STOCK PURCHASE AGREEMENT

Exhibit 2.1

STOCK PURCHASE AGREEMENT

DATED AS OF

February 15, 2008

BY AND AMONG

DASHAMERICA, INC. D/B/A PEARL IZUMI USA, INC.,

NAUTILUS, INC.

AND

SHIMANO AMERICAN CORPORATION

TABLE OF CONTENTS

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EXHIBITS AND SCHEDULES

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STOCK PURCHASE AGREEMENT

This STOCK PURCHASE AGREEMENT, dated as of February 15, 2008, is by and among Nautilus, Inc., a Washington corporation (“ Seller ”), DashAmerica, Inc. d/b/a Pearl Izumi USA, Inc., a Colorado corporation (the “ Company ”), and Shimano American Corporation, a California corporation (“Buyer”).

WHEREAS, the respective Boards of Directors of Seller and Buyer have approved the sale by Seller of all of the outstanding capital stock of the Company to Buyer on the terms and subject to the conditions set forth herein; and

NOW, THEREFORE, in consideration of the mutual covenants contained herein, and intending to be legally bound, the parties hereto agree as follows:

ARTICLE I - CERTAIN DEFINITIONS

Section 1.1 Certain Definitions. As used in this Agreement, the following terms have the respective meanings set forth below.

“ ABS Agreement ” means that certain Apparel Business System ERP software license (tool for order entry and management and general accounting) entered into by Seller and dated October 4, 2006.

“ Actual Adjustment ” has the meaning set forth in Section 2.2(d)(i) of this Agreement.

“ Affiliate ” means, with respect to any Person, any other Person who directly or indirectly, through one or more intermediaries, controls, is controlled by, or is under common control with, such Person. The term “control” means the possession, directly or indirectly, of the power to direct or cause the direction of the management and policies of a Person, whether through the ownership of voting securities, by contract or otherwise, and the terms “controlled” and “controlling” have meanings correlative thereto.

“ Agreement ” means this Stock Purchase Agreement.

“ Articles of Incorporation ” means the Company’s Articles of Incorporation as amended and restated and filed with the Colorado Secretary of State on July 7, 2005.

“ Business Day ” means a day, other than a Saturday or Sunday, on which commercial banks in New York City are open for the general transaction of business.

“ Closing ” and “ Closing Date ” have the meanings set forth in Section 2.3 of this Agreement.

“ Closing Date Certificate ” has the meaning set forth in Section 2.2(a) of this Agreement.

“ Closing Date Indebtedness ” means solely accounts payable incurred in the ordinary course of business and which have been outstanding for less than 45 days as of the Closing; and

SCHEDULE 6.2(c)

specifically excluding any amounts due and owing under the Licensor/Japan Obligation, and amounts outstanding under agreements entered into by Seller, including but not limited to the ABS Agreement.

“ COBRA ” means requirements of Part 6 of Subtitle B of Title I of ERISA and Section 4980B of the Code and any similar state law.

“ Code ” means the Internal Revenue Code of 1986, as amended.

“ Common Stock ” means common stock, no par value, of the Company.

“ Company Certificate ” has the meaning set forth in Section 2.2(a) of this Agreement.

“ Company Intellectual Property Rights ” has the meaning set forth in Section 3.14 of this Agreement.

“ Confidentiality Agreement ” has the meaning set forth in Section 5.1(b) of this Agreement.

“ Employee Benefit Plan ” means each “employee benefit plan” (as such term is defined in Section 3(3) of ERISA) and each other material employee benefit plan, obligation, program, practice or arrangement, whether or not legally enforceable, maintained, sponsored or contributed to by the Company or any of its ERISA Affiliates to provide benefits (other than (i) base salary or hourly wages and (ii) any government sponsored program for which contributions by the Company or any of its ERISA Affiliates are required by law) to present or former directors, employees, or agents, including consulting agreements, vacation pay, severance policies, and fringe benefits.

“ Employee Retention Plan ” means the Key Employee Retention Plan approved and adopted by Seller and the Company on November 7, 2007 allowing for payment of retention bonuses if employees continued in the employ of the Company through and beyond the consummation of this transaction.

“ Environmental Laws ” shall mean all federal, state and foreign statutes, regulations, and local ordinances having the force and effect of law concerning pollution or protection of the environment in effect on or prior to the Closing Date.

“ ERISA ” means the Employee Retirement Income Security Act of 1974, as amended.

“ ERISA Affiliate ” means any entity that is considered a single employer with the Company under Section 414 of the Code.

“ Escrow Account ” has the meaning set forth in Section 2.2(b)(i) of this Agreement.

“ Escrow Agreement ” has the meaning set forth in Section 2.2(b)(i) of this Agreement.

