Case Doc 505 Filed 02/06/19 Page 1 of 31 IN THE UNITED STATES BANKRUPTCY COURT FOR THE MIDDLE DISTRICT OF NORTH CAROLINA DURHAM DIVISION

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1 SO ORDERED. Case Doc 505 Filed 02/06/19 Page 1 of 31 SIGNED this 6th day of February, IN THE UNITED STATES BANKRUPTCY COURT FOR THE MIDDLE DISTRICT OF NORTH CAROLINA DURHAM DIVISION In re: ) Chapter 11 ) Advanced Sports Enterprises, Inc., et al., ) Case No ) ) (Joint Administration) Debtors. ) ) ORDER APPROVING SALE, TRANSFERRING LIENS TO PROCEEDS, AND GRANTING OTHER RELIEF This matter came before the Court on February 1, 2019 (the Sale Hearing ) for further consideration of the motion (Doc. 37, the Motion ), dated November 16, 2018, filed by the Debtors in the above-captioned chapter 11 cases, pursuant to the Order (Doc. 205, the Bidding Procedures Order ) entered December 7, 2018, granting the initial relief requested in the Motion and (i) scheduling a hearing on approval of one or more sales of or other acquisition transactions for (each a Sale ) substantially all of the Debtors personal property and other related interests, either individually or in lots, free and clear of all liens, claims, encumbrances, and other interests (collectively, the Encumbrances ), other than those Encumbrances permitted by the applicable asset purchase agreement or other agreement for the applicable Sale, and authorizing the assumption and assignment of certain executory contracts and unexpired leases (each, an Assumed Contract, and collectively, the Assumed Contracts ) in

2 Case Doc 505 Filed 02/06/19 Page 2 of 31 connection therewith, (ii) authorizing and approving certain proposed bidding procedures for the Sales in the form attached to the Bidding Procedures Order (collectively, the Bidding Procedures ), certain proposed assumption and assignment procedures (collectively, the Assumption and Assignment Procedures ), and the form and manner of notice thereof, and (iii) granting related relief. The Debtors filed a Notice of Change of Bid Deadline, Auction Date and Related Deadlines and Notice of Location of Auction Sale on January 11, 2019 (Doc. 357). At the conclusion of the Auction, the Debtors designated HTM USA HOLDINGS, INC. ( HTM ) as the successful bidder for certain assets. The Debtors and HTM subsequently advised the Court that substantial and material disputes had arisen between the Debtors and HTM, and that the Debtors intended to submit alternative bids by a group of bidders who actively participated at the Auction and submitted four combined, but not joint, bids for certain assets (the Original Tiger Group ) for consideration by the Court. The Original Tiger Group consisted of Tiger Capital Group, LLC ( Tiger ), Ideal Bike Corporation ( Ideal ), Advanced Holdings Co., Ltd. ( Advanced Holdings ), AMain.com, Inc. ( AMain ), and K&B Investment Corporation ( K&B ). Prior to the Sale Hearing, the Debtors filed copies of (i) the Asset Purchase Agreement of BikeCo, LLC ( BikeCo ), 1 to acquire all of the BikeCo Acquired Assets, including Acquired Intellectual Property of the Debtors associated with the Debtors Wholesale Business, as described more fully therein excluding those assets being purchased by K&B and AMain (the BikeCo Acquired Assets ), (ii) the Asset Purchase Agreement of K&B, to acquire all of the Debtors right, title and interest in real property known as (a) 1940 Dutton Road, Philadelphia, 1 BikeCo is wholly owned by Tiger and Advanced Holdings. 2

3 Case Doc 505 Filed 02/06/19 Page 3 of 31 Pennsylvania and (b) 144 Old Lystra Road, Chapel Hill, Chatham County, North Carolina, as described more fully therein (the K&B Acquired Assets ), (iii) the Asset Purchase Agreement of AMain to acquire the AMain Acquired Assets, consisting of the Debtors assets associated with the Debtors Nashbar and Performance brands and related customer lists and data, as described more fully therein (the AMain Acquired Assets and together with the BikeCo Acquired Assets and the K&B Acquired Assets, the Acquired Assets ); 2 and (iv) the amended Asset Purchase Agreement of HTM (ECF No. 460) and the Addendum thereto (ECF No. 476) (together, the Final HTM Asset Purchase Agreement ), consisting of all the Acquired Assets. At the Sale Hearing the Debtors reported that appropriate notice was provided to parties in interest, to the extent and in the manner required by the Bidding Procedures Order, and that members of the Tiger Group and HTM had submitted revised Asset Purchase Agreements and responses that were filed on the docket prior to the Sale Hearing to increase their respective purchase prices and address certain concerns raised by the Debtors and the Consultation Parties. At the Sale Hearing the Debtors requested an opportunity to solicit best and final bids from the respective bidders by sealed bids, and after evaluation of such final bids reported to the Court that members of the Tiger Group collectively submitted the highest and best offers for the Acquired Assets identified in their respective Asset Purchase Agreements, as summarized below, and should be designated (collectively) as the Successful Bidders: BikeCo $16,148,000 AMain $1,245,000 K&B, NC real property $3,625,000 2 BikeCo, K&B, and AMain shall be referred to herein as the Tiger Group. 3

