EXHIBIT 10.7
 
 
March 9, 2009
AMENDMENT NO. 3
TO THE CREDIT FACILITY AGREEMENT
DATED MARCH 14, 2008
(AS AMENDED BY AMENDMENT NO. 1 DATED AUGUST 14, 2008
AND BY AMENDMENT NO. 2 DATED OCTOBER 30 OCTOBRE 2008)
by and among
BNP PARIBAS
CRÉDIT LYONNAIS
SOCIÉTÉ GÉNÉRALE
as Banks
and
BNP PARIBAS
as Security Agent (Agent des Sûretés)
and
SOCIÉTÉ GÉNÉRALE
as Credit Agent (Agent du Credit)
and
PILOT SAS
as Borrower
and
QUIKSILVER, INC.
 
 
(WHITE & CASE LLP LOGO) [a51665a5166503.gif]
11, boulevard de la Madeleine
75001 Paris

 

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BETWEEN THE UNDERSIGNED:

(1)   BNP PARIBAS, a corporation (société anonyme) with share capital of
1,824,192,214 €, whose registered office is located 16, boulevard des Italiens,
75009 Paris, incorporated with the Paris Trade and Companies Register under the
unique identification number 662 042 449,   (2)   CRÉDIT LYONNAIS, a corporation
(société anonyme) with share capital of 1,847,857,783 €, whose registered office
is located 18, rue de la République, 69002 Lyon and whose headquarters are
located 19, boulevard des Italiens, 75002 Paris, incorporated with the Lyon
Trade and Companies Register under the unique identification number 954 509 741,
  (3)   SOCIÉTÉ GÉNÉRALE, a corporation (société anonyme) with share capital of
725,909,055, whose registered office is located 29, boulevard Haussmann, 75009
Paris, incorporated with the Paris Trade and Companies Register under the unique
identification number 552 120 222,       (parties (1) to (3) above being
collective designated as the “Banks”),   (4)   BNP PARIBAS, as designated above,
in the capacity of Security Agent pursuant to the terms and conditions of the
Credit Facility (Convention de Credit) (as defined below),   (5)   SOCIÉTÉ
GÉNÉRALE, as designated above, in the capacity of Credit Agent pursuant to the
terms and conditions of the Credit Facility,   (6)   PILOT SAS, simplified form
joint stock company (société par actions simplifiée) with share capital of
124,813,632 €, whose registered office is located 26/28, rue Danielle Casanova,
75002 Paris, incorporated with the Paris Trade and Companies Register under the
unique identification number 070 501 374 (hereinafter, the “Borrower” or
“Pilot”),   (7)   QUIKSILVER, INC., a company incorporated in the State of
Delaware, whose registered office is located 15202 Graham Street, Huntington
Beach, California 92649, U.S.A. (hereinafter, “Quiksilver, Inc.”).

WHEREAS:

(A)   According to the terms and conditions of a facility agreement executed on
March 14, 2008, as modified by an amendment dated August 14, 2008 (“AMENDMENT
NO. 1”) and an amendment dated October 30, 2008 (“AMENDMENT NO. 2”) (this
agreement, as modified, the “Credit Facility”), the Banks granted to the
Borrower a renewable credit of a maximum principal amount of €70,000,000.

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(B)   According to the terms and conditions of Amendment No. 2, the Banks
extended the term of the Facility (as defined in the Credit Facility), reduced
to a maximum principal amount of €55,000,000.   (C)   Pursuant to a letter dated
March 9, 2009, the Borrower and Quiksilver, Inc. have requested the Banks to
agree to grant an extension of the term of the Facility, until June 30, 2009.  
(D)   The purpose of this Agreement is to define the terms and conditions of the
extension of the Credit requested by the Borrower and Quiksilver, Inc. and to
define in detail the covenants and obligations of the Borrower and of
Quiksilver, Inc. in connection with such extension.