“ Estimated Purchase Price ” means a good faith estimate of the Purchase Price (as such term is defined in this Section 1.1 ) on the basis of the Company’s most recent financial

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statements and as determined by the Company’s Vice President of Finance in accordance with the terms of Section 2.2(a) , taking into account a good faith estimate of the Net Working Capital Adjustment.

“ Financial Statements ” has the meaning set forth in Section 3.6(a) of this Agreement.

“ GAAP ” means generally accepted accounting principles as in effect in the United States on the date of this Agreement, applied on a consistent basis.

“ Governmental Authority ” means any national, federal, state, provincial, county, municipal or local government, foreign or domestic, or the government of any political subdivision of any of the foregoing, or any entity, authority, agency, ministry or other similar body exercising executive, legislative, judicial, regulatory or administrative authority or functions of or pertaining to government, including any authority or other quasi-governmental entity established to perform any of such functions.

“ Hazardous Substances ” means (a) any petrochemical or petroleum products, radioactive materials, asbestos, urea formaldehyde foam insulation, transformers or other equipment that contain dielectric fluid containing polychlorinated biphenyls, and radon gas; (b) any chemicals, materials or substances defined as or included in the definition of “hazardous substances,” “hazardous wastes,” “hazardous materials,” “hazardous air pollutants,” “restricted hazardous materials,” “extremely hazardous substances,” “toxic substances,” “contaminants” or “pollutants” or words of similar meaning and regulatory effect; or (c) any other chemical, material or substance, the release, disposal, discharge, emission or exposure to which is prohibited, limited, addressed or regulated by any applicable Environmental Law.

“ HSR Act ” means the Hart-Scott-Rodino Antitrust Improvements Act of 1976, as amended, and the rules and regulations promulgated thereunder.

“ Indebtedness ” means, as of any date, without duplication, the aggregate outstanding principal amount of, accrued and unpaid interest on and other payment obligations (including any prepayment premiums payable as a result of the consummation of the Transaction) arising under any obligations of the Company or any Subsidiary consisting of (i) indebtedness for borrowed money or indebtedness issued in substitution or exchange for borrowed money or for the deferred purchase price of property or services (excluding trade payables and accrued expenses arising in the ordinary course of business), (ii) indebtedness evidenced by any note, bond, debenture or other debt security or (iii) obligations under any interest rate, currency or other hedging agreements, in each case, as of such date, excluding any undrawn letters of credit and undrawn portions of lines of credit and including, without limitation, the Licensor/Japan Obligation. Notwithstanding the foregoing, “Indebtedness” shall not include: (i) any obligations under operating leases or capitalized leases; or (ii) amounts outstanding under agreements entered into by Seller (even if on behalf of the Company) including the ABS Agreement.

“ Indemnity Cap ” means $7,000,000 (seven million US dollars).

“ Intellectual Property Rights ” means all patents, patent applications and industrial designs (including without limitation any continuations, divisionals, continuations-in-part, renewals and reissues), trademarks, service marks, trade names, designs, logos, slogans, other

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similar designations of source or origin and general intangibles of like nature, together with the goodwill of the business symbolized by any of the foregoing, and all registrations and applications therefor, copyrights, copyright registrations and applications, re-examination certificates, domain names, trade secrets, know-how, show-how and other confidential information, software and databases.

“ Knowledge ” as used with respect to the Company (including references to the Company being aware of a particular matter) shall mean those facts that are known or should reasonably have been known after due inquiry by the Company’s board of directors, executive officers, including but not limited to the President and all Vice Presidents, and members of management with the title of Director.

“ Licensor/Japan ” means Pearl Izumi, Inc., a Japanese corporation.

“ Licensor/Japan Obligation ” means the Indebtedness relating to the Promissory Note, dated February 22, 2005, issued by the Company to Licensor/Japan, pursuant to the Purchase Agreement, dated as of February 22, 2005, between Licensor/Japan and the Company. For purposes of this Agreement, the amount of the Licensor/Japan Obligation shall be deemed the lesser of (i) $4,244,613 and (ii) the stated net present value of the Licensor/Japan Obligation as reflected on the Company’s balance sheet as of the Closing Date.

“ Lien ” means any mortgage, pledge, security interest, encumbrance, lien or charge of any kind but, for the avoidance of doubt, shall not include license agreements or consent agreements.

