Exhibit 10.7

 
Escrow Agreement

This Escrow Agreement (this “Agreement”) is made as of May 28, 2010, by and
among (a) Everest/Sapphire Acquisition, LLC, a Delaware limited liability
company (“Purchaser”); (b) Ed McCall, an individual, in his capacity as
Stockholders’ Representative (“Stockholders’ Representative”); (c) Black Diamond
Equipment, Ltd., a Delaware corporation (including the Surviving Corporation,
the “Company”); and (d) U.S. Bank National Association, as escrow agent (the
“Escrow Agent”).  Capitalized terms used herein, but not otherwise defined
herein, shall have the meanings ascribed to them in the Merger Agreement (as
defined below).  For purposes of this Agreement, the Stockholders and the Option
Holders shall collectively be referred to herein as the “Company Escrow
Parties”.

Recitals

Whereas, the parties hereto are entering into this Agreement pursuant to that
certain Agreement and Plan of Merger, dated as of May 7, 2010, by and among
Clarus Corporation, a Delaware corporation (“Purchaser Parent”), the Purchaser,
Sapphire Merger Corp., a Delaware corporation and wholly owned direct subsidiary
of Purchaser (“Merger Sub”), the Company and the Stockholders’ Representative,
(the “Merger Agreement”; an executed copy of which has been provided to Escrow
Agent), pursuant to which Merger Sub has agreed to merge with and into the
Company with the result that the Company shall be the surviving corporation and
shall become a wholly owned subsidiary of the Purchaser (the “Merger”);

Whereas, pursuant to this Agreement, Section 11.1 of the Merger Agreement,
Section 6 of each Company Stockholders’ Support Agreement and Section 3 of each
Option Holder Agreement (collectively, the “Authorizing Provisions”), the
Stockholders’ Representative has been appointed, authorized and empowered by the
Company Escrow Parties as the agent and attorney-in-fact to act on behalf of the
Company Escrow Parties with respect to certain matters; and

Whereas, under the terms of the Merger Agreement, the Escrow Funds (as
hereinafter defined) are to be delivered to the Escrow Agent, deposited into the
escrow account established hereunder to (a) secure payment of the
indemnification obligations of the Company and the stockholders of the Company
thereunder pursuant to Sections 8.2(a) and 10.3(a) of the Merger Agreement and
distributed by the Escrow Agent pursuant to the terms and conditions of this
Agreement and (b) provide for the payment by the Company of certain amounts that
may become payable pursuant to Retention Bonus Agreements.

Now, Therefore, in consideration of the mutual covenants and agreements set
forth herein, and for other good and valuable consideration, the receipt and
sufficiency of which are hereby acknowledged, the parties hereto hereby covenant
and agree as follows:

Article I
Appointment of Escrow Agent;
Establishment of Escrow Arrangement

1.1           Appointment of the Escrow Agent.  The Purchaser and the
Stockholders’ Representative hereby constitute and appoint the Escrow Agent as,
and the Escrow Agent hereby agrees to assume and perform the duties of, the
escrow agent under and pursuant to the terms and conditions of this Agreement.

 

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1.2          Deposit of Escrow Funds.  Simultaneously with the execution and
delivery of this Agreement, the Purchaser will deliver to the Escrow Agent, by
wire transfer of same day funds, the following sums:

(a)           Four Million Five Hundred Thousand Dollars ($4,500,000.00) (such
sum together with any Escrow Earnings (as hereinafter defined) thereon and
subject to the deductions provided for in this Agreement, the “Indemnification
Fund”); and

(b)           Three Hundred Seventy-Five Thousand Dollars ($375,000) (such sum
together with any Escrow Earnings thereon and subject to the deductions provided
for in this Agreement, the “Retention Bonus Fund” and together with the
Indemnification Fund, the “Escrow Funds”).

All such sums shall be delivered to the following account:

 
BBK:
U.S. Bank N.A. (ABA #091000022)

 
BNF:
U.S. Bank Trust N.A./AC #180121167365

 
Ref:
Everest/Sapphire Acq(                                )

 
Attn:
Ryan Brennan/206-344-4648

The Escrow Agent agrees to hold the Escrow Funds in escrow subject to the terms
and conditions of this Agreement.

1.3           Transferability.  Except as provided in Section 5.9 hereof, the
interests of the Purchaser, the Stockholders’ Representative, and the Company
Escrow Parties in the Escrow Funds shall not be assignable or transferable by
any party hereto other than by operation of law or pursuant to the terms of this
Agreement.  Notice of any such assignment or transfer shall be delivered in
writing by such transferring party to each other party hereto and no such
assignment or transfer shall be valid until such notice is provided.

1.4           Authority of Stockholders’ Representative.  The Stockholders’
Representative confirms that he has been appointed by, and is authorized and
empowered to act on behalf of, the Company Escrow Parties as their agent and
representative for and in respect of each of the matters set forth in the
Authorizing Provisions including, without limitation, each of the matters
contemplated to be decided or acted upon, or performed by, the Stockholders’
Representative pursuant to this Agreement on behalf of the Company Escrow
Parties, and each party hereto shall be entitled to rely on such appointment and
power for all purposes of this Agreement.

