Unassociated Document


    Exhibit
10.5

    


    Subordination
Agreement

    (Kanders
GMP Holdings, LLC)

    


    This Subordination Agreement (the
“Agreement”) is made by and between Zions First National Bank whose address is
Corporate Banking Group, One South Main, Suite 200, Salt Lake City, Utah 84111
(“Lender”), Black Diamond Equipment, Ltd. (”BDEL”), Black Diamond Retail, Inc.
(“BD-Retail”), Clarus Corporation (“Clarus”), and Everest/Sapphire Acquisition,
LLC (“Everest”) and Gregory Mountain Products, LLC (“GMP”) (BDEL, BD-Retail,
Clarus, Everest, and GMP are collectively, the “Borrower”) whose address is 2084
East 3900 South, Salt Lake City, Utah 84124, and Kanders GMP Holdings, LLC whose
address is c/o Warren Kanders, One Landmark Square, Stamford, Connecticut 06901
(“Creditor”).

     

    RECITALS:

     

    1.           Lender
is making or has made a loan to BDEL, BD-Retail, Clarus and Everest in the
amount of thirty-five million dollars ($35,000,000.00) (the
“Loan”).

     

    2.           GMP
has become a borrower under the Loan pursuant to the execution of an Assumption
Agreement dated May 28, 2010.

     

    3.           Clarus
is indebted to Creditor pursuant to that certain 5% Unsecured Subordinated Note
due May 28, 2017 in the original principal amount of fourteen million five
hundred sixteen thousand nine hundred forty-five dollars ($14,516,945.00) (the
“Subordinated Promissory Note”).

     

    4.           The
documents evidencing the Loan require that Creditor enter into this
Agreement.

     

    AGREEMENT

     

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

     

    1.           Definitions.  Terms
used in the singular shall have the same meaning when used in the plural and
vice versa.  In addition to the terms defined above, as used herein,
the term:

     

    a.           
“Creditor Indebtedness” means the indebtedness of Clarus to Creditor evidenced
by the Subordinated Promissory Note, together with any and all renewals,
extensions, modifications, and replacements thereof, and all other indebtedness
of Clarus to Creditor arising from or related thereto.

     

    b.       
     “Default Rights and Remedies” means any and all rights
and remedies granted in, arising from, or relating to any agreement,
instruction, or document and any and all rights and remedies now or hereafter
existing by statute, at law, or in equity, which may be exercised only upon the
occurrence of a breach or event of default.


    
      
         


      

      
         


        
          

        

      

      
         


      

    


    c.           
“Lender Indebtedness” means the indebtedness of Borrower to Lender evidenced by
the (i) Loan Agreement, and (ii) First Substitute Promissory Note (Revolving
Line of Credit) dated May 28, 2010, in the original principal amount of
thirty-five million dollars ($35,000,000.00), together with any and all
renewals, extensions, modifications, and replacements thereof, including any
increase in the principal amount thereof, and all other indebtedness of Borrower
to Creditor arising from or relating thereto.

     

    d.           
“Loan Agreement” means the Loan Agreement between Lender and Borrower dated May
28, 2010, pursuant to which Lender will loan Borrower the sum of up to
thirty-five million dollars ($35,000,000.00) together with any exhibits,
amendments, addendums, and modifications.

     

    2.           Warranties Regarding
Creditor Indebtedness.  Creditor represents and warrants to
Lender that the Creditor Indebtedness is not secured by any collateral, security
interest or lien and Creditor covenants and agrees that the Creditor
Indebtedness shall remain unsecured so long as any amount is outstanding and
unpaid on the Lender Indebtedness.

     

    3.           Exercise of Default and
Remedies.  Creditor agrees that it will not exercise any
Default Rights and Remedies concerning the Creditor Indebtedness, so long as any
amount is outstanding and unpaid on the Lender Indebtedness, without the prior
written consent of Lender, except that, in the event that a Borrower files for
bankruptcy relief, Creditor may file a proof of claim in the
bankruptcy.