“ Material Adverse Effect ” means any change in or effect on the business, results of operations, assets, financial condition or liabilities of the Company that is materially adverse to the Company taken as a whole; provided, however , that any change or effect resulting from, attributable to or arising out of any of the following shall not be taken into account in making any such determination and shall not be deemed to constitute or give rise to a Material Adverse Effect: (i) any change or changes in general economic conditions or local, regional, national or international industry conditions (including, without limitation, changes in applicable laws or regulations, and changes in financial or market conditions); (ii) in and of itself, any change in the market price or trading volume of Seller's capital stock, (iii) in and of itself, any change in the business, results of operations, assets, financial condition or liabilities of Seller; (iv) in and of itself, a failure by Seller or the Company to meet the revenue or earnings predictions of equity analysts for any period ending (or for which earnings are released) during the period prior to the Closing Date; (v) the taking of any action required by the Transaction Documents or to which Buyer has given its written consent; (vi) any changes or effects to the extent attributable to the execution of the Transaction Documents or the consummation of the transactions contemplated by the Agreement or to the public announcement or the pendency of the execution of the Transaction Documents or the consummation of the transactions contemplated thereby, including disruption or loss of customer, business partner, supplier or employee relationships; (vii) any changes or effects resulting from the actions of Buyer or any of its Affiliates; (viii) any changes arising in connection with acts of nature (including without limitation, earthquakes, floods, tornadoes, and hurricanes), war or terrorism; (ix) changes in GAAP; (x) the effect of any change that is generally applicable to the industries in which the Company operates or the United States economy or securities markets or the world economy or international securities markets; (xi) any change in the mix of the sources of the Company's total revenue; or (xii) any changes or effects to the extent primarily attributable to the fact that Buyer is the buyer.

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“ Most Recent Balance Sheet Date ” and “ Most Recent Unaudited Financial Statements ” have the meanings set forth in Section 3.6(a)(ii) of this Agreement.

“ Multiemployer Plan ” has the meaning set forth in Section 3(37) of ERISA.

“ Net Working Capital ” means, as of any date:

(i)(A) accounts receivable (net of reserves for doubtful accounts) plus (B) inventory (net of (1) inventory reserves, and (2) Nautilus-branded inventory and (3) Schwinn-branded inventory) plus (C) prepaid expenses and other current assets

minus

(ii)(A) accounts payable plus (B) accrued expenses and other current liabilities,

of the Company and the Subsidiaries, on a consolidated basis, as of such date, as determined in accordance with GAAP (subject to Section 3.6(b) of this Agreement) and without giving effect to the transactions contemplated by this Agreement. Notwithstanding the foregoing, “Net Working Capital” shall not include any cash and cash equivalents, deferred income taxes, property and equipment, trademarks, goodwill and other intangible assets, Indebtedness, Seller Expenses, and any fees, expenses or other liabilities incurred in connection with any financing by Seller, Buyer and their respective Affiliates of the transactions contemplated hereby.

“ Net Working Capital Adjustment ” means an amount (which may be a positive or negative number) equal to the amount determined by subtracting $28,000,000 (twenty-eight million US dollars) from the Net Working Capital as of February 29, 2008 (as determined pursuant to Section 2.2(c)); provided, that the Net Working Capital Adjustment shall be deemed zero ($0) if Net Working Capital as of February 29, 2008 is less than $28,000,000 but greater than $25,600,000.

“ Permitted Liens ” means such of the following as to which no enforcement, collection, execution, levy or foreclosure proceeding shall have been commenced: (i) Liens for Taxes, assessments and governmental charges or levies not yet due and payable as of the Closing Date; (ii) Liens imposed by law, such as materialmen’s, mechanics’, carriers’, workmen’s and repairmen’s Liens and other similar Liens arising in the ordinary course of business securing obligations that (A) are not due and payable and (B) are not in excess of $50,000 in the aggregate at any time; (iii) pledges or deposits to secure obligations under workers’ compensation laws or similar legislation or to secure public or statutory obligations; and (iv) reciprocal easement agreements and other customary encumbrances on title to the Leased Property that (A) were not incurred in connection with any indebtedness, (B) do not render title to the property encumbered thereby unmarketable and (C) do not, individually or in the aggregate, materially adversely affect the use or occupancy of such property.

“Pending Tax Liability ” means any taxes, penalties and interest and any other related fees or costs that may become due and owing in connection with: (i) a tax audit of the Company’s

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German subsidiary Pearl Izumi GmbH commenced within three (3) years of Closing and related to pre-Closing periods, including but not limited to fees and costs incurred by the Company for professional services in connection with assessing and paying the taxes, penalties and interest associated with such an audit; or (ii) any breach of the representations made under Section 3.10(e).

“ Person ” means an individual, partnership, corporation, limited liability company, joint stock company, unincorporated organization or association, trust, joint venture, association or other organization, whether or not a legal entity, or a Governmental Authority.

“ Purchase Price ” means $69,500,000.00 (sixty-nine million five hundred thousand US dollars),

(i) plus the Net Working Capital Adjustment;

(ii) minus (x) Seller Expenses paid by the Company prior to the Closing Date; (y) all Indebtedness except Closing Date Indebtedness; and (z) amounts identified in Schedule 3.13(g) for payments under the Employee Retention Plan (including related social security and Medicare taxes as set forth on Schedule 3.13(g) ).