1.5           Investment of Escrow Funds.  The Escrow Agent shall establish and
maintain one escrow account for the Indemnification Fund and one escrow account
for the Retention Bonus Fund and shall promptly invest and reinvest the Escrow
Funds and any earnings on, proceeds from investment of, and interest accruing on
the Escrow Funds (the “Escrow Earnings”) through the date of payment of all
funds therein in the U.S. Bank Money Market Savings Account or as or as
otherwise instructed, such instruction to be jointly in writing by the Purchaser
and the Stockholders’ Representative.  Escrow Earnings will be added to the
respective Escrow Funds and distributed pursuant to Article II hereof.  The
parties hereto acknowledge that the U. S. Bank Money Market account is Escrow
Agent’s interest-bearing money market deposit account designed to meet the needs
of Escrow Agent’s Corporate Trust Services Escrow Group and other Corporate
Trust customers of Escrow Agent.  Selection of this investment includes
authorization to place funds on deposit with Escrow Agent.  Escrow Agent uses
the daily balance method to calculate interest on this account (actual/365 or
366).  This method applies a daily periodic rate to the principal balance in the
account each day.  Interest is accrued daily and credited monthly to the
account.  Interest rates currently offered on the accounts are determined at
Escrow Agent’s discretion and may be tiered by customer deposit amount.  The
owner of the accounts is Escrow Agent as Agent for its trust customers.  Escrow
Agent’s trust department performs all account deposits and withdrawals.  Each
customer’s deposit is insured by the Federal Deposit Insurance Corporation as
determined under FDIC Regulations, up to applicable FDIC limits.  A statement of
citizenship will be provided if requested by Agent.  Agent shall not be
responsible for maximizing the yield on the Escrow Funds.  Escrow Agent shall
not be liable for losses, penalties or charges incurred upon any sale or
purchase of any such investment.

 

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Article II
Distribution of Escrow Funds

2.1           Termination of Agreement.  Unless the Purchaser and the
Stockholders’ Representative provide the Escrow Agent joint written instructions
to the contrary, this Agreement shall terminate on the date when all of the
Escrow Funds have been distributed in their entirety by the Escrow Agent in
accordance with the terms of this Agreement; provided, however, that the
provisions of Section 3.1 hereof shall survive such termination and/or the
resignation or removal of the Escrow Agent.

2.2           Delivery of Escrow Funds.

(a)           Subject to the withholding of the Retained Escrow Portion (as
hereinafter defined) pursuant to Section 2.7 hereof, the Escrow Agent shall, no
later than ten (10) Business Days after the first anniversary of the date of
this Agreement (the “Scheduled Release Date”) deliver the Indemnification Fund
to the Company Escrow Parties, it being agreed that each such Person shall be
delivered such Person’s “Pro Rata Percentage” (as set forth opposite such
Person’s name on Exhibit A) of the aggregate amount of the Indemnification Fund
being released.  Such amount shall be delivered to bank account(s) designated in
writing by the Stockholders’ Representative on behalf of such Persons at least
three (3) Business Days prior to the payment date or, if no such wire
instructions have been provided for a Stockholder, by check payable to such
Stockholder delivered or mailed to the address for such Stockholder provided by
the Stockholders’ Representative, it being agreed that any amounts delivered in
respect of the Option Holders shall be delivered to the Company for payment
through its payroll system.  For purposes hereof, a “Business Day” shall mean
any day other than a Saturday, Sunday or other day on which commercial banks in
New York, New York are authorized or required by law to close.

(b)           If the Escrow Agent is provided written instructions signed by the
Company and the Stockholders’ Representative to release any amount of the
Retention Bonus Fund prior to the Scheduled Release Date, such amount shall be
promptly delivered to the bank account(s) of the Company designated by the Chief
Executive Officer or Chief Financial Officer of the Company at least three (3)
Business Days prior to the payment date.  With regard to any amounts remaining
in the Retention Bonus Fund on the Scheduled Release Date, the Escrow Agent
shall, no later than ten (10) Business Days after the Scheduled Release Date,
deliver the remaining Retention Bonus Fund to the bank account(s) of the Company
designated by the Chief Executive Officer or Chief Financial Officer of the
Company at least three (3) Business Days prior to the payment date. All amounts
delivered to the Company pursuant to this Section 2.2(b) shall be paid to
employees having Company Retention Agreements (who remain eligible for such
retention bonuses pursuant to the terms thereof) through the Company’s payroll
system, with any balance of the Retention Bonus Fund to be retained by the
Company.

2.3           Purchaser Indemnity Claims.  At any time prior to the Scheduled
Release Date, the Purchaser may give written notice (an “Indemnity Notice”),
which notice shall state that it is given pursuant to this Section 2.3, of each
claim for payment to the Purchaser from the Indemnification Fund for
indemnification pursuant to Sections 8.2(a) or 10.3(a) of the Merger Agreement
(each, a “Purchaser Indemnity Claim”) to each of the Stockholders’
Representative and Escrow Agent setting forth (i) the Purchaser’s belief of the
basis therefor, (ii) a description of the matter requiring such payment or that
is subject to indemnification in reasonable detail in light of the circumstances
then known to the Purchaser and (iii) either (A) the amount of the Purchaser
Indemnity Claim, if determined, or (B) the Purchaser’s estimate of the
reasonably foreseeable amount of the Purchaser Indemnity Claim.

