated ASSETS Current assets: Cash and cash equivalents $2,697 $5,813 $20,995 $ $29,505 Accounts receivable, net 227,920 22,263 250,183 Inventories, net 130,161 15,654 145,815 Prepaid expenses 2,563 3,546 833 6,942 Deferred taxes 17,798 17,798 Other current assets 7,886 1,759 9,645 Total current assets 5,260 393,124 61,504 459,888 Property, plant and equipment, net 24,579 28,804 946 54,329 Deferred financing fees, net 12,622 12,622 Investments and intercompany receivables 374,661 81,052 59,014 (514,727 ) Intangible assets, net 265,049 5,409 270,458 Goodwill 16,195 187,311 5,191 208,697 Other assets 425 1,066 126 1,617 Total assets $433,742 $956,406 $132,190 $(514,727 ) $1,007,611

LIABILITIES AND STOCKHOLDERS EQUITY Current liabilities: Revolving credit facility $42,000 $ $ $ $42,000 Current portion of capital lease obligations 26 26 Accounts payable 86,421 2,268 88,689 Accrued expenses 11,511 46,999 4,781 63,291 Total current liabilities 53,511 133,446 7,049 194,006 Long-term debt, less current portion 346,670 346,670 Capital lease obligations, less current portion 52 52 Deferred taxes 58,928 58,928 Other noncurrent liabilities 10,897 7,433 18,330 Long-term intercompany payables 432,339 45,297 (477,636 ) Total liabilities 400,181 635,662 59,779 (477,636 ) 617,986 Total stockholders equity 33,561 320,744 72,411 (37,091 ) 389,625 Total liabilities and stockholders equity $433,742 $956,406 $132,190 $(514,727 ) $1,007,611

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS(Continued) (Amounts in thousands, except as specified)

Condensed Consolidating Balance Sheet January 1, 2011

Guarantor Non-Guarantor Issuer Subsidiaries Subsidiaries Eliminations Consolidated ASSETS Current assets: Cash and cash equivalents $1,981 $7,049 $14,994 $ $24,024 Accounts receivable, net 189,750 26,416 216,166 Inventories, net 122,116 18,977 141,093 Prepaid expenses 1,306 4,907 867 7,080 Deferred taxes 16,254 16,254 Other current assets 7,504 979 8,483 Total current assets 3,287 347,580 62,233 413,100 Property, plant and equipment, net 21,235 27,776 725 49,736 Deferred financing fees, net 14,248 14,248 Investments and intercompany receivables 370,712 70,614 74,634 (515,960 ) Intangible assets, net 273,466 5,581 279,047 Goodwill 16,195 185,542 5,191 206,928 Other assets 1,355 140 1,495 Total assets $425,677 $906,333 $148,504 $(515,960 ) $964,554

LIABILITIES AND STOCKHOLDERS EQUITY Current liabilities: Revolving credit facility $38,893 $ $ $ $38,893 Current portion of capital lease obligations 24 24 Accounts payable 71,244 1,904 73,148 Accrued expenses 10,562 41,313 6,577 58,452 Total current liabilities 49,455 112,581 8,481 170,517 Long-term debt, less current portion 346,168 346,168 Capital lease obligations, less current portion 78 78 Deferred taxes 49,379 49,379 Other noncurrent liabilities 13,341 7,433 20,774 Long-term intercompany payables 417,140 60,496 (477,636 ) Total liabilities 395,623 592,519 76,410 (477,636 ) 586,916 Total stockholders equity 30,054 313,814 72,094 (38,324 ) 377,638 Total liabilities and stockholders equity $425,677 $906,333 $148,504 $(515,960 ) $964,554

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS(Continued) (Amounts in thousands, except as specified)

Condensed Consolidating Statement of Operations Fiscal Year Ended December 31, 2011

Non- Guarantor Guarantor Issuer Subsidiaries Subsidiaries Eliminations Consolidated Net sales $ $805,009 $83,603 $(53,702 ) $834,910 Cost of sales 534,410 70,701 (53,702 ) 551,409 Gross profit 270,599 12,902 283,501 Selling, general and administrative expenses 42,264 158,896 10,132 211,292 Amortization of intangibles 9,612 9,612 (Loss) income from operations (42,264 ) 102,091 2,770 62,597 Interest expense, net 40,797 2,060 15 42,872 Share of net income (loss) of subsidiaries under equity method 93,089 1,863 (94,952 ) Income (loss) before income taxes 10,028 101,894 2,755 (94,952 ) 19,725 Income tax expense 8,805 892 9,697 Net income (loss) $10,028 $93,089 $1,863 $(94,952 ) $10,028

Condensed Consolidating Statement of Operations Fiscal Year Ended January 1, 2011

Non- Guarantor Guarantor Issuer Subsidiaries Subsidiaries Eliminations Consolidated Net sales $ $719,238 $87,938 $(34,333 ) $772,843 Cost of sales 475,073 69,706 (34,333 ) 510,446 Gross profit 244,165 18,232 262,397 Selling, general and administrative expenses 41,935 139,290 10,078 191,303 Amortization of intangibles 11,765 11,765 (Loss) income from operations (41,935 ) 93,110 8,154 59,329 Interest expense, net 43,445 1,121 2 44,568 Share of net income (loss) of subsidiaries under equity method 93,506 5,364 (98,870 ) Income (loss) before income taxes 8,126 97,353 8,152 (98,870 ) 14,761 Income tax expense 3,847 2,788 6,635 Net income (loss) $8,126 $93,506 $5,364 $(98,870 ) $8,126

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS(Continued) (Amounts in thousands, except as specified)

Condensed Consolidating Statement of Operations Fiscal Year Ended January 2, 2010

Non- Guarantor Guarantor Issuer Subsidiaries Subsidiaries Eliminations Consolidated Net sales $ $673,399 $79,905 $(36,974 ) $716,330 Cost of sales 454,687 64,715 (36,974 ) 482,428 Gross profit 218,712 15,190 233,902 Selling, general and administrative expenses 34,038 130,076 10,924 175,038 Amortization of intangibles 13,406 13,406 (Loss) income from operations (34,038 ) 75,230 4,266 45,458 Interest expense, net 44,123 785 2 44,910 Share of net income (loss) of subsidiaries under equity method 74,063 3,259 (77,322 ) (Loss) income before income taxes (4,098 ) 77,704 4,264 (77,322 ) 548 Income tax expense 3,641 1,005 4,646 Net (loss) income $(4,098 ) $74,063 $3,259 $(77,322 ) $(4,098 )

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS(Continued) (Amounts in thousands, except as specified)

Condensed Consolidating Statement of Cash Flows Fiscal Year Ended December 31, 2011

Guarantor Non-Guarantor Issuer Subsidiaries Subsidiaries Eliminations Consolidated Cash flows from operating activities: Net income (loss) $10,028 $93,089 $1,863 $(94,952 ) $10,028 Non-cash adjustments 1,839 (53,904 ) 930 94,952 43,817 Changes in operating assets and liabilities, net of effects from purchase of businesses (733 ) (27,445 ) 4,085 (24,093 ) Net cash provided by operating activities 11,134 11,740 6,878 29,752 Cash flows from investing activities: Purchase of property, plant and equipment (12,243 ) (11,077 ) (478 ) (23,798 ) Purchases of businesses, net of cash acquired (1,875 ) (1,875 ) Net cash used in investing activities (12,243 ) (12,952 ) (478 ) (25,673 ) Cash flows from financing activities: Payments on capital lease obligations (24 ) (24 ) Proceeds on revolving credit facility, net 3,107 3,107 Payments on debt issuance costs (1,282 ) (1,282 ) Net cash used in financing activities 1,825 (24 ) 1,801 Effect of exchange rate changes on cash and cash equivalents (399 ) (399 ) Net change in cash and cash equivalents 716 (1,236 ) 6,001 5,481 Cash and cash equivalents, beginning of year 1,981 7,049 14,994 24,024 Cash and cash equivalents, end of year $2,697 $5,813 $20,995 $ $29,505

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS(Continued) (Amounts in thousands, except as specified)

Condensed Consolidating Statement of Cash Flows Fiscal Year Ended January 1, 2011

Guarantor Non-Guarantor Issuer Subsidiaries Subsidiaries Eliminations Consolidated Cash flows from operating activities: Net income (loss) $8,126 $93,506 $5,364 $(98,870 ) $8,126 Non-cash adjustments 21,753 (80,034 ) (894 ) 98,870 39,695 Changes in operating assets and liabilities, net of effects from purchase of businesses 7,262 (3,895 ) (3,616 ) (249 ) Net cash provided by operating activities 37,141 9,577 854 47,572 Cash flows from investing activities: Purchase of property, plant and equipment (9,507 ) (10,985 ) (232 ) (20,724 ) Purchases of businesses, net of cash acquired (1,750 ) (1,750 ) Net cash used in investing activities (9,507 ) (12,735 ) (232 ) (22,474 ) Cash flows from financing activities: Payments on capital lease obligations (22 ) (22 ) Payments on revolving credit facility, net (35,000 ) (35,000 ) Net cash used in financing activities (35,000 ) (22 ) (35,022 ) Effect of exchange rate changes on cash and cash equivalents 630 630 Net change in cash and cash equivalents (7,366 ) (3,180 ) 1,252 (9,294 ) Cash and cash equivalents, beginning of year 9,347 10,229 13,742 33,318 Cash and cash equivalents, end of year $1,981 $7,049 $14,994 $ $24,024

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS(Continued) (Amounts in thousands, except as specified)

Condensed Consolidating Statement of Cash Flows Fiscal Year Ended January 2, 2010

Guarantor Non-Guarantor Issuer Subsidiaries Subsidiaries Eliminations Consolidated Cash flows from operating activities: Net (loss) income $(4,098 ) $74,063 $3,259 $(77,322 ) $(4,098 ) Non-cash adjustments 43,646 (74,964 ) (1,008 ) 77,322 44,996 Changes in operating assets and liabilities, net of effects from purchase of businesses 9,554 9,906 (6,564 ) 12,896 Net cash provided by operating activities 49,102 9,005 (4,313 ) 53,794 Cash flows from investing activities: Purchase of property, plant and equipment (7,232 ) (8,178 ) (246 ) (15,656 ) Purchase of intellectual property (400 ) (400 ) Net cash used in investing activities (7,232 ) (8,578 ) (246 ) (16,056 ) Cash flows from financing activities: Payments on capital lease obligations (21 ) (21 ) Payments on old senior term notes (315,788 ) (315,788 ) Proceeds from new revolving ABL credit facility, net 70,000 70,000 Extinguishment of senior subordinated notes (140,000 ) (140,000 ) Proceeds from issuance of senior secured notes 345,677 345,677 Payments on debt issuance costs (17,505 ) (17,505 ) Distribution to RBG (2,594 ) (2,594 ) Capital contribution by RBG 12,858 12,858 Net cash used in financing activities (47,352 ) (21 ) (47,373 ) Effect of exchange rate changes on cash and cash equivalents 1,652 1,652 Net change in cash and cash equivalents (5,482 ) 406 (2,907 ) (7,983 ) Cash and cash equivalents, beginning of year 14,829 9,823 16,649 41,301 Cash and cash equivalents, end of year $9,347 $10,229 $13,742 $ $33,318

Copyright © 2013 www.secdatabase.com. All Rights Reserved. Please Consider the Environment Before Printing This Document Item 9. Changes in and Disagreements with Accountants on Accounting and Financial Disclosure

None.

Item 9A. Controls and Procedures

Evaluation of disclosure controls and procedures

At December 31, 2011, the end of the period covered by this annual report, we performed an evaluation, under the supervision and with the participation of management, including our Principal Executive Officer and Principal Financial Officer, of the effectiveness of the design and operation of our disclosure controls and procedures pursuant to Rule 13a-15 and Rule 15d-15 of the Securities Exchange Act of 1934, as amended, or the Exchange Act. Based on that evaluation, our Principal Executive Officer and Principal Financial Officer each concluded that our disclosure controls and procedures are effective to ensure that information required to be disclosed in the reports that we file or submit under the Exchange Act is recorded, processed, summarized and reported within the time periods specified in the Securities and Exchange Commissions rules and forms.

We maintain a disclosure committee to assist the Principal Executive Officer and Principal Financial Officer in performing the evaluation discussed above. The members of this committee include our executive officers, senior operating managers and senior members of our finance and accounting staff.

Managements annual report on internal control over financial reporting

Our management is responsible for establishing and maintaining adequate internal control over financial reporting (as defined in Rule 13a-l5(f) under the Exchange Act) and for assessing the effectiveness of our internal control over financial reporting. Our internal control system is designed to provide reasonable assurance to our management and board of directors regarding the preparation and fair presentation of published financial statements in accordance with United States generally accepted accounting principles.

Our internal control over financial reporting is supported by written policies and procedures that pertain to the maintenance of records that, in reasonable detail, accurately and fairly reflect the transactions and dispositions of our assets; provide reasonable assurance that transactions are recorded as necessary to permit preparation of financial statements in accordance with generally accepted accounting principles and that our receipts and expenditures are being made only in accordance with authorizations of our management and our board of directors; and provide reasonable assurance regarding prevention or timely detection of unauthorized acquisition, use or disposition of our assets that could have a material effect on our financial statements.

Our management assessed the effectiveness of our internal control over financial reporting as of December 31, 2011 using the criteria set forth by the Committee of Sponsoring Organizations of the Treadway Commission, or COSO, in Internal Control Integrated Framework. Managements assessment included an evaluation of the design of our internal control over financial reporting and testing of the operational effectiveness of our internal control over financial reporting. Based on this assessment, our management concluded that, as of December 31, 2011, our internal control over financial reporting was effective.

Because of its inherent limitations, a system of internal control over financial reporting can provide only reasonable assurance and may not prevent or detect misstatements or fraud. In addition, projections of any evaluation of effectiveness to future periods are subject to the risks that controls may become inadequate because of changes in conditions and that the degree of compliance with the policies or procedures may deteriorate.

This annual report does not include an attestation report of our Companys independent registered public accounting firm, Ernst & Young, LLP, regarding internal control over financial reporting. Managements report was not subject to attestation by our Companys independent registered public accounting firm pursuant to the rules of the Securities and Exchange Commission that permit us to provide only managements report in this annual report.

Item 9B. Other Information

None.

Item 10. Directors, Executive Officers and Corporate Governance

Our board of directors and the board of managers of our Parent, Easton-Bell Sports, LLC, are controlled by Fenway Partners Capital Fund II, L.P. The board of managers of our Parent is comprised of the same individuals as our board of directors. Each of our directors were chosen to serve as directors based on their prior work experience and directorships. The following table sets forth certain information regarding our directors and executive officers as of the date of this annual report:

Name Age Position James L. Easton 76 Chairman Paul E. Harrington 50 President, Chief Executive Officer and Director Mark A. Tripp 53 Chief Financial Officer, Senior Vice President of Finance, Treasurer and Secretary Donna L. Flood 49 President of Giro and Easton Cycling and Chief Operations Officer Daniel J. Arment 51 President of Riddell Sports Steven T. Bigelow 48 President of Bell/Blackburn Christopher Zimmerman 52 President of Easton Sports Thomas T. Merrigan 61 Executive Vice President and General Counsel Hugh J. Hamill 57 Senior Vice President for Product Creation and Global Manufacturing Laura K. Moore 49 Senior Vice President of Corporate Communications Jackelyn E. Werblo 58 Senior Vice President of Human Resources William L. Beane III 49 Director Andrew J. Claerhout 40 Director Peter D. Lamm 60 Director Terry G. Lee 63 Director Timothy P. Mayhew 44 Director David A. Perdue 62 Director Peter V. Ueberroth 74 Director Richard E. Wenz 62 Director Michael J. Wilskey 55 Director

James L. Easton joined our board of directors and became Chairman in connection with the closing of our acquisition of Easton in 2006. Since 1973, Mr. Easton has served as Chairman and CEO of Jas. D. Easton, Inc. and Chairman of Easton. Mr. Easton was elected as a member of the International Olympic Committee (IOC) in 1994, and in 2002, was elected as a member of the IOC Executive Board and one of the four Vice Presidents of the IOC. He presently serves on the IOC Nominations Commission and IOC Marketing Commission and is a member of the United States Olympic Committee (USOC) Board of Directors. Mr. Easton was President of Federation Internationale de Tir a lArc (FITAInternational Archery Federation) from 1989 until 2005 and is currently a member of the Board of Visitors of the Anderson School of Management at UCLA and the LA84 Foundation.

Paul E. Harrington has served as our Chief Executive Officer and as a member of our board of directors since April 2008. Previously, Mr. Harrington was the President and Chief Executive Officer of Reebok International Ltd or Reebok from January 2006 to March 2008. From 2004 to 2006, Mr. Harrington served as Reeboks Senior Vice President, International Operations, and Chief Supply Chain Officer, as well as oversaw Reeboks Global Retail division including sales and marketing for the North America, Europe and Asia Pacific regions. From 2002 to 2004, he was Senior Vice PresidentWorld Supply Chain of Levi Strauss & Co.

Mark A. Tripp has served as our Chief Financial Officer since April 2006, as our Senior Vice President of Finance and Treasurer since November 2006 and as our Secretary since March 2009. Mr. Tripp previously served as the Chief Financial Officer and Vice President of Finance for Easton since 2001. From 1998 to 2001, he was with the Black & Decker Corporation working as Director of Finance for the Hardware & Home Improvement Group and the Division Controller for Price Pfister. From 1991 to 1998, Mr. Tripp was with Corning, Inc. where he held various finance positions. Prior to joining Corning, Inc. Mr. Tripp was with Deloitte & Touche from 1984 to 1991. Mr. Tripp is a certified public accountant in New York State.

Copyright © 2013 www.secdatabase.com. All Rights Reserved. Please Consider the Environment Before Printing This Document Donna L. Flood has served as our President of Giro and Easton Cycling since January 2012 and as our Chief Operations Officer since January 2009. Additionally, for 2010 only, she also had responsibilities as our Executive Vice President of Specialty Product Marketing. Previous to joining our Company, Ms. Flood was the Vice President-Apparel Product Marketing in Asia (beginning January 2008) and the Vice President-Branded Apparel Development and Operations for Reebok since August 2004. From July 2003 to August 2004, she served as Vice President-European Operations for Reebok, with oversight for all supply chain activities in Europe. Starting in 1994, her 14 year career at Reebok also included the positions of Senior Director-Sales Operations/Inventory Management, Director- International Operations/Inventory Management, and Manager-International Footwear Operations.

Daniel J. Arment has served as our President of Riddell Sports since May 2008. Mr. Arment previously served as our Executive Vice President, General Manager Mass-Market Division since January 2005. Prior to that time, from September 2001 to December 2004, Mr. Arment was Vice President of Mass Sales for Bell and Bell Riddell Holdings. From 2000 to 2001, Mr. Arment was Vice President of National Sales for the Speedo Division of the Authentic Fitness Corporation. From 1991 to 2000 Mr. Arment served in various sales and customer marketing positions including Vice President of Field Sales for the Mass Cosmetics and Beauty Care Division of Revlon Inc. Prior to 1991, Mr. Arment worked for the Paper Art Company Inc./A Mennen Company and Playtex Family Products, Inc.

Steven T. Bigelow has served as our President of Bell/Blackburn since January 2012. Mr. Bigelow previously served as our President of Action Sports during 2011. He also served as our Executive Vice President and General Manager of Mass Division from May 2008 and as our General Manager of Action Sports Sales from January 2010 to December 2010. Mr. Bigelow served as Vice President of Mass Sales from February 2005 to April 2008 and was the Director of Sales for the Bell Sports, Mass Division from 2002 to January 2005. From 1990 to 2002, Mr. Bigelow served in various sales management positions, including Director of Sales for the Mass Cosmetics and Beauty Care Division of Revlon, Inc. Prior to 1990, Mr. Bigelow worked for R. J. Reynolds Company.

Christopher Zimmerman has served as our President of Easton Sports since March 2010. Previously, Mr. Zimmerman was President and CEO of Canucks Sports and Entertainment from November 2006 through August 2009. From April 2003 to October 2006, Mr. Zimmerman served as President and CEO of Nike Bauer Hockey an independent subsidiary of Nike. From August 1995 through March 2003, Mr. Zimmerman was employed by Nike in various positions including General Manager, Nike Golf and US Advertising Director. From 1983 until August, 1995, Mr. Zimmerman held various positions with Saatchi and Saatchi Advertising Agency, including Senior VP and Account Director. Mr. Zimmerman serves as a director of Ritchie Bros. Auctioneers Inc.

Thomas T. Merrigan has served as our Executive Vice President and General Counsel since July 2010. Since 2002, Mr. Merrigan has been a law partner of the firm Rawson, Merrigan & Litner, LLP. Previously, Mr. Merrigan served in Massachusetts as First Justice in the Orange District Court, from 1992 to 2002, and as an Associate Justice of the Appellate Division of the District Court from 1994 to 2002. Mr. Merrigan is a trained mediator with certificates from the National Justice College, the Harvard Law School Negotiation Project, Program of Instruction for Lawyers and the MIT-Harvard Public Disputes Program.

Hugh J. Hamill has served as our Senior Vice President for Global Manufacturing since January 2012 and as our Senior Vice President for Product Creation since December 2010. Previously, Mr. Hamill served as our Senior Vice President for Asia Operations from September 2009 to December 2010. From January 2006 to July 2009, he served as Senior Vice President for Reebok Brand Operations (Footwear, Apparel and Advanced Concepts). From October 2004 to January 2006, he served as Senior Vice President for Reebok Development and Manufacturing of footwear. Starting in 1987, his 22 year career at Reebok also included various positions in development and manufacturing with assignments in Korea, Indonesia and Hong Kong.

Laura K. Moore has served as our Senior Vice President of Corporate Communications since July 2011. Previously, Ms. Moore was Vice President of Global Communications for Kimberly-Clark from November 2008 to December 2010. From March 2007 to June 2008, Ms. Moore was Senior Vice President - Public Relations and Internal Communications for Regions Financial Corporation. Ms. Moore also served as Senior Vice President - Communications and Public Relations for RadioShack Corporation; and Vice President of Corporate Communications for Zale Corporation. Ms. Moore serves on the board of directors for the Dallas Womens Foundation and is a member of the Arthur W. Page Society.

Jackelyn E. Werblo has served as our Senior Vice President, Human Resources since April 2006. Prior to that time, from April 2005, Ms. Werblo was Vice President of Human Resources for our Company. From January 2004 to April 2005, Ms. Werblo was a

Copyright © 2013 www.secdatabase.com. All Rights Reserved. Please Consider the Environment Before Printing This Document Senior Consultant in the Mercer HR Services division. From April 2000 to January 2004, Ms. Werblo was Vice President, Product Strategy and HR Outsourcing Services for SynHRgy HR Technologies. This company was acquired by Mercer, Inc. in January 2004.

Copyright © 2013 www.secdatabase.com. All Rights Reserved. Please Consider the Environment Before Printing This Document William L. Beane III has been one of our directors since 2005. Mr. Beane also serves as General Manager of the Oakland As, a position that he has held since 1997. Prior to becoming the General Manager of the Oakland As, Mr. Beane served as the Assistant to the Oakland As General Manager and as an Advance Scout. He is also a former major league baseball player and played for the New York Mets, the Minnesota Twins, the Detroit Tigers and the Oakland As.

Andrew J. Claerhout has been one of our directors since May 2009. Mr. Claerhout is a Vice President of Teachers Private Capital or TPC, the private equity arm of Ontario Teachers Pension Plan. Mr. Claerhout joined TPC in 2005 after working previously at EdgeStone Capital Partners, Pacific Equity Partners and Bain & Company. He also sits on the boards of National Bedding (Serta), Exal Corporation, General Nutrition Centers, Inc., Munchkin Inc. and Simmons Bedding Co. Mr. Claerhout previously served on the Board of Directors of Alexander Forbes Limited.

Peter D. Lamm has been one of our directors since 2004. Mr. Lamm also serves as Chairman and Chief Executive Officer of Fenway Partners, LLC, an affiliate of Fenway Partners Capital Fund II, L.P. and Fenway Partners Capital Fund III, L.P. Mr. Lamm co- founded Fenway Partners in 1994. He was previously a General Partner of the investment partnerships managed by Butler Capital Corporation and a Managing Director of Butler Capital Corporation. Mr. Lamm serves on the boards of 1-800 Contacts, Inc, Fastfrate Holdings, Inc., Panther Expedited Services, Inc., Preferred Freezer Services, LLC, and Roadlink, Inc. Mr. Lamm is also a board member and Vice Chairman of the United States Fund for UNICEF and previously served on the Board of Directors of American Achievement Corporation.

Terry G. Lee has been one of our directors since 2004. Mr. Lee also serves as Executive Chairman of Bell Automotive Products, Inc. and is a Managing Director and co-founder of Hayden Capital Investments, LLC. In 1984, Mr. Lee and a partner acquired Bell Sports, Inc. and Mr. Lee served as Chairman and Chief Executive Officer of Bell from 1989 to 1998 and as Interim Chief Executive Officer in 2000. From 1998 to 2004, Mr. Lee served as Chairman of Bell. Prior to joining Bell, Mr. Lee was employed by Wilson Sporting Goods for 14 years, where he began his career in sales and distribution and ultimately served as Senior Vice President of Sales before departing in 1983. Mr. Lee previously served as a Director of Jurlique International Pty Ltd., which was recently acquired by POLA Orbis.

Timothy P. Mayhew has served as one of our directors since 2004. Mr. Mayhew is a Managing Director of Fenway Partners, LLC, an affiliate of Fenway Partners Capital Fund II, L.P. and Fenway Partners Capital Fund III, L.P. Prior to joining Fenway Partners in June 2003, Mr. Mayhew was a founding member of Palladium Equity Partners. Prior to forming Palladium, Mr. Mayhew was a principal of Joseph Littlejohn & Levy. Mr. Mayhew was formerly in the restructuring group at Merrill Lynch & Co. Mr. Mayhew serves as a director of 1-800 Contacts, Inc., American Achievement Corporation, Fastfrate Holdings, Inc., and Panther Expedited Services, Inc. Mr. Mayhew was previously on the Board of Directors for RoadLink Inc. and Targus Group International, Inc.

David A. Perdue joined our board of directors in August 2011. Since 2007, Mr. Perdue has served as the Chief Executive Officer of the Aquila Group LLC, a private investment firm that is involved with retail markets in India. He served as Chief Executive Officer and Chairman of Dollar General from April 2003 to July 2007. His prior experience includes serving as President of Reebok, in addition to executive positions with Haggar Inc. and the Sara Lee Corporation. He currently serves on the Board of Directors of Graphic Packaging Holding Corporation, Cardlytics, Inc., Liquidity Service, Inc., and Alliant Energy Corporation. Previously, he served on the Boards of Jo-Ann Stores and Pillowtex Corporation.

Peter V. Ueberroth joined our board of directors in 2006 in connection with the closing of our acquisition of Easton. Mr. Ueberroth is a managing director of Contrarian Group, Inc., an investment and business management company, where he has served since 1989. He is also an owner and Co-Chairman of the Pebble Beach Company. Mr. Ueberroth served as Chairman of the Board of the United States Olympic Committee (USOC) from June 2004 to October 2008. He previously served as Commissioner of Major League Baseball and as President and Chief Executive Officer of the Los Angeles Olympic Organizing Committee for the 1984 Los Angeles Olympic Games. He is a Director of the Coca-Cola Company, Aircastle Limited and The Irvine Company.

Copyright © 2013 www.secdatabase.com. All Rights Reserved. Please Consider the Environment Before Printing This Document Richard E. Wenz joined our board of directors in July 2006 and serves as the Chairman of the Audit Committee. Mr. Wenz is a consultant and private investor. From 2000 to 2003, Mr. Wenz was an operating affiliate of DB Capital Partners, LLC, the private equity investment group of Deutsche Bank A.G. Mr. Wenz also served as Chief Executive Officer of Jenny Craig International from 2002 to 2003. From 1997 to 2000, Mr. Wenz was President and Chief Operating Officer of Safety 1st, Inc. During 1995 and 1996, Mr. Wenz was the partner in charge of the Chicago office of The Lucas Group, a business strategy consulting firm. Prior to 1995, Mr. Wenz held senior executive positions with Professional Golf Corporation, Electrolux Corporation, The Regina Company and Wilson Sporting Goods Company. Mr. Wenz began his career in 1971 with Arthur Young & Co. (predecessor of Ernst & Young LLP) and left the firm as a partner in 1983. Mr. Wenz is a certified public accountant and he currently serves on the Board of Directors of Armstrong World Industries, Coach America Holdings, Inc. and Summer Infant Company.

Michael J. Wilskey joined our board of directors in August 2011 and serves as a brand management consultant as an owner of Dimension Six Innovation, LLC. Mr. Wilskey is a 25 year veteran of Nike, Inc. and previously served as Vice President of Brand Management Affiliates from 2004 to 2009, Vice President of Advanced Concepts from 2001 to 2004, Vice President of Brand USA from 1999 to 2001, Vice President of Global Brand Management from 1996 to 1998 and held various other managerial positions at Nike.

Code of Ethics

We have adopted a formal, written code of conduct within the specific guidelines as promulgated by the Securities and Exchange Commission. This document can be found on our website at www.eastonbellsports.com. Our Code of Ethics applies to our named executive officers, as well as all other employees. We have communicated the high level of ethical conduct expected from all of our employees, including our officers.

Audit Committee

Our board of directors has a separately designated standing audit committee, or Audit Committee established in accordance with Section 3(a)(58)(A) of the Securities Exchange Act of 1934, as amended. The members of the audit committee are Messrs. Wenz and Mayhew. Our board of directors has determined that Mr. Wenz is an audit committee financial expert as that term is defined by Securities and Exchange Commission rules.

Item 11. Executive Compensation

Compensation Discussion and Analysis

Philosophy

At Easton-Bell we design all of our compensation programs to retain and as necessary attract key employees who are motivated to achieve outstanding results. Our programs are designed to reward superior performance based on team and individual performance. Annual compensation programs recognize the impact of earnings growth each year. Long term equity based incentives reward executives for achieving increased value over a specified term. Our executive compensation programs impact all employees because these programs help establish our performance expectations and our general approach to rewards. As part of our overall philosophy of pay for performance, we have developed an innovative performance management program which measures the results of all employees and executives in a common way. This encourages our business leaders to work together to create a high performance environment that is reinforced by constant attention to common business and unique individual goals and expectations. This linkage between expectations, results and compensation is intended to assure that all employees are focused on the long term success of our Company and that compensation is performance-based throughout our Company.

Copyright © 2013 www.secdatabase.com. All Rights Reserved. Please Consider the Environment Before Printing This Document We believe that the performance of the executives in managing our Company should be considered in light of general economic and specific company, industry and competitive conditions. We believe that our compensation programs for our executives should reflect our success as a management team, in attaining key operating objectives, such as growth of sales, growth of operating earnings and growth or maintenance of market share and long-term competitive advantage, and ultimately, in attaining an increased value for us. We also believe that individual performance should be evaluated annually and considered in compensation decisions.

Overview of Compensation and Process

Elements of compensation for our executives include: salary, annual bonus, equity unit awards consisting of grants of Class B Common Units of our Parent, 401(k) participation, medical, disability and life insurance and miscellaneous fringe benefits and other perquisites. Our compensation committee, or the Committee, consists of Messrs. Easton, Mayhew, Claerhout and Perdue. It generally meets early in the fiscal year to formally approve the annual incentive plans. Executive awards under the prior years plan are reviewed and approved subsequent to receipt of audited financial data, generally in February of each year. In addition, the Committee annually reviews and considers annual increases and additive equity awards for key executives.

As part of this annual review, the history of all the elements of each executives total compensation over each of the past three years is evaluated and compared to the compensation of other executive officers in an appropriate market comparison group. Typically, our chief executive officer makes compensation recommendations to the Committee with respect to the executive officers who report to him. Such executive officers are not present at the time of these deliberations. The Committee considers and then determines, any annual compensation changes with respect to the chief executive officer. Paul E. Harrington, our President and Chief Executive Officer, was not present at the meeting when his compensation was discussed by the Committee. The Committee has the right to set the applicable compensation, taking into account any such recommendations as it sees fit.

We choose to pay each element of compensation to attract and retain the necessary executive talent, reward annual performance and provide incentive for their balanced focus on long-term strategic goals, as well as short-term performance. The amount of each element of compensation is determined by the Committee, which uses the following factors to determine the amount of salary and other benefits to pay each executive:

performance against corporate and individual objectives for the previous year;

difficulty of achieving desired results in the coming year;

value of their unique skills and capabilities to support long-term performance of our Company;

performance of their general management responsibilities; and

contribution as a member of the management team.