“ Seller Expenses ” means the following expenses incurred by or on behalf of the Company in connection with the consummation of the transactions contemplated hereby: (i) fees and expenses payable to Wachovia Capital Markets, LLC pursuant to its engagement letter with the Board of Directors of Seller, dated November 13, 2007, and (ii) fees and expenses payable to any legal, accounting or professional entity or person that are fees and expenses of the Company or the Board of Directors of the Company, or Seller or the Board of Directors of Seller; provided , that in no event shall Seller Expenses include any expenses incurred by any legal counsel, accountants, investment bankers, or consultants hired by Buyer or any of their respective Affiliates or any expenses incurred in connection with the financing of the transactions contemplated hereby.

“ Subsidiary ” means, with respect to any Person, any corporation, partnership, association or other business entity of which (i) if a corporation, a majority of the total voting power of shares of stock entitled (without regard to the occurrence of any contingency) to vote in the election of directors, managers or trustees thereof is at the time owned or controlled, directly or indirectly, by that Person or one or more of the other Subsidiaries of that Person or a combination thereof, or (ii) if a partnership, association or other business entity, a majority of the partnership or other similar ownership interests thereof is at the time owned or controlled, directly or indirectly, by any Person or one or more Subsidiaries of that Person or a combination thereof. For purposes hereof, a Person or Persons shall be deemed to have a majority ownership interest in a partnership, association or other business entity if such Person or Persons shall be allocated a majority of partnership, association or other business entity gains or losses or shall be or control the managing director, managing member, general partner or other managing Person of such partnership, association or other business entity. Unless the context requires otherwise, each reference to a Subsidiary shall be deemed to be a reference to a Subsidiary of the Company.

“ Tax ” means any federal, state, local or foreign income, gross receipts, franchise,

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estimated, alternative minimum, add-on minimum, sales, use, transfer, real property gains, registration, value added, excise, natural resources, severance, stamp, occupation, windfall profits, environmental (under Section 59A of the Code), customs, duties, real property, personal property, capital stock, social security (or similar), unemployment, disability, payroll, license, employee or other withholding, or other tax, of any kind whatsoever, including any interest, penalties or additions to tax or similar items in respect of the foregoing (whether disputed or not).

“ Tax Return ” means any return, report, declaration, claim for refund, information return or other document (including any related or supporting schedule, statement or information) filed or required to be filed in connection with the determination, assessment or collection of any Tax of any party or the administration of any laws, regulations or administrative requirements relating to any Tax (including any amendment thereof).

“ Threshold Amount ” means $347,500.00 (three hundred forty-seven thousand five hundred US dollars).

“ Transition Agreement ” means the form of agreement attached hereto as Exhibit E, governing the provision of services by Seller to the Company for post-Closing matters.

“ Transaction Documents ” means, collectively, this Agreement, the Escrow Agreement, the Transition Agreement, the Paying Agent Agreement, and all other agreements and documents entered into in connection with the Transaction and the other transactions contemplated hereby.

Section 1.2 Interpretation . Unless otherwise indicated to the contrary herein by the context or use thereof: (i) the words, “herein,” “hereto,” “hereof” and words of similar import refer to this Agreement as a whole and not to any particular Section or paragraph hereof; (ii) the word “including” means “including, but not limited to”; (iii) masculine gender shall also include the feminine and neutral genders, and vice versa; and (iv) words importing the singular shall also include the plural, and vice versa.

ARTICLE II - PURCHASE AND SALE

Section 2.1 Purchase and Sale . Upon the terms and subject to the conditions of this Agreement, at the Closing, Seller shall sell, and Buyer shall purchase, all of the issued and outstanding capital stock of the Company.

Section 2.2 Purchase Price .

(a) Estimated Purchase Price . No later than two Business Days following the satisfaction or waiver of all conditions required by Article VI of this Agreement (other than those conditions that by their terms cannot be satisfied until Closing) (the “ Company Certificate Date ”), the Company shall deliver to Buyer a certificate (the “ Company Certificate ”) setting forth the calculation of the Estimated Purchase Price. The calculation of the Estimated Purchase Price shall be executed by the Company’s Vice President of Finance and shall be determined based upon the Company’s most recent financial statements as of the date of such estimate, taking into account changes in the Company’s financial position since the date of such financial statements. The Company shall deliver to Seller, upon its reasonable request, any information and documentation relied upon by the Company in completing the Company Certificate.

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As promptly as practicable but not later than three Business Days after the Company Certificate Date, Buyer shall identify to the Company and Seller any adjustments to the Company Certificate that it reasonably believes are required to accurately set forth the Estimated Purchase Price or shall confirm in writing to the Company that no such adjustments are necessary. If the Company or Seller disputes any such adjustments, they shall all use their reasonable best efforts to resolve such dispute. No later than the next Business Day after the day upon which the parties resolve such dispute, or, in the absence of a dispute on the fourth Business Day after the Company Certificate Date, the Company shall re-deliver to Buyer a certificate (the “ Closing Date Certificate ”) setting forth the calculation of the Estimated Purchase Price (with such adjustments as the parties have agreed are appropriate, if applicable).