 
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2.4           Purchaser Indemnity Claims Not Disputed by the Stockholders’
Representative.  If, within thirty (30) days after receipt of the Indemnity
Notice, the Escrow Agent and the Purchaser have not received written notice from
the Stockholders’ Representative that the Stockholders’ Representative disputes
the Purchaser Indemnity Claim described in such Indemnity Notice or the amount
the Purchaser seeks payment on account of such Purchaser Indemnity Claim (a
“Dispute Notice”), the Purchaser shall be entitled to make demand (an
“Undisputed Indemnity Notice Demand”) that the Escrow Agent either (i) deliver
to the Purchaser, if the amount of such Purchaser Indemnity Claim has then been
determined, an aggregate amount of cash from the Indemnification Fund equal to
the amount of the Purchaser Indemnity Claim set forth in such Indemnity Notice
up to the amount then remaining in the Indemnification Fund or (ii) retain, as
part of the Retained Escrow Portion (as defined below) an aggregate amount of
cash from the Indemnification Fund equal to the estimated amount of the
Purchaser Indemnity Claim set forth in such Indemnity Notice, up to the amount
then remaining in the Indemnification Fund.

2.5           Purchaser Indemnity Claim Disputed by the Stockholders’
Representative in Whole.  In the event that the Stockholders’ Representative
disputes an entire Purchaser Indemnity Claim, the Stockholders’ Representative
shall, within thirty (30) days after receipt of the applicable Indemnity Notice,
provide the Escrow Agent and the Purchaser a Dispute Notice setting forth the
basis therefor in reasonable detail in light of the circumstances then known to
the Stockholders’ Representative, and the Escrow Agent shall not distribute any
portion of the Indemnification Fund in respect of such Purchaser Indemnity Claim
until the Escrow Agent receives (i) a written agreement signed by the Purchaser
and the Stockholders’ Representative stating the aggregate amount to which the
Purchaser is entitled in connection with such Purchaser Indemnity Claim (an
“Indemnity Claim Agreement”), provided that the Escrow Agent shall have given
written notice of the proposed distribution of such amount, together with copies
of all such documents and opinions to the Purchaser and the Stockholders’
Representative at least five (5) Business Days prior to the date of such
distribution by the Escrow Agent, or (ii) a copy of an arbitrator’s award or
court order or judgment stating the aggregate amount to which the Purchaser is
entitled in connection with such Purchaser Indemnity Claim, provided that such
award, order or judgment is final and binding with respect to the Purchaser and
the Stockholders’ Representative and from which no appeal may be taken or for
which the time to appeal has expired (a “Final Judgment”).  After the occurrence
of the events specified in clause (i) or (ii) above, the Escrow Agent shall
deliver to Purchaser an amount of cash from the Indemnification Fund equal to
the amount specified in the Indemnity Claim Agreement or Final Judgment, as
applicable, up to the amount remaining in the Indemnification Fund.  The
Stockholders’ Representative shall, upon the Purchaser’s request, make available
to the Purchaser all relevant information concerning the Dispute Notice relating
to a Purchaser Indemnity Claim as the Purchaser shall reasonably request and
that is in or comes into the possession of the Stockholders’ Representative
and/or the Company Escrow Parties.

 
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2.6          Purchaser Indemnity Claim Disputed by the Stockholders’
Representative in Part.  In the event that the Stockholders’ Representative
disputes part of, but not all of, a Purchaser Indemnity Claim, the Stockholders’
Representative shall, within thirty (30) days after receipt of the Purchaser
Indemnity Notice, deliver to the Escrow Agent and the Purchaser a Dispute Notice
setting forth (a) the basis for the disputed portion of such Purchaser Indemnity
Claim in reasonable detail in light of the circumstances then known to the
Stockholders’ Representative and (b) the undisputed portion of the Purchaser
Indemnity Claim and an authorization to release a portion of the Indemnification
Fund to Purchaser in respect thereof to the extent such amount is determined, up
to the amount remaining in the Indemnification Fund, and the Escrow Agent shall,
with respect to that portion of the Purchaser Indemnity Claim that is not
disputed by the Stockholders’ Representative (i) deliver to the Purchaser an
aggregate amount of cash from the Indemnification Fund equal to the amount of
the Purchaser Indemnity Claim set forth in such Indemnity Notice that has been
determined, up to the amount remaining in the Indemnification Fund, and (ii)
retain, as part of the Retained Escrow Portion, an aggregate amount of cash from
the Indemnification Fund equal to the estimated amount of the Purchaser
Indemnity Claim set forth in such Indemnity Notice (to the extent that the
amount of such Purchaser Indemnity Claim is not determined), up to the amount
remaining in the Indemnification Fund after payment of the amount set forth in
clause (i) above; provided, however, notwithstanding clauses (i) and (ii) above,
the Escrow Agent shall not deliver any portion of the Indemnification Fund that
is attributable to the portion of such Purchaser Indemnity Claim that is
disputed by the Stockholders’ Representative.  The Escrow Agent shall not
deliver any of the cash in the Indemnification Fund to the Purchaser or the
Company Escrow Parties relating to the disputed portion of such Purchaser
Indemnity Claim, except in accordance with the procedures set forth in Section
2.5 of this Agreement as if the disputed portion of such Purchaser Indemnity
Claim consisted of a separate Purchaser Indemnity Claim that was disputed by the
Stockholders’ Representative in whole.  Receipt by Purchaser of the undisputed
portion of any Purchaser Indemnity Claim shall not be deemed to be a waiver of
any rights to the disputed portion of such Purchaser Indemnity Claim.

2.7          Retention of Escrow Funds After Scheduled Release Date.  After the
Scheduled Release Date, the Escrow Agent shall continue to hold an amount of
cash in the Indemnification Fund having an aggregate value equal to the entire
amount of any unresolved Purchaser Indemnity Claim that is the subject of an
Indemnity Notice received by the Escrow Agent prior to the Scheduled Release
Date (the “Retained Escrow Portion”) until such time as the Escrow Agent
receives for such unresolved Indemnity Claim (i) an Indemnity Claim Agreement or
(ii) a Final Judgment, in each case evidencing the ultimate resolution of any of
the underlying claims referred to in such Indemnity Notice, at which time, and
no later than ten (10) Business Days after receipt of the Indemnity Claim
Agreement or Final Judgment, as applicable, the Escrow Agent shall deliver an
amount of cash from the Retained Escrow Portion to the Purchaser specified in
the Indemnity Claim Agreement or Final Judgment, as applicable, and the
remaining Retained Escrow Portion, if any, to the Company Escrow Parties in
accordance with the procedures set forth in Section 2.2(a) of this Agreement.