THE FOLLOWING HAS THEREFORE BEEN AGREED
ARTICLE 1 — DEFINITIONS AND INTERPRETATIONS

1.1.   Definitions   (a)   For the purposes of the Agreement, except where
otherwise stipulated, the terms and expressions defined in the Preamble shall
have the same meaning in the rest of the Agreement.   (b)   The terms and
expressions used in the Agreement but not defined therein shall have the meaning
ascribed to them in the Credit Facility.   (c)   The following terms and
expressions used in the Agreement shall, unless a different interpretation is
required by the context, have the following meaning:       “Agreement” means
this amendment, the Preamble thereto and any potential amendments, which form an
integral part thereof;       “Effective Date” means March 13, 2009, subject to
all of the conditions precedent listed in Article 4 (Conditions Precedent)
having been fulfilled, in accordance with the provisions of the said article, at
that date;       “Signing Date” means the date of signature of this Agreement by
the parties.   1.2.   Interpretations

For purposes of this Agreement, except where a different interpretation is
required by the context:

(a)   Any reference, within the Agreement, to an “Article”, a “paragraph”, to
the “Preamble” or to a “Schedule” must, except where otherwise stipulated or
when a

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    different interpretation is required by the context, be interpreted as being
a reference to an article, a paragraph, a preamble or a schedule to the
Agreement.   (b)   Any reference, within the Agreement, to a document, a
contract, a treaty (including the Agreement) or a deed must be understood as
being a reference to this document, this contract, this treaty or this deed, as
potentially modified or completed in accordance with the terms and conditions of
the Agreement and including, if applicable, any document, contract, treaty or
deed that may be substituted thereto via novation.

ARTICLE 2 -MODIFICATION OF THE CREDIT FACILITY

2.1.   Modification of Article 1 of the Credit Facility   (a)   The parties to
this Agreement agree that, as from the Effective Date, the definition of
“Applicable Margin” shall be deleted and replaced by the following new
definition:       ““Applicable Margin” means the margin applicable to the
Credit, equal to 2.8%.”   (b)   The parties to this Agreement agree that, as
from the Effective Date, the definition of “Subsidiary” shall be deleted and
replaced by the following new definition:       ““Subsidiary” means any company
controlled by another, directly or indirectly, as defined by Article L. 233-3 I
and II of the [French] Commercial Code.”   (c)   The parties to this Agreement
agree that, as from the Effective Date, the following definition is added
immediately after the definition of “TARGET Day”:       ““Extension Letter”
means the letter dated 9 March 2009 addressed by the Borrower and Quiksilver,
Inc. to the Credit Agent, whereby the Borrower and Quiksilver, Inc. have asked
the Banks to extend the term of the Facility to 30 June 2009.”   (d)   The
parties to this Agreement agree that, as from the Effective Date, the following
definition shall be added immediately after the definition of “Interest Period”:
      ““Quiksilver, Inc.” means Quiksilver, Inc., a Delaware corporation with
headquarters at 15202 Graham Street, Huntington Beach, California 92649, U.S.A.”

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2.2.   Modification of Article 2 of the Credit Facility

The parties to this Agreement agree that, as from the Effective Date, subject to
the fulfillment of all of the conditions precedent cited at Article 4 herein,
Article 2 (Amount and Term) of the Credit Facility shall be deleted and replaced
by the following new article:
“2. AMOUNT AND TERM
The Banks have made available to the Borrower, in accordance with the methods
and conditions defined in the Agreement, a Facility of a maximum amount of EUR
70,000,000.00 (seventy million euros), as from March 14, 2008 and for a term of
six months. Pursuant to Amendment No. 1 dated August 14, 2008, the Facility was
extended until October 31, 2008
At the Borrower’s request, by October 15, 2008 at the latest, this Facility
could be renewed once, by the unanimous decision of the Banks, up until
March 14, 2009, date by which the capital and interest must have been fully
reimbursed.
On October 9, 2008, the Borrower requested an extension of the term of the
Facility.
By Amendment No. 2 dated October 30, 2008, the Banks acted unanimously to extend
the aforementioned Facility, reduced to a maximum amount of 55,000,000 euros
(fifty-five million euros) as from October 30, 2008 up until March 14, 2009.
On March 9, 2009, the Borrower requested an extension of the term of the
Facility.
By a unanimous decision, the Banks extend the aforementioned Facility up until
June 30, 2009, the amount in principal of the Facility remaining limited to
55,000,000 euros (fifty-five million euros).
Each Bank participates in the Facility at the level of the amounts indicated in
Schedule 1.
Each Bank undertakes, individually and without joint liability with the other
Banks, to participate in the Facility. The Banks cannot be held liable for any
potential participation default and for the failure of one or several of the
other Banks.”

