Bauer Performance Sports Ltd.

Decision

Headnote

National Policy 11-203 Process for Exemptive Relief Applications in Multiple Jurisdictions -- Issuer granted relief from requirements under National Instrument 51-102 Continuous Disclosure Obligations to refer to restricted securities using prescribed restricted security term -- relief granted subject to conditions.

OSC Rule 56-501 Restricted Shares -- Exemption granted from requirements to refer to restricted securities using prescribed restricted security term -- relief subject to condition that specified alternate term is used -- exemption granted from requirements of section 3.2 of OSC Rule 56-501 in respect of future exempt distributions of certain restricted shares -- relief granted subject to conditions.

Applicable Legislative Provisions

National Instrument 51-102 Continuous Disclosure Obligations, s. 10.1.

OSC Rule 56-501 Restricted Shares, ss. 2.3,3.2.

March 9, 2011

IN THE MATTER OF

THE SECURITIES LEGISLATION OF

ONTARIO

(THE JURISDICTION)

AND

IN THE MATTER OF

THE PROCESS FOR EXEMPTIVE RELIEF

APPLICATIONS IN MULTIPLE JURISDICTIONS

AND

IN THE MATTER OF

BAUER PERFORMANCE SPORTS LTD.

(THE FILER)

DECISION

Background

The principal regulator in the Jurisdiction has received an application from the Filer for a decision under the securities legislation of the Jurisdiction of the principal regulator (the Legislation) that:

a) the requirements under Part 10 of National Instrument 51-102 Continuous Disclosure Obligations (NI 51-102) shall not apply to the common shares in the share capital of the Filer (the Common Shares) (the 51-102 Disclosure Exemption); and

b) the requirements under Parts 2 and 3 of OSC Rule 56-501 Restricted Shares (OSC Rule 56-501) shall not apply to the Filer's Common Shares (the 56-501 Exemption) (the 51-102 Disclosure Exemption and, together with 56-501 Exemption, the Exemption Sought).

Under the Process for Exemptive Relief Applications in Multiple Jurisdictions (for a passport application):

(i) the Ontario Securities Commission is the principal regulator for this Application, and

(ii) the Filer has provided notice that Section 4.7(1) of Multilateral Instrument 11-102 Passport System (MI 11-102) is intended to be relied upon in Alberta, British Columbia, Manitoba, New Brunswick, Newfoundland, the Northwest Territories, Nova Scotia, Nunavut, Prince Edward Island, Quebec, Saskatchewan and the Yukon Territory.

Interpretation

Terms defined in National Instrument 14-101 Definitions and MI 11-102 have the same meaning if used in this decision, unless otherwise defined.

Representations

This decision is based on the following facts represented by the Filer:

2. The Filer is a corporation incorporated under the British Columbia Business Corporations Act (BCBCA).

3. The registered office of the Filer is located at Suite 1700, 666 Burrard Street, Vancouver, British Columbia, V6C 2X8, and its headquarters are located at 150 Ocean Road, Greenland, New Hampshire, 03840, USA.

4. The Filer was incorporated to acquire and hold all of the shares of Kohlberg Sports Group Inc. (KSGI) in contemplation of the initial public offering of Common Shares (the IPO).

5. Immediately following the IPO, KSGI's existing securityholders will exchange all of their ordinary shares of KSGI for shares of the Filer pursuant to an acquisition agreement. Following completion of the acquisition, the Filer will own 100% of the ordinary shares of KSGI.

6. The Filer's authorized share capital consists of Common Shares and proportionate voting shares (PV Shares), (together, the Equity Shares). Immediately prior to the IPO, the Filer's share capital will consist of one issued and outstanding Common Share and at no other time have other shares of the Filer been issued and outstanding.

7. The Filer filed a preliminary prospectus, dated January 27, 2011 (the Preliminary Prospectus) with the securities regulatory authorities in each of the provinces and territories of Canada in connection with the IPO.

8. As described in the Preliminary Prospectus, upon closing of the IPO, the Filer's share capital will consist of:

(i) Common Shares; and

(ii) PV Shares.

9. The Filer is seeking the 51-102 Disclosure Exemption and the 56-501 Disclosure Exemption in respect of future references to the Common Shares of the Filer in prescribed continuous disclosure documents and offering documents.

10. The Common Shares may at any time, at the option of the holder, be converted into PV Shares on the following basis: 1,000 Common Shares for one PV Share.

11. The PV Shares may at any time, at the option of the holder, be converted into Common Shares on the following basis: one PV Share for 1,000 Common Shares.

12. In the event of the liquidation, dissolution or winding-up of the Filer, the holders of Equity Shares will be entitled to participate in the distribution of the remaining property and assets of the Filer on the following basis: each PV Share will be entitled to 1,000 times the amount distributed per Common Share.

13. Each Equity Share will be entitled to dividends if, as and when declared by the board of directors of the Filer, on the following basis, and otherwise without preference or distinction among or between such shares: each PV Share will be entitled to 1,000 times the amount paid or distributed per Common Share.

14. The Common Shares will carry one vote per share for all matters coming before the shareholders and the PV Shares will carry 1,000 votes per share for all matters coming before the shareholders.

15. The holders of Common Shares and PV Shares are entitled to receive notice of any meeting of shareholders of the Filer and to attend and vote at those meetings, except those meetings at which holders of a specific class of shares are entitled to vote separately as a class under the BCBCA.

16. The rights, privileges, conditions and restrictions attaching to any Equity Shares may be modified if the amendment is authorized by not less than 66 2/3% of the votes cast at a meeting of holders of Equity Shares duly held for that purpose. However, if the holders of PV Shares, as a class, or the holders of Common Shares, as a class, are to be affected in a manner materially different from such other class of Equity Shares, the amendment must, in addition, be authorized by not less than 66 2/3% of the votes cast at a meeting of the holders of the class of shares which is affected differently.