These elements fit into our overall compensation objectives by helping to secure the future potential of our operations, facilitating our entry into new markets, providing proper compliance and regulatory guidance and helping to create a cohesive team.

Our policy for allocating between long-term and currently paid compensation is to ensure adequate base compensation to attract and retain personnel, while providing incentives to maximize long-term value for our Company. Likewise, we provide cash compensation in the form of base salary to meet competitive salary norms and provide bonus compensation to recognize superior performance against specific short-term goals.

From time to time, the Committee may request and receive advice from independent compensation consultants. During 2011, Towers Watson & Co., a global human resources consulting company was retained to provide independent analysis of the compensation of certain key executives as compared to national industry averages as obtained through market surveys and an analysis of similarly sized companies, which was then summarized and presented to the compensation committee. This work was limited to certain key executive reviews and was not broad in scope. In the event of any significant compensation restructuring, the Committee may use independent compensation consultants for assistance.

Base Salary and Bonus

It is the goal of the Committee to establish salary compensation for our executive officers based on our Companys operating performance relative to comparable peer companies. It is our policy to pay our chief executive officer competitively and on a basis that is relative to both the market and other members of our senior management team. We believe that this gives us the opportunity to attract and retain talented managerial employees both at the senior executive level and below.

The management incentive plan is designed to reward our executives for the achievement of shorter-term financial goals, principally EBITDA (as reported to our lenders) and working capital. It is our general philosophy that management be rewarded for their performance as a team in the attainment of these goals, but that individual performance be accounted for as well. Thus, executive bonuses may be adjusted if individual performance has been less than expected or required. We believe that this is important to aligning our executive officers and promoting teamwork among them and also in maintaining each executives personal commitment to delivering superior results.

Equity Incentives

A significant goal of our compensation is to afford our executives an opportunity to participate in our performance through direct equity interests in our ultimate Parent, Easton-Bell Sports, LLC. We accomplish this goal, from time to time, by giving certain qualifying executives the right to purchase Class A Common Units of our Parent directly or by making grants of Class B Common Units of our Parent to managers, directors, employees, consultants or advisers pursuant to the terms of our Parents Incentive Plan.

Direct Investment

In August 2009, we provided certain existing investors of Parent, including certain members of management, the opportunity to invest cash in our Parent and EB Sports to purchase Class C Common Units of our Parent and to purchase shares of Series A Preferred Stock of EB Sports. Class C Common Units represent limited liability company membership interests in our Parent.

In connection with the Refinancing, we provided certain existing investors of Parent and EB Sports the opportunity to invest cash in our Parent and EB Sports to purchase Class C Common Units of our Parent and to purchase shares of Series A Preferred Stock of EB Sports.

Incentive Plan

On March 16, 2006 our Parent adopted the Incentive Plan. The purpose of the Incentive Plan is to advance the interests of our Parent to attract and retain managers, directors, employees, consultants or advisers who are in a position to make significant contributions to the success of our Parent and to encourage such persons to take into account the long-term interests of our Parent, us and our subsidiaries. On August 25, 2011, the Incentive Plan was amended to increase the number of authorized Units issuable under the Incentive Plan to 110,152,750.854 Units.

Copyright © 2013 www.secdatabase.com. All Rights Reserved. Please Consider the Environment Before Printing This Document Class B Common Units represent limited liability company membership interests in our Parent. The Class B Common Units entitle the holder to participate in certain distributions made by our Parent.

Pursuant to the terms of our Parents limited liability company agreement holders of the Class A Common Units, Class B Common Units and Class C Common Units of our Parent are entitled to receive certain distributions in accordance with the waterfall distribution provisions of our Parents limited liability company agreement.

The board of managers of our Parent, its designees, and the compensation committee of the board of managers of our Parent serve as the administrator of the Incentive Plan. The administrator of the Incentive Plan has the authority, in its sole discretion, to select participants to receive awards, to determine the time of receipt, the number of Class B Common Units subject to each award and to establish any other terms, conditions and provisions of the awards under the Incentive Plan. The awards granted under the Incentive Plan will vest at such time or times as the administrator of the Incentive Plan may determine and the administrator of the Incentive Plan may accelerate the vesting of any award at any time. Generally, time vesting occurs over a four-year period measured from the date of the grant, and performance vesting is based on achievement of certain Company performance goals (including certain EBITDA thresholds) for 2011 and 2012. Subject to certain conditions, Units are also eligible to vest in the event of an initial public offering or change of control.

Except as otherwise determined by the administrator of the Incentive Plan or as expressly provided in an employment agreement between a participant under the Incentive Plan and our Parent or one of its subsidiaries, if a participant under the Incentive Plan is terminated from employment with our Parent or one of its subsidiaries for cause (as described in the Incentive Plan or such participants employment agreement, as applicable), then all awards held by such participant, whether or not they are vested, will terminate and be forfeited. Additionally, except as otherwise determined by the administrator of the Incentive Plan or as expressly provided in an employment agreement between a participant under the Incentive Plan and our Parent or one of its subsidiaries, if the employment of a participant under the Incentive Plan is terminated for any reason other than for cause, then all unvested awards will terminate.

Perquisites

We limit the perquisites that we make available to our executive officers. Our executives are entitled to few benefits that are not otherwise available to all of our employees. The benefits available to certain members of the Executive Management team is an insured supplemental medical benefits program that reimburses executives for certain medical expenses not otherwise paid through the group medical plan, a supplemental insured long term disability policy that normalizes coverage not available to executives through our Companys group plan. In addition, certain executive officers are provided with an auto allowance and some executives receive a housing/geographic allowance based upon their location.

Post-Employment Compensation

We do not provide post-retirement health coverage for our executives or employees. Our executive officers are eligible to participate in our 401(k) Contributory Defined Contribution Plan. Currently, we contribute to each participant a matching contribution equal to 50.0% of the first 6.0% of the participants compensation that has been contributed to the plan, subject to applicable legal limits. Most of our executive officers participated in our 401(k) plan during fiscal 2011 and received matching contributions.

The following compensation discussion describes the material elements of the compensation awarded to, earned by, or paid our officers who are considered named executive officers during our last completed fiscal year. Named executive officers consist of Paul E. Harrington, Chief Executive Officer, Mark A. Tripp, Chief Financial Officer and the three most-highly compensated individuals serving as executive officers at the end of 2011 (which includes Donna L. Flood, President of Giro and Easton Cycling and Chief Operations Officer, Steven T. Bigelow, President of Bell/Blackburn and Christopher Zimmerman, President of Easton Sports).

Summary Compensation Table

Unit Salary Bonus Awards All Other Total Name and Principal Position Year ($) ($) ($)(6) Compensation ($) Paul E. Harrington, 2011 $750,000 $1,000,000 $1,053,788 $378,113 $3,181,901 Chief Executive Officer(1) 2010 709,616 1,000,000 1,053,788 379,997 3,143,401 2009 715,385 425,000 1,056,256 359,117 2,555,758

Mark A. Tripp, 2011 336,261 230,000 108,183 18,713 693,157 Chief Financial Officer(2) 2010 316,875 195,000 141,724 10,132 663,731 2009 316,875 150,000 271,502 25,360 763,737

Donna L. Flood, 2011 352,975 240,000 146,858 213,408 953,241 President of Giro and Easton 2010 335,712 258,750 146,858 206,274 947,594 Cycling and Chief 2009 339,692 146,858 86,838 573,388 Operations Officer(3)

Steven T. Bigelow, 2011 358,081 280,000 154,118 136,756 928,955 President of 2010 325,000 275,025 130,390 240,829 971,244 Bell/Blackburn(4) 2009 236,269 185,848 6,290 428,407

Christopher Zimmerman, 2011 450,000 210,000 218,620 210,379 1,088,999 President of Easton Sports(5) 2010 375,000 185,000 218,620 598,911 1,377,531

(1) For 2011, all other compensation for Mr. Harrington includes $180,000 for housing allowance and related taxes paid of $164,696, $30,000 for auto allowance and the remainder for medical expenses and life insurance and disability insurance premiums.

(2) For 2011, all other compensation for Mr. Tripp includes $9,600 for auto allowance, $7,350 for 401K company contributions and the remainder for medical expenses and life insurance and disability insurance premiums.

(3) For 2011, all other compensation for Ms. Flood includes $96,000 for housing allowance and related taxes paid of $84,045, $18,000 for auto allowance, $7,350 for 401K company contributions and the remainder for medical expenses and life insurance and disability insurance premiums.

(4) For 2011, all other compensation for Mr. Bigelow includes $56,520 for housing allowance and related taxes paid of $49,482, $9,600 for auto allowance, $7,350 for 401K company contributions, $6,990 for relocation expenses and the remainder for medical expenses and life insurance and disability insurance premiums.

(5) Mr. Zimmermans employment with us began on March 1, 2010. For 2010, his salary reflects earned amounts after the commencement of employment. For 2011, all other compensation for Mr. Zimmerman includes $96,000 for housing allowance and related taxes paid of $86,683, $18,000 for auto allowance, $7,350 for 401K company contributions and the remainder for life insurance and disability insurance premiums.

(6) For all named executive officers, unit awards include the Class B Common Units of our Parent granted to such officer under our Parents Incentive Plan. The amounts set forth in the table reflect the amounts reported for financial statement reporting purposes

Copyright © 2013 www.secdatabase.com. All Rights Reserved. Please Consider the Environment Before Printing This Document for the respective fiscal year. The assumptions made in establishing such amounts are more fully described in Note 10 to the Audited Consolidated Financial Statements included in Item 8 of this annual report.

Estimated Future Payments Under Grant Date Fair Equity Incentive Plan Awards Number of Class B Option Exercise Value of options Grant Date Threshold ($)(1) Target ($)(2) Maximum ($)(3) Common Units (#) (4) Price ($/sh)(5) ($)(6) Steven T. Bigelow 3/1/2011 $166,667 $333,333 $500,000 860,709 $1.3218 $0.21

(1) The threshold payout assumes vesting of all time-based and performance-based Class B Common Units as well as achievement of the lowest floor payment (based on our Company achieving certain EBITDA thresholds) payable pursuant to the terms of our Parents limited liability company agreement. Under the distribution waterfall provisions set forth in our Parents limited liability company agreement, holders may be entitled to certain additional distributions.

(2) The target payout assumes vesting of all time-based and performance-based Class B Common Units as well as achievement of the intermediate floor payment (based on our Company achieving certain EBITDA thresholds) payable pursuant to the terms of our Parents limited liability company agreement. Under the distribution waterfall provisions set forth in our Parents limited liability company agreement, holders may be entitled to certain additional distributions.

(3) The maximum payout assumes vesting of all time-based and performance-based Class B Common Units as well as achievement of the highest floor payment (based on our Company achieving certain EBITDA thresholds) payable pursuant to the terms of our Parents limited liability company agreement. Under the distribution waterfall provisions set forth in our Parents limited liability company agreement, holders may be entitled to certain additional distributions.

(4) All awards consist of Class B Common Units issued pursuant to our Parents Incentive Plan.

(5) The amounts set forth in the table represent the fair market value of a Class A Common Unit of our Parent on the date the applicable Class B Common Units were granted to such holder.

(6) The amounts set forth in the table reflect the grant date fair value. The assumptions made in establishing such amount are more fully described in Note 10 to the Audited Consolidated Financial Statements included in this annual report.

100

Unit Awards Total Number of Number of Unit Unit Units Units (#) Base Vesting Outstanding Unvested Price Date (1) (2) ($)(3) (4) Paul E. Harrington 4,426,545.85 $1.3218 21,394,722.05 13,371,701.28 $1.3218 12/31/2012 Mark A. Tripp 725,987.95 $1.3218 4,438,265.63 2,773,916.02 $1.3218 12/31/2012 Donna L. Flood 6,024,962.51 3,765,601.57 $1.3218 12/31/2012 Steven T. Bigelow 116,505.85 $1.3218 60,000.00 $1.3218 90,000.00 22,500.00 $1.3218 5/31/2012 4,897,747.80 3,168,681.00 $1.3218 12/31/2012 Christopher Zimmerman 6,885,671.44 5,164,253.58 $1.3218 12/31/2013

(1) Awards consist of Class B Common Units issued pursuant to our Parents Incentive Plan.

(2) Total number of unvested Class B Common Units as of December 31, 2011. These Class B Common Units consist of a portion of the Units that vest over time, and a portion of the Units that vest if certain performance conditions are met.

(3) Represents the fair market value of a Class A Common Unit of our Parent on the date the applicable Class B Common Units were granted to such holder, some of which were amended in December 2009 to effect, among other things, a reduction in the applicable distribution threshold.

(4) Date on which 100% of time based units will have vested. Generally, time based units vest evenly on an annual basis over a 4 year period (in increments of 25% per year).

Vested Equity Awards at Fiscal Year-End

Vested Unit Awards Cumulative Value Number of Expensed Units (#) through Vested Fiscal 2011 Name (1) (2) Paul E. Harrington 12,449,566.62 $3,696,124 Mark A. Tripp 2,390,337.56 $977,830 Donna L. Flood 2,259,360.94 $440,574 Steven T. Bigelow 1,973,072.65 $572,438 Christopher Zimmerman 1,721,417.86 $437,240

(1) Awards consist of Class B Common Units issued pursuant to our Parents Incentive Plan that have time vested prior to December 31, 2011.

(2) Cumulative expense recognized through December 31, 2011 as compensation expense computed.

101

Set forth below is a brief description of the employment agreements that we have with our named executive officers.

Paul E. Harrington entered into an employment agreement with us as of March 5, 2008, which we amended and restated on March 5, 2012. The employment agreement provides, among other things, for an initial term from March 5, 2012 to March 31, 2014, with an automatic renewal for an additional one-year term; a base salary and an annual bonus as determined by our board of directors or compensation committee; and equity-based compensation as determined by the board of managers of our Parent.

Mr. Harringtons employment agreement provides that if he is terminated for cause, or if he terminates his employment without good reason (as defined therein), Mr. Harrington will be entitled to any accrued and unpaid base salary through the date of termination, pay at his base salary rate for any earned but unused vacation for the fiscal year immediately preceding the date of termination and any amounts owing but not paid for any annual bonus earned and reimbursements of certain expenses. If Mr. Harrington is terminated for cause, all of his Class B Common Units shall expire and terminate on the date of termination, whether vested or not. If we terminate Mr. Harrington without cause, or if he terminates his employment for good reason (as defined therein), then, subject to the conditions set forth below, we will, in addition to providing the payments and benefits referred to above:

(1) provide Mr. Harrington monthly payments equal to one-twelfth of his annual base salary at the time of termination, through March 31, 2016 (although, without changing the overall schedule, actual commencement could occur in the 74-day period following termination);

(2) if Mr. Harrington is terminated without cause, the Company will pay Mr. Harrington an amount equal to his target annual bonus for each proceeding fiscal year on its next regular payroll date following each March 1 through March 31, 2016;

(3) subject to certain conditions, pay the premium cost for participation by Mr. Harrington and his eligible dependents in our group health and dental plans under COBRA for the earliest to occur of (1) the expiration of the 18 months immediately following the date of termination, (2) the date Mr. Harrington becomes eligible for participation in the health or dental plan of a new employer or (3) the date Mr. Harrington is no longer eligible for participation under the Companys health and dental plans under COBRA; and

(4) if Mr. Harrington is terminated without cause, the Company will allow Mr. Harrington to put his vested Units to our Parent at seventy-five percent of fair market value provided he does so within 120 days following the date of termination. If Mr. Harrington terminates his employment for good reason, he will be allowed to put his vested Units to our Parent at one hundred percent of fair market value provided he does so within 120 days following the date of termination.

The following table sets forth the cash amounts that we would be obliged to pay Mr. Harrington under each triggering event scenario as if it had occurred on April 1, 2012 exclusive of COBRA costs, the value of which varies depending on the length of time such COBRA costs are to be incurred (assuming no exercise of the put right described below and also assuming no accrued and unpaid amounts of base salary, annual bonus for the fiscal year, earned vacation or certain qualified reimbursements):

Triggering Event Pay-Out Amount Company terminates for cause Company terminates other than for cause $6,960,000 Mr. Harrington terminates for Good Reason $3,660,000 Mr. Harrington terminates other than for Good Reason Termination following a Change of Control $6,960,000

If a change of control (as defined in Mr. Harringtons Class B Common Unit Certificate) of our Parent should occur and Mr. Harrington is continuously employed with us at the time of the change of control, then 100% of Mr. Harringtons Class B Common Units shall accelerate and immediately vest. If we terminate Mr. Harrington for reasons other than for cause, then all unvested Class B Common Units of our Parent shall expire and terminate on the date of termination. Upon termination, our Parent shall have the right to call up to 100% of Mr. Harringtons vested Class B Common Units of our Parent at the fair market value on the date of termination,

Copyright © 2013 www.secdatabase.com. All Rights Reserved. Please Consider the Environment Before Printing This Document provided that such call right is exercised within 90 days from the date of termination. If we terminate Mr. Harrington for cause, all of his Class B Common Units shall expire and terminate on the date of termination, whether vested or not.

102

Copyright © 2013 www.secdatabase.com. All Rights Reserved. Please Consider the Environment Before Printing This Document All payments and benefits (except for the participation rights provided to Mr. Harrington under COBRA) are conditioned on Mr. Harringtons timely delivery of an effective release of claims to us, as well as Mr. Harringtons compliance with non-competition, non-solicitation and other restrictive covenants for a period of 24 months from the date of termination.

Mark A. Tripp entered into an employment agreement with us as of March 16, 2006. The employment agreement provides, among other things, for an initial term of 18 months, with an automatic renewal for additional one-year terms; a base salary, subject to annual review, and an annual bonus as determined by our board of directors or compensation committee; and equity-based compensation as determined by the board of managers of our Parent.

Mr. Tripps employment agreement provides that if he is terminated for cause, or if he terminates his employment without good reason (as defined therein), Mr. Tripp will be entitled to any accrued and unpaid base salary through the date of termination and any amounts owing but not paid for any annual bonus earned and any reimbursements of certain expenses. If we terminate Mr. Tripp without cause, or if he terminates his employment for good reason (as defined therein), then, subject to the conditions set forth below, we will, in addition to providing the payments and benefits referred to above:

(1) provide Mr. Tripp monthly payments equal to one-twelfth of his annual base salary at the time of termination, for 18 months immediately following the date of termination;

(2) pay Mr. Tripp an annual bonus of up to 75% of base salary for the fiscal year in which termination occurs, payable in a single lump sum, pro-rated for the fiscal year in which termination occurs; and

(3) pay or reimburse the premium cost for participation by Mr. Tripp and his eligible dependents in our group health and dental plans under COBRA for the earliest to occur of (1) the expiration of the 18 months immediately following the date of termination, (2) the date Mr. Tripp becomes eligible for participation in the health or dental plan of a new employer or (3) the date Mr. Tripp is no longer eligible for continuation of participation under COBRA.

In the event that Mr. Tripp terminates his employment for certain enumerated good reasons or we terminate his employment other than for cause during the 24 months after a change of control (as defined in the employment agreement) has occurred, Mr. Tripp shall be entitled to substantially the same payments and benefits as if we had otherwise terminated Mr. Tripp without cause prior to such change of control, except that if Mr. Tripp is terminated during the 24 months after a change of control he shall be entitled to a single lump sum payment equal to 18 months of his base salary.

The following table sets forth the cash amounts that we would be obliged to pay Mr. Tripp under each triggering event scenario as if it had occurred on December 31, 2011 (assuming no exercise of the put right described below and also assuming no accrued and unpaid amounts of base salary, annual bonus for the previous fiscal year, earned vacation or certain qualified reimbursements):

Triggering Event Pay-Out Amount Company terminates for cause Company terminates other than for cause $765,000 Mr. Tripp terminates for Good Reason $765,000 Mr. Tripp terminates other than for Good Reason Termination following a Change of Control $765,000

If a change of control (as defined in Mr. Tripps Class B Common Unit certificate) of our Parent should occur and Mr. Tripp is continuously employed with us at the time of the change of control, then 100% of Mr. Tripps Class B Common Units shall accelerate and immediately vest. If we terminate Mr. Tripp for reasons other than for cause, then all unvested Class B Common Units of our Parent shall expire and terminate on the date of termination. Upon termination, our Parent shall have the right to call up to 100% of Mr. Tripps vested Class B Common Units of our Parent at the fair market value on the date of termination, provided that such call right is exercised within 90 days from the date of termination. In accordance with our Parents LLC Agreement, Mr. Tripp has the right to put his vested Class B Common Units to our Parent at 75% of fair market value, provided that (1) our EBITDA and target growth rate of EBITDA exceed certain thresholds, (2) Mr. Tripp is terminated other than for cause or he elects to terminate for good reason and (3) Mr. Tripp exercises his put option within 120 days of the date of termination. If we terminate Mr. Tripp for cause, all of his Class B Common Units shall expire and terminate on the date of termination, whether vested or not.

Copyright © 2013 www.secdatabase.com. All Rights Reserved. Please Consider the Environment Before Printing This Document All payments and benefits, (except for the participation rights provided to Mr. Tripp under COBRA) are conditioned on Mr. Tripps timely delivery of an effective release of claims to us, as well as Mr. Tripps compliance with non-competition, non- solicitation and other restrictive covenants for a period of 18 months from the date of termination.

Donna L. Flood entered into an employment agreement with us as of November 10, 2008, which was amended on April 13, 2010. The employment agreement provides, among other things, for an initial term commencing on January 7, 2009 and ending on January 13, 2013, with an automatic renewal for additional one-year terms following the initial term; a base salary, subject to annual review, and an annual bonus as determined by our board of directors or its designated committee; and equity-based compensation as determined by the board of managers of our Parent. A housing allowance is included in Ms. Floods compensation through January 31, 2013.

Ms. Floods employment agreement provides that if she is terminated for cause, or if she terminates her employment without good reason (as defined therein), Ms. Flood will be entitled to any accrued and unpaid base salary through the date of termination, pay at her base salary rate for any earned but unused vacation for the fiscal year immediately preceding the date of termination, and any amounts owing but not paid for any annual bonus earned and reimbursements of certain expenses. If we terminate Ms. Flood without cause, or if she terminates her employment for good reason (as defined therein), then, subject to the conditions set forth below, we will, in addition to providing the payments and benefits referred to above:

(1) provide Ms. Flood monthly payments equal to one-twelfth of her annual base salary for 18 months immediately following the date of termination;

(2) pay Ms. Flood an annual bonus of up to 75% of base salary for the fiscal year in which termination occurs, payable in a single lump sum, pro-rated for the fiscal year in which termination occurs and subject to increase by our board of directors;

(3) pay or reimburse the premium cost for participation by Ms. Flood and her eligible dependents in our group health and dental plans under COBRA for the earliest to occur of (1) the expiration of the 18 months following the date of termination, (2) the date Ms. Flood becomes eligible for participation in the health or dental plan of a new employer or (3) the date Ms. Flood is no longer eligible for continuation of participation under COBRA; and

(4) provide Ms. Flood monthly payments for any housing allowance due to her for the earlier of (1) 12 months immediately following the date of termination or (2) January 31, 2013.

In the event that Ms. Flood terminates her employment for certain enumerated good reasons or we terminate her employment other than for cause during the 24 months after a change of control (as defined in the employment agreement) has occurred, Ms. Flood shall be entitled to substantially the same payments and benefits as if we had otherwise terminated Ms. Flood without cause prior to such change of control, except that if Ms. Flood is terminated during the 24 months after a change of control she shall be entitled to a single lump sum payment equal to 18 months of her salary.

The following table sets forth the cash amounts that we would be obliged to pay Ms. Flood under each triggering event scenario as if it had occurred on December 31, 2011 (assuming no exercise of the put right described below and also assuming no accrued and unpaid amounts of base salary, annual bonus for the previous fiscal year, earned vacation or certain qualified reimbursements):

Triggering Event Pay-Out Amount Company terminates for cause Company terminates other than for cause $906,000 Ms. Flood terminates for Good Reason $906,000 Ms. Flood terminates other than for Good Reason Termination following a Change of Control $906,000

104

Copyright © 2013 www.secdatabase.com. All Rights Reserved. Please Consider the Environment Before Printing This Document If a change of control (as defined in Ms. Floods Class B Common Unit certificate) of our Parent should occur, then up to 100% of Ms. Floods Class B Common Units shall accelerate and immediately vest. If we terminate Ms. Flood for reasons other than for cause, then all unvested Class B Common Units of our Parent shall expire and terminate on the date of termination. Upon termination, our Parent shall have the right to call up to 100% of Ms. Floods vested Class B Common Units of our Parent at the fair market value on the date of termination, provided that such call right is exercised within 90 days from the date of termination. In accordance with our Parents LLC Agreement, Ms. Flood has the right to put her vested Class B Common Units to our Parent at 75% of fair market value, provided that (1) our EBITDA and target growth rate of EBITDA exceed certain thresholds, (2) Ms. Flood is terminated other than for cause or she elects to terminate for good reason and (3) Ms. Flood exercises her put option within 120 days of the date of termination. If we terminate Ms. Flood for cause, all of her Class B Common Units shall expire and terminate on the date of termination, whether vested or not.

All payments and benefits, (except for the participation rights provided to Ms. Flood under COBRA) are conditioned on Ms. Floods timely delivery of an effective release of claims and assignment of certain intellectual property to us, as well as Ms. Floods compliance with non-competition, non-solicitation and other restrictive covenants for a period of 18 months from the date of termination.

Steven T. Bigelow entered into an employment agreement with us as of January 9, 2012. The employment agreement provides, among other things, for an initial term commencing on January 1, 2012 and ending on December 31, 2014, with an automatic renewal for additional one-year terms following the initial term; a base salary, subject to annual review, a housing allowance, and an annual bonus as determined by our board of directors or its designated committee; and equity-based compensation as determined by the board of managers of our Parent.

Mr. Bigelows employment agreement provides that if he is terminated for cause, or if he terminates his employment without good reason (as defined therein), Mr. Bigelow will be entitled to any accrued and unpaid base salary through the date of termination, pay at his base salary rate for any earned but unused vacation for the fiscal year immediately preceding the date of termination, and any amounts owing but not paid for any annual bonus earned and reimbursements of certain expenses. If we terminate Mr. Bigelow without cause, or if he terminates his employment for good reason (as defined therein), then, subject to the conditions set forth below, we will, in addition to providing the payments and benefits referred to above:

(1) provide Mr. Bigelow monthly payments equal to one-twelfth of his annual base salary, housing and automobile allowances for 18 months immediately following the date of termination. The housing allowance remains in effect only while residing in the state of California;

(2) pay Mr. Bigelow an annual bonus of up to 75% of base salary for the fiscal year in which termination occurs, payable in a single lump sum, pro-rated for the fiscal year in which termination occurs and subject to increase by our board of directors; and

(3) pay or reimburse the premium cost for participation by Mr. Bigelow and his eligible dependents in our group health and dental plans under COBRA for the earliest to occur of (1) the expiration of the 18 months following the date of termination, (2) the date Mr. Bigelow becomes eligible for participation in the health or dental plan of a new employer or (3) the date Mr. Bigelow is no longer eligible for continuation of participation under COBRA.

The following table sets forth the cash amounts that we would be obliged to pay Mr. Bigelow under each triggering event scenario as if it had occurred on January 9, 2012 (assuming no exercise of the put right described below and also assuming no accrued and unpaid amounts of base salary, annual bonus for the previous fiscal year, earned vacation or certain qualified reimbursements):

Triggering Event Pay-Out Amount Company terminates for cause Company terminates other than for cause $974,400 Mr. Bigelow terminates for Good Reason $974,400 Mr. Bigelow terminates other than for Good Reason

105

Copyright © 2013 www.secdatabase.com. All Rights Reserved. Please Consider the Environment Before Printing This Document If a change of control (as defined in Mr. Bigelows Class B Common Unit certificate) of our Parent should occur, then up to 100% of Mr. Bigelows Class B Common Units shall accelerate and immediately vest. If we terminate Mr. Bigelow for reasons other than for cause, then all unvested Class B Common Units of our Parent shall expire and terminate on the date of termination. Upon termination, our Parent shall have the right to call up to 100% of Mr. Bigelows vested Class B Common Units of our Parent at the fair market value on the date of termination, provided that such call right is exercised within 90 days from the date of termination. In accordance with our Parents LLC Agreement, Mr. Bigelow has the right to put his vested Class B Common Units to our Parent at 75% of fair market value, provided that (1) our EBITDA and target growth rate of EBITDA exceed certain thresholds, (2) Mr. Bigelow is terminated other than for cause or he elects to terminate for good reason and (3) Mr. Bigelow exercises his put option within 120 days of the date of termination. If we terminate Mr. Bigelow for cause, all of his Class B Common Units shall expire and terminate on the date of termination, whether vested or not.

All payments and benefits, (except for the participation rights provided to Mr. Bigelow under COBRA) are conditioned on Mr. Bigelows timely delivery of an effective release of claims and assignment of certain intellectual property to us, as well as Mr. Bigelows compliance with non-competition, non-solicitation and other restrictive covenants for a period of 18 months from the date of termination.

Christopher Zimmerman entered into an employment agreement with us as of March 1, 2010. The employment agreement provides, among other things, for an initial term of 3 years from March 1, 2010, with an automatic renewal for additional one-year terms; a base salary, subject to annual review, and an annual bonus as determined by our board of directors or its designated committee; and equity interest compensation of 6,885,671.44 Class B Common Units of our Parent and any further equity-based compensation as determined by the board of managers of our Parent. A housing allowance is included in Mr. Zimmermans compensation through March 1, 2013.

Mr. Zimmermans employment agreement provides that if he is terminated for cause, or if he terminates his employment without good reason (as defined therein), Mr. Zimmerman will be entitled to any accrued and unpaid base salary through the date of termination, pay at his base salary rate for any earned but unused vacation for the fiscal year immediately preceding the date of termination, and any amounts owing but not paid for any annual bonus earned and reimbursements of certain expenses. If we terminate Mr. Zimmerman without cause, or if he terminates his employment for good reason (as defined therein), then, subject to the conditions set forth below, we will, in addition to providing the payments and benefits referred to above:

(1) provide Mr. Zimmerman monthly payments equal to one-twelfth of his annual base salary for 18 months immediately following the date of termination;

(2) pay Mr. Zimmerman an annual bonus of up to 75% of base salary for the fiscal year in which termination occurs, payable in a single lump sum, pro-rated for the fiscal year in which termination occurs and subject to increase by our board of directors;

(3) pay or reimburse the premium cost for participation by Mr. Zimmerman and his eligible dependents in our group health and dental plans under COBRA for the earliest to occur of (1) the expiration of the 18 months following the date of termination, (2) the date Mr. Zimmerman becomes eligible for participation in the health or dental plan of a new employer or (3) the date Mr. Zimmerman is no longer eligible for continuation of participation under COBRA; and

(4) provide Mr. Zimmerman monthly payments for any housing allowance due to him for the earlier of (1) 12 months immediately following the date of termination or (2) March 1, 2013.

In the event that Mr. Zimmerman terminates his employment for certain enumerated good reasons or we terminate his employment other than for cause during the 24 months after a change of control (as defined in the employment agreement) has occurred, Mr. Zimmerman shall be entitled to substantially the same payments and benefits as if we had otherwise terminated Mr. Zimmerman without cause prior to such change of control, except that if Mr. Zimmerman is terminated during the 24 months after a change of control he shall be entitled to a single lump sum payment equal to 18 months of his salary.

106

Copyright © 2013 www.secdatabase.com. All Rights Reserved. Please Consider the Environment Before Printing This Document The following table sets forth the cash amounts that we would be obliged to pay Mr. Zimmerman under each triggering event scenario as if it had occurred on December 31, 2011 (assuming no exercise of the put right described below and also assuming no accrued and unpaid amounts of base salary, annual bonus for the previous fiscal year, earned vacation or certain qualified reimbursements):

Triggering Event Pay-Out Amount Company terminates for cause Company terminates other than for cause $1,108,500 Mr. Zimmerman terminates for Good Reason $1,108,500 Mr. Zimmerman terminates other than for Good Reason Termination following a Change of Control $1,108,500

If a change of control (as defined in Mr. Zimmermans Class B Common Unit certificate) of our Parent should occur, then up to 100% of Mr. Zimmermans Class B Common Units shall accelerate and immediately vest. If we terminate Mr. Zimmerman for reasons other than for cause, then all unvested Class B Common Units of our Parent shall expire and terminate on the date of termination. Upon termination, our Parent shall have the right to call up to 100% of Mr. Zimmermans vested Class B Common Units of our Parent at the fair market value on the date of termination, provided that such call right is exercised within 90 days from the date of termination. In accordance with our Parents LLC Agreement, Mr. Zimmerman has the right to put his vested Class B Common Units to our Parent at 75% of fair market value, provided that (1) our EBITDA and target growth rate of EBITDA exceed certain thresholds, (2) Mr. Zimmerman is terminated other than for cause or he elects to terminate for good reason and (3) Mr. Zimmerman exercises his put option within 120 days of the date of termination. If we terminate Mr. Zimmerman for cause, all of his Class B Common Units shall expire and terminate on the date of termination, whether vested or not.