2.3.   Modification of Article 7.2 (Effective Global Rate) of the Credit
Facility

The parties to this Agreement agree that, as from the Effective Date,
Article 7.2 (Effective Global Rate) of the Credit Facility shall be replaced by
the following new article:
“7.2 Effective Global Rate
As the Facility generates interest at a floating rate, it is impossible to
calculate an Effective Global Rate valid for the entire term of the Credit.
However, the Credit Agent shall inform the Borrower, by way of an example, that
in the event of the utilization of the maximum Facility amount as from the
signature of the Agreement, and on the basis of all

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of the financial conditions described herein and of the most recent level of the
EURIBOR 3-month rate published on 6 March 2009, i.e., 1.726% per annum increased
by 2.8% per annum, the period rate on this basis for an Interest Period is
1.2459%. The Effective Global Rate, which is the annual rate in proportion to
the period rate, therefore reaches 4.98% per annum.

2.4.   Modification of Article 8.2 (Mandatory Prepayment) of the Credit Facility

The parties to this Agreement agree that, as from the Effective Date, the
following paragraph shall be added at the end of Article 8.2 (Mandatory
Prepayment):
“In the event of the sale of one or more of the principal businesses or brands
of the group of companies comprising of Quiksilver, Inc. and its Subsidiaries
(the “Quiksilver Group”) (including the Quiksilver, Roxy or DC Shoes brands
and/or businesses), and whatever form such sale may take, simultaneously with
(i) the said sale (and without regard as to the provisions of the preceding
paragraph) and (ii) the repayment of amounts due under the ABL Agreement (to the
extent such amounts are due under the ABL Agreement upon the date of such sale
and that the ABL lenders require such repayment on such date), the Borrower
shall reimburse, and Quiksilver, Inc. shall procure that the Borrower reimburse,
all of the Drawings and amounts owed to the Banks pursuant to the Facility.”

2.5.   Modification of Article 11.1 of the Credit Facility

The parties to this Agreement agree that, as from the Signing Date, the
following provisions shall be added to the end of Article 11.1 (Positive
covenants) of the Credit Facility:
“The Borrower undertakes (and Quiksilver, Inc. shall procure (within the meaning
of Article 1120 of the [French] Civil Code) that the Borrower comply with such
undertakings):

  a)   To inform the Credit Agent in writing of any termination of any bank
financing of any kind for the Borrower and its Subsidiaries immediately upon
becoming aware thereof (including the factoring agreement executed by Na Pali
and certain of its Subsidiaries with GE Factofrance and the lending listed in
Schedule 6).     b)   To disclose immediately to the Credit Agent any material
information relating to the sale of Rossignol carried out pursuant to the terms
and conditions of the Stock Purchase Agreement dated November 12, 2008 executed
notably by and between Quiksilver, Inc. and Macquarie Asset Finance Limited
(including any material information in connection with any litigation or
arbitration relating thereto) and to immediately forward to the Credit Agent any
material information relating to the price adjustment (including in relation to
the adjustment of the net working capital requirements) or to any claim under
the representations and warranties made pursuant to the said sale of Rossignol.

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  c)   That the Borrower’s percentage holding in Na Pali be maintained at a
level identical to that in existence as of January 1st, 2009.     d)   To
provide to the Credit Agent, by March 30, 2009 at the latest, a consolidated
business plan for the Borrower and Na Pali, including and excluding the DC Shoes
business, reviewed by the management of the Borrower, of Na Pali and of
Quiksilver, Inc. and by Ernst & Young.     e)   To provide to the Credit Agent,
by March 30, 2009 at the latest, a copy certified exact by a legal
representative of the Borrower of the minutes of the Borrower’s general
shareholders’ meeting convened pursuant to the provisions of Article L. 225-248
of the [French] Commercial Code, rejecting the dissolution of the Borrower
despite of the fact that its net assets are equal to less than one half of its
share capital and approving the measures envisaged for the reconstitution of the
Borrower’s net assets.