     

    4.           Conditions to Payment on
Creditor Indebtedness.  Clarus may make regularly scheduled
cash interest payments on the Subordinated Promissory Note not to exceed five
percent (5%) per annum (“Interest Payments”), until (i) an Event of Default (as
defined in the Loan Agreement) exists and is continuing, and written notice of
the same has been given by Lender to Creditor, or (ii) Borrower is not in
compliance with the financial covenants specified in the Loan
Agreement.  If Clarus makes an interest payment to Creditor in
violation of these conditions, Creditor covenants and agrees that upon written
demand by Lender the payment shall be promptly tendered to Lender to be applied
toward payment of the Lender Indebtedness.

     

    If an
Event of Default (as defined in the Subordinated Promissory Note) occurs under
any Subordinated Promissory Note as a result of Clarus failing to pay any
Interest Payments, Lender agrees not to waive the resulting Event of Default (as
defined in the Loan Agreement), so long as (i) no other Event of Default(as
defined in the Loan Agreement) exists and is continuing and (ii) Borrower is in
compliance with the financial covenants specified in the Loan Agreement. If
additional Events of Default (as defined in the Loan Agreement) exist at the
time the Event of Default (as defined in the Loan Agreement) related to Clarus’s
failure to pay the Interest Payments, Lender may waive the Event of Default (as
defined in the Loan Agreement) based upon failure to pay Interest Payments in
connection with waiver of other Events of Defaults(as defined in the Loan
Agreement); provided, however, that Lender shall not be prohibited hereunder
from waiving such Event of Default (as defined in the Loan Agreement), if it has
received written notice from the holder(s) of a majority of the aggregate
principal amount of all of the holders of the Subordinated Debt (as defined in
the Loan Agreement) that Lender shall not be prohibited hereunder from waiving
such Event of Default (as defined in the Loan Agreement).


    
      
         


      

      
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    5.           Prohibition of Prepayment of
Creditor Indebtedness.  Clarus covenants that it will not make,
and Creditor covenants and agrees that it will not receive or accept, any
prepayment on the Creditor Indebtedness so long as any amount is outstanding and
unpaid on the Lender Indebtedness, without the prior written consent of
Lender.  However, if Creditor receives any prepayment in violation of
this covenant, such payments shall be received in trust for Lender and shall be
immediately tendered to Lender to be applied toward payment of the Lender
Indebtedness.

     

    6.           Subordination of
Payment.  Except as provided in Section 4 above, so long as any
amount is outstanding and owing to Lender on or related to the
Loan:

     

    a.            The
right of Creditor to receive payment, whether of principal or interest, on the
Creditor Indebtedness is subordinated to the right of Lender to receive payment
on the Lender Indebtedness.

     

    b.           
Creditor covenants that it will not receive or accept any payments from or on
behalf of Borrower, or any other obligor on the Creditor Indebtedness without
the prior written consent of Lender.  However, if Creditor receives
any cash payment in violation of this covenant, such cash payments shall be
received in trust for Lender and shall be promptly tendered to Lender to be
applied toward payment of the Lender Indebtedness.

     

    7.           Conversion to
Equity.  Notwithstanding anything to the contrary in this
Agreement, Creditor may at any time convert the Creditor Loan and any interest
thereon into equity of Clarus.

     

    8.           Controlling
Agreement.  In the event of any conflict or inconsistency
between the terms and provisions of the Subordinated Promissory Note and this
Agreement, this Agreement shall govern and any conflicting or inconsistent
provisions of this Agreement supersedes the Subordinated Promissory
Note.

     

    9.           No Waiver of Other
Rights.  This Agreement is intended solely for the purpose of
defining the relative rights of Lender and Creditor and nothing contained herein
is intended to nor shall impair the obligations of Borrower, or any other
obligors, to pay Lender or Creditor, as the case may be, the principal and
interest on the Lender Indebtedness and the Creditor Indebtedness as and when
the same shall become due and payable in accordance with their terms, subject to
the rights of Lender created by this Agreement.  For the sake of
clarity, the agreements and covenants of the Creditor under this Agreement apply
only with respect to the Creditor Indebtedness and shall not affect the rights
of the Creditor arising under any other agreement.