All payments and benefits, (except for the participation rights provided to Mr. Zimmerman under COBRA) are conditioned on Mr. Zimmermans timely delivery of an effective release of claims and assignment of certain intellectual property to us, as well as Mr. Zimmermans compliance with non-competition, non-solicitation and other restrictive covenants for a period of 18 months from the date of termination.

107

Except as set forth below, the members of our board of directors and the board of managers of our Parent are not separately compensated for their services as directors or managers, as applicable, other than reimbursement for out-of-pocket expenses incurred with rendering such services. From time to time members of our board of directors and the board of managers of our Parent may be granted Class B Common Units of our Parent pursuant to awards made under the Incentive Plan. All such grants are reflected in the table set forth in Item 12 Security Ownership of Certain Beneficial Owners and Management and Related Stockholder Matters. All such grants made during the fiscal year ended December 31, 2011 as well as other compensation paid to our directors is set forth in the table below.

Director Compensation

All Other Option Awards Compensation Total Name(1) ($) ($)(1) ($) James L. Easton Paul E. Harrington(2) William L. Beane III $116,031 $116,031 Andrew J. Claerhout Peter D. Lamm Terry G. Lee 116,031 $100,000 216,031 Kevin M. Mansfield (3) Timothy P. Mayhew David A. Perdue (3) 60,331 25,000 85,331 Aron I. Schwartz (4) Peter V. Ueberroth 116,031 116,031 Richard E. Wenz 232,063 50,000 282,063 Michael J. Wilskey(4) 80,000 80,000

(1) Mr. Lee and Mr. Wilskey received $100,000 and $80,000, respectively, pursuant to consulting agreements with us. Mr. Perdue received $25,000 as a board member and compensation committee member and Mr. Wenz received $50,000 as the Chair of the Audit Committee.

(2) As noted above, Mr. Harrington also serves as a director of our Company and as a member of the board of managers of our Parent. All of Mr. Harringtons compensation, including for services as a director, is reflected in the summary compensation table above and therefore has been omitted from this table.

(3) Mr. Mansfield was replaced by Mr. Perdue as a member of our board of directors in August 2011.

(4) Mr. Schwartz was replaced by Mr. Wilskey as a member of our board of directors in August 2011.

Compensation Committee Interlocks and Insider Participation

Messrs. Easton, Mayhew, Claerhout and Perdue are the members of our compensation committee. See the Section entitled Arrangements with Jas. D. Easton, Inc. in Item 13 of this Annual Report for information regarding our Companys related-person transactions with Mr. Easton.

Compensation Committee Report

As noted above, the members of our compensation committee are Messrs. Easton, Mayhew, Claerhout and Perdue. Our compensation committee has reviewed and discussed with management the compensation discussion and analysis above. Based on its review and those discussions, our compensation committee has adopted the foregoing discussion and analysis and recommended that it be included in this annual report.

Copyright © 2013 www.secdatabase.com. All Rights Reserved. Please Consider the Environment Before Printing This Document Item 12. Security Ownership of Certain Beneficial Owners and Management and Related Stockholder Matters

All of our issued and outstanding shares of capital stock are held by RBG. All of RBGs issued and outstanding shares of capital stock are held by EB Sports Corp. and all of EB Sports Corp.s outstanding shares of common stock are held directly by our Parent. The following table provides certain information as of March 27, 2012 with respect to the beneficial ownership of the membership interests of our Parent by (i) each holder known by us who beneficially owns 5% or more of any class of the outstanding membership units of our Parent and shares of Series A Preferred Stock of EB Sports, (ii) each of the members of our board of directors and the board of managers of our Parent and (iii) each of our named executive officers. Unless otherwise indicated in a footnote, the business address of each person is our corporate address.

EB Sports Corp. Easton-Bell Sports, LLC Percentage Ownership Interest in Percentage Percentage Percentage Series A Series A Ownership Ownership Ownership Preferred Preferred Class A Interest in Class B Interest in Class C Interest in Stock Stock Common Class A Common Class B Common Class C (1) (2) Units(3) Units Units(4) Units(5) Units(6) Units(7) Fenway Partners, LLC(8) 66,176.674 54.1 % 111,020,957.500 53.5 % 104,070,987.270 54.1 % Ontario Teachers Pension Plan Board(9) 28,385.788 23.2 % 47,621,270.834 22.9 % 44,640,154.395 23.2 % York Street Capital Partners, LLC(10) 7,238.856 5.9 % 12,271,099.273 5.9 % 11,383,865.730 5.9 % James L. Easton Living Trust(11) 3,948.119 3.2 % 11,671,880.106 5.6 % 6,182,723.655 3.2 % Westerkirk Alberta Inc.(12) 8,162.079 6.7 % 1,724,038.508 * 12,899,170.890 6.7 % Paul E. Harrington 392.270 * 25,821,267.898 23.4 % 600,000.000 * Mark A. Tripp 101.179 * 58,359.401 * 5,164,253.580 4.7 % 155,632.920 * Christopher Zimmerman 6,885,671.440 6.3 % Steven T. Bigelow 2.186 * 33,974.315 * 5,164,253.650 4.7 % 3,279.240 * Donna L. Flood 94.847 * 6,024,962.510 5.5 % 150,000.000 * James L. Easton(11) 3,948.119 3.2 % 11,671,880.106 5.6 % 6,182,723.655 3.2 % Peter V. Ueberroth(13) 881,556.000 * Andrew Claerhout(14) 28,385.788 23.2 % 47,621,270.834 22.9 % 44,640,154.395 23.2 % Terry G. Lee(15) 67.271 * 114,035.208 * 881,556.000 * 105,790.155 * William L. Beane III(16) 881,556.000 * Peter D. Lamm(17) 66,176.674 54.1 % 111,020,957.500 53.5 % 104,070,987.270 54.1 %

Copyright © 2013 www.secdatabase.com. All Rights Reserved. Please Consider the Environment Before Printing This Document Timothy P. Mayhew(18) 1,046,209.017 * Richard E. Wenz(19) 1,763,112.000 * David A. Perdue (20) 881,556.000 * Michael J. Wilskey (21) All directors and executive officers as a group(22) 99,219.692 81.0 % 170,581,631.133 82.2 % 69,361,742.355 63.0 % 155,989,470.270 81.0 %

* means less than 1%.

(1) For a discussion of the Series A Preferred Stock of EB Sports, see Item 11 Executive Compensation and Item 13 Certain Relationships and Related Transactions, and Director Independence. Easton-Bell Sports, LLC owns all of the outstanding voting common stock of EB Sports.

(2) Represents percentage of ownership interest out of 122,428.495 Series A Preferred Stock.

(3) For a discussion of the Class A Common Units of our Parent, see Item 11 Executive Compensation and Item 13 Certain Relationships and Related Transactions, and Director Independence.

(4) For a discussion of the Class B Common Units of our Parent, see Item 11 Executive Compensation and Item 13 Certain Relationships and Related Transactions, and Director Independence.

(5) Represents percentage of ownership interest in Class B units of authorized shares of 110,152,750.854.

109

Copyright © 2013 www.secdatabase.com. All Rights Reserved. Please Consider the Environment Before Printing This Document (6) For a discussion of the Class C Common Units of our Parent, see Item 11 Executive Compensation and Item 13 Certain Relationships and Related Transactions, and Director Independence.

(7) Represents percentage of ownership interest out of 192,531,729.375 Class C units.

(8) Represents (i) 108,791,970.029 Class A Common Units and 34,806,025.245 Class C Common Units of our Parent and 22,379.531 Series A Preferred Stock of EB Sports held by Fenway Easton-Bell Sports Holdings, LLC, whose managing member is Fenway Partners Capital Fund II, L.P., whose managing member is Fenway Partners, LLC, (ii) 1,706,031.636 Class A Common Units and 793,729.500 Class C Common Units of our Parent and 501.886 Series A Preferred Stock of EB Sports held by FPIP, LLC, whose managing member is Fenway Partners, LLC, (iii) 522,955.835 Class A Common Units and 1,014,940.500 Class C Common Units of our Parent and 641.760 Series A Preferred Stock of EB Sports held by FPIP Trust, LLC whose managing member is Fenway Partners, LLC and (iv) 67,456,292.025 Class C Common Units of our Parent and 42,653.497 Series A Preferred Stock of EB Sports held by Fenway Partners Capital Fund III, L.P., whose general partner is Fenway Partners III, LLC, whose managing member is Fenway Partners, LLC. The principal executive offices of Fenway Partners, LLC and its affiliates are located at 152 W. 57th Street, 59th Floor, New York, New York 10019.

(9) The principal executive offices of Ontario Teachers Pension Plan Board are located at 5650 Yonge Street, Toronto, Ontario M2M 4H5 Canada.

(10) Represents (i) 7,602,347.230 Class A Common Units and 7,052,677.035 Class C Common Units of our Parent and 4,484.708 Series A Preferred Shares of EB Sports held by York Street Mezzanine Partners, L.P. over which it has sole voting and investment power and (ii) 4,668,752.043 Class A Common Units and 4,331,188.695 Class C Common Units of our Parent and 2,754.148 Series A Preferred Shares of EB Sports held by York Street Mezzanine Partners II, L.P. over which it has sole voting and investment power. The principal executive offices of York Street Capital Partners, LLC are located at 376 Main Street, Bedminster, New Jersey 07921.

(11) James L. Easton is the Chairman of Easton-Bell Sports, Inc.s board of directors and may be deemed to beneficially own 11,205,004.902 Class A Common Units and 5,748,726.405 Class C Common Units of our Parent and 3,672.149 Series A Preferred Shares of EB Sports that are beneficially owned by the James L. Easton Living Trust and 466,875.204 Class A Common Units and 433,997.250 Class C Common Units of our Parent and 275.970 Series A Preferred Shares of EB Sports that are beneficially owned by Gregory J. Easton, the son of James L. Easton. Mr. James L. Easton disclaims beneficial ownership of such units except to the extent of his pecuniary interests therein. The principal executive offices of the James L. Easton Living Trust and James L. Easton are located at 7855 Haskell Avenue, Suite 350, Van Nuys, California 91406.

(12) The principal office of Westerkirk Alberta Inc. is located at 95 Wellington Street West, Suite 1410, Toronto, Ontario M5J 2N7.

(13) The principal office of Peter V. Ueberroth is located at The Contrarian Group, 5 San Joaquin Plaza, Suite 330, Newport Beach, CA 92660.

(14) Andrew Claerhout is a Vice-President of Ontario Teachers Pension Plan Board. Mr. Claerhout may be deemed to beneficially own the Class A Common Units and Class C Common Units of Easton-Bell Sports, LLC and Series A Preferred Stock of EB Sports that are owned by Ontario Teachers Pension Plan Board. Mr. Claerhout may be deemed to have the power to dispose of the shares held by Ontario Teachers Pension Plan Board due to a delegation of authority from the board of directors of Ontario Teachers Pension Plan Board and expressly disclaims beneficial ownership of such shares. The principal office of Mr. Claerhout is located at 5650 Yonge Street, Toronto, Ontario M2M 4H5 Canada.

110

Copyright © 2013 www.secdatabase.com. All Rights Reserved. Please Consider the Environment Before Printing This Document (15) Represents (i) 114,035.208 Class A Common Units and 105,790.155 Class C Common Units of our Parent and 67.271 Series A Preferred Shares of EB Sports held by Hayden Capital Investments, LLC over which it has sole voting and investment power and (ii) 881,556.000 Class B Common Units held by Terry G. Lee. Mr. Lee is the managing member of Hayden Capital Investments, LLC. Mr. Lee may be deemed to beneficially own the units of our Parent that are beneficially owned by Hayden Capital Investments, LLC. Mr. Lee disclaims beneficial ownership of such units except to the extent of his pecuniary interests therein. The principal office of Mr. Lee is located at 3655 W. Anthem Way, Suite A109-421, Anthem, AZ 85086.

(16) The principal office of William L. Beane III is located at Oakland As, 7000 Coliseum Way, Oakland, California 94621.

(17) Peter D. Lamm is the Chairman and Chief Executive Officer of Fenway Partners, LLC, which is the managing member of: Fenway Partners Capital Fund II, L.P., which is the managing member of Fenway Easton-Bell Sports Holdings, LLC; Fenway Partners III, LLC, which is the general partner of Fenway Partners Capital Fund III, L.P.; FPIP, LLC; and FPIP Trust, LLC. Mr. Lamm may be deemed to beneficially own the units of Easton-Bell Sports, LLC that are beneficially owned by Fenway Easton-Bell Sports Holdings, LLC, Fenway Partners Capital Fund III, L.P., FPIP, LLC and FPIP Trust, LLC. Mr. Lamm disclaims beneficial ownership of such units except to the extent of his pecuniary interests therein. The principal office of Mr. Lamm is located at 152 W. 57th Street, 59th Floor, New York, New York 10019.

(18) The principal office of Timothy P. Mayhew is located at 152 W. 57th Street, 59th Floor, New York, New York 10019.

(19) The principal office of Richard E. Wenz is located at 26429 Brick Lane, Bonita Springs, Florida 34134.

(20) The principal office of David A. Perdue is located at 494 Forest Road, Sea Island, GA 31561.

(21) The principal office of Michael J. Wilskey is located at 1900 SW Kanan St., Portland, Oregon, 97239.

(22) Represents 20 persons as a group for Class A Common Units, Class B Common Units, Class C Common Units of our Parent and Series A Preferred Stock of EB Sports.

111

Copyright © 2013 www.secdatabase.com. All Rights Reserved. Please Consider the Environment Before Printing This Document Item 13. Certain Relationships and Related Transactions, and Director Independence

Limited Liability Company Agreement

All holders of our Parents equity securities are parties to our Parents limited liability company agreement. The limited liability company agreement provides, among other things, for the various rights, preferences and privileges of the holders of our Parents equity securities, restrictions on transfer of equity interests, drag-along rights in favor of investors affiliated with Fenway Partners Capital Fund II, L.P. and Fenway Partners Capital Fund III, L.P., tag-along rights in favor of all members on certain transfers by such investors, certain participation rights for members in connection with equity issuances to investors affiliated with Fenway Partners Capital Fund II, L.P. and Fenway Partners Capital Fund III, L.P. and certain put and call rights with respect to shares held by management. The operating agreement also contains customary indemnification rights.

Pursuant to our Parents limited liability company agreement and subject to certain limitations, the Fenway Investors have the right to appoint seven members to the board of managers of our Parent (such appointees being, William Beane, Paul Harrington, Peter Lamm, Terry Lee, Timothy Mayhew, Richard Wenz and Michael Wilskey), Ontario Teachers Pension Plan Board has the right to appoint two members to the board of managers of our Parent (such appointees being Andrew Claerhout and David Perdue) and affiliates of James Easton have the right to appoint two members of the board of managers of our Parent (such appointees being James Easton and Peter Ueberroth).

Stockholders Agreement

All holders of shares of Series A Preferred Stock of EB Sports are parties to the preferred stockholders agreement of EB Sports. The stockholders agreement provides, among other things, for the various rights, preferences and privileges of the holders of shares of Series A Preferred Stock of EB Sports, restrictions on transfer of the Series A Preferred Stock, drag-along rights in favor of investors affiliated with the Fenway Investors, tag-along rights in favor of all stockholders on certain transfers by the Fenway Investors, certain participation rights for stockholders in connection with equity issuances to investors affiliated with the Fenway Investors and certain call rights with respect to shares held by management. The stockholders agreement also contains customary indemnification rights.

Holdco Facility Refinancing and Equity Investment

On December 3, 2009, EB Sports refinanced the Previous Holdco Facility with Wachovia Investment Holdings, LLC and the lenders named therein pursuant to which EB Sports had initially borrowed $175.0 million, in part through an equity investment from the Fenway Investors and certain existing investors of Parent and EB Sports and their respective affiliates. The equity investment was comprised of (1) $1.725 million in cash in exchange for Class C Common Units of our Parent (of which, $1.466 million was contributed by Parent to EB Sports) and (2) $113.275 million in cash in exchange for shares of Series A Preferred Stock of EB Sports. The Series A Preferred Stock accrues dividends quarterly at a rate of 17.5% per annum. In addition to the $13.2 million invested by existing investors of EB Sports, their respective affiliates and Paul Harrington in August 2009, the issuance of new shares of Series A Preferred Stock on December 3, 2009 resulted in an aggregate of $126.5 million invested in Series A Preferred Stock immediately after giving effect to the financing.

Under the terms of the refinancing transaction, the proceeds from the equity issuance were used to repurchase loans under the Previous Holdco Facility at a price of 90% of the principal amount thereof, and the consenting lenders whose loans were repurchased exchanged their remaining principal and accrued interest into the New Holdco Facility and the Previous Holdco Facility was terminated. In addition, EB Sports borrowed $108.3 million under the New Holdco Facility. The New Holdco Facility is secured by a pledge of all of the capital stock of RBG and Easton-Bell. The New Holdco Facility is guaranteed by RBG and will, in the future, be guaranteed by any other subsidiary of EB Sports if such other subsidiary of EB Sports guarantees other indebtedness of either EB Sports or RBG. Borrowings under the New Holdco Facility through May 1, 2012 will bear interest at 11.5% per annum and EB Sports may elect to pay interest in cash or defer interest by adding it to the aggregate amount of principal due under the loan. Interest after May 1, 2012 will be paid in cash; provided, that prior to maturity if EB Sports doesnt have sufficient cash on hand and our Company is either prohibited from distributing sufficient cash to EB Sports to make such interest payments or does not have sufficient liquidity (in the reasonable determination of our Companys management) to permit us to distribute cash in an amount sufficient to allow such payment, then EB Sports will pay cash to the extent it is able to do so using cash on hand after giving effect to permitted and available distributions, and

Copyright © 2013 www.secdatabase.com. All Rights Reserved. Please Consider the Environment Before Printing This Document the remainder of the interest due shall be added to the principal amount of the loan at a rate of 13.5% per annum for the then ending interest period.

112

Copyright © 2013 www.secdatabase.com. All Rights Reserved. Please Consider the Environment Before Printing This Document Borrowings under the New Holdco Facility are not guaranteed by our Company or any of our subsidiaries and are senior unsecured obligations of EB Sports. However, EB Sports depends on us and our subsidiaries, who conduct the operations of the business, for dividends and other payments to generate the funds necessary to meet its financial obligations, including payments of principal and interest on the New Holdco Facility. Given that EB Sports controls our Companys direct parent, EB Sports has the ability, subject to the terms of our Companys existing senior secured credit facility and any other agreements which limit our ability to declare and pay dividends, to obtain money from our Company and our subsidiaries in order to fund its obligations under such loan.

As of December 31, 2011, the amount of loans issued under the New Holdco Facility was approximately $137.0 million, including accrued interest.

Management Agreements

We, our Parent and certain of its other subsidiaries entered into management agreements with Fenway Partners, LLC and Fenway Partners Resources, Inc., each an affiliate of Fenway Partners Capital Fund II, L.P., in September 2004. Pursuant to these management agreements, as subsequently amended, Fenway Partners LLC and Fenway Partners Resources, Inc. provide advisory services in connection with certain types of transactions and will be entitled to receive a fee equal to the greater of $1.0 million or 1.5% of the gross value of such transaction, plus reimbursement of fees and expenses incurred in connection with such transactions. The management agreements include customary indemnification provisions in favor of these entities and their affiliates and have initial terms of ten years.

Employment Agreements and Arrangements with Management

We have employment agreements with all of our fiscal 2011 named executive officers, Paul Harrington, our President and Chief Executive Officer, Mark Tripp, our Senior Vice President of Finance, Treasurer, Secretary and Chief Financial Officer, Donna Flood, our President of Giro and Easton Cycling and Chief Operations Officer, Steven Bigelow, our President of Bell/Blackburn and Christopher Zimmerman, our President of Easton Sports. Mr. Harringtons employment agreement was amended and restated on March 5, 2012 and provides for an initial term from March 5, 2012 to March 31, 2014, with an automatic renewal for an additional one-year term. Mr. Tripps employment agreement contains an evergreen term provision which provides for automatic renewal of the agreement for a one year term each year. Ms. Floods and Mr. Zimmermans employment agreements have a term of three years and provide for automatic renewal of the agreements for one year terms. Mr. Bigelows employment agreement has a term of two years and provides for automatic renewal of the agreement for one year terms. We also have employment agreements with certain of our other executive officers.

Arrangements with Jas. D. Easton, Inc.

Jas. D. Easton, Inc. is an affiliate of James Easton and former owner of Easton. On February 1, 2006, we entered into a Stock Purchase Agreement with Jas. D. Easton, Inc., to acquire 100% of the outstanding capital stock of Easton and we consummated the Easton acquisition on March 16, 2006. Pursuant to the transaction, we paid the seller $401.2 million (including a post-close working capital adjustment payment). The stock purchase agreement contains customary representations, warranties and covenants. In addition, the stock purchase agreement provides that Jas. D. Easton, Inc. will indemnify us for breaches of its representations, warranties and covenants, subject to certain baskets and caps. Simultaneously with the closing of our acquisition of Easton, Jas. D. Easton, Inc. purchased equity in our Parent pursuant to a subscription agreement described above in an aggregate amount of $25.0 million.

113

Copyright © 2013 www.secdatabase.com. All Rights Reserved. Please Consider the Environment Before Printing This Document In connection with our acquisition of Easton, Easton and various affiliates of James L. Easton (including Jas. D. Easton, Inc.) entered into various technology license and trademark license agreements with respect to certain intellectual property owned or licensed by Easton, including the Easton brand name. Pursuant to these agreements, Easton has granted each of Jas D. Easton, Inc., James L. Easton Foundation, Easton Development, Inc. and Easton Sports Development Foundation a name license for use of the Easton name solely as part of their respective company names. In addition, Easton has granted each of Easton Technical Products, Inc. and Hoyt Archery, Inc. a license to certain trademarks, solely in connection with specific products or services, none of which are currently competitive with us. The trademarks licensed to Easton Technical Products under this license include the Easton brand. Easton has also granted Easton Technical Products, Hoyt Archery and Easton, Inc. a license to certain technology solely in connection with specific products and fields. Easton has also entered into a patent license agreement with Easton Technical Products, Inc., which grants it a license to exploit the inventions disclosed in the patent solely within specific fields. Lastly, Easton entered into a trademark license agreement with Easton Technical Products, Inc., which grants Easton a license to use certain trademarks solely in connection with specific products or services.

We have entered into a right of first offer agreement with Jas. D. Easton, Inc. and Easton Technical Products, Inc. pursuant to which we are to receive the opportunity to purchase Easton Technical Products, Inc. prior to any third party buyer. The term of the right of first offer agreement extends until the earliest of (1) the tenth anniversary of the consummation of our acquisition of Easton, (2) the date Easton Technical Products, Inc. no longer uses the name Easton, (3) the effectiveness of any registered public offering by Easton Technical Products, Inc. and (4) the consummation of any sale of such company or a controlling interest therein effectuated in accordance with the terms of the right of first offer agreement.

Affiliates of Jas. D. Easton, Inc. and James L. Easton own certain of the properties currently leased by Easton. During the fiscal years ended 2011, 2010 and 2009, Easton paid approximately $1.2 million for each of the three years in rent pursuant to such affiliate leases. We believe the rents payable pursuant to such leases are consistent with the market rents for similar facilities in such jurisdictions. We expect the aggregate rent payable pursuant to such leases to be approximately $1.2 million in fiscal 2012.

Other Related Party Transactions

On July 14, 2004, Bell entered into a license agreement with Bell Automotive Products, Inc., an entity of which Terry Lee, a member of our board of directors is a minority owner and occupies the position of Co-Chairman. Under the license agreement, Bell Automotive, as the licensee, has the worldwide, exclusive, perpetual and royalty-free right to use the Bell trademarks in connection with certain auto accessories and equipment. The license agreement replaced a 1999 license agreement, as amended, between Bell and Bell Racing Company, and a 2000 sublicense agreement, as amended, between Bell, Bell Racing Company and Bell Automotive.

On October 1, 2004, Bell entered into a consulting agreement with Terry Lee, a member of our board of directors. Pursuant to the terms of the consulting agreement, Mr. Lee agreed to provide us and our affiliates with certain consulting services relating to Bell. In exchange for his services, Mr. Lee is entitled to an annual compensation of $100,000. The term of Mr. Lees consulting agreement is for one year and automatically extends for additional one-year terms until we elect not to extend the agreement.

Effective August 2008, our Parent agreed to compensate Richard Wenz, a member of the board of managers of our Parent and our board of directors, for his services as Chair of our Audit Committee. Mr. Wenz was paid a one-time fee of $50,000 for services previously rendered and is paid an annual compensation of $50,000.

On November 28, 2011, our Company entered into a consulting agreement with Dimension Six Innovation, LLC or Dimension, an entity of which Michael Wilskey, a member of the board of managers of our Parent and the board of directors of our Company, is an owner. Pursuant to the terms of the consulting agreement, Dimension agreed to provide us with strategic and product innovation consulting services. In exchange for services, Dimension is entitled to a compensation of $80,000 for 2011, $265,000 for 2012 and $60,000 for the first three months of 2013, with the agreement expiring on March 31, 2013.

114

Under the Audit Committees charter, any material potential or actual conflict of interest or transaction between our Company and any related person of our Company must be reviewed and approved or ratified by the Audit Committee. SEC rules define a related person of the Company as any Company director (or nominee), executive officer, 5%-or-greater shareholder or immediate family member of any of these persons.

Director Independence

Our Companys securities are not listed on a national securities exchange or interdealer quotation system that has requirements as to board composition. The following members of our board of directors are independent directors as such term is defined in the regulations of the NASDAQ Stock Market: William Beane, Andrew Claerhout, Peter Lamm, Terry Lee, David Perdue, Timothy Mayhew, Peter Ueberroth, Richard Wenz and Michael Wilskey.

Item 14. Principal Accountant Fees and Services

Audit-Related and All Other Fees

Aggregate fees which were billed to us by our principal accountants, Ernst & Young, LLP for audit services related to the two most recent fiscal years and for other professional services in the most recent two fiscal years were as follows:

2011 2010 Audit Fees $1,026,000 $1,076,000 Other Fees Total $1,026,000 $1,076,000

Audit Fees consist of fees for the audit of our Companys annual consolidated financial statements, the review of financial statements included in our Companys quarterly Form 10-Q reports, and the services that an independent auditor would customarily provide in connection with subsidiary audits, statutory requirements, regulatory filings, registration statements and similar engagements for the fiscal year, such as comfort letters, attest services, consents and assistance with review of documents filed with the SEC. Audit Fees also include advice on accounting matters that arose in connection with or as a result of the audit or the review of periodic consolidated financial statements and statutory audits the non-U.S. jurisdictions require.

Other FeesNo other fees were paid to Ernst & Young, LLP in 2011 and 2010.

Policy of Audit Committee Pre-Approval of Audit and Permissible Non-Audit Services of Independent Auditor

The audit committee of our Companys board of directors is responsible for appointing, setting compensation and overseeing the work of the independent auditor. The audit committee has established a policy regarding pre-approval of all audit and permissible non- audit services provided by the independent auditor. The audit committee has approved the pre-authorization of audit and non-audit services up to $20,000.

115

Item 15. Exhibits, Financial Statement Schedules

(a)The following documents are filed as part of this Form 10-K:

(1) The Consolidated Financial Statements, Notes to Consolidated Financial Statements, Report of Independent Registered Public Accounting Firm for Easton-Bell Sports, Inc. and its subsidiaries are presented on pages 57 to 90 under Item 8 of this Form 10-K.

(2) Financial Statement Schedules:

The following Consolidated Financial Statement Schedule of Easton-Bell Sports, Inc. and its subsidiaries is included herein on page II-1.

Schedule Description Schedule II Valuation and Qualifying Accounts

Schedules other than that listed above have been omitted because the required information is contained in the Notes to the Consolidated Financial Statements or because such schedules are not required or are not applicable.

(3) The following exhibits are filed or incorporated by reference as part of this report. Each management contract or compensation plan required to be filed as an exhibit is identified by an asterisk (*).

Exhibit The Filings Referenced for Number Description of Exhibit Incorporation by Reference are: 2.1 Stock Purchase Agreement dated as of February 1, 2006 Exhibit 2.1 to the Companys Current Report on Form 8-K filed February 7, 2006

3.1(a) Amended and Restated Certificate of Incorporation of Exhibit 3.1(a) to the Companys Annual Report on Form Easton-Bell Sports, Inc. 10-K filed March 30, 2006

3.1(b) Amended and Restated Bylaws of Easton-Bell Sports, Exhibit 3.1(b) to the Companys Annual Report on Form Inc. 10-K filed March 30, 2006

4.1 Form of 9.750% Senior Secured Notes due 2016 Exhibit 4.1 to the Companys Current Report on Form 8-K filed December 9, 2009

4.2 Indenture dated as of December 3, 2009 Exhibit 4.2 to the Companys Current Report on Form 8-K filed December 9, 2009

4.3 Registration Rights Agreement dated as of December 3, Exhibit 4.3 to the Companys Current Report on Form 8-K 2009 filed December 9, 2009

10.1 Amendment and Restated Agreement dated as of May Exhibit 10.1 to the Companys Current Report on Form 8-K 13, 2011 filed May 19, 2011

10.2* 2006 Equity Incentive Plan Exhibit 10.4 to the Companys Annual Report on Form 10-K filed March 30, 2006

10.3* Amendment to the 2006 Incentive Plan Filed herewith

116

Copyright © 2013 www.secdatabase.com. All Rights Reserved. Please Consider the Environment Before Printing This Document Exhibit The Filings Referenced for Number Description of Exhibit Incorporation by Reference are: 10.4* Second Amended and Restated Employment Agreement with Paul Harrington Filed herewith

10.5 * Employment Agreement with Mark Tripp Exhibit 10.3 to the Companys Current Report on Form 8-K/A filed June 23, 2006

10.6 * Amended and Restated Employment Agreement with Donna L. Flood Exhibit 10.6 to the Companys Annual Report on Form 10-K filed March 8, 2011

10.7* Employment Agreement with Chris Zimmerman Exhibit 10.7 to the Companys Registration Statement on S-4, filed May 5, 2010

10.8 * Consulting Agreement with Terry Lee Exhibit 10.8 to the Companys Registration Statement on Form S-4 filed April 7, 2005

10.9* Employment Agreement with Steve Bigelow Filed herewith

10.10* Employment Agreement with Thomas T. Merrigan Filed herewith

10.11* Amended and Restated Employment Agreement with Jackelyn E. Werblo Filed herewith

21.1 List of Subsidiaries Exhibit 21.1 to the Companys Annual Report on Form 10-K filed March 8, 2011

31.1 Certification of Principal Executive Officer pursuant to the Section 302 of the Filed herewith Sarbanes-Oxley Act of 2002

31.2 Certification of the Principal Financial Officer pursuant to the Section 302 of Filed herewith the Sarbanes-Oxley Act of 2002

32.1 Certification of Principal Executive Officer and Principal Financial Officer Filed herewith pursuant to the 18 U.S.C. Section 1350 as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002

101.INS XBRL Report Instance Document

101.SCH XBRL Taxonomy Extension Schema Document

101.CAL XBRL Taxonomy Calculation Linkbase Document

101.LAB XBRL Taxonomy Label Linkbase Document

101.PRE XBRL Presentation Linkbase Document

101.DEF XBRL Taxonomy Extension Definition Linkbase Document

Indicates furnished herewith

117

Pursuant to the requirements of Section 13 or 15(d) of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned, thereto duly authorized.

EASTON-BELL SPORTS, INC.

By: /S/ PAUL E. HARRINGTON Paul E. Harrington Principal Executive Officer

Date: March 27, 2012

Pursuant to the requirements of the Securities Exchange Act of 1934, this report has been signed below by the following persons on behalf of the registrant in the capacities and on the date indicated.