Quiksilver, Inc. undertakes:

  f)   That the equity percentage holding (i) of Quiksilver, Inc. in QS Holdings
Sàrl, (ii) of QS Holdings Sàrl in Quiksilver Europa and (iii) of Quiksilver
Europa in the Borrower shall be maintained at a level identical to that in
existence as of January 1st, 2009.     g)   In event of the sale of the any of
the principal businesses or brands of the Quiksilver Group (including the
Quiksilver, Roxy or DC Shoes businesses and/or brands), and whatever form such
sale could take, simultaneously with the said sale to cause the repayment of
(i) all amounts due under the ABL Agreement and (ii) the Credit Facility, and
immediately after repayments (or simultaneously with such repayments if the
proceeds from such sale are sufficient), (x) to replace Na Pali in the EUR
35,600,000 cash collateral granted by Na Pali to JP Morgan and dated December 9,
2008, or (y) to contribute an equivalent amount in capital to Quiksilver Europa
(in the form of an increase in the share capital of QS Holdings Sàrl), and to
cause Quiksilver Europa to replace Na Pali in the EUR 35,600,000 cash collateral
granted by Na Pali to JP Morgan and dated December 9, 2008.”.     h)   To
disclose immediately to the Credit Agent any material information relating to
the sale of Rossignol carried out pursuant to the terms and conditions of the
Stock Purchase Agreement dated November 12, 2008 executed notably by and between
Quiksilver, Inc. and Macquarie Asset Finance Limited (including any material
information in connection with any litigation or arbitration relating thereto)
and to immediately forward to the Credit Agent any material information relating
to the price adjustment (including in relation to the adjustment of the net
working capital requirements) or to any claim under the representations and
warranties made pursuant to the said sale of Rossignol.”

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2.6.   Modification of Article 11.2 of the Credit Facility

The parties to this Agreement agree that, as from the Signing Date, Article 11.2
(Negative covenants) of the Credit Facility shall be deleted and replaced by the
new Article 11.2 (Negative covenants) set forth in Schedule B.

2.7.   Modification of Article 12.1 (Prepayment Event) of the Credit Facility  
(a)   The parties to this Agreement agree that, as from the Signing Date,
paragraph (c) of Article 12.1 (Prepayment Event) of the Credit Facility shall be
deleted and replaced by the following new paragraph:       “(c) Any one of the
undertakings made by the Borrower and/or Quiksilver, Inc. in the Agreement (and
notably, but not exclusively, those made at Article 12.1 is not complied with.”
  (b)   The parties to this Agreement agree that, as from the Signing Date, the
following paragraphs shall be added at the end of Article 12.1 (Prepayment
Event) of the Credit Facility:       “(j) The tax consolidation of the group
comprised of the Borrower (the Borrower being consolidation head) and certain
French subsidiaries of the Borrower, as in existence as of 31 October 2008, is
terminated for any reason whatsoever, or the conditions allowing such tax
consolidation are no longer met.       (k) Any one of the credits listed in
Schedule 6 is terminated, cancelled, annulled, declared payable, declared
payable in advance and/or repaid in advance (including the repayment of any due
debt prior to the expiry of any applicable legal deadline, but excluding
voluntary repayments of amounts drawn under overdraft facilities (provided that
the maximum amount authorized under such overdrafts shall have remained
unchanged)).       (l) Any one of the credits granted pursuant to the agreement
entitled “Amended and Restated Credit Agreement” dated June 3, 2005 (and as
modified since then by successive riders) executed by and between Quiksilver,
Inc., Quiksilver Americas, Inc., Bank of America, N.A., Union Bank of
California, N.A., JP Morgan Chase Bank, N.A., JP Morgan Chase Bank, N.A.,
Toronto Branch, J.P. Morgan Securities Inc. and various financial establishments
in the capacity of lenders (the “ABL Agreement”) terminated, cancelled,
annulled, declared payable, declared payable in advance and/or repaid in advance
(including the repayment of any due debt prior to the expiry of any applicable
legal deadline, but excluding repayments not involving a cancellation of the ABL
arising from a change in utilizations of revolving facilities under such ABL
Agreement).       (m) Any one of the undertakings made by the Borrower and/or by
Quiksilver, Inc. pursuant to the Extension Letter and/or Amendment No. 3 to this
Agreement dated March 9, 2009, is not complied with.”

