Exhibit 10.3

 

SECOND AMENDED AND RESTATED LOAN AGREEMENT

 

Between

 

ZIONS FIRST NATIONAL BANK

Lender

 

and

 

BLACK DIAMOND, INC.

BLACK DIAMOND EQUIPMENT, LTD.

BLACK DIAMOND RETAIL, INC.

EVEREST/SAPPHIRE ACQUISITION, LLC

BD NORTH AMERICAN HOLDINGS, LLC

POC USA, LLC

PIEPS SERVICE, LLC

BD EUROPEAN HOLDINGS, LLC

Co-Borrowers

 

Effective Date: October 31, 2014

 

 

 

 

SECOND AMENDED AND RESTATED LOAN AGREEMENT

 

This Second Amended and Restated Loan Agreement is made and entered into as of
October 31, 2014 (the “Effective Date”) by and among Zions First National Bank,
a national banking association, as Lender, and Black Diamond, Inc., a Delaware
corporation; Black Diamond Equipment, Ltd., a Delaware corporation; Black
Diamond Retail, Inc., a Delaware corporation; Everest/Sapphire Acquisition, LLC,
a Delaware limited liability company; BD North American Holdings, LLC, a
Delaware limited liability company; POC USA, LLC, a Delaware limited liability
company; PIEPS Service, LLC, a Delaware limited liability company; and BD
European Holdings, LLC, a Delaware limited liability company, collectively as
Borrowers, and the other Loan Parties from time to time party hereto.

 

RECITALS

 

A.           Lender and Borrowers have entered into that certain Amended and
Restated Loan Agreement dated as of March 8, 2013, as amended by that certain
First Amendment to Amended and Restated Loan Agreement dated as of February 28,
2014 (collectively, the “A&R Loan Agreement”) pursuant to which, among other
things, Lender extended to Borrowers (i) a revolving line of credit in the
maximum principal amount of $30,000,000 as evidenced by that certain Amended and
Restated Promissory Note (Revolving Loan) dated as of March 8, 2013 (the “A&R
Promissory Note”) and (ii) a term loan in the original principal amount of
$10,000,000 as evidenced by that certain Amended and Restated Promissory Note
(Term Loan) dated as of February 28, 2014.

 

B.           Lender and Borrowers now desire to enter into this Second Amended
and Restated Loan Agreement for the purpose of amending and restating the A&R
Loan Agreement in its entirety.

 

For good and valuable consideration, the receipt and sufficiency of which are
hereby acknowledged, the parties agree as follows:

 

1.           Definitions

 

1.1           Definitions

 

Terms defined in the singular shall have the same meaning when used in the
plural and vice versa. As used herein, the term:

 

“Accordion Increase Loan Fee” means a one-time loan fee equal to $20,000 to be
paid by the Borrowers to Lender in respect of the increased availability under
the Revolving Loan.

 

“Accounting Standards” means (i) in the case of financial statements and
reports, conformity with generally accepted accounting principles fairly
representing in all material respects the financial condition as of the date
thereof and the results of operations for the period or periods covered thereby,
consistent in all material respects with other financial statements of that
company previously delivered to Lender in connection with the Loan, and (ii) in
the case of calculations, definitions, and covenants, generally accepted
accounting principles consistent in all material respects with those used in the
preparation of financial statements of the Loan Parties previously delivered to
Lender.

 

1

 

 

“Administrator” shall have the meaning set forth in Section 10.18 Jury Trial
Waiver, Arbitration, and Class Action.

 

“Affiliate” means, with respect to a specified Person, another Person (i) which
directly or indirectly controls or is controlled by or is under common control
with the Person specified, (ii) which is a Subsidiary of the Person specified,
or (iii) which directly or indirectly beneficially owns or holds 25% or more of
any voting class of any equity interest of the Person specified. As used in this
definition, “control” or “controlled” 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 equity interests,
by contract, or otherwise.

 

“Agreement” means this Loan Agreement, as amended, supplemented, restated,
amended and restated, or otherwise modified from time to time and together with
any exhibits, schedules and addendums hereof and thereto.

 

“Applicable Margin” means, for any day, the applicable percentage set forth as
follows:

 

Tier  Senior Net Debt to
Trailing Twelve
Month EBITDA Ratio  Applicable
Percentage   Non-Use Fee  1  Greater than 2.00   4.00%   0.60% 2  Greater than
or equal to 1.00, but less than or equal to 2.00   3.00%   0.50% 3  Less than
1.00   2.00%   0.40%

 

The Applicable Margin shall be adjusted from time to time upon delivery to
Lender of the quarterly financial statements of Black Diamond required to be
delivered pursuant to Section 6.7 accompanied by a written calculation of the
ratio of Senior Net Debt to Trailing Twelve Month EBITDA certified on behalf of
the Borrowers by a Responsible Officer of the Borrowers as of the end of the
fiscal quarter for which such financial statements are delivered. If such
calculation indicates that the Applicable Margin shall increase or decrease,
then on the first day of the calendar month following the date of delivery of
such financial statements and written calculation the Applicable Margin shall be
adjusted in accordance therewith; provided, however, that if the Borrowers shall
fail to deliver any such financial statements for any such fiscal quarter by the
date required pursuant to Section 6.7, then, at Lender’s election, effective as
of the first day of the calendar month following the end of the fiscal quarter
during which such financial statements were to have been delivered, and
continuing through the first day of the calendar month following the date (if
ever) when such financial statements and such written calculation are finally
delivered, the Applicable Margin shall be conclusively presumed to equal Tier 1
specified in the pricing table set forth above.

 

2

 

 

In the event that any financial statement delivered pursuant to Sections 6.7 is
inaccurate, and such inaccuracy, if corrected, would have led to the imposition
of a higher Applicable Margin for any period than the Applicable Margin applied
for that period, then (i) the Borrowers shall immediately deliver to Lender a
corrected financial statement with an accompanying corrected written calculation
certified by a Responsible Officer of the Borrowers for that period, (ii) the
Applicable Margin shall be determined based on the corrected calculation for
that period, and (iii) the Borrowers shall immediately pay to Lender the accrued
additional interest owing as a result of such increased Applicable Margin for
that period. This paragraph shall survive the termination of this Agreement
until the payment in full in cash of the aggregate outstanding principal balance
of the Loans.

 

“Arbitration Order” shall have the meaning set forth in Section 10.18 Jury Trial
Waiver, Arbitration, and Class Action.

 

“Asset Coverage” means (i) 70% of the sum of the net book value of the accounts
receivable, inventory and property, plant and equipment, less (ii)Total Senior
Net Liabilities of Borrowers on a Consolidated basis, as reflected on Black
Diamond’s Consolidated Financial Statements.

 

“Asset Protection Trust” shall have the meaning set forth in Section 6.27
Creation of Trusts; Transfers to Trusts.

 

“Auto-Extension Letter of Credit” shall have the meaning set forth in Section
2.2e Letters of Credit.

 

“A&R Loan Agreement” shall have the meaning set forth in the recitals of this
Agreement.

 

“A&R Promissory Note” shall have the meaning set forth in the recitals of this
Agreement.

 

“Banking Business Day” means any day not a Saturday, Sunday, legal holiday in
the State of Utah, or day on which national banks in the State of Utah are
authorized to close and, when used with respect to all notices and
determinations in connection with, and payments of principal and interest on,
advances of the Loan bearing interest at a LIBOR Rate, any day on which dealings
in dollar deposits are also carried on in the London Interbank market and banks
are open for business in London.

 

“BDEH” means BD European Holdings, LLC, a limited liability company organized
and existing under the laws of the State of Delaware.

 

“BDEL” means Black Diamond Equipment, Ltd., a corporation organized and existing
under the laws of the State of Delaware.

 

“BDNA” means BD North American Holdings, LLC, a limited liability company
organized and existing under the laws of the State of Delaware.

 

“BD-Retail” means Black Diamond Retail, Inc., a corporation organized and
existing under the laws of the State of Delaware.

 

3

 

 

“Black Diamond” means Black Diamond, Inc., a corporation organized and existing
under the laws of the State of Delaware.

 

“Borrowers” means, collectively, Black Diamond, BDEL, BD-Retail, Everest, BDNA,
POC, Pieps Service, BDEH and any domestic Subsidiaries of Borrowers formed by
Borrowers as provided in Section 6.21 Subsidiaries or acquired pursuant to a
Permitted Acquisition, or any of them.

 

“Capital Expenditures” means expenditures for fixed or capital assets as
determined in accordance with Accounting Standards.

 

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

 

“Collateral” means any and all property owned, leased or operated by a Person
covered by the Collateral Documents and any and all other property of any Loan
Party, existing upon or acquired after the Effective Date, that may after the
occurrence of a Collateral Triggering Event be or become subject to a security
interest or Lien in favor of Lender to secure the Obligations.

 

“Collateral Documents” means, collectively, all security agreements,
assignments, pledges, control agreements, financing statements, deeds of trust,
mortgages, and other documents creating, granting, evidencing or perfecting a
Lien upon the Collateral as security for payment of the Obligations under the
Loan Documents, and all amendments, modifications, addendums, and replacements
thereof, whether presently existing or created in the future.

 

“Collateral Triggering Event” means the occurrence and continuance beyond any
applicable cure or grace periods of any Event of Default.

 

“Compliance Certificate” means a certificate executed by the Loan Parties, as
described in Section 6.7 Financial Statements and Reports, substantially in the
form attached hereto as Exhibit A.

 

“Consolidated” or “on a Consolidated basis” means, with respect to calculations,
amounts, reports, statements, or certificates required hereunder, such
calculations, amounts, reports, statements or certificates of a Person and their
Subsidiaries.

 

“Consolidated Financial Statements” means the Consolidated financial statements
of Black Diamond prepared in accordance with Accounting Standards.

 

“Covenant Liquidity” means unencumbered cash or marketable securities in one or
more deposit or approved investment accounts owned by Borrowers and maintained
with or managed by Lender or Lender’s Affiliates.

 

4

 

 

“Debt” means, with respect to any Person and without duplication, (i)
indebtedness or liability for borrowed money; (ii) obligations evidenced by
bonds, debentures, notes, or other similar instruments, including obligations so
evidenced incurred in connection with the acquisition of property, assets or
businesses; (iii) obligations for the deferred purchase price of property or
services (excluding trade obligations incurred in the ordinary course of
business not more than 120 days past due); (iv) obligations as lessee under
capital leases; (v) current liabilities in respect of unfunded vested benefits
under Plans covered by ERISA; (vi) obligations under acceptance facilities;
(vii) any Disqualified Equity Interests of such Person; (viii) the face amount
of all letters of credit issued for the account of such Person and without
duplication, all drafts drawn thereunder and all reimbursement or payment
obligations with respect to letters of credit, surety bonds, and other similar
instruments issued by such Person; (ix) all indebtedness created or arising
under any conditional sale or other title retention agreement, or incurred as
financing, in either case with respect to property acquired by such Person (even
though the rights and remedies of the seller or lender under such agreement in
the event of default are limited to repossession or sale of such property); (x)
the principal balance outstanding under any synthetic lease, off-balance sheet
loan or similar off balance sheet financing product; (xi) all guarantees,
endorsements (other than for collection or deposit in the ordinary course of
business), and other contingent obligations to purchase, to provide funds for
payment, to supply funds to invest in any Person, or otherwise to provide
assurance to the obligee of such liability that such liability will be paid or
discharged, or that any agreements relating thereto will be complied with, or
that the holders of such liability will be protected (in whole or in part)
against loss with respect thereto; (xii) obligations as lessee under any
operating lease; and (xiii) obligations secured by any mortgage, deed of trust,
lien, pledge, or security interest or other charge or encumbrance on property,
whether or not such Person has assumed or become liable for the payment of any
such obligation.

 

“Default” means an event which, with the passage of time or giving of notice or
both, without waiver or timely cure, would constitute an Event of Default.

 

“Default Rate” means 3.0% per annum above the LIBOR Rate plus the Tier 1
Applicable Margin.

 

“Dispute” shall have the meaning set forth in Section 10.18 Jury Trial Waiver,
Arbitration, and Class Action Waiver.

 

“Disqualified Equity Interests” means any Equity Interest which, by its terms
(or by the terms of any security or other Equity Interest into which it is
convertible or for which it is exchangeable), or upon the happening of any event
or condition (a) matures or is mandatorily redeemable, pursuant to a sinking
fund obligation or otherwise, or is redeemable at the option of the holder
thereof, in whole or in part, on or prior to the date that is 91 days following
the final maturity date of the Loan (excluding any provisions requiring
redemption upon a “change of control” or similar event; provided that such
“change of control” or similar event results in the prior payment in full in
cash of the Obligations (other than contingent indemnification obligations to
the extent no claim giving rise thereto has been asserted), the termination of
all commitments to lend hereunder and the termination of this Agreement), (b) is
convertible into or exchangeable for (1) debt securities or (2) any Equity
Interest referred to in (a) above, in each case, at any time on or prior to the
date that is 91 days following the final maturity date of the Loan, or (c) is
entitled to receive scheduled dividends or distributions in cash prior to the
time that the Obligations (other than contingent indemnification obligations to
the extent no claim giving rise thereto has been asserted) are paid in full in
cash.

 

“Distributions” means any payment to any shareholder of the Loan Parties for
dividends, repurchases, redemptions, retirements or reacquisitions of capital
stock, whether in cash or assets.

 

5

 

 

“Dry Hole Expenses” means verifiable expenses for legal, accounting, investment
banking, financial advisory, consulting and other third-party services that
would otherwise qualify as Transaction Expenses except that such expenses
related to transactions that failed to close, not to exceed an aggregate amount
of $500,000 during any Trailing Twelve Month period.

 

“EBITDA” means earnings (excluding extraordinary gains and losses realized other
than in the ordinary course of business and excluding the sale or writedown of
intangible or capital assets) before Interest Expense, Income Tax Expense,
depreciation, amortization, other non-cash charges (including stock-based
compensation and inventory increases required in purchase accounting),
Transaction Expenses incurred on or prior to September 30, 2014, Dry Hole
Expenses incurred on or prior to September 30, 2014, and other non-recurring
expenses approved by Lender in its sole discretion, in each case as determined
in accordance with Accounting Standards.

 

“Environmental Condition” means any condition involving or relating to Hazardous
Materials and/or the environment affecting the Real Property, whether or not yet
discovered, which is reasonably likely to or does result in any damage, loss,
cost, expense, claim, demand, order, or liability to or against the Loan Parties
or Lender by any third party (including, without limitation, any government
entity), including, without limitation, any condition resulting from the
operation of the Loan Parties’ business and/or operations in the vicinity of the
Real Property and/or any activity or operation formerly conducted by any Person
on or off the Real Property.

 

“Environmental Health and Safety Law” means any legal requirement that governs
the Loan Parties or the Real Property that requires or relates to:

 

a.           advising appropriate authorities, employees, or the public of
intended or actual releases of Hazardous Materials, violations of discharge
limits or other prohibitions, and of the commencement of activities, such as
resource extraction or construction, that do or could have significant impact on
the environment;

 

b.           preventing or reducing to acceptable levels the release of
Hazardous Materials;

 

c.           reducing the quantities, preventing the release, or minimizing the
hazardous characteristics of wastes that are generated;

 

d.           assuring that products are designed, formulated, packaged, and used
so that they do not present unreasonable risks to human health or the
environment when used or disposed of;

 

e.           protecting resources, species, or ecological amenities;

 

f.            use, storage, transportation, sale, or transfer of Hazardous
Materials or other potentially harmful substances;

 

g.           cleaning up Hazardous Materials that have been released, preventing
the threat of release, and/or paying the costs of such clean up or prevention;
or

 

6

 

 

h.           making responsible parties pay for damages done to the health of
others or the environment or permitting self-appointed representatives of the
public interest to recover for injuries done to public assets.

 

“Equity Interests” means shares of capital stock, partnership interests,
membership interests or units in a limited liability company, beneficial
interests in a trust or other equity ownership interests in a Person, and any
warrants, options or other rights entitling the holder thereof to purchase or
acquire any such equity interest.

 

“ERISA” shall have the meaning set forth in Section 5.8 Compliance with ERISA.

 

“ERISA Affiliate” shall have the meaning set forth in Section 5.8 Compliance
with ERISA.

 

“Event of Default” shall have the meaning set forth in Section 7.1 Events of
Default.

 

“Everest” means Everest/Sapphire Acquisition, LLC, a limited liability company
organized and existing under the laws of the State of Delaware.

 

“Excluded Taxes” means any of the following Taxes imposed on or with respect to
any Lender or required to be withheld or deducted from a payment to any Lender
under this Agreement: (a) Taxes imposed on or measured by net income (however
denominated), franchise Taxes, and branch profits Taxes, in each case, (i)
imposed as a result of such Lender being organized under the laws of, or having
its principal office or its applicable lending office located in the
jurisdiction imposing such Tax (or any political subdivision thereof) or (ii)
that are Other Connection Taxes; (b) U.S. federal withholding Taxes imposed on
amounts payable to or for the account of such Lender with respect to an
applicable interest in the Loan pursuant to a law in effect on the date on which
(i) such Lender acquires such interest in the Loan or (ii) such Lender changes
its lending office, except to the extent that such Lender (or its assignor, if
any) was entitled, at the time of designation of a new lending office (or
assignment), to receive additional amounts from any Loan Party with respect to
such withholding Tax pursuant to Section 2.9a Payment Free of Taxes (provided
that such Lender has complied with Section 2.9d Status of Lenders); (c) Taxes
attributable to such Lender’s failure to comply with Section 2.9d Status of
Lenders; and (d) any U.S. federal withholding Taxes imposed under FATCA.

