EX-10.38 5 v337239_ex10-38.htm EXHIBIT 10.38

EXHIBIT 10.38

PROMISSORY NOTE

(Acquisition Loan)

March 8, 2013

Borrowers: | Black Diamond, Inc., formerly known as Clarus Corporation
| Black Diamond Equipment, Ltd.
| Black Diamond Retail, Inc.
| Everest/Sapphire Acquisition, LLC
| Gregory Mountain Products, LLC
| POC USA, LLC
| Pieps Corporation
| PIEPS Service, LLC
| BD European Holdings, LLC
Lender: | Zions First National Bank
Amount: | $10,000,000
Maturity Date: | Six years from the date of each Advance hereunder, but not later than March 8, 2021.

For value received, Borrowers promise to pay to the order of Lender at Zions First National Bank, Corporate Banking Group, One South Main Street, Suite 200, Salt Lake City, Utah 84133, the sum of $10,000,000 or such other principal balance as may be outstanding hereunder in lawful money of the United States with interest thereon calculated and payable as provided herein.

Definitions

Terms used in the singular shall have the same meaning when used in the plural and vice versa. Capitalized terms not otherwise defined herein shall have the meaning set forth in the Loan Agreement. As used in this Promissory Note (the “Note”), the term:

“Advance” means one or more disbursements under this Note of not less than $1,000,000 for the purpose of funding Permitted Acquisitions.

“Dollars” and the sign “$” mean lawful money of the United States.

“Draw Period” means the Effective Date through March 8, 2016.

“Loan Agreement” means the Amended and Restated Loan Agreement of even date herewith between Lender and Borrowers, together with any exhibits, amendments, addenda, and modifications.

“Thirty Day FHLB Rate” means the rate per annum quoted by Lender as Lender’s Thirty Day Federal Home Loan Bank rate based upon the FHLB Seattle rate as quoted in Bloomberg, or on the FHLB Seattle internet web site at www.FHLBsea.com, or other comparable service selected by Lender. The definition of “Thirty Day FHLB Rate” is to be strictly interpreted and is not intended to serve any purpose other than providing an index to determine the interest rate used herein. It is not necessarily the lowest rate charged by Lender on its loans. If the Thirty Day FHLB Rate becomes unavailable during the term of this Note, Lender may designate a substitute index after notifying Borrowers.

“Thirty Day LIBOR Rate” means the rate per annum quoted by Lender as its Thirty Day LIBOR Rate based upon quotes from the London Interbank Offered Rate from the British Bankers Association Interest Settlement Rates as quoted for United States Dollars by Bloomberg or other comparable services selected by Lender. This definition of “Thirty Day LIBOR Rate” is to be strictly interpreted and is not intended to serve any purpose other than providing an index to determine the interest rate used herein. It is not the lowest rate at which Lender may make loans to any of its customers, either now or in the future.

Interest

Interest shall accrue on the outstanding principal balance hereunder from the date of disbursement until paid, both before and after judgment, at a variable rate computed on the basis of a 360 day year and actual days elapsed equal to the Thirty Day LIBOR Rate plus the Applicable Margin from time to time in effect, adjusted as of the date of any change in the Thirty Day LIBOR Rate.

Notwithstanding the foregoing, if Lender reasonably determines (which determination shall be conclusive) that (i) quotations of interest rates referred to in the definition of Lender’s Thirty Day LIBOR Rate are not being provided in the relevant amounts or for the relevant maturities for purposes of Lender determining the Thirty Day LIBOR Rate, (ii) the adoption of any applicable law, rule, or regulation or any change therein, or any change in the interpretation or administration thereof by any governmental authority, central bank, or comparable agency charged with the interpretation or administration thereof, or compliance by Lender with any request or directive (whether or not having the force of law) of any such authority, central bank, or comparable agency shall make it unlawful or impossible for Lender to offer loans based on the Thirty Day LIBOR Rate, or (iii) the Thirty Day LIBOR Rate does not adequately cover the cost of Lender making or maintaining advances based on the Thirty Day LIBOR Rate, then Lender shall give notice thereof to Borrowers, whereupon until Lender notifies Borrowers that the circumstances giving rise to such suspension no longer exist, the interest rate hereunder shall be converted to a variable rate computed on the basis of a 360 day year and actual days elapsed equal to the Thirty Day FHLB Rate plus the Applicable Margin from time to time in effect, adjusted as of the date of any change in the Thirty Day FHLB Rate.

