FOX FACTORY HOLDING CORP

Transcription

1 FOX FACTORY HOLDING CORP FORM 8-K (Current report filing) Filed 11/16/15 for the Period Ending 11/16/15 Address 915 DISC DRIVE SCOTTS VALLEY, CA Telephone CIK Symbol FOXF SIC Code Motorcycles, Bicycles, and Parts Copyright 2015, EDGAR Online, Inc. All Rights Reserved. Distribution and use of this document restricted under EDGAR Online, Inc. Terms of Use.

2 UNITED STATES SECURITIES AND EXCHANGE COMMISSION Washington, D.C FORM 8-K Current Report Pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934 November 16, 2015 (November 13, 2015) Date of Report (date of earliest event reported) Fox Factory Holding Corp. (Exact name of Registrant as Specified in its Charter) Delaware (State or Other Jurisdiction of Incorporation or Organization) (Commission File Number) 915 Disc Drive Scotts Valley, California (Address of Principal Executive Offices) (Zip Code) (831) (Registrant s Telephone Number, Including Area Code) (IRS Employer Identification Number) N/A (Former Name or Former Address, if Changed Since Last Report) ChecktheappropriateboxbelowiftheForm8-Kfilingisintendedtosimultaneouslysatisfythefilingobligationoftheregistrantunderanyofthefollowing provisions: WrittencommunicationspursuanttoRule425undertheSecuritiesAct(17CFR ) SolicitingmaterialpursuanttoRule14a-12undertheExchangeAct(17CFR240.14a-12) Pre-commencementcommunicationspursuanttoRule14d-2(b)undertheExchangeAct(17CFR240.14d-2(b)) Pre-commencementcommunicationspursuanttoRule13e-4(c)undertheExchangeAct(17CFR240.13e-4(c))

3 Section 1 Registrant s Business and Operations Item 1.01 Entry into a Material Definitive Agreement OnNovember13,2015,FoxFactoryHoldingCorp.(the"Company"),throughitswhollyownedsubsidiariesFoxFactory,Inc.(" Fox"), RFEHolding(US) Corp. ("USBuyer"), RFEHolding(Canada) Corp. ("CABuyer") andfoxfactoryipholdingcorp. ("KY Buyer,"andcollectivelythe"Buyer"),enteredintoaSecondAmendmenttoAssetPurchaseAgreement(the"Amendment")with B.C.Ltd.("CASeller"),EastonCycling(USA),Inc.("USSeller,"andtogetherwithCASeller,the"Seller")andtheownersoftheSeller. TheAmendmententeredinto(i) guaranteesthemaximumearn-outpayableforthefiscalyearendedoctober31, 2015(CAD9,000,0000) (the"2015earn-out")andthemaximumearn-outpayableforthefiscalyearendingoctober31,2016(cad10,500,000)(the"2016earn- Out"andtogetherwiththe2015Earn-Out,the"Earn-Outs"),tobepaidinthetimeandmannerassetforthintheoriginalAssetPurchase Agreement,(ii)requiresthatChrisTuttonremainemployedbytheCABuyerthroughthedatestheEarn-Outsarepayabletonotsubjectany such Earn-Outs to forfeiture (unless Mr. Tutton is terminated without Just Cause or for Good Reason) and (iii) removes all operational, financial and any other post-closing covenants placed on the Company and its subsidiaries. All terms not defined herein shall have the meaningascribedtothemintheamendment,attachedheretoasexhibit10.1. Basedonperformancetodateandprojections,theSeller'sbusiness("RFE")hasachievedthemaximum2015Earn-Outandison targettoachievethemaximum2016earn-out.becauseofthis,thecompanyhasagreedtoguaranteethepaymentoftheearn-outsinorder toallowittoaccelerateintegrationandallowforclosercooperationbetweenthelegacyfoxbusinessandtherfebusiness(pertheoriginal Asset Purchase Agreement, Fox was required to separately operate and track the RFE business and such integration was limited). The anticipatedintegrationshouldallowfor(i)theabilitytocommerciallybundlefoxandrfesolutionsanddiscountwhereappropriate,(ii)the abilitytobetteraligninternationaldistribution,(iii)adeepertechnologycollaborationacrossthebusinesslines,(iv)theinclusionofrfeina potentialexpansionintaiwantoincreaseitsproductioncapacity, (v)asimplificationofthecompany'saccountingalongwithbackoffice integration, (vi) RFE's operations executive, Chris Tutton, to focus on broader initiatives (rather than just the RFE business), and (vii) an alignmentoflong-termgoals. The foregoing description of the Amendment does not purport to be complete and is qualified in its entirety by reference to the Amendment,whichisattachedtothisreportasExhibit10.1andincorporatedhereinbyreference. Cautionary Note Regarding Forward-Looking Statements Certain statements in this Current Report on Form 8-K may be deemed to be forward-looking statements within the meaning of Section27AoftheSecuritiesActof1933,asamendedandSection21EoftheSecuritiesExchangeActof1934,asamended.TheCompany intendsthatallsuchstatementsbesubjecttothe"safe-harbor"provisionscontainedinthosesections.forward-lookingstatementsgenerally relate to future events or the Company's future financial or operating performance. In some cases, you can identify forward-looking statementsbecausetheycontainwordssuchas"may,""might,""will,""would,""should,""expect,""plan,""anticipate,""could,""intend," "target," "project," "contemplate," "believe," "estimate," "predict," "likely," "potential" or "continue" or other similar terms or expressions and such forward-looking statements include, but are not limited to, statements about RFE being on target to achieve the maximum 2016 Earn-out,statementsaboutwhattheanticipatedintegrationshouldallowforandanyotherstatementsinthis8-Kthatarenotofahistorical nature.manyimportantfactorsmaycausethecompany'sactualresults,eventsorcircumstancestodiffermateriallyfromthosediscussedin anysuchforward-lookingstatements,includingbutnotlimitedto:thecompany'sabilitytocompleteanyacquisitionand/orincorporateany acquiredassetsintoitsbusiness;thecompany'sabilitytoimproveoperatingandsupplychainefficiencies; thecompany'sfuturefinancial performance, including its sales, cost of sales, gross profit or gross margin, operating expenses, ability to generate positive cash flow and ability to maintain profitability; factors which impact the calculation of the weighted average number of diluted shares of common stock outstanding,includingthemarketpriceofthecompany'scommonstock,grantsofequity-basedawardsandthevestingschedulesofequitybasedawards;thecompany'sabilitytodevelopnewandinnovativeproductsinitscurrentend-marketsandtoleverageitstechnologiesand brandtoexpandintonewcategoriesandend-markets;thecompany'sabilitytoincreaseitsaftermarketpenetration;thepossibilitythatthe