2.8          Payments to the Purchaser.  Any portion of the Indemnification Fund
to be paid to the Purchaser in cash pursuant to any provision of this Agreement
will be paid by bank check or wire transfer of immediately available funds
pursuant to wire transfer instructions given to the Escrow Agent by the
Purchaser.  In the event that wire transfer instructions are given, whether in
writing, by facsimile or otherwise, the Escrow Agent is authorized to seek
confirmation of such instructions by telephone call-back to the person or
persons designated on Exhibit B hereto, and the Escrow Agent may rely upon the
confirmation of anyone purporting to be the person or persons so
designated.  The persons and telephone numbers for call-backs may be changed
only in a writing actually received and acknowledged by the Escrow Agent.  The
Escrow Agent may rely solely upon any account numbers or similar identifying
numbers provided in writing by the Purchaser, Stockholders’ Representative or
the Company, as applicable, to identify (i) the beneficiary, (ii) the
beneficiary’s bank or (iii) an intermediary bank.  Notwithstanding anything in
this Agreement to the contrary, the Purchaser shall have no right to receive any
funds from the Retention Bonus Fund for any Purchaser Indemnity Claim.

Article III
Escrow Agent

3.1          Exculpation and Indemnification of the Escrow Agent.  The Escrow
Agent’s duties and responsibilities shall be limited to those expressly set
forth in this Agreement.  Without limiting the foregoing, it is understood and
agreed that the Escrow Agent shall:

(a)           be under no duty to accept information from any Person other than
the Purchaser or the Stockholders’ Representative (as applicable) in the manner
provided in this Agreement;

 
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(b)           be protected in acting upon any written notice, opinion, request,
certificate, approval, consent, judgment, arbitration award, demand or other
document believed by it to be genuine and to be signed by the proper Person or
Persons, including but not limited to a determination of jurisdiction of any
court;

(c)           upon delivery of any notice in writing to the intended recipient
thereof, be deemed for all purposes to have given, delivered and received such
notice (i) if the same is delivered personally to the Person or to an officer of
the Person to whom the same is directed, or (ii) when the same is actually
received, if sent by a nationally recognized courier service (which provides
proof of delivery), or by facsimile (if such facsimile is followed by a hard
copy of the facsimile communication sent promptly thereafter by a nationally
recognized courier service (which provides proof of delivery)), addressed as
follows:

If to the Stockholders’ Representative:

Ed McCall
2114 Manhattan Avenue
Hermosa Beach, CA  90254
 
Fax:
(310) 318-5252

with a copy to:

Davis Wright Tremaine LLP
1201 3rd Avenue
Suite 2200
Seattle, WA  98101
 
Attn:
Bruce T. Bjerke, Esq.

 
Fax:
(206) 757-7071

If to the Purchaser or the Company:

c/o Clarus Corporation
One Landmark Square, 22nd Fl
Stamford, CT  06901
 
Attn:
Executive Chairman

 
Fax:
(203) 552-9607

and

Black Diamond Equipment, Ltd.
2084 East 3900 South
Salt Lake City, UT 84124
 
Attn:
President

 
Fax:
(801) 278-5544

 
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with a copy to:

Kane Kessler, P.C.
1350 Avenue of the Americas, 26th Floor
New York, New York 10019
Attn.:
Robert L. Lawrence, Esq.

Jeffrey S. Tullman, Esq.
 
Fax:
(212) 245-3009

or, in each case, to such other address as any party hereto may specify by
notice in writing given in the manner described above in this clause (c);

(d)           be indemnified and held harmless jointly and severally by the
other parties hereto against any claim made against it by reason of its acting
or failing to act in connection with any of the transactions contemplated hereby
and against any loss, liability or expense, including the expense of defending
itself (including reasonable attorneys’ fees) against any claim of liability it
may sustain in carrying out the terms of this Agreement, except such claims as
are occasioned by its bad faith, gross negligence, willful misconduct, fraud or
any other breach of fiduciary duty;

(e)           have no liability or duty to inquire into the terms and conditions
of any agreements to which the Escrow Agent is not a party nor be subject to or
obliged to recognize any other agreement between the Purchaser and the
Stockholder Representative or Company Escrow Parties (other than referenced
defined terms of the Merger Agreement, a copy of which has been furnished to the
Escrow Agent herewith) even though reference to such an agreement may be made
herein, its duties under this Agreement being understood to be purely
ministerial in nature;

(f)           be permitted to consult with counsel of its choice and shall not
be liable for any action taken, suffered or omitted by it in good faith in
accordance with the written advice of such counsel; provided, that, nothing
contained in this clause (f), nor any action taken by the Escrow Agent, or of
any counsel, shall relieve the Escrow Agent from liability for any claims which
are occasioned by its bad faith, gross negligence, willful misconduct, fraud or
any other breach of fiduciary duty, all as provided in clause (d) above;

(g)           not be bound by any modification, amendment, termination,
cancellation, rescission or supersession of this Agreement, unless the same
shall be in writing and signed by the parties hereto;

(h)           have no liability for any act or omission done pursuant to the
instructions contained or expressly provided for herein, or written instructions
given by the Purchaser and the Stockholders’ Representative pursuant hereto, or
for incidental, punitive or consequential damages, other than for its gross
negligence or willful misconduct;

(i)            have no liability in connection with its investment or
reinvestment of any cash held by it hereunder in good faith, in accordance with
the terms hereof, including, without limitation, any liability for delays (not
resulting from bad faith, gross negligence, willful misconduct, fraud or any
other breach of fiduciary duty) in the investment or reinvestment of the Escrow
Funds, or any loss of interest incident to such delays.

