Study of Local Incentive Appropriation for Clarus Corporation (Black Diamond Equipment)

Study of Local Incentive Appropriation for

Clarus Corporation (Black Diamond Equipment)

─ 12.21.2018

City of Holladay 4580 South 2300 East Holladay, Utah 84117 City of Holladay Study of Local Incentive Appropriation for Clarus Corporation (Black Diamond Equipment)

Background Over the past year, the City of Holladay has worked with Clarus Corporation (Black Diamond), Scout Economics (Clarus’ consultant), the Economic Development Corporation of Utah (edcUtah), and the Utah Governor’s Office of Economic Development (GOED) on potential plans for Clarus to build a new corporate headquarters. Holladay was one of several sites under consideration both within and outside the State of Utah. Clarus with assistance from edcUtah sought incentives from GOED to grow the business in Utah; the City provided two letters of support conveying support for the company to remain in Holladay. Ultimately, the company decided to stay and grow in Holladay for the short term.

In May 2018, the GOED Board of Directors approved an Economic Development Tax Increment Finance (EDTIF) tax credit rebate for Clarus Corporation. GOED requires a local incentive in order for the recipient company to secure the EDTIF. There is no minimum financial value or established threshold set to meet the state’s local incentive requirement. Local incentive participation from cities varies greatly—from waiving building fees and expediting review processes to establishing new project areas and providing property tax rebates. Based on past practices, the City is considering waiving the building permit fees and expediting the review process.

Current Proposal Clarus Corporation’s immediate plans for the future include staying at their Holladay headquarters, located at 2092 East 3900 South, and growing their business. Per Aaron Kuehne, CAO/CFO of Clarus Corporation, the growth underway at Clarus is caused both by broad increases to existing businesses and new acquisitions, such as their purchase of Sierra Bullets in August 2017 and SKINourishment in November 2018. They need to accommodate a mix of new HQ personnel, adding 15-25 new jobs per year, for the foreseeable future. These positions will provide total compensation of more than $95,000 on average.

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Plans for the HQ building improvements include the following: . A complete re-facing of the building; . Reconfiguring the ground level to incorporate a “flagship” retail venue; . A Company “museum” and social gathering space; . Moving the main entrance to the West side; . Providing outdoor meeting space on the east side; and . Adding space to the Climbing Gym.

The basic footprint of the buildings will not be materially altered other than possibly adding a portico or other entryway features. The total project cost is estimated to range between $1.5 million and $3.5 million, with construction beginning the first Quarter of 2019.

City’s Fee Waiver and Expedited Processing History Of the 8,122 building permits process by the City from 2000-2017, only 51 (or 0.63%) were classified as commercial or public buildings purposes. Holladay has waived building permit fees and/or expedited the processing for other significant or substantial projects, such as:

CANYON SLOPE – HYATT, retail center Address: 3090 East 6200 South Permit #12-0531-1111 *Expedited permit review 5-7 day turnaround and weekend Inspections

HOLLADAY VILLAGE SQUARE (2-Buildings) Address: 4640 - 4670 South 2300 East Permit #13-0210-1508 *Expedited permit review 5-7 day turnaround Waived Impact fees – Approx. $8,000

OLYMPUS CLINIC Address: 4624 South Holladay Blvd Permit # 14-00-2617 *Expedited permit review 5-7 day turnaround

FIRE STATION (PUBLIC BUILDING) Address: 2200 E Murray Holladay Rd Permit # 12-0000-1347 Fees Waived – Approx. $23,000

*Saves applicant upfront plan review fee plus weekend hours at $75/per hour.

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Key Public Benefits of the Proposed Project . Retention of Holladay’s top employer to safeguard local jobs. Per their 2018 City business license, there are currently about 330 people employed at the Clarus Corporation/Black Diamond Headquarters in Holladay. . Additional opportunities for more local, high-paying jobs for residents. Clarus Corporation estimates that 15-25 new positions will be added per year for the foreseeable future with wages that are estimated to exceed 110 percent of the Salt Lake County average wage. . Continuation of the existing “grandfathered” use on the site, which produces more revenue for the City compared to the anticipated revenue if the site were redeveloped under current zoning. . Fostering Holladay’s role in the regional, state, national and global economy. Clarus Corporation is a global leader in the outdoor recreation industry with 100 patents worldwide and products sold in 50+ countries. . Attracting more interest from the outdoor recreation industry and potentially, the relocation/start-up of additional companies in the City, thus strengthening Holladay’s employment and economic base.