4 Case Doc 505 Filed 02/06/19 Page 4 of 31 K&B, PA real property $2,000,000 Total $23,018,000 The Debtors also reported that HTM submitted the second highest and best offer for the Acquired Assets identified in its Asset Purchase Agreement in the amount of $21,800,000 (plus up to $500,000 in reimbursement for any topping fee approved by the Court) and should be designated as the Backup Bidder. The Court conducted a preliminary sale hearing on January 22, 2019 and the Sale Hearing on February 1, 2019, at which time all interested parties were offered an opportunity to be heard with respect to the proposed asset sales to BikeCo, K&B and AMain, including the Transactions (as defined below). BikeCo s final Asset Purchase Agreement (Doc. 502, the BikeCo Asset Purchase Agreement or BikeCo s APA ), K&B s final Asset Purchase Agreements (Doc. 503, the K&B Asset Purchase Agreements or K&B s APAs ) and the AMain final Asset Purchase Agreement (Doc. 501, the AMain Asset Purchase Agreement or AMain s APA ) are incorporated by reference. The Debtors have agreed, among other things, (i) to sell the BikeCo Acquired Assets to BikeCo, including any Assumed Contracts that may be assumed and assigned to BikeCo or its designee at a later date subject to approval by the Court after further notice and hearing, all on the terms and conditions set forth in BikeCo s APA (the BikeCo Transaction ), (ii) to sell the K&B Acquired Assets to K&B, all on the terms and conditions set forth in K&B s APAs (the K&B Transaction ), and (iii) to sell the AMain Acquired Assets to AMain, all on the terms and conditions set forth in AMain s APA (the AMain Transaction ). 4

5 Case Doc 505 Filed 02/06/19 Page 5 of 31 The Court reviewed and further considered (i) the Motion, (ii) BikeCo s APA, (iii) K&B s APAs, (iv) AMain s APA, (v) objections filed by parties in interest, and (vi) objections filed or asserted at the Sale Hearing by HTM. Based upon the matters set forth in the Motion, and after due consideration of the arguments and representations of counsel, the evidence proffered or presented at the Sale Hearing, and upon the record of the Sale Hearing and these chapter 11 cases, good cause appearing, it is hereby FOUND AND DETERMINED THAT: A. Fed. R. Bankr. P The findings and conclusions set forth in the Bidding Procedures Order and on the record at the sale hearings are incorporated herein by reference. The findings and conclusions set forth herein and, on the record, constitute the Court s findings of fact and conclusions of law pursuant to Bankruptcy Rule 7052 made applicable to this proceeding pursuant to Bankruptcy Rule To the extent any of the following findings of fact constitute conclusions of law, they are adopted as such. To the extent any of the following conclusions of law constitute findings of fact, they are adopted as such. Any undefined capitalized term contained herein shall have the meaning ascribed to such term in the respective Asset Purchase Agreement. B. Jurisdiction and Venue. This Court has jurisdiction over this matter pursuant to 28 U.S.C Under 11 U. S.C. 157(a), the United States District Court for the Middle District of North Carolina has referred this case and this proceeding to this Court by its Local Rule This matter is a statutorily and constitutionally core matter in which this Court may enter final orders under 28 U.S.C. 157(b). Venue is proper pursuant to 28 U.S.C and

6 Case Doc 505 Filed 02/06/19 Page 6 of 31 C. Statutory and Rule Predicates. The statutory and other legal predicates for the relief sought in the Motion are sections 105(a), 363 and 365 of the Bankruptcy Code, and Bankruptcy Rules 2002, 6004, 6006, 9007 and D. Notice and Opportunity to Object. Actual written notice of, and a fair and reasonable opportunity to object to and to be heard with respect to the Motion, the Transactions, the sale of the respective Acquired Assets free and clear of any Encumbrances, and the relief requested in the Sale Motion has been given, as required by the Bankruptcy Code and the Bankruptcy Rules, to all persons entitled to notice pursuant to the Bidding Procedures, including, but not limited to, the following: (i) all parties who have requested notice in these chapter 11 cases pursuant to Bankruptcy Rule 2002, (ii) all applicable federal, state, and local taxing and regulatory authorities, and (iii) all of the Debtors known creditors and parties in interest. E. Final Order. This Sale Order constitutes a final order within the meaning of 28 U.S.C. 158(a). F. Sound Business Purpose. The Debtors have demonstrated good, sufficient, and sound business purposes and justifications for approval of BikeCo s APA, K&B s APAs and AMain s APA and the respective Transactions, and in entering into (i) the respective Asset Purchase Agreements, (ii) the BikeCo Transition Services Agreement (as defined in BikeCo s APA, the Transition Services Agreement ), and (iii) any other documents required to transfer the BikeCo Acquired Assets to BikeCo, the K&B Acquired Assets to K&B, and the AMain Acquired Assets to AMain (respectively, the Related Agreements ). The Debtors entry into and collective performance under the respective Asset Purchase Agreements and Related Agreements (i) are the result of due deliberation by the Debtors and consultation with their advisors and the Consultation Parties and constitute a sound and reasonable exercise of the 6

7 Case Doc 505 Filed 02/06/19 Page 7 of 31 Debtors business judgment consistent with their fiduciary duties, (ii) provide value to and are beneficial to the Debtors estates, and are in the best interests of the Debtors and their stakeholders, and (iii) are reasonable and appropriate under the circumstances. Business justifications for the respective Transactions include, but are not limited to, the following: (i) the Asset Purchase Agreements collectively constitute the highest and best offer received for the Acquired Assets; (ii) the Asset Purchase Agreements collectively present the best opportunity to maximize the value of the Acquired Assets and avoid decline and devaluation of the Acquired Assets; (iii) unless the Transactions contemplated by the Asset Purchase Agreements are concluded expeditiously, as provided for pursuant to the respective Asset Purchase Agreements, recoveries to creditors may be materially diminished; and (iv) the value of the Debtors estates will be maximized through the sale of the Acquired Assets pursuant to the respective Asset Purchase Agreements. G. Compliance with Procedures. The Debtors and the Tiger Group, BikeCo, K&B and AMain complied with the Bidding Procedures in all material respects. H. Highest and Best Value. (i) The Debtors and their advisors engaged in a robust and extensive marketing and sale process for the Acquired Assets, (ii) the Debtors in consultation with their advisors and the Consultation Parties conducted a fair and open sale process, (iii) the sale process and the Auction were non-collusive, duly noticed and provided a full, fair and reasonable opportunity for any entity to make an offer to purchase any or all of the Acquired Assets, and (iv) the process conducted by the Debtors in consultation with their advisors and the Consultation Parties pursuant to the Bidding Procedures obtained the highest and best value for the Acquired Assets for the Debtors and their estates under the circumstances. For the reasons set forth herein and on the record at the sale hearing, the Debtors designation of 7