(j)            be reimbursed from either the Indemnification Fund or the
Retention Bonus Fund, as applicable, for all reasonable expenses, disbursements
and advances incurred or made by it in accordance with any provisions of this
Agreement in respect of the Indemnification Fund or the Retention Fund, as
applicable, except any such expenses, disbursements or advances as may be
attributable to its gross negligence, willful misconduct, bad faith, fraud or
any other breach of fiduciary duty.

 
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(k)           not be required to make any representation as to the validity,
value, genuineness or the collectability of any security or other document or
instrument held by or delivered to it;

(l)            not be called upon to advise any party as to the wisdom in
selling or retaining or taking or refraining from any action with respect to any
securities or other property deposited hereunder;

(m)          be authorized by the Purchaser and Stockholders’ Representative to
use the services of any United States central securities depository it
reasonably deems appropriate, including, without limitation, the Depositary
Trust Company and the Federal Reserve Book Entry System, for any securities held
hereunder; and

(n)           maintain books and records regarding its administration of the
Escrow Funds, and the deposit, investment, collections and disbursement or
transfer of the assets in the Escrow Funds, shall retain copies of all written
notices and directions sent or received by it in the performance of its duties
hereunder, and shall afford each of the Purchaser and the Stockholders’
Representative reasonable and prompt access, during regular business hours, to
review and make photocopies (at such party’s cost) of the same.

3.2          Resignation or Replacement of the Escrow Agent.  In addition, the
Escrow Agent may resign and be discharged from its duties under this Agreement
at any time by giving at least thirty (30) days’ prior written notice of such
resignation to the Purchaser and the Stockholders’ Representative and specifying
a date upon which such resignation shall take effect.  Upon receipt of such
notice, a successor escrow agent shall jointly be appointed by the Purchaser and
the Stockholders’ Representative, such successor escrow agent to become the
Escrow Agent hereunder on the resignation date specified in such notice and the
Escrow Agent shall deliver the assets remaining in the Escrow Funds, less any
fees and expenses due to the Escrow Agent, to such successor Escrow Agent,
whereupon the Escrow Agent shall be discharged of and from any and all further
obligations arising in connection with this Agreement.  If no successor Escrow
Agent is appointed prior to the date specified, the Escrow Agent shall have the
right to deposit the Escrow Funds (including any Escrow Earnings) with a court
of competent jurisdiction and the Escrow Agent shall have no further obligation
with respect thereto.  The Purchaser and the Stockholders’ Representative,
acting jointly, may at any time substitute a new escrow agent by giving ten (10)
days’ notice thereof to the Escrow Agent then acting and paying all fees and
expenses of such Escrow Agent.  Any Person into which the Escrow Agent may be
merged or converted or with which it may be consolidated, or any Person to which
all or substantially all the escrow business of the Escrow Agent’s corporate
trust line of business may be transferred, shall be the Escrow Agent under this
Agreement without further act.

 
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3.3           Payment of Fees to Escrow Agent.  The Escrow Agent shall be paid a
fee for its services as set forth on Exhibit C attached hereto and incorporated
herein and reimbursed for its reasonable costs and expenses incurred.  If the
Escrow Agent’s fees, or reasonable costs or expenses, provided for herein, with
respect to the Indemnification Fund or the Retention Bonus Fund are not paid
within ten (10) Business Days after the Escrow Agent delivers to the Purchaser
(in respect of the Indemnification Fund) or the Company (in respect of the
Retention Bonus Fund) an invoice therefor, Escrow Agent shall have the right to
sell such portion of the Indemnification Fund or the Retention Bonus Fund, as
applicable, and reimburse itself therefor from the proceeds of such sale or from
the cash held therein in respect of such fees, costs or expenses.  In the event
that the terms and conditions of this Agreement are not promptly fulfilled, or
if the Escrow Agent renders any service not provided for in this Agreement, or
if the Stockholders’ Representative and the Purchaser request a substantial
modification of its terms, or if any controversy arises, or if the Escrow Agent
is made a party to, or intervenes in, any litigation pertaining to this escrow
or its subject matter, in respect of the Indemnification Fund or the Retention
Bonus Fund, the Escrow Agent shall be reasonably compensated for such
extraordinary services and reimbursed for all costs, attorneys’ fees, including
allocated costs of in-house counsel, and expenses occasioned by such default,
delay, controversy or litigation and the Escrow Agent shall have the right to
retain all documents and/or other things of value at any time held by the Escrow
Agent in the Indemnification Fund or Retention Bonus Fund, as applicable, until
such compensation, fees, costs and expenses are paid.  The Company and the
Stockholders’ Representative jointly and severally promise to pay such sums
relating to the Indemnification Fund upon demand and the Company agrees to pay
such sums relating to the Retention Bonus Fund upon demand.  The Company will
pay all amounts owing to the Escrow Agent hereunder (whether as fees,
reimbursement of expenses or otherwise) and the Escrow Agent may deduct such
sums from the funds deposited in the manner provided herein.  The Company and
Stockholders’ Representative and their respective successors and assigns agree
jointly and severally to indemnify and hold the Escrow Agent harmless against
any and all losses, claims, damages, liabilities and expenses, including
reasonable costs of investigation, counsel fees, including allocated costs of
in-house counsel and disbursements that may be imposed on the Escrow Agent or
incurred by the Escrow Agent in connection with the performance of its duties
under this Agreement with respect to the Indemnification Fund, including but not
limited to any litigation arising in connection therewith or involving such
subject matter.  The Company and its respective successors and assigns agree to
indemnify and hold the Escrow Agent harmless against any and all losses, claims,
damages, liabilities and expenses, including reasonable costs of investigation,
counsel fees, including allocated costs of in-house counsel and disbursements
that may be imposed on the Escrow Agent or incurred by the Escrow Agent in
connection with the performance of its duties under this Agreement with respect
to the Retention Bonus Fund, including but not limited to any litigation arising
in connection therewith or involving such subject matter.  The Escrow Agent
shall have a first lien on the assets of the Indemnification Fund or the
Retention Bonus Fund, as applicable, pursuant to this Agreement for such
compensation and expenses.