(b) Closing Date Payments .

(i) On the Closing Date, Buyer shall:

(A) Deposit $4,365,000 in cash (such amount, the “ Escrow Amount ” and such cash, the “ Escrow Fund ”) into an escrow account (the “ Escrow Account ”), pursuant to an escrow agreement (the “ Escrow Agreement ”) to be entered into on the Closing Date among Buyer, Seller and an escrow agent to be mutually agreed upon between Buyer and Seller (the “Escrow Agent”), substantially in the form of Exhibit B attached hereto (which Escrow Amount may be increased or decreased by one hundred percent of the earnings and interest, or fifty percent of the costs and fees, associated with the Escrow Fund and Escrow Account, as more specifically provided in the Escrow Agreement); and

(B) Pay Seller an amount in cash equal to the remaining amount after deduction from the Estimated Purchase Price for:

(I) the Escrow Amount; and

(II) Seller Expenses.

(ii) Before any payment or deposit is made by Buyer under (i) above, Seller shall present evidence of release of all Company assets from the Bank of America liens filed November 2007 and January 2008.

(c) Calculation of the Post-Closing Adjusted Purchase Price .

(i) As soon as practicable, but no later than 90 days after the Closing Date, Seller shall prepare and deliver to Buyer a proposed calculation of the post-Closing adjusted Purchase Price (the “ Proposed Purchase Price ”) reflecting Seller’s calculation of the Net Working Capital Adjustment (the “ Proposed Net Working Capital Adjustment ”). Such calculations shall collectively be referred to herein from time to time as the “ Proposed Closing Date Calculations .”

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(ii) If Buyer does not give written notice of dispute (a “ Purchase Price Dispute Notice ”) to Seller within 30 days after receiving the Proposed Closing Date Calculations, Buyer and the other parties hereto agree that (A) the Proposed Net Working Capital Adjustment shall be deemed to be the Net Working Capital Adjustment, and (B) the Proposed Purchase Price shall be deemed to be the Purchase Price. If Buyer gives Seller a Purchase Price Dispute Notice (which Purchase Price Dispute Notice must set forth, in reasonable detail, the items and amounts in dispute) within such 30-day period, Seller and Buyer will use reasonable efforts to resolve the dispute during the 30-day period commencing on the date Seller receives the applicable Purchase Price Dispute Notice from Buyer.

(iii) If Buyer and Seller do not obtain a final resolution within such 30-day period, then the items in dispute shall be submitted immediately to a nationally-recognized accounting firm mutually agreed to by the parties (the “ Accounting Firm ”) which is independent. Each party agrees to execute, if required by the Accounting Firm, an engagement letter with the Accounting Firm containing reasonable and customary terms. The Accounting Firm shall determine only those issues still in dispute at the time of submission to the Accounting Firm, and the Accounting Firm’s determination shall be based upon and consistent with the terms and conditions of this Agreement. The determination by the Accounting Firm shall be based on presentations with respect to such disputed items by Buyer and Seller to the Accounting Firm and, if determined necessary by the Accounting Firm, on the Accounting Firm’s independent review. Each of Buyer and Seller shall use its reasonable best efforts to make its presentation as promptly as practicable following submission to the Accounting Firm of the disputed items, and each such party shall be entitled, as part of its presentation, to respond to the presentation of the other party and any questions and requests of the Accounting Firm. In deciding any matter, the Accounting Firm (i) shall be bound by the provisions of this Section 2.2(c) and (ii) may not assign a value to any item greater than the greatest value for such item claimed by either Buyer or Seller or less than the smallest value for such item claimed by Buyer or Seller. The Accounting Firm’s determination shall be made within 30 days after its engagement, shall be set forth in a written statement delivered to Buyer and Seller and shall be final, conclusive, non-appealable and binding for all purposes hereunder; provided , that such determination may be reviewed, corrected or set aside by a court of competent jurisdiction but only upon a finding that the Accounting Firm committed manifest error with respect to its determination. The determination of the Accounting Firm shall not be deemed an award subject to review under the Federal Arbitration Act or any other statute. The Accounting Firm will revise the Proposed Closing Date Calculations as appropriate to reflect the resolution of any objections thereto pursuant to this Section 2.2(c) . The Proposed Purchase Price together with any revisions thereto pursuant to this Section 2.2(c) shall be deemed the actual Purchase Price for purposes hereof.