Signature Title Date

/s/ PAUL E. HARRINGTON President, Chief Executive Officer and Director March 27, 2012 Paul E. Harrington (Principal Executive Officer)

/s/ MARK A. TRIPP Chief Financial Officer March 27 , 2012 Mark A. Tripp (Principal Financial Officer)

/s/ James L. Easton Director March 27, 2012 James L. Easton

/s/ WILLIAM L. BEANE III Director March 27 , 2012 William L. Beane III

/s/ ANDREW J. CLAERHOUT Director March 27, 2012 Andrew J. Claerhout

/s/ PETER D. LAMM Director March 27, 2012 Peter D. Lamm

/s/ TERRY G. LEE Director March 27, 2012 Terry G. Lee

/s/ TIMOTHY P. MAYHEW Director March 27, 2012 Timothy P. Mayhew

/s/ DAVID A. PERDUE Director March 27, 2012 David Perdue

/s/ PETER V. UEBERROTH Director March 27, 2012 Peter V. Ueberroth

/s/ RICHARD E. WENZ Director March 27, 2012 Richard E. Wenz

/s/ MICHAEL J. WILSKEY Director March 27, 2012 Michael J. Wilskey

FINANCIAL STATEMENT SCHEDULE YEAR ENDED DECEMBER 31, 2011

II-1

VALUATION AND QUALIFYING ACCOUNTS

Additions Balance at Charged to Balance at Beginning Acquired Costs and End of Description of Period Businesses Adjustments Deductions Period (Dollars in thousands) Product Liability Reserve Year ended December 31, 2011 $18,786 $ $6,399 $(6,646 ) $18,539 Year ended January 1, 2011 17,208 5,412 (3,834 ) 18,786 Year ended January 2, 2010 16,246 3,539 (2,577 ) 17,208 Excess and Obsolete Inventory Reserve Year ended December 31, 2011 $9,651 $ $7,397 $(7,072 ) $9,976 Year ended January 1, 2011 7,748 8,410 (6,507 ) 9,651 Year ended January 2, 2010 7,736 6,801 (6,789 ) 7,748 Allowance for Doubtful Accounts Year ended December 31, 2011 $6,942 $ $4,011 $(2,862 ) $8,091 Year ended January 1, 2011 6,453 3,409 (2,920 ) 6,942 Year ended January 2, 2010 7,273 3,826 (4,646 ) 6,453

119

Copyright © 2013 www.secdatabase.com. All Rights Reserved. Please Consider the Environment Before Printing This Document Exhibit 10.3 AMENDMENT TO THE EASTON-BELL SPORTS, LLC 2006 EQUITY INCENTIVE PLAN

Pursuant to Section 8 of the Easton-Bell Sports, LLC 2006 Equity Incentive Plan (the Plan), the Board of Managers of Easton- Bell Sports, LLC having approved this Amendment to the Plan, the Plan is hereby amended by amending and restating in its entirety Section 5(a) of the Plan as follows:

(a) Number of Units. Subject to adjustment as provided in Section 5(c), the aggregate number of Units that may be awarded under the Plan shall be 110,152,750.854 Units. If any award granted under the Plan terminates without having been Vested in full, the number of Units as to which such award was not Vested shall be available for future grants within the limits set forth in this Section 5(a).

IN WITNESS WHEREOF, Easton-Bell Sports, LLC has caused this instrument of amendment to be executed by its duly authorized officer as of the 25th day of August, 2011.

EASTON-BELL SPORTS, LLC

By: /s/ Mark A. Tripp Name: Mark A. Tripp Title: Chief Financial Officer

SECOND AMENDED AND RESTATED AGREEMENT

This Amended and Restated Agreement (hereinafter referred to as this Agreement) is made and entered into by and between Easton-Bell Sports, Inc. (the Company) and Paul E. Harrington (the Executive) as of the 5th day of March, 2012 (the Effective Date) amending in part and restating that certain Amended and Restated Agreement between the parties dated as of the 3rd day of December, 2009 (the Prior Agreement) which amended and restated that certain Agreement between the parties dated as of the fifth day of March, 2008 (the Original Agreement).

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, continued employment.

2. Term. Subject to earlier termination as hereafter provided, the Executives employment hereunder shall be for a term commencing as of March 6, 2012 and ending on March 31, 2014 and, following such initial term, shall automatically renew for one additional year through March 31, 2015. The term of this Agreement is hereafter referred to as the term of this Agreement or the term hereof.

3. Capacity and Performance.

(a) During his employment hereunder, the Executive shall serve the Company as its Chief Executive Officer (CEO), reporting to the Board of Directors of the Company (the Board) or a committee thereof.

(b) In addition, and without further compensation, the Executive shall serve as a member of the Board for so long as he continues to be employed hereunder in the position of CEO, and the Executive agrees also to serve as a director and/or officer of one or more of the Companys Immediate Affiliates (as defined in Section 14 hereof), if so elected or appointed from time to time during the term hereof. At the request of the Board, upon termination of his employment with the Company for any reason, the Executive shall resign as a member of the Board and as an officer of the Company and shall resign from any other positions, offices and directorships he may have with the Company or any of its Immediate Affiliates. In the event the Executive ceases to hold the position of CEO while continuing his employment with the Company, he shall, at the request of the Board, resign as a member thereof.

(c) During the term hereof, the Executive shall be employed by the Company on a full-time basis. He shall have the duties and responsibilities of CEO and such other duties and responsibilities, reasonably consistent with that position, with respect to the business operations of the Company and its Immediate Affiliates, as may be assigned by the Board or a committee thereof from time to time.

Copyright © 2013 www.secdatabase.com. All Rights Reserved. Please Consider the Environment Before Printing This Document (d) Subject to business travel as necessary or desirable for the performance of the Executives duties and responsibilities hereunder, the Executives primary worksite during the term hereof shall be at the location of the Companys offices in Van Nuys, California as of the date hereof (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.

(e) During the term hereof, the Executive shall devote his full business time and best efforts, business judgment, skill and knowledge exclusively to the advancement of the business and interests of the Company and its Immediate 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. It is agreed that the Executive shall not accept membership on a board of directors or other governing board of any Person (as defined in Section 14 hereof) without the prior approval of the Board or its authorized representative. It also is agreed that if the Board subsequently determines, and gives notice to the Executive, that any such membership, previously approved, is materially inconsistent with the Executives obligations under Section 7, Section 8 or Section 9 of this Agreement or gives rise to a material conflict of interest, the Executive shall cease such activity promptly following notice from the Company.

(f) In connection with an initial public offering of the equity securities of Easton-Bell Sports, LLC (the Parent) or its successor and provided that the Executive is then continuing his employment hereunder in the position of CEO, (i) he will be consulted in advance by Parent regarding the selection of an underwriter in connection with such initial public offering and (ii) prior to converting or exchanging any of the Class B Common Units of the Parent into or for options to purchase common stock and/or common stock and/ or stock units of a successor company of Parent pursuant to Section 7.4 of Parents Fifth Amended and Restated Limited Liability Company Agreement, dated as of December 9, 2009 (as amended from time to time, the LLC Agreement), the Parent shall obtain the written consent of the Executive to the value treatment of the Easton-Bell Sports, LLC 2006 Equity Incentive Plan, as amended from time to time (the Plan), or any subsequent equity incentive plan then in effect as part of such initial public offering, provided that such consent shall not be unreasonably withheld or delayed.

Copyright © 2013 www.secdatabase.com. All Rights Reserved. Please Consider the Environment Before Printing This Document 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 Executives duties and of the obligations of the Executive to the Company and its Affiliates, pursuant to this Agreement or otherwise:

(a) Base Salary.

(i) Commencing April 1, 2012 and during the term hereof, the Company shall pay the Executive a base salary at the rate of Eight Hundred and Twenty-Five Thousand Dollars ($825,000.00) per annum, payable in accordance with the payroll practices of the Company for its executives. The Executives base salary is hereafter referred to as the Base Salary.

(ii) By mutual agreement of the Company and the Executive following the Executives relocation to the greater Los Angeles area and while the Original Agreement and the Prior Agreement were in effect, the Company commenced to provide the Executive a housing allowance in the amount of Fifteen Thousand Dollars ($15,000.00) per month, grossed up for the state and federal income tax liability resulting to the Executive (the Housing Allowance), which Housing Allowance was in lieu of the Interest Subsidy (as defined in Section 4(a)(ii) of the Original Agreement). The Company will continue to provide the Executive the Housing Allowance, payable monthly with the Base Salary, while his employment continues under this Agreement, until March 31, 2014. In the event that the Executives employment hereunder terminates prior to March 31, 2014, the Housing Allowance will be provided to the Executive in accordance with the applicable provision of Section 5 hereof and the following: In the event that the Executives employment hereunder is terminated by the Company other than for Cause or is terminated by the Executive for Good Reason prior to March 31, 2014, the Housing Allowance will be continued, as Post-Employment Compensation (as defined in Section 5(g) hereof), subject to the conditions set forth in said Section 5(g), payable on a monthly basis until March 31, 2014. In the event of termination of the Executives employment pursuant to Section 5(a) hereof (as a result of death), the Housing Allowance will be payable monthly to the Executives estate until the expiration of twelve (12) months following the Date of Termination or until March 31, 2014, whichever occurs first. In the event that the Executives employment hereunder is terminated by the Company pursuant to Section 5(b) hereof, the Housing Allowance will be continued, as Post- Employment Compensation (as defined in Section 5(g) hereof), subject to the conditions set forth in said Section 5(g), payable on a monthly basis until the expiration of twelve (12) months following the Date of Termination, until the Executive commences new employment or until March 31, 2014, whichever occurs first. In the event that the Executives employment terminates other than in accordance with Section 5(a), Section 5(b), Section 5(d) or Section 5(e) of this Agreement, the Housing Allowance shall cease on the Date of Termination. The Company will review and adjust the Housing Allowance at reasonable intervals during the term hereof and following the final payment hereunder to true up for federal and state income taxes imposed on the Executive as a result of the Housing Allowance paid hereunder; the Executive agrees that he will cooperate by providing such information and supporting documentation as the Company may reasonably request in connection with any such review; the Company will provide the Executive a copy of the results of each such review and supporting calculations; and the Company and the Executive each agrees to pay promptly such amount, if any, determined by any Company review to be owed to the other party. The true up payment to be made by the Company to the Executive hereunder shall be made by no later than the end of the Executives taxable year immediately following the taxable year in which the Executive remits the related taxes.

Copyright © 2013 www.secdatabase.com. All Rights Reserved. Please Consider the Environment Before Printing This Document (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 executive incentive plan then applicable to the Companys executives, as in effect from time to time, based on target objectives determined by the Board or a designated committee thereof after consultation with the Executive. The Executives target bonus under the executive incentive plan shall be One Hundred Percent (100%) of the Base Salary, with a potential for the Annual Bonus to exceed target if achievement exceeds the target objectives. The actual amount of each Annual Bonus shall be as determined by the Board or its designated committee. Any Annual Bonus due to the Executive hereunder will be payable not later than two and one-half months following the close of the fiscal year for which the bonus was earned or as soon as administratively practicable thereafter, within the meaning of Section 409A of the Internal Revenue Code and the regulations promulgated thereunder, each as amended (Section 409A). 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.

(c ) Equity Participation.

(i) Any equity awards granted to the Executive after the Effective Date shall be at the discretion of the Board of Managers of the Parent and subject to the LLC Agreement, to the Plan or any subsequent equity incentive plan and to any unit certificate and/or other agreements and requirements as the Parent may adopt from time to time for those equity participants who are employees of the Company or for all equity participants generally.

(ii) [Intentionally Omitted.]

(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. The Executives participation shall be subject to the terms of the applicable Employee Benefit Plan documents and generally applicable Company policies. During his continued employment hereunder, the Company shall provide the Executive with premium reimbursement for an individual term life insurance policy of up to $2 million in death benefits, which such premium shall not exceed $7,500 per annum.

Copyright © 2013 www.secdatabase.com. All Rights Reserved. Please Consider the Environment Before Printing This Document (e) Car Allowance. During the term hereof, the Company shall provide the Executive a non-accountable expense allowance for an automobile and its expenses in the amount of Two Thousand, Five Hundred Dollars ($2,500.00) per month.

(f) Vacations. During the term hereof, the Executive will be entitled to four (4) 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 Board or a committee thereof. Vacation shall otherwise be governed by the policies of the Company, as in effect from time to time.

(g) Business Expenses. The Company will 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, to such reasonable substantiation, documentation and submission deadlines as may be specified by the Company from time to time. Any such reimbursements shall be paid no later than December 31 of the year following the year in which the expense was incurred.

(h) Relocation and Temporary Housing and Travel Expenses. Under Section 4(h) of the Original Agreement, the Company agreed to pay or reimburse certain expenses incurred by the Executive in connection with his relocation of himself and his family to the greater Los Angeles area, temporary housing, travel and resulting income taxes to him. Total payments and reimbursements to be provided the Executive with respect thereto was increased by mutual agreement of the Company and the Executive from $85,000.00 to $150,000.00; that increased total was fully disbursed to the Executive under the Original Agreement; and as of the effective date of this Agreement, set forth in its opening paragraph, nothing further is owed to the Executive in this connection.

(i) Reimbursement of Legal Fees. The Company will reimburse the Executives legal fees and expenses incurred in the negotiation of the terms and conditions of his employment with the Company under this Agreement, to a maximum total reimbursement of Ten Thousand Dollars ($10,000.00), subject to such reasonable substantiation, documentation and submission deadlines as may be specified by the Company. Any such reimbursements shall be paid no later than December 31 of the year following the year in which the expense was incurred.

(j) Directors & Officers Insurance Coverage. During the term hereof, the Company shall provide the Executive the same coverage under any directors and officers (D&O) liability insurance which the Company elects to maintain as it provides to its other executives and, after the termination of his employment hereunder, the same rights of indemnification and contribution, and the same coverage under any D&O liability insurance it elects to maintain, as its other former executives. The Company shall be under no obligation hereunder, however, to maintain any D&O liability insurance.

Copyright © 2013 www.secdatabase.com. All Rights Reserved. Please Consider the Environment Before Printing This Document 5. Termination of Employment and Severance Benefits. Notwithstanding the provisions of Section 2 hereof, the Executives employment hereunder shall terminate during the term hereof under the following circumstances:

(a) Death. In the event of the Executives death during the term hereof, the Executives employment hereunder shall immediately and automatically terminate. In such event, promptly following the date of termination of the Executives employment with the Company (hereafter, the Date of Termination), the Company shall pay promptly to his estate the Final Compensation (as defined in Section 14 hereof). In addition to Final Compensation: (A) The Company will pay to the Executives 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 that 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). Such Final Pro-Rated Bonus will be payable at the time annual bonuses are paid to Company executives generally under its executive incentive plan. (B) The Company will pay the full premium cost of health and dental plan coverage for each of Executives qualified beneficiaries on a taxable basis for eighteen (18) months from the Date of Termination or until the date the qualified beneficiary ceases to be eligible for coverage continuation under the federal law commonly known as COBRA, whichever is less; provided, however, that in order to be eligible for the Companys payments hereunder the qualified beneficiary must elect in a timely manner to continue coverage under the Companys health and dental plans under COBRA. (C) The executor or administrator of the Executives estate, as applicable, may put the Executives vested Units to the Parent at Fair Market Value (as defined in the Unit Certificate), provided he/she does so within one hundred and twenty (120) days following the Date of Termination. Payment by the Parent may be by cash or promissory note in accordance with those provisions governing the purchase and sale of management Units contained in the LLC Agreement. Any equity in the Parent held by the Executive on the Date of Termination shall otherwise be governed by the terms of the LLC Agreement, the applicable equity incentive plan and any applicable unit certification, agreements and other requirements. (D) The Company will pay the Executives estate on a monthly basis until the expiration of twelve (12) months following the Date of Termination or until March 31, 2014, whichever is earlier, any Housing Allowance due to it in accordance with Section 4(a)(ii) hereof.

(i) The Company may terminate the Executives 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 substantially all of 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 Executive satisfies in full all of the conditions set forth in Section 5(g) hereof, then, in addition to Final Compensation, the Company shall provide 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, within seventy-four (74) days of the Date of Termination (subject to Section 5(g) hereof), (B) The Company will pay the full premium cost of health and dental plan coverage for Executive and his qualified beneficiaries on a taxable basis for eighteen (18) months following the Date of Termination or until the date the Executive and his qualified beneficiaries cease to be eligible for coverage continuation under COBRA, whichever is less; provided, however, that in order to be eligible for the Companys premium payments hereunder the Executive and each qualified beneficiary must elect in a timely manner to continue coverage under the Companys health and dental plans under COBRA. (C) The Executive may put his vested Units to the Parent at Fair Market Value (as defined in the Unit Certificate), provided he does so within one hundred and twenty (120) days following the Date of Termination. Payment by the Parent may be by cash or promissory note in accordance with those provisions governing the purchase and sale of management Units contained in the LLC Agreement (or any successor corporate governance document). Any equity in the Parent held by the Executive on the Date of Termination shall otherwise be governed by the terms of the LLC Agreement, the applicable equity incentive plan and any applicable unit certification, agreements and other requirements. (D) In the event that the Company had not provided the Executive the opportunity to participate in a long-term disability insurance plan, the Company will 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 within seventy-four (74) days of the Date of Termination (subject to Section 5(g)(i) hereof), but with the first payment retroactive to the day immediately following the Date of Termination. (E) The Company will pay to the Executive any Housing Allowance due to him in accordance with Section 4(a)(ii) and this clause (E), which Housing Allowance will be payable on a monthly basis (x) until the expiration of twelve (12) months following the Date of Termination, (y) until the date the Executive commences new employment, or (z) until March 31, 2014, whichever occurs first. Subject to the provisions of Section 5(g)(i), the first payment shall be made 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 person designated by the Company to receive notices on its behalf in accordance with Section 19 hereof, but with the first payment being retroactive to the month immediately following the month in which the Date of Termination occurred.

Copyright © 2013 www.secdatabase.com. All Rights Reserved. Please Consider the Environment Before Printing This Document (ii) The Board may designate another employee to act in the Executives place during any period of the Executives 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, subject to the terms and conditions of any plans, policies, agreements and other documents to which reference is made therein (collectively, the Plan Documents), while his disability continues 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 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 not be eligible to receive the Base Salary, but shall continue to be eligible for payments and benefits in accordance with Sections 4(b) through 4(e) of this Agreement, subject to 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 substantially all of 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 Companys determination of the issue shall be binding on the Executive.

Copyright © 2013 www.secdatabase.com. All Rights Reserved. Please Consider the Environment Before Printing This Document (c) By the Company for Cause. The Company may terminate the Executives 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) Executives indictment, charge or conviction of, or plea of nolo contendere to, (A) a felony or (B) any other crime involving fraud or material financial dishonesty or (C) any other crime involving moral turpitude that might be reasonably expected to, or does, materially adversely affect the Company or any of its Affiliates, whether that effect is to economics, to reputation or otherwise; (ii) Executives gross negligence or willful misconduct with regard to the Company or any of its Affiliates, including but not limited to its Immediate Affiliates, which has a material adverse impact on Company or its Affiliates, whether economic or to reputation or otherwise; (iii) Executives refusal or willful failure to substantially perform his duties or to follow a material lawful written directive of the Board or its designee within the scope of the Executives 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) Executives theft, fraud or any material act of financial dishonesty related to the Company or any of its Affiliates; (v) the failure by the Executive to disclose any legal impediments to his employment by the Company or his breach of any of his obligations to a former employer in connection with his employment by the Company (e.g., his disclosure or use of proprietary confidential information of a former employer on behalf of the Company without such former employers consent); provided that 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 Executives breach or violation of those provisions of this Agreement setting forth the Executives obligations with respect to confidentiality, non-competition and non-solicitation; or (vii) the Executives breach of any other material provision of this Agreement unless corrected by the Executive within twenty (20) days of the Companys written notification to the Executive of such breach. 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 Parent held by the Executive on the Date of Termination shall be governed by the terms of the LLC Agreement, the applicable equity incentive plan and any applicable unit certification, agreements and other requirements.

(d) By the Company other than for Cause. The Company may terminate the Executives 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(g) hereof, then, in addition to Final Compensation, the Executive, as compensation for his satisfying those conditions, shall be entitled to the following:

(i) The Company shall pay the Executive compensation through March 31, 2016, at the rate of one-twelfth of the Base Salary per month, commencing within seventy-four (74) days of the Date of Termination (subject to Section 5(g)(i) hereof), but with the first payment being retroactive to the day immediately following the Date of Termination.

(ii) The Company shall pay to the Executive, on its next regular payroll date following each March 1 through March 31, 2016, an amount equal to his most recent target annual bonus in effect prior to the Date of Termination; provided that any bonus payable hereunder for the fiscal year in which the Date of Termination occurs shall be paid at the time set forth in Section 4(b) hereof, but in no event later than two and one-half months following the close of the fiscal year for which the bonus was earned or as soon as administratively practicable thereafter, within the meaning of Section 409A .

Copyright © 2013 www.secdatabase.com. All Rights Reserved. Please Consider the Environment Before Printing This Document (iii) The Company shall pay the full premium cost of health and dental plan coverage for Executive and his qualified beneficiaries on a taxable basis until the earliest to occur of (A) the expiration of eighteen (18) months following the Date of Termination, (B) the date the Executive becomes eligible for participation in health and dental plans of another employer or (C) the date the Executive ceases to be eligible for participation under the Companys health and dental plans under COBRA; provided, however, that, in order to be eligible for the Companys payments hereunder, the Executive and each of his qualified beneficiaries must elect in a timely manner to continue coverage under the Companys health and dental plans under COBRA. In the event that the maximum continuation coverage under an employers health and dental plans provided under COBRA as a result of the qualifying event of voluntary or involuntary termination of employment for reasons other than gross misconduct is increased beyond eighteen (18) months, then the number of months set forth under clause (A) hereof shall be increased to the maximum continuation coverage provided under COBRA, to a maximum of twenty-four (24) months.

(iv) The Executive may put his vested Units to the Parent at seventy-five percent (75%) of Fair Market Value (as defined in the Unit Certificate), provided he does so within one hundred and twenty (120) days following the date of termination. Payment by the Parent may be by cash or promissory note in accordance with those provisions governing the purchase and sale of management Units contained in the LLC Agreement (or any successor corporate governance document). Any equity in the Parent held by the Executive on the Date of Termination shall otherwise be governed by the terms of the LLC Agreement, the applicable equity incentive plan and any applicable unit certification, agreements and other requirements.

(v) The Company shall pay to the Executive any Housing Allowance due to him in accordance with Section 4(a)(ii) hereof.

(i) In the event of the occurrence of the events described in (A) through (D) of the definition of Good Reason set forth in Section 5(e)(ii) below, the Executive may terminate his employment hereunder for Good Reason by providing notice to the Company of the condition giving rise to the Good Reason no later than thirty (30) days following the occurrence of the condition, by giving the Company thirty (30) days to remedy the condition and by terminating employment for Good Reason within thirty (30) days thereafter if the Company fails to remedy the condition. In the event of a sale under the circumstances described in clause (E) or (F) of the definition of Good Reason set forth in Section 5(e)(ii) below, the Executive may terminate his employment hereunder for Good Reason by providing written notice to the Company of his objection to such sale and his consequent decision to terminate his employment for Good Reason pursuant to clause (E) or (F), whichever is applicable, on the date of the consummation of the sale transaction, subject only to the occurrence of such consummation (the Notice of Good Reason due to Sale), which Notice of Good Reason due to Sale must be given at or prior to the time the Boards final approval of a definitive agreement with respect to such sale, whether such final approval is given pursuant to a meeting for which the Executive has received notice in accordance with the LLC Agreement, by an unanimous written consent or as otherwise permitted by applicable law. The Notice of Good Reason due to Sale shall become effective upon the consummation of such sale transaction, and the Executives employment shall terminate for Good Reason under the circumstances described in clause (E) or (F) of Section 5(e)(ii) below on the date of such consummation. In the event of a decision to pursue debt financing under the circumstances described in clause (G) of the definition of Good Reason set forth in Section 5(e)(ii) below, the Executive may terminate his employment hereunder for Good Reason by providing written notice to the Company of his objection to such decision and his consequent decision to terminate his employment for Good Reason pursuant to clause (G) on the date of the consummation of the debt financing transaction, subject only to the occurrence of such consummation (the Notice of Good Reason due to Debt Financing), which Notice of Good Reason due to Debt Financing must be given within ten (10) business days following the decision described in clause (G), whether such decision is given pursuant to a meeting for which the Executive has received notice in accordance with the LLC Agreement, by an unanimous written consent or as otherwise permitted by applicable law. The Notice of Good Reason due to Debt Financing shall become effective upon the consummation of such debt financing, and the Executives employment shall terminate for Good Reason under the circumstances described in clause (G) of Section 5(e)(ii) below on the date of such consummation. In the event of a decision to pursue an initial public offering under the circumstances described in clause (H) of the definition of Good Reason set forth in Section 5(e)(ii) below, the Executive may terminate his employment hereunder for Good Reason by providing written notice to the Company of his objection to such decision and his consequent decision to terminate his employment for Good Reason pursuant to clause (H) on the date of the consummation of such initial public offering, subject only to the occurrence of such consummation (the Notice of Good Reason due to IPO), which Notice of Good Reason due to IPO must be given within ten (10) business days following the decision described in clause (H), whether such decision is given pursuant to a meeting for which the Executive has received notice in accordance with the LLC Agreement, by an unanimous written consent or as otherwise permitted by applicable law. The Notice of Good Reason due to IPO shall become effective upon the consummation of such initial public offering, and the Executives employment shall terminate for Good Reason under the circumstances described in clause (H) of Section 5(e)(ii) below on the date of such consummation.

Copyright © 2013 www.secdatabase.com. All Rights Reserved. Please Consider the Environment Before Printing This Document (ii) For purposes of this Agreement, Good Reason shall mean, without the Executives consent, the occurrence of any one or more of the following events: (A) the material breach of this Agreement by the Company; (B) a material diminution of the Executives title as Chief Executive Officer or of any of the Executives significant duties, authority or responsibilities; (C) any reduction in or failure to pay the Base Salary; (D) any relocation of the Executives primary worksite to a site that is more than thirty-five (35) miles from the Van Nuys Location; (E) in connection with a sale of the entire business (meaning the Company and all of its Immediate Affiliates) if (1) the holders of Class B Common Units (as defined in the LLC Agreement) will not receive at least $40.0 million and (2) the Executive will not receive at least $10.0 million in transaction consideration (which amount shall not be construed to include any payments to be made hereunder in connection with the termination of Executives employment for Good Reason) and, in the case of clause (1) and (2) above the Executive has notified the Company of his objection to such sale in accordance with the second sentence of clause (i) above; (F) in connection with a sale of more than twenty-five percent (25%), but less than all, of the total assets of the Company and all of its Immediate Affiliates, or a sale of twenty-five percent (25%) or more, but less than all, of the outstanding equity interests of the Company or the Parent in one transaction or a series of related transactions and regardless of whether accomplished as a merger, stock purchase, asset sale, tender offer or otherwise, the Executive has notified the Company of his objection to such sale in accordance with the second sentence of clause (i) above; (G) a formal decision by the Board or the Board of Managers of the Parent to pursue debt financing for the purpose of redeeming, paying a dividend on or otherwise making a payment or distribution with respect to the outstanding equity interests in the Company or the Parent that would cause the Consolidated Net Leverage Ratio to exceed 4.5x on a pro forma basis; or (H) a formal decision by the Board or the Board of Managers of the Parent to pursue an initial public offering by the Company or its successor entity in which (1) the holders of Class A Common Units (as defined in the LLC Agreement) will receive a cash dividend, cash payment or cash distribution in exchange for twenty-five percent (25%) or more of their outstanding equity interests in the Company or the Parent, (2) the holders of Class B Common Units (as defined in the LLC Agreement) will not receive at least $40.0 million in cash, common stock, options to purchase common stock or stock units (based upon the initial public offering price) and (3) the Executive will not receive at least $10.0 million in cash, common stock, options to purchase common stock or stock units (based upon the initial public offering price).

(iii) 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(g) hereof, then, in addition to Final Compensation, the Company shall provide the Executive the same base salary and benefits premium payments, he would have received under clauses (i) and (iii) of Section 5(d) had his employment been terminated by the Company other than for Cause and the Executive may put his vested Units to the Parent at Fair Market Value (as defined in the Unit Certificate), provided he does so within one hundred and twenty (120) days following the Date of Termination, with payment by the Parent being made by cash or promissory note in accordance with those provisions governing the purchase and sale of management Units contained in the LLC Agreement (or any successor corporate governance document). Any equity in the Parent held by the Executive on the Date of Termination shall otherwise be governed by the terms of the LLC Agreement, the applicable equity incentive plan and any applicable unit certification, agreements and other requirements.

Copyright © 2013 www.secdatabase.com. All Rights Reserved. Please Consider the Environment Before Printing This Document (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 Companys 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 LLC Agreement, the applicable equity incentive plan and any applicable unit certification, agreements and other requirements.

(g) Conditions. The Executives eligibility to receive and retain any Post-Employment Compensation (meaning any and all compensation, of any kind, provided in accordance with the applicable provision of Section 5 of 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 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 Compensation 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 his obligations under the covenant of confidentiality and assignment of rights to Intellectual Property (which obligations are not optional and shall survive any termination, howsoever occurring). The conditions to receipt of Post-Employment Compensation are as follows:

(i) The Executives execution and return, to the person designated by the Company to receive notices on its behalf in accordance with Section 19 hereof, of a timely and effective release of claims in the form attached hereto and marked Exhibit A (Release of Claims), within the time period specified therein. The Release of Claims creates legally binding obligations and the Company therefore advises the Executive to consult an attorney before signing it. Notwithstanding any other provision of this Agreement, (i) the Company shall not be required to make any payment of Post-Employment Compensation unless and until a Release of Claims has been executed by such holder and delivered to the Company, and the Release of Claims has become irrevocable, all within sixty (60) days following the Date of Termination; and (ii) without limiting the generality of the foregoing, the Company shall not be or become obligated to make any such payment unless a Release of Claims is so executed and delivered and the Release of Claims has become irrevocable before the expiration of such 60-day period. If the 60-day period begins in one calendar year and ends in a second calendar year, payment shall commence in the second calendar year. The foregoing provisions relating to a Release of Claims and any other provisions herein relating to a Release of Claims are not in limitation of any claims provisions contained in the LLC Agreement and the provisions of the LLC Agreement relating to releases shall apply in accordance with their terms.

Copyright © 2013 www.secdatabase.com. All Rights Reserved. Please Consider the Environment Before Printing This Document (ii) Forbearance by the Executive for twenty-four (24) months following the Date of Termination from competition with the business of the Company and its Immediate Affiliates anywhere in the world where the Company or any of those Immediate Affiliates is doing business, whether as owner, partner, investor, consultant, agent, employee, co-venturer or otherwise. Specifically, but without limiting the foregoing, in order to satisfy this condition, the Executive must forbear from engaging in any activity that is competitive, or is in preparation to engage in competition, with the business of the Company and its Immediate Affiliates and further the Executive must forbear from working or providing services, in any capacity, whether as an employee, independent contractor or otherwise, whether with or without compensation, for or to any person or entity engaged in the business of the Company and its Immediate Affiliates. The business of the Company and its Affiliates is sporting hard goods. For illustrative purposes only, competitors of the Company and its Immediate Affiliates on the date of this Agreement include Amer Sports Corporation and Jarden Corporation and their respective subsidiaries. The foregoing condition, however, shall not fail to be met solely due to the Executives passive ownership of less than 3% of the equity securities of any publicly traded company.

(iii) Forbearance by the Executive for twenty-four (24) months following the Date of Termination from any direct or indirect solicitation or encouragement of any of the Customers of the Company or any of its Immediate Affiliates to terminate or diminish their relationship with the Company or any of its Immediate Affiliates and from any direct or indirect solicitation or encouragement of any of the Customers or Prospective Customers of the Company or any of its Immediate Affiliates to conduct with himself or any other Person (as defined in Section 14 hereof) any business or activity which such Customer or Prospective Customer conducts or could conduct with the Company or any of its Immediate Affiliates. For purposes of this Section 5(g), a Customer is a person or entity which was such at any time during 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 Immediate 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 Immediate Affiliates.

Copyright © 2013 www.secdatabase.com. All Rights Reserved. Please Consider the Environment Before Printing This Document (iv) Forbearance by the Executive for twenty-four (24) months following the Date of Termination 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 Immediate 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 Immediate Affiliates. For purposes of this Section 5(g), an employee, independent contractor or agent means any Person who was performing services for the Company or any of its Immediate Affiliates in such capacity at any time during the twelve (12) months immediately preceding the Date of Termination.

(h) Timing of Payments. Notwithstanding anything to the contrary in this Agreement, if at the time of the Executives separation from service the Executive is a specified employee, as hereinafter defined, no payment shall be made to the Executive before the date which is six months after he separates from service (within the meaning of Section 409A), except to the extent of amounts that do not constitute a deferral of compensation within the meaning of Treasury Regulations 1.409A-1(b) (including without limitation by reason of the safe harbor set forth in 1.409A-1(b)(9)(iii)), benefits which qualify as excepted welfare benefits pursuant to Section 409A, or other amounts or benefits that are not subject to the requirements of Section 409A. For purposes of this Section, 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. Each payment of Post-Employment Compensation shall be considered a separate payment (within the meaning of Section 409A).