17. No subdivision or consolidation of the Common Shares or PV Shares may be carried out unless, at the same time, the Common Shares or PV Shares, as the case may be, are subdivided or consolidated in the same manner and on the same basis, so as to preserve the relative rights of the holders of each class of Equity Shares.

18. In addition to the conversion rights described above, if an offer (the Offer) is being made for PV Shares where: (a) by reason of applicable securities legislation or stock exchange requirements, the offer must be made to all holders of the class of PV Shares; and (b) no equivalent offer is made for the Common Shares, the holders of Common Shares have the right, at their option, to convert their Common Shares into PV Shares for the purpose of allowing the holders of the Common Shares to tender to that offer.

19. In the event that holders of Common Shares are entitled to convert their Common Shares into PV Shares in connection with an Offer, holders of an aggregate of Common Shares of less than 1,000 (an Odd Lot) will be entitled to convert all but not less than all of such Odd Lot of Common Shares into a fraction of one PV Share, at a conversion ratio equivalent to 1,000 to 1, provided that such conversion into a fractional PV Share will be solely for the purpose of tendering the fractional PV Share to the offer in question and that any fraction of a PV Share that is tendered to the Offer but that is not, for any reason, taken up and paid for by the offeror will automatically be reconverted into the Common Shares that existed prior to such conversion.

20. Pursuant to NI 51-102, a "restricted security" means an equity security of a reporting issuer if any of the following apply: (a) there is another class of securities of the reporting issuer that, to a reasonable person, appears to carry a greater number of votes per security relative to the equity security; (b) the conditions of the class of equity securities, the conditions attached to another class of securities of the reporting issuer, or the reporting issuer's constating documents have provisions that nullify or, to a reasonable person appear to significantly restrict the voting rights of the equity securities; or (c) the reporting issuer has issued another class of equity securities that, to a reasonable person, appears to entitle the owners of securities of that other class to participate in the earnings or assets of the reporting issuer to a greater extent, on a per security basis, than the owners of the first class of equity securities.

21. Part 10 of NI 51-102 requires a reporting issuer that has outstanding restricted securities, or securities that are directly or indirectly convertible into or exercisable or exchangeable for restricted securities or securities that will, when issued, result in an existing class of outstanding securities being considered restricted securities, to provide specific disclosure with respect to such securities in its information circular, a document required by NI 51-102 to be delivered upon request by a reporting issuer to any of its securityholders, an annual information form prepared by the issuer, as well as in any other document that it sends to its securityholders.

22. Subsection 2.2 of OSC Rule 56-501 requires dealer and adviser documentation to include the appropriate restricted share term if restricted shares and the appropriate restricted share term or a code reference to restricted shares or the appropriate restricted share term are included in a trading record published by The Toronto Stock Exchange (TSX) or other exchange listed in Rule 56-501 or a trade reporting and quotation system operated by The Canadian Dealing Network Inc.

23. Subsection 2.3 of OSC Rule 56-501 requires that a rights offering or offering memorandum for a stock distribution prepared for a reporting issuer comply with certain requirements including, among others, the restricted shares may not be referred to by a term or a defined term that includes "common", "preference" or "preferred" and that such shares shall be referred to using a term or a defined term that includes the appropriate restricted share term.

24. Pursuant to subsection 4.2 of OSC Rule 56-501, the Director may determine that the Common Shares are exempt from the requirements of subsection 2.2 of OSC Rule 56-501 with respect to dealer and adviser documentation and that references to Common Shares in all applicable disclosure documentation are exempt from the requirements of subsection 2.3 of OSC Rule 56-501.

25. Subsection 3.2 of OSC Rule 56-501 provides that the prospectus exemptions under Ontario securities law are not available for a stock distribution of securities of a reporting issuer or an issuer if the issuer will become a reporting issuer as a result of the stock distribution unless either the stock distribution received minority approval of shareholders or all of the conditions set out in subsection 3.2(2) are satisfied and the information circular relating to the shareholders' meeting held to obtain such minority approval for the stock distribution included prescribed disclosure. Pursuant to subsection 4.2 of OSC Rule 56-501, the Director may determine that the Filer is exempt from Part 3 of OSC Rule 56-501.

26. Absent the Exemption Sought, the Filer will be required to provide specific disclosure with respect to its securities in an information circular, a document required by NI 51-102 to be delivered upon request by the Filer to any of its securityholders, an annual information form and any other document that it sends to its securityholders, including an offering document as referred to in OSC Rule 56-501, which disclosure may be confusing and misleading to market participants in light of the terms and conditions of the Equity Shares.

27. The Filer made an application to the TSX for a decision that Common Shares are exempt from Section 624 -- Restricted Securities of the TSX Company Manual and confirmation that it may refer to the Common Shares as common shares.

28. The TSX advised on January 19, 2011 that they will permit the Filer to designate the Common Shares of the Filer as common shares.

Decision

The principal regulator is satisfied that the decision meets the test set out in the Legislation for the principal regulator to make the decision.

The decision of the principal regulator under the Legislation is that the Exemption Sought is granted for the Filer's Common Shares for so long as:

(a) the Filer has no restricted securities (as defined in subsection 1.1(1) of NI 51-102) issued and outstanding, other than the Equity Shares; and

(b) holders' rights under the Equity Shares continue to be as described in representations 10 through 19, above.

"Jo-Anne Matear"
Assistant Manager, Corporate Finance
Ontario Securities Commission