Form Of Hamilton Stock Purchase Agreement

AGREEMENT


This Agreement (the "Agreement") is entered into as of August 24, 1992 by and between Columbia Sportswear Holdings Limited, a corporation organized under the laws of the Province of Ontario, Canada ("Columbia Holdings"), Columbia Sportswear Canada Limited, a corporation organized under the laws of the Province of Ontario, Canada and a wholly owned subsidiary of Columbia Holdings ("Columbia Canada") and Douglas Hamilton ("Hamilton") and Doug Hamilton in trust for Elizabeth K. Hamilton (together, the "Hamiltons").


Recitals


1. The Hamiltons own 25 percent of the issued and outstanding common stock of Canada-Trans Limited, a corporation organized under the laws of the Province of Ontario, Canada ("Canada-Trans").


2. Pursuant to a stock purchase agreement dated as of August 20, 1992 among Canada-Trans, Columbia Canada and all of the shareholders of Canada-Trans (the "Purchase Agreement"), Canada-Trans, Columbia Canada and the shareholders of Canada-Trans have agreed that (a) Columbia Canada will acquire all of the issued and outstanding shares of Canada-Trans' capital stock in exchange for cash, notes and, in the case of the shares of Canada- Trans common stock held by the Hamiltons, shares of the common stock of Columbia Canada, (b) immediately after Columbia Canada's acquisition of the stock of Canada-Trans, Columbia Canada and Canada-Trans will be amalgamated and the Hamiltons will hold 2,500 shares of the common stock of the amalgamated company ("Successor"), constituting 25 percent of the outstanding capital stock of Successor, and (c) upon the terms and conditions provided herein, Columbia Holdings shall purchase from the Hamiltons all of their shares of Successor's stock (the "Hamilton Shares").


Agreement


In consideration of the mutual covenants and agreements set forth below and in the Purchase Agreement and other good and valuable consideration, the parties agree as follows:


1. AGREEMENT TO PURCHASE SHARES OF SUCCESSOR


Subject to the following paragraph, Columbia Holdings agrees to purchase, and the Hamiltons agree to sell to Columbia Holdings, the Hamilton Shares on April 30, 1996. The purchase price for the Hamilton Shares shall be determined as follows:


-- -- -- -- | C$749,750 x x | + |C$250,000 x y | | ---------- | ----------- | | C$4,000,00 | | C$4,000,000 | -- -- -- --


Where x = the lesser of (1) the Cumulative EBT (as defined below) and (2) C$4,000,000 and y = the lesser of (1) the amount, if any, by which the Cumulative EBT exceeds C$4,000,000 and (2) $4,000,000.


In the event of Hamilton's death, permanent disability or termination of employment by Successor without cause, Columbia Holdings agrees to purchase, and the Hamiltons agree to sell to Columbia Holdings, the Hamilton Shares for a purchase price of the greater of (a) C$750,000 or (b) the purchase price as determined in accordance with the formula above. Columbia Holdings shall pay the Hamiltons C$750,000 in a lump sum within 90 days after the date of death, permanent disability or termination without


cause and the remaining portion of the purchase price, if any, shall be paid on April 30, 1996.


For purposes of this Agreement, "cause" shall mean: (a) Hamilton's gross dereliction of his duties; (b) theft or misappropriation of any property of Successor by Hamilton; (c) conviction of Hamilton of a felony or of any crime involving dishonesty or moral turpitude which might reasonably be expected to adversely affect the business, reputation or business relationships of Successor; or (d) violation by Hamilton of any of the provisions of this Agreement.


For purposes of this Agreement, Cumulative EBT shall mean the sum of Earnings Before Taxes for each of Canada-Trans' and Successor's calendar years 1992 through 1995. Earnings Before Taxes shall mean Canada- Trans' and Successor's net income before taxes as shown on audited financial statements prepared for Canada-Trans and Successor with respect to the calendar year then ended and in accordance with generally accepted Canadian accounting principles and subject to the following adjustments:


a. The parties acknowledge that in the past the Gross Margin to Columbia Sportswear Company, an affiliate of Columbia Holdings and Columbia Canada ("Columbia"), on merchandise sold to Canada-Trans, Successor's predecessor, has been consistent with the Gross Margin on merchandise sold to Columbia's other foreign distributors and that, based on a number of factors including market conditions, such margins change from time to time. The parties further acknowledge that Columbia's Gross Margin on products sold to its other foreign distributors is currently higher than the Gross Margin on merchandise sold to the Company. Nevertheless, for ease and certainty in determining the purchase price and notwithstanding the actual Gross Margin on Columbia merchandise sold to Successor and other foreign distributors, Successor's cost of goods sold shall be adjusted, for purposes of this calculation, so as to reflect a pro forma 20 percent Gross Margin to Columbia on all Columbia merchandise purchased by Successor. For purposes of the adjustment, and as used in this subparagraph, "Gross Margin" shall mean Columbia's pro forma net revenue from sales of merchandise to Successor, less Columbia's f.o.b. cost of the merchandise (determined on a basis consistent with accounting principles applied in prior years).