The Applicable Margin above the Thirty Day LIBOR Rate or Thirty Day FHLB Rate shall adjust on the first day of each month following the later of the due date or date of receipt of the quarterly or annual financial statements to be provided by Borrowers pursuant to the Loan Agreement.

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Notwithstanding the foregoing, in no case shall the interest rate hereunder be less than 3.25% per annum, regardless of Borrowers’ Senior Net Debt to Trailing Twelve Month EBITDA ratio and regardless of the Thirty Day LIBOR Rate or Thirty Day FHLB Rate.

Advances

This Note shall be an amortizing term loan. Amounts borrowed and repaid may not be re-advanced or re-borrowed by Borrowers. The right of Borrowers to draw funds and the obligation of Lender to make any Advance of the proceeds of this Note to Borrowers shall not accrue, in the case of each requested Advance, until all of the conditions set forth in Section 4 of the Loan Agreement have been fully satisfied and Borrowers have provided evidence that the requested Advance will be used to fund a Permitted Acquisition, and shall terminate on the earlier to occur of: (i) the end of the Draw Period, or (ii) upon occurrence of an Event of Default or event which, with the passage of time or giving of notice or both, would constitute an Event of Default. Any principal amounts for which disbursement has not been requested during the Draw Period shall not be disbursed hereunder and Borrowers shall not be liable to repay such non-disbursed amounts. All amounts owing under this Note shall be due and payable in full by Borrower upon maturity, whether at the stated maturity date, upon acceleration thereof, or upon renewal or extension thereof.

Requests for Advances shall be given in writing or orally no later than 12:00 p.m. Mountain Time of the Banking Business Day on which the Advance is to be made. Advances hereunder shall be made to Borrowers’ account with Lender.

Payment Terms

Principal and interest on each Advance shall be payable as follows: Interest accrued is to be paid monthly in arrears commencing the first month after each Advance and on the same day of each month for the following 11 months. Thereafter, principal and interest shall be payable in equal monthly installments on the same day of each month based on a 60 month mortgage-style amortization of the principal amount of such Advance. All outstanding principal, unpaid interest and all other amounts due under this Note or any of the other Loan Documents shall be paid in full on the Maturity Date of such Advance.

All payments shall be applied (a) first, to reimbursable fees, late charges, costs and expenses payable by Borrowers under the Loan Agreement or any of the other Loan Documents, (b) second, to accrued interest and (c) the remainder, if any, to principal.

Prepayment

Borrowers may prepay all or any portion of this Note at any time. Any prepayments shall first be applied to any Advance for which principal payments are not yet due and with the longest remaining amortization and then to the Advances with the largest number of monthly principal installment payments owing.

In the event of prepayment, Borrowers shall make Lender whole and Borrowers shall pay to Lender all reasonable and documented out-of-pocket costs incurred by Lender in connection with such prepayment and compensate Lender for any loss and any breakage costs arising from the re-employment of funds at rates lower than the rate provided by this Note, cost to Lender of such funds, any interest or fees payable by Lender to lenders of funds obtained by them in order to make or maintain the loan evidenced by this Note and any related costs.

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General

This Note is made in accordance with, governed by, and deemed to be a promissory note under, and subject to all terms and conditions of, the Loan Agreement and, upon a Collateral Triggering Event, is secured by Collateral identified in and contemplated by the Loan Agreement.