 

“Existing Debt” means the existing debt of Borrowers and their Subsidiaries as
set forth on Exhibit B attached hereto and incorporated hereby.

 

“FATCA” means Sections 1471 through 1474 of the Code, as of the date of this
Agreement (or any amended or successor version that is substantively comparable
and not materially more onerous to comply with) and any current or future
regulations or official interpretations thereof, and any agreements entered into
pursuant to Section 1471(b)(1) of the Code.

 

“FASB” shall have the meaning set forth in Section 5.8 Compliance with ERISA.

 

“Fiscal Year” means the fiscal year of Black Diamond.

 

“Fiscal Year End” means December 31 for any year.

 

7

 

 

“FHLB Rate” means, as of any date of determination, the rate per annum quoted by
Lender as its Thirty Day FHLB 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. This definition of “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 the
lowest rate at which Lender may make loans to any of its customers, now or in
the future. If the FHLB Rate becomes unavailable during the term of this
Agreement, Lender may designate a substitute index after notifying Borrowers.

 

“Foreign Lender” means any Lender that is not a U.S. Person.

 

“Hazardous Materials” means (i) “hazardous waste” as defined by the Solid Waste
Disposal Act, as amended by the Resource Conservation and Recovery Act of 1976
(42 U.S.C. Section 6901 et. seq.), including any future amendments thereto, and
regulations promulgated thereunder, and as the term may be defined by any
contemporary state counterpart to such act; (ii) “hazardous substance” as
defined by the Comprehensive Environmental Response, Compensation and Liability
Act of 1980 (42 U.S.C. Section 9601 et. seq.), including any future amendments
thereto, and regulations promulgated thereunder, and as the term may be defined
by any contemporary state counterpart of such act; (iii) asbestos; (iv)
polychlorinated biphenyls; (v) underground or above ground storage tanks,
whether empty or filled or partially filled with any substance; (vi) any
substance the presence of which is or becomes prohibited by any federal, state,
or local law, ordinance, rule, or regulation; and (vii) any substance which
under any federal, state, or local law, ordinance, rule or regulation requires
special handling or notification in its collection, storage, treatment,
transportation, use or disposal.

 

“Hedging Transaction” means and includes any transaction now existing or
hereafter entered into between any of the Loan Parties and Lender or an
Affiliate of Lender which is a rate swap, basis swap, forward rate transaction,
commodity swap, commodity option, equity or equity index swap, equity or equity
index option, bond option, interest rate option, foreign exchange transaction,
cap transaction, floor transaction, collar transaction, forward transaction,
currency swap transaction, cross-currency rate swap transaction, currency option
or any other similar transaction (including any option with respect to any of
these transactions) or any combination thereof whether linked to one or more
interest rates, foreign currencies, commodity prices, equity prices or other
financial measures, including without limitation the transactions entered into
pursuant to the Hedging Transaction Documents.

 

“Hedging Transaction Documents” means and includes all ISDA Master Agreements
and Schedules thereto, and all Confirmations (as such term is defined by any
ISDA Master Agreement) between any of the Loan Parties and Lender or an
Affiliate of Lender in connection with any Hedging Transactions, together with
all renewals, extensions, modifications, and consolidations of or substitutions
for any of the foregoing “Income Tax Expense” means expenditures and accruals
for federal and state income taxes and foreign income taxes, each determined in
accordance with Accounting Standards.

 

“Indemnified Taxes” means (a) Taxes, other than Excluded Taxes, imposed on or
with respect to any payment made by or on account of any obligation of the Loan
Parties under any Loan Document and (b) to the extent not otherwise described in
(a), Other Taxes.

 

8

 

 

“Intercompany Loans” means any loan or extension of credit from the Loan Parties
or non-Loan Party Subsidiaries to any Loan Party or non-Loan Party Subsidiary,
now existing or in the future, including, without limitation, those set forth on
Schedule 1.1 hereto.

 

“Interest Expense” means expenditures and accruals for interest determined in
accordance with Accounting Standards.

 

“Joinder Agreement” means an agreement whereby a company which is the subject of
a Permitted Acquisition or which otherwise becomes a Subsidiary of any Loan
Party agrees to become a Borrower and be bound by the terms and conditions of
the Loan Documents, in substantially the form of Exhibit D.

 

“Laws” means any law, statute, rule, regulation or order of any domestic or
foreign government, or any instrumentality or agency thereof having jurisdiction
over the conduct of any Loan Party’s business or the ownership of its
properties.

 

“LC Sublimit” means, at any time, a portion of the Revolving Loan amount
available from time to time for the issuance of Letters of Credit equal to the
lesser of (a) the undrawn amount under the Revolving Loan (including amounts
frozen for outstanding Letters of Credit) at the time of determination and (b)
$5,000,000.

 

“Lender” means Zions First National Bank, a national banking association, its
successors, and assigns.

 

“Letter of Credit” means any standby or commercial letter of credit issued by
Lender under this Agreement pursuant to Section 2.2e Letters of Credit for the
account of Borrower.

 

“LIBOR Rate” means the rate per annum quoted by Lender as its One Month LIBOR
Rate based upon the London Interbank Offered Rate for Dollar deposits published
by Bloomberg or other comparable services selected by Lender, as determined for
the date of any adjustment thereof at approximately 11:00 a.m. London time two
Banking Business Days prior to such date of adjustment. If such LIBOR Rate is
not available at such time for any reason, then the LIBOR Rate will be
determined by such alternate method as reasonably selected by Lender. This
definition of 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. The LIBOR Rate of Lender may not necessarily be the same as the
quoted offered side in the Eurodollar time deposit market quoted by any
particular institution or service. It is not necessarily the lowest rate at
which Lender may make loans to any of its customers, either now or in the
future.

 

“Lien” means, with respect to any asset, (a) any mortgage, deed of trust, lien,
pledge, hypothecation, encumbrance, charge, security interest, assignment,
deposit arrangement, or other preferential arrangement of any nature, in, on, of
or with respect to such asset, (b) the interest of a vendor or lessor under any
conditional sale agreement, capital lease or title retention agreement (or any
financing lease having substantially the same economic effect as any of the
foregoing) relating to such asset, (c) under the Uniform Commercial Code of any
jurisdiction, any financing statement filed identifying or including such asset
as collateral, and (d) without limiting the foregoing, in the case of Equity
Interests, any purchase option, call or similar right of a third party with
respect to such Equity Interests.

 

9

 

 

“Loan” means the Revolving Loan.

 

“Loan Documents” means this Agreement, Promissory Note, any Hedging Transaction
Documents, all other agreements, documents or instruments governing, evidencing,
securing, guaranteeing or otherwise pertaining to the Obligations, and all other
agreements and documents contemplated by any of the aforesaid documents. Any
reference in this Agreement or any other Loan Document to a Loan Document shall
include all appendices, exhibits or schedules thereto, and all amendments,
restatements supplements or other modifications, addendums and replacements
thereto, whether presently existing or created in the future, and shall refer to
this Agreement or such Loan Document as the same may be in effect at any and all
times such reference becomes operative.

 

“Loan Parties” means Borrowers, each domestic Subsidiary of any of the
foregoing, and each Person who becomes a party to this Agreement as a borrower.

 

“Material Adverse Effect” means a material adverse effect on Black Diamond’s and
its Subsidiaries’ financial condition, conduct of their business, or ability to
perform their obligations under the Loan Documents, in each case taken as a
whole.

 

“Maturity Date” means April 1, 2017.

 

“Maximum Availability” means, at the time of determination, an amount equal to
the Revolving Loan amount minus the aggregate principal amount of all advances
outstanding under the Revolving Loan (including amounts frozen for outstanding
Letters of Credit).

 

“Minimum EBITDA Period” means (i) at any time prior to the Permanent Accordion
Increase Date other than during a Seasonal Accordion Increase Period, the period
commencing the date upon which Covenant Liquidity is less than $30,000,000 and
ending the date upon which Covenant Liquidity equals or exceeds $30,000,000 and
(ii) any period following the Permanent Accordion Increase Date.

 

“Multi-Employer Plan” shall have the meaning set forth in Section 5.8 Compliance
with ERISA.

 

“Negative Pledge” shall have the meaning set forth in Section 6.15 Negative
Pledge.

 

“Net Proceeds” means, with respect to any event, (a) the cash proceeds received
in respect of such event, including (i) any cash received in respect of any
non-cash proceeds (including any cash payments received by way of deferred
payment of principal pursuant to a note or installment receivable or purchase
price adjustment receivable or otherwise, but excluding any interest payments),
but only as and when received, (ii) in the case of a casualty, insurance
proceeds and (iii) in the case of a condemnation or similar event, condemnation
awards and similar payments, net of (b) the sum of (i) all reasonable fees and
out-of-pocket expenses paid to third parties (other than Affiliates) in
connection with such event, (ii) in the case of a sale, transfer or other
disposition of an asset (including pursuant to a sale and leaseback transaction
or a casualty or a condemnation or similar proceeding), the amount of all
payments required to be made as a result of such event to repay Debt (other than
the Loan) secured by such asset or otherwise subject to mandatory prepayment as
a result of such event, and (iii) the amount of all taxes paid (or reasonably
estimated to be payable) and the amount of any reserves established to fund
contingent liabilities reasonably estimated to be payable, in each case during
the year that such event occurred or the next succeeding year and that are
directly attributable to such event (as determined reasonably and in good faith
by the Loan Parties).

 

10

 

 

“Net Worth” means total assets minus total liabilities.

 

“Obligations” means and includes without limitation (but without duplication):
(i) any and all obligations, indebtedness and liabilities of any of the Loan
Parties, whether individual, joint and several, absolute or contingent, direct
or indirect, liquidated or unliquidated, now or hereafter existing, in favor of
Lender, including without limitation all unpaid principal of and accrued and
unpaid interest (including any interest accruing after the filing of any
petition in bankruptcy or the commencement of any proceeding relating to any
Loan Party, whether or not a claim for post-filing or post-petition interest is
allowed in such proceeding) on the Loan, all accrued and unpaid fees and all
expenses (including all fees and expenses of counsel to Lender incurred and
payable by the Loan Parties pursuant to this Agreement or any other Loan
Document), reimbursements, indemnities and other obligations of the Loan Parties
to Lender or any indemnified party arising under the Loan Documents; (ii) any
and all obligations of any of the Loan Parties, whether individual, joint and
several, absolute or contingent, direct or indirect, liquidated or unliquidated,
now or hereafter existing, in favor of Lender with respect to any treasury
management services, including, without limitation, controlled disbursements,
automated clearinghouse transactions, interstate depository network services,
credit or debit or purchasing cards, or other cash management services; and
(iii) any and all obligations of any of the Loan Parties to Lender or its
Affiliates arising under or in connection with any Hedging Transaction now
existing or hereafter entered into between any such Loan Party and Lender or its
Affiliates, in each case, together with all renewals, extensions, modifications
or refinancings thereof.

 

“Organizational Documents” means, in the case of a corporation, its Articles of
Incorporation or Certificate of Incorporation and By-Laws; in the case of a
general partnership, its Articles of Partnership; in the case of a limited
partnership, its Articles of Limited Partnership; in the case of a limited
liability company, its Articles of Organization or Certificate of Formation and
Operating Agreement or Regulations, if any; in the case of a limited liability
partnership, its Articles of Limited Liability Partnership; and all amendments,
modifications, and changes to any of the foregoing which are currently in
effect.

 

“Other Connection Taxes” means, with respect to any recipient of a payment under
any Loan Document, Taxes imposed as a result of a present or former connection
between such recipient and the jurisdiction imposing such Tax (other than
connections arising from such recipient having executed, delivered, become a
party to, performed its obligations under, received payments under, received or
perfected a security interest under, sold or assigned of any interest in,
engaged in any other transaction pursuant to or enforced any Loan Document).

 

“Other Taxes” means all present or future stamp, court or documentary,
intangible, recording, filing or similar Taxes or any other excise or property
Taxes, charges or similar levies that arise from any payment made under, from
the execution, delivery, performance, enforcement or registration of, from the
receipt or perfection of a security interest under, or otherwise with respect
to, any Loan Document, except any such Taxes that are imposed with respect to an
assignment.

 

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“PBGC” shall have the meaning set forth in Section 5.8 Compliance with ERISA.

 

“Permanent Accordion Increase Date” means the date upon which all of the
following conditions are satisfied: (i) Black Diamond and its Subsidiaries, on a
Consolidated basis, achieve a Trailing Twelve Month EBITDA of not less than
$11,000,000 for the most recent fiscal quarter then ending, (ii) Borrowers
provide Lender not less than 5 days’ prior written notice that they wish to have
permanent access to the maximum principal amount under the Revolving Loan of up
to $30,000,000, and (iii) the Accordion Increase Loan Fee has been paid to
Lender.

 

“Permitted Acquisitions” shall have the meaning set forth in Section 6.17
Mergers, Consolidations, Acquisitions, Sale of Assets.

 

“Permitted Business” means any business in which the Loan Parties are engaged on
the Effective Date or any other business in the outdoor recreation industry,
including without limitation, climbing, hiking, skiing, cycling and camping
products, accessories and apparel, and any business reasonably similar,
ancillary, related or complementary thereto, or a reasonable extension,
development or expansion thereof.

 

“Permitted Joint Venture” shall have the meaning set forth in Section 6.18 Joint
Ventures and Investments.

 

“Permitted Liens” shall have the meaning set forth in Section 6.15 Negative
Pledge.

 

“Person” means any natural person, any unincorporated association, any
corporation, firm, any joint venture, any partnership, any limited liability
company, any association, any enterprise, any trust or other legal entity or
organization, or any government or political subdivision or any agency,
department or instrumentality thereof.

 

“Prepayment Event” means (a) any sale, transfer or other disposition of any
property or asset of any Loan Party (other than sales of inventory in the
ordinary course of business) to the extent such asset or property has a fair
value immediately prior to such event in excess of (i) $100,000 for any single
sale, transfer or disposition or (ii) $250,000 in the aggregate with all other
such sales, transfers and dispositions; (b) any casualty or other insured damage
to, or any taking under power of eminent domain or by condemnation or similar
proceeding of, any property or asset of any Loan Party in respect of which any
Loan Party, individually or in the aggregate, shall receive Net Proceeds in
excess of $100,000; or (c) the occurrence of any Change of Control.

 

“PIEPS Service” means PIEPS Service, LLC, a limited liability company organized
and existing under the laws of the State of Delaware.

 

“Plan” shall have the meaning set forth in Section 5.8 Compliance with ERISA.

 

“POC” means POC USA, LLC, a limited liability company organized and existing
under the laws of the State of Delaware.

 

“Promissory Note” means the Revolving Note.

 

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“Real Property” means any and all real property or improvements thereon owned or
leased by any Loan Party or in which any Loan Party has any other interest of
any nature whatsoever.

 

“Reimbursement Agreement” shall have the meaning set forth in Section 2.2e
Letters of Credit.

 

“Reportable Event” shall have the meaning set forth in Section 5.8 Compliance
with ERISA.

 

“Responsible Officer” means, with respect to any Borrower, the president,
chairman, vice chairman, chief executive officer, chief financial officer, vice
president, treasurer, secretary or controller of such Borrower.

 

“Revolving Loan” means the revolving loan described in Section 2.2 Revolving
Loan.

 

“Revolving Note” means, individually and collectively, the revolving line of
credit promissory note to be executed by Borrowers and delivered to Lender
pursuant to Section 2.2c Revolving Note hereto, and any and all renewals,
extensions, modifications, and replacements thereof.

 

“Seasonal Accordion Increase Period” means, solely to the extent (i) with
respect to the first such period, the Accordion Increase Loan Fee has been paid
to Lender, (ii) Covenant Liquidity is greater than $40,000,000 and (iii) prior
to the Permanent Accordion Increase Date, the period commencing July 1st of each
Fiscal Year and ending on the earlier of (a) December 31st of such Fiscal Year
and (b) the date upon which Covenant Liquidity is less than $40,000,000.

 

“Senior Net Debt” means Borrowers’ Debt minus cash on hand, cash equivalents,
marketable securities, and Subordinated Debt.

 

“Subordinated Debt” means those certain 5% Unsecured Subordinated Notes not to
exceed an aggregate amount of up to $23,000,000, executed by Black Diamond dated
as of: (i) May 28, 2010 in favor of Kanders GMP Holdings, LLC, Robert R.
Schiller Cornerstone Trust, and Deborah Schiller 2005 Revocable Trust; (ii) May
29, 2012 in favor of Kanders GMP Holdings and Schiller Gregory Investment
Company, LLC; and (iii) August 13, 2012 in favor of Kanders GMP Holdings and
Schiller Gregory Investment Company, LLC.