     

    10.         Successors and
Benefits.  This Agreement is and shall be binding upon and
shall inure to the benefit of Lender, Borrower, Creditor and their respective
successors and assigns.

     

    11.         Governing
Law.  This Agreement shall be governed by and construed in
accordance with the laws of the State of Utah.

     

    12.         Continuing
Agreement.  All agreements, representations, warranties, and
covenants made herein shall survive the execution and delivery of this Agreement
and shall continue in effect so long as the Lender Indebtedness or any portion
thereof is outstanding and unpaid.


    
      
         


      

      
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    13.         Counterparts,
Originals.  This Agreement may be executed in any number of
counterparts and by the different parties hereto on separate counterparts and
each such counterpart shall be deemed to be an original, but all such
counterparts shall together constitute but one and the same
Agreement.  Receipt by telecopy or email of any executed signature
page to this Loan Agreement shall constitute effective delivery of such
signature page.

     

    14.         Entire
Agreement.  This Agreement constitutes the entire agreement
between Lender, Borrower and Creditor concerning the subject matter
hereof.  Except as expressly provided herein, all other prior and
contemporaneous agreements concerning the subject matter hereof are merged
herein.  This Agreement may not be terminated, amended, or modified
except in writing signed by Lender, Borrower and Creditor.

     

    Dated:
May 28, 2010.

    


    
      
        
          	 
      	
                  Borrower:

                
	 
      	 
      
	 
      	
                  Black
      Diamond Equipment, Ltd

                
	 
      	 
      
	 
      	
                  By:

                	
                  /s/ Peter Metcalf

                
	 
      	
                  Name:  

                	
                   Peter Metcalf

                
	 
      	
                  Title:

                	
                   Chief Executive Officer and
      President

                
	 
      	 
      
	 
      	
                  Black
      Diamond Retail, Inc.

                
	 
      	 
      
	 
      	
                  By:

                	
                  /s/ Peter Metcalf

                
	 
      	
                  Name:  

                	
                   Peter Metcalf

                
	 
      	
                  Title:

                	
                   Chief Executive Officer and
      President

                
	 
      	
                   
      

                
	 
      	
                  Clarus
      Corporation

                
	 
      	 
      
	 
      	
                  By:

                	
                  /s/ Peter Metcalf

                
	 
      	
                  Name:  

                	
                   Peter Metcalf

                
	 
      	
                  Title:

                	
                   Chief Executive Officer and
      President

                


        

      

    


    
      
         


      

      
        4

        
          

        

      

      
         


      

    

    
 

    
      
        
          
            
              
                
                  	 
      	
                          Everest/Sapphire
      Acquisition, LLC

                        
	 
      	 
      
	 
      	
                          By:

                        	
                          /s/ Peter Metcalf

                        
	 
      	
                          Name:  

                        	
                           Peter Metcalf

                        
	 
      	
                          Title:

                        	
                           President

                        
	 
      	 
      
	 
      	
                          Gregory
      Mountain Products, LLC

                        
	 
      	 
      
	 
      	
                          By:

                        	
                          /s/ Peter Metcalf

                        
	 
      	
                          Name:  

                        	
                           Peter Metcalf

                        
	 
      	
                          Title:

                        	
                           President

                        
	 
      	 
      
	 
      	
                          Lender:

                        
	 
      	 
      
	 
      	
                          Zions
      First National Bank

                        
	 
      	 
      
	 
      	
                          By:

                        	      
                          /s/ Michael R.
  Brough

                        
	 
      	
                          Name:  

                        	
                           
      Michael R. Brough

                        
	 
      	
                          Title:

                        	
                           
      Senior Vice President

                        
	 
      	 
      
	 
      	
                          Creditor:

                        
	 
      	 
      
	 
      	
                          Kanders
      GMP Holdings, LLC

                        
	 
      	 
      
	 
      	
                          By:

                        	
                          /s/ Warren B. Kanders

                        
	 
      	
                          Name:  

                        	
                           Warren B. Kanders

                        
	 
      	
                          Title:

                        	
                           President

                        


                

              

            

          

        

      

    

     

    
      
         


      

      
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