Article IV
Tax Matters

4.1           Tax Reporting.  The Escrow Agent does not have any interest in the
Escrow Funds deposited hereunder, but is serving as escrow holder only and
having only possession thereof.  The parties hereto shall, for federal income
tax purposes and, to the extent permitted by applicable law, state and local tax
purposes, report consistent with the Company Escrow Parties as the owners of the
Indemnification Fund and the Company as the owner of the Retention Bonus Fund,
it being agreed that (a) each of the Company Escrow Parties shall be attributed
for taxation purposes with an amount of the Indemnification Fund and Escrow
Earnings on the Indemnification Fund equal to such Person’s Pro Rata Percentage
as set forth opposite such Person’s name on Exhibit A hereto and (b) the Company
shall be attributed for taxation purposes with an amount of the Retention Bonus
Fund and Escrow Earnings on the Retention Bonus Fund.

4.2           Payment of Taxes.  The Company Escrow Parties shall pay all
applicable income, withholding and any other taxes imposed or measured by income
which is attributable to income from the Indemnification Fund, and the Company
shall pay all income, withholding and any other taxes imposed or measured by
income which is attributable to income from the Retention Bonus Fund, and each
shall file all tax and information returns applicable thereto.  Each such Person
shall include in its gross income any Escrow Earnings for each taxable year of
such Person (a “Taxable Year”) that have accrued during such Taxable Year, based
on such Person’s Pro Rata Percentage as set forth opposite such Person’s name on
Exhibit A hereto with respect to the Indemnification Fund, in each case without
regard to whether such Escrow Earnings have been distributed.

 
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4.3           Tax Reporting Documentation; Withholding.  With respect to amounts
held in the Indemnification Fund, the Stockholders’ Representative (on behalf of
each of the Company Escrow Parties other than the Option Holders) and the
Company shall provide, and with respect to the Retention Bonus Fund the Company
shall provide, to the Escrow Agent upon execution of this Agreement each of the
Company Escrow Parties’ (other than the Option Holders), or Company’s, as
applicable, respective certified tax identification numbers on Forms W-9 (or
Forms W-8 if they are non-U.S. persons) and such other tax-related forms,
documents and information as the Escrow Agent may reasonably request
(collectively, “Tax Reporting Documentation”).  The parties hereto understand
that, if such Tax Reporting Documentation is not so certified to the Escrow
Agent, the Escrow Agent may be required by the Internal Revenue Code of 1986, as
it may be amended from time to time, to withhold a portion of any Escrow
Earnings earned on the investment of the Escrow Funds or other property held by
the Escrow Agent pursuant to this Agreement.  The Escrow Funds will be subject
to applicable United States withholding tax and any distribution thereof to
(I)(a) the Company Escrow Parties other than the Option Holders and (b) the
Company (with respect to the Indemnification Fund) and (II) the Company with
respect to the Retention Bonus Fund, will be made net of such withholding if
required by law, which withholding shall be determined on the basis of the Tax
Reporting Documentation provided pursuant to this Agreement as required
herein.  All interest or other income earned under this Agreement shall be
reported by the Escrow Agent to the Internal Revenue Service, applicable tax
authorities of the State of Washington or other taxing authority if and as
required by law.  The Escrow Agent shall report and withhold any taxes from the
Company or any of the Company Escrow Parties (other than the Option Holders) as
it determines is required by any law or regulation in effect at the time of the
distribution and shall remit such taxes to the appropriate authorities.

4.4           Survival.  Notwithstanding any other provision of this Agreement,
this Article IV shall survive any termination of this Agreement and/or the
resignation or removal of the Escrow Agent.

Article V
Miscellaneous

5.1           Notices.  Any notice, demand, or communication required or
permitted to be given by any provision of this Agreement shall be in writing and
shall be deemed to have been delivered, given, and received for all purposes (i)
if delivered personally to the Person or to an officer of the Person to whom the
same is directed, or (ii) when the same is actually received, if sent by a
nationally recognized courier service (which provides proof of delivery), or by
facsimile (if such facsimile is followed by a hard copy of the facsimile
communication sent promptly thereafter by a nationally recognized courier
service (which provides proof of delivery)), addressed (i) to the addresses of
the Purchaser and the Stockholders’ Representative set forth in Section 3.1(c)
above, or (ii) to the address of the Escrow Agent as follows:

U.S. Bank National Association
60 Livingston Ave
EP-MN-WS3T
St. Paul, MN 55107-2292
Attention:Scott Kjar
Telephone:(651) 495-3808
Facsimile(651) 495-8708

With a faxed copy to:
Shirley Young
(206) 344-4630

Notwithstanding the foregoing, any notice addressed to the Escrow Agent shall be
effective only upon receipt at the address set forth above.  If any notice or
other document is required to be delivered to the Escrow Agent and any other
Person, the Escrow Agent may assume without inquiry that it has been received by
such other Person if it has been received by the Escrow Agent.

