Exhibit 10.1

THIRD AMENDMENT TO REVOLVING CREDIT AND SECURITY AGREEMENT

This Third Amendment to Revolving Credit and Security Agreement (the
“Amendment”) is made as of this 25th day of January by and among SKULLCANDY,
INC., a Delaware corporation (“Skullcandy”), AG ACQUISITION CORPORATION, a
Delaware corporation (“AG”, together with Skullcandy, the “Borrowers” and each a
“Borrower”), the financial institutions which are now or which hereafter become
party to the Loan Agreement defined below as lenders (the “Lenders”), UPS
CAPITAL CORPORATION, a Delaware corporation (“UPSC”), as foreign collateral
agent for the Lenders (in such capacity, the “Foreign Collateral Agent”), and
PNC BANK, NATIONAL ASSOCIATION (“PNC”), as administrative agent for the Lenders
(