Recommended Local Incentive for Consideration The City of Holladay proposes to waive, as appropriate, building permit fees only (estimated at $20,000) for improving the company’s existing campus, up to $1.5 million in construction value, and/or to expedite the building permit review and issuance process.

The appropriation will be used to enhance the prosperity of Holladay, per the public benefits outlined in the previous section of this document. It also supports the City’s adopted General Plan objective to become more economically sustainable through the development and redevelopment of key districts, including the Black Diamond site. Lastly, the local incentive satisfies the GOED requirement for a local incentive, in order for Clarus Corporation to qualify for their EDTIF.

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Attachments for References . Press Release Clarus Corporation to Expand in Utah, May 15, 2018 . City of Holladay Proposal Letters of Support; Preliminary Letter of Commitment . Current aerial of Clarus Corporation/Black Diamond Headquarters . Link to City of Holladay Zoning Map

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May 15, 2018

Clarus Corporation to Expand in Utah

SALT LAKE CITY, May 15, 2018 (GLOBE NEWSWIRE) -- The Governor’s Office of Economic Development (GOED) announced Clarus Corporation (NASDAQ:CLAR), parent company of Black Diamond Equipment, will expand in Utah over the next eight years, adding up to 147 high-paying jobs, $8.9 million in new state revenue and $40 million in capital investment.

“Clarus Corporation is a bedrock partner and an anchor of Utah’s outdoor industry. We couldn’t be more pleased with their decision to expand in the state of Utah,” said Val Hale, executive director of GOED. “We look forward to future partnership opportunities with Clarus Corporation as we help advance the state’s outdoor recreation economy.”

With a heritage dating back to 1957, Black Diamond Equipment relocated to Utah in 1991. This move allowed its employees to be closer to the activities that create its passion: climbing, skiing, and various mountain and canyon pursuits. Clarus Corporation and Black Diamond Equipment merged in May 2010, where a previous incentive agreement with GOED assisted the company in moving its headquarters to Utah. This is just one indication of long-term collaboration between Clarus Corporation, Black Diamond Equipment and the state to grow Utah’s outdoor industry.

Clarus Corporation also owns Austrian-based PIEPS, an innovator and technology leader in beacon technology and avalanche safety equipment. Clarus also recently acquired Missouri-based Sierra Bullets, an iconic American manufacturer of high performance bullets. Overall, Clarus boasts an increasing portfolio of outdoor equipment and lifestyle products for climbing, mountaineering, backpacking, skiing, and sporting activities. The company has more than 100 patents worldwide for its renowned products.

“Salt Lake City has been home to Black Diamond Equipment, and now Clarus, for over 25 years,” said John Walbrecht, president of Clarus. “We are excited about the future of the outdoor industry in Utah, and expect to play an important role in its growth for years to come.”

Clarus Corporation will create up to 147 jobs over the next eight years. The total wages in aggregate are required to exceed 110 percent of the Salt Lake County average wage. The projected new state wages over the life of the agreement are expected to be approximately $91,067,138. Projected new state tax revenues, as a result of corporate, payroll and sales taxes, are estimated to be $8,936,826.9 over eight years.

“When Black Diamond Equipment moved to Utah in the 1990’s it was a monumental event for the state’s outdoor products industry,” said Theresa Foxley, president and CEO of the Economic Development Corporation of Utah. “Today, as they, and its parent Clarus Corporation, announce their most recent Utah expansion, we look forward to our continued partnership as we support and grow Utah’s outdoor products industry.”

Clarus Corporation may earn up to 20 percent of the new state taxes they will pay over the eight-year life of the agreement in the form of a post-performance Economic Development Tax Increment Finance (EDTIF) tax credit rebate. As part of the contract with Clarus Corporation, the GOED Board of Directors has approved a post-performance tax credit rebate not to exceed $1.8 million. Each year as Clarus Corporation meets the criteria in its contract with the state, it will earn a portion of the total tax credit rebate.

About the Utah Governor’s Office of Economic Development (GOED) business.utah.gov The Governor’s Office of Economic Development (GOED) charter is based on Gov. Gary R. Herbert’s commitment to statewide economic development. The state’s economic vision is that Utah will lead the nation as the best performing economy and be recognized as a premier global business environment and tourist destination. GOED provides extensive resources and support for business creation, growth and recruitment statewide, as well as programs to increase tourism and film production for the benefit of Utah residents. All administered programs are based upon strategic industry clusters to develop a diverse, sustainable economy. GOED accomplishes its mission through unprecedented partnerships. For more information please contact: Aimee Edwards, (801) 538- 8811 or [email protected].