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2.8.   Modification of the Schedules to the Credit Facility

The parties to this Agreement agree that, as from the Signing Date, the
schedules set forth in Schedule D shall be added after Schedule 5 of the Credit
Facility.
ARTICLE 3 — ADHESION OF QUIKSILVER, INC.
In signing this Agreement, Quiksilver, Inc. agrees to become a party to the
Credit Facility and to be bound by the terms and conditions of such agreement as
if it had been a party thereto from its origins. Quiksilver, Inc. declares that
it is bound with regard to each of the Banks by all of the obligations and
undertakings placed upon it by the Credit Facility as modified by this
Agreement.
ARTICLE 4 — CONDITIONS PRECEDENT

(a)   Subject to the provisions of paragraph (b) below, this Agreement shall
become effective on March 13, 2009 on condition that, as of this date:

  (i)   the Credit Agent has received all of the documents listed in Schedule C
and has confirmed in writing (thereby acting on the instructions of all of the
Banks) to the Borrower that such documents and certificates are satisfactory,
both in form and in content;     (ii)   the Credit Agent has received payment,
on behalf of the Banks, of (i) all of the amounts mentioned in paragraph (a) of
Article 6 and (ii) amounts payable pursuant to paragraph (b) of Article 6
notified by the Credit Agent to the Borrower;     (iii)   the representations
made by the Borrower at Article 10 of the Credit Facility are accurate;     (iv)
  the Security mentioned at Article 4 of the Credit Facility remains valid and
guarantees all of the amounts owed by the Borrower pursuant to the terms and
conditions of the Credit Facility (as modified by this Agreement);     (v)   no
Prepayment Event has occurred; and     (vi)   no Material Adverse Event has
occurred.

(b)   In the event that the conditions precedent listed in paragraph (a) have
not been fulfilled by March 13, 2009, this Agreement shall lapse and the parties
shall be released from any obligation pursuant to this Agreement. As a result,
all of the Drawings made on the Credit, both in their principal and in interest,
shall be due and payable as of March 14, 2009.

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ARTICLE 5 — INTERDEPENDANCE OF THE UNDERTAKINGS MADE BY EACH PARTY

(a)   The decisions and/or undertakings by each of the parties to this Agreement
are made in consideration of the decisions and/or undertakings of the other
parties, such interdependence of undertakings constituting an essential factor
in the consent of each party, without which such party would not have taken part
in the present.   (b)   In particular, the performance by each party of its
undertakings and/or obligations as of the Effective Date is subject to the
simultaneous performance of the respective undertakings and/or obligations of
the other parties to be performed at the said date.

ARTICLE 6 — ARRANGEMENT FEE — ADVISORS’ FEES

(a)   The Borrower shall pay an arrangement fee to the Credit Agent (on behalf
of the Banks) by March 13, 2009 at the latest, of an amount equal to 0.5% of the
total amount of the outstanding Credit as of the Signing Date. The Credit Agent
shall pay to each of the Banks its part of the said commission, in direct
proportion to the participation of the said Bank in the Credit.   (b)   All
expenses, costs and fees, notably attorneys’ fees and disbursements (up to a
maximum amount agreed in a separate letter for attorneys’ fees) that will be
incurred by the Banks in relation to the preparation and the execution of the
Agreement, and in particular for the drawing up of deeds and documents that must
be drawn up in application of the Agreement, shall be borne by Pilot, who agrees
thereto.