4 Company could experience a disruption in its planned transition of the majority of the Company's mountain bike suspension component manufacturingoperationstotaiwanorunexpecteddifficultiesinconnectionwithsuchtransition;thepossibilitythatthecompanymaynot beabletoaccelerateitsinternationalgrowth;thecompany'sabilitytomaintainitspremiumbrandimageandhigh-performanceproducts;the Company'sabilitytomaintainrelationshipswiththeprofessionalathletesandraceteamsthatitsponsors;thepossibilitythattheCompany may not be able to selectively add additional dealers and distributors in certain geographic markets; the overall growth of the markets in whichthecompanycompetes;thecompany'sexpectationsregardingconsumerpreferencesanditsabilitytorespondtochangesinconsumer preferences;changesindemandforhigh-endsuspensionandridedynamicsproducts;thecompany'sabilitytosuccessfullyidentify,evaluate and manage potential acquisitions and to benefit from such acquisitions; future economic or market conditions; and the other risks and uncertainties described in "Risk Factors" contained in its Annual Report on Form 10-K or Quarterly Reports on Form 10-Q or otherwise describedinthecompany'sotherfilingswiththesecuritiesandexchangecommission. Newrisksanduncertaintiesemergefromtimeto timeanditisnotpossibleforthecompanytopredictallrisksanduncertaintiesthatcouldhaveanimpactontheforward-lookingstatements containedinthiscurrentreportonform8-k.inlightofthesignificantuncertaintiesinherentintheforward-lookinginformationincluded herein,theinclusionofsuchinformationshouldnotberegardedasarepresentationbythecompanyoranyotherpersonthatthecompany's expectations,objectivesorplanswillbeachievedinthetimeframeanticipatedoratall.investorsarecautionednottoplaceunduerelianceon the Company's forward-looking statements and the Company undertakes no obligation to publicly update or revise any forward-looking statements,whetherasaresultofnewinformation,futureeventsorotherwise,exceptasrequiredbylaw. Section 9.01 Financial Statements and Exhibits Item 9.01 Financial Statements and Exhibits d)exhibits Thefollowingexhibitsarefiledherewith: Exhibit Description SecondAmendmenttoAssetPurchaseAgreement,byandamongFoxFactory,Inc.,RFEHolding(US)Corp., RFEHolding(Canada)Corp.,FoxFactoryIPHoldingCorp., B.C.Ltd.,EastonCycling(USA),Inc.and 10.1 theotherpartiestheretodatednovember13,2015.