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

(a) Provision by the Company of Final Compensation, if any, to which the Executive is entitled and Post-Employment Compensation, if any, which the Executive earns 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) Except for health and dental plan participation continued in accordance with COBRA, the Executives participation in Employee Benefit Plans shall terminate pursuant to the terms of the applicable Plan Documents based on the Date of Termination without regard to any Post-Employment Compensation earned by the Executive following the Date of Termination.

Copyright © 2013 www.secdatabase.com. All Rights Reserved. Please Consider the Environment Before Printing This Document (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 Compensation set forth in Section 5(g) and the obligations of the Executive under Sections 7 and 8 hereof. The Executive recognizes that, except as expressly provided in Section 5(d) and 5(e) with respect to Post-Employment Compensation earned in accordance with Section 5(g), or as expressly provided in Section 5(f) with respect to Base Salary for any notice period waived, 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 14 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 Executives possession or control.

8. Assignment of Rights to Intellectual Property. The Executive shall promptly and fully disclose all Intellectual Property (as defined in Section 14 hereof) to the Company. The Executive hereby assigns and agrees to assign to the Company (or as otherwise directed by the Company) the Executives 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 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 pertain to the business of the Company or any of its Affiliates or are suggested by any work performed by the Executive for the Company or any of its Affiliates or make 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.

Copyright © 2013 www.secdatabase.com. All Rights Reserved. Please Consider the Environment Before Printing This Document 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 Executives 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 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 of 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 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.

12. 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 Reebok International Ltd. or any other third party without such partys consent.

13. Indemnification. The Company shall indemnify the Executive to the fullest extent permitted by applicable law. Executives 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 (whether because of Executives breach of this Agreement or for Executives conduct constituting Cause hereunder). 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.

14. 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) 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) 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.

Copyright © 2013 www.secdatabase.com. All Rights Reserved. Please Consider the Environment Before Printing This Document (c) Consolidated Net Leverage Ratio means the Consolidated Net Leverage Ratio as defined in and calculated in accordance with the Credit and Guaranty Agreement, dated as of December 3, 2009, among EB Sports Corp., as Borrower, RBG Holdings Corp., as Guarantor, and Wachovia Bank, N.A., as agent and the lenders from time to time party thereto, as such agreement is in effect on the date hereof.

(d) Final Compensation means (i) Base Salary earned but not paid through the Date of Termination, (ii) pay at the final rate of the Base Salary for any vacation earned but not used through the Date of Termination, (iii) any Annual Bonus earned but unpaid for the fiscal year preceding that in which the Date of Termination occurs and (iv) 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 following, the Date of Termination and that such expenses are reimbursable under Company policy.

(e) Immediate Affiliates of the Company are its direct and indirect subsidiaries, its direct and indirect parents and their other direct and indirect subsidiaries (excluding the Company itself).

(f) 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 Immediate 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 Immediate Affiliate, (ii) to the actual or demonstrably anticipated research or development of the Company or of any Immediate 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.

(g) 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.

(h) 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 Executives employment.

Copyright © 2013 www.secdatabase.com. All Rights Reserved. Please Consider the Environment Before Printing This Document 15. 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.

16. 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.

17. 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.

18. 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.

19. 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 Timothy P. Mayhew, Fenway Partners, LLC, 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.

20. Entire Agreement. This Agreement constitutes the entire agreement, and supersedes all prior agreements, whether written or oral, between the Company and the Executive with respect to the Executives employment and all related matters. Further, notwithstanding anything to the contrary contained in this Agreement, this Agreement shall not supersede the Plan, the LLC Agreement, any Class B Common Unit Certificates issued to Executive or the Preferred Stockholders Agreement of EB Sports Corp., each of which shall continue in full force and effect in accordance with its terms, as amended from time to time, but shall also remain subject to amendment, termination or replacement from time to time in accordance with its terms. This Agreement, to which the Parent is a party with respect to certain subject matter expressly identified above the signature of its representative below, also supersedes all prior agreements, whether written or oral, with respect to that subject.

Copyright © 2013 www.secdatabase.com. All Rights Reserved. Please Consider the Environment Before Printing This Document 21. 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.

22. 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.

23. 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.

24. 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. Signature page follows immediately.]

Copyright © 2013 www.secdatabase.com. All Rights Reserved. Please Consider the Environment Before Printing This Document 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/ Paul E. Harrington By: /s/ Timothy P. Mayhew Paul E. Harrington Name: Timothy P. Mayhew Title:

Easton-Bell Sports, LLC shall be a party to this Agreement, but solely for the purposes of Section 3(f) and Section 4(c) hereof.

EASTON-BELL SPORTS, LLC

By: /s/ Timothy P. Mayhew Name: Timothy P. Mayhew Title:

RELEASE OF CLAIMS

FOR AND IN CONSIDERATION OF the Post-Employment Compensation that I am eligible to earn following the termination of my employment, as that term is defined in the amended and restated employment agreement between me and Easton-Bell Sports, Inc. (the Company) dated as of the day of , 2009 (the Agreement), which is 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 or claiming through 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.

A-1

Copyright © 2013 www.secdatabase.com. All Rights Reserved. Please Consider the Environment Before Printing This Document 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, (ii) any right of indemnification or contribution that I have pursuant to the Articles of Incorporation or By-Laws of the Company or any of its Immediate Affiliates (as that term is defined in the Agreement) and (iii) any right to payment under Section 5.1 of the LLC 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, before signing, dating and returning this Release of Claims to the Company c/o Timothy P. Mayhew, Fenway Partners, LLC, 152 W. 57th St., 59th Floor, New York, NY 10019, or to such other address as the Company may specify. 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 Timothy P. Mayhew, Fenway Partners, LLC, 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: Paul E. Harrington Date Signed:

A-2

January 9, 2012

Mr. Steve Bigelow

Dear Steve:

Easton-Bell Sports, Inc. (the Company) has determined that, given the nature of your position, the interests of the Company will be best served by providing you the assurance of separation benefits, as described below, in the event that your employment is terminated by the Company other than for cause. Therefore, the purpose of this letter is to confirm the agreement between you and the Company concerning termination of your employment and certain ancillary matters, as follows and is hereafter referred to as Agreement:

1. Term of this Agreement: Subject to earlier termination as hereafter provided, this Agreement is for a period of two (2) years beginning January 1, 2012 and ending December 31, 2014. However, after the initial two year period, this Agreement shall continue from year to year, herein referred to as Evergreen continuation.

a. Title and reporting: Your title of President, Bell Sports may only be adjusted or changed with your consent, and you may decline such title change unless such change is a clear promotion in title and responsibility.

2. Compensation during the Term of the Agreement: Your base salary, bonus percentage, housing subsidy and automobile allowance may be increased but not decreased during the initial Term of the Agreement. Housing subsidy is only payable while you are assigned and required to work in a California location of the Company. Currently such amounts are as follows:

a. Base Annual Salary-$360,000

b. Bonus Opportunity Percentage-75%

c. Housing Subsidy- $100,000 (Which includes value of gross-up)

d. Participation in the Easton-Bell Sports, LLC Equity Incentive Plan (the Plan): is subject to the terms and conditions of that plan and nothing contained herein will change the terms and conditions of the Plan.

3. Separation Benefits. If your employment is terminated by the Company other than for Cause, as defined below, the Company will provide you the following separation payments and other benefits in exchange for periodic consulting to the Company (in the aggregate, the Separation Benefits), provided that you satisfy the conditions set forth in this Agreement

(a) The Company will provide you Separation pay, at the same rate as that of your base salary on the date your employment terminates (the Termination Date), for the period of Eighteen months (18 months) following the Termination Date (the Separation Pay Period). Such rate to include base pay, housing and automobile allowances. Separation pay will be provided you in the form of salary continuation in accordance with the Companys normal payroll practices, but not less than eight days following receipt of your signed release of claims and subject to the Timing requirements of this Agreement. The Housing Subsidy payment shall not, however, continue after the date of move to a different location as it is only payable while residing in the State of CA.

Copyright © 2013 www.secdatabase.com. All Rights Reserved. Please Consider the Environment Before Printing This Document (b) Timing of Payments: Notwithstanding anything to the contrary in this Agreement, if at the time of Separation, you are a specified employee as defined within the meaning of Treasury regulations such payments will be made in a manner and time consistent to comply with sections 409A and 404 (c). The Company reserves the right to change this language than at the time it changes all employment Agreements and contracts for compliance with Section 409A and 404(c) or at other dates from time to time as necessary to comply with securities, tax and treasury regulations.

(c) Provided that you and your eligible dependents, if any, exercise your rights to continue participation in the Companys group health and dental plans in a timely manner under the federal law known as COBRA, the Company will pay the premium cost of your participation and that of your eligible dependents in those plans from the Termination Date until the earliest to occur of (i) the last day of the Separation Pay Period, (ii) the date you become eligible to enroll in the health and/or dental plan of another employer or (iii) the date you or any of your dependents otherwise ceases to be eligible to continue participation in these Company plans under COBRA. You agree to notify the Company promptly if you become eligible to enroll in the health or dental plan of another employer or if you or any of your dependents otherwise ceases to be eligible for continued coverage under COBRA. After the Companys contributions end, you may continue coverage for the remainder of the COBRA period, if any, by paying the full premium cost plus a small administrative fee. All requirements under federal COBRA laws and tax laws will be followed by the Company in the administration of your health benefits.

(d) The Companys responsibility and your obligations for payment of Bonus in 2012 is stated in Exhibit B to this Agreement. In succeeding years, the Company will pay you a pro-rated annual bonus for the final year in which the Termination Date occurs. The bonus will be determined by multiplying the annual bonus you would have received had you continued employment through the last day of that fiscal year by a fraction, the numerator of which is the number of days you were employed during the fiscal year, through the Termination Date, and the denominator of which is 365. The pro-rated bonus will be payable at the time annual bonuses are paid to Company executives generally under its bonus plan. Such payout would be subject to all other terms and metrics of the plan.

(e) In addition to the pro-rated annual bonus to be provided under Section 1(c) immediately above, in the event that the Termination Date occurs prior to the date on which payment is made of annual bonuses for the immediately preceding fiscal year, you will be paid that annual bonus on the later of the date annual bonuses for that preceding fiscal year are paid to Company executives generally and the payday on which the first payment is made under Section 1(a) of this Agreement.

(f) At your option, the Company will relocate your household goods and up to two automobiles from The Scotts Valley-Santa Cruz, CA region to the Dallas-Fort Worth, TX Metroplex. This option is available for up to twelve months past your effective Separation Date.

Copyright © 2013 www.secdatabase.com. All Rights Reserved. Please Consider the Environment Before Printing This Document Note that your Housing Subsidy will terminate upon the relocation of your household goods to TX, as such subsidy is only payable while residing in the state of CA.

(g) In addition to the Separation benefits described above you will receive any payment due for base salary for the final payroll period of your employment through the Termination Date, and pay, at your final base salary rate, for any vacation you have earned but not used as of the Termination Date and reimbursement of any business expenses incurred on or before the Termination Date which are eligible for reimbursement under Company policies then in effect and are submitted by you with required documentation and substantiation no later than sixty (60) days following the Termination Date.

(h) Except for any right you and your eligible dependents, if any, have to continue participation in the Companys group health and dental plans under COBRA following termination of your employment, your participation in Company benefit plans will terminate on the Termination Date in accordance with the terms thereof and will not continue while you are a paid consultant to the Company. (i) (intentionally not included for purposes of clarity)

(j) As previously outlined above any equity in Easton-Bell Sports, LLC that you hold on the Termination Date shall be governed by the terms of the Unit Certificate, the Plan and the LLC Agreement, as applicable.

4. Conditions to Separation Benefit Eligibility. In order to be eligible to receive the Separation Benefits, you must meet all of the following conditions:

(a) In May, 2012, you and the Company will meet to determine how the operation of the brands ( Bell and Giro) in their separate manner is succeeding. At that time you may voluntarily elect to leave and receive separation benefits as defined herein.

(b) Between May 31 and December 31, 2012, you may resign and receive Separation Benefits, provided you transition your role as directed by the President & CEO and provide no less than 90 days notice. (c) After December 31, 2012, in order to receive the Separation Benefits defined herein your employment must be terminated by the Company for a reason other than for Cause. A termination of employment by the Company for Cause or such a termination resulting from death or from disability (meaning termination as a result of your being unable to perform the essential functions of your job with or without accommodation after exhaustion of any leave to which you are entitled or which is otherwise granted you by the Company voluntarily) or any resignation by you of your employment shall not qualify you for Separation Benefits, except as specifically provided for in (a) above for 2012, where your resignation will still result in payment of Separation Benefits.

(c) Following the Termination Date, in order to receive any Separation Benefits, you must sign and return in a timely and effective release of claims in the form that is attached to this Agreement as Exhibit A (the Release). The Release creates legally binding obligations and the Company advises you to seek the advice of an attorney before signing it.

Copyright © 2013 www.secdatabase.com. All Rights Reserved. Please Consider the Environment Before Printing This Document (d) You must comply meet in full your obligations under this Agreement during your employment and thereafter, in accordance with its terms.

(e) 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 Executives consent, the occurrence of any one or more of the 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 Executives significant duties or the assignment to the Executive of material duties inconsistent with his position

(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 or any material failure to provide Executive Perquisites 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 Executives written notice to the Company specifying in reasonable detail the nature of the reduction or failure;

(iv) any relocation of the Executives primary worksite to a site that is more than thirty-five (35) miles from the Executives current office location (Scotts Valley, CA) without agreement by the Executive

(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. Note: The Executive may in writing waive a breach of one portion of the Agreement on a voluntary basis for a specified period of time without invalidating the Separation Benefits for other breaches. For example, an Executive may agree to a voluntary reduction in pay for a temporary period without invalidating any other provision of the Agreement.

5. Employees Ancillary Covenants. It is acknowledged and agreed that the following covenants, which shall apply throughout your employment and following its termination (regardless of how it occurs) are ancillary to this Agreement between you and the Company with respect to your Separation benefits:

(a) Confidential Information. You agree that the Company and its Affiliates (as defined below) continually develop Confidential Information (as defined below); that you have developed and may hereafter develop Confidential Information for the Company and its Affiliates; and that you have learned and may learn hereafter of Confidential Information during the course of employment. You agree to comply with the policies and procedures of the

Copyright © 2013 www.secdatabase.com. All Rights Reserved. Please Consider the Environment Before Printing This Document Company and its Affiliates for protecting Confidential Information and agree not to disclose to any Person or use any Confidential Information that you have obtained or obtain hereafter incident to your employment or any other associations with the Company or any of its Affiliates, other than as required for the proper performance of your regular duties and responsibilities to the Company and its Immediate Affiliates or as required by applicable law or legal process after notice to the Company and a reasonable opportunity for the Company to see protection of the Confidential Information prior to its disclosure. You agree that these restrictions shall continue to apply after your employment terminates, regardless of the reason for termination. The confidentiality obligation under this Section 4(a) does not apply, however, to information that is generally known or readily available to the public at the time of disclosure or becomes generally known through no wrongful act on your part or that of any other Person having an obligation of confidentiality to the Company or any of its Affiliates.

(b) Protection of Documents. All documents, records and files, in any media of whatever 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 you, shall be the sole and exclusive property of the Company. You agree to safeguard all Documents and to surrender to the Company, at the time your employment terminates (without regard to the reason for termination) or at such earlier time or times as the Company may specify, all Documents and other property of the Company and its Affiliates then in your possession or control.

(c) Restricted Activities. You acknowledge the importance to the Company and its Immediate Affiliates of protecting their trade secrets, other Confidential Information and goodwill that they have developed or acquired and which they shall continue to develop and acquire while your employment continues. Further, in addition to assurances of Separation Benefits in accordance with this Agreement, the Company agrees, in consideration of your acceptance of the restrictions set forth below, to grant you access to trade secrets and other Confidential Information of the Company and its Immediate Affiliates as well as to their valuable relationships with employees and others. You in turn acknowledge and agree that the restrictions on your activities during and after your employment set forth below are necessary to protect the goodwill, Confidential Information and other legitimate interests of the Company and its Immediate Affiliates:

(i) You agree that, during your employment with the Company and, you will not, directly or indirectly, alone or in association with others, anywhere in the United States where the Company or any of its Immediate Affiliates is doing or actively planning to do business, own, manage, operate, control or participate in the ownership, management, operation or control of, or be connected as an officer, employee, investor, principal, joint venturer, shareholder, partner, director, consultant, agent or otherwise with, or have any financial interest (through equity ownership or otherwise) in, any business, venture or activity that directly or indirectly competes, or is in planning, or has undertaken any preparation, to compete, with the business of the Company or any of its Immediate Affiliates (a Competitor), except that nothing contained in this Agreement shall prevent your wholly passive ownership of five percent (5%) or less of the equity securities of any Competitor that is a publicly-traded company.

Copyright © 2013 www.secdatabase.com. All Rights Reserved. Please Consider the Environment Before Printing This Document (ii) You agree that for the period of Eighteen (18) months immediately following the Termination Date, however it occurs, you will be considered a paid consultant to our Company and will therefore not do substantially the same or similar work as you did prior to Termination, as either an employee or consultant with a company that directly competes in our cycling and snow businesses including but not limited to : Doral Industries, Specialized, Trek, Smith or Burton. Topeak, Mavic, Avenir.

(iii) You agree that, during your employment with the Company and for the period of Eighteen (18) months immediately following the Termination Date, however it occurs, you will be considered a consultant to our Company and will therefore not, directly or indirectly, hire or otherwise engage to provide services or attempt to hire or so engage, any employee or independent contractor providing services to the Company or any of its Immediate Affiliates; assist in such hiring or engagement by any other person or entity; or encourage any employee or independent contractor providing services to the Company or any of its Immediate Affiliates to terminate or diminish his or her relationship with the Company or such Immediate Affiliate. For purposes of this Agreement, an employee means any person who was employed by, or had an offer of employment from, the Company or any of its Immediate Affiliates on the Termination Date or at any time during the preceding six months and an independent contractor means any person otherwise providing services to the Company or any of its Immediate Affiliates on the Termination Date or at any time during the preceding six months.

(iii) You agree that, during your employment with the Company and for the period of Eighteen (18) months immediately following the Termination Date, however it occurs, you will not, directly or indirectly, solicit or encourage any customer or other Person doing business with the Company or any of its Immediate Affiliates to terminate or diminish its relationship with the Company or any of its Immediate Affiliates; provided, however, that, after termination of your employment with the Company, these restrictions shall apply only with respect to those customers and other Persons doing business with the Company or any of its Immediate Affiliates on the Termination Date or at any time during the preceding six (6) months whom you know or reasonably should know is a customer or otherwise doing business with the Company or any of its Immediate Affiliates.

(d) Enforcement of Covenants. You acknowledge that you have carefully read and considered all the terms and conditions of this Agreement, including the restraints imposed on you under this Section. You agree without reservation that each of the restraints contained here is necessary for the reasonable and proper protection of the goodwill, Confidential Information and other legitimate interests of the Company and its Immediate Affiliates; that each and every one of those restraints is reasonable in respect to subject matter, length of time and geographic area; and that these restraints, individually or in the aggregate, will not prevent you from obtaining other suitable employment during the period in which you are bound by these restraints. You also acknowledge that if you were to breach any of the covenants contained in this Section, the damage to the Company and its Immediate Affiliates would be irreparable. You therefore agree that the Company, in addition to any other remedies available to it, shall be entitled to preliminary and permanent injunctive relief against any breach or threatened breach by you of any of these covenants. You and the Company also agree that, in the event any provision of this Section 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, that provision shall be deemed to be modified to permit its enforcement to the maximum extent permitted by law.

Copyright © 2013 www.secdatabase.com. All Rights Reserved. Please Consider the Environment Before Printing This Document 6. 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.

7. Definitions. 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 Company, where control may be by management authority, contract or equity interest.

(b) Termination by the Company for Cause shall mean only (i) your refusal or willful failure to perform, or serious negligence in the performance of, your duties and responsibilities for the Company which remains uncured, continues or recurs after ten (10) business days notice from the Company describing in reasonable detail the nature of the refusal, failure or neglect; (ii) your material breach of breach of this Agreement or of any fiduciary duty or duty of loyalty owed to the Company or any of its Immediate Affiliates; (iii) fraud or other material dishonesty with respect to the Company or any of its Immediate Affiliates (meaning its direct and indirect parents and subsidiaries and its parents other direct and indirect subsidiaries); or (iv) other conduct that is, or could reasonably be expected to be, materially harmful to the business interests or reputation of the Company or any of its Immediate Affiliates.

(c) Confidential Information means any and all information of the Company and its Immediate Affiliates that is not generally known by those with whom the Company or any of its Immediate Affiliates competes or does business, or with whom the Company or any of its Immediate 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 Immediate Affiliates,

(ii) the development, research, testing, marketing and financial activities and strategic plans of the Company and its Immediate Affiliates,

(iii) their costs and sources of supply,

(iv) the identity and special needs of the customers and prospective customers of the Company and its Immediate Affiliates and

(v) the employees and other Persons with whom the Company and its Immediate 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, employees or others with any understanding, express or implied, that the information would not be disclosed.

Copyright © 2013 www.secdatabase.com. All Rights Reserved. Please Consider the Environment Before Printing This Document (d) 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 Immediate Affiliates.

(e) 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 Immediate Affiliates, together with all services provided or planned by the Company or any of its Immediate Affiliates, during your employment.

8. Miscellaneous. This is the entire agreement between you and the Company, and supersedes all prior and contemporaneous communications, agreements and understandings, written or oral, with respect to the subject matter hereof. This Agreement may not be modified or amended, and no breach shall be treated as being waived, unless in writing and signed by you and an expressly authorized representative of the Company. Provisions of this Agreement shall survive any termination if so provided here or if necessary or desirable to accomplish the purposes of other surviving provisions, including without limitation the obligations of the Company in the event of a termination of your employment by the Company other than for Cause and your obligations stated herein. The headings of this Agreement are only for convenience and are not part of this Agreement. This Agreement is a contract for the provision of Separation benefits in accordance with its terms and is not intended, and shall not be interpreted, to restrict your right or that of the Company to terminate your employment relationship with the Company. Nor does this Agreement in any way restrict the Companys alteration of any of the terms or conditions of your employment, other than as expressly provided herein.

9. Severability: If any portion of this Agreement shall be to any extent declared illegal or unenforceable by a court of competent jurisdiction, then the the remained of this Agreement, or the application of such portion of provision in circumstances other than those as to which is so declared illegal or unenforceable, shall not be affected thereby and each portion and provision of the Agreement shall be valid and enforceable to the fullest extent of the law possible. This is a Texas contract and shall be governed and construed in accordance with the laws of the State of Texas.

10. Disputes: In the event of disputes under this Agreement, both you and the Company agree to submit such disputes to binding arbitration. The Arbitrator to be jointly selected from a list of Arbitrators who are members of the American Arbitration Association and who perform such services within a 50 mile range of Dallas, TX The prevailing partys costs will be assumed by the non-prevailing party.

Copyright © 2013 www.secdatabase.com. All Rights Reserved. Please Consider the Environment Before Printing This Document If the terms of this Agreement are acceptable to you, please so indicate by signing and returning the original of this letter to me within ten (10) business days of its date. The second copy is for your records.

Sincerely, EASTON-BELL SPORTS, INC.

/s/ Jackelyn E. Werblo

Jackelyn E. Werblo Senior Vice President- Human Resources

/s/ Steve Bigelow Steve Bigelow

1/9/12 Date

RELEASE OF CLAIMS

4. 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 on or about January 9, 2012 (the Agreement), which are conditioned 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, Steve Bigelow, 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 defined in the Agreement) and all of their respective past, present and future officers, directors, shareholders, employees, agents, general and limited partners, members, managers, joint venturers, representatives, successors and assigns, and all others connected with any of them, 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, from the beginning of time, 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 to the Company (jointly, Company Releasees) from the all claims debts, liabilities, demands, obligations, promises, acts, agreements, contracts, losses, suits, indemnities, duties, costs and expense (including but not limited to attorneys fees, damages, actions and causes of action of whatsoever kind or nature), and all rights or claims regarding Employees employment with the Company. This shall include but not be limited to a release of any rights or claims arising under any state or federal statute or common law regulating or affecting employment including the California Fair Employment and Housing Act [which prohibits discrimination and harassment in employment based on race, religious creed, color, national origin, ancestry, physical disability, mental disability, medical condition, marital status, sex, sexual harassment, age, sexual orientation, or retaliation]; Title VII of the Civil Rights Act of 1964, as amended, the Civil Rights Act of 1991 [which prohibits discrimination in employment based on race, color, national origin, religion or sex or sexual harassment]; the Age Discrimination in Employment Act (ADEA); Executive Order 11246 [which prohibits age discrimination]; Sections 503 and 504 of the Rehabilitation Act of 1973 [which prohibits disability discrimination]; Labor Code Sections 1050 through 1054 [which prohibit attempts to prevent reemployment]; the Employee Retirement Income Security Act of 1974 (ERISA) [which prohibits wrongful denial of employee benefits]; California Labor Code Section 132a [which prohibits discrimination based on filing of workers compensation claim]; the Equal Pay Act [which prohibits paying men and women unequal pay for equal work]; The Americans with Disabilities Act (ADA) [which prohibits discrimination based on disability]; or any and all state or local statutes, ordinances, or regulations, as well as all claims arising under federal, state or local laws

Copyright © 2013 www.secdatabase.com. All Rights Reserved. Please Consider the Environment Before Printing This Document involving any tort, employment contract (express or implied), public policy, wrongful discharge, or any other claim, and prohibiting employment discrimination or restricting statutes, ordinances, or regulations, as well as all claims arising under Companys right to hire, promote, discipline or terminate employees. Employee irrevocably unconditionally waives, releases and forever discharges Company Releasees from all State Labor Code claims and Fair Labor Standards Act (FLSA) claims (including, without limitation, claims for unpaid wages, bonuses, unpaid overtime compensation, meal period and rest breaks, interest, liquidated damages, penalties of any kind, as well as any claims for attorneys fees, Private Attorney General Act penalties, and costs related thereto) that Employee has or may have against Company Releasees whether known or unknown, arising out of, relating to, or resulting from any events occurring from inception of his employment until the execution of this Agreement.

Compliance with California Civil Code: Employee understands and agrees that this release extends to all claims of every nature, known or unknown, suspected or unsuspected, past or present, and that any and all rights granted to Employee under Section 1542 of the California Civil Code or any similar federal law or regulation are hereby expressly waived. Section 1542 provides:

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

Employee certifies that he has read and understood this general release and Section 1542 and that he expressly waives any right or benefit available to him in any capacity under the provisions of Section 1542.

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 indemnification or contribution that I have pursuant to the Articles of Incorporation or By- Laws of the Company or any of the governing documents of its Immediate 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 have been advised by the Company in the Agreement 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.

Copyright © 2013 www.secdatabase.com. All Rights Reserved. Please Consider the Environment Before Printing This Document 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 Jackelyn Werblo, 6225 N. State Highway 161, Irving, TX 75038, 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.

Date: Steve Bigelow

(Balance of Page Intentionally Left Blank)

2012 Bonus Addendum

The Company will guarantee 50% of your Bonus in 2012, payable regardless of whether you are employed or separated during 2012.

This will operate as follows:

1. In the event The Company initiates your separation during 2012, you will receive 100% of your Bonus for 2012, payable at the time all bonuses are paid, without regard to achievement of metrics.

2. If you initiate the Separation for any reason in 2012, before December 31, 2012, you will receive 50% of your bonus, regardless of achievement of metrics. Bonus payout will not increase above 50% if you initiate the Separation for any reason before December 31, 2012.

3. If you remain employed by EBS in 2012, The Company will guarantee 50% of your Bonus in 2012, and the balance is based upon achievement of bonus metricsso you may earn full bonus if metrics are achieved.

4. For purposes of clarity, if you initiate a Separation on December 31, 2012, and the Company does not require a transition period you would not earn any pro-rata bonus in 2013.

Signed: /s/ Jackelyn E. Werblo on behalf of Easton-Bell Sports, Inc. Date: 1/9/12

Signed: /s/ Steve Bigelow Date: 1/9/12 Steve Bigelow

THIS AMENDED AND RESTATED EMPLOYMENT AGREEMENT (this Agreement) is made and entered into by and between Easton-Bell Sports, Inc. (the Company) and Thomas T. Merrigan (the Executive), dated as of the 1st day of December, 2011.

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, continued employment which began on or about June 1, 2010.

2. Term. Subject to earlier termination as hereafter provided, the initial term of Executives employment hereunder shall have been deemed to have commenced on June 1, 2010 and end on January 31, 2013 and, following the initial term, 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) During his employment hereunder, the Executive shall serve the Company as its Executive Vice President and General Counsel (EVP and GC) reporting to the President and Chief Executive Officer of the Company (the CEO).

(b) During the term hereof, the Executive shall be employed by the Company on a full-time basis. He shall have the duties and responsibilities of EVP and GC with respect to the legal matters of the Company and its Immediate Affiliates, and as may be assigned by the CEO or the Board of Directors of the Company (the Board) or a committee thereof from time to time.

(c) Subject to business travel as necessary or desirable for the performance of the Executives duties and responsibilities hereunder, the Executives primary worksite shall be in the greater Boston, MA area. Such business travel, as necessary, may be purchased as first class tickets when such flights exceed three and one half hours of flight time.

(d) During the term hereof, the Executive shall devote his full business time and best efforts, business judgment, skill and knowledge exclusively to the advancement of the business and interests of the Company and its Immediate 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. It is agreed that the Executive shall not accept membership on a board of directors or other governing board of any Person (as defined in Section 13 hereof) without the prior approval of the Board or its authorized representative. It also is agreed that if the Board subsequently determines, and gives notice to the Executive, that any such membership, previously approved, is materially inconsistent with the Executives obligations under Section 7, Section 8 or Section 9 of this Agreement or gives rise to a material conflict of interest, the Executive shall cease such activity promptly following notice from the Company.

(a) Base Salary.

(i) the Company shall pay the Executive a base salary at the rate of Three Hundred Sixty Thousand Dollars ($360,500.00) 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. The Executives base salary, as from time to time increased, is hereafter referred to as the Base Salary.

(b) Office Stipend. For the term of the agreement and each renewal period the Company will provide Executive with an annual non-accountable net (after taxes) office stipend of $50,000 divided and payable in equal monthly payments. The Company will also reimburse up to $50,000 of office expenses in addition to the non-accountable stipend.

(c) 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 executive incentive plan then applicable to the Companys executives, as in effect from time to time, based on target objectives determined by the Board or a designated committee thereof after consultation with the CEO. Executives target bonus under the Executive incentive plan shall be Seventy Five (75%) of the Base Salary plus the annual non- accountable net office stipend. The Annual Bonus may exceed target if achievement exceeds the target objectives. For each year, the Executives bonus will be tied to achievement of EBITDA(25%) and attainment of specific company legal objectives (75%). Any Annual Bonus due to the Executive hereunder will be payable not later than two and one-half months following the close of the fiscal year for which the bonus was earned or as soon as administratively practicable thereafter, within the meaning of Section 409A of the Internal Revenue Code and the regulations promulgated thereunder, each as amended (Section 409A). 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.

(d) Equity Participation. Pursuant to the Companys offer of employment and periodic grants thereafter, Executive has received 4,114, 817 b units. Units granted to the Executive after the date hereof shall be at the discretion of the Board of Managers of Easton Bell Sports, LLC (the Parent) and subject to the Easton Bell Sports, LLC Fifth Amended and Restated Limited Liability Company Agreement as amended from time to time (the LLC Agreement), to the Easton Bell Sports, LLC 2006 Equity Incentive Plan, as amended from time to time (the Plan), or any subsequent equity incentive plan and to any unit certificate and/or other agreements and requirements as the Parent may adopt from time to time for those equity participants who are employees of the Company or for all equity participants generally.

Copyright © 2013 www.secdatabase.com. All Rights Reserved. Please Consider the Environment Before Printing This Document (e) 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. The Executives participation shall be subject to the terms of the applicable Employee Benefit Plan documents and generally applicable Company policies. The Company reserves the right and Executive agrees to accept any modification or change in employee benefit plans so long as such change applies to the group of participants eligible for the benefit plan.

(f) Car Allowance. The Company shall provide the Executive a non-accountable expense allowance for an automobile and its expenses in the amount of Eight Hundred Dollars per month ($800); which amount shall be subject to federal, state and local income and employment taxes).

(g) Vacations. During the term hereof, the Executive will be entitled to four (4) 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 Board or a committee thereof. Vacation shall otherwise be governed by the policies of the Company, as in effect from time to time.