 
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5.2           Confidentiality.  The Escrow Agent agrees that it will not
disclose to any third party any of the terms or provisions of the Merger
Agreement, the Merger or the other transactions contemplated in the Merger
Agreement, and that the Escrow Agent will keep the same
confidential.  Notwithstanding the foregoing, nothing shall prevent the Escrow
Agent from any required disclosure pursuant to a subpoena, court order or other
regulatory process applicable to the Escrow Agent; provided, that the Escrow
Agent will give prompt written notice to the other parties hereto of any such
proceeding and cooperate with each such party in such party’s attempts to retain
the confidential nature of the Merger Agreement, the Merger and the other
transactions contemplated in the Merger Agreement, all at the cost of such
party.

5.3           Public Announcement.  No public announcement or other publicity
regarding this Agreement, the Merger Agreement or the transactions contemplated
hereby and thereby shall be made prior to or after the date hereof without the
prior written consent of Stockholders’ Representative and Purchaser as to form,
content, timing and manner of distribution.  Notwithstanding the foregoing,
nothing in this Agreement shall preclude any party or its Affiliates from making
any public announcement or filing pursuant to any federal or state securities
law, rule or regulation.

5.4           Severability.  The invalidity of any term or terms of this
Agreement shall not affect any other term of this Agreement which shall remain
in full force and effect.

5.5           No Third Party Beneficiaries.  There are no third party
beneficiaries of this Agreement or of the transactions contemplated hereby and
nothing contained herein shall be deemed to confer upon any one other than the
parties hereto (and their permitted successors and assigns, and including, with
respect to the Company, the Surviving Corporation) any right to insist upon or
to enforce the performance of any of the obligations contained herein.
 
5.6           Time of the Essence.  Time is of the essence with respect to the
obligations of the parties hereunder.
 
5.7           Negotiation of Agreement.  Each of the parties acknowledges that
it has been represented by independent counsel of its choice throughout all
negotiations that have preceded the execution of this Agreement.  Each party and
its counsel cooperated in the drafting and preparation of this Agreement and the
other documents referred to herein, and any and all drafts relating thereto will
be deemed the work product of the parties hereto and may not be construed
against any party by reason of its preparation.  Accordingly, any rule of law or
any legal decision that would require interpretation of any ambiguities in this
Agreement against the party that drafted it is of no application and is hereby
expressly waived.
 
5.8           Counterparts.  This Agreement may be executed in any number of
counterparts each of which shall be deemed an original but all of which together
shall constitute one and the same instrument.  The exchange of copies of this
Agreement and of signature pages by facsimile transmission shall constitute
effective execution and delivery of this Agreement as to the parties and may be
used in lieu of the original Agreement for all purposes. Signatures of the
parties transmitted by facsimile shall be deemed to be their original signatures
for all purposes.
 
5.9           Successors and Assigns.  This Agreement will inure to the benefit
of, and be binding upon, the parties hereto and their respective successors and
permitted assigns; provided, however, that this Agreement may not be assigned by
any party hereto, in whole or in part, without the prior written consent of the
other parties hereto (which consent may be withheld in the sole discretion of
such other party), except that the Purchaser may assign its rights hereunder to
an Affiliate of the Purchaser.  Any attempted assignment in violation of this
Section 5.9 shall be null and void.

 
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5.10           Entire Agreement; Waiver and Modification.  This Agreement and
the Merger Agreement (together with the certificates, agreements, exhibits,
schedules, instruments and other documents referred to herein or therein)
constitutes the entire agreement between the parties with respect to the subject
matter hereof and thereof and supersedes all prior agreements, both written and
oral, with respect to such subject matter.  Any provision of this Agreement may
be waived at any time in writing by the party which is entitled to the benefits
thereof. No change, modification, extension, termination, notice of termination,
discharge, abandonment or waiver of this Agreement or any of its provisions, nor
any representation, promise or condition relating to this Agreement, will be
binding upon any party unless made in writing and signed by such party.
 
5.11           Governing Law.  THIS AGREEMENT HAS BEEN ENTERED INTO AND SHALL BE
CONSTRUED AND ENFORCED IN ACCORDANCE WITH THE LAWS OF THE STATE OF DELAWARE
WITHOUT REFERENCE TO THE CHOICE OF LAW PRINCIPLES THEREOF.
 