5 SIGNATURE PursuanttotherequirementsoftheSecuritiesExchangeActof1934,theregistranthasdulycausedthisreporttobesignedonits behalfbytheundersignedhereuntodulyauthorized. Fox Factory Holding Corp. Date: November16,2015 By: /s/zviglasman ZviGlasman ChiefFinancialOfficer,SecretaryandTreasurer

6 EXHIBIT 10.1 SECOND AMENDMENT TO ASSET PURCHASE AGREEMENT ThisSECOND AMENDMENT TO ASSET PURCHASE AGREEMENT (this"amendment"),datedasofnovember13,2015 (the"effectivedate"),isbyandamongfoxfactory,inc.,acaliforniacorporation("fox"),rfeholding(canada)corp.,acorporation organizedunderthelawsofbritishcolumbia("cabuyer"),rfeholding(us)corp.,adelawarecorporation("usbuyer"),foxfactory IPHoldingCorp.,anexemptedcompanyincorporatedunderthelawsoftheCaymanIslands("KYBuyer"andtogetherwiththeFox,CA BuyerandUSBuyer,eachindividuallya"Buyer"andcollectivelythe"Buyers"), B.C.Ltd.,acorporationamalgamatedunderthe laws of British Columbia (" CASeller"), and Easton Cycling (USA), Inc., a Delaware corporation (" USSeller" and together with CA Seller,eachindividuallya"Seller"andcollectivelythe"Sellers").EachofBuyersandSellersaresometimesindividuallyreferredtoherein asa"party"andcollectivelyasthe"parties". W I T N E S S E T H : WHEREAS, the Parties are party to that certain Asset Purchase Agreement dated as of December 5, 2014, as amended by that certainletteragreementdatedmarch10,2015(the"purchaseagreement"); WHEREAS,thePartiesacknowledgeandagreethatthe2015earn-outamounthasbeenearnedandisequalto$9,000,000andthe 2016 earn-out amount is hereby deemed to have been earned, subject to certain forfeiture restrictions contained herein, and is equal to $10,500,000;and WHEREAS, in accordance with Section of the Purchase Agreement, the Parties have determined to amend the Purchase AgreementassetforthinthisAmendment. AGREEMENT NOW,THEREFORE,inconsiderationofthepremisesandmutualcovenantsandagreementssetforthhereinandothergoodand valuableconsideration,thereceiptandsufficiencyofwhichareherebyacknowledged,thepartiesagreeasfollows: 1. Definitions. Certain capitalized words and phrases used herein and not otherwise defined have the meanings set forth or referencedinthepurchaseagreement. 2. Amendments. (a)section1.2ofthepurchaseagreementisherebyamendedbydeletingthefollowingrows: "2015Earn-Out" "2015ActualEBITDA" "2015EBITDAMaximum" "2015EBITDAMinimum" "2015EBITDAThreshold" "2016Earn-Out" "2016ActualEBITDA" "2016EBITDAMaximum" "2016EBITDAMinimum" 2.10(a) 2.10(a) 2.10(d) 2.10(b) 2.10(c) 2.10(a) 2.10(a) 2.10(d) 2.10(b)