8 Case Doc 505 Filed 02/06/19 Page 8 of 31 HTM as the successful bidder for certain assets at the Auction is hereby rescinded and is null and void, HTM is designated as the Backup Bidder, and all of HTM s and the Debtors rights and obligations with respect to HTM s bid and its Asset Purchase Agreement are preserved. The Debtors designation of the collective bids of BikeCo, K&B, and AMain as the highest and best bids for the assets reflected in their respective Asset Purchase Agreements is hereby approved, and BikeCo, K&B, and AMain are each designated as the Successful Bidders for their respective Acquired Assets. I. Fair Consideration. The consideration to be paid by BikeCo, K&B, and AMain under their respective Asset Purchase Agreements (i) constitutes fair and reasonable consideration for their respective Acquired Assets, (ii) is the highest and best offer for their respective Acquired Assets under the circumstances, (iii) will provide a greater recovery for the Debtors estates and creditors than would be provided by any other practically available alternative, and (iv) constitutes reasonably equivalent value and fair consideration under the Bankruptcy Code and other laws of the United States, any state, territory, possession or District of Columbia or any other applicable jurisdiction with laws substantially similar to the foregoing. J. No Successor or Other Derivative Liability. In each instance, BikeCo, K&B, and AMain will not be a mere continuation and none is holding itself out as a mere continuation of the Debtors or their estates, and there is no continuity between BikeCo, K&B or AMain, collectively or respectively, and the Debtors. The respective Transactions do not amount to a consolidation, merger or de facto merger of BikeCo, K&B or AMain with any or all of the Debtors. K. Good Faith; No Collusion. The Debtors in consultation with their advisors and the Consultation Parties and with BikeCo, K&B and AMain and their respective counsel and 8

9 Case Doc 505 Filed 02/06/19 Page 9 of 31 advisors, have negotiated, proposed and entered into the respective Asset Purchase Agreements and the Transactions contemplated therein in good faith, without collusion and from arm slength bargaining positions. In each instance, BikeCo, K&B and AMain is a good faith purchaser and is acting in good faith within the meaning of section 363(m) of the Bankruptcy Code and, as such, is entitled to all the protections afforded thereby. BikeCo, K&B and AMain, respectively, have proceeded in good faith in all respects in that, among other things, (i) each of BikeCo, K&B and AMain has recognized that the Debtors are free to deal with any other party in interest in acquiring the respective Acquired Assets, and (ii) all payments to be made by each of BikeCo, K&B and AMain and all other material agreements or arrangements entered into by each of BikeCo, K&B and AMain with the Debtors in connection with the respective Transactions have been disclosed and are appropriate. The sale price in respect of the BikeCo Acquired Assets, K&B Acquired Assets and AMain Acquired Assets, respectively, was not controlled by any agreement among potential purchasers and neither the Debtors nor any of BikeCo, K&B and AMain have engaged in collusion or any other conduct that would cause or permit the respective Asset Purchase Agreement to be avoided or costs and damages to be imposed under section 363(n) of the Bankruptcy Code. Accordingly, none of the BikeCo Asset Purchase Agreement, K&B Asset Purchase Agreements and AMain Asset Purchase Agreement nor the BikeCo, K&B and AMain Transactions may be avoided, and no party shall be entitled to damages or other recovery pursuant to section 363(n) of the Bankruptcy Code. In each instance, K&B and AMain is not an insider or affiliate of the Debtors, as those terms are defined in section 101 of the Bankruptcy Code, and no common identity of incorporators, directors, or controlling stockholders existed between each of K&B and AMain and the Debtors. BikeCo has the right to assign all or part of BikeCo s rights or obligations under BikeCo s APA to one or 9

10 Case Doc 505 Filed 02/06/19 Page 10 of 31 more Affiliates of BikeCo, or to Tiger, Advanced Holdings, Ideal or Fulltech Fiber Glass Corp., or any of their respective Affiliates. The Court is aware that Ideal and Advanced Holdings may be an insider with respect to certain of the Debtors. The Court finds that, notwithstanding Ideal and Advanced Holdings being part of the Original Tiger Group and Advanced Holdings being part of the Tiger Group, the Debtors in consultation with their advisors and the Consultation Parties conducted a fair and open sale process in a non-collusive manner which provided a full, fair and reasonable opportunity for any entity to make an offer to purchase the BikeCo Acquired Assets, and that the Purchase Price set forth in BikeCo s APA constitutes the highest and best value for the BikeCo Acquired Assets for the Debtors and their estates under the circumstances. L. Notice. As evidenced by the certificates of service filed with the Court: (i) due, proper, timely, adequate and sufficient notice of the Sale Motion, the Bidding Procedures Hearing, the Bid Procedures Order, the Sale Hearing, the Transaction and the other relief requested in the Sale Motion was provided by the Debtors; (ii) such notice was good, sufficient and appropriate under the particular circumstances and complied with the Bidding Procedures Order; and (iii) no other or further notice of the Sale Motion, the Transactions, the Sale Hearing or any of the relief requested in the Sale Motion is required. M. Assignment Notice. As evidenced by the certificates of service filed with the Court, and in accordance with the provisions of the Bidding Procedures Order, the Debtors have served, prior to the Sale Hearing, a general notice of the Debtor s possible intent to assume and assign executory contracts and unexpired leases and of the related proposed cure amount upon each non-debtor counterparty to the Assumed Contracts. BikeCo, K&B and AMain, respectively, are not seeking, nor do their respective Asset Purchase Agreements require, the assumption by the Debtors and assignment of any of the Debtors executory contracts or 10