(iv) In the event Buyer and Seller submit any unresolved objections to an Accounting Firm for resolution as provided in this Section 2.2(c) , the responsibility for the fees and expenses of the Accounting Firm shall be as follows:

(A) if such Accounting Firm resolves all of the remaining objections in

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favor of Buyer’s position (Buyer’s position on the Purchase Price is referred to herein as the “ Low Value ”), then Seller will be responsible for all of the fees and expenses of the Accounting Firm;

(B) if the Accounting Firm resolves all of the remaining objections in favor of Seller’s position (Seller’s position on the Purchase Price is referred to herein as the “ High Value ”), then Buyer will be responsible for all of the fees and expenses of the Accounting Firm; and

(C) if such Accounting Firm neither resolves all of the remaining objections in favor of Seller’s position nor resolves all of the remaining objections in favor of Buyer’s position (the Purchase Price so determined is referred to herein as the “ Actual Value ”), then that fraction of the fees and expenses of the Accounting Firm equal to (x) the difference between the High Value and the Actual Value over (y) the difference between the High Value and the Low Value shall be paid by Seller, and Buyer will be responsible for the remainder of the fees and expenses of the Accounting Firm .

(v) Each of Buyer and Seller will make the financial records of the Company available to the other party, its accountants, the Accounting Firm and other representatives of the other party and the Accounting Firm at reasonable times upon reasonable notice at any time before and after the delivery of the Proposed Closing Date Calculations and continuing during the resolution of any objections with respect to the Proposed Closing Date Calculations.

(d) Adjustment to Estimated Purchase Price .

(i) If the difference between (A) the Purchase Price determined in accordance with Section 2.2(c) , minus (B) the Estimated Purchase Price as set forth in the Closing Date Certificate (the “ Actual Adjustment ”) is a positive amount, then within three Business Days after the date on which the Purchase Price is finally determined pursuant to Section 2.2(c) above, Buyer will pay to Seller such positive amount, without interest.

(ii) If the Actual Adjustment is a negative amount, then within three Business Days after the date on which the Purchase Price is finally determined pursuant to Section 2.2(c) above, Seller will pay to Buyer such negative amount, without interest.

Section 2.3 Closing . The closing of the transactions contemplated hereby (the “ Closing ”) shall take place at the offices of Garvey Schubert Barer, Seattle, Washington, at 10:00 A.M. Pacific Time on the Business Day following the later of (i) satisfaction or waiver of the conditions set forth in Article VI (other than those conditions that by their terms cannot be satisfied until the Closing); or (ii) the delivery of the Closing Date Certificate in accordance with the terms of Section 2.2(a) of this Agreement; or on such date and time as Buyer and Seller shall mutually agree. Closing may occur upon receipt of facsimile or .pdf signatures, with original signatures to be provided within three business days. The time and date of the Closing is herein called the “ Closing Date .”

For clarification purposes, any calculations made pursuant to this Agreement with

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reference to the Closing Date, the Closing, or immediately prior to the Closing or the Closing Date, shall be deemed to be in reference to the close of business on the Business Day immediately preceding the Closing Date. By way of example, cash credited to the account of the Company on the Business Day prior to the Closing Date shall be considered the property of Seller for purposes hereof, but cash credited to the account of the Company at any time on the Closing Date shall be deemed the property of Buyer (consolidated with the Company) upon Closing.

ARTICLE III - REPRESENTATIONS AND WARRANTIES

OF THE COMPANY AND SELLER

Except as disclosed in the Company Disclosure Schedule attached hereto as Exhibit A (the "Company Disclosure Schedule"), the Company and Seller hereby represent and warrant, jointly and severally, to Buyer the statements contained in this Article III as of the date of this Agreement and (except for any representations and warranties that speak as of a different specified date) as of the Closing Date. The Company Disclosure Schedule shall be arranged in sections corresponding to the numbered and lettered sections contained in this Article III; provided , that any information disclosed relative to one section of Article III shall be deemed to be disclosed in respect of any and all other sections of Article III to the extent that such disclosure is responsive or relevant to the matters addressed in such other section(s). The representations and warranties set forth in this Article III shall be additive to, and not mutually exclusive or in derogation of, one another.

Section 3.1 Organization and Qualification; Subsidiaries . The Company is a corporation duly organized, validly existing and in good standing under the laws of the State of Colorado. Except as set forth in Schedule 3.1 , the Company has the corporate power and authority to own or lease its property and assets and to carry on its business as presently conducted, and is duly qualified to do business as a foreign corporation and is in good standing in each jurisdiction wherein the nature of its business or the ownership of its assets makes such qualification necessary, except where the failure to be so qualified and in good standing would not have a Material Adverse Effect. Each Subsidiary of the Company is a business entity that is duly organized, validly existing and (to the extent relevant in the jurisdiction of organization) in good standing under the laws of its jurisdiction of organization, has all organizational powers to own or lease its property and assets and to carry on its business as presently conducted, and is duly qualified to do business as a foreign corporation and (to the extent relevant in other jurisdictions) is in good standing in each jurisdiction wherein the nature of its business or the ownership of its assets makes such qualification necessary, except where the failure to be so qualified and in good standing would not have a Material Adverse Effect. The Company has previously provided or made available to Buyer true and complete copies of (i) its Articles of Incorporation and all amendments thereto or restatements thereof, (ii) its bylaws as currently in effect and (iii) true and complete copies of the certificate or articles of incorporation and bylaws (or equivalent governing instruments), as currently in effect, of each Subsidiary.