(h) Directors & Officers Insurance Coverage. During the term hereof, the Company shall provide the Executive the same coverage under any directors and officers (D&O) liability insurance which the Company elects to maintain as it provides to its other executives and, after the termination of her employment hereunder, the same rights of indemnification and contribution, and the same coverage under any D&O liability insurance it elects to maintain, as its other former executives. The Company shall be under no obligation hereunder, however, to maintain any D&O liability insurance.

5. Termination of Employment and Severance Benefits. Notwithstanding the provisions of Section 2 hereof, the Executives employment hereunder shall terminate during the term hereof under the following circumstances:

Copyright © 2013 www.secdatabase.com. All Rights Reserved. Please Consider the Environment Before Printing This Document Rated Bonus will be (i) based on an assumed bonus of no less than the Annual Bonus received by the Executive (if any) for the fiscal year preceding the fiscal year in which the Date of Termination occurs and (ii) payable at the time annual bonuses are paid to Company executives generally under its executive incentive plan. (B) The Company will pay the full premium cost of health and dental plan coverage for each of the Executives qualified beneficiaries for thirty-six (36) months from the Date of Termination or until the date the qualified beneficiary ceases to be eligible for coverage continuation under the federal law commonly known as COBRA, whichever is less; provided, however, that in order to be eligible for the Companys payments hereunder the qualified beneficiary must elect in a timely manner to continue coverage under the Companys health and dental plans under COBRA.

(b) Disability.

(i) The Company may terminate the Executives employment hereunder, upon notice to the Executive, in the event that the Executive becomes disabled during her employment through any illness, injury, accident or condition of either a physical or psychological nature and, as a result, is unable to perform substantially all of her 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 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 following: (A) The Company will pay the Executive a Final Pro-Rated Bonus for the fiscal year on 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 sixtieth (60th) day after the Date of Termination (subject to Section 5(h) hereof). (B) The Company will pay the full premium cost of health and dental plan coverage for Executive and her qualified beneficiaries the full period of COBRA, following the Date of Termination or, until the date the Executive and her qualified beneficiaries cease to be eligible for coverage continuation under COBRA, whichever is less; provided, however, that in order to be eligible for the Companys premium payments hereunder the Executive and each qualified beneficiary must elect in a timely manner to continue coverage under the Companys health and dental plans under COBRA. (C) If the Executive fails to satisfy the requirements to participate in the Companys long-term disability insurance plan, the Company will continue to pay the Executive the Base Salary from the Date of Termination until the expiration of twelve (12) months thereafter or, if earlier, until the date the Executive recovers sufficiently from illness or injury to resume work on a substantially full-time basis (the Recovery Date), with payments commencing on the sixtieth (60th) day after the Date of Termination (subject to Section 5(h) hereof), but with the first payment retroactive to the day immediately following the Date of Termination

Copyright © 2013 www.secdatabase.com. All Rights Reserved. Please Consider the Environment Before Printing This Document conditions of any plans, policies, agreements and other documents to which reference is made therein (collectively, the Plan Documents), while disability continues, until the Executive becomes eligible for disability income benefits under any disability plan in which He is a participant as a result of employment with the Company or until He recovers sufficiently to resume duties and responsibilities hereunder (provided He does so within the aforesaid one hundred and eighty (180) days or such longer period as the Board in its discretion may provide) or until the termination of her employment, whichever shall first occur. If, while employment hereunder continues, the Executive is receiving disability income benefits under any such disability plan, the Executive shall not be eligible to receive the Base Salary, but shall continue to be eligible for payments and benefits in accordance with Sections 4(b) through 4(e) of this Agreement, subject to the terms and conditions of the Plan Documents, until the earlier to occur of her recovery or the termination of employment under this Agreement. Executive agrees that determination of disability benefits is solely determined by the insurance company providing such benefits to executives and employees.

(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 substantially all of her 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 her 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 Companys determination of the issue shall be binding on the Executive.

Copyright © 2013 www.secdatabase.com. All Rights Reserved. Please Consider the Environment Before Printing This Document Company without such former employers consent); provided that Executive has been provided with written notification of the foregoing and has been given five (5) days to present any mitigating, corrective or clarifying information to the Board; (vi) the Executives breach or violation of those provisions of this Agreement setting forth the Executives obligations with respect to confidentiality, non-competition and non-solicitation; or (vii) the Executives breach of any other material provision of this Agreement unless corrected by the Executive within twenty (20) days of the Companys written notification to the Executive of such breach. 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 Parent held by the Executive on the Date of Termination shall be governed by the terms of the LLC Agreement, the applicable equity incentive plan and any applicable unit certification, agreements and other requirements.

(d) By the Company other than for Cause. The Company may terminate the Executives 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 her satisfying 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 sixtieth (60th) day after the Date of Termination (subject to Section 5(h) hereof).

(ii) The Company shall pay 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 sixtieth (60th) day after the Date of Termination (subject to Section 5(h) hereof), but with the first payment being retroactive to the day immediately following the Date of Termination.

(iii) The Company shall pay the full premium cost of health and dental plan coverage for Executive and his qualified beneficiaries until the earliest to occur of (A) the expiration of eighteen (18) months following the Date of Termination, (B) the date the Executive becomes eligible for participation in health and dental plans of another employer or (C) the date the Executive ceases to be eligible for participation under the Companys health and dental plans under COBRA; provided, however, that, in order to be eligible for the Companys payments hereunder, the Executive and each qualified beneficiaries must elect in a timely manner to continue coverage under the Companys health and dental plans under COBRA.

(e) By the Executive for Good Reason.

(i) The Executive may terminate employment hereunder for Good Reason by providing notice to the Company of the condition giving rise to the Good Reason no later than thirty (30) days following the occurrence of the condition, by giving the Company thirty (30) days to remedy the condition and by terminating employment for Good Reason within thirty (30) days thereafter if the Company fails to remedy the condition.

(iii) 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 bonus, compensation, premium payments and, Office Stipend He would have received under clauses (i), (ii), (iii), and (iv) of Section 5(d) had her employment been terminated by the Company other than for Cause.

(f) By the Executive Other than for Good Reason. The Executive may terminate 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 Base Salary for the initial sixty (60) days of the notice period (or for any remaining portion thereof). The Companys only other obligation to the Executive hereunder shall be for Final Compensation, if any. Any equity in the Parent held by the Executive on the Date of Termination shall be governed by the terms of the LLC Agreement, the applicable equity incentive plan and any applicable unit certification, agreements and other requirements.

Copyright © 2013 www.secdatabase.com. All Rights Reserved. Please Consider the Environment Before Printing This Document Section 7 below and (B) the assignment of rights to Intellectual Property (as hereafter defined) set forth in Section 8 below, but with the express understanding and agreement of the parties that the Executive is 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 her right to any Post- Employment Compensation 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 her full satisfaction of her obligations under the covenant of confidentiality and assignment of rights to Intellectual Property (which obligations are not optional and shall survive any termination, howsoever occurring). The conditions to receipt of Post-Employment Compensation are as follows:

(i) The Executives execution and return, to the person designated by the Company to receive notices on its behalf in accordance with Section 18 hereof, of a timely and effective release of claims in the form attached hereto and marked Exhibit A (Release of Claims), within the time period specified therein. The Release of Claims creates legally binding obligations and the Company therefore advises the Executive to consult an attorney before signing it. Notwithstanding any other provision of this Agreement, (A) the Company shall not be required to make any payment of Post-Employment Compensation unless and until a Release of Claims has been executed by such holder and delivered to the Company, and the Release of Claims has become irrevocable, all within sixty (60) days following the Date of Termination; and (B) without limiting the generality of the foregoing, the Company shall not be or become obligated to make any such payment unless a Release of Claims is so executed and delivered and the Release of Claims has become irrevocable before the expiration of such 60-day period. The foregoing provisions relating to a Release of Claims and any other provisions herein relating to a Release of Claims are not in limitation of any claims provisions contained in the LLC Agreement and the provisions of the LLC Agreement relating to releases shall apply in accordance with their terms.

(ii) Forbearance by the Executive for twelve (12) months following the Date of Termination from competition with the business of the Company and its Immediate Affiliates anywhere in the world where the Company or any of those Immediate Affiliates is doing business, whether as owner, partner, investor, consultant, agent, employee, co-venturer or otherwise. Specifically, but without limiting the foregoing, in order to satisfy this condition, the Executive must forbear from engaging in any activity that is competitive, or is in preparation to engage in competition, with the business of the Company and its Immediate Affiliates and further the Executive must forbear from working or providing services, in any capacity, whether as an employee, independent contractor or otherwise, whether with or without compensation, for or to any person or entity engaged in the business of the Company and its Immediate Affiliates. The business of the Company and its Affiliates is sporting hard goods. For illustrative purposes only, competitors of the Company and its Immediate Affiliates on the date of this Agreement include Amer Sports Corporation and Jarden Corporation and their respective subsidiaries. The foregoing condition, however, shall not fail to be met solely due to the Executives passive ownership of less than 3% of the equity securities of any publicly traded company.

Copyright © 2013 www.secdatabase.com. All Rights Reserved. Please Consider the Environment Before Printing This Document (iii) Forbearance by the Executive for twelve (12) months following the Date of Termination from any direct or indirect solicitation or encouragement of any of the Customers of the Company or any of its Immediate Affiliates to terminate or diminish their relationship with the Company or any of its Immediate Affiliates and from any direct or indirect solicitation or encouragement of any of the Customers or Prospective Customers of the Company or any of its Immediate Affiliates to conduct with herself 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 Immediate Affiliates. For purposes of this Section 5(h), a Customer is a person or entity which was such at any time during the eighteen (18) months prior to the Date of Termination and a Potential Customer is a Person contacted by the Company or any of its Immediate Affiliates to become such at any time within eighteen (18) 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 her employment or her other associations with the Company or any of its Immediate Affiliates or had access to Confidential Information that would assist in her solicitation of such Customer or Potential Customer in competition with the Company or any of its Immediate Affiliates.

(iv) Forbearance by the Executive for twelve (12)months following the Date of Termination 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 Immediate 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 Immediate 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 Immediate Affiliates in such capacity at any time during the twelve (12) months immediately preceding the Date of Termination.

(h) Timing of Payments. Notwithstanding anything to the contrary in this Agreement, if at the time of the Executives separation from service the Executive is a specified employee, as hereinafter defined, no payment shall be made to the Executive before the date which is six (6) months after He separates from service (within the meaning of Section 409A), except to the extent of amounts that do not constitute a deferral of compensation within the meaning of Treasury Regulations 1.409A-1(b) (including without limitation by reason of the safe harbor set forth in 1.409A-1(b)(9)(iii)), benefits which qualify as excepted welfare benefits pursuant to Section 409A, or other amounts or benefits that are not subject to the requirements of Section 409A. For purposes of this Section, 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 Executives employment under this Agreement, whether pursuant to Section 5 or otherwise.

Copyright © 2013 www.secdatabase.com. All Rights Reserved. Please Consider the Environment Before Printing This Document (a) Provision by the Company of Final Compensation, if any, to which the Executive is entitled and Post-Employment Compensation, if any, which the Executive earns under the applicable termination provision of Section 5 shall constitute the entire obligation of the Company to the Executive hereunder following termination of her 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.

(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 Compensation set forth in Section 5(h) and the obligations of the Executive under Sections 7 and 8 hereof. The Executive recognizes that, except as expressly provided in Section 5(d) and 5(e) with respect to Post-Employment Compensation earned in accordance with Section 5(h), or as expressly provided in Section 5(f) with respect to Base Salary for any notice period waived, 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 her duties and responsibilities to the Company and its Affiliates, any Confidential Information obtained by the Executive incident to her employment or other association with the Company or any of its Affiliates. The Executive understands that this restriction shall continue to apply after her 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 her employment terminates, or at such earlier time or times as the CEO or the Board or its designee may specify, all Documents and all other property of the Company and its Affiliates then in the Executives possession or control.

Copyright © 2013 www.secdatabase.com. All Rights Reserved. Please Consider the Environment Before Printing This Document 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 Executives 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 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. The Executive acknowledges her understanding that any provision of this Agreement requiring her to assign rights to Intellectual Property does not apply to any invention that qualifies under California Labor Code §2870, which was reproduced in Exhibit B to the Original Agreement (Written Notification to the Employee), attached hereto, which the Executive here acknowledges that He has received. All copyrightable works that the Executive creates during the course of her employment by the Company and which pertain to the business of the Company or any of its Affiliates or are suggested by any work performed by the Executive for the Company or any of its Affiliates or make 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. Further, the Executive hereby waives, expressly and irrevocably, any and all moral rights He may have as an author, whether arising under the copyright laws of the United States or any other jurisdiction or at common law or otherwise, with respect to any copyrighted works prepared by the Executive in the course of her employment, including without limitation the right to attribution of authorship, the right to restrain any distortion, mutilation or other modification of any such work and the right to prohibit any use of any such work in association with a product, service, cause or institution that might be prejudicial to the Companys reputation.

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

Copyright © 2013 www.secdatabase.com. All Rights Reserved. Please Consider the Environment Before Printing This Document 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 of 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 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.

(d) The Company agrees that Executives participation and role with the Governors Council For Massachusetts is permitted and is encouraged and supported as furthering the image and reputation of the Executive and the Company.

(e) The Company agrees to permit Executive to retain his ownership share in the legal firm Rawson, Merrigan and Litner, LLP. Executive may refer new and existing clients to the partners and other attorneys of the firm. No Easton-Bell business will be referred to or handled by partners or attorneys of this firm without the express written consent of the President and CEO and CFO of the Company.

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 her 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 Section 7, 8 or 9 hereof, the damage to the Company and its Affiliates would be irreparable. The Executive therefore agrees that the Company, in 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 her 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 her obligations hereunder. The Executive will not disclose to or use on behalf of the Company any proprietary information of her former employer or any other Person without such Persons consent.

Copyright © 2013 www.secdatabase.com. All Rights Reserved. Please Consider the Environment Before Printing This Document ultimately determined that the Executive is not entitled to be indemnified for such expenses under this Agreement or otherwise (whether because of Executives breach of this Agreement or for Executives conduct constituting Cause hereunder). The Executive agrees promptly to notify the Company of any actual or threatened claim arising out of or as a result of his mployment 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:

(b) Change of Control shall mean the occurrence of (i) any change in the ownership of the capital equity of the Parent, 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 date immediately prior to such Change of Control, or (B) any Person (as defined within this paragraph) other than the Investors and their Affiliates will hold, directly or indirectly, greater than 50% of the number of outstanding Common Units of the Parent; or (ii) any sale or other disposition of all or substantially all of the assets of the Parent (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 the Parent 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 13(b): 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 the Parent as of the date of this Agreement, including without limitation Fenway Partners, Inc., 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.

(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) 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,

Copyright © 2013 www.secdatabase.com. All Rights Reserved. Please Consider the Environment Before Printing This Document 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.

(e) Immediate Affiliates of the Company are its direct and indirect subsidiaries, its direct and indirect parents and their other direct and indirect subsidiaries (excluding the Company itself).

(f) 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 her employment by the Company; provided, however, that, as used in this Agreement and as provided by Section 2870 of the California Labor Code, 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 its Immediate Affiliates to which the Executive has access as a result of her 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 Immediate Affiliate or (ii) to the actual or demonstrably anticipated research or development of the Company or of any Immediate 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.

(g) Other than for purposes of Section 13(b), above, 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.

14. Withholding. Except as otherwise provided herein, 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.

Copyright © 2013 www.secdatabase.com. All Rights Reserved. Please Consider the Environment Before Printing This Document 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.

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 for next day or next business day delivery 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 Timothy P. Mayhew, Fenway Partners, LLC, 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 constitutes the entire agreement, and supersedes all prior agreements, whether written or oral between the Company and the Executive with respect to the Executives employment and all related matters.

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.

Copyright © 2013 www.secdatabase.com. All Rights Reserved. Please Consider the Environment Before Printing This Document 23. Governing Law. This is a Texas contract, where Human Resources is based for Easton-Bell Sports and shall be construed and enforced under and be governed in all respects by the laws of the State of Texas, without regard to the conflict of laws principles thereof, and, for the avoidance of doubt, shall include both the statutory and common law of Texas except to the extent preempted by federal law.

[Remainder of page intentionally left blank. Signature page follows immediately.]

THE COMPANY:

EASTON-BELL SPORTS, INC.

By: /s/ Jackelyn E. Werblo Name: Jackelyn E. Werblo Title: SVP Human Resources

THE EXECUTIVE:

/s/ Thomas T. Merrigan Thomas T. Merrigan

RELEASE OF CLAIMS

FOR AND IN CONSIDERATION OF the Post-Employment Compensation that I am eligible to earn following the termination of my employment, as that term is defined in the amended and restated employment agreement between me and Easton-Bell Sports, Inc. (the Company) dated as of the [ ] day of December, 2011(the Agreement), which is 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 or claiming through 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).

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

Copyright © 2013 www.secdatabase.com. All Rights Reserved. Please Consider the Environment Before Printing This Document 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 Claims (ii) any right of indemnification by or contribution from the Company that I am entitled to, including without limitation any such right pursuant to the Articles of Incorporation or By-Laws of the Company or any of its Immediate Affiliates (as that term is defined in the Agreement), and (iii) any right to payment under the LLC Agreement (as that term is 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, before signing, dating and returning this Release of Claims to the Company c/o Timothy P. Mayhew, Fenway Partners, LLC, 152 W. 57th St., 59th Floor, New York, NY 10019, or to such other address as the Company may specify. 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 wish 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 Timothy P. Mayhew, Fenway Partners, LLC, 152 W. 57th St., 59th Floor, New York, NY 10019, or to such other address as the Company 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: Thomas T. Merrigan

Date Signed:

THIS AMENDED AND RESTATED EMPLOYMENT AGREEMENT (this Agreement) is made and entered into by and between Easton-Bell Sports, Inc. (the Company) and Jackelyn E. Werblo (the Executive), dated as of the 31st of January, 2012.

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, continued employment which began on or about April 1, 2005.

2. Term. The initial term of the Agreement was January 1,2008 and it has and shall continue to automatically renew thereafter for successive terms of one year each, (Evergreen). 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) During her employment hereunder, the Executive shall serve the Company as its Senior Vice President-Human Resources (SVP-HR) reporting to the President and Chief Executive Officer of the Company (the CEO).

(b) During the term hereof, the Executive shall be employed by the Company on a full-time basis. She shall have the duties and responsibilities of Senior Vice President-Human Resources with respect to Human Resources matters of the Company and its Immediate Affiliates, and as may be assigned by the CEO or the Board of Directors of the Company (the Board) or a committee thereof from time to time.

(a) Base Salary.

(i) the Company shall pay the Executive a base salary at the rate of as determined by the Company, payable in accordance with the payroll practices of the Company for its executives and, subject to annual review and to increase, but not decrease. The Executives 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 executive incentive plan then applicable to the Companys executives, as in effect from time to time, based on target objectives determined by the Board or a designated committee thereof after consultation with the CEO. Executives target bonus under the Executive incentive plan shall be Seventy Five (75%) of the Base Salary. The Annual Bonus may exceed target if achievement exceeds the target objectives. Any Annual Bonus due to the Executive hereunder will be payable not later than two and one-half months following the close of the fiscal year for which the bonus was earned or as soon as administratively practicable thereafter, within the meaning of Section 409A of the Internal Revenue Code and the regulations promulgated thereunder, each as amended (Section 409A). 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.

(c) Equity Participation. Pursuant to the Companys offer of employment and periodic grants thereafter, Executive has received b units. Units granted to the Executive after the date hereof shall be at the discretion of the Board of Managers of Easton Bell Sports, LLC (the Parent) and subject to the Easton Bell Sports, LLC Fifth Amended and Restated Limited Liability Company Agreement as amended from time to time (the LLC Agreement), to the Easton Bell Sports, LLC 2006 and 2009 Equity Incentive Plan, as amended from time to time (the Plan), or any subsequent equity incentive plan and to any unit certificate and/or other agreements and requirements as the Parent may adopt from time to time for those equity participants who are employees of the Company or for all equity participants generally.

(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. The Executives participation shall be subject to the terms of the applicable Employee Benefit Plan documents and generally applicable Company policies. The Company reserves the right and Executive agrees to accept any modification or change in employee benefit plans so long as such change applies to the group of participants eligible for the benefit plan.

Copyright © 2013 www.secdatabase.com. All Rights Reserved. Please Consider the Environment Before Printing This Document (e) Car Allowance. The Company shall provide the Executive a non-accountable expense allowance for an automobile and its expenses in the amount of Eight Hundred Dollars per month ($800); which amount shall be subject to federal, state and local income and employment taxes).

(g) Directors & Officers Insurance Coverage. During the term hereof, the Company shall provide the Executive the same coverage under any directors and officers (D&O) liability insurance which the Company elects to maintain as it provides to its other executives and, after the termination of her employment hereunder, the same rights of indemnification and contribution, and the same coverage under any D&O liability insurance it elects to maintain, as its other former executives. The Company shall be under no obligation hereunder, however, to maintain any D&O liability insurance.

(a) Death. In the event of the Executives death during the term hereof, the Executives employment hereunder shall immediately and automatically terminate. In such event, promptly following the date of termination of the Executives employment with the Company (hereafter, the Date of Termination), the Company shall pay promptly to his estate the Final Compensation (as defined in Section 13 hereof). In addition to Final Compensation: (A) Subject to the Boards discretion as provided in Section 4(b), the Company will pay to the Executives 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 that 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). Such Final Pro-Rated Bonus will be (i) based on an assumed bonus of no less than the Annual Bonus received by the Executive (if any) for the fiscal year preceding the fiscal year in which the Date of Termination occurs and (ii) payable at the time annual bonuses are paid to Company executives generally under its executive incentive plan. (B) The Company will pay the full premium cost of health and dental plan coverage for each of the Executives qualified beneficiaries for thirty-six (36) months from the Date of Termination or until the date the qualified beneficiary ceases to be eligible for coverage continuation under the federal law commonly known as COBRA, whichever is less; provided, however, that in order to be eligible for the Companys payments hereunder the qualified beneficiary must elect in a timely manner to continue coverage under the Companys health and dental plans under COBRA.

(i) The Company may terminate the Executives employment hereunder, upon notice to the Executive, in the event that the Executive becomes disabled during her employment through any illness, injury, accident or condition of either a physical or psychological nature and, as a result, is unable to perform substantially all of her 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 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 following: (A) The Company will pay the Executive a Final Pro-Rated Bonus for the fiscal year on 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 sixtieth (60th) day after the Date of Termination (subject to Section 5(h) hereof). (B) The Company will pay the full premium cost of health and dental plan coverage for Executive and her qualified beneficiaries the full period of COBRA, following the Date of Termination or, until the date the Executive and her qualified beneficiaries cease to be eligible for coverage continuation under COBRA, whichever is less; provided, however, that in order to be eligible for the Companys premium payments hereunder the Executive and each qualified beneficiary must elect in a timely manner to continue coverage under the Companys health and dental plans under COBRA. (C) If the Executive fails to satisfy the requirements to participate in the Companys long-term disability insurance plan, the Company will continue to pay the Executive the Base Salary from the Date of Termination until the expiration of Eighteen (18) months thereafter or, if earlier, until the date the Executive recovers sufficiently from illness or injury to resume work on a substantially full-time basis (the Recovery Date), with payments commencing on the sixtieth (60th) day after the Date of Termination (subject to Section 5(h) hereof), but with the first payment retroactive to the day immediately following the Date of Termination

(ii) The Board may designate another employee to act in the Executives place during any period of the Executives 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, subject to the terms and conditions of any plans, policies, agreements and other documents to which reference is made therein (collectively, the Plan Documents), while disability continues, until the Executive becomes eligible for disability income benefits under any disability plan in which He is a participant as a result of employment with the Company or until He recovers sufficiently to resume duties and responsibilities hereunder (provided He does so within the aforesaid one hundred and eighty (180) days or such longer period as the Board in its discretion may provide) or until the termination of her employment, whichever shall first occur. If, while employment hereunder continues, the Executive is receiving disability income benefits under any such disability plan, the Executive shall not be eligible to receive the Base Salary, but shall continue to be eligible for payments and benefits in accordance with Sections 4(b) through 4(e) of this Agreement, subject to

Copyright © 2013 www.secdatabase.com. All Rights Reserved. Please Consider the Environment Before Printing This Document the terms and conditions of the Plan Documents, until the earlier to occur of her recovery or the termination of employment under this Agreement. Executive agrees that determination of disability benefits is solely determined by the insurance company providing such benefits to executives and employees.

(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 substantially all of her 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 her 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 Companys determination of the issue shall be binding on the Executive.

(c) By the Company for Cause. The Company may terminate the Executives 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) Executives indictment, charge or conviction of, or plea of nolo contendere to, (A) a felony or (B) any other crime involving fraud or material financial dishonesty or (C) any other crime involving moral turpitude that might be reasonably expected to, or does, materially adversely affect the Company or any of its Affiliates, whether that effect is to economics, to reputation or otherwise; (ii) Executives gross negligence or willful misconduct with regard to the Company or any of its Affiliates, including but not limited to its Immediate Affiliates, which has a material adverse impact on Company or its Affiliates, whether economic or to reputation or otherwise; (iii) Executives refusal or willful failure to substantially perform duties or to follow a material lawful written directive of the CEO or the Board or its designee within the scope of the Executives duties hereunder which refusal or failure, 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) Executives theft, fraud or any material act of financial dishonesty related to the Company or any of its Affiliates; (v) the failure by the Executive to disclose any legal impediments to her employment by the Company or breach of any of obligations to a former employer in connection with employment by the Company (e.g., her disclosure or use of proprietary confidential information of a former employer on behalf of the Company without such former employers consent); provided that Executive has been provided with written notification of the foregoing and has been given five (5) days to present any mitigating, corrective or clarifying information to the Board; (vi) the Executives breach or violation of those provisions of this Agreement setting forth the Executives obligations with respect to confidentiality, non-competition and non-solicitation; or (vii) the Executives breach of any other material provision of this Agreement unless corrected by the Executive within twenty (20) days of the Companys written notification to the Executive of such breach. 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 Parent held by the Executive on the Date of Termination shall be governed by the terms of the LLC Agreement, the applicable equity incentive plan and any applicable unit certification, agreements and other requirements.

Copyright © 2013 www.secdatabase.com. All Rights Reserved. Please Consider the Environment Before Printing This Document (d) By the Company other than for Cause. The Company may terminate the Executives 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 her satisfying those conditions, shall be entitled to the following:

(ii) The Company shall pay the Executive compensation for the period of Eighteen (18) months following the Date of Termination, at the rate of one-twelfth of the Base Salary per month, commencing on the sixtieth (60th) day after the Date of Termination (subject to Section 5(h) hereof), but with the first payment being retroactive to the day immediately following the Date of Termination.

(e) By the Executive for Good Reason.

(ii) For purposes of this Agreement, Good Reason shall mean, without the Executives consent, the occurrence of any one or more of the following events: (A) a material breach of this Agreement by the Company; (B) the material diminution of the Executives title from that of Senior Vice President or of any of the Executives significant duties, authority or responsibilities; (C) any reduction in or failure to pay the Base Salary; or (D) any mandatory relocation of the Executives primary worksite to a site outside of Irving, Texas, or more than thirty five (35) miles from the current Irving, Tx office.

Copyright © 2013 www.secdatabase.com. All Rights Reserved. Please Consider the Environment Before Printing This Document (iii) 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 bonus, compensation, premium payments would have received under clauses (i), (ii), (iii), and (iv) of Section 5(d) had her employment been terminated by the Company other than for Cause.

(g) Termination Following a Change of Control. In the event that there occurs a Change of Control, as defined in Section 13(b) 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 the Company terminates the Executives employment hereunder other than for Cause in accordance with Section 5(d) or the Executive terminates her 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 Eighteen 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; (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; and (D) Office Stipend subject to the following conditions Conditions:. The Executives eligibility to receive and retain any Post-Employment Compensation (meaning any and all compensation, of any kind, provided in accordance with the applicable provision of Section 5 of 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 (A) the covenant of confidentiality set forth in Section 7 below and (B) the assignment of rights to Intellectual Property (as hereafter defined) set forth in Section 8 below, but with the express understanding and agreement of the parties that the Executive is 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 her right to any Post-Employment Compensation 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 her full satisfaction of her obligations under the covenant of confidentiality and assignment of rights to Intellectual Property (which obligations are not optional and shall survive any termination, howsoever occurring). The conditions to receipt of Post-Employment Compensation are as follows:

Copyright © 2013 www.secdatabase.com. All Rights Reserved. Please Consider the Environment Before Printing This Document (i) The Executives execution and return, to the person designated by the Company to receive notices on its behalf in accordance with Section 18 hereof, of a timely and effective release of claims in the form attached hereto and marked Exhibit A (Release of Claims), within the time period specified therein. The Release of Claims creates legally binding obligations and the Company therefore advises the Executive to consult an attorney before signing it. Notwithstanding any other provision of this Agreement, (A) the Company shall not be required to make any payment of Post-Employment Compensation unless and until a Release of Claims has been executed by such holder and delivered to the Company, and the Release of Claims has become irrevocable, all within sixty (60) days following the Date of Termination; and (B) without limiting the generality of the foregoing, the Company shall not be or become obligated to make any such payment unless a Release of Claims is so executed and delivered and the Release of Claims has become irrevocable before the expiration of such 60-day period. The foregoing provisions relating to a Release of Claims and any other provisions herein relating to a Release of Claims are not in limitation of any claims provisions contained in the LLC Agreement and the provisions of the LLC Agreement relating to releases shall apply in accordance with their terms.

(ii) Forbearance by the Executive for Eighteen (18) months following the Date of Termination from competition with the business of the Company and its Immediate Affiliates anywhere in the world where the Company or any of those Immediate Affiliates is doing business, whether as owner, partner, investor, consultant, agent, employee, co-venturer or otherwise. Specifically, but without limiting the foregoing, in order to satisfy this condition, the Executive must forbear from engaging in any activity that is competitive, or is in preparation to engage in competition, with the business of the Company and its Immediate Affiliates and further the Executive must forbear from working or providing services, in any capacity, whether as an employee, independent contractor or otherwise, whether with or without compensation, for or to any person or entity engaged in the business of the Company and its Immediate Affiliates. The business of the Company and its Affiliates is sporting hard goods. For illustrative purposes only, competitors of the Company and its Immediate Affiliates on the date of this Agreement include Amer Sports Corporation and Jarden Corporation and their respective subsidiaries. The foregoing condition, however, shall not fail to be met solely due to the Executives passive ownership of less than 3% of the equity securities of any publicly traded company.

(iii) Forbearance by the Executive for Eighteen (18) months following the Date of Termination from any direct or indirect solicitation or encouragement of any of the Customers of the Company or any of its Immediate Affiliates to terminate or diminish their relationship with the Company or any of its Immediate Affiliates and from any direct or indirect solicitation or encouragement of any of the Customers or Prospective Customers of the Company or any of its Immediate Affiliates to conduct with herself 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

Copyright © 2013 www.secdatabase.com. All Rights Reserved. Please Consider the Environment Before Printing This Document Company or any of its Immediate Affiliates. For purposes of this Section 5(h), a Customer is a person or entity which was such at any time during the eighteen (18) months prior to the Date of Termination and a Potential Customer is a Person contacted by the Company or any of its Immediate Affiliates to become such at any time within eighteen (18) 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 her employment or her other associations with the Company or any of its Immediate Affiliates or had access to Confidential Information that would assist in her solicitation of such Customer or Potential Customer in competition with the Company or any of its Immediate Affiliates.

(iv) Forbearance by the Executive for Eighteen (18) months following the Date of Termination 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 Immediate 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 Immediate 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 Immediate Affiliates in such capacity at any time during the twelve (12) months immediately preceding the Date of Termination.

(h) Timing of Payments. Notwithstanding anything to the contrary in this Agreement, if at the time of the Executives separation from service the Executive is a specified employee, as hereinafter defined, no payment shall be made to the Executive before the date which is six (6) months after He separates from service (within the meaning of Section 409A), except to the extent of amounts that do not constitute a deferral of compensation within the meaning of Treasury Regulations 1.409A-1(b) (including without limitation by reason of the safe harbor set forth in 1.409A-1(b)(9)(iii)), benefits which qualify as excepted welfare benefits pursuant to Section 409A, or other amounts or benefits that are not subject to the requirements of Section 409A. For purposes of this Section, 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 Executives employment under this Agreement, whether pursuant to Section 5 or otherwise.

(a) Provision by the Company of Final Compensation, if any, to which the Executive is entitled and Post-Employment Compensation, if any, which the Executive earns under the applicable termination provision of Section 5 shall constitute the entire obligation of the Company to the Executive hereunder following termination of her 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.