11 Case Doc 505 Filed 02/06/19 Page 11 of 31 unexpired real property leases at the Closing. Pursuant to the terms of BikeCo s APA, from the Closing Date until thirty (30) days prior to the conclusion of the Transition Period (as defined in the Transition Agreement), BikeCo or its designee shall have the right to designate any Wholesale-Related Contracts or unexpired real property leases which have not previously been rejected for assumption by the Sellers and assignment to BikeCo or its designee. Upon such designation by BikeCo or its designee pursuant to an Assumption Notice, the Debtors shall take all actions reasonably necessary to seek the authority of this Court, subject to BikeCo or its designee demonstrating adequate assurance of future performance thereunder and the satisfaction of any Cure Costs (as defined in BikeCo s APA) relating thereto, to assume and assign to BikeCo or its designee pursuant to Section 365 of the Bankruptcy Code the contract(s) or lease(s) set forth in the applicable Assumption Notice. The Debtors will serve upon each nondebtor counterparty to such designated contracts and leases (the Designated Contracts ) notice of the intent to assume and assign the Designated Contracts to BikeCo or its designee (the Assignment Notice ) and provide an opportunity for objection, notice and further hearing upon any objection timely filed. The failure of this Court to approve the subsequent proposed assumption and assignment of any the contract(s) or lease(s) set forth in the applicable Assumption Notice will not constitute a breach of BikeCo s APA or reduction in the Purchase Price thereunder. All of the respective rights of the non-debtor counterparties to the Debtors executory contracts or unexpired real property leases arising under the Bankruptcy Code or prior orders of this Court, including without limitation to (i) seek relief from the automatic stay or otherwise move to compel the Debtors to assume or reject their respective contracts or leases, (ii) object to the proposed assumption and assignment of their respective contracts or leases on any grounds, and/or (iii) object to any motion by the Debtors to extend their time to assume or reject 11

12 Case Doc 505 Filed 02/06/19 Page 12 of 31 unexpired real property leases, are reserved and shall be unaffected by the terms of this Sale Order. For the removal of any doubt, the Assumption and Assignment Procedures; Contract Objections in the Bidding Procedures Order are hereby null and void and of no further effect, and all rights of counterparties under the contracts or leases and the Bankruptcy Code and nonbankruptcy law are preserved, and nothing in this Sale Order shall be construed to extend the time within which Debtors may assume or reject an unexpired lease of nonresidential real property under 11 U.S.C. 365(d)(4). N. Transfer of Acquired Assets Free and Clear; Satisfaction of Section 363(f) Standards. Except as otherwise set forth below or in the respective Asset Purchase Agreements (including, without limitation, any buyer s obligation to pay Cure Costs associated with any Assumed Contract), the Debtors may sell the Acquired Assets free and clear of all Encumbrances against the Debtors or the Acquired Assets, including, without limitation, any debts arising under or out of, in connection with, or in any way relating to, any acts or omissions, obligations, demands, guaranties, rights, contractual commitments, restrictions, product liability claims including design defect claims, warranty claims, antitrust claims, environmental liabilities, employee pension or benefit plan claims, multiemployer benefit plan claims, employee claims, age claims, disability claims, discrimination claims, workers compensation claims, unemployment claims, labor claims, retiree healthcare or life insurance claims or claims for taxes of or against the Debtors, and any derivative, vicarious, transferee or successor liability claims, rights or causes of action, whether in law or in equity, under any law, statute, rule or regulation of the United States, any state, territory, or possession thereof or the District of Columbia, and whether arising prior to or subsequent to the commencement of these chapter 11 cases, known or unknown, disclosed or undisclosed, direct or indirect, anticipated or unanticipated, asserted or 12

13 Case Doc 505 Filed 02/06/19 Page 13 of 31 unasserted, written or unwritten, filed or unfiled, scheduled or unscheduled, accrued or unaccrued, choate or inchoate, matured or unmatured, contingent or non-contingent, liquidated or unliquidated, and whether imposed by agreement, understanding, law, equity or otherwise, arising under or out of, in connection with, or in any way related to the Debtors, the Debtors interests in the Acquired Assets, the operation of the Debtors businesses before the Closing, or the transfer of the Debtors interests in the Acquired Assets, because, in each case, one or more of the standards set forth in section 363(f)(1)-(5) of the Bankruptcy Code have been satisfied. Except as specifically provided for herein, all persons having or asserting Encumbrances of any kind or nature whatsoever against the Debtors or the Acquired Assets shall be forever barred, estopped and permanently enjoined from pursuing or asserting such claims against BikeCo or its designee, K&B or AMain, or any of their respective assets, property, affiliates, successors, assigns, or the Acquired Assets. O. Without limiting the foregoing, the following Encumbrances are being transferred to proceeds of sale for the reasons summarized below: 1. Actual consent: (a) (b) Wells Fargo Bank, National Association, as Agent m2 Lease Funds, LLC Intercreditor Agreement: 2. Actual and/or Contractual consent pursuant to the Amended and Restated (a) York Street Mezzanine Partners II, L.P., A. Garry Snook and Sharon M. Snook, Howard Heavin and Diane Heavin, and Peter A. Roy (b) Advanced Holdings Co. Ltd. 13