7 "2016EBITDAThreshold" "AmountinControversy" "ArbitrationPanel" "AuditedEBITDAStatement" "BreachAccelerationPayment" "Earn-OutPeriod" "EBITDAStatement" "ElectingParty'sEarn-OutStatement" "InstallmentSalePayment" 2.10(c) 2.10(j) 2.10(j)(ii) 2.10(h) 7.13(e) 7.13(b) 2.10(h) 2.10(j) 2.10(n)(i) order: (b)section1.2ofthepurchaseagreementisherebyfurtheramendedbyinsertingthefollowingrowsintheirappropriatealphabetical "2015MaxEarn-OutAmount" "2016MaxEarn-OutAmount" 2.10(a) 2.10(a) (c)section2.3ofthepurchaseagreementisherebyamendedbydeletingthephrase"ifearned"andreplacingsuchphrasewith"if payable." (d)section2.10ofthepurchaseagreementisherebyamendedandrestatedinitsentiretytoreadasfollows: "2.10Earn-Out. (a)subjecttosection7.13,article8andthetermsandconditionssetforthinthissection2.10,buyerswillpayto(i)ca Seller, on behalf of the Sellers, the 2015 Max Earn-Out Amount within five (5) Business Days after April 1, 2016 and (ii) CA Seller, on behalf of the Sellers, the 2016 Max Earn-Out Amount within five (5) Business Days after April 1, 2017 (collectively, the " Earn-Out Amounts"). Forpurposeshereof, "2015 Max Earn-Out Amount" shallmean$9,000,000, "2016 Max Earn-Out Amount" shall mean $10,500,000. (b)buyersshallhavetherighttowithholdandsetoffagainstanyamountduetobepaidpursuanttothissection2.10the amountofanydamagestowhichanybuyerindemnifiedpersonsmaybeentitledunderarticle8hereofandwhich(forgreatercertainty) have been finally determined by a court of competent jurisdiction or mutually agreed between the Buyer Representative and the Seller Representative. (c)theearn-outamountswillbeallocatedtogoodwillinamannerconsistentwiththetaxpurchasepriceallocationin Section2.5andpaidbytheapplicableBuyertotheappropriateSeller. (d)u.s.taxtreatmentofearn-out. (i) US Buyer and US Seller agree that the sale and purchase of the Acquired Assets pursuant to the terms of this Agreement represents a contingent payment sale with a stated maximum selling price as contemplated by Treasury Regulations Sections15A.453-1(c)(1)-(2).Asaresult,anypaymentoftheEarn-OutAmountsallocabletotheAcquiredAssetspurchasedbythe USBuyer(eachan"InstallmentSalePayment")willconstituteaninstallmentsaleforpurposesofCodeSection453. (ii)incalculatingtheportionofeachinstallmentsalepaymentthatconstitutesinterest,eachbuyerandeachselleragree thateachapplicablebuyershallimputeinteresttotheinstallmentsalepaymentbyapplyingthemid-termapplicablefederalrate,as determinedbycodesection1274(d),forinterest

8 compounding annually for the month in which the Closing Date occurs, and shall in writing inform Seller Representative of the amountoftheimputedinterestineachtaxyear. (iii)eachbuyerandeachselleragreethat,forunitedstatesfederalincometaxpurposes,eachinstallmentsalepayment shallbetreatedasadditionalpurchasepricepaidtooronaccountofsuchsellerfortheacquiredassetsexcepttotheextentaportion ofaninstallmentsalepaymentconstitutesinterestforunitedstatestaxpurposespursuanttothissection2.10(d). (e)canadiantaxtreatmentofearn-out.earn-outamountsallocatedtotheacquiredassetspurchasedbythecaseller willbetaxedinaccordancewiththeprovisionsoftheita. TotheextentanyEarn-OutAmountsaresubjecttoCanadianwithholdingtax under the ITA, subject to a reduction in the applicable rate of withholding tax under the Canada-U.S. Income Tax Convention, such withholdingtaxwillbewithheldfromsuchearn-outamountsandremittedtothecanadiangovernment. (f)forfeitureofearn-outamounts.ifchristutton'semploymentwithrfeholding(canada)corp.is(i)terminatedfor JustCause(assuchtermisdefinedinhisEmploymentAgreement),or(ii)ifMr.TuttonterminateshisemploymentwithoutGoodReason(as suchtermisdefinedinhisemploymentagreement),thensellersshallforfeitallrightstothe2015maxearn-outamountandthe2016max Earn-OutAmounttotheextentsuchamountsarenotyetdue.TheSellerswillnotforfeitanyrightstothe2015MaxEarn-OutAmountorthe 2016MaxEarn-OutAmountbyreasonofMr.Tutton's(i)deathor(ii)hisdisabilityorincapacitation." (e)section7.13ofthepurchaseagreementisherebyamendedandrestatedinitsentiretytoreadasfollows: "7.13OperationoftheBusiness. (a)ingeneral.subjecttothetermsofthissection7.13andsection7.15,buyersshallhavesolediscretionwithregardto all matters relating to the operation of the Business following the Closing. For the avoidance of doubt, in no event shall any Buyer be obligatedto: (i)operatethebusinessasastandalonebusinessofsuchbuyerinaccordancewithsoundbusinesspractices; (ii)maintain separate books and records for the Business and any additional books and records necessary to calculate EBITDA of the Business and the other components thereof, including the calculation of EBITDA attributable to RF Canada and EastonCanadaseparately;and (iii) allow the Business to retain working capital sufficient to satisfy the reasonable business needs of the Business consistentwiththeoperationofthebusinessbysellerspriortoclosing. Furthermore,nothinghereinshallpreventanyBuyerfrommakingamaterialmodificationtotheBusinessoritsoperations(includingtaking anyactionthatwouldreasonablybeexpectedtoresultinthediversionofanymaterialportionofthecustomersorbusinessofthebusiness awayfromthebusiness,whetherbythetransferofanycustomercontracttorelatedpersonsofbuyerorotherwise). (b)accelerationpaymentsuponchangeofcontrol.withoutthepriorconsentofsellerrepresentative(butsubjecttothe lastsentenceofthisparagraph),promptlyupontheconsummationof(a)thesale,lease,exchangeorothertransferofsubstantiallyallofthe AcquiredAssets(onanaggregatebasisandinonetransactionorinaseriesofrelatedtransactions)toapersonorentitythatisnotcontrolled, directlyorindirectly,bybuyerguarantor,(b)adirectorindirect(whetherbythesaleofstockormergerofarelatedperson,orotherwise) sale, exchange, or other transfer of more than 50% of the capital stock of Buyers (excluding Fox) (on an aggregate basis and in one transaction or in a series of related transactions) to a person or entity that is not controlled by Buyer Guarantor, or (C) a merger or consolidationtowhichanyofthebuyers(excludingfox)(onanaggregatebasisandinonetransactionorinaseriesofrelatedtransactions) areapartyifthebuyerguarantororanyofitssubsidiariesdoesnothave"beneficial