Copyright © 2013 www.secdatabase.com. All Rights Reserved. Please Consider the Environment Before Printing This Document (b) Except for health and dental plan participation continued in accordance with COBRA, the Executives participation in Employee Benefit Plans shall terminate pursuant to the terms of the applicable Plan Documents based on the Date of Termination without regard to any Post-Employment Compensation earned by the Executive following the Date of Termination.

7. Confidential Information.

(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 her employment terminates, or at such earlier time or times as the CEO or the Board or its designee may specify, all Documents and all other property of the Company and its Affiliates then in the Executives 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 Executives 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 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

Copyright © 2013 www.secdatabase.com. All Rights Reserved. Please Consider the Environment Before Printing This Document charge the Company for time spent in complying with these obligations. The Executive acknowledges her understanding that any provision of this Agreement requiring her to assign rights to Intellectual Property does not apply to any invention that qualifies under California Labor Code §2870, which was reproduced in Exhibit B to the Original Agreement (Written Notification to the Employee), attached hereto, which the Executive here acknowledges that He has received. All copyrightable works that the Executive creates during the course of her employment by the Company and which pertain to the business of the Company or any of its Affiliates or are suggested by any work performed by the Executive for the Company or any of its Affiliates or make 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. Further, the Executive hereby waives, expressly and irrevocably, any and all moral rights He may have as an author, whether arising under the copyright laws of the United States or any other jurisdiction or at common law or otherwise, with respect to any copyrighted works prepared by the Executive in the course of her employment, including without limitation the right to attribution of authorship, the right to restrain any distortion, mutilation or other modification of any such work and the right to prohibit any use of any such work in association with a product, service, cause or institution that might be prejudicial to the Companys reputation.

(b) The Executive agrees that, while employed by the Company, and excluding any activities undertaken on behalf of the Company or any of its Affiliates in the course of her 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 her 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 of 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 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.

Copyright © 2013 www.secdatabase.com. All Rights Reserved. Please Consider the Environment Before Printing This Document 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 her 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 Section 7, 8 or 9 hereof, the damage to the Company and its Affiliates would be irreparable. The Executive therefore agrees that the Company, in 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.

12. Indemnification. The Company shall indemnify the Executive to the fullest extent permitted by applicable law. Executives 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 (whether because of Executives breach of this Agreement or for Executives conduct constituting Cause hereunder). The Executive agrees promptly to notify the Company of any actual or threatened claim arising out of or as a result of his mployment or offices with the Company or any of its Affiliates.

Copyright © 2013 www.secdatabase.com. All Rights Reserved. Please Consider the Environment Before Printing This Document paragraph) other than the Investors and their Affiliates will hold, directly or indirectly, greater than 50% of the number of outstanding Common Units of the Parent; or (ii) any sale or other disposition of all or substantially all of the assets of the Parent (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 the Parent 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 13(b): 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 the Parent as of the date of this Agreement, including without limitation Fenway Partners, Inc., 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.

(e) Immediate Affiliates of the Company are its direct and indirect subsidiaries, its direct and indirect parents and their other direct and indirect subsidiaries (excluding the Company itself).

Copyright © 2013 www.secdatabase.com. All Rights Reserved. Please Consider the Environment Before Printing This Document (f) 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 her employment by the Company; provided, however, that, as used in this Agreement and as provided by Section 2870 of the California Labor Code, 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 its Immediate Affiliates to which the Executive has access as a result of her 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 Immediate Affiliate or (ii) to the actual or demonstrably anticipated research or development of the Company or of any Immediate 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.

(i) He, his, She, her and hers are used interchangeably and refer collectively to the Executive without reference to gender.

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.

Copyright © 2013 www.secdatabase.com. All Rights Reserved. Please Consider the Environment Before Printing This Document 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.

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 Texas contract, where Human Resources is based for Easton-Bell Sports and shall be construed and enforced under and be governed in all respects by the laws of the State of Texas, without regard to the conflict of laws principles thereof, and, for the avoidance of doubt, shall include both the statutory and common law of Texas except to the extent preempted by federal law.

[Remainder of page intentionally left blank. Signature page follows immediately.]

THE COMPANY:

EASTON-BELL SPORTS, INC.

By: /s/ Paul Harrington Name: Paul Harrington Title: President and CEO

THE EXECUTIVE:

/s/ Jackelyn E. Werblo Jackelyn E. Werblo

RELEASE OF CLAIMS

FOR AND IN CONSIDERATION OF the Post-Employment Compensation that I am eligible to earn following the termination of my employment, as that term is defined in the amended and restated employment agreement between me and Easton-Bell Sports, Inc. (the Company) dated as of the [ ] day of January 31, 2012 (the Agreement), which is 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 or claiming through 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).

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 Claims (ii) any right of indemnification by or contribution from the Company that I am entitled to, including without limitation any such right pursuant to the Articles of Incorporation or By-Laws of the Company or any of its Immediate Affiliates (as that term is defined in the Agreement), and (iii) any right to payment under the LLC Agreement (as that term is defined in the Agreement).

Copyright © 2013 www.secdatabase.com. All Rights Reserved. Please Consider the Environment Before Printing This Document 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, before signing, dating and returning this Release of Claims to the Company c/o Timothy P. Mayhew, Fenway Partners, LLC, 152 W. 57th St., 59th Floor, New York, NY 10019, or to such other address as the Company may specify. 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 wish 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 Timothy P. Mayhew, Fenway Partners, LLC, 152 W. 57th St., 59th Floor, New York, NY 10019, or to such other address as the Company 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: Jackelyn E. Werblo

Date Signed:

Copyright © 2013 www.secdatabase.com. All Rights Reserved. Please Consider the Environment Before Printing This Document Exhibit 31.1 CERTIFICATION PURSUANT TO SECTION 302 OF THE SARBANES-OXLEY ACT OF 2002

I, Paul E. Harrington, certify that:

1. I have reviewed this Annual Report on Form 10-K of Easton-Bell Sports, Inc.;

2. Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;

3. Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;

4. The registrants other certifying officer and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and we have:

(a) Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;

(b) Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;

(c) Evaluated the effectiveness of the registrants disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and

(d) Disclosed in this report any changes in the registrants internal control over financial reporting that occurred during the registrants most recent fiscal quarter (the registrants fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrants internal control over financial reporting.

5. The registrants other certifying officer and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrants auditors and the audit committee of registrants board of directors (or persons performing the equivalent function):

(a) All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrants ability to record, process, summarize and report financial information; and

(b) Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrants internal control over financial reporting.

/s/ Paul E. Harrington Paul E. Harrington President and Chief Executive Officer (Principal Executive Officer)

Date: March 27, 2012

Copyright © 2013 www.secdatabase.com. All Rights Reserved. Please Consider the Environment Before Printing This Document Exhibit 31.2 CERTIFICATION PURSUANT TO SECTION 302 OF THE SARBANES-OXLEY ACT OF 2002

I, Mark A. Tripp, certify that:

1. I have reviewed this Annual Report on Form 10-K of Easton-Bell Sports, Inc.;

(b) Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrants internal control over financial reporting.

/s/ Mark A. Tripp Mark A. Tripp Chief Financial Officer (Principal Financial Officer)

Date: March 27, 2012

Copyright © 2013 www.secdatabase.com. All Rights Reserved. Please Consider the Environment Before Printing This Document Exhibit 32.1 CERTIFICATION PURSUANT TO 18 U.S.C. SECTION 1350, AS ADOPTED PURSUANT TO SECTION 906 OF THE SARBANES-OXLEY ACT OF 2002

The undersigned, as Principal Executive Officer and as Principal Financial Officer of Easton-Bell Sports, Inc., or the Company, respectively, certify that, to the best of their knowledge and belief, the Companys Annual Report on Form 10-K for the year ended December 31, 2011, which accompanies this certification fully complies with the requirements of Section 13(a) and 15(d) of the Securities Act of 1934 and the information contained in the Companys Annual Report on Form 10-K for the year ended December 31, 2011 fairly presents, in all material respects, the financial condition and results of operations of the Company at the dates and for the periods indicated therein. The foregoing certifications are made pursuant to Section 906 of the Sarbanes-Oxley Act of 2002 (18 U.S.C. 1350) and shall not be relied upon for any other purpose.

/s/ Paul E. Harrington Paul E. Harrington President and Chief Executive Officer (Principal Executive Officer) March 27, 2012

/s/ Mark A. Tripp Mark A. Tripp Chief Financial Officer (Principal Financial Officer) March 27, 2012

A signed original of this written statement required by Section 906, or other document authenticating, acknowledging, or otherwise adopting the signature that appears in typed form within the electronic version of this written statement required by Section 906, has been provided to Easton-Bell Sports, Inc. and will be retained by Easton-Bell Sports, Inc. and furnished to the Securities and Exchange Commission or its staff upon request.

Copyright © 2013 www.secdatabase.com. All Rights Reserved. Please Consider the Environment Before Printing This Document 12 Months Ended Accrued Expenses Dec. 31, 2011 Accrued Expenses [Abstract] Accrued Expenses 3. Accrued Expenses

Accrued expenses consist of the following at December 31, 2011 and January 1, 2011:

2011 2010 Salaries, wages, commissions and bonuses $17,032 $14,675 Advertising 5,919 5,410 Rebates 6,111 6,044 Warranty 2,240 2,434 Product liability — current portion 5,521 4,491 Royalties 1,703 1,830 Interest 3,092 3,689 Income taxes 1,504 1,192 Other 20,169 18,687 $63,291 $58,452

Copyright © 2013 www.secdatabase.com. All Rights Reserved. Please Consider the Environment Before Printing This Document 12 Months Ended Long-term Debt Dec. 31, 2011 Long-term Debt [Abstract] Long-term Debt 2. Long-term Debt

Long-term debt consisted of the following at December 31, 2011 and January 1, 2011:

(1) Includes long-term portion of capital lease obligations.

9.750% Senior Secured Notes

In December 2009, in connection with the refinancing of our Company’s then-existing indebtedness, or the Refinancing, we issued $350,000 of 9.750% Senior Secured Notes, due December 2016, or the Notes. Interest is payable on the Notes semi-annually on June 1 and December 1 of each year. We may redeem some or all of the Notes prior to December 1, 2012 at a price equal to 100.00% of the principal amount, plus accrued and unpaid interest and a make- whole premium. We may redeem all or any of the Notes on or after December 1, 2012 and prior to December 1, 2013 at 107.313% of the principal amount of the Notes, plus accrued and unpaid interest. Then we may redeem all or any of the Notes on or after December 1, 2013 and prior to December 1, 2014 at 104.875% of the principal amount of the Notes, plus accrued and unpaid interest. Then we may redeem all or any of the Notes on or after December 1, 2014 and prior to December 1, 2015 at 102.438% of the principal amount of the Notes, plus accrued and unpaid interest. At any time on or after December 1, 2015, our Company may redeem all or any of the Notes at 100.00% of the principal amount of the Notes, plus accrued and unpaid interest. In addition, during any twelve month period commencing on the issue date prior to December 1, 2012, we may redeem up to 10% of aggregate principal amount of the Notes at a price equal to 103.00% of their principal amount, plus accrued and unpaid interest. At any time prior to December 1, 2012, we may also redeem up to 35.00% of the aggregate principal amount of the Notes at a price equal to 109.750% of the principal amount of the Notes, plus accrued and unpaid interest, with the net cash proceeds of one or more equity offerings of our Company. We are not required to make mandatory redemption or sinking fund payments with respect to the Notes. However, the Notes will become due and payable on October 1, 2015 unless on or prior to August 28, 2015, the indebtedness of EB Sports under its senior secured credit agreement with Wachovia Bank, N.A. and the lenders party thereto, or the New Holdco Facility, has been either repaid or refinanced with indebtedness with a stated maturity that is at least 91 days after the maturity date of the Notes.

Among other provisions, the indenture governing the Notes contains certain restrictions that limit our Company’s ability to (1) incur, assume or guarantee additional debt, (2) pay dividends and make other restricted payments, (3) create liens, (4) use the proceeds from sales of assets and subsidiary stock, (5) enter into sale and leaseback transactions, (6) enter into agreements that

Copyright © 2013 www.secdatabase.com. All Rights Reserved. Please Consider the Environment Before Printing This Document restrict dividends from subsidiaries, (7) change our business, (8) enter into transactions with affiliates and (9) transfer all or substantially all of our assets or enter into merger or consolidation transactions. The indenture governing the Notes also requires us to make an offer to repurchase the Notes at 101.00% of the principal amount following a change of control of our Company, and at 100.00% of the principal amount with the proceeds of certain sales of assets and subsidiary stock.

ABL Credit Facility

Concurrently with the issuance of the Notes on December 3, 2009, our Company, together with certain of our subsidiaries as Canadian Borrowers (as defined therein) or Guarantors (as defined therein), entered into a senior secured asset based revolving credit facility with JPMorgan Chase Bank, N.A., as administrative agent and collateral agent, the other agents party thereto and the lenders party thereto, or the ABL Facility, under which our Company and the Canadian Borrowers may borrow, subject to availability under each of a United States and Canadian borrowing base, up to $250,000 which amount, subject to certain conditions, may be increased to allow borrowings of up to $300,000. The unused portion of the ABL Facility (subject to borrowing base availability) is to be drawn from time to time for general corporate purposes (including permitted acquisitions) and working capital needs. At December 31, 2011, we had $42,000 outstanding under the ABL facility and $190,923 in availability.

Certain of our Company’s wholly-owned domestic subsidiaries, and all subsidiaries that guarantee the Notes (currently only our wholly-owned domestic subsidiaries) guarantee all of our obligations (both United States and Canadian) under the ABL Facility. In addition, our wholly- owned Canadian subsidiaries guarantee the obligations of the Canadian borrowings under the Canadian sub-facility of the ABL Facility. Furthermore, we and our wholly-owned domestic subsidiaries, subject to certain exceptions, grant security with respect to substantially all of our personal property as collateral for our obligations (and related guarantees) under the ABL Facility, including a first-priority security interest in cash and cash equivalents, lockbox and deposit accounts, accounts receivable, inventory, other personal property relating to such inventory and accounts receivable and all proceeds therefrom and a second-priority security interest in substantially all of our equipment and all assets that secure the Notes on a first-priority basis. The obligations of our Canadian subsidiaries that are borrowers under the Canadian sub- facility of the ABL Facility are secured, subject to certain exceptions and permitted liens, on a first-priority lien basis, by substantially all of the assets of our wholly-owned Canadian subsidiaries and by our and our domestic subsidiaries’ assets on the same basis as borrowings under the ABL Facility. At December 31, 2011, we had a zero balance outstanding under the Canadian sub-facility of the ABL facility.

Copyright © 2013 www.secdatabase.com. All Rights Reserved. Please Consider the Environment Before Printing This Document under the ABL Facility from December 3, 2013 to May 13, 2016; provided that if the Credit and Guaranty Agreement, dated as of December 3, 2009 among EB Sports Corp., as borrower, RBG Holdings Corp., as guarantor, Wachovia Bank, N.A., as administrative agent and collateral agent and the lenders from time to time party thereto has not been repaid or refinanced prior to July 1, 2015 with a new credit agreement that meets certain criteria set forth in the ABL Facility, the loans under the ABL Facility will mature on July 1, 2015.

At December 31, 2011, the aggregate contractual maturities of long-term debt were as follows:

Senior Secured Capital Fiscal Year Ending Notes Leases Total 2012 $— $26 $26 2013 — 29 29 2014 — 23 23 2015 — — — 2016 350,000 — 350,000 Thereafter — — — $350,000 $78 $350,078

Cash payments for interest were $40,543, $42,061 and $32,294 for 2011, 2010 and 2009, respectively.

Copyright © 2013 www.secdatabase.com. All Rights Reserved. Please Consider the Environment Before Printing This Document Our Company has arrangements with various banks to issue standby letters of credit or similar instruments, which guarantee our obligations for the purchase of certain inventories and for potential claims exposure for insurance coverage. At December 31, 2011 and January 1, 2011, outstanding letters of credit issued under the revolving credit facilities totaled $3,256 and $3,306, respectively. The amount of unused lines of credit at December 31, 2011 and January 1, 2011, was $190,923 and $162,902, respectively. The average interest rate on short term borrowings under the credit facilities during 2011 and 2010 was approximately 3.6% and 5.9%, respectively.

Holdco Facility Refinancing and Equity Investment

Copyright © 2013 www.secdatabase.com. All Rights Reserved. Please Consider the Environment Before Printing This Document allow such payment, EB Sports will pay cash to the extent it is able to do so using cash on hand after giving effect to permitted and available distributions, and the remainder of the interest due shall be added to the principal amount of the loan at a rate of 13.5% per annum for the then ending interest period.

Borrowings under the New Holdco Facility are not guaranteed by us or any of our subsidiaries and are senior unsecured obligations of EB Sports. However, given that EB Sports controls our Company’s direct parent, EB Sports has the ability, subject to the terms of the ABL Facility and any other agreements which limit our ability to declare and pay dividends, to obtain money from us and our subsidiaries in order to fund its obligations under such loan.

At December 31, 2011, the amount of loans issued under the New Holdco Facility was $137,034 including accrued interest.

Copyright © 2013 www.secdatabase.com. All Rights Reserved. Please Consider the Environment Before Printing This Document Consolidated Balance Sheets (USD $) Dec. 31, Jan. 01, In Thousands, unless 2011 2011 otherwise specified Current assets: Cash and cash equivalents $ 29,505 $ 24,024 Accounts receivable, net 250,183 216,166 Inventories, net 145,815 141,093 Prepaid expenses 6,942 7,080 Deferred taxes, net 17,798 16,254 Other current assets 9,645 8,483 Total current assets 459,888 413,100 Property, plant and equipment, net 54,329 49,736 Deferred financing fees, net 12,622 14,248 Intangible assets, net 270,458 279,047 Goodwill 208,697 206,928 Other assets 1,617 1,495 Total assets 1,007,611964,554 Current liabilities: Revolving credit facility 42,000 38,893 Current portion of capital lease obligations 26 24 Accounts payable 88,689 73,148 Accrued expenses 63,291 58,452 Total current liabilities 194,006 170,517 Long-term debt, less current portion 346,670 346,168 Capital lease obligations, less current portion 52 78 Deferred taxes 58,928 49,379 Other noncurrent liabilities 18,330 20,774 Total liabilities 617,986 586,916 Stockholder's equity: Common stock: $0.01 par value, 100 shares authorized, 100 shares issued and outstanding at December 31, 2011 and January 1, 2011 Additional paid-in capital 363,730 360,223 Retained earnings 25,429 15,401 Accumulated other comprehensive income 466 2,014 Total stockholder's equity 389,625 377,638 Total liabilities and stockholder's equity $ $ 1,007,611964,554

Copyright © 2013 www.secdatabase.com. All Rights Reserved. Please Consider the Environment Before Printing This Document Consolidated Statements of 12 Months Ended Cash Flows (USD $) Dec. 31, Jan. 01, Jan. 02, In Thousands, unless 2011 2011 2010 otherwise specified Cash flows from operating activities: Net income (loss) $ 10,028 $ 8,126 $ (4,098) Adjustments to reconcile net income (loss) to net cash provided by operating activities: Depreciation and amortization 28,842 28,873 28,530 Amortization of deferred financing fees and debt discount 3,290 3,460 3,530 Deferred financing fees written-off 120 8,775 Equity compensation expense 3,507 3,435 5,327 Deferred income taxes 8,005 3,628 (1,169) Disposal of property, plant and equipment 53 299 3 Changes in operating assets and liabilities, net of effects from purchase of businesses: Accounts receivable, net (34,800) (6,116) 7,580 Inventories, net (5,345) (11,820) 21,344 Other current and noncurrent assets (2,053) 2,581 1,278 Accounts payable 15,512 2,158 (10,789) Accrued expenses 5,047 12,815 (2,002) Other current and noncurrent liabilities (2,454) 133 (4,515) Net cash provided by operating activities 29,752 47,572 53,794 Cash flows from investing activities: Purchase of property, plant and equipment (23,798) (20,724) (15,656) Purchase of intellectual property (400) Purchase of businesses, net of cash acquired (1,875) (1,750) Net cash used in investing activities (25,673) (22,474) (16,056) Cash flows from financing activities: Payments on capital lease obligations (24) (22) (21) Payments on revolving ABL credit facility (54,671) (61,000) (15,000) Proceeds from revolving ABL credit facility 57,778 26,000 85,000 Proceeds from old revolving credit facility 6,000 Payments on old revolving credit facility (6,000) Proceeds from issuance of senior secured notes 345,677 Payments on old senior term notes (315,788) Extinguishment of senior subordinated notes (140,000) Capital contribution by RBG 12,858 Distribution to RBG (2,594) Payment of debt issuance costs (1,282) (17,505) Net cash provided by (used in) financing activities 1,801 (35,022) (47,373) Effect of exchange rate changes on cash and cash equivalents (399) 630 1,652 Net change in cash and cash equivalents 5,481 (9,294) (7,983) Cash and cash equivalents, beginning of year 24,024 33,318 41,301

Copyright © 2013 www.secdatabase.com. All Rights Reserved. Please Consider the Environment Before Printing This Document Business and Summary of 12 Months Ended Significant Accounting Dec. 31, 2011 Policies Business and Summary of Significant Accounting Policies [Abstract] Business and Summary of 1. Business and Summary of Significant Accounting Policies Significant Accounting Policies Organization and Business

Easton-Bell Sports, Inc. is a wholly-owned subsidiary of RBG Holdings Corp., or RBG, which, in turn, is a wholly-owned subsidiary of EB Sports Corp., or EB Sports, of which 100% of the issued and outstanding voting common stock is owned by Easton-Bell Sports, LLC, the ultimate parent company, or our Parent. Unless otherwise indicated, all references in this Form 10-K to Easton-Bell, we, us, our, and the Company refer to Easton-Bell Sports, Inc. and its consolidated subsidiaries. References to Easton, Bell and Riddell refer to Easton Sports, Inc. and its consolidated subsidiaries, Bell Sports Corp. and its consolidated subsidiaries and Riddell Sports Group, Inc. and its consolidated subsidiaries, respectively.

Our Company is a designer, developer and marketer of sporting goods and related accessories under authentic brands. Our products are used in baseball, softball, ice hockey, football, lacrosse and other team sports, and in various action sports, including cycling, snowsports, powersports and skateboarding. We currently sell a broad range of products primarily under four brands — Easton (baseball, softball, ice hockey, lacrosse and cycling equipment), Bell (cycling and action sports helmets and accessories), Giro (cycling and snowsports helmets and accessories) and Riddell (football and reconditioning services).

Reporting Period

Principles of Consolidation

Cash and Cash Equivalents

Accounts Receivable and Concentration of Credit Risk

Copyright © 2013 www.secdatabase.com. All Rights Reserved. Please Consider the Environment Before Printing This Document attributable to our top ten customers. In 2011, 2010 and 2009, one customer accounted for 13.9% of our net sales for each of the three years, but no other customer accounted for more than 10% of our net sales. Our Company’s top ten customers accounted for approximately 34.8%, 33.6% and 34.1% of our net sales for 2011, 2010 and 2009, respectively. Ongoing credit evaluations of customers are performed and collateral on trade accounts receivable is generally not required. An allowance is determined based on the age of the accounts receivable balance and specific charge- off history. Trade accounts receivable are charged to the allowance when we determine that the receivable will not be collectable. Trade accounts receivable balances are determined to be delinquent when the amount is past due based on the payment terms with our customer.

Inventories

2011 2010 Raw materials $20,990 $19,310 Work-in-process 2,647 2,364 Finished goods 122,178 119,419 $145,815 $141,093

Property, Plant and Equipment

Property, plant and equipment consisted of the following at December 31, 2011 and January 1, 2011:

Depreciation expense relating to all property, plant and equipment amounted to $19,230, $17,108 and $15,124 for 2011, 2010 and 2009, respectively.

Capitalized costs of internal use software is amortized on a straight-line basis over the estimated useful life commencing from the date the software asset is ready for its intended use.

Goodwill and Intangible Assets

Goodwill and other indefinite-lived intangible assets resulting from acquisitions are not amortized. A fair value method of testing goodwill and other indefinite-lived intangible assets for impairment is completed on an annual basis, or on an interim basis if an event occurs or circumstances change that would indicate impairment or reduce the fair value of the indefinite- lived intangible asset or a reporting unit (for goodwill) below its carrying value. Our Company’s annual impairment assessments are performed as of the fiscal year end date by determining an estimate of the fair value of our indefinite-lived intangible assets or, for goodwill, the fair value of the reporting units to evaluate whether an impairment exists. A reporting unit is an operating segment or one level below an operating segment (e.g., a component). A component of an operating segment is a reporting unit if the component constitutes a business for which discrete financial information is available and our executive management team regularly reviews the operating results of that component.

The results of our Company’s annual analysis indicated that no impairment occurred in the carrying amount of goodwill and other indefinite-lived intangible assets in 2011, 2010 or 2009, and that none of the reporting units was at risk of failing the impairment test as of the date of each respective impairment assessment. We also reviewed our finite-lived intangible assets and noted no impairment occurred in the carrying amount in 2011, 2010 or 2009.

Our Company’s acquired intangible assets were as follows at December 31, 2011 and January 1, 2011:

Copyright © 2013 www.secdatabase.com. All Rights Reserved. Please Consider the Environment Before Printing This Document approximately 10.9 years. For 2011, 2010 and 2009 acquired intangible asset amortization was $9,612, $11,765 and $13,406, respectively. We estimate that amortization of existing intangible assets will be $9,351, $6,826, $6,063, $5,354 and $3,220 for 2012, 2013, 2014, 2015 and 2016, respectively.

Our Company does not amortize most of our trademarks, which are determined to have indefinite lives. The Riddell tradename has been in existence since 1929. The Riddell brand is currently one of the most widely recognized and sold football helmet brands in the world. This brand is one of the primary product lines of our Company’s business and management plans to use the trademark for an indefinite period of time. We plan to continue to make investments in product development to enhance the value of the brand in the future. There are no legal, regulatory, contractual, competitive, economic or other factors that we are aware of that our Company believes would limit the useful life of the trademark. The Riddell trademark registration can be renewed in the countries in which we operate at a nominal cost.

As a result of our Company’s acquisition of Bell in September 2004, we identified the Bell, Giro and Blackburn trademarks as indefinite-lived assets. The Bell, Giro and Blackburn trademarks have been in existence since 1952, 1986 and 1988, respectively. We plan to use these trademarks for an indefinite period of time and will continue to make investments in product development to enhance the value of the brands in the future. There are no legal, regulatory, contractual, competitive, economic or other factors that we are aware of that our Company believes would limit the useful life of the trademarks. The Bell, Giro and Blackburn trademark registrations can be renewed in the countries in which we operate at a nominal cost.

As a result of our Company’s acquisition of Easton in March 2006, we identified the Easton trademark as an indefinite-lived asset. The Easton brand has been in existence since 1922 and we plan to use this trademark for an indefinite period of time and will continue to make investments in product development to enhance the value of the brand in the future. There are no legal, regulatory, contractual, competitive, economic or other factors that we are aware of that our Company believes would limit the useful life of the Easton trademark.

Changes in the carrying amount of goodwill during the year ended December 31, 2011 and January 1, 2011 are summarized as follows:

Team Action Sports Sports Consolidated Balance at January 2, 2010 $142,077 $61,464 $203,541 Acquisitions 3,158 — 3,158 Additional purchase price 229 — 229 Balance at January 1, 2011 145,464 61,464 206,928 Acquisition 862 — 862 Opening balance sheet reclassification — 907 907 Balance at December 31, 2011 $146,326 $62,371 $208,697

Copyright © 2013 www.secdatabase.com. All Rights Reserved. Please Consider the Environment Before Printing This Document equipment for approximately $1,000 in cash. Based on an allocation of purchase price, the carrying amount of goodwill related to our Team Sports segment was increased by $3,158 due these acquisitions.

The carrying amount of goodwill related to the Team Sports segment was increased in 2010 by $229 due to earn-out payments related to Riddell.

Long-Lived Assets

Our Company reviews our long-lived assets for impairment whenever events or changes in circumstances indicate that the carrying amount of an asset may not be recoverable. An impairment loss is recognized when the undiscounted future cash flows estimated to be generated by the asset to be held and used are not sufficient to recover the unamortized balance of the asset. An impairment loss would be recognized based on the difference between the carrying values and estimated fair value. The estimated fair value will be determined based on either the discounted future cash flows or other appropriate fair value methods with the amount of any such deficiency charged to income in the current year. If the asset being tested for recoverability was acquired in a business combination, amortizable intangible assets resulting from the acquisition that are related to the asset are included in the assessment. Estimates of future cash flows are based on many factors, including current operating results, expected market trends and competitive influences. We also evaluate the amortization periods assigned to our intangible assets to determine whether events or changes in circumstances warrant revised estimates of useful lives. Assets to be disposed of by sale are reported at the lower of the carrying amount or fair value, less estimated costs to sell. During 2011, 2010 and 2009, we did not have any impairment of long-lived assets.

Deferred Financing Fees

Income Taxes

Copyright © 2013 www.secdatabase.com. All Rights Reserved. Please Consider the Environment Before Printing This Document the years in which the differences are expected to become recoverable or payable. Our Company is included in the consolidated tax return of our Parent.

Revenue Recognition

Sales of products are recognized when title passes and risks of ownership have been transferred to our customer, which usually is upon shipment. Title generally passes to our dealer or distributor upon shipment from our Company’s facilities and the risk of loss upon damage, theft or destruction of the product in transit is the responsibility of our dealer or distributor. Reconditioning revenue is recognized upon the completion of services. Allowances for sales returns, discounts and allowances, including volume-based customer incentives, are estimated and recorded concurrent with the recognition of the sale. Royalty income, which historically has not been material, is recorded when earned based upon contract terms with licensees which provide for royalties.

Warranty Obligations

The following is a reconciliation of the changes in our Company’s product warranty liability for 2011 and 2010.

Year Ended 2011 2010 Beginning of year $2,434 $3,242 Warranty costs incurred during the period (5,646 ) (4,995 ) Warranty expense recorded during the period 5,452 4,187 End of year $2,240 $2,434

Advertising Costs

Shipping and Handling

All shipping and handling fees billed to our customers are included as a component of net sales. Shipping and handling costs incurred by us are included in cost of sales.

Research and Development Expenses

Use of Estimates

The preparation of financial statements in conformity with accounting principles generally accepted in the United States requires our management to make estimates and assumptions that

Copyright © 2013 www.secdatabase.com. All Rights Reserved. Please Consider the Environment Before Printing This Document affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements and reported amount of revenues during the reporting period. Actual results could differ from those estimates. The estimates made by our management primarily relate to accounts receivable allowances, inventory reserves, product liability reserves, deferred income taxes, intangible assets, goodwill and certain other liabilities.

Foreign Currency Translation

The financial position and results of operations outside the United States are measured using the local currency as the functional currency. Revenues and expenses are translated into United States dollars at average exchange rates prevailing during the fiscal period, and assets and liabilities are translated using the exchange rates at the balance sheet date. Translation adjustments are included in accumulated other comprehensive income in stockholder’s equity. Gains and losses, which result from foreign currency transactions, are included in earnings.

Fair Values of Financial Instruments

The carrying amounts reported in our Company’s Consolidated Balance Sheets for “Cash and cash equivalents,” “Accounts receivable, net” and “Accounts payable” approximate fair value because of the immediate or short-term maturity of these financial instruments. The fair value amount of long-term debt under our Company’s Notes are based on quoted market prices for the same or similar issues on borrowing rates available to our Company for loans with similar terms and average maturities.

The estimated fair values of our Company’s long-term debt including accrued interest were as follows:

December 31, 2011 January 1, 2011 Carrying Fair Carrying Fair Amount Value Amount Value Financial liability: 9.75% Senior Secured Notes $349,609 $384,439 $349,201 $387,158

Stock-Based Employee Compensation

Our Company expenses Class B Common Units, or Units, granted under our Parent’s equity incentive plan, or the Incentive Plan, based upon the fair market value calculation under the Black-Scholes Option Pricing Model of such Units on the date of grant. We amortize the fair market value of the Units granted over the vesting period of the Units.

Recent Accounting Pronouncements

In June 2011, the FASB issued a new standard which revises the manner in which entities present comprehensive income in their financial statements. The new standard removes the presentation options and requires entities to report components of other comprehensive income in either (1) a continuous statement of comprehensive income or (2) two separate but consecutive statements. The new standard does not change the items that must be reported in other comprehensive income and based on an update issued by the FASB, the effective date is pending and there may be a future modification to the standard. The adoption of the new standard will not have a material impact on our Company’s consolidated financial statements as we currently show comprehensive income as a continuous statement with our Consolidated Statements of Operations and Comprehensive Income.