14 Case Doc 505 Filed 02/06/19 Page 14 of 31 (c) Ideal Bike Corporation/Econotrade Limited 3. Bona fide dispute: (a) (b) (c) (d) Expeditors International of Washington, Inc. Marin Mountain Bikes Antares Capital LP Cycle Support West, Inc. and David Menahem 4. To the extent that Amer Sports Winter & Outdoor Company ( Amer Sports ) does not consent to the sale of the BikeCo Acquired Assets free and clear of its alleged lien and security interest, and subject to Paragraph 11 of this Order, the BikeCo Acquired Assets shall be sold, transferred and conveyed subject to such alleged lien and security interest, and BikeCo may credit against the Purchase Price at Closing the sum of $83,094.94, representing the Amer Sports filed proof of claim (Claim #76). 5. With respect to the Debtors Leases or agreements with the following counterparties (i) Raymond Leasing Corporation, (ii) Hewlett-Packard Financial Services Company, and (iii) Ikon Financial Svcs. (collectively, the Special Lease Counterparties ), (a) to the extent any of the agreements of the Special Lease Counterparties are found by this Court to constitute true leases, such Agreements shall not constitute Acquired Assets, and shall be treated as Designated Contracts which require the Debtors to follow the Assignment Notice procedures set forth in paragraph M above before they are assumed and assigned by the Debtors to BikeCo or its designee; (b) to the extent that any of the agreements of the Special Lease Counterparties are found by this Court to be disguised financing agreements 14

15 Case Doc 505 Filed 02/06/19 Page 15 of 31 rather than true leases, and the Special Lease Counterparties to such financing agreements have properly perfected their security interests in the assets that are the subject of such financing agreements, such assets shall not constitute Acquired Assets; (c) to the extent that any of the agreements of the Special Lease Counterparties are found by this Court to be disguised financing agreements rather than true leases, and the Court finds that the Special Lease Counterparties to such financing agreements have not properly perfected their security interests in the assets that are the subject of such financing agreements, such assets shall constitute BikeCo Acquired Assets; and (d) BikeCo shall have thirty (30) days from the date of the BikeCo Closing to file an appropriate paper seeking a determination by this Court that any agreement of the Special Lease Counterparties is a disguised financing agreement rather than a true lease, and that the Special Lease Counterparties to such financing agreements do not have a properly perfected security interest in the assets that are the subject of such financing agreements. If BikeCo fails to file such appropriate paper with the thirty (30) day period, the assets that are the subject of such financing agreement shall not constitute Acquired Assets. P. A sale of the Acquired Assets other than one free and clear of all Encumbrances would adversely impact the Debtors, the estates and creditors, and would yield substantially less value for the Debtors estates, with less certainty than the Transactions. Q. Validity of the Transfer. As of the Closing, the transfers of the Acquired Assets will be legal, valid and effective transfers of the Acquired Assets, and will vest the respective 15

16 Case Doc 505 Filed 02/06/19 Page 16 of 31 buyers with all right, title and interest of the Debtors in and to the Acquired Assets, and except as otherwise set forth herein and in the respective Asset Purchase Agreements, free and clear of all Encumbrances. The consummation of the Transactions is legal, valid and properly authorized under all applicable provisions of the Bankruptcy Code, including, without limitation, sections 105(a), 363(b), 363(f), 363(m) and 365 of the Bankruptcy Code and all of the applicable requirements of the Bankruptcy Code have been complied with in respect of the Transactions. R. The Debtors (i) have full corporate power and authority to execute the Asset Purchase Agreements and all other documents contemplated thereby, and the Transactions have been duly and validly authorized by all necessary corporate action of the Debtors, (ii) have all of the corporate power and authority necessary to consummate the transactions contemplated by the Asset Purchase Agreements, and (iii) upon entry of this Sale Order, other than any consents identified in the respective Asset Purchase Agreements, need no consent or approval from any other person to consummate the Transactions. S. The Acquired Assets constitute property of the Debtors estates and good title is vested in the Debtors estates within the meaning of section 541(a) of the Bankruptcy Code. The Debtors are the sole and rightful owners of the Acquired Assets, and no other person has any ownership right, title, or interests therein. T. The Asset Purchase Agreements are valid and binding contracts between the Debtors and BikeCo, K&B and AMain, respectively, and shall be enforceable pursuant to their terms. The Asset Purchase Agreements were not entered into for the purpose of hindering, delaying or defrauding creditors under the Bankruptcy Code or under laws of the United States, any state, territory, possession or the District of Columbia. The Asset Purchase Agreements and the Transactions, and the consummation thereof, shall be specifically enforceable against and 16

17 Case Doc 505 Filed 02/06/19 Page 17 of 31 binding upon (without posting any bond) the Debtors, any chapter 7 or chapter 11 trustee appointed in these chapter 11 cases, and BikeCo, K&B and AMain, respectively, and shall not be subject to rejection or avoidance by any of the foregoing parties or any other person. U. Waiver of Bankruptcy Rules 6004(h) and 6006(d). The sale of the Acquired Assets must be approved and consummated promptly in order to preserve the value of the Acquired Assets. The Debtors have demonstrated compelling circumstances and a good, sufficient, and sound business purpose and justification for the immediate approval and consummation of the Transactions as contemplated by the Asset Purchase Agreements. Accordingly, there is sufficient cause to lift the stay contemplated by Bankruptcy Rules 6004(h) and 6006(d) with regards to the transactions contemplated by this Sale Order. NOW THEREFORE, IT IS ORDERED THAT: 1. Motion is Granted. The Sale Motion and the relief requested therein is granted and approved as set forth herein. All objections to the Sale Motion, the relief requested therein or to the bids submitted by the members of the Tiger Group that have not been withdrawn, waived, or settled by announcement to the Court during the Sale Hearing or by stipulation filed with the Court or as incorporated herein, including any and all reservations of rights included in such objections or otherwise, are hereby denied and overruled on the merits with prejudice, including but not limited to any objections asserted by HTM. 2. Notice. Notice of the Sale Motion, Transactions, and Sale Hearing was fair and equitable under the circumstances and complied in all respects with section 102(1) of the Bankruptcy Code and Bankruptcy Rules 2002, 6004 and Fair Purchase Price. The consideration provided to the Debtors under the Asset Purchase Agreements is fair and reasonable and constitutes reasonable equivalent value, fair 17