Section 3.2 Authorization . The Company has all requisite corporate power and authority to execute and deliver this Agreement and each other Transaction Document to be executed by the Company in connection herewith and to perform its obligations hereunder and thereunder, all of which have been duly authorized by all necessary corporate action. This

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Agreement has been duly authorized, executed and delivered by the Company and, assuming that this Agreement has been duly and validly authorized, executed and delivered by Seller and Buyer, constitutes a valid and binding agreement of the Company, enforceable against the Company in accordance with its terms, except as the enforceability hereof may be limited by (i) applicable bankruptcy, insolvency, reorganization, moratorium or other similar laws affecting the enforcement of creditors’ rights generally or (ii) applicable equitable principles (whether considered in a proceeding at law or in equity).

Section 3.3 Non-contravention. None of the execution and delivery of this Agreement or any other Transaction Document, the consummation of the Transaction and the other transactions contemplated hereby and thereby nor the fulfillment of and the performance by the Company of its obligations hereunder and thereunder will (i) contravene any provision contained in the Company’s Articles of Incorporation or bylaws or, (ii) except as set forth in Schedule 3.3 , conflict with, violate or result in a breach (with or without the lapse of time, the giving of notice, or both) of, or constitute a default under or give rise to any right of termination, cancellation, acceleration or to a loss of any benefit (with or without the lapse of time, the giving of notice, or both) under (A) any contract, agreement, commitment, indenture, mortgage, lease, pledge, note, bond, license, permit or other instrument or obligation or (B) to the Company’s Knowledge, any judgment, order, decree, statute, law, rule or regulation or other restriction of any Governmental Authority, in each case to which the Company or any of the Subsidiaries is a party or by which any of them is bound or to which any of their respective assets or properties are subject, (iii) except as contemplated herein or with respect to Liens granted to any lender at the Closing in connection with any financing by Buyer of the transactions contemplated hereby, result in the creation or imposition of any Lien, other than any Permitted Lien, on any of the assets or properties of the Company or the Subsidiaries, or (iv) except as set forth in Schedule 3.3 , result in the acceleration of, or permit any Person to terminate, modify, cancel, accelerate or declare due and payable prior to its stated maturity, any obligation of the Company or any Subsidiaries, which in the case of any of clauses (ii) through (iv) above, has had or could have a Material Adverse Effect, or could prohibit, materially impair or materially delay the ability of the Company to consummate the transactions contemplated hereby and thereby.

Section 3.4 Consents. Except for (i) filings, permits, authorizations, consents and approvals as may be required under, and other applicable requirements of, the HSR Act and other antitrust laws, and (ii) the filings, consents and approvals set forth in Schedule 3.4 , no notice to, filing with, or authorization, registration, consent or approval of any Governmental Authority or other Person is necessary for the execution, delivery or performance of this Agreement or any other Transaction Documents to be executed by the Company or the consummation of the transactions contemplated hereby or thereby by the Company.

Section 3.5 Capitalization; Subsidiaries.

(a) As of the date hereof, the Company’s authorized capital stock consists solely of 100 shares of Common Stock, all of which are outstanding and held by Seller. The Company does not have any outstanding or authorized options or warrants, relating to its capital stock or any outstanding securities or obligations convertible into or exchangeable for, or giving any Person any right to subscribe for or acquire from it, by contract or otherwise, any shares of its capital stock. All of the issued and outstanding shares of capital stock of the Company have

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been duly authorized, validly issued, are fully paid and are nonassessable. There are no Liens on the issued and outstanding shares, nor have the outstanding shares been pledged in any manner, and no legends or other purported encumbrance appears on any certificate representing the outstanding shares. No proxies have been granted with respect to the Company’s outstanding Common Stock.

(b) All Subsidiaries of the Company are listed in Schedule 3.5(b) . All of the outstanding capital stock of, or other ownership interests in, each Subsidiary of the Company is owned beneficially and of record by the Company, directly or indirectly, is validly issued, fully paid and nonassessable and free and clear of any preemptive rights (other than such rights as may be held by the Company), restrictions on transfer, Taxes or Liens. There are no authorized or outstanding securities of the Company or any of the Subsidiaries convertible into or exchangeable for, options or warrants or the right to subscribe for, or providing for the issuance or sale of, any capital stock or other ownership interest in, or any other securities of, any Subsidiary. Except as set forth in Schedule 3.5(b) , no shares of capital stock or any ownership, partnership or other equity or investment interest in any Person is directly or indirectly owned or held, either of record, beneficially or equitably, by the Company or any of the Subsidiaries listed in Schedule 3.5(b) . No proxies have been granted with respect to the outstanding ownership interests of any Subsidiary. Effective at or prior to Closing, the Company will have transferred all of its equity interests in Pearl Izumi Europe B.V. to Seller.