Copyright © 2013 www.secdatabase.com. All Rights Reserved. Please Consider the Environment Before Printing This Document In September 2011, the FASB issued an amendment to simplify how an entity is required to test goodwill for impairment. Under this amendment, an entity has the option to first assess qualitative factors to determine whether it is more likely than not, that the fair value of a reporting unit is less than its carrying amount. If, after assessing the totality of events or circumstances, an entity determines it is more likely than not, that the fair value of a reporting unit is less than its carrying amount, then performing the two-step quantitative impairment test is necessary; otherwise no further testing is necessary. The amendment is effective for annual and interim goodwill impairment tests performed for fiscal years beginning after December 15, 2011. The adoption of these amendments will not have a material impact on our Company’s consolidated financial statements.

Copyright © 2013 www.secdatabase.com. All Rights Reserved. Please Consider the Environment Before Printing This Document Consolidated Balance Sheets Dec. 31, 2011Jan. 01, 2011 (Parenthetical) (USD $) Consolidated Balance Sheets [Abstract] Common stock, par value $ 0.01 $ 0.01 Common stock, shares authorized 100 100 Common stock, shares issued 100 100 Common stock, shares outstanding 100 100

Copyright © 2013 www.secdatabase.com. All Rights Reserved. Please Consider the Environment Before Printing This Document 12 Months Ended Related Party Transactions Dec. 31, 2011 Related Party Transactions [Abstract] Related Party Transactions 11. Related Party Transactions

In connection with the acquisition of Easton in 2006, Easton and various affiliates of James L. Easton (including Jas. D. Easton, Inc.) entered into various technology license and trademark license agreements with respect to certain intellectual property owned or licensed by Easton, including the Easton brand name. Pursuant to these agreements, Easton has granted each of Jas D. Easton, Inc., James L. Easton Foundation, Easton Development, Inc. and Easton Sports Development Foundation a name license for use of the Easton name solely as part of their respective company names. In addition, Easton has granted each of Easton Technical Products, Inc. and Hoyt Archery, Inc. a license to certain trademarks, including the Easton brand solely in connection with specific products or services, none of which are currently competitive with our Company’s products or services. Easton has also granted each of these entities a license to certain technology solely in connection with specific products and fields. Easton has also entered into a patent license agreement with Easton Technical Products, Inc., which grants it a license to exploit the inventions disclosed in the patent solely within specific fields. Lastly, Easton entered into a trademark license agreement with Easton Technical Products, Inc., which grants Easton a license to use certain trademarks solely in connection with specific products or services.

Our Company has entered into a right of first offer agreement with Jas. D. Easton, Inc. and Easton Technical Products, Inc. pursuant to which our Company is to receive the opportunity to purchase Easton Technical Products, Inc. prior to any third party buyer. The term of the right of first offer agreement extends until the earliest of (1) March 16, 2016, (2) the date Easton Technical Products, Inc. no longer uses the name “Easton,” (3) the effectiveness of any initial public offering by Easton Technical Products, Inc. and (4) the consummation of any sale of such company or a controlling interest therein effectuated in accordance with the terms of the right of first offer agreement.

In connection with the Refinancing on December 3, 2009, our Company distributed $2,594 to RBG, which has been recorded as a distribution to RBG in Stockholder’s Equity.

Copyright © 2013 www.secdatabase.com. All Rights Reserved. Please Consider the Environment Before Printing This Document Affiliates of Jas. D. Easton, Inc. and James L. Easton own certain of the properties currently leased by Easton. During the fiscal years ended 2011, 2010 and 2009, Easton paid approximately $1,186, $1,152 and $1,152, respectively, in rent pursuant to such affiliate leases.

On October 1, 2004, Bell entered into a consulting agreement with Terry Lee, a member of the board of managers of our Parent and the board of directors of our Company. Pursuant to the terms of the consulting agreement, Mr. Lee agreed to provide us and our affiliates with certain consulting services relating to Bell. In exchange for his services, Mr. Lee is entitled to annual compensation of $100. The term of Mr. Lee’s consulting agreement is for one year and will automatically extend for additional one-year terms until our Company elects not to extend the agreement.

Effective August 2008, our Parent has agreed to compensate Richard Wenz, a member of the board of managers of our Parent and the board of directors of our Company, for his services as Chair of our Company’s Audit Committee. Mr. Wenz was paid a one-time fee of $50 for services previously rendered and will be paid an annual compensation of $50.

Copyright © 2013 www.secdatabase.com. All Rights Reserved. Please Consider the Environment Before Printing This Document Document and Entity 12 Months Ended Information (USD $) Dec. 31, 2011 Mar. 27, 2012Jul. 02, 2011 Document and Entity Information [Abstract] Entity Registrant Name EASTON-BELL SPORTS, INC. Entity Central Index Key 0001322739 Document Type 10-K Document Period End Date Dec. 31, 2011 Amendment Flag false Document Fiscal Year Focus 2011 Document Fiscal Period Focus FY Current Fiscal Year End Date --12-31 Entity Well-known Seasoned Issuer No Entity Voluntary Filers Yes Entity Current Reporting Status No Entity Filer Category Non-accelerated Filer Entity Public Float $ 0 Entity Common Stock, Shares Outstanding 100

Copyright © 2013 www.secdatabase.com. All Rights Reserved. Please Consider the Environment Before Printing This Document Supplemental Guarantor 12 Months Ended Condensed Financial Dec. 31, 2011 Information Supplemental Guarantor Condensed Financial Information [Abstract] Supplemental Guarantor 12. Supplemental Guarantor Condensed Financial Information Condensed Financial Information In December 2009, in connection with the Refinancing, we issued $350,000 of 9.750% Senior Secured Notes due 2016, or the Notes. The indenture governing the Notes contains certain restrictions on us, including restrictions on our ability to incur indebtedness, pay dividends, grant liens, sell assets and engage in certain other activities. The Notes are guaranteed by all of our domestic subsidiaries, or Guarantors. Each subsidiary guarantor is wholly owned and the guarantees are full and unconditional and joint and several. All other subsidiaries of our Company, or Non-Guarantors, do not guarantee the Notes.

Condensed Consolidating Balance Sheet December 31, 2011

Guarantor Non-Guarantor Issuer Subsidiaries Subsidiaries Eliminations Consolidated ASSETS Current assets: Cash and cash equivalents $2,697 $5,813 $20,995 $— $29,505 Accounts receivable, net — 227,920 22,263 — 250,183 Inventories, net — 130,161 15,654 — 145,815 Prepaid expenses 2,563 3,546 833 — 6,942 Deferred taxes — 17,798 — — 17,798 Other current assets — 7,886 1,759 — 9,645 Total current assets 5,260 393,124 61,504 — 459,888 Property, plant and equipment, net 24,579 28,804 946 — 54,329 Deferred financing fees, net 12,622 — — — 12,622 Investments and intercompany receivables 374,661 81,052 59,014 (514,727 ) — Intangible assets, net — 265,049 5,409 — 270,458 Goodwill 16,195 187,311 5,191 — 208,697 Other assets 425 1,066 126 — 1,617

LIABILITIES AND STOCKHOLDER’S EQUITY Current liabilities: Revolving credit facility $42,000 $— $— $— $42,000 Current portion of capital lease obligations — 26 — — 26 Accounts payable — 86,421 2,268 — 88,689 Accrued expenses 11,511 46,999 4,781 — 63,291 Total current liabilities 53,511 133,446 7,049 — 194,006 Long-term debt, less current portion 346,670 — — — 346,670 Capital lease obligations, less current portion — 52 — — 52 Deferred taxes — 58,928 — — 58,928 Other noncurrent liabilities — 10,897 7,433 — 18,330 Long-term intercompany payables — 432,339 45,297 (477,636 ) — Total liabilities 400,181 635,662 59,779 (477,636 ) 617,986 Total stockholder’s equity 33,561 320,744 72,411 (37,091 ) 389,625 Total liabilities and stockholder’s equity $433,742 $956,406 $132,190 $(514,727 ) $1,007,611

Condensed Consolidating Balance Sheet January 1, 2011

Guarantor Non-Guarantor Issuer Subsidiaries Subsidiaries Eliminations Consolidated ASSETS Current assets: Cash and cash equivalents $1,981 $7,049 $14,994 $— $24,024 Accounts receivable, net — 189,750 26,416 — 216,166 Inventories, net — 122,116 18,977 — 141,093 Prepaid expenses 1,306 4,907 867 — 7,080 Deferred taxes — 16,254 — — 16,254 Other current assets — 7,504 979 — 8,483 Total current assets 3,287 347,580 62,233 — 413,100

Copyright © 2013 www.secdatabase.com. All Rights Reserved. Please Consider the Environment Before Printing This Document Property, plant and equipment, net 21,235 27,776 725 — 49,736 Deferred financing fees, net 14,248 — — — 14,248 Investments and intercompany receivables 370,712 70,614 74,634 (515,960 ) — Intangible assets, net — 273,466 5,581 — 279,047 Goodwill 16,195 185,542 5,191 — 206,928 Other assets — 1,355 140 — 1,495 Total assets $425,677 $906,333 $148,504 $(515,960 ) $964,554

LIABILITIES AND STOCKHOLDER’S EQUITY Current liabilities: Revolving credit facility $38,893 $— $— $— $38,893 Current portion of capital lease obligations — 24 — — 24 Accounts payable — 71,244 1,904 — 73,148 Accrued expenses 10,562 41,313 6,577 — 58,452 Total current liabilities 49,455 112,581 8,481 — 170,517 Long-term debt, less current portion 346,168 — — — 346,168 Capital lease obligations, less current portion — 78 — — 78 Deferred taxes — 49,379 — — 49,379 Other noncurrent liabilities — 13,341 7,433 — 20,774 Long-term intercompany payables — 417,140 60,496 (477,636 ) — Total liabilities 395,623 592,519 76,410 (477,636 ) 586,916 Total stockholder’s equity 30,054 313,814 72,094 (38,324 ) 377,638 Total liabilities and stockholder’s equity $425,677 $906,333 $148,504 $(515,960 ) $964,554

Condensed Consolidating Statement of Operations Fiscal Year Ended December 31, 2011

Non- Guarantor Guarantor Issuer Subsidiaries Subsidiaries Eliminations Consolidated Net sales $— $805,009 $83,603 $(53,702 ) $834,910 Cost of sales — 534,410 70,701 (53,702 ) 551,409 Gross profit — 270,599 12,902 — 283,501

Copyright © 2013 www.secdatabase.com. All Rights Reserved. Please Consider the Environment Before Printing This Document Selling, general and administrative expenses 42,264 158,896 10,132 — 211,292 Amortization of intangibles — 9,612 — — 9,612 (Loss) income from operations (42,264 ) 102,091 2,770 — 62,597 Interest expense, net 40,797 2,060 15 — 42,872 Share of net income (loss) of subsidiaries under equity method 93,089 1,863 — (94,952 ) — Income (loss) before income taxes 10,028 101,894 2,755 (94,952 ) 19,725 Income tax expense — 8,805 892 — 9,697 Net income (loss) $10,028 $93,089 $1,863 $(94,952 ) $10,028

Condensed Consolidating Statement of Operations Fiscal Year Ended January 1, 2011

Non- Guarantor Guarantor Issuer Subsidiaries Subsidiaries Eliminations Consolidated Net sales $— $719,238 $87,938 $(34,333 ) $772,843 Cost of sales — 475,073 69,706 (34,333 ) 510,446 Gross profit — 244,165 18,232 — 262,397 Selling, general and administrative expenses 41,935 139,290 10,078 — 191,303 Amortization of intangibles — 11,765 — — 11,765 (Loss) income from operations (41,935 ) 93,110 8,154 — 59,329 Interest expense, net 43,445 1,121 2 — 44,568 Share of net income (loss) of subsidiaries under equity method 93,506 5,364 — (98,870 ) — Income (loss) before income taxes 8,126 97,353 8,152 (98,870 ) 14,761 Income tax expense — 3,847 2,788 — 6,635 Net income (loss) $8,126 $93,506 $5,364 $(98,870 ) $8,126

Condensed Consolidating Statement of Operations Fiscal Year Ended January 2, 2010

Non- Guarantor Guarantor Issuer Subsidiaries Subsidiaries Eliminations Consolidated Net sales $— $673,399 $79,905 $(36,974 ) $716,330 Cost of sales — 454,687 64,715 (36,974 ) 482,428 Gross profit — 218,712 15,190 — 233,902 Selling, general and administrative expenses 34,038 130,076 10,924 — 175,038 Amortization of intangibles — 13,406 — — 13,406

Copyright © 2013 www.secdatabase.com. All Rights Reserved. Please Consider the Environment Before Printing This Document (Loss) income from operations (34,038 ) 75,230 4,266 — 45,458 Interest expense, net 44,123 785 2 — 44,910 Share of net income (loss) of subsidiaries under equity method 74,063 3,259 — (77,322 ) — (Loss) income before income taxes (4,098 ) 77,704 4,264 (77,322 ) 548 Income tax expense — 3,641 1,005 — 4,646 Net (loss) income $(4,098 ) $74,063 $3,259 $(77,322 ) $(4,098 )

Condensed Consolidating Statement of Cash Flows Fiscal Year Ended December 31, 2011

Copyright © 2013 www.secdatabase.com. All Rights Reserved. Please Consider the Environment Before Printing This Document Proceeds on revolving credit facility, net 3,107 — — — 3,107 Payments on debt issuance costs (1,282 ) — — — (1,282 ) Net cash used in financing activities 1,825 (24 ) — — 1,801 Effect of exchange rate changes on cash and cash equivalents — — (399 ) — (399 ) Net change in cash and cash equivalents 716 (1,236 ) 6,001 — 5,481 Cash and cash equivalents, beginning of year 1,981 7,049 14,994 — 24,024 Cash and cash equivalents, end of year $2,697 $5,813 $20,995 $— $29,505

Condensed Consolidating Statement of Cash Flows Fiscal Year Ended January 1, 2011

Copyright © 2013 www.secdatabase.com. All Rights Reserved. Please Consider the Environment Before Printing This Document Net cash used in investing activities (9,507 ) (12,735 ) (232 ) — (22,474 ) Cash flows from financing activities: Payments on capital lease obligations — (22 ) — — (22 ) Payments on revolving credit facility, net (35,000 ) — — — (35,000 ) Net cash used in financing activities (35,000 ) (22 ) — — (35,022 ) Effect of exchange rate changes on cash and cash equivalents — — 630 — 630 Net change in cash and cash equivalents (7,366 ) (3,180 ) 1,252 — (9,294 ) Cash and cash equivalents, beginning of year 9,347 10,229 13,742 — 33,318 Cash and cash equivalents, end of year $1,981 $7,049 $14,994 $— $24,024

Condensed Consolidating Statement of Cash Flows Fiscal Year Ended January 2, 2010

Copyright © 2013 www.secdatabase.com. All Rights Reserved. Please Consider the Environment Before Printing This Document Purchase of property, plant and equipment (7,232 ) (8,178 ) (246 ) — (15,656 ) Purchase of intellectual property — (400 ) — — (400 ) Net cash used in investing activities (7,232 ) (8,578 ) (246 ) — (16,056 ) Cash flows from financing activities: Payments on capital lease obligations — (21 ) — — (21 ) Payments on old senior term notes (315,788 ) — — — (315,788 ) Proceeds from new revolving ABL credit facility, net 70,000 — — — 70,000 Extinguishment of senior subordinated notes (140,000 ) — — — (140,000 ) Proceeds from issuance of senior secured notes 345,677 — — — 345,677 Payments on debt issuance costs (17,505 ) — — — (17,505 ) Distribution to RBG (2,594 ) — — — (2,594 ) Capital contribution by RBG 12,858 — — — 12,858 Net cash used in financing activities (47,352 ) (21 ) — — (47,373 ) Effect of exchange rate changes on cash and cash equivalents — — 1,652 — 1,652 Net change in cash and cash equivalents (5,482 ) 406 (2,907 ) — (7,983 ) Cash and cash equivalents, beginning of year 14,829 9,823 16,649 — 41,301

Copyright © 2013 www.secdatabase.com. All Rights Reserved. Please Consider the Environment Before Printing This Document Consolidated Statements of 12 Months Ended Operations and Comprehensive Income Dec. 31, Jan. 01, Jan. 02, (USD $) 2011 2011 2010 In Thousands, unless otherwise specified Consolidated Statements of Operations and Comprehensive Income [Abstract] Net sales $ 834,910 $ 772,843 $ 716,330 Cost of sales 551,409 510,446 482,428 Gross profit 283,501 262,397 233,902 Selling, general and administrative expenses 211,292 191,303 175,038 Amortization of intangibles 9,612 11,765 13,406 Income from operations 62,597 59,329 45,458 Interest expense, net 42,872 44,568 44,910 Income before income taxes 19,725 14,761 548 Income tax expense 9,697 6,635 4,646 Net income (loss) 10,028 8,126 (4,098) Other comprehensive income: Foreign currency translation adjustment (1,548) 2,240 5,320 Comprehensive income $ 8,480 $ 10,366 $ 1,222

Copyright © 2013 www.secdatabase.com. All Rights Reserved. Please Consider the Environment Before Printing This Document 12 Months Ended Segment Information Dec. 31, 2011 Segment Information [Abstract] Segment Information 6. Segment Information

Our Company has two reportable segments: Team Sports and Action Sports. The majority of Easton’s activity is reflected in our Team Sports segment which primarily consists of football, baseball, softball, ice hockey, lacrosse and other team sports products and reconditioning services related to certain of these products. Our Action Sports segment consists primarily of helmets, equipment, components, footwear and accessories for cycling, snowsports and powersports and fitness related products. Following the acquisition of Easton, our Action Sports segment includes Easton’s cycling business. Our Company evaluates segment performance primarily based on income from operations excluding equity compensation expense, management expenses, restructuring and other infrequent expenses, amortization of intangibles and corporate expenses. Our selling, general and administrative expenses, excluding corporate expenses, are charged to each segment based on where the expenses are incurred. Segment operating income as presented by our Company may not be comparable to similarly titled measures used by other companies. As a result, the components of operating income for one segment may not be comparable to another segment.

Segment results for 2011, 2010 and 2009 are as follows:

Team Action Sports Sports Consolidated Assets December 31, 2011 $640,109 $367,502 $1,007,611 January 1, 2011 599,980 364,574 964,554

A reconciliation from the segment information to the Consolidated Statements of Operations and Comprehensive Income is set forth below:

Fiscal Year 2011 2010 2009

Segment income from operations $108,851 $107,169 $88,315 Equity compensation expense (3,507 ) (3,435 ) (5,327 ) Amortization of intangibles (9,612 ) (11,765 ) (13,406 )

Copyright © 2013 www.secdatabase.com. All Rights Reserved. Please Consider the Environment Before Printing This Document Corporate expenses (33,135 ) (32,640 ) (24,124 ) Consolidated income from operations $62,597 $59,329 $45,458

(a) The following table summarizes net sales by product line. The categorization of our Company’s products into product lines is based on the characteristics of the individual products and is subject to judgment in some cases and can vary over time. In instances where products move between product lines, we reclassify the amounts in the product lines for all prior periods. Such reclassifications typically do not materially change the sizing of, or the underlying trends of results within each product line.

(b) Net sales by customer location for 2011, 2010 and 2009 were as follows:

2011 2010 2009 North America $712,007 $655,121 $602,367 Europe 100,254 101,714 100,137 Other 22,649 16,008 13,826 $834,910 $772,843 $716,330

(d) Total assets by location at December 31, 2011 and January 1, 2011 were as follows:

2011 2010 North America $943,259 $912,619 Other 64,352 51,935 $1,007,611 $964,554

Copyright © 2013 www.secdatabase.com. All Rights Reserved. Please Consider the Environment Before Printing This Document 12 Months Ended Employee Benefit Plans Dec. 31, 2011 Employee Benefit Plans [Abstract] Employee Benefit Plans 5. Employee Benefit Plans

At December 31, 2011, our Company had one defined contribution plan covering substantially all of our non-union employees. Through March 31, 2009, we contributed to each participant a matching contribution equal to 50.0% of the first 6.0% of the participant’s compensation that has been contributed to the plan, subject to applicable legal limits. Effective April 1, 2009, we contribute to each participant a matching contribution determined on a discretionary basis. No discretionary contributions were made to the plan for 2010 and 2009. Discretionary contributions were made in 2011. Expenses related to these plans amounted to approximately $1,344, $6 and $570 for 2011, 2010 and 2009, respectively.

Copyright © 2013 www.secdatabase.com. All Rights Reserved. Please Consider the Environment Before Printing This Document Valuation and Qualifying 12 Months Ended Accounts Dec. 31, 2011 Valuation and Qualifying Accounts [Abstract] VALUATION AND ANNUAL REPORT ON FORM 10-K QUALIFYING ACCOUNTS ITEM 15 (a)(2)

FINANCIAL STATEMENT SCHEDULE YEAR ENDED DECEMBER 31, 2011

II-1

VALUATION AND QUALIFYING ACCOUNTS

Additions Balance at Charged to Balance at Beginning Acquired Costs and End of Description of Period Businesses Adjustments Deductions Period (Dollars in thousands) Product Liability Reserve Year ended December 31, 2011 $18,786 $— $6,399 $(6,646 ) $18,539 Year ended January 1, 2011 17,208 — 5,412 (3,834 ) 18,786 Year ended January 2, 2010 16,246 — 3,539 (2,577 ) 17,208 Excess and Obsolete Inventory Reserve Year ended December 31, 2011 $9,651 $— $7,397 $(7,072 ) $9,976 Year ended January 1, 2011 7,748 — 8,410 (6,507 ) 9,651 Year ended January 2, 2010 7,736 — 6,801 (6,789 ) 7,748 Allowance for Doubtful Accounts

Copyright © 2013 www.secdatabase.com. All Rights Reserved. Please Consider the Environment Before Printing This Document Year ended December 31, 2011 $6,942 $— $4,011 $(2,862 ) $8,091 Year ended January 1, 2011 6,453 — 3,409 (2,920 ) 6,942 Year ended January 2, 2010 7,273 — 3,826 (4,646 ) 6,453

Copyright © 2013 www.secdatabase.com. All Rights Reserved. Please Consider the Environment Before Printing This Document Derivative Instruments and 12 Months Ended Hedging Activity Dec. 31, 2011 Derivative Instruments and Hedging Activity [Abstract] Derivative Instruments and 9. Derivative Instruments and Hedging Activity Hedging Activity Our Company accounts for all derivatives on the balance sheet as an asset or liability measured at fair value and changes in fair values are recognized in earnings unless specific hedge accounting criteria are met for cash flow or net investment hedges. If such hedge accounting criteria are met, the change is deferred in stockholder’s equity as a component of accumulated other comprehensive income. The deferred items are recognized in the period the derivative contract is settled. As of December 31, 2011, we had not designated any of our derivative instruments as hedges, and therefore, have recorded the changes in fair value in the Consolidated Statements of Operations and Comprehensive Income.

Our Company uses a fair value hierarchy that prioritizes observable and unobservable inputs used to measure fair value into three broad levels, which are described below:

Level 1: Quoted prices (unadjusted) in active markets that are accessible at the measurement date for assets or liabilities. The fair value hierarchy gives the highest priority to Level 1 inputs.

Level 2: Observable prices that are based on inputs not quoted on active markets, but corroborated by market data.

Level 3: Unobservable inputs are used when little or no market data is available. The fair value hierarchy gives the lowest priority to Level 3 inputs.

Copyright © 2013 www.secdatabase.com. All Rights Reserved. Please Consider the Environment Before Printing This Document Our Company utilizes foreign currency exchange forward contracts to reduce our risk related to inventory purchases and foreign currency based accounts receivable. These contracts are not designated as hedges, and therefore, under current accounting standards are recorded at fair value at each balance sheet date, with the resulting change charged or credited to selling, general and administrative expenses in the accompanying Consolidated Statements of Operations and Comprehensive Income.

December 31, 2011 January 1, 2011 Foreign Foreign U.S. Dollars Currency U.S. Dollars Currency Foreign Currency Exchange Forward Contracts: U.S. Dollars / Canadian Dollars $— Cdn$— $4,500 Cdn$4,476

Copyright © 2013 www.secdatabase.com. All Rights Reserved. Please Consider the Environment Before Printing This Document Product Liability, Litigation 12 Months Ended and Other Contingencies Dec. 31, 2011 Product Liability, Litigation and Other Contingencies [Abstract] Product Liability, Litigation 7. Product Liability, Litigation and Other Contingencies and Other Contingencies Product Liability

In the opinion of management, amounts accrued for exposures relating to product liability claims and other legal proceedings are adequate and, accordingly, the ultimate resolution of these matters is not expected to have a material adverse effect on our Company’s consolidated financial statements. As of December 31, 2011, our Company had no known probable but inestimable exposures relating to product liability or other legal proceedings that are expected to have a material adverse effect on our Company.

Our Company maintains product liability insurance coverage under various policies. These policies provide coverage against claims resulting from alleged injuries sustained during the respective policy periods, subject to policy terms and conditions. The primary portion of our Company’s product liability coverage is written under a policy expiring in January 2013 with a $2,000 limit per occurrence excess of a $1,000, $50 and $500 self-insured retention for helmets, soft goods and all other products, respectively. Our Company’s first layer excess policy is written under a liability policy with a limit of $25,000 excess of $3,000 expiring in January 2013. We also carry a second layer excess liability policy providing an additional limit of $15,000 excess of $28,000 expiring January 2013, and a third layer excess liability policy providing an additional limit of $10,000 excess of $43,000 expiring January 2013, for a total limit of $53,000.

Copyright © 2013 www.secdatabase.com. All Rights Reserved. Please Consider the Environment Before Printing This Document 12 Months Ended Income Taxes Dec. 31, 2011 Income Taxes [Abstract] Income Taxes 8. Income Taxes

Our Company applies FASB ASC topic 740, “Income Taxes” or ASC 740 which addresses the determination of whether tax benefits claimed, or expected to be claimed on a tax return should be recorded in the financial statements. Under ASC 740, our Company may recognize the tax benefit from an uncertain tax position only if it is more likely than not that the tax position will be sustained on examination by the taxing authorities, based on the technical merits of the position. The tax benefits recognized in the financial statements from such a position should be measured based on the largest benefit that has a greater than fifty percent likelihood of being realized upon ultimate settlement. ASC 740 also provides guidance on derecognition, classification, interest and penalties on income taxes, accounting in interim periods and requires increased disclosures.

A reconciliation of the total gross amount of unrecognized tax benefits at December 31, 2011 and January 1, 2011 is as follows:

2011 2010 Beginning balance $3,258 $2,690 Additions for tax positions of the current year — — Additions for tax positions of the prior year 99 568 Ending balance $3,357 $3,258

Income tax expense (benefit) consisted of the following for December 31, 2011, January 1, 2011 and January 2, 2010:

Total deferred tax assets 56,787 55,591 Deferred income tax liabilities: Property, plant and equipment 7,263 2,577 Intangible assets 83,481 79,626

Total deferred tax liabilities 90,744 82,203 Valuation allowance (7,173 ) (6,513 )

Total net deferred income tax liability $(41,130 ) $(33,125 )

Copyright © 2013 www.secdatabase.com. All Rights Reserved. Please Consider the Environment Before Printing This Document the valuation allowance. These net operating loss carryforwards will begin to expire in 2021 through 2029. The additional $660 of valuation allowance established in the current year relates to net operating losses and capital loss carryforwards in foreign jurisdictions, including Canada and Sweden.

Our Company files a U.S. federal income tax return as a member of a U.S. consolidated group with EB Sports as the common parent. We record our provision for income taxes on a separate return basis which excludes any impact of EB Sports. As a result of filing our tax returns on a consolidated basis with EB Sports, there are additional net operating loss carryforwards that would be available to offset future income of our Company and EB Sports. To the extent these net operating losses are utilized to offset future income of our Company, a tax sharing agreement would be entered into providing that the tax benefit received by our Company ascribed to these net operating losses be recorded as either a payable to EB Sports or a contribution of capital by EB Sports to our Company.

Income (loss) before income taxes, consisted of the following:

2011 2010 2009 Domestic $16,475 $6,525 $(3,034 ) Foreign 3,250 8,236 3,582 Income before income taxes $19,725 $14,761 $548

Cash paid for income taxes was $3,465, $3,362 and $6,251 for 2011, 2010 and 2009, respectively.

Copyright © 2013 www.secdatabase.com. All Rights Reserved. Please Consider the Environment Before Printing This Document Stock-Based Employee 12 Months Ended Compensation Dec. 31, 2011 Stock-Based Employee Compensation [Abstract] Stock-Based Employee 10. Stock-Based Employee Compensation Compensation On March 16, 2006, our Parent adopted the Incentive Plan. Our parent amended the Incentive Plan in December 2009 to allow for certain new grants. The Incentive Plan provides for the issuance of Class B Common Units of our Parent, which are intended to be profits interests. Such units qualify as equity instruments of our Parent. The holders of these units are entitled to share in the distribution of profits above a certain threshold, or the distribution threshold. For any particular such Unit, the distribution threshold is the fair value of a Class A Common Unit of our Parent on the date of grant. Our Parent has made grants of these units pursuant to the Incentive Plan since its adoption. Generally, so long as the Unit holder is employed or remains a member of the board of managers of our Parent, these units vest over time (generally a four-year period) or upon achievement of certain company performance goals. Subject to certain conditions, Units are also eligible to vest in the event of an initial public offering or change of control. In December 2009, our Parent issued new Class B Common Units and amended certain existing Class B Common Units, which, in each case, are eligible, subject to certain conditions, for additional distributions from our Parent in the event that certain company performance goals are met through 2012. In addition, in December 2009, our Parent agreed to amend and restate certain existing Class B Common Units to revise the distribution threshold of such units to an amount commensurate with the then fair market value of a Class A Common Unit. As of December 31, 2011, there were 110,152,750.854 Units authorized for grant pursuant to the Incentive Plan.

In fiscal years 2011, 2010 and 2009, the weighted average assumptions used in the Black- Scholes Option Pricing Model were as follows:

(1) Expected volatility is based upon a peer group of companies given no historical data for the Units.

Copyright © 2013 www.secdatabase.com. All Rights Reserved. Please Consider the Environment Before Printing This Document performance conditions will be met. As of December 31, 2011, we have not recognized any compensation expense for the performance based vesting Units as it is not probable that the performance conditions will be met.

Our Company recognized the following unit based compensation expense, included in selling, general and administrative expenses for its Units during 2011, 2010 and 2009:

2011 2010 2009 Equity compensation expense $3,507 $3,435 $5,327

Our Company’s Unit activity under the Incentive Plan is as follows:

Copyright © 2013 www.secdatabase.com. All Rights Reserved. Please Consider the Environment Before Printing This Document Consolidated Statements of Stockholder's Equity (USD Total Additional Retained Accumulated Other Common $) USD Paid-in Capital Earnings Comprehensive (Loss) Income Shares In Thousands, except Share ($) USD ($) USD ($) USD ($) data Balance at Jan. 03, 2009 $ $ 341,197 $ 11,373 $ (5,546) 347,024 Balance, shares at Jan. 03, 100 2009 Equity compensation expense 5,327 5,327 Net income (loss) (4,098) (4,098) Capital contribution by RBG 12,858 12,858 Distribution to RBG (2,594) (2,594) Foreign currency translation 5,320 5,320 adjustment Balance at Jan. 02, 2010 363,837 356,788 7,275 (226) Balance, shares at Jan. 02, 100 2010 Equity compensation expense 3,435 3,435 Net income (loss) 8,126 8,126 Foreign currency translation 2,240 2,240 adjustment Balance at Jan. 01, 2011 377,638 360,223 15,401 2,014 Balance, shares at Jan. 01, 100 100 2011 Equity compensation expense 3,507 3,507 Net income (loss) 10,028 10,028 Foreign currency translation (1,548) (1,548) adjustment Balance at Dec. 31, 2011 $ $ 363,730 $ 25,429 $ 466 389,625 Balance, shares at Dec. 31, 100 100 2011

Capital Operating Fiscal Year Ending Leases Leases 2012 $32 $9,643 2013 32 5,617 2014 24 3,997 2015 — 2,766 2016 — 2,719 Thereafter — 6,829 Total minimum lease payments 88 $31,571 Less amount representing interest (10 ) Present value of minimum lease payments, including current maturities of $26 $78

Property and equipment included the following amounts under capital leases at December 31, 2011 and January 1, 2011:

2011 2010 Leasehold improvements $247 $247 Less accumulated depreciation (199 ) (181 ) $48 $66

Rent expense for operating leases was approximately $10,317, $9,873 and $9,698 for 2011, 2010 and 2009, respectively.