18 Case Doc 505 Filed 02/06/19 Page 18 of 31 consideration and fair value under the Bankruptcy Code, the Uniform Fraudulent Transfer Act, the Uniform Voidable Transactions Act, the Uniform Fraudulent Conveyance Act and any other applicable laws of the United States, any state, territory or possession or the District of Columbia. 4. Approval of the Asset Purchase Agreements. The Asset Purchase Agreements, the Transition Services Agreement, the Related Agreements, and the Transactions contemplated therein (including but not limited to all ancillary agreements contemplated thereby) and all of the terms and conditions thereof, subject to the terms of this Sale Order, are hereby approved. The failure specifically to include any particular provision of the Asset Purchase Agreements in this Sale Order shall not diminish or impair the effectiveness of such provision, it being the intent of the Court that the Asset Purchase Agreements (including, but not limited to, all ancillary agreements contemplated thereby) are authorized and approved in their entirety. 5. Consummation of Transactions. Pursuant to sections 105 and 363 of the Bankruptcy Code, the Debtors, as well as their officers, employees and agents, are authorized and directed to execute, deliver and perform their obligations under and comply with the terms of the Asset Purchase Agreements and the Related Agreements and to consummate the Transactions, pursuant to and in accordance with the terms and conditions of the Asset Purchase Agreements and this Sale Order. 6. The Debtors and their respective officers, employees and agents, are authorized and directed to execute and deliver, and authorized to perform under, consummate and implement all additional instruments and documents that may be reasonably necessary or desirable to implement the Asset Purchase Agreements and Related Agreements and to take all further actions as may be (a) reasonably requested for the purpose of assigning, transferring, 18

19 Case Doc 505 Filed 02/06/19 Page 19 of 31 granting, conveying and conferring, or reducing to possession, the Acquired Assets or (b) necessary or appropriate to the performance of the obligations contemplated by the Asset Purchase Agreements, all without further order of the Court. 7. All persons or entities that are currently in possession or control of some or all of the Acquired Assets are hereby directed to surrender possession and control of such Acquired Assets to BikeCo, K&B or AMain, as applicable, as of the Closing. 8. As adequate protection for the claims of the Local Texas Tax Authorities (Bexar County, Dallas County, Harris County and Tarrant County), the Debtors will segregate proceeds in the amount of $100,000 from the proceeds of the non-ordinary course sale of any of the Debtors assets located in the state of Texas. The liens asserted by the Local Texas Tax Authorities shall attach to these segregated proceeds to the same extent and with the same priority as the liens the Local Texas Tax Authorities assert against such assets of the Debtors. The segregated funds shall be maintained solely for the purpose of providing adequate protection for the Local Texas Tax Authorities prior to the distribution of any proceeds to any other creditor and shall constitute neither the allowance of the claims of the Local Texas Tax Authorities, nor a floor or cap on the amounts the Local Texas Tax Authorities may be entitled to receive. All parties rights to object to the priority, validity, amount and extent of the claims and liens asserted by the Local Texas Tax Authorities are fully preserved. The segregated funds may be distributed upon agreement between the Local Texas Tax Authorities and the Debtors or by subsequent order of the Court, duly noticed to the Local Texas Tax Authorities. 9. In connection with the Closing of the transactions provided for under the respective Asset Purchase Agreements and this Order, the Debtors are authorized and directed to pay Wells Fargo Bank, National Association, as administrative agent and collateral agent 19

20 Case Doc 505 Filed 02/06/19 Page 20 of 31 ( Prepetition ABL Agent ), for the benefit of itself and the Prepetition ABL Lenders (as such term is defined in that certain Final Order (I) Authorizing Use Of Cash Collateral, (II) Granting Adequate Protection To Prepetition ABL Lenders, (III) Scheduling A Further Hearing, And (IV) Granting Related Relief entered February 5, 2019 [Doc. 498] (the Final Cash Collateral Order ), the net proceeds of the sale as provided under the Asset Purchase Agreements (including any good faith deposit(s) previously received by the Debtors) as and to the extent provided in the Final Cash Collateral Order, which payment shall be in partial satisfaction of the Obligations under the Prepetition ABL Financing Documents (as defined in the Final Cash Collateral Order). In addition, upon the Closing of the transactions provided for under the Asset Purchase Agreements and this Order, the Debtors are authorized and directed to deliver to the Prepetition ABL Agent, for the benefit of the L/C Issuer (as defined in the Prepetition ABL Financing Documents), cash or deposit account balances in an amount equal to 105% of the Outstanding Amount of all L/C Obligations (each as defined in the Prepetition ABL Financing Documents) as cash collateral for the L/C Obligations (hereinafter, L/C Cash Collateral ) as and to the extent provided in the Final Cash Collateral Order; and the automatic stay under Section 362(a) of the Bankruptcy Code is hereby modified to enable the Prepetition ABL Agent and/or the L/C Issuer, as their interests may appear, to realize upon and apply the L/C Cash Collateral in satisfaction of Debtors Obligations and L/C Obligations, as applicable and as and to the extent provided in the Final Cash Collateral Order, under, inter alia, the Prepetition ABL Financing Documents with respect to any outstanding and undrawn Letters of Credit and associated L/C Obligations. Net proceeds in excess of the payments and reserves necessary to satisfy the Obligations in full shall be retained by the Debtors, and no other payment of claims from net proceeds of the sale shall be made unless otherwise authorized by this Sale 20