 

“Subsidiaries” means any existing or future domestic or foreign corporation,
partnership, joint venture, limited liability company or other business entity
of which a majority of the shares of securities or other interests having
ordinary voting power for the election of directors or other governing body
(other than securities or interests having such power only by reason of the
happening of a contingency) are at the time beneficially owned by any Borrower,
or the management of which is otherwise controlled by any Borrower, directly, or
indirectly through one or more intermediaries. As used in this definition,
“control” or “controlled” 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 equity interests, by contract,
or otherwise.

 

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“Sweep Account” means any account or accounts of Borrowers established with
Lender pursuant to the Sweep Account Agreement, now or in the future.

 

“Sweep Account Agreement” means any agreement between Borrowers and Lender
establishing a sweep account arrangement, and all amendments, modifications and
replacements thereof.

 

“Taxes” means all present or future taxes, levies, imposts, duties, deductions,
withholdings (including backup withholding), assessments, fees or other charges
imposed, levied, withheld or assessed by any governmental authority, including
any interest, additions to tax or penalties applicable thereto.

 

“Total Senior Net Liabilities” means total liabilities minus the sum of: cash on
hand, cash equivalents, marketable securities, Subordinated Debt, and deferred
tax liabilities.

 

“Trailing Twelve Month” means the 12 calendar month period immediately preceding
the date of calculation.

 

“Transaction Expenses” means reasonable and customary costs and fees paid or
accrued in connection with the closing of any acquisitions, including all legal,
accounting, banking and underwriting fees and expenses, commissions, discounts
and other issuance expenses (including, for the avoidance of doubt, financial
consultants engaged for the purpose of determining and implementing a best
practices strategy with respect to the integration of Black Diamond into the
overall Black Diamond operations, accounting systems, culture and so forth).

 

“U.S. Person” means any Person that is a “United States Person” as defined in
Section 7701(a)(30) of the Code.

 

1.2           Terms Generally

 

The definitions of terms herein shall apply equally to the singular and plural
forms of the terms defined. Whenever the context may require, any pronoun shall
include the corresponding masculine, feminine and neuter forms. The words
“include”, “includes and “including” shall be deemed to be followed by the
phrase “without limitation”. The word “will” shall be construed to have the same
meaning and effect as the word “shall”. Unless the context requires otherwise
(a) any definition of or reference to any agreement, instrument or other
document herein shall be construed as referring to such agreement, instrument or
other document as from time to time amended, supplemented or otherwise modified
(subject to any restrictions on such amendments, supplements or modifications
set forth herein), (b) any reference herein to any Person shall be construed to
include such Person’s successors and assigns, (c) the words “herein”, “hereof”
and “hereunder”, and words of similar import, shall be construed to refer to
this Agreement in its entirety and not to any particular provision hereof, (d)
all references to Articles, Sections, Exhibits and Schedules shall be construed
to refer to Articles and Sections of, and Exhibits and Schedules to, this
Agreement and (e) the words “asset” and “property” shall be construed to have
the same meaning and effect and to refer to any and all tangible and intangible
assets and properties, including cash, securities, accounts and contract rights.

 

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2.           The Loan

 

2.1           Intentionally Omitted

 

2.2           Revolving Loan

 

a.           Amount of Revolving Loan. Upon fulfillment of all conditions
precedent set forth in this Agreement, subject to the terms of the Revolving
Note, and so long as no Event of Default exists which has not been waived or
timely cured, and no other breach has occurred which has not been waived or
timely cured under the Loan Documents, Lender agrees to loan Borrowers up to
$30,000,000 pursuant to this Section 2.2; provided, however, other than during a
Seasonal Accordion Increase Period, Lender shall loan up to no more than
$20,000,000 at any one time outstanding prior to the Permanent Accordion
Increase Date.

 

b.           Nature and Duration of Revolving Loan. The Revolving Loan shall be
a revolving loan payable in full upon the date and upon the terms and conditions
provided in this Agreement and in the Revolving Note. Lender and Borrowers
intend the Revolving Loan to be in the nature of a line of credit under which
Borrowers may repeatedly draw funds on a revolving basis in accordance with the
terms and conditions of this Agreement and the Revolving Note. If, at any time
prior to the Maturity Date, the Revolving Note shall have a zero balance owing,
the Revolving Note shall not be deemed satisfied or terminated and shall remain
in full force and effect for future draws unless terminated or suspended upon
other grounds. The right of Borrowers to draw funds and the obligation of Lender
to advance funds under the Revolving Loan shall not accrue until all of the
conditions set forth in Section 4. Conditions to Loan Disbursements have been
fully satisfied, and shall terminate: (i) upon occurrence and during the
continuation of a Default or Event of Default, or (ii) upon the maturity of the
Revolving Loan, unless the Revolving Loan is renewed or extended by Lender in
which case such termination shall occur upon the maturity of the final renewal
or extension of the Revolving Loan. Upon such termination, any and all amounts
owing to Lender pursuant to the Revolving Note and this Agreement shall
thereupon be due and payable in full.

 

c.           Revolving Note. The Revolving Loan shall be evidenced by a Second
Amended and Restated Promissory Note (Revolving Loan) (the “Revolving Note)
which shall amend and restate the A&R Promissory Note in its entirety. The
Revolving Note shall be executed and delivered to Lender upon execution and
delivery of this Agreement. Proceeds of the Revolving Loan may be disbursed by
Lender by wire transfer.

 

d.           Notice and Manner of Borrowing. Borrowers shall give Lender at
least one Banking Business Days prior written notice of any advances requested
under the Revolving Loan no later than 12:00 p.m. Mountain Time of the Banking
Business Day on which the requested advance is to be made.

 

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Additionally, at the election of Borrowers, the Revolving Loan may be linked to
the Sweep Account pursuant to the Sweep Account Agreement. Borrowers and Lender
may each unilaterally terminate the Sweep Account at any time. To the extent, if
any, the terms of the Sweep Account are inconsistent with or contradict the
terms of the Loan Documents, the terms of the Loan Documents shall govern. All
references in the Sweep Account Agreement to a “Commercial Loan Line” or similar
references to a line of credit are amended to refer to the Revolving Loan.

 

If such election is made, (i) Lender is authorized and directed to disburse
funds under the Revolving Loan for deposit into the Sweep Account on each
Banking Business Day as needed to cover all checks and other charges against the
Sweep Account; (ii) disbursements shall be made up to the Maximum Availability
at the time of determination; (iii) upon occurrence of a Default or Event of
Default, Lender may, in its sole discretion, cease all disbursements under the
Revolving Note into the Sweep Account; and (iv) Lender is authorized and
directed to disburse all collected funds in the Sweep Account on each Banking
Business Day to Lender to be applied on the Revolving Loan.

 

It is acknowledged that posting of credits and debits to and from the Sweep
Account are made on the same Banking Business Day the transactions occur and
that the posting of credits and debits to and from the Revolving Loan are made
one Banking Business Day after the transactions occur but are deemed effective
as of the prior Banking Business Day.

 

e.           Letters of Credit. Borrowers may request that Lender or Lender’s
affiliates issue Letters of Credit against the Revolving Loan. Any Letter of
Credit issued hereunder shall be in form and content acceptable to Lender. All
requests for issuance of Letters of Credit shall require two Banking Business
Days’ prior notice, and shall, unless otherwise agreed by Lender, have an expiry
date which is the earlier of one year after its issuance or the maturity date of
the Revolving Note provided that the expiry date of any Letter of Credit may be
up to 12 months later than the maturity date of the Revolving Loan if Borrowers
agree at the time of issuance that, after the payment of all of the obligations
of Borrowers hereunder, Borrowers will provide Lender with cash collateral in
the amount of 105% of the stated amount of the applicable Letter of Credit.
Lender may require Borrowers to execute Lender’s standard application and
reimbursement agreement for Letters of Credit (the “Reimbursement Agreement”),
provided that, in the event of any conflict between the terms of the
Reimbursement Agreement and this Agreement, the terms of this Agreement shall
apply, including terms with respect to the disbursement of funds hereunder to
reimburse Lender for drawings on Letters of Credit.

 

If any Borrower so requests, Lender shall, subject to the other conditions set
forth in this Section 2.2e and so long as no Default or Event of Default has
occurred and is continuing and there is availability therefor under the Loan,
issue Letters of Credit under this Agreement that have automatic extension
provisions (each, an “Auto-Extension Letter of Credit”); provided that any such
Auto-Extension Letter of Credit must (i) permit Lender to prevent any such
extension at least once in each twelve-month period (commencing with the date of
issuance of such Letter of Credit) by giving prior notice to the beneficiary
thereof not later than a day in each such twelve-month period to be agreed upon
at the time such Letter of Credit is issued, and (ii) not be permitted to have
an expiry date later than the maturity date of the Revolving Loan unless
Borrowers satisfy the requirements set forth in this Section 2.2e. Unless
otherwise directed by Lender in writing, Borrowers shall not be required to make
a specific request to Lender for any such extension. In no event shall the
aggregate amount frozen for outstanding Letters of Credit exceed the LC Sublimit
at any time.

 

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Borrowers shall pay quarterly, in advance all fees and charges for issuance of
Letters of Credit, including: (i) fees customarily charged by Lender, (ii) for
standby Letters of Credit, an issuance fee equal to the Applicable Margin then
in effect of the face amount of each such Letter of Credit, and (iii) any fees
set forth in this Agreement or the Reimbursement Agreement. Upon issuance of a
Letter of Credit against the Revolving Loan, an amount of the Revolving Loan
equal to the amount of the Letter of Credit shall be frozen and unavailable for
disbursement upon request of Borrowers so long as the Letter of Credit is
outstanding or subject to payment. Upon payment by Lender of any drawing on any
Letter of Credit issued against the Revolving Loan, Lender shall disburse funds
under the Revolving Loan to reimburse Lender for the amount of the drawing and,
for the avoidance of doubt, the LC Sublimit shall be correspondingly increased
to reflect the reduction of the outstanding Letter of Credit obligations.

 

f.            Non-Use Fee. Borrowers shall pay to Lender a non-use fee based on
the unused portion of the maximum commitment amount of the Revolving Loan at the
time of determination, calculated on the average unused daily balance of the
Revolving Loan for each calendar quarter or portion thereof based on a 360 day
year and actual days elapsed based on the applicable per annum percentage
stipulated in the definition of Applicable Margin. For purposes of calculating
the unused portion of the Revolving Loan, outstanding Letters of Credit issued
hereunder shall be considered usage of the Revolving Loan. The fee shall be
payable quarterly, in arrears, and shall be due no later than the fifth Banking
Business Day after receipt by Borrowers of a statement therefor from Lender.

 

g.           Maximum Availability. Notwithstanding anything to the contrary in
the Loan Documents, no advances shall be made under the Revolving Loan if any
such advance exceeds the Maximum Availability at the time of determination. If
at any time the Maximum Availability is less than $0, Borrowers shall
immediately make payment to Lender in a sufficient amount to have the Maximum
Availability equal to an amount not less than $0.

 

h.           Payments on Revolving Loan. Principal and interest under the
Revolving Loan shall be payable as follows: Interest shall be paid monthly in
arrears on the first day of each calendar month beginning November 1, 2014. All
principal, unpaid interest and all other amounts due under the Revolving Loan
shall be paid in full on the Maturity Date, unless required to be paid or
prepaid at an earlier date in accordance with this Agreement.

 

2.3           Interest on Loan

 

a.           Interest Rate on Loan. Interest on the Loan shall be calculated on
the basis of a 360 day year and actual days elapsed as follows: The LIBOR Rate
from time to time in effect, adjusted as of the day that is two Banking Business
Days prior to the first day of each calendar month, plus the Applicable Margin.

 

17

 

 

b.           Interest Rate Unavailable or Unacceptable.

 

(i)          Notwithstanding the foregoing, if 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 maintain balances
based on the LIBOR Rate then in effect, then upon notice to Borrowers by Lender,
the outstanding principal amount of the balances based on the LIBOR Rate then in
effect, together with interest accrued thereon, shall be repaid immediately upon
demand of Lender if such change or compliance with such request, in the judgment
of Lender, requires immediate repayment or, if such repayment is not required,
at the election of Borrowers shall be converted to a balance based on the FHLB
Rate plus the Applicable Margin.

 

(ii)         Notwithstanding anything to the contrary herein, if Lender
determines (which determination shall be conclusive) that (A) quotations of
interest rates referred to in the definition of the LIBOR Rate then in effect
are not being provided in the relevant amounts or for the relevant maturities
for purposes of determining such LIBOR Rate, or (B) the LIBOR Rate then in
effect does not accurately cover the cost to Lender of making or maintaining
advances based on such LIBOR Rate, then Lender may give notice thereof to
Borrowers, whereupon until Lender notifies Borrowers that the circumstances
giving rise to such suspension no longer exist the interest rate applicable to
the outstanding principal balances based on the LIBOR Rate then in effect shall
be converted to balances based on the FHLB Rate plus the Applicable Margin.

 

c.           Accrual of Interest. Interest on the Loan shall accrue from the
date of disbursement of any principal amount or portion thereof until paid, both
before and after judgment, in accordance with the terms set forth herein.

 

d.           Default Rate. Upon the occurrence and during the continuation of an
Event of Default, at the election of Lender, the Loan and all other Obligations
hereunder shall bear interest at the Default Rate, both before and after
judgment, until paid.

 

18

 

 

2.4           Prepayments; Account Debit

 

a.           Optional Prepayments. Borrowers may not prepay in full or in part
any balances unless Borrowers shall make Lender whole and Borrowers shall pay to
Lender all 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 herein, cost to
Lender of such funds, any interest or fees payable by Lender to lenders of funds
obtained by it in order to make or maintain the Loan and any related costs.

 

b.           Mandatory Payments of Loan.

 

(i)          In the event and on each occasion that any Net Proceeds are
received by or on behalf of any Loan Party in respect of any Prepayment Event,
Borrowers shall promptly, but in any event within five Banking Business Days
after such Net Proceeds are received by such Person, make a payment on the Loan
in an aggregate amount equal to 100% of such Net Proceeds (without resulting in
any permanent reduction in the Revolving Loan commitment hereunder, except in
the case of a Change of Control); provided that, in the case of any event
described in clauses (a) or (b) of the definition of the term “Prepayment
Event,” if Borrowers shall deliver to Lender a certificate of the president,
chief executive officer, chief financial officer or controller of Borrowers to
the effect that Borrowers intend to apply the Net Proceeds from such event (or a
portion thereof specified in such certificate), within 180 days after receipt of
such Net Proceeds, to acquire equipment or other tangible assets to be used in
the business of Borrowers, and certifying that no Event of Default has occurred
and is continuing, then no prepayment shall be required pursuant to this
paragraph in respect of the Net Proceeds specified in such certificate;
provided, further, that to the extent of any such Net Proceeds therefrom that
have not been so applied by the end of such 180 day period, a prepayment shall
be required in an amount equal to such Net Proceeds that have not been so
applied. Except as specifically set forth herein, nothing contained in this
paragraph shall be or be deemed to be a consent to any Prepayment Event.

 

(ii)         Prior to the Permanent Accordion Increase Date, Borrowers shall
promptly, but in any event within fifteen Banking Business Days after the end of
such Seasonal Accordion Increase Period, prepay the Loan in an amount equal to
100% of the outstanding amounts under the Loan in excess of $20,000,000 at the
end of any Seasonal Accordion Increase Period.

 

c.           Account Debit . Borrowers hereby irrevocably authorizes Lender to
charge any of Borrowers’ deposit accounts maintained with Lender for the amounts
from time to time necessary to pay any then due Obligations; provided that
Borrowers acknowledge and agree that Lender shall not be under an obligation to
do so and Lender shall not incur any liability to Borrowers or any other Person
for Lender’s failure to do so.

 

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d.           Application of Payments. All payments on the Loan shall be applied
(i) first, to reimbursable fees, late charges, costs and expenses payable by
Borrowers under this Agreement or any of the other Loan Documents, (ii) second,
to accrued interest and (iii) the remainder, if any, to principal.

 

2.5           Recovery of Additional Costs

 

If the imposition of or any change in any law, rule, regulation or treaty, the
issuance of any request, rule, guideline or directive, or the interpretation or
application of any thereof by any court or administrative or governmental
authority (including any request or policy not having the force of law and any
changes imposed by (i) the Dodd-Frank Wall Street Reform and Consumer Protection
Act and all requests, rules, regulations, guidelines or directives issued under
or in connection with such act and (ii) the Bank for International Settlements,
the Basel Committee on Banking Supervision (or any successor or similar
authority) or the United States or foreign regulatory authorities, in each case
pursuant to Basel III) shall impose, modify, or make applicable any taxes
(except federal, state, or local income or franchise taxes imposed on Lender),
reserve requirements, capital adequacy requirements, Federal Deposit Insurance
Corporation (FDIC) deposit insurance premiums or assessments, or other
obligations which would (a) increase the cost to Lender for extending,
maintaining or funding the Loan, (b) reduce the amounts payable to Lender under
the Loan, or (c) reduce the rate of return on Lender’s capital as a consequence
of Lender’s obligations with respect to the Loan, then Borrowers agree to pay
Lender such additional amounts as will compensate Lender therefor, within five
Banking Business Days after Lender’s demand for such payment. Lender’s demand
shall be accompanied by an explanation of such imposition or charge and a
calculation in reasonable detail of the additional amounts payable by Borrowers,
which explanation and calculations shall be conclusive in the absence of
manifest error.