ARTICLE 7 — MODIFICATIONS — AMENDMENTS
Any modification to this Agreement and to any other document related hereto must
be the subject of a written agreement between the parties.
This Agreement, as from its Effective Date, shall have the value of an amendment
to the Credit Facility. All other provisions of the Credit Facility not modified
by this Agreement shall remain unchanged and shall retain their full and entire
effectiveness. It is stipulated that this Agreement does not act as a novation
to the Credit Facility and that the Surety shall retain its full and entire
effectiveness.
ARTICLE 8 — PARTIAL INVALIDITY
In the event of a provision of this Agreement becoming null and void, unlawful
or not liable to be enforced, in full or in part, such annulment or invalidity
shall have no impact upon the other provisions of this Agreement. In this case,
the parties must immediately

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and in so far as is possible replace the impacted stipulation with a similar
provision that will comply as far as possible with the financial aim of the
impacted stipulation, in accordance with the spirit of this Agreement.
ARTICLE 9 — APPLICABLE LEGAL REGIME
This Agreement shall be governed by and interpreted in accordance with French
law.
ARTICLE 10 -COMPETENT JURISDICTION — DOMICILE

10.1.   Competent jurisdiction

The Borrower and Quiksilver, Inc. irrevocably accept that any dispute relating
to the validity, interpretation or performance of this Agreement or arising
therefrom shall be brought before the Paris Commercial Courts.

10.2.   Domicile

For the performance of the present and the consequences thereof, the parties
designate domicile as follows:

  (i)   for BNP Paribas, at Centre d’Affaires Sud Atlantique Entreprises, Les
Bureaux de la Cité — 23 Parvis des Chartrons 33 000 Bordeaux;     (ii)   for
Credit Lyonnais, at the Direction Entreprises Dauphiné Savoie located 1, rue
Molière, 38000 Grenoble;     (iii)   for Société Générale, at its registered
office as given hereinabove;     (iv)   for the Borrower, at its registered
office as given hereinabove; and     (v)   for Quiksilver, Inc., at its
registered office as given hereinabove.

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Executed in Saint-Jean-de-Luz, on March 9, 2009
on seven (7) original copies

          BNP PARIBAS
as Bank     BNP PARIBAS
as Security Agent                     By:       By:      CRÉDIT LYONNAIS
as Bank                        By:         SOCIÉTÉ GÉNÉRALE
as Bank     SOCIÉTÉ GÉNÉRALE
as Credit Agent                     By:       By:      PILOT SAS
as Borrower
                      By:         QUIKSILVER, INC.                       By:    
 

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Schedule B
Article 11.2 (Negative Covenants)
“11.2 Negative Covenants

(A)   The Borrower, for so long as it shall continue to be a debtor pursuant to
the Agreement, undertakes (and procures (within the meaning of Article 1120 of
the [French] Civil Code) that its Subsidiaries shall comply with those of the
following undertakings that concern them (whereas Quiksilver, Inc. procures
(within the meaning of Article 1120 of the [French] Civil Code) that the
Borrower and each of its Subsidiaries comply with such undertakings)), except
with the prior agreement of the Majority of the Banks:

  a)   Not to modify, and to ensure that the Group members do not modify, the
relevant corporate purpose, legal status or nature of commercial activities as
in existence on the day of the signature of the Agreement.     b)   Not to carry
out any Change in Control, and to ensure that no such Change in Control is
carried out.     c)   Not to carry out any reduction in the Borrower’s share
capital, and to ensure that the Borrower does not make any payment of dividends,
interim dividends or share buy-back programs (and not to put to the vote of the
competent management bodies of the Borrower any draft resolution on the
distribution of dividends in favor of its shareholders).     d)   Not to carry
out any reorganization transaction (including in the form of a merger, merger by
absorption, demerger or partial asset contribution) having an impact upon the
Borrower or upon any one of its Subsidiaries.     e)   Not to grant (and to
ensure that no member of the Group neither grants nor permits to exist) security
for any present or future debt (other than to allow the financing of an asset
acquisition, when such security relates exclusively to the said asset and when
it guarantees the payment or the financing thereof), or security for any
guarantee undertaking concluded with or toward any entity whatsoever, present or
future, for any mortgage, pledge, endorsement (or their equivalent under any
legal regime other than French law) or other rights or guarantees of any kind
whatsoever over all or part of its assets or income, present or future, or over
the assets or income, present of future, of its Subsidiaries, without granting
to the Banks the same security, of the same rank, or without conferring upon
them any other type of security that the Banks shall deem to be an equivalent
thereto, with the exception of the following securities that may be granted by
Na Pali and its Subsidiaries:

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  (i)   any legal privilege arising in the ordinary course of the Group’s
business and not further to a default or omission by a member of the Group;    
(ii)   any security resulting from any retention right regarding an asset of any
Group member in the normal course of its business, and not resulting from a
default or omission by a member of the relevant Group member.

  f)   To inform the Credit Agent immediately and in writing of the
implementation by any creditor, notably by any financial institution, of any
forfeiture of term or any prepayment event, with or without advance notice, in
relation to any loan, credit or other financial assistance granted to the
Borrower or to any member of the Group.     g)   To inform the Credit Agent
immediately and in writing of any positive or negative undertakings (“to do” or
“not to do”) made or to be made by a member of the Group to any financial
institution, the non-performance or breach of which could result in the
forfeiture of term of the prepayment of the obligation in relation to which such
undertaking would have been made, and to allow the Banks to benefit, in the
event of such an undertaking having been made, either from the same undertaking
(if not already granted herein) or from equivalent rights or advantages
satisfactory to such Banks;     h)   That no member of the Group shall incur any
bank or other financial indebtedness of any kind whatsoever with any third
parties, with Quiksilver, Inc. or with the latter’s Subsidiaries (including the
members of the Group), except any borrowing pursuant to:

  (i)   the Loan Facility;     (ii)   existing cash pooling agreement between Na
Pali and its Subsidiaries;     (iii)   bank debt incurred by the Borrower’s
Subsidiary in Poland, for a maximum amount of EUR1,000,000;     (iv)   bank debt
incurred by the Borrower’s Subsidiary in the Czech Republic, for a maximum
amount of EUR3,000,000;     (v)   the intra-group loans 7 shown in the detailed
list (certified by a legal representative of the Borrower) delivered this day by
the Borrower to the Credit Agent; and     (vi)   the factoring agreement
executed with GE Factofrance by Na Pali and certain of its Subsidiaries.

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  i)   That no member of the Group shall grant nor consent any additional loan
or advance (including intra-group loans or advances on current accounts) to
third parties or to any one of the members of the group consisting of
Quiksilver, Inc. and of its Subsidiaries (other than debt pursuant to the
existing cash pooling agreement between Na Pali and its Subsidiaries and the
intra-group loans described in Schedule 7)     j)   Not to carry and to ensure
that none of its Subsidiaries carries out any asset acquisition or sale with the
exception of any acquisition or sale of assets other than brands, real estate,
shares, partnership interests and/or business interests, and subject to the said
acquisitions or sales being executed in the normal course of business and on
arm’s length terms.     k)   Not to take part in the creation of any joint
venture and to ensure that its Subsidiaries do not take part in the creation of
any joint venture.     l)   Not to make any payment of any kind whatsoever
(including the payment of any royalties and management fees) or any
reimbursement of any debt or borrowing whatsoever and of any kind that may be
due to Quiksilver, Inc. or to one of the latter’s Subsidiaries.     m)   To
ensure that none of its Subsidiaries make any payment of any kind whatsoever
(including the payment of all royalties or management fees) or any reimbursement
of any debt or borrowing whatsoever and of any kind that may be due to
Quiksilver, Inc. or to any one of the latter’s Subsidiaries (other than members
of the Group), other than payments arising in the normal course of business and
on arm’s length terms.