b. Notwithstanding financing and service fees actually paid during the period, financing and service fees will be adjusted for purposes of this calculation to 6 percent of Successor's cost (as adjusted pursuant to subparagraph (a) above) for all merchandise purchased from Columbia.


c. For purposes of this calculation, all customs and duty costs will be adjusted commensurate with adjustments in pricing resulting from the Gross Margin assumptions in subparagraph (a) above.


d. Amortized goodwill resulting from this transaction shall be excluded.


e. Notwithstanding Successor's interest expense during the period, interest on all indebtedness of Successor shall be assumed for purposes of this calculation to have been equal to the prime interest rate on loans by the Royal Bank of Canada plus one percent; provided, however, that there shall be no charge on indebtedness incurred to fund the acquisition of the Canada-Trans stock and the retirement of loans to Canada-Trans made by Canada-Trans' shareholders pursuant to the Purchase Agreement.


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f. There shall be no charge with respect to any management fees paid by the Successor Company to Columbia.


2. THE CLOSING


At the closing of the purchase of the Hamilton Shares (the "Closing"), the Hamiltons shall deliver to Columbia Holdings, or its nominee, the certificates representing the Hamilton Shares, duly endorsed in blank, and Columbia Holdings shall wire transfer to the account designated in writing by the Hamiltons the cash consideration described in Section 1.


3. HAMILTON'S EMPLOYMENT


3.01 Title and Duties. After the amalgamation of Columbia Canada and Canada-Trans, Hamilton shall hold the title of President and Chief Operating Officer of Successor and shall undertake and render such services as are customarily performed by the President and Chief Operating Officer of a corporation engaged in the business of marketing sportswear or prescribed in Successor's bylaws and such other duties as may from time to time be assigned to him by Successor's Board of Directors. Hamilton shall devote his full business time to Successor and to its affairs and safeguard and promote its lawful interests.


3.02 Compensation. As payment in full for all his services rendered under this Agreement, Successor shall pay Hamilton a salary and provide benefits as previously agreed upon by Hamilton and Columbia Canada.


4. CONFIDENTIALITY AND NONCOMPETITION


4.01 Definition of Confidential Information. As used in this Agreement, the term "Confidential Information" means: (a) proprietary information of Successor; (b) information marked or designated by Successor as confidential; (c) information, whether or not in written form and whether or not designated as confidential, which is known to Hamilton as being treated by Successor as confidential; and (d) information provided to Successor by third parties which Successor is obligated to keep confidential. Confidential Information includes but is not limited to know-how, customer lists, marketing plans, and financial and technical information.


4.02 Acknowledgment of Receipt of Confidential Information. Hamilton acknowledges that in the course of performing his duties for Successor he will have access to Confidential Information, the ownership and confidential status of which are highly important to Successor, and Hamilton agrees in addition to the specific covenants contained herein, to comply with all reasonable policies and procedures of Successor as may be established from time to time for the protection of such Confidential Information.


4.03 Ownership. Hamilton acknowledges that all Confidential Information is and shall continue to be the exclusive property of Successor, whether or not prepared in whole or in part by him and whether or not disclosed to or entrusted to him in connection with employment by Successor.


4.04 Acknowledgment of Irreparable Harm. Hamilton acknowledges that any disclosure of Confidential Information will cause irreparable harm to Successor.


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4.05 Covenant of Nondisclosure and Nonuse. Hamilton agrees not to disclose Confidential Information, directly or indirectly, under any circumstances or by any means, to any third person. Hamilton agrees that he will not copy, transmit, reproduce, summarize, quote or make any commercial or other use whatsoever of Confidential Information, except as may be necessary to perform work done by him for Successor.


4.06 Safeguard of Confidential Information. Hamilton agrees to exercise the highest degree of care in safeguarding Confidential Information against loss, theft, or other inadvertent disclosure and agrees generally to take all steps necessary or requested by Successor to insure maintenance of confidentiality.


4.07 Exclusions. This Section 4 shall not apply to the following information: (a) information now and hereafter voluntarily disseminated by Successor to the public or which otherwise becomes part of the public domain through lawful means; (b) information subsequently and rightfully received from third parties and not subject to any obligation of confidentiality; and (c) information independently developed by Hamilton after termination of his employment.


4.08 Work Made for Hire. Hamilton agrees that all creative work prepared or originated by him for Successor or during or within the scope of his employment by Successor is owned by Successor; and, in any event, Hamilton assigns to Successor all intellectual property rights in such work whether by right of copyright, trade secret or otherwise and whether or not subject to protection by copyright laws.


4.09 Noncompetition. During the term of Hamilton's employment by Successor and for one year thereafter, Hamilton agrees that he will not, without the prior written consent of Successor, directly or indirectly, whether as emp ...