 

2.6           Funding Fee

 

Upon execution and delivery of this Agreement, Borrowers shall pay to Lender a
loan fee equal to $40,000 in respect of the Revolving Loan. Prior to the first
to occur of (i) the commencement of the first Seasonal Accordion Increase
Period, if any, or (ii) the Permanent Accordion Increase Date, Borrowers shall
pay to Lender the Accordion Increase Loan Fee. No portion of such loan fees
shall be refunded in the event of early termination of this Agreement or any
termination or reduction of the right of Borrowers to request advances under
this Agreement. Lender is authorized and directed, upon execution of this
Agreement and fulfillment of all conditions precedent hereunder, to disburse a
sufficient amount of the Loan proceeds to pay the loan fees in full.

 

2.7           Late Fee

 

If any payment hereunder is more than ten days past due, Lender may charge, and
Borrowers shall pay upon demand, a late fee equal to 5% of the amount of such
payment or $50, whichever is greater, to compensate Lender for administrative
expenses and other costs of delinquent payments, and such late fee shall be in
addition to and not as a waiver of, Lender’s remedies arising from Borrowers’
failure to make such payment. The amount of any late fee shall be added to the
principal balance of the Loan and shall accrue interest hereunder at the Default
Rate until paid in full.

 

20

 

 

2.8           Consideration Among Co-Borrowers

 

The transactions evidenced by the Loan Documents are in the best interests of
Borrowers, including non-Borrower Subsidiaries, and creditors of Borrowers,
including non-Borrower Subsidiaries. Borrowers and non-Borrower Subsidiaries are
a single integrated financial enterprise and each of the Borrowers and
non-Borrower Subsidiaries receives a substantial benefit from the availability
of credit under the Loan Documents. Borrowers and non-Borrower Subsidiaries
would not be able to obtain financing in the amounts or upon terms as favorable
as provided in the Loan Documents on an individual basis. The Loan will enable
each of the Borrowers and non-Borrower Subsidiaries to operate their business
more efficiently, more profitably, and to expand their businesses. The direct
and indirect benefits that inure to each of the Borrowers and non-Borrower
Subsidiaries by entering into the Loan Documents constitute substantially more
than “reasonable equivalent value” (as such term is used in § 548 of the United
States Bankruptcy Code) and “valuable consideration”, “fair value”, and “fair
consideration” (as such terms are used in state fraudulent transfer law).

 

2.9           Taxes

 

a.           Payments Free of Taxes. Any and all payments by or on account of
any obligation of any Loan Party under any Loan Document shall be made free and
clear of and without deduction or withholding for any Taxes, except as required
by applicable law. If any applicable law (as determined in the good faith
discretion of a Loan Party) requires the deduction or withholding of any Tax
from any such payment, then (i) the applicable Loan Party shall be entitled to
make such deduction or withholding, (ii) the applicable Loan Party shall timely
pay the full amount deducted or withheld to the relevant governmental authority
in accordance with applicable law, and (iii) if such Tax is an Indemnified Tax,
then the sum payable by the applicable Loan Party shall be increased as
necessary so that after such deduction or withholding has been made (including
deductions or withholdings applicable to additional amounts payable under this
Section) the applicable recipient of such payment receives an amount equal to
the sum it would have received had no such deduction or withholding been made.

 

b.           Payment of Other Taxes by Borrowers. The Loan Parties shall timely
pay to the relevant governmental authority in accordance with applicable law, or
at the option of Lender timely reimburse it for the payment of, any Other Taxes.

 

c.           Indemnification by Borrowers. The Loan Parties shall jointly and
severally indemnify each Lender, within 10 Banking Business Days after written
demand therefor, for the full amount of any Indemnified Taxes (including
Indemnified Taxes imposed on or attributable to amounts payable under this
Section) paid or payable by the applicable recipient of such payment or required
to be withheld or deducted from a payment to such recipient and any reasonable
expenses arising therefrom or with respect thereto, whether or not such
Indemnified Taxes were correctly or legally imposed or asserted by the relevant
governmental authority. A certificate showing in reasonable detail the
calculation of the amount of such payment or liability delivered to the Loan
Parties by a Lender shall be conclusive absent manifest error.

 

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d.           Status of Lenders.

 

(i)          Any Lender that is entitled to an exemption from, reduction of or
withholding of any Tax with respect to payments made under any Loan Document
shall deliver to Borrowers, at the time or times reasonably requested by
Borrowers, such properly completed and executed documentation reasonably
requested by Borrowers as will permit such payments to be made without
withholding or at a reduced rate of withholding. In addition, any Lender, if
reasonably requested by Borrowers, shall deliver such other documentation
prescribed by applicable law or reasonably requested by Borrowers as will enable
Borrowers to determine whether or not such Lender is subject to backup
withholding or information reporting requirements.

 

(ii)         Without limiting the generality of the foregoing, if any Borrower
is a US Person:

 

(1)         any Lender that is a U.S. Person shall deliver to Borrowers on or
prior to the date on which such Lender becomes a Lender under this Agreement
(and from time to time thereafter upon the reasonable request of Borrowers),
executed originals of IRS Form W-9 certifying that such Lender is exempt from
U.S. federal backup withholding tax;

 

(2)         any Foreign Lender shall, to the extent it is legally entitled to do
so, deliver to Borrowers (in such number of copies as shall be requested by
Borrowers) on or prior to the date on which such Foreign Lender becomes a Lender
under this Agreement (and from time to time thereafter upon the reasonable
request of Borrowers), whichever of the following is applicable: (I) an IRS Form
W-8BEN establishing an exemption from U.S. federal withholding Tax, (II) an IRS
Form W-8ECI, (III) to the extent a Foreign Lender is not the beneficial owner of
a payment received under any Loan Document, executed originals of IRS Form
W-8IMY, accompanied by IRS Form W-8ECI, IRS Form W-8BEN, IRS Form W-9, and/or
other certification documents from each beneficial owner, or (IV) executed
originals of any other form prescribed by applicable law as a basis for claiming
exemption from or a reduction in U.S. federal withholding Tax, duly completed,
together with such supplementary documentation as may be prescribed by
applicable law to permit Borrowers to determine the withholding or deduction
required to be made; and

 

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(3)         if a payment made to a Lender under any Loan Document would be
subject to U.S. federal withholding Tax imposed by FATCA if such Lender were to
fail to comply with the applicable reporting requirements of FATCA (including
those contained in Section 1471(b) or 1472(b) of the Code, as applicable), such
Lender shall deliver to Borrowers at the time or times prescribed by law and at
such time or times reasonably requested by Borrowers such documentation
prescribed by applicable law (including as prescribed by Section
1471(b)(3)(C)(i) of the Code) and such additional documentation reasonably
requested by Borrowers as may be necessary for Borrowers to comply with their
obligations under FATCA and to determine that such Lender has complied with such
Lender’s obligations under FATCA or to determine the amount, if any, to deduct
and withhold from such payment. Solely for purposes of this clause (D), “FATCA”
shall include any amendments made to FATCA after the date of this Agreement.

 

(iii)        Each Lender agrees that if any form or certification it previously
delivered expires or becomes obsolete or inaccurate in any material respect, it
shall update such form or certification or promptly notify Borrowers in writing
of its legal inability to do so

 

e.           Treatment of Certain Refunds. If any party determines, in its sole
discretion exercised in good faith, that it has received a refund of any Taxes
as to which it has been indemnified pursuant to this Section 2.9 (including by
the payment of additional amounts pursuant to this Section 2.9), it shall pay to
the indemnifying party an amount equal to such refund (but only to the extent of
indemnity payments made under this Section with respect to the Taxes giving rise
to such refund), net of all out-of-pocket expenses (including Taxes) of such
indemnified party and without interest (other than any interest paid by the
relevant governmental authority with respect to such refund). Such indemnifying
party, upon the request of such indemnified party, shall repay to such
indemnified party the amount paid over pursuant to this paragraph (e) (plus any
penalties, interest or other charges imposed by the relevant governmental
authority) in the event that such indemnified party is required to repay such
refund to such governmental authority. Notwithstanding anything to the contrary
in this paragraph (e), in no event will the indemnified party be required to pay
any amount to an indemnifying party pursuant to this paragraph (e) the payment
of which would place the indemnified party in a less favorable net after-Tax
position than the indemnified party would have been in if the indemnification
payments or additional amounts giving rise to such refund had never been paid.
This paragraph shall not be construed to require any indemnified party to make
available its Tax returns (or any other information relating to its Taxes that
it deems confidential) to the indemnifying party or any other person.

 

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3.           Security for Loan

 

3.1           Collateral

 

The Obligations shall be unsecured so long as no Collateral Triggering Event has
occurred. Upon the occurrence of a Collateral Triggering Event, each Loan Party
shall at the election of Lender either (i) immediately grant a security interest
in and Lien against all of its respective assets, including, without limitation,
a pledge of 100% of such Loan Party’s Equity Interests in each of its domestic
Subsidiaries and 66% of such Loan Party’s voting Equity Interests and 100% of
such Loan Party’s non-voting Equity Interests in each of its foreign
Subsidiaries, or (ii) grant a security interest in and Lien against no less than
$30,000,000 of the Loan Parties’ cash or cash equivalents, in each case, to
secure the Obligations. At such time, the Loan Parties shall execute any and all
Collateral Documents Lender deems necessary to grant such security interests in
the Collateral and shall take such actions as Lender requests to permit Lender
to perfect its security interests in the Collateral.

 

Each Loan Party acknowledges its intention that the Loan is a “Related Debt” as
defined in the Hedging Transaction Documents, and agrees that the intention and
interpretation of said interest rate management transaction is that the Loan is
a “Related Debt” thereunder. The priority of the interests in the Collateral
securing the Loan and any Hedging Transactions shall be pari passu.

 

4.           Conditions to Loan Disbursements

 

4.1           Conditions to Initial Loan Disbursements

 

Lender’s obligation to disburse any of the Loan on the Effective Date is
expressly subject to, and shall not arise until all of the conditions set forth
below have been satisfied or waived. All of the documents referred to below must
be in a form and substance acceptable to Lender.

 

a.           All of the Loan Documents and all other documents contemplated to
be delivered to Lender prior to funding have been fully executed and delivered
to Lender.

 

b.           All other conditions precedent provided in or contemplated by the
Loan Documents or any other agreement or document have been performed.

 

c.           As of the Effective Date, the following shall be true and correct:
(i) all representations and warranties made by Borrowers in the Loan Documents
are true and correct in all material respects as of the date of such
disbursement; and (ii) no Default or Event of Default has occurred which has not
been waived or timely cured.

 

d.           Lender has received certificates of insurance pursuant to Section
6.8 Insurance reasonably acceptable to Lender.

 

e.           Lender has received a certificate of the corporate secretary, an
assistant secretary or equivalent partner, manager or member, as applicable, of
Borrowers, in a form and content reasonably acceptable to Lender, attaching or
including as applicable: (i) certified copies of all Organizational Documents of
Borrowers, (ii) resolutions of the board of directors or managers, as
applicable, and of the shareholders or members, as applicable, of Borrowers
authorizing and approving the execution, delivery and performance of each Loan
Document to which such Person is a party; (iii) good standing certificates or
their equivalents from the respective states of organization and the respective
states in which the principal places of business of each is located, each to be
dated a recent date prior to the Effective Date; and (iv) signature and
incumbency certificates of the Responsible Officers of Borrowers executing the
Loan Documents.

 

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f.            Lender shall have received the initial funding fee referenced in
Section 2.6 Funding Fee and all fees and other amounts due and payable on or
prior to the Effective Date, including, reimbursement or payment of all
reasonable legal fees and expenses of Lender’s counsel, and all reasonable
out-of-pocket expenses required to be reimbursed or paid by Borrowers under the
Loan Documents

 

All conditions precedent set forth in this Agreement and any of the Loan
Documents are for the sole benefit of Lender and may be waived unilaterally by
Lender.

 

4.2           Conditions to Subsequent Loan Disbursements

 

After the Effective Date, Lender’s obligation to make any disbursements of the
Loan, and to issue, extend or renew any Letter of Credit, shall be subject to
the satisfaction or waiver of the following conditions precedent:

 

a.           Any such disbursement, or the face amount of any such Letter of
Credit to be issued, extended or renewed, as the case may be, shall not exceed
the Maximum Availability at the time of determination.

 

b.           All other conditions precedent for subsequent disbursements
provided in or contemplated by the Loan Documents or any other agreement or
document have been performed.

 

c.           At the time of each such disbursement of the Loan, or the issuance,
extension or renewal of such Letter of Credit, and also immediately after giving
effect thereto, (i) there shall exist no Default or Event of Default, and (ii)
all representations and warranties of the Loan Parties contained herein or in
the other Loan Documents shall be true and correct in all material respects
(except that to the extent any such representation or warranty contains any
materiality qualifier, such representation or warranty shall be true and correct
in all respects) with the same effect as though such representations and
warranties had been made on and as of the date of such disbursement of the Loan
or issuance, extension or renewal of any Letter of Credit, except to the extent
that such representations and warranties expressly relate to an earlier
specified date, in which case such representations and warranties shall have
been true and correct in all material respects (except that if any such
representation or warranty contains any materiality qualifier, such
representation or warranty shall be true and correct in all respects) as of such
earlier date.

 

d.           The acceptance of the benefits of each disbursement of the Loan or
issuance, extension or renewal of any Letter of Credit shall constitute a
representation and warranty by the Loan Parties to Lender that all of the
applicable conditions specified in this Section 4.2 have been satisfied as of
the times referred to in this Section.

 

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4.3           No Default, Adverse Change, False or Misleading Statement

 

Lender’s obligation to advance any funds at any time pursuant to this Agreement
and the Promissory Note shall, at Lender’s sole discretion, terminate upon the
occurrence of any Event of Default or any event which could have a Material
Adverse Effect. Upon the exercise of such discretion, Lender shall be relieved
of all further obligations under the Loan Documents.

 

5.           Representations and Warranties

 

Each Loan Party as to itself represents and warrants to Lender as follows:

 

5.1           Organization and Qualification

 

Black Diamond is a corporation duly organized and existing in good standing
under the laws of the State of Delaware, and that it is qualified and in good
standing as a foreign corporation in the States of Connecticut and Utah.

 

BDEL is a corporation duly organized and existing in good standing under the
laws of the State of Delaware, and that it is qualified and in good standing as
a foreign corporation in the State of Utah.

 

BD-Retail is a corporation duly organized and existing in good standing under
the laws of the State of Delaware, and that it is qualified and in good standing
as a foreign corporation in the State of Utah.

 

Each of Everest, BDNA, POC, PIEPS Service and BDEH is a limited liability
company duly organized and existing in good standing under the laws of the State
of Delaware, and that, if required, it is qualified and in good standing as a
foreign limited liability company in the State of Utah.

 

Each other Loan Party not listed above is a corporation or limited liability
company, as applicable, duly organized and validly existing in good standing
under the laws of the State of its organization.

 

Each Loan Party is duly qualified to do business and is in good standing as a
foreign corporation or limited liability company, as applicable, in each
jurisdiction where the conduct of its business requires qualification, except
where the failure to be so qualified would not reasonably be expected to have a
Material Adverse Effect.

 

Each Loan Party has the requisite power and authority to own its property and to
conduct the business in which it engages and to enter into and perform its
Obligations under the Loan Documents.

 

Each Loan Party has delivered to Lender or Lender’s counsel accurate and
complete copies of its Organizational Documents which are operative and in
effect as of the Effective Date.

 

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5.2           Authorization

 

The execution, delivery and performance by such Loan Party of the Loan Documents
and the transactions contemplated thereby have been duly authorized by all
necessary corporate or limited liability company action on the part of such Loan
Party and are not inconsistent with such Loan Party’s Organizational Documents
or any resolution of the shareholders or board of directors or members or
managers, as applicable, of such Loan Party, do not and will not contravene any
provision of, or constitute a default under, any indenture, mortgage, contract,
or other instrument to which such Loan Party is a party or by which it is bound,
where such contravention or default would reasonably be expected to have a
Material Adverse Effect, and that upon execution and delivery thereof, the Loan
Documents will constitute legal, valid, and binding agreements and Obligations
of such Loan Party, enforceable in accordance with their respective terms except
as enforceability may be limited by bankruptcy, insolvency or other laws
affecting creditors generally and limitations on the availability of equitable
remedies.

 

5.3           Corporate Relationships

 

The shareholders or members, as applicable, of each Loan Party (other than Black
Diamond) and their respective number and percentage of issued and outstanding
Equity Interests in each Loan Party are as set forth on Schedule 5.3 hereto.