Section 3.6 Financial Statements.

(a) Attached hereto as Schedule 3.6 are true and complete copies of the following financial statements (such financial statements, the “ Financial Statements ”):

(i) the unaudited consolidated balance sheets of the Company as of December 31, 2006 and December 31, 2007 and the related unaudited consolidated income statements for the years ended December 31, 2006 and December 31, 2007; and

(ii) the unaudited consolidated balance sheet of the Company (the “Most Recent Balance Sheet”) as of January 31, 2008 (the “Most Recent Balance Sheet Date”) and the related unaudited consolidated statements of income and cash flows for the one (1) month then ended (the “Most Recent Unaudited Financial Statements”).

(b) Except as described in Schedule 3.6 , the Financial Statements (i) have been prepared in good faith from the books and records of the Company kept in the ordinary course of business consistent with past practices, (ii) have been prepared in accordance with GAAP applied on a consistent basis throughout the periods covered thereby, except for the absence of footnotes and, in the case of the Most Recent Unaudited Financial Statements, subject to normal year-end adjustments and (iii) fairly present, in all material respects, the consolidated assets, liabilities and financial condition of the Company as of the dates thereof and for the periods then ended (subject to the absence of footnotes and, in the case of the Most Recent Unaudited Financial Statements, to normal year-end adjustments).

(c) Except as set forth in Schedule 3.6 , there are no liabilities of the Company and the Subsidiaries of any kind, other than (a) liabilities provided for in the Most Recent Balance Sheet;

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(b) liabilities not required under GAAP to be shown on the Most Recent Balance Sheet for reasons other than the contingent nature thereof or the difficulty of determining the amount thereof; or (c) liabilities incurred in the ordinary course of business consistent with past practice since the Most Recent Balance Sheet Date. The Financial Statements and any other financial statements to be provided prior to Closing, including but not limited to the February 29, 2008 financial statements, include appropriate reserves, expenses or set-asides for (1) all design issues described in Schedule 3.6 , and (2) all pending and open litigation described in Schedule 3.9 .

(d) The Company has good and marketable title to all assets set forth on the Most Recent Balance Sheet, except for such assets as have been sold, transferred or otherwise disposed of in the ordinary course of business since the Most Recent Balance Sheet Date.

Section 3.7 Absence of Certain Developments. Except as set forth in Schedule 3.7 , since the Most Recent Balance Sheet Date there has not been any Material Adverse Effect and the Company has conducted its business in the ordinary and usual course consistent with past practices, and used its commercially reasonable efforts, consistent with past practices, to preserve intact its business relationships with third parties, including, without limitation, customers, suppliers, distributors and employees. Except as set forth in Schedule 3.7 , since the Most Recent Balance Sheet Date, neither the Company nor any of its Subsidiaries has:

(a) sold, leased, licensed or otherwise disposed of any material assets or property except (i) pursuant to existing contracts or commitments disclosed on Schedule 3.15 or (ii) in the ordinary course of business consistent with past practice;

(b) (i) incurred or assumed any debt, except in each case in the ordinary course of business, (ii) assumed, guaranteed, endorsed or otherwise become liable or responsible (whether directly, contingently or otherwise) for the obligations of any other Person (except Seller, the Company or its Subsidiaries), (iii) made any loans, advances or capital contributions to any other Person (except Seller, the Company or its Subsidiaries), or (iv) mortgaged or pledged any material assets or created any Lien upon any material assets except for Permitted Liens;

(c) had any material change in any compensation arrangement or agreement with any director, officer, shareholder or employee of the Company, incurred or made any payment of any dividend or distribution, or had any material change by the Company in its accounting methods or practices; or

(d) agreed or committed to do any of the foregoing.

Section 3.8 Governmental Authorizations; Licenses; Etc. Except as set forth in Schedule 3.8 , the business of each of the Company and its Subsidiaries has been operated in compliance with all applicable laws, rules, regulations, codes, ordinances and orders of all Governmental Authorities. Except as set forth in Schedule 3.8 (and for licenses for Intellectual Property Rights), each of the Company and its Subsidiaries has all permits, licenses, approvals, certificates and other authorizations, and has made all notifications, registrations, certifications and filings with all Governmental Authorities, necessary for the operation of its business as currently conducted. Except as set forth in Schedule 3.8 , as of the date hereof, there is no action, case or proceeding pending or, to the Company’s Knowledge, threatened by any Governmental

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Authority with respect to (i) any alleged violation by the Company or its Subsidiaries of any statute, l