(B)   For so long as the Borrower shall continue to be a debtor pursuant to the
Agreement, Quiksilver, Inc. shall procure (within the meaning of Article 1120 of
the [French] Civil Code) that QS Holdings Sàrl shall not grant any security of
any kind over its assets (including over the trademarks held by the latter
(including Quiksilver, Quiksilver & Mountain & Wave and Roxy)).”

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Schedule C
Conditions Precedent

(a)   Delivery of a declaration signed by a legal representative of Pilot
confirming that there has been no termination of any financing arrangement
whatsoever (of any kind whatsoever, including the factoring agreement executed
by Na Pali and certain of its Subsidiaries with GE Factofrance) granted to Pilot
and its Subsidiaries, and confirming the preservation of, the short- or
medium-term credit facilities listed in Schedule A for the maximum undertakings
detailed in the said Schedule.   (b)   Delivery of a deed confirming and
reiterating the guarantee granted by Quiksilver, Inc. in accordance with the
terms and conditions of the Credit Facility in order to ensure the maintenance
of the said guarantee, in connection with the extension granted pursuant to the
terms and conditions of the Agreement.   (c)   Delivery of a declaration signed
by a legal representative of Pilot confirming:

  (i)   that no Prepayment Event has occurred and is continuing pursuant to the
Credit Facility; and     (ii)   that no Material Adverse Event has occurred
pursuant to the Credit Facility.

(d)   Payment (i) of all commissions owing pursuant to the paragraph (a) of
Article 6 hereof and (ii) of the fees of the Banks’ legal advisers incurred as
of the date of signature of the Extension Agreement (up to a maximum limit
agreed in a separate letter) and any other amounts payable pursuant to paragraph
(a) of Article 6 which have been notified by the Credit Agent to the Borrower.  
(e)   Delivery of legal opinions by counsel to Pilot and Quiksilver, Inc.
confirming (x) the capacity and authority of Pilot and Quiksilver, Inc. to sign
the agreements herein, and that (y) the signature of the Extension Agreement and
the provisions contained therein are not contrary to and do not violate the ABL
Agreement and the Indenture dated July 22, 2005 governing the Senior Notes,
among Quiksilver, Inc., the subsidiary Guarantors party thereto and Wilmington
Trust Guarantor as Trustee.   (f)   Delivery of a copy certified exact by a
legal representative of Pilot of the quarterly consolidated balance sheet
relating to the companies within the European perimeter of the Quiksilver group
as of January 31, 2009 (including a balance sheet and profit and loss account)
provided to Quiksilver, Inc. for US GAAP consolidation purposes.

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(g)   Delivery of a list, certified by a legal representative of Pilot, of the
financial indebtedness of Pilot and Na Pali (authorizations and utilizations) as
of February 28, 2009, including details of the type of undertakings (notably
long-, medium- and short-term undertakings, undertakings made by signature
(engagements de signature), letters of credit).   (h)   Delivery of a cash flow
statement certified by a legal representative of Pilot for Pilot and its
Subsidiaries as of February 28, 2009.   (i)   Delivery of a copy of the letter
canceling the termination letter dated February 9, 2009, relating to the
overdraft facility granted by Natixis to Na Pali.   (j)   Delivery of an
undertaking by which Quiksilver, Inc. agrees, in the event of the sale of any of
one or more of the principal businesses or brands of the Quiksilver group
(including the Quiksilver, Roxy or DC Shoes business and/or brands), and
regardless of the form of the sale, simultaneously with the said sale (and
without regard as to the provisions of the preceding paragraph), to cause the
repayment of (i) all amounts due under the ABL Agreement and (ii) the Credit
Facility, and immediately after such repayments (or simultaneously with such
repayments if the proceeds from such sale are sufficient), (x) to replace Na
Pali in the EUR 35,600,000 cash collateral granted by Na Pali to JP Morgan and
dated December 9, 2008, or (y) to contribute an equivalent amount in capital to
Quiksilver Europa (in the form of an increase in the share capital of QS
Holdings Sàrl), and to cause Quiksilver Europa to replace Na Pali in the EUR
35,600,000 cash collateral granted by Na Pali to JP Morgan and dated December 9,
2008.

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