 

5.4           No Governmental Approval Necessary

 

No consent by, approval of, giving of notice to, registration with, or taking of
any other action with respect to or by any federal, state, or local governmental
authority or organization is required for such Loan Party’s execution, delivery,
or performance of the Loan Documents, except where any failure to so obtain such
consent or approval or take any other action could not reasonably be expected to
have a Material Adverse Effect.

 

5.5           Accuracy of Financial Statements

 

The Consolidated audited financial statements of Black Diamond and its
Subsidiaries heretofore delivered to Lender have been prepared in accordance
with Accounting Standards.

 

The Consolidated unaudited financial statements of Black Diamond and its
Subsidiaries heretofore delivered to Lender fairly present in all material
respects Black Diamond’s and its Subsidiaries’ financial condition as of the
date thereof and the results of its operations for the period or periods covered
thereby and are consistent in all material respects with other financial
statements previously delivered to Lender.

 

Since the dates of the most recent Consolidated audited and Consolidated
unaudited financial statements delivered to Lender, there has been no event
which would have a Material Adverse Effect on the financial condition of Black
Diamond and its Subsidiaries, taken as a whole.

 

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5.6           No Pending or Threatened Litigation

 

Except as disclosed in Black Diamond’s periodic filings with the Securities and
Exchange Commission pursuant to the Securities Exchange Act of 1934, as amended,
there are no demands, judgments, actions, suits, orders, decrees, arbitrations
or proceedings pending or, to such Loan Party’s knowledge, threatened against or
affecting any of the Loan Parties in any court or before any governmental
commission, board, or authority which, if adversely determined, would have a
Material Adverse Effect.

 

5.7           Full and Accurate Disclosure

 

This Agreement, the financial statements referred to herein, any loan
application submitted to Lender, and all other statements furnished by the Loan
Parties to Lender under any of the Loan Documents or in connection herewith
contain no untrue statement of a material fact and do not omit to state a
material fact necessary to make the statements contained therein or herein not
misleading in any material respect. Each Loan Party has not failed to disclose
in writing to Lender any fact that would have a Material Adverse Effect.

 

5.8           Compliance with ERISA

 

Each Loan Party is in compliance in all material respects with all applicable
provisions of the Employee Retirement Income Security Act of 1974 (“ERISA”), as
amended, and the regulations and published interpretations thereunder. Neither a
Reportable Event as set forth in Section 4043 of ERISA or the regulations
thereunder (“Reportable Event”) nor a prohibited transaction as set forth in
Section 406 of ERISA or Section 4975 of the Internal Revenue Code of 1986, as
amended, has occurred and is continuing with respect to any employee benefit
plan (other than a multiemployer pension plan as defined under Sections 3(37) or
4001(a)(3) of ERISA or a “Taft Hartley” employee welfare benefit plan
established, maintained, or to which contributions have been made by such Loan
Party or any trade or business (whether or not incorporated) which together with
such Loan Party would be treated as a single employer under Section 4001 of
ERISA (“ERISA Affiliate”) for its employees which is covered by Title I or Title
IV of ERISA (“Plan”); no notice of intent to terminate a Plan has been filed nor
has any Plan been terminated which is subject to Title IV of ERISA; no
circumstances exist that constitute grounds under Section 4042 of ERISA
entitling the Pension Benefit Guaranty Corporation (“PBGC”) to institute
proceedings to terminate, or appoint a trustee to administer a Plan, nor has the
PBGC instituted any such proceedings; neither any Loan Party nor any ERISA
Affiliate has completely or partially withdrawn under Section 4201 or 4204 of
ERISA from any Plan described in Section 4001(a)(3) of ERISA which covers any
employees of the Loan Parties or any ERISA Affiliate (“Multi-employer Plan”);
each Loan Party and each ERISA Affiliate has met its minimum funding
requirements under ERISA with respect to all of its Plans and the present fair
market value of all Plan assets equals or exceeds the present value of all
vested benefits under or all claims reasonably anticipated against each Plan, as
determined on the most recent valuation date of the Plan and in accordance with
the provisions of ERISA and the regulations thereunder and the applicable
statements of the Financial Accounting Standards Board for calculating the
potential liability of any Loan Party or any ERISA Affiliate under any Plan;
neither any Loan Party nor any ERISA Affiliate has incurred any liability to the
PBGC (except payment of premiums, which is current) under ERISA.

 

28

 

 

Each Loan Party, each ERISA Affiliate and each group health plan (as defined in
ERISA Section 733) sponsored by the Loan Parties and each ERISA Affiliate, or in
which any Loan Party or any ERISA Affiliate is a participating employer, are in
compliance with, have satisfied and continue to satisfy (to the extent
applicable) all requirements for continuation of group health coverage under
Section 4980B of the Internal Revenue Code and Sections 601 et seq. of ERISA,
and are in compliance with, have satisfied and continue to satisfy Part 7 of
ERISA and all corresponding and similar state laws relating to portability,
access and renewability of group health benefits and other requirements included
in Part 7.

 

5.9           Compliance with USA Patriot Act

 

No Loan Party is subject to any law, regulation, or list of any government
agency (including, without limitation, the U.S. Office of Foreign Asset Control
list) that prohibits or limits Lender from making any advance or extension of
credit to the Loan Parties or from otherwise conducting business with the Loan
Parties.

 

5.10         Compliance with All Other Applicable Law

 

Each Loan Party has complied in all material respects with all applicable Laws,
except where the failure to so comply could not reasonably be expected to have a
Material Adverse Effect.

 

5.11         Environmental Representations and Warranties

 

Except as set forth on Schedule 5.11, no Hazardous Materials are now located on,
in, or under the Real Property, nor is there any Environmental Condition on, in,
or under the Real Property and neither the Loan Parties nor, to the Loan
Parties’ knowledge, after due inquiry and investigation, any other Person has
ever caused or permitted any Hazardous Materials to be placed, held, used,
stored, released, generated, located or disposed of on, in or under the Real
Property, or any part thereof, nor caused or allowed an Environmental Condition
to exist on, in or under the Real Property, except in the ordinary course of the
Loan Parties’ businesses under conditions that are generally recognized to be
appropriate and safe and that are in compliance with all applicable
Environmental Health and Safety Laws. No investigation, administrative order,
consent order and agreement, litigation or settlement with respect to Hazardous
Materials and/or an Environmental Condition is proposed, threatened, anticipated
or in existence with respect to the Real Property.

 

Except as set forth on Schedule 5.11, the Loan Parties have no knowledge of the
existence of any report, document, or other evidence of any Hazardous Materials
or Environmental Condition with respect to the Real Property.

 

5.12         Operation of Business

 

Except as set forth on Schedule 5.12, to their knowledge, each Loan Party
possesses all material licenses, permits, franchises, patents, copyrights,
trademarks, and trade names, or rights thereto, to conduct its business
substantially as now conducted and as presently proposed to be conducted, and to
their knowledge, the Loan Parties are not in violation of any valid rights of
others which would have a Material Adverse Effect on the Loan Parties with
respect to any of the foregoing.

 

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5.13         Payment of Taxes

 

Each Loan Party has filed all material tax returns (federal, state, and local)
required to be filed and has paid all material taxes, assessments, and
governmental charges and levies, including interest and penalties, on such Loan
Party’s assets, business and income, except such as are being contested in good
faith by proper proceedings and as to which adequate reserves are maintained.

 

5.14         Solvency

 

Both before and immediately after the consummation of all transactions
contemplated by the Loan Documents, and immediately after the making of each
advance on the Loan thereafter, and after giving effect to the application of
the proceeds of the Loan, (a) the fair value of the assets of each Loan Party
will exceed its Debts, (b) the present fair saleable value of the assets of each
Loan Party will be greater than the amount that will be required to pay the
probable liability of its Debts, as such Debts can reasonably be expected to
become absolute and matured, (c) each Loan Party will be able to pay its Debts
as such Debts can reasonably be expected to become absolute and matured, and (d)
each Loan Party will not have unreasonably small capital with which to conduct
its business and its business as is proposed, contemplated or about to be
conducted.

 

5.15         Employee Matters

 

Except as set forth on Schedule 5.15 hereto, (a) none of the Loan Parties are
subject to any collective bargaining agreement, (b) no petition for
certification or union election is pending with respect to the employees of the
Loan Parties, and to the knowledge of the Loan Parties, no union or collective
bargaining unit has sought such certificates or recognition with respect to the
employees of any Loan Party and (c) there are no strikes, slowdowns, work
stoppages or controversies pending or, to the knowledge of the Loan Parties,
threatened between any Loan Party and their employees, other than employee
grievances arising in the ordinary course of business which could not reasonably
be expected to have, either individually or in the aggregate, a Material Adverse
Effect.

 

5.16         Brokerage

 

There are no rights to or claims for broker’s, finder’s, due diligence,
structuring, debt or equity placement fees, commissions, or similar compensation
payable with respect to the consummation of the transactions contemplated in the
Loan Documents.

 

6.           Covenants

 

The Loan Parties make the following agreements and covenants, which shall
continue so long as this Agreement is in effect and so long as the Loan Parties
are indebted to Lender for the Obligations.

 

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6.1           Use of Proceeds

 

The Loan Parties shall use the proceeds of the Loan for general corporate
purposes, including funds for working capital, capital expenditures, loans
and/or investments in wholly-owned foreign Subsidiaries and the issuance of
letters of credit.

 

The Loan Parties shall not, directly or indirectly, use any of the proceeds of
the Loan for the purpose of purchasing or carrying any margin stock within the
meaning of Regulation U of the Board of Governors of the Federal Reserve System,
or to extend credit to any Person for the purpose of purchasing or carrying any
such margin stock or for any purpose which violates, or is inconsistent with,
Regulation X of said Board of Governors, or for any other purpose not permitted
by Section 7 of the Securities Exchange Act of 1934, as amended, or by any of
the rules and regulations respecting the extension of credit promulgated
thereunder.

 

6.2           Continued Compliance with ERISA

 

The Loan Parties covenant that, with respect to all Plans (as defined in Section
5.8 Compliance with ERISA) which the Loan Parties or any ERISA Affiliate
currently maintains or to which the Loan Parties or any ERISA Affiliate is a
sponsoring or participating employer, fiduciary, party in interest or
disqualified person or which the Loan Parties or any ERISA Affiliate may
hereafter adopt, the Loan Parties and each ERISA Affiliate shall continue to
comply in all material respects with all applicable provisions of the Internal
Revenue Code and ERISA and with all representations made in Section 5.8
Compliance with ERISA, including, without limitation, conformance with all
notice and reporting requirements, funding standards, prohibited transaction
rules, multi-employer plan rules, necessary reserve requirements, and health
care continuation, coverage and portability requirements, except where the
failure to so comply would not have a Material Adverse Effect on Black Diamond
and its Subsidiaries, taken as a whole.

 

6.3           Continued Compliance with USA Patriot Act

 

The Loan Parties shall (a) not be or become subject at any time to any law,
regulation, or list of any government agency (including, without limitation, the
U.S. Office of Foreign Asset Control list) that prohibits or limits Lender from
making any advance or extension of credit to the Loan Parties or from otherwise
conducting business with the Loan Parties, and (b) provide documentary and other
evidence of the Loan Parties’ identity as may be requested by Lender at any time
to enable Lender to verify the Loan Parties’ identity or to comply with any
applicable law or regulation, including, without limitation, Section 326 of the
USA Patriot Act of 2001, 31 U.S.C. Section 5318.

 

6.4           Continued Compliance with Applicable Law

 

Each Loan Party shall conduct its business in a lawful manner and in material
compliance with all applicable Laws; shall maintain in good standing all
licenses and organizational or other qualifications reasonably necessary to its
business and existence; and shall not engage in any business not authorized by
and not in accordance with its Organizational Documents and other governing
documents.

 

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6.5           Prior Consent for Amendment or Change

 

Except as set forth in Schedule 6.5 or changes that would not have any material
adverse effect on Lender, the Loan Parties shall not modify, amend, waive, or
otherwise alter, or fail to enforce, their respective Organizational Documents
or other governing documents without Lender’s prior written consent.

 

6.6           Payment of Taxes and Obligations

 

The Loan Parties shall pay when due all material taxes, assessments, and
governmental charges and levies on the Loan Parties’ assets, business, and
income, and all material obligations of the Loan Parties of whatever nature,
except such as are being contested in good faith by proper proceedings and as to
which adequate reserves are maintained.

 

6.7           Financial Statements and Reports

 

The Loan Parties shall provide Lender with the financial statements and reports
described below. Audited financial statements and reports shall be prepared in
accordance with Accounting Standards. Unaudited financial statements and reports
shall fairly present in all material respects the Loan Parties’ financial
condition as of the date thereof and the results of the Loan Parties’ operations
for the period or periods covered thereby and shall be consistent in all
material respects with other financial statements previously delivered to Lender
in connection with this Loan.

 

Until requested otherwise by Lender, the Loan Parties shall provide the
following financial statements and reports to Lender:

 

a.           Annual audited Consolidated Financial Statements of Black Diamond
for each Fiscal Year, to be delivered to Lender within 105 days after such
Fiscal Year End. Borrowers shall also submit to Lender copies of any management
letters or other reports submitted by independent certified public accountants
in connection with the examination of the financial statements of Borrowers made
by such accountants.

 

b.           Quarterly Consolidated Financial Statements of Black Diamond for
each fiscal quarter of Black Diamond, to be delivered to Lender within 45 days
after the end of the fiscal quarter. The quarterly financial statements shall
include a certification by a Responsible Officer of Black Diamond that the
quarterly financial statements fairly present Borrowers’ financial condition in
all material respects as of the date thereof and the results of the operations
of the period covered thereby and are consistent, except as disclosed in the
footnotes thereto, in all material respects with other financial statements
previously delivered to Lender.

 

c.           Together with each of the annual and quarterly Consolidated
Financial Statements required to be delivered to Lender pursuant to the
provisions of paragraphs (a) and (b) above, Borrowers shall submit to Lender a
Compliance Certificate certifying that Borrowers are in compliance with all
terms and conditions of this Agreement, including compliance with the financial
covenants provided in Section 6.14 Financial Covenants. Each Compliance
Certificate shall include the data and calculations supporting all financial
covenants, whether in compliance or not, and shall be signed by a Responsible
Officer of Black Diamond.

 

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d.           Financial forecasts for each Fiscal Year, with projections broken
down by each fiscal quarter, to be delivered to Lender within 60 days after each
Fiscal Year End.

 

e.           Brokerage statements of the Loan Parties covering the current
period in respect of all brokerage accounts owned by the Loan Parties, to be
delivered to Lender within 10 days after the end of each fiscal quarter of Black
Diamond.

 

f.            Promptly after discovery thereof, the Loan Parties will notify
Lender of any breach of any covenants contained in Section 6 Covenants and of
the occurrence of any Default or Event of Default hereunder.

 

g.           The Loan Parties will furnish to Lender as soon as available copies
of any other information pertinent to any provision of this Agreement or to the
Loan Parties’ business which Lender may reasonably request.

 

6.8           Insurance

 

The Loan Parties shall maintain insurance with financially sound and reputable
insurance companies or associations in such amounts and covering such risks as
are usually carried by companies engaged in the same or a similar business and
similarly situated, which insurance may provide for reasonable deductibility
from coverage thereof.

 

6.9           Inspection

 

The Loan Parties shall at any reasonable time during normal business hours and
from time to time permit Lender or any representative of Lender to examine and
make copies of and abstracts from the records and books of account of, and visit
and inspect the properties and assets of, the Loan Parties, and to discuss the
affairs, finances, and accounts of the Loan Parties with any of the Loan
Parties’ officers and directors and with the Loan Parties’ independent
accountants; provided, however, that Lender shall take reasonable steps to
ensure the confidentiality of any documents or information that may be disclosed
pursuant to this Section 6.9, including maintaining the confidentiality thereof
as required by laws, rules and regulations, including the Securities Act of
1933, as amended, and the Securities Exchange Act of 1934, as amended.

 

6.10         Operation of Business

 

The Loan Parties shall maintain all material licenses, permits, franchises,
patents, copyrights, trademarks, and trade names, or rights thereto, that the
Loan Parties reasonably determine are necessary in the operation of their
business. The Loan Parties shall continue to engage in a Permitted Business.

 

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6.11         Maintenance of Records and Properties

 

The Loan Parties shall keep adequate records and books of account in which
complete entries will be made in accordance with Accounting Standards. The Loan
Parties shall maintain, keep and preserve all of their material properties
(tangible and intangible) necessary or useful in the proper conduct of its
business in good working order and condition, ordinary wear and tear excepted.
Notwithstanding anything in this Agreement to the contrary, the Loan Parties
shall be free to close any of their respective offices or open any offices as
they, in their reasonable business judgment, determine is appropriate.

 

6.12         Notice of Claims

 

The Loan Parties shall promptly notify Lender in writing of all actions, suits
or proceedings filed against or affecting the Loan Parties in any court or
before any governmental commission, board, or authority which, if adversely
determined, would have a Material Adverse Effect.

 

6.13         Environmental Covenants

 

The Loan Parties covenant that they will:

 

a.           Not permit the presence, use, disposal, storage or release of any
Hazardous Materials on, in, or under the Real Property, except in the ordinary
course of the Loan Parties’ business under conditions that are generally
recognized to be appropriate and safe and that are in compliance with all
applicable Environmental Health and Safety Laws.