21 Case Doc 505 Filed 02/06/19 Page 21 of 31 Order, the Final Cash Collateral Order, or subsequent order of the Court. Nothing in this Sale Order nor the payments made to the Prepetition ABL Agent in accordance with this Sale Order shall act as a determination of an allocation of assets amongst or claims against the Debtors. The Debtors reserve their respective rights to determine an appropriate allocation of assets amongst and claims against the Debtors and a reconciliation of inter-debtor claims as a result of payments made by the Debtors in accordance with this Sale Order and the Final Cash Collateral Order, and the Committee and the other Prepetition Secured Parties (as defined in the Final Cash Collateral Order) reserve their respective rights to challenge any such allocation or reconciliation proposed by the Debtors. 10. Executory Contracts and Unexpired Leases. All of the respective rights of the non-debtor counterparties to the Debtors executory contracts or unexpired real property leases arising under the Bankruptcy Code or prior orders of this Court, including without limitation to (i) seek relief from the automatic stay or otherwise move to compel the Debtors to assume or reject their respective contracts or leases, (ii) object to the proposed assumption and assignment of their respective contracts or leases, and/or (iii) object to any motion by the Debtors to extend their time to assume or reject unexpired real property leases, are fully reserved and shall be unaffected by the terms of this Sale Order. 11. Transfer of Acquired Assets Free and Clear of Encumbrances. Pursuant to sections 105(a), 363(b) and 363(f) of the Bankruptcy Code and except as specifically provided for herein, the Debtors are authorized to transfer the Acquired Assets in accordance with the terms of the Asset Purchase Agreements and this Sale Order to BikeCo or its designee, K&B or AMain, respectively, and upon the Closing such transfer shall: (a) be valid, legal, binding and effective; (b) vest such purchaser with all right, title and interest of the Debtors in the respective 21

22 Case Doc 505 Filed 02/06/19 Page 22 of 31 Acquired Assets; and (c) be free and clear of all Encumbrances in accordance with section 363(f) of the Bankruptcy Code, with all Encumbrances that represent interests in property to attach to the net proceeds of the Transactions, in the same amount and order of their priority, with the same validity, force and effect which they have against the Acquired Assets, and subject to any claims and defenses the Debtors may possess with respect thereto in each case immediately before the Closing; provided, however, to the extent that Amer Sports does not consent to the sale of the BikeCo Acquired Assets free and clear of its alleged lien and security interest, the BikeCo Acquired Assets shall be sold, transferred and conveyed subject to such alleged lien and security interest, and BikeCo may credit against the Purchase Price at Closing the sum of $83,094.94, representing the amount set forth in Amer Sports filed proof of claim (Claim #76) (the Amer Sports Deduction ); provided further, that if the Debtors (at their own cost) resolve the alleged lien and security interest of Amer Sports within thirty (30) days of the closing on BikeCo s APA, BikeCo will refund the Debtors the amount of the Amer Sports Deduction; provided further, that if the Debtors do not resolve the alleged lien and security interest of Amer Sports within thirty (30) days of the closing on BikeCo s APA, BikeCo may resolve such claim and lien in its sole discretion with Amer Sports and will not be obligated to refund to the Debtors any portion of the Amer Sports Deduction. Upon the resolution of the alleged claim and lien and security interest of Amer Sports (either through the Debtors or BikeCo), BikeCo shall inform Debtors of the terms of such resolution, such resolution shall be in full satisfaction of any secured claim asserted in Debtors bankruptcy cases, and BikeCo shall be authorized to file any and all lien releases necessary to release the alleged lien of Amer Sports through the same mechanism as provided in Paragraph 15 of this Order. Nothing herein shall be construed to 22

23 Case Doc 505 Filed 02/06/19 Page 23 of 31 relieve Amer Sports from crediting or amending or withdrawing its filed claim in any of Debtors bankruptcy cases with respect to any resolution of its claim and lien by BikeCo. 12. Notwithstanding anything to the contrary in the Asset Purchase Agreements, the Acquired Assets shall not include (i) the Debtors rights, title or interests to or arising under the License Agreement dated January 5, 2016, or as amended, between Trek Bicycle Corporation and Advanced Sports International, Inc., predecessor by merger of Advanced Sports, Inc., (ii) the Roubaix Acquired Assets as defined in the Asset Purchase Agreement between the Debtors and Specialized Bicycle Components, Inc., dated February 5, 2019 (Doc. 504, Exh. A), and (iii) subject to the provisions of Section O(5) above, Actions (as defined in BikeCo s APA) for or under (a) chapter 5 of the Bankruptcy Code and related state law claims, (b) credit card exchange claims, (c) breach of fiduciary duty claims, (d) claims arising prior to the commencement of the Bankruptcy Cases against insiders (as defined in 11 U.S.C. 101(31)) and their Affiliates of the Sellers, (e) lien challenges, (f) debt characterization claims, (g) equitable subordination claims and (h) claim disallowances, all of which shall constitute Excluded Assets under the Asset Purchase Agreements. 13. During the post-closing term when the Debtors continue to occupy the K&B Acquired Assets constituting the facility located at 144 Old Lystra Road, Chapel Hill, North Carolina pursuant to a transition services agreement, K&B or the Debtors, as appropriate, shall provide BikeCo with access to such facility in order to allow BikeCo (or the Debtors, for the benefit of BikeCo as part of the transition services) to operate (and, in BikeCo s discretion, remove) the Wholesale Business Assets (as defined in the BikeCo Asset Purchase Agreement) at such location. The Debtors, K&B and BikeCo agree that they will cooperate in good faith to allow such access, operation, and removal. 23