5.12           Consent to Jurisdiction.  EACH PARTY TO THIS AGREEMENT, BY ITS
EXECUTION HEREOF, (I) HEREBY IRREVOCABLY SUBMITS, AND AGREES TO CAUSE EACH OF
ITS SUBSIDIARIES TO SUBMIT, TO THE EXCLUSIVE JURISDICTION OF THE STATE COURTS OF
THE STATE OF DELAWARE LOCATED IN NEW CASTLE COUNTY (OR IF JURISDICTION THERETO
IS NOT PERMITTED BY LAW, THE UNITED STATES DISTRICT COURT FOR THE DISTRICT OF
DELAWARE) FOR THE PURPOSE OF ANY ACTION, CLAIM, CAUSE OF ACTION OR SUIT (IN
CONTRACT, TORT OR OTHERWISE), INQUIRY PROCEEDING OR INVESTIGATION ARISING OUT OF
OR BASED UPON THIS AGREEMENT OR RELATING TO THE SUBJECT MATTER HEREOF, (II)
HEREBY WAIVES, AND AGREES TO CAUSE EACH OF ITS SUBSIDIARIES TO WAIVE, TO THE
EXTENT NOT PROHIBITED BY APPLICABLE LAW, AND AGREES NOT TO ASSERT, AND AGREES
NOT TO ALLOW ANY OF ITS SUBSIDIARIES TO ASSERT, BY WAY OF MOTION, AS A DEFENSE
OR OTHERWISE, IN ANY SUCH ACTION, ANY CLAIM THAT IT IS NOT SUBJECT PERSONALLY TO
THE JURISDICTION OF THE ABOVE-NAMED COURTS, THAT ITS PROPERTY IS EXEMPT OR
IMMUNE FROM ATTACHMENT OR EXECUTION, THAT ANY SUCH PROCEEDING BROUGHT IN ONE OF
THE ABOVE-NAMED COURTS IS IMPROPER, OR THAT THIS AGREEMENT OR THE SUBJECT MATTER
HEREOF MAY NOT BE ENFORCED IN OR BY SUCH COURT AND (III) HEREBY AGREES NOT TO
COMMENCE OR TO PERMIT ANY OF ITS SUBSIDIARIES TO COMMENCE ANY ACTION, CLAIM,
CAUSE OF ACTION OR SUIT (IN CONTRACT, TORT OR OTHERWISE), INQUIRY PROCEEDING OR
INVESTIGATION ARISING OUT OF OR BASED UPON THIS AGREEMENT OR RELATING TO THE
SUBJECT MATTER HEREOF OTHER THAN BEFORE ONE OF THE ABOVE-NAMED COURTS NOR TO
MAKE ANY MOTION OR TAKE ANY OTHER ACTION SEEKING OR INTENDING TO CAUSE THE
TRANSFER OR REMOVAL OF ANY SUCH ACTION, CLAIM, CAUSE OF ACTION OR SUIT (IN
CONTRACT, TORT OR OTHERWISE), INQUIRY, PROCEEDING OR INVESTIGATION TO ANY COURT
OTHER THAN ONE OF THE ABOVE-NAMED COURT WHETHER ON THE GROUNDS OF INCONVENIENT
FORUM OR OTHERWISE.  EACH PARTY HEREBY CONSENTS TO SERVICE OF PROCESS IN ANY
SUCH PROCEEDING IN ANY MANNER PERMITTED BY DELAWARE LAW, AND AGREES THAT SERVICE
OF PROCESS BY REGISTERED OR CERTIFIED MAIL, RETURN RECEIPT REQUESTED, AT ITS
ADDRESS SPECIFIED PURSUANT TO SECTION 5.1 IS REASONABLY CALCULATED TO GIVE
ACTUAL NOTICE.
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5.13           Waiver of Jury Trial.  EACH OF THE PARTIES HERETO HEREBY WAIVES
AND COVENANTS THAT IT WILL NOT ASSERT (WHETHER AS PLAINTIFF, DEFENDANT OR
OTHERWISE) ANY RIGHT TO TRIAL BY JURY IN ANY FORUM IN RESPECT OF ANY ISSUE OR
ACTION, CLAIM, CAUSE OF ACTION OR SUIT (IN CONTRACT, TORT OR OTHERWISE),
INQUIRY, PROCEEDING OR INVESTIGATION ARISING OUT OF OR BASED UPON THIS AGREEMENT
OR THE SUBJECT MATTER HEREOF OR IN ANY WAY CONNECTED WITH OR RELATED OR
INCIDENTAL TO THE TRANSACTIONS CONTEMPLATED HEREBY, IN EACH CASE WHETHER NOW
EXISTING OR HEREAFTER ARISING.  EACH OF THE PARTIES AGREES AND ACKNOWLEDGES THAT
IT HAS BEEN INFORMED THAT THIS SECTION 5.13 CONSTITUTES A MATERIAL INDUCEMENT
UPON WHICH THE OTHER PARTIES HERETO ARE RELYING AND WILL RELY IN ENTERING INTO
THIS AGREEMENT AND ANY OTHER AGREEMENTS RELATING HERETO OR CONTEMPLATED
HEREBY.  ANY PARTY HERETO MAY FILE AN ORIGINAL COUNTERPART OR A COPY OF THIS
SECTION 5.13 WITH ANY COURT AS WRITTEN EVIDENCE OF THE CONSENT OF EACH SUCH
PARTY TO THE WAIVER OF ITS RIGHT TO TRIAL BY JURY.
 
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In Witness Whereof, the parties hereto have caused this Agreement to be executed
as of the date first above written.

Purchaser:
 
Stockholders’ Representative
     
Everest/Sapphire Acquisition, LLC
         
By:
  /s/ Philip A. Baratelli
 
/s/ Ed McCall
 
Name:
Philip A. Baratelli
 
Name:
Ed McCall
 
Title:
Secretary and Treasurer
             
Company:
 
Escrow Agent:
     
Black Diamond Equipment, Ltd.
 
U.S. Bank National Association
     
By:
 /s/ Peter Metcalf
 
By:
 /s/ Shirley Young
 
Name:
Peter Metcalf
   
Name:
Shirley Young
 
Title:
Chief Executive Officer
and President
   
Title:
Vice President

 
 

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