 

b.           Not permit any substance, activity or Environmental Condition on,
in, under or affecting the Real Property which is in violation of any
Environmental Health and Safety Laws.

 

c.           Comply in all material respects with the provisions of all
Environmental Health and Safety Laws.

 

d.           Notify Lender promptly of any discharge of Hazardous Materials,
Environmental Condition, or environmental complaint or notice received from any
governmental agency or any other party.

 

e.           Upon any discharge of Hazardous Materials or upon the occurrence of
any Environmental Condition, promptly contain and remediate the same in
compliance with all Environmental Health and Safety Laws, promptly pay any fine
or penalty assessed in connection therewith, and promptly notify Lender of such
events.

 

f.            Permit Lender to inspect the Real Property for Hazardous Materials
and Environmental Conditions, and to inspect all books, correspondence, and
records pertaining thereto, and upon the occurrence and continuation of an Event
of Default, to conduct tests thereon.

 

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g.           Provide a Phase 1 report (including all validated and unvalidated
data generated for such reports) of a qualified independent environmental
engineer reasonably acceptable to Lender, reasonably satisfactory to Lender in
scope, form, and content, and provide to Lender such other and further
assurances reasonably satisfactory to Lender, that the Loan Parties are in
compliance with these covenants concerning Hazardous Materials and Environmental
Conditions, and that any past violation thereof has been corrected in compliance
with all applicable Environmental Health and Safety Laws. Lender shall be
entitled to one report every two years at the Loan Parties’ expense if Lender
has a good faith reason to believe that there is an Environmental Condition
affecting the Real Property. Upon the occurrence of a Collateral Triggering
Event, such report shall be provided to Lender from time to time upon request of
Lender and at the Loan Parties’ expense.

 

h.           Immediately advise Lender of any additional, supplemental, new, or
other information concerning any Hazardous Materials or Environmental Conditions
relating to the Real Property.

 

6.14         Financial Covenants

 

Except as otherwise provided herein, each of the accounting terms used in this
Section 6.14 shall have the meanings used in accordance with Accounting
Standards. Each of the financial covenants listed below shall be tested on a
quarterly basis.

 

a.           Minimum EBITDA. During a Minimum EBITDA Period, Black Diamond and
its Subsidiaries, on a Consolidated basis, shall maintain Trailing Twelve Month
EBITDA of not less than (i) $6,000,000 for each fiscal quarter ending on or
prior to December 31, 2015 and $7,000,000 for each fiscal quarter thereafter, in
each case, to the extent prior to the Permanent Accordion Increase Date and (ii)
$11,000,000 for the fiscal quarter immediately prior to, and for each fiscal
quarter following, the Permanent Accordion Increase Date. EBITDA shall be
adjusted on a pro forma basis for future Permitted Acquisitions, such
calculations to be limited to pro forma statements filed with the Securities
Exchange Commission, or if not filed with the Securities Exchange Commission,
then subject to reasonable approval by Lender.

 

b.           Net Worth. Black Diamond and its Subsidiaries, on a Consolidated
basis, will maintain a Net Worth, measured at each reporting period set forth in
Section 6.7 Financial Statements and Reports, of not less than $240,000,000
through the Fiscal Year End for 2014, plus an increase of $2,000,000 during each
Fiscal Year thereafter.

 

c.           Asset Coverage. Black Diamond and its Subsidiaries, on a
Consolidated basis, measured at each reporting period set forth in Section 6.7
Financial Statements and Reports, shall maintain a positive amount of Asset
Coverage. Asset Coverage shall be adjusted on a pro forma basis for future
Permitted Acquisitions, such calculations to be limited to pro forma statements
filed with the Securities Exchange Commission, or if not filed with the
Securities Exchange Commission, then subject to reasonable approval by Lender.

 

d.           Maximum Capital Expenditures. Black Diamond and its Subsidiaries,
on a Consolidated basis, will not make any Capital Expenditures if, after giving
effect thereto, the aggregate of all Capital Expenditures made by Borrowers, on
a Consolidated basis, would exceed $6,500,000 in any Fiscal Year; provided,
however, that if during any Fiscal Year the amount of Capital Expenditures
permitted for that year is not so utilized, such unutilized amount may be added
to the maximum Capital Expenditures permitted under this Section 6.14d during
the next succeeding Fiscal Year, but in no event shall the maximum Capital
Expenditures during any Fiscal Year include unused amounts from any year prior
to the immediately preceding Fiscal Year.

 

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6.15         Negative Pledge

 

The Loan Parties will not, and will not allow any non-Loan Party Subsidiary to,
create, incur, assume, or suffer to exist any mortgage, deed of trust, pledge,
lien, security interest, hypothecation, assignment, or other preferential
arrangement, charge, or encumbrance (including, without limitation, any
conditional sale, other title retention agreement, or finance lease) of any
nature, upon or with respect to any of its domestic or foreign properties or
assets, now owned or hereafter acquired, or sign or file, under the Uniform
Commercial Code of any jurisdiction, a financing statement under which any Loan
Party appears as debtor, or sign any security agreement authorizing any secured
party thereunder to file such financing statement, except (all of the following,
collectively, “Permitted Liens”) (a) those contemplated by this Agreement; (b)
liens arising in the ordinary course of business (such as liens of carriers,
warehousemen, mechanics, repairmen, and materialmen) and other similar liens
imposed by law for sums not yet due and payable or, if due and payable, those
being contested in good faith by appropriate proceedings and for which
appropriate reserves are maintained in accordance with Accounting Standards; (c)
easements, rights of way, restrictions, minor defects or irregularities in title
or other similar liens which alone or in the aggregate do not interfere in any
material way with the ordinary conduct of the business of the Loan Parties; (d)
liens for taxes and assessments not yet due and payable or, if due and payable,
those being contested in good faith by appropriate proceedings and for which
appropriate reserves are maintained in accordance with Accounting Standards; (e)
Permitted Liens set forth on Schedule 6.15 hereto; (f) liens securing Debt not
to exceed an aggregate outstanding amount of $3,000,000, except as authorized by
prior written consent of Lender; (g) pledges or deposits in the ordinary course
of business in connection with workers’ compensation, employment and
unemployment insurance and other social security legislation, other than any
lien imposed by ERISA; (h) deposits to secure the performance of bids, trade
contracts and leases (other than Debt), statutory obligations, surety and appeal
bonds, performance bonds and other obligations of a like nature, or arising as a
result of process payments under government contracts to the extent required or
imposed by applicable laws, all to the extent incurred in the ordinary course of
business; and (i) liens granted by a Loan Party in favor of a licensor under any
intellectual property license agreement entered into by such Loan Party, as
licensee, in the ordinary course of such Loan Party’s business; provided, that
such liens do not encumber any property other than the intellectual property
licensed by such Loan Party pursuant to the applicable license agreement and the
property manufactured or sold by such Borrower utilizing such intellectual
property.

 

The Loan Parties will not, and will not allow any non-Loan Party Subsidiary to,
enter into any agreement with any third party (each a “Negative Pledge”) whereby
any Loan Party or such Subsidiary is prohibited from creating, incurring,
assuming or suffering to exist any mortgage, deed of trust, pledge, lien,
security interest, hypothecation, assignment, deposit arrangement, or other
preferential arrangement, charge, or encumbrance (including, without limitation,
any conditional sale, other title retention agreement, or finance lease) of any
nature, upon or with respect to any of its properties or assets, now owned or
hereafter acquired, or from signing or filing, under the Uniform Commercial Code
of any jurisdiction, a financing statement under which the Loan Parties or any
of their Subsidiaries appear as debtor, or signing any security agreement
authorizing any secured party thereunder to file such financing statement, or
enter into any agreement with any third party whereby the Loan Parties’ or such
non-Loan Party Subsidiary’s rights to do any of the foregoing are limited or
restricted in any way, other than standard and customary Negative Pledge
provisions in property acquired with the proceeds of any capital lease or
purchase money financing that extend and apply only to such acquired property.

 

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6.16         Restriction on Debt

 

The Loan Parties will not, and will not allow any non-Loan Party Subsidiary to,
create, incur, assume, or suffer to exist any Debt except as permitted by this
Section 6.16.

 

Permitted exceptions to this covenant are: (a) the Loan; (b) Intercompany Loans;
(c) obligations under Hedging Transaction Documents with Lender or its
affiliates; (d) Debt, not to exceed an aggregate outstanding principal amount of
$3,000,000, which amount includes secured debt as authorized under Sections
6.15(e) and (f) of this Agreement; (e) the Subordinated Debt; (f) any foreign
currency or interest rate hedge in the ordinary course of business; (g) Existing
Debt; and (h) contingent obligations of (A) the Loan Parties or any non-Loan
Party Subsidiaries in respect of Debt otherwise permitted hereunder of the Loan
Parties or any non-Loan Party Subsidiaries, and (B) the Loan Parties or any
non-Loan Party Subsidiaries for customary and commercially reasonable
indemnification obligations incurred in good faith in connection with any
Permitted Acquisitions or otherwise in connection with contractual obligations
entered into in the ordinary course of business.

 

6.17         Mergers, Consolidations, Acquisitions, Sale of Assets

 

None of the Loan Parties shall wind up, liquidate, or dissolve itself,
reorganize, merge, or consolidate into, acquire, or convey, sell, assign,
transfer, lease, or otherwise dispose of (whether in one transaction or a series
of transactions) all or substantially all of its assets (whether now owned or
hereafter acquired) to any Person except in connection with Permitted
Acquisitions.

 

“Permitted Acquisitions” means mergers, consolidations or acquisitions meeting
the following requirements:

 

a.           At the time of completion of the Permitted Acquisition, no Default
or Event of Default which has not been waived or timely cured, exists.

 

b.           Prior to closing of the Permitted Acquisition, Borrowers shall
present information concerning the business conducted by the potential Permitted
Acquisition to Lender and Lender shall respond to the Loan Parties as to whether
or not the potential Permitted Acquisition is deemed to be a Permitted Business
within five Banking Business Days.

 

c.           Prior to the closing of the Permitted Acquisition, the Loan Parties
shall have provided Lender with a pro forma compliance certificate in the form
provided in Section 6.7 Financial Statements and Reports, showing that upon
completion of the Permitted Acquisition, the Loan Parties will be in compliance
with the financial covenants provided in Section 6.14 Financial Covenants. The
method and information used in the calculation of the financial covenants for
the pro forma compliance certificate shall be reasonably acceptable to Lender.

 

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d.           If the Permitted Acquisition is a merger or a consolidation, either
(i) one of the Loan Parties will be the surviving entity, (ii) the acquired
company will become a majority-owned Subsidiary of one of the Loan Parties, or
(iii) the Loan Parties will comply with Section 6.17f.

 

e.           If the Permitted Acquisition is an acquisition of ownership
interests in a company, the acquired company will be a majority-owned Subsidiary
of one of the Loan Parties.

 

f.            If the Permitted Acquisition is an acquisition of a majority of
the ownership interests in a company or is a merger where a Borrower is not the
surviving company and the company is not a foreign Subsidiary, the Loan Parties
must comply with Section 6.21 Subsidiaries.

 

g.           The aggregate amount of consideration paid by the Loan Parties for
all Permitted Acquisitions shall not exceed $10,000,000.

 

6.18         Joint Ventures and Investments

 

No Loan Party will make any capital contribution to or investment in, or
purchase any stock or other Equity Interest of, any other Person, except in
connection with Permitted Acquisitions or any joint venture meeting the
following requirements (the “Permitted Joint Ventures”):

 

a.           At the time of completion of the proposed Permitted Joint Venture,
no Default or Event of Default which has not been waived or timely cured,
exists.

 

b.           At no time shall the Loan Parties own less than 45% of the
interests in the proposed Permitted Joint Venture. If at any time the Loan
Parties own more than 50% of the interests in the proposed Permitted Joint
Venture, such Permitted Joint Venture must comply with Section 6.21
Subsidiaries.

 

c.           At all times the Loan Parties shall have control of the proposed
Permitted Joint Venture. For purposes of this Section control means the Loan
Parties have a “financial controlling interest” determined in accordance with
Accounting Standards.

 

d.           The aggregate amount of consideration paid by the Loan Parties for
the proposed Permitted Joint Venture and all other Permitted Joint Ventures
during the preceding three year period shall not exceed $3,000,000.

 

6.19         Change in Control

 

a.           No Change of Control of Black Diamond shall occur.

 

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“Change of Control” means (i) the acquisition by any “person” or “group” (as
such terms are used in Sections 13(d) and 14(d) of the Securities Exchange Act
of 1934, as amended) of beneficial ownership (within the meaning of Rule 13d-3
promulgated under such Act) of 40% or more of the outstanding common stock of
Black Diamond, other than a “person” or “group” that includes Warren B. Kanders;
or (ii) during any 24-month period individuals who at the beginning of such
period constituted the Board of Directors of Black Diamond (together with any
new directors whose election by the Board of Directors or whose nomination for
election by the shareholders of Black Diamond was approved by a vote of a
majority of the directors who either were directors at the beginning of such
period or whose election or nomination was previously so approved) ceasing for
any reason to constitute a majority of the Board of Directors of Black Diamond.

 

b.           Black Diamond shall own, either directly or indirectly, all of the
equity interests of each of the other Loan Parties.

 

6.20         Loans and Distributions

 

The Loan Parties shall not (i) declare or pay any dividends, (ii) purchase,
redeem, retire or otherwise acquire for value any of its Equity Interests now or
hereafter outstanding, (iii) make any distribution of assets to its
stockholders, investors, or equity holders, whether in cash, assets, or in
obligations of any Loan Party, (iv) allocate or otherwise set apart any sum for
the payment of any dividend or distribution on, or for the purchase, redemption,
or retirement of any shares of its Equity Interests, or (v) make any other
distribution by reduction of capital or otherwise in respect of any shares of
its Equity Interests; provided, however the Loan Parties may make dividends,
redemptions, repurchases and distributions as described in the foregoing clauses
(i) through (v): (a) so long as the Loan Parties are in pro forma compliance
with the financial covenants set forth in Section 6.14 Financial Covenants, and
(b) Borrowers do not draw on the Revolving Loan to make such dividends,
redemptions, repurchases and distributions unless Black Diamond demonstrates to
Lender to Lender’s satisfaction (which determination shall be in Lender’s sole
discretion) that such use of the Revolving Loan will not impair Black Diamond’s
liquidity and availability under the Revolving Loan for funding Capital
Expenditures, seasonal working capital and other corporate obligations and
operational cash requirements.

 

The Loan Parties shall not make any loans or pay any advances of any nature
whatsoever to any Person, except advances in the ordinary course of business to
(i) vendors, suppliers, and contractors, (ii) employees, not to exceed $500,000
in the aggregate at any one time outstanding, and (iii) Intercompany Loans. The
Loan Parties shall notify Lender in writing within ten days after amending or
creating a new Intercompany Loan, which amendment or new Intercompany Loan
agreement shall be substantially in the form of Exhibit C.

 

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6.21         Subsidiaries

 

Any Loan Party may directly or indirectly create or form any Subsidiaries (other
than pursuant to Permitted Acquisitions, which are governed by Section 6.17
Mergers, Consolidations, Acquisitions, Sale of Assets and Permitted Joint
Ventures, which are governed by Section 6.18 Joint Ventures) as long as such
Loan Party and the other specified parties comply with the remainder of this
Section. If any Loan Party, directly or indirectly, creates, forms or acquires
any domestic Subsidiary on or after the Effective Date, such Loan Party will,
and will cause such Subsidiary to, not more than 30 days after the consummation
of the creation, formation or acquisition of such Subsidiary, (a) deliver to
Lender a summary providing a reasonably detailed description of such Subsidiary
and the current terms and conditions of the proposed creation, formation or
acquisition of such Subsidiary in writing, and (b) cause such Subsidiary to
(i) join in the obligations of Borrowers under the Loan Documents as a
co-borrower by executing a Joinder Agreement, and (ii) deliver such other
documentation and take such other actions as reasonably required by Lender in
connection with the foregoing. The Loan Parties hereby consent and agree to the
addition of any such Subsidiary as an additional Borrower hereunder through the
execution of the Joinder Agreement.

 

6.22         Subordinated Debt

 

The Loan Parties represent and warrant to Lender and hereby confirm that each of
the Subordination Agreements attached hereto as Exhibit E remain in full force
and effect as of the Effective Date without any amendment or modification
thereto.

 

Payments of principal under the Subordinated Debt may be made only: (a) so long
as the Loan Parties are in pro forma compliance with the financial covenants set
forth in Section 6.14 Financial Covenants and (b) Borrowers do not draw on the
Revolving Loan to repay such Subordinated Debt unless Black Diamond demonstrates
to Lender to Lender’s satisfaction (which determination shall be in Lender’s
sole discretion) that such use of the Revolving Loan will not impair Black
Diamond’s liquidity and availability under the Revolving Loan for funding
Capital Expenditures, seasonal working capital and other corporate obligations
and operational cash requirements.

