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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