If, at any time prior to the end of the Draw Period, this Note shall have a zero balance owing, this Note shall not be deemed satisfied or terminated by and shall remain in full force and effect for future draws unless terminated upon other grounds.

Upon an Event of Default in payment of any principal or interest when due, whether due at stated maturity, by acceleration, or otherwise, all outstanding principal shall bear interest at the Default Rate from the date when due until paid, both before and after judgment.

If an Event of Default occurs, time being the essence hereof, then the entire unpaid balance, with interest as aforesaid, shall, at the election of the holder hereof and without notice of such election, become immediately due and payable in full.

If an Event of Default occurs, Borrowers agree to pay to the holder hereof all collection costs, including reasonable attorney fees and legal expenses, in addition to all other sums due hereunder.

This Note shall be governed by and construed in accordance with the laws of the State of Utah.

Borrowers acknowledge that by execution and delivery of this Note Borrowers have transacted business in the State of Utah and Borrowers voluntarily submit to, consent to, and waive any defense to the jurisdiction of courts located in the State of Utah as to all matters relating to or arising from this Note. EXCEPT AS EXPRESSLY AGREED IN WRITING BY LENDER AND EXCEPT AS PROVIDED IN THE ARBITRATION PROVISIONS IN THE LOAN AGREEMENT, THE STATE AND FEDERAL COURTS LOCATED IN THE STATE OF UTAH SHALL HAVE SOLE AND EXCLUSIVE JURISDICTION OF ANY AND ALL CLAIMS, DISPUTES, AND CONTROVERSIES, ARISING UNDER OR RELATING TO THIS NOTE. NO LAWSUIT, PROCEEDING, OR ANY OTHER ACTION RELATING TO OR ARISING UNDER THIS NOTE MAY BE COMMENCED OR PROSECUTED IN ANY OTHER FORUM EXCEPT AS EXPRESSLY AGREED IN WRITING BY LENDER.

All obligations of Borrowers under this Note shall be joint and several.

Borrowers and all endorsers, sureties and guarantors hereof hereby jointly and severally waive presentment for payment, demand, protest, notice of protest, notice of protest and of non-payment and of dishonor, and consent to extensions of time, renewal, waivers or modifications without notice and further consent to the release of any collateral or any part thereof with or without substitution.

[Signature Pages Follow]

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IN WITNESS WHEREOF, the parties hereto have executed this Promissory Note (Term Loan) and it becomes effective as of the day and year first set forth above.

| Borrowers:
| Black Diamond Equipment, Ltd.
| By: | /s/ Robert Peay
| Name: | Robert Peay
| Title: | Chief Financial Officer and Secretary
| Black Diamond Retail, Inc.
| By: | /s/ Robert Peay
| Name: | Robert Peay
| Title: | Chief Financial Officer and Secretary
| Black Diamond, Inc.
| By: | /s/ Robert Peay
| Name: | Robert Peay
| Title: | Chief Financial Officer, Secretary
|  | and Treasurer
| Everest/Sapphire Acquisition, LLC
| By: | /s/ Robert Peay
| Name: | Robert Peay
| Title: | Secretary and Treasurer
| Gregory Mountain Products, LLC
| By: | /s/ Robert Peay
| Name: | Robert Peay
| Title: | Treasurer

PROMISSORY NOTE (ACQUISITION LOAN)

Signature Pages

| POC USA, LLC
| By: | /s/ Robert Peay
| Name: | Robert Peay
| Title: | Secretary and Treasurer
| BD European Holdings, LLC
| By: | /s/ Robert Peay
| Name: | Robert Peay
| Title: | Secretary and Treasurer
| Pieps Corporation
| By: | /s/ Robert Peay
| Name: | Robert Peay
| Title: | Secretary and Treasurer
| PIEPS Service, LLC
| By: | /s/ Robert Peay
| Name: | Robert Peay
| Title: | Secretary and Treasurer

PROMISSORY NOTE (ACQUISITION LOAN)

Signature Pages

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