About Black Diamond Equipment Black Diamond Equipment, Ltd. is a global leader in creating innovative outdoor engineered equipment and apparel for climbing, mountaineering, backpacking, skiing and a wide range of other year-round outdoor activities. Black Diamond Equipment, and its sister brand PIEPS™, are synonymous with performance, innovation, durability and safety in the outdoor consumer community. Headquartered in Salt Lake City at the base of the Wasatch Mountains, our products are designed and exhaustively tested by an engaged team of discerning entrepreneurs and engineers. The Black Diamond Equipment culture of precision and excellence enhance the authenticity of our brands, inspire product innovation and strengthen customer loyalty. Black Diamond Equipment's products are sold in approximately 50 countries around the world.

About Clarus Corporation Clarus Corporation is focused on the outdoor and consumer industries, seeking opportunities to acquire and grow businesses that can generate attractive stockholder returns. The Company has substantial net operating tax loss carryforwards which it is seeking to redeploy to maximize stockholder value. Clarus’ primary business is as a leading developer, manufacturer and distributor of outdoor equipment and lifestyle products focused on the climb, ski, mountain, and sport categories. The Company’s products are principally sold under the Black Diamond®, Sierra® and PIEPS® brand names through specialty and online retailers, distributors and original equipment manufacturers throughout the U.S. and internationally. For additional information, please visit www.claruscorp.com or the brand websites at www.blackdiamondequipment.com, www.sierrabullets.com or www.pieps.com. Forward-Looking Statements Please note that in this press release we may use words such as “appears,” “anticipates,” “believes,” “plans,” “expects,” “intends,” “future,” and similar expressions which constitute forward-looking statements within the meaning of the safe harbor provisions of the Private Securities Litigation Reform Act of 1995. Forward-looking statements are made based on our expectations and beliefs concerning future events impacting the Company and therefore involve a number of risks and uncertainties. We caution that forward-looking statements are not guarantees and that actual results could differ materially from those expressed or implied in the forward-looking statements. Potential risks and uncertainties that could cause the actual results of operations or financial condition of the Company to differ materially from those expressed or implied by forward-looking statements in this release include, but are not limited to, the overall level of consumer spending on our products; general economic conditions and other factors affecting consumer confidence; disruption and volatility in the global capital and credit markets, including the ability to obtain sufficient financing; the financial strength of the Company’s customers; the Company’s ability to implement its growth strategy, including its ability to organically grow each of its historical product lines, the ability of the Company to identify potential acquisition or investment opportunities as part of its acquisition strategy; the Company’s ability to successfully execute its acquisition strategy or that any such strategy will result in the Company’s future profitability; the Company’s ability to successfully integrate Sierra Bullets, L.L.C.; changes in governmental regulation, legislation or public opinion relating to the manufacture and sale of bullets by our Sierra segment, and the possession and use of firearms and ammunition by our customers; the Company’s exposure to product liability or product warranty claims and other loss contingencies; stability of the Company’s manufacturing facilities and foreign suppliers; the Company’s ability to protect patents, trademarks and other intellectual property rights; any breaches of, or interruptions in, our information systems; fluctuations in the price, availability and quality of raw materials and contracted products as well as foreign currency fluctuations; our ability to utilize our net operating loss carryforwards; legal, regulatory, political and economic risks in international markets; the additional leverage that we may incur to finance the Tender Offer could adversely affect our capital resources, financial condition and liquidity; our decreased “public float” (the number of Shares owned by non-affiliate stockholders and available for trading in the securities markets) as a result of the Tender Offer and other share repurchases; and the commencement and completion of the Tender Offer. More information on potential factors that could affect the Company’s financial results is included from time to time in the Company’s public reports filed with the Securities and Exchange Commission, including the Company’s Annual Report on Form 10-K, Quarterly Reports on Form 10-Q, and Current Reports on Form 8-K. All forward-looking statements included in this press release are based upon information available to the Company as of the date of this press release, and speak only as of the date hereof. We assume no obligation to update any forward-looking statements to reflect events or circumstances after the date of this press release.

Company Contact:

Warren B. Kanders Executive Chairman Tel 1-203-552-9600 [email protected] or John C. Walbrecht President Tel 1-801-993-1344 [email protected] or Aaron J. Kuehne Chief Administrative Officer and Chief Financial Officer Tel 1-801-993-1364 [email protected]

Investor Relations:

Liolios Cody Slach Tel 1-949-574-3860 [email protected]

Source: Clarus Corporation