24 Case Doc 505 Filed 02/06/19 Page 24 of Except as otherwise provided herein and in the Asset Purchase Agreements, all persons (and their respective successors and assigns) holding Encumbrances against the Debtors or the Acquired Assets, are hereby forever barred, estopped and permanently enjoined from asserting or pursuing such Encumbrances against BikeCo or its designee, K&B or AMain, their respective affiliates, successors or assigns, or the Acquired Assets. Except to the extent expressly set forth in the Asset Purchase Agreements, all persons and entities, including, without limitation, all debt security holders, all equity security holders, the Debtors employees, officers and directors, or former employees, officers and directors, governmental, tax, regulatory or investigatory authorities of any sort, contract counterparties, licensees, lenders, parties to or beneficiaries under any benefit plan, trade and other creditors asserting or holding any Encumbrances of any kind and every kind whatsoever against, in or with respect to the Debtors, their businesses, or all or any part of the Acquired Assets (whether legal or equitable, secured or unsecured, matured or unmatured, contingent or non-contingent, senior or subordinated), arising under or out of, in connection with, or in any way relating to the Debtors, all or any part of the Acquired Assets, the operation of the businesses prior to the Closing Date, or the transfer of the Acquired Assets pursuant to the Asset Purchase Agreements and this Sale Order (including any rights or claims based on any successor or transferee liability), shall be forever barred, estopped, and permanently enjoined from asserting, prosecuting, or otherwise pursuing such Encumbrances, whether by payment, setoff, or otherwise, directly or indirectly, against BikeCo or its designee, K&B or AMain, or their respective affiliates, successors, or assigns thereof, or against the Acquired Assets. Following the Closing, no holder of any Encumbrances shall interfere with BikeCo or its designee, K&B or AMain, respectively, with respect to the title to or 24

25 Case Doc 505 Filed 02/06/19 Page 25 of 31 use and enjoyment of their respective Acquired Assets based on or related to any such Encumbrances or based on any action the Debtors may have taken or may take in the future. 15. If any person that has filed financing statements, mortgages, mechanic s liens, lis pendens or other documents or agreements evidencing Encumbrances against or in the Debtors or the Acquired Assets shall not have delivered to the Debtors prior to the Closing of the Transactions, in proper form for filing and executed by the appropriate parties, termination statements, instruments of satisfaction, release of all interests which the person has with respect to the Debtors or the Acquired Assets or otherwise, then with regard to the Acquired Assets that are purchased pursuant to the Asset Purchase Agreements and this Sale Order (a) the Debtors and BikeCo or its designee, K&B and AMain, as applicable, are hereby authorized and directed to execute and file such statements, instruments, releases, and other documents on behalf of the person with respect to the Acquired Assets and (b) BikeCo or its designee, K&B and AMain, respectively, are hereby authorized to file, register or otherwise record a certified copy of this Sale Order, which, once filed, registered or otherwise recorded, shall constitute conclusive evidence of the release of all Encumbrances against the Acquired Assets except as to the Encumbrance against the BikeCo Acquired Assets held by Amer Sports, which may only be released pursuant to this Paragraph following a resolution (either by the Debtors or BikeCo pursuant to Paragraph 11 of this Order) of the alleged lien and security interest of Amer Sports. This Sale Order is deemed to be in recordable form sufficient to be placed in the filing or recording system of each and every national, federal, state or local government agency, department or office. Each and every federal, state, and local governmental agency or department, including without limitation, filing agents and officers, recorders of mortgages, recorders of deeds, registrars of deeds, registrar of trademarks, register of domain names, administrator of social media accounts, administrative agencies, and all other persons and entities 25

26 Case Doc 505 Filed 02/06/19 Page 26 of 31 who may be required by operation of law, the duties of their office, or contract, to accept, file, register, or otherwise record or release any documents or instruments, or who may be required to report or insure any title or state of title in or to any lease, trademark, domain name, or intellectual property right, is hereby authorized and directed to accept any and all documents and instruments necessary and appropriate to consummate the transactions under the Asset Purchase Agreements, including all agreements entered into in connection therewith, and this Sale Order. 16. On the Closing Date, this Sale Order shall be considered and constitute for any and all purposes a full and complete general assignment, conveyance and transfer of the Acquired Assets acquired under the Asset Purchase Agreements or a bill of sale or assignment transferring good and marketable title and interest in all of the Acquired Assets to BikeCo or its designee, K&B or AMain, as applicable. 17. To the maximum extent available under applicable law and to the extent provided for under the Asset Purchase Agreements, BikeCo or its designee, K&B or AMain, as applicable, shall be authorized, as of the Closing Date, to operate under any license, permit, registration and governmental authorization or approval of the Debtor with respect to their respective Acquired Assets and, to the maximum extent available under applicable law and to the extent provided for under the Asset Purchase Agreements, all such licenses, permits, registration and governmental authorizations and approvals are deemed to have been transferred to BikeCo or its designee, K&B or AMain, as applicable, as of the Closing Date. 18. With respect to Personally Identifiable Information as defined in Bankruptcy Code Section 101(41A) in the possession of the Debtors (the Customer PII ), the Debtors shall transfer to AMain on the Closing Date and to BikeCo or its designee on such later date within the Transition Period as may be requested by BikeCo, the Customer PII which is part of their respective Acquired Assets, provided that in each instance, AMain and BikeCo or its designee, 26