 

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6.23         Prior Consent for Name or Organizational Change

 

The Loan Parties shall not change their name or convert to a different form of
legal entity without Lender’s prior written consent, which such consent shall
not be unreasonably withheld, delayed or conditioned.

 

6.24         Maintenance of Existence

 

Each Loan Party shall maintain and preserve (a) its existence and good standing
in the jurisdiction of its organization, and (b) its qualification and good
standing in each jurisdiction where the nature of its business makes such
qualification necessary unless such failure under this clause (b) would not
reasonably be expected to have a Material Adverse Effect.

 

6.25         Further Assurances

 

Each Loan Party shall take such actions as Lender may reasonably request from
time to time (i) including the executing and delivery of an amendment to this
Agreement in form substance reasonably satisfactory to Lender to effectuate the
increase of the Revolving Loan under the foregoing clause following the
Permanent Accordion Increase Date and (ii) to ensure that the Obligations of
each Loan Party hereunder and under the other Loan Documents are secured by the
Collateral upon and following a Collateral Triggering Event.

 

6.26         Collateral Triggering Event

 

Upon the happening of any Collateral Triggering Event, the Loan Parties shall
grant Lender a security interest in and Lien against their respective property
in support of the Obligations pursuant to and in accordance with Section 3.1.

 

6.27         Creation of Trusts; Transfers to Trusts

 

The Loan Parties shall not create as settlor any trust, or transfer any assets
into any trust, without giving written notice to Lender at least ninety (90)
days prior to such creation or transfer. Such notice shall describe in
reasonable detail the trust to be created and/or the asset transfer to be made.
Failure by any such settlor to provide that notice shall be an Event of Default
under the Loan Documents.

 

The Loan Parties shall not create as settlor any actual or purported spendthrift
trust, asset protection trust or any other trust intended by its terms or
purpose (or having the effect) to protect assets from creditors or to limit the
rights of existing or future creditors (an “Asset Protection Trust”) without the
prior written consent of Lender. Lender may withhold that consent in its sole
discretion. Creation of any Asset Protection Trust, and each transfer of assets
thereto, by any such settlor without the Lender’s prior written consent:

 

a.           Shall be an Event of Default under the Loan Documents;

 

b.           Shall have the effect of, and shall be deemed as a matter of law,
regardless of that settlor’s solvency, of having been made by that settlor with
the actual intent of hindering and delaying and defrauding Lender as that
settlor’s creditor; and

 

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c.           Shall constitute a fraudulent transfer that is unenforceable and
void (not merely voidable) as against Lender.

 

With respect to each such fraudulent transfer, Lender shall have all the rights
and remedies provided by state fraudulent transfer laws, or otherwise provided
at law or equity. Lender shall have the right to obtain an ex parte court order
directing the trustee of the Asset Protection Trust to give Lender written
notice a reasonable time (of not less than ten (10) Banking Business Days) prior
to making any distribution from said trust. Nothing in this paragraph shall
limit or affect any rights or remedies otherwise provided to Lender by law,
equity or any contract.

 

7.           Default

 

7.1           Events of Default

 

Time is of the essence of this Agreement. The occurrence of any of the following
events shall constitute a default under this Agreement and under the Loan
Documents and shall be termed an “Event of Default”:

 

a.           Default in the payment when due of any amount payable by the Loan
Parties hereunder or under the Loan Documents.

 

b.           Any representation, warranty, or financial statement made by or on
behalf of any Loan Party in any of the Loan Documents, or any document
contemplated by the Loan Documents, is materially false or materially misleading
when made or deemed made.

 

c.           Default in the performance or observance by any Loan Party of any
term, covenant or agreement contained in this Agreement or any other Loan
Document.

 

d.           Any indebtedness of the Loan Parties or Subsidiaries in an
aggregate amount in excess of one million five hundred thousand dollars
($1,500,000) under any note, indenture or any other debt instrument is
accelerated, excluding this Loan.

 

e.           Default or an event which, with the passage of time or the giving
of notice or both, would constitute a default, by the Loan Parties or
Subsidiaries, having an aggregate liability to the Loan Parties in excess of one
million five hundred thousand dollars ($1,500,000), occurs on any note,
indenture, contract, agreement or any other debt instrument.

 

f.            Any Loan Party (i) ceases or fails to be solvent, or generally
fails to pay, or admits in writing its inability to pay, its debts as they
become due; (ii) voluntarily ceases to conduct its business in the ordinary
course; (iii) commences any bankruptcy proceeding with respect to itself; or
(iv) takes any action to effectuate or authorize any of the foregoing.

 

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g.           (i) Any involuntary bankruptcy proceeding is commenced or filed
against any Loan Party, or any writ, judgment, warrant of attachment, warrant of
execution or similar process is issued or levied against a substantial part of
any Loan Party’s properties, and such proceeding or petition shall not be
dismissed, or such writ, judgment, warrant of attachment, warrant of execution
or similar process shall not be released, vacated or fully bonded within 60 days
after commencement, filing or levy; (ii) any Loan Party admits the material
allegations of a petition against it in any bankruptcy proceeding, or an order
for relief (or similar order under non-U.S. law) is ordered in any bankruptcy
proceeding; or (iii) any Loan Party acquiesces in the appointment of a receiver,
trustee, custodian, conservator, liquidator, mortgagee in possession (or agent
therefor) or other similar Person for itself or a substantial portion of its
property or business.

 

h.           Any judgment or regulatory fine is entered against any Loan Party
which could be reasonably expected to have a Material Adverse Effect.

 

i.            Following a Collateral Triggering Event, the Collateral Documents
shall cease to be in full force and effect; or any Loan Party, any officer,
director or manager of any Loan Party, or the members or shareholders of any
Loan Party or any person by, through or on behalf of any Loan Party or said
officers, directors, managers, members or shareholders shall contest the
validity or enforceability of any Collateral Document or any other Loan
Document.

 

j.            Default occurs or the Loan Parties fail to comply with any term in
any Hedging Transaction Document.

 

7.2           Cure Periods

 

Borrowers shall not be entitled to any notice of an Event of Default. Borrowers
shall not have any right to cure any Event of Default under Section 7.1(a), (f),
(g), (h), (i), or (j). For any other Event of Default, Borrowers may cure such
default within ten (10) Banking Business Days of the occurrence of the default,
or if it is commercially unreasonable to cure such default within ten Banking
Business Days and with Lender's consent, within such longer period of time as is
reasonably necessary to accomplish the cure, provided (i) Borrowers promptly
commence such cure, (ii) such cure period does not exceed 90 days under any
circumstances, and (iii) Borrowers shall pay to Lender all of Lender’s
reasonable costs to confirm that the Event of Default has been cured. If an
Event of Default is cured, provided Borrowers immediately pay all of Lender’s
reasonable enforcement costs, including attorneys’ fees, incurred through the
date Lender received notice of the cure, Lender shall cease its enforcement
actions and remedies, including any acceleration remedy provided herein or
elsewhere in the Loan Documents, and the parties shall proceed under the Loan
Documents as if no default has occurred. Notwithstanding Lender’s obligation to
terminate its remedies upon a cure as set forth above, Lender shall have no
obligation to suspend or delay its enforcement of its rights and remedies under
the Loan Documents and at law during any applicable cure period after the
expiration of the initial ten Banking Business Days. In no event shall Borrowers
have the right to cure Events of Default more than three times during the term
of this Agreement.

 

An Event of Default in respect of any default subject to cure shall not exist
during any applicable cure period. If the cure period expires without Borrowers
having cured the Event of Default and the Event of Default is not waived, the
Event of Default shall be deemed to have occurred as of the date the event or
omission giving rise to the Event of Default first occurred. Furthermore, if
during the cure period any proceeding is commenced or petition filed under any
bankruptcy or insolvency law by or against Borrowers, the cure period shall
terminate upon such commencement or filing and the Event of Default shall be
deemed to have occurred as of the date the event or omission giving rise to the
Event of Default first occurred.

 

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7.3           No Waiver of Event of Default

 

No course of dealing or delay or failure to assert any Event of Default shall
constitute a waiver of that Event of Default or of any prior or subsequent Event
of Default.

 

8.           Remedies

 

8.1           Remedies upon Event of Default

 

Upon the occurrence of an Event of Default, and at any time thereafter, all or
any portion of the Obligations due or to become due from the Loan Parties to
Lender, whether arising under this Agreement, the Promissory Note, or otherwise,
at the option of Lender and without notice to the Loan Parties of the exercise
of such option (and automatically upon any Event of Default under Sections 7f or
7g), shall accelerate and become at once due and payable in full, and Lender
shall have all rights and remedies created by or arising from the Loan
Documents, and all other rights and remedies existing at law, in equity, or by
statute.

 

Additionally, Lender shall have the right, immediately and without prior notice
or demand, to set off against the Obligations, whether or not due, all money and
other amounts owed by Lender in any capacity to the Loan Parties, including,
without limitation, checking accounts, savings accounts, and other depository
accounts, and Lender shall be deemed to have exercised such right of setoff and
to have made a charge against any such money or amounts immediately upon
occurrence of an Event of Default, even though such charge is entered on
Lender’s books subsequently thereto.

 

8.2           Rights and Remedies Cumulative

 

The rights and remedies conferred herein and in the other Loan Documents are
cumulative and not exclusive of any other rights or remedies and shall be in
addition to every other right, power, and remedy that Lender may have, whether
specifically granted herein or hereafter existing at law, in equity, or by
statute. Any and all such rights and remedies (subject to any applicable cure
period to which the Loan Parties are entitled) may be exercised from time to
time and as often and in such order as Lender may deem expedient, whether or not
the Obligations shall be due and payable and whether or not Lender shall have
instituted any suit for collection, foreclosure, or other action under or in
connection with the Loan Documents.

 

8.3           No Waiver of Rights

 

No delay or omission in the exercise or pursuance by Lender of any right, power,
or remedy shall impair any such right, power, or remedy or shall be construed to
be a waiver thereof.

 

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9.           Reserved

 

10.         General Provisions

 

10.1         Governing Agreement

 

Except with respect to any Hedging Transaction Documents, in the event of
conflict or inconsistency between this Agreement and the other Loan Documents,
the terms, provisions and intent of this Agreement shall govern.

 

10.2         Loan Parties’ Obligations Cumulative

 

Every obligation, covenant, condition, provision, warranty, agreement,
liability, and undertaking of the Loan Parties contained in the Loan Documents
shall be deemed cumulative and not in derogation or substitution of any of the
other obligations, covenants, conditions, provisions, warranties, agreements,
liabilities, or undertakings of the Loan Parties contained herein or therein.

 

10.3         Co-Borrowers

 

All obligations of Borrowers under this Agreement and the Loan Documents shall
be joint and several. Each reference to Borrowers in the Loan Documents shall be
deemed to refer to each Borrower individually and collectively and each
obligation to be performed by Borrowers hereunder shall be performed by each
Borrower.

 

Each of the Borrowers hereby irrevocably appoints the other as its agent and
attorney-in-fact for all purposes related to the Loan Documents, including,
without limitation, making requests for advances, giving and receiving of
notices and other communications, and the making of all certifications and
reports required pursuant to the Loan Documents. The action of any of the
Borrowers with respect to any advance and the requests, notices, reports and
other materials submitted by any of the Borrowers shall bind each of the
Borrowers.

 

Lender shall have no responsibility to inquire into the apportionment,
allocation or disposition of any advances.

 

Each of the Borrowers hereby agrees to indemnify Lender and to hold Lender
harmless, pursuant to Section 10.12 Indemnification, from and against any and
all liabilities and damages (including contract, tort and equitable claims)
which may be awarded against Lender, and for all reasonable attorneys fees,
legal expenses and other expenses incurred in defending such claims, arising
from or related in any manner to the joint nature of the borrowings hereunder or
the status of Borrowers as co-borrowers.

 

Each of the Borrowers represents and warrants that each of the Borrowers is
engaged in operations that require financing on such a joint basis with each
other and that each of the Borrowers will derive benefit, directly or
indirectly, from the advances made under this Agreement.

 

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Each of the Borrowers shall be a direct, primary and independent obligor and
shall not be a guarantor, accommodation party or other Person secondarily liable
for the Loan, on the Promissory Note, or under any of the Loan Documents.

 

10.4         Payment of Expenses and Attorney’s Fees

 

The Loan Parties shall pay all reasonable expenses of Lender relating to the
negotiation, drafting of documents, documentation of the Loan, and
administration and supervision of the Loan, including, without limitation, title
insurance, recording fees, filing fees, and reasonable attorneys fees and legal
expenses, whether incurred in making the Loan, in future amendments or
modifications to the Loan Documents, or in ongoing administration and
supervision of the Loan.

 

Upon occurrence of an Event of Default which has not been waived or timely
cured, the Loan Parties agree to pay appraisal fees, environmental inspection
fees and field examination expenses upon request of Lender, and all costs and
expenses, including reasonable attorney fees and legal expenses, incurred by
Lender in enforcing, or exercising any remedies under, the Loan Documents, and
any other rights and remedies.

 

The Loan Parties agree to pay all expenses, including reasonable attorney fees
and legal expenses, incurred by Lender in any bankruptcy proceedings of any type
involving the Loan Parties, the Loan Documents, including, without limitation,
expenses incurred in modifying or lifting the automatic stay, determining
adequate protection, use of cash collateral or relating to any plan of
reorganization.

 

10.5         Right to Perform for Borrowers

 

During the existence of an Event of Default, Lender may, in its sole discretion
and without any duty to do so, elect to discharge taxes, tax Liens, security
interests, or any other Lien upon any property or asset of the Loan Parties, to
pay any filing, recording, or other charges payable by the Loan Parties, or to
perform any other obligation of the Loan Parties under this Agreement or under
the other Loan Documents.

 

10.6         Assignability

 

No Loan Party may assign or transfer any of the Loan Documents and any such
purported assignment or transfer is void. Lender may assign or transfer any of
the Loan Documents with the consent of Borrowers, which consent shall not be
unreasonably withheld or delayed; provided, however, that no consent of
Borrowers shall be required (a) so long as an Event of Default has occurred and
is continuing; (b) for Lender to pledge or assign a security interest in all or
any portion of its rights under this Agreement, the Promissory Note or any other
Loan Document to secure obligations of Lender, including any pledge or
assignment to secure obligations to a Federal Reserve Bank or Federal Home Loan
Bank; or (c) for Lender to assign or transfer any of the Loan Documents to an
Affiliate of Lender. Funding of the Loan may be provided by an Affiliate of
Lender.

 

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10.7         Third Party Beneficiaries

 

The Loan Documents are made for the sole and exclusive benefit of the Loan
Parties and Lender and are not intended to benefit any other third party. No
third party may claim any right or benefit or seek to enforce any term or
provision of the Loan Documents.

 

10.8         Governing Law

 

The Loan Documents shall be governed by and construed in accordance with the
laws of the State of Utah, excluding conflict of law provisions that would
result in the application of any law other than the laws of the State of Utah,
and except to the extent that any such document expressly provides otherwise.

 

10.9         Severability of Invalid Provisions

 

Any provision of this Agreement which is prohibited or unenforceable in any
jurisdiction shall, as to such jurisdiction only, be ineffective only to the
extent of such prohibition or unenforceability without invalidating the
remaining provisions hereof or thereof, and any such prohibition or
unenforceability in any jurisdiction shall not invalidate or render
unenforceable such provision in any other jurisdiction.

 

10.10         Interpretation of Agreement

 

The article and section headings in this Agreement are inserted for convenience
only and shall not be considered part of this Agreement nor be used in its
interpretation.

 

All references in this Agreement to the singular shall be deemed to include the
plural when the context so requires, and vice versa. References in the
collective or conjunctive shall also include the disjunctive unless the context
otherwise clearly requires a different interpretation.

 

10.11         Survival and Binding Effect of Representations, Warranties, and
Covenants

 

All agreements, representations, warranties, and covenants made herein by the
Loan Parties shall survive the execution and delivery of this Agreement and
shall continue in effect so long as any obligation to Lender contemplated by
this Agreement is outstanding and unpaid, notwithstanding any termination of
this Agreement. All agreements, representations, warranties, and covenants made
herein by the Loan Parties shall survive any bankruptcy proceedings involving
the Loan Parties. All agreements, representations, warranties, and covenants in
this Agreement shall bind the party making the same, its successors and, in
Lender’s case, assigns, and all rights and remedies in this Agreement shall
inure to the benefit of and be enforceable by each party for whom made, their
respective successors and, in Lender’s case, assigns.

 

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10.12         Indemnification

 

Each Loan Party hereby agrees to indemnify Lender for all liabilities and
damages (including contract, tort and equitable claims) which may be awarded to
third parties against Lender, and for all reasonable attorneys fees, legal
expenses and other expenses incurred in defending such claims, arising from or
relating in any manner to the negotiation, execution or performance by Lender of
the Loan Documents (including all reasonable attorneys fees, legal expenses and
other expenses incurred in defending any such claims brought by the Loan Parties
if the Loan Parties do not prevail in such actions), excluding only breach of
contract, gross negligence, and willful misconduct by Lender. Lender shall have
the sole and complete control of the defense of any such claims and is hereby
authorized to settle or otherwise compromise any such claims as Lender in good
faith determines shall be in the best interests of Lender.

 

10.13         Environmental Indemnification

 

Each Loan Party shall indemnify Lender for any and all claims and liabilities,
and for damages which may be awarded or incurred by Lender, and for all
reasonable attorney fees, legal expenses, and other out-of-pocket expenses
arising from or related in any manner, directly or indirectly, to (i) Hazardous
Materials located on, in, or under the Real Property; (ii) any Environmental
Condition on, in, or under the Real Property; (iii) any material violation of or
non compliance with any Environmental Health and Safety Law; (iv) any material
breach or violation of Section 5.11 Environmental Representations and Warranties
and/or Section 6.13 Environmental Covenants; and/or (v) any activity or
omission, whether occurring on or off the Real Property, whether prior to or
during the term of the loans secured hereby, and whether by the Loan Parties or
any other Person, relating to Hazardous Materials or an Environmental Condition.
The indemnification obligations of the Loan Parties under this Section shall
survive any reconveyance, release, or foreclosure of the Real Property, any
transfer in lieu of foreclosure, and satisfaction of the obligations secured
hereby.

 

Lender shall have the sole and complete control of the defense of any such
claims. Lender is hereby authorized to settle or otherwise compromise any such
claims as Lender in good faith determines shall be in its best interests.

 

10.14         Interest on Expenses and Indemnification, Order of Application

 

All expenses, out-of-pocket costs, attorneys fees and legal expenses, amounts
advanced in performance of obligations of the Loan Parties, and indemnification
amounts owing by the Loan Parties to Lender under or pursuant to this Agreement
and any other Loan Document shall be due and payable upon demand. If not paid
upon demand, all such obligations shall bear interest at the Default Rate from
the date of disbursement until paid to Lender, both before and after judgment.
Lender is authorized to disburse funds under the Revolving Loan for payment of
all such obligations.

 

All payments and recoveries shall be applied to payment of the foregoing
obligations, the Promissory Note, and all other amounts owing to Lender by
Borrowers in such order and priority as set forth in this Agreement.

 

10.15         Limitation of Consequential Damages

 

Lender and its officers, directors, employees, representatives, agents, and
attorneys, shall not be liable to the Loan Parties for consequential damages
arising from or relating to any breach of contract, tort, or other wrong in
connection with the negotiation, documentation, administration or collection of
the Loan.

 

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10.16         Waiver and Release of Claims

 

Each Loan Party hereby (i) represents that neither the Loan Parties nor any
Affiliate or principal of the Loan Parties have any defenses to or setoffs
against any obligations owing by the Loan Parties, or by the Loan Parties’
Affiliates or principals, to Lender or Lender’s Affiliates, nor any claims
against Lender or Lender’s Affiliates for any matter whatsoever, related or
unrelated to the Loan Documents or any Obligations, and (ii) releases Lender and
Lender’s Affiliates, officers, directors, employees, representatives and agents
from all claims, causes of action, and costs, in law or equity, known or
unknown, whether or not matured or contingent, existing as of the date hereof
that the Loan Parties have or may have by reason of any matter of any
conceivable kind or character whatsoever, related or unrelated to the Loan,
including the subject matter of the Loan Documents. The foregoing release does
not apply, however, to claims for future performance of express contractual
obligations that mature after the date hereof that are owing to the Loan Parties
by Lender or Lender’s Affiliates. The Loan Parties acknowledge that Lender has
been induced to enter into or continue the obligations by, among other things,
the waivers and releases in this Section.

 

10.17         Revival Clause

 

If the incurring of any debt by any Loan Party or the payment of any money or
transfer of property to Lender by or on behalf of the Loan Parties should for
any reason subsequently be determined to be “voidable” or “avoidable” in whole
or in part within the meaning of any state or federal law (collectively
“voidable transfers”), including, without limitation, fraudulent conveyances or
preferential transfers under the United States Bankruptcy Code or any other
federal or state law, and Lender is required to repay or restore any voidable
transfers or the amount or any portion thereof, or upon the advice of Lender’s
counsel is advised to do so, then, as to any such amount or property repaid or
restored, including all reasonable costs, expenses, and attorneys fees of Lender
related thereto, the liability of the Loan Parties, and each of them, shall
automatically be revived, reinstated and restored and shall exist as though the
voidable transfers had never been made.

 

10.18         Jury Trial Waiver, Arbitration, and Class Action Waiver

 

This Section contains a jury waiver, arbitration clause, and a class action
waiver. READ IT CAREFULLY.

 

a.           Jury Trial Waiver. As permitted by applicable law, the Loan Parties
and Lender each waive their respective rights to a trial before a jury in
connection with any Dispute (as “Dispute” is hereinafter defined), and Disputes
shall be resolved by a judge sitting without a jury. If a court determines that
this provision is not enforceable for any reason and at any time prior to trial
of the Dispute, but not later than 30 days after entry of the order determining
this provision is unenforceable, any party shall be entitled to move the court
for an order compelling arbitration and staying or dismissing such litigation
pending arbitration (“Arbitration Order”).

 

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b.           Arbitration. If a claim, dispute, or controversy arises between the
Loan Parties and Lender with respect to the Loan Documents, or any other
agreement or business relationship between the Loan Parties and Lender whether
or not related to the subject matter of this Agreement (all of the foregoing, a
“Dispute”), and only if a jury trial waiver is not permitted by applicable law
or ruling by a court, any of the parties may require that the Dispute be
resolved by binding arbitration before a single arbitrator at the request of any
party. By agreeing to arbitrate a Dispute, the Loan Parties and Lender give up
any right they may have to a jury trial, as well as other rights they would have
in court that are not available or are more limited in arbitration, such as the
rights to discovery and to appeal.

 

Arbitration shall be commenced by filing a petition with, and in accordance with
the applicable arbitration rules of, JAMS or National Arbitration Forum
(“Administrator”) as selected by the initiating party. If the parties agree,
arbitration may be commenced by appointment of a licensed attorney who is
selected by the parties and who agrees to conduct the arbitration without an
Administrator. Disputes include matters relating to a deposit account,
application for or denial of credit, enforcement of any of the obligations the
parties have to each other, compliance with applicable laws and/or regulations,
performance or services provided under any agreement by any party, including but
not limited to the validity, enforceability, meaning, or scope of this
arbitration provision, and including a dispute based on or arising from an
alleged tort or matters involving either the Loan Parties’ or Lender’s
employees, agents, Affiliates, or assigns of a party. However, Disputes do not
include the validity, enforceability, meaning, or scope of this arbitration
provision and such matters may be determined only by a court. If a third party
is a party to a Dispute, the Loan Parties and Lender each will consent to
including the third party in the arbitration proceeding for resolving the
Dispute with the third party. Venue for the arbitration proceeding shall be at a
location determined by mutual agreement of the parties or, if there is no
agreement, in Salt Lake City, Utah.

 

After entry of an Arbitration Order, the non-moving party shall commence
arbitration. The moving party shall, at its discretion, also be entitled to
commence arbitration but is under no obligation to do so, and the moving party
shall not in any way be adversely prejudiced by electing not to commence
arbitration. The arbitrator will (i) hear and rule on appropriate dispositive
motions for judgment on the pleadings, for failure to state a claim, or for full
or partial summary judgment, (ii) will render a decision and any award applying
applicable law, (iii) give effect to any limitations period in determining any
Dispute or defense, (iv) enforce the doctrines of compulsory counterclaim, res
judicata, and collateral estoppel, if applicable, (v) with regard to motions and
the arbitration hearing, apply rules of evidence governing civil cases, and (vi)
apply the law of the state specified in the agreement giving rise to the
Dispute. Filing of a petition for arbitration shall not prevent any party from
(i) seeking and obtaining from a court of competent jurisdiction
(notwithstanding ongoing arbitration) provisional or ancillary remedies
including but not limited to injunctive relief, property preservation orders,
foreclosure, eviction, attachment, replevin, garnishment, and/or the appointment
of a receiver, (ii) pursuing non-judicial foreclosure, or (iii) availing itself
of any self-help remedies such as setoff and repossession. The exercise of such
rights shall not constitute a waiver of the right to submit any Dispute to
arbitration.

 

50

 

 

Judgment upon an arbitration award may be entered in any court having
jurisdiction except that, if the arbitration award exceeds $4,000,000, any party
shall be entitled to a de novo appeal of the award before a panel of three
arbitrators. To allow for such appeal, if the award (including Administrator,
arbitrator, and attorney’s fees and costs) exceeds $4,000,000, the arbitrator
will issue a written, reasoned decision supporting the award, including a
statement of authority and its application to the Dispute. A request for de novo
appeal must be filed with the arbitrator within 30 days following the date of
the arbitration award; if such a request is not made within that time period,
the arbitration decision shall become final and binding. On appeal, the
arbitrators shall review the award de novo, meaning that they shall reach their
own findings of fact and conclusions of law rather than deferring in any manner
to the original arbitrator. Appeal of an arbitration award shall be pursuant to
the rules of the Administrator or, if Administrator has no such rules, then the
JAMS arbitration appellate rules shall apply.

 

Arbitration under this provision concerns a transaction involving interstate
commerce and shall be governed by the Federal Arbitration Act, 9 U.S.C. § 1 et
seq. The provisions of this arbitration provision shall survive any termination,
amendment, or expiration of this Agreement. If the terms of this provision vary
from the Administrator’s rules, this arbitration provision shall control.

 

c.           Class Action Waiver. The Loan Parties and Lender each waive the
right to litigate in court or arbitrate any claim or Dispute as a class action,
either as a member of a class or as a representative, or to act as a private
attorney general.

 

d.           Reliance. Each party (i) certifies that no one has represented to
such party that the other party would not seek to enforce jury and class action
waivers in the event of suit, and (ii) acknowledges that it and the other party
have been induced to enter into this Agreement by, among other things, the
mutual waivers, agreements, and certifications in this section.

 

10.19         Consent to Utah Jurisdiction and Exclusive Jurisdiction of Utah
Courts

 

The Loan Parties and Lender each acknowledge that by execution and delivery of
the Loan Documents the parties hereto have transacted business in the State of
Utah and the parties hereto 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 the Loan Documents and/or the transactions
contemplated thereby. EXCEPT AS EXPRESSLY AGREED IN WRITING BY LENDER AND EXCEPT
AS PROVIDED IN THE ARBITRATION PROVISIONS ABOVE, 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 THE
LOAN DOCUMENTS AND/OR THE TRANSACTIONS CONTEMPLATED THEREBY. NO LAWSUIT,
PROCEEDING, OR ANY OTHER ACTION RELATING TO OR ARISING UNDER THE LOAN DOCUMENTS
AND/OR THE TRANSACTIONS CONTEMPLATED THEREBY MAY BE COMMENCED OR PROSECUTED IN
ANY OTHER FORUM EXCEPT AS EXPRESSLY AGREED IN WRITING BY LENDER.

 

51

 

 

10.20         Joint and Several Liability

 

Each Loan Party shall be jointly and severally liable for all obligations and
liabilities arising under the Loan Documents.

 

10.21         Savings Clause

 

In any action or proceeding involving any state corporate law or any state,
federal or foreign bankruptcy, insolvency, reorganization or other law affecting
the rights of creditors generally, if the obligations of any Loan Party, or the
validity and enforceability of any security interest, lien or other encumbrance,
would otherwise be held or determined to be avoidable, invalid or unenforceable
but for the application of this Section, then, notwithstanding any other
provision of the Loan Documents to the contrary, without any further action by
the Loan Parties or Lender, the amount of such obligations shall be
automatically limited and reduced to the highest amount that would not cause
such obligations to be voidable, invalid or unenforceable, and any such security
interest, lien or encumbrance shall limited to the maximum extent not subject to
being voidable, invalid or enforceable, and the Loan Documents shall be deemed
automatically amended accordingly.

 

This Section is intended solely to preserve the rights of Lender to the maximum
extent not subject to avoidance, invalidity or unenforceability, and no Loan
Party or other Person shall have any right or claim under this Section.

 

10.22         No Partnership or Joint Venture

 

This Agreement is not intended to create and shall not be interpreted to create
any partnership or joint ventures between or among Lender and the Loan Parties.

 

10.23         Notices

 

All notices or demands by any party to this Agreement shall, except as otherwise
provided herein or in any Hedging Transaction Documents, be in writing and may
be sent by certified mail, return receipt requested. Notices so mailed shall be
deemed received when deposited in a United States post office box, postage
prepaid, properly addressed to the party hereto at the mailing addresses stated
herein or to such other addresses as any party hereto may from time to time
specify in writing. Any notice so addressed and otherwise delivered shall be
deemed to be given when actually received by the addressee. Notices concerning
any Hedging Transaction Documents shall be provided as set forth therein.

52

 

 

Mailing addresses:

 

Lender:

 

Zions First National Bank

Corporate Banking Group

One South Main, Suite 200

Salt Lake City, Utah 84111

Attention: Michael R. Brough

Senior Vice President

 

With a copy to:

 

Holland & Hart LLP

222 South Main Street, Suite 2200

Salt Lake City, Utah 84101

Attention: Scott R. Irwin, Esq.

 

With respect to all Borrowers:

 

c/o Black Diamond, Inc.

2084 East 3900 South

Salt Lake City, Utah 84124

Attention: President

 

With a copy to:

 

Kane Kessler, P.C.

1350 Avenue of the Americas, 26th Floor

New York, New York 10019

Attention: Robert L. Lawrence, Esq.

 

10.24         Duplicate Originals; Counterpart Execution

 

Two or more duplicate originals of the Loan Documents may be signed by the
parties, each duplicate of which shall be an original but all of which together
shall constitute one and the same instrument. Any of the Loan Documents may be
executed in several counterparts, without the requirement that all parties sign
each counterpart. Each of such counterparts shall be an original, but all
counterparts together shall constitute one and the same instrument. Receipt by
Lender and the Loan Parties of an executed copy of this Agreement by facsimile
or electronic mail shall constitute conclusive evidence of execution and
delivery of this Agreement by the signatory thereto.

 

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10.25         Disclosure of Financial and Other Information

 

The Loan Parties hereby consent to Lender disclosing to any other lender who may
participate in the Loan any and all information, knowledge, reports, and
records, including, without limitation, financial statements, relating in any
manner whatsoever to the Loan and the Loan Parties; provided, however, that
Lender shall take reasonable steps to ensure the confidentiality of any
documents or information that may be disclosed pursuant to this Section 10.25,
including maintaining the confidentiality thereof as required by laws, rules and
regulations, including the Securities Act of 1933, as amended, and the
Securities Exchange Act of 1934, as amended.

 

10.26         Integrated Agreement and Subsequent Amendment

 

The Loan Documents constitute the entire agreement between Lender and the Loan
Parties, and may not be altered or amended except by written agreement signed by
Lender and the Loan Parties. PURSUANT TO UTAH CODE SECTION 25-5-4, THE LOAN
PARTIES ARE NOTIFIED THAT THESE AGREEMENTS ARE A FINAL EXPRESSION OF THE
AGREEMENT BETWEEN LENDER AND THE APPLICABLE LOAN PARTIES, AND THESE AGREEMENTS
MAY NOT BE CONTRADICTED BY EVIDENCE OF ANY ALLEGED ORAL AGREEMENT.

 

All prior and contemporaneous agreements, arrangements and understandings
between the parties hereto as to the subject matter hereof are, except as
otherwise expressly provided herein, rescinded.

 

This Agreement restates, replaces and supersedes in its entirety, but does not
extinguish or novate, the A&R Loan Agreement.

 

[Signatures Pages Follow]

 

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IN WITNESS WHEREOF, this Agreement has been executed and becomes effective as of
the Effective Date.

 

  Lender:       Zions First National Bank         By: /s/ Michael R. Brough  
Name: Michael R. Brough   Title: Senior Vice President       Borrowers:      
Black Diamond Equipment, Ltd.         By: /s/ Aaron J. Kuehne   Name: Aaron J.
Kuehne   Title: Chief Financial Officer and Secretary       Black Diamond
Retail, Inc.         By: /s/ Aaron J. Kuehne   Name: Aaron J. Kuehne   Title:
Chief Financial Officer and Secretary       Black Diamond, Inc.         By: /s/
Aaron J. Kuehne   Name: Aaron J. Kuehne   Title: Chief Financial Officer,
Secretary   and Treasurer       Everest/Sapphire Acquisition, LLC         By:
/s/ Aaron J. Kuehne   Name: Aaron J. Kuehne   Title: Secretary and Treasurer

 

LOAN AGREEMENT

Signature Pages

 

 

 

 

  BD North American Holdings, LLC       By: /s/ Aaron J. Kuehne   Name: Aaron J.
Kuehne   Title: Treasurer       POC USA, LLC         By: /s/ Aaron J. Kuehne  
Name: Aaron J. Kuehne   Title: Secretary and Treasurer       BD European
Holdings, LLC         By: /s/ Aaron J. Kuehne   Name: Aaron J. Kuehne   Title:
Secretary and Treasurer       PIEPS Service, LLC         By: /s/ Aaron J. Kuehne
  Name: Aaron J. Kuehne   Title: Secretary and Treasurer

 

LOAN AGREEMENT

Signature Pages