9 ownership"(asdefinedinrule13d-3undertheexchangeact)immediatelyfollowingtheeffectivedateofsuchmergerorconsolidationof more than 50% of the combined voting power of the surviving corporation's or corporations' outstanding securities (that in either case, as applicable,directlyorindirectlyholdtheacquiredassets)ordinarilyhavingtherighttovoteatelectionsofdirectors,ineachcaseonorprior tooctober31,2016,thenbuyersshallpaytosellerrepresentative,onbehalfofsellers,the2016maxearn-outamountplusanyunpaid 2015 Earn-Out Amount (such payment, as applicable, referred to herein as the " Change of Control Acceleration Payment "). For the avoidanceofdoubt,achangeofcontrolaccelerationpaymentshallnotbetriggeredupontheconsummationofanytransactionsorseriesof relatedtransactionspursuanttowhichthereisachangeincontrolofeitherbuyerguarantororfoxorasaleorothertransferbyeitherbuyer Guarantor or Fox of substantially all of its assets; provided, that if Chris Tutton's employment with RFE Holding (Canada) Corp. is (i) terminatedwithoutjustcause(assuchtermisdefinedinhisemploymentagreement),or(ii)ifmr.tuttonterminateshisemploymentwith GoodReason(assuchtermisdefinedinhisEmploymentAgreement)inconnectionwithachangeincontrolofeitherBuyerGuarantoror FoxorasaleorothertransferbyeitherBuyerGuarantororFoxofsubstantiallyallofitsassets, thenthechangeofcontrolacceleration Paymentshallbepromptlypaid." (c)accelerationpaymentsuponbreach.intheeventthatchristutton'semploymentwithrfeholding(canada)corp.is (i)terminatedwithoutjustcause(assuchtermisdefinedinhisemploymentagreement),or(ii)ifmr.tuttonterminateshisemployment with Good Reason (as such term is defined in his Employment Agreement), then Buyers shall promptly pay to CA Seller, on behalf of Sellers,the2016MaxEarn-OutAmount,plusanyunpaid2015MaxEarn-OutAmount." (f)section7.15ofthepurchaseagreementisherebyamendedandrestatedinitsentiretytoreadasfollows: "7.15GermanUtilityModelSuit.EachSeller,onbehalfofitselfandeachofitsRelatedPersons,agreesthatitshallberesponsible fordefendingitselfagainstthespecifiedclaimsandthatnobuyershallberesponsibleforanyliabilityarisingtherefrom,includinganyfees andexpenseofattorneysorotherprofessionals;provided,that,fortheavoidanceofdoubt,ifabuyerissubjecttoathird-partyclaimwith respecttoaspecifiedclaimforsalesof"narrow-widechainrings"thatoccurredpriortotheclosingdate,suchbuyershallbeaffordedthe rightsandprotectionssetforthinsection8.7.innoeventshallanysellerhaveanindemnityobligationinfavorofbuyerswithrespecttoa SpecifiedClaimtotheextentthatsuchindemnifyobligation(ortheportionthereof) relatestoproduct(s) soldbybuyersaftertheclosing Date." 3. CA Seller and CA Seller Owners' Agreement. CASellerandeachownerofCASellerrepresentandwarranttoeachBuyer thattheyhaveagreedtoaspecificdollaramountthateachownerofcasellerwillreceivewithrespecttothe2015maxearn-outamount andthe2016maxearn-outamount.furthermore,casellerandeachownerofcaselleragreethatundernocircumstancesforthefiscal yearendedoctober 31, 2016andthereafter shallanybuyerbe requiredtotrackseparately theracefaceand Eastonbusiness(including revenues, expenses, results from operations or any other metric), nor shall such owner's share of the 2016 Max Earn-Out Amount be dependentupontheresultsofeithertheracefaceoreastonbusiness.forgreatercertaintyandnotwithstandingthattheearn-outamounts arepayable,thebuyerwilltrackseparatelytheracefaceandeastonbusinessesfortheoctober31,2015fiscalyearjustended(including revenues,expenses,andresultsfromoperations)anddelivertheseresultstothecasellerassoonaspracticable. 4. Conditions to Effectiveness. ThisAmendmentshallbecomeeffectiveasofthedateandtimeatwhichBuyersshallhave received an executed amendment to his current employment agreement from Chris Tutton and with terms and conditions reasonably satisfactorytobuyersandmr.tuttonandconsistentwiththeirpriorunderstanding. 5. Meaning of "Agreement". Theterm"Agreement "asusedinthepurchaseagreement,shall,unlessotherwisespecifiedor unless the context otherwise requires, mean and include the Purchase Agreement and this Amendment, together, it being the intent of the Partiesthateachoftheforegoingbeappliedandconstruedasasingleinstrument.

10 6. Ratification and Confirmation of the Purchase Agreement. ThePartiesdoherebyratifyandreaffirmallofthetermsand provisionsofthepurchaseagreement,which,asamendedandsupplementedbythisamendmentshallremaininfullforceandeffect. 7. Miscellaneous.Article12ofthePurchaseAgreementshallapplytothisAmendment,mutatis mutandis. [Signature Page Follows]

11 IN WITNESS WHEREOF, the parties hereto have caused this Amendment to be duly executed by their respective authorized officersasofthedayandyearfirstabovewritten. CA Buyer: RFEHOLDING(CANADA)CORP., abritishcolumbiacorporation US BUYER: RFEHOLDING(US)CORP., adelawarecorporation By:/s/DavidHaugen Name:DavidHaugen Title:VicePresident By:/s/DavidHaugen Name:DavidHaugen Title:VicePresident FOX AND BUYER REPRESENTATIVE: FOXFACTORY,INC., acaliforniacorporation KY BUYER: FOXFACTORYIPHOLDINGCORP., acaymanislandcorporation By:/s/LarryEnterline Name:LarryEnterline Title:CEO BUYER GUARANTOR: FOXFACTORYHOLDINGCORP., adelawarecorporation By:/s/DavidHaugen Name:DavidHaugen Title:VicePresident By:/s/JohnBoulton Name:JohnBoulton Title:VicePresident SELLERS: B.C.LTD., abritishcolumbiacorporation By:/s/ChrisTutton Name:ChrisTutton Title:President SELLER REPRESENTATIVE: EASTONCYCLINGUSA,INC., adelawarecorporation By:/s/ChrisTutton Name:ChrisTutton Title:President /s/christutton ChrisTutton,an individual residing in British Columbia

12 ACKNOWLEDGED AND AGREED BY THE OWNERS: BRITISHCOLUMBIALTD. /s/stanfuller By:StanFuller BRITISHCOLUMBIALTD. /s/christopherj.tutton ChristopherJ.Tutton /s/darrenmabbot DarrenMabbot, an individual /s/derekm.wills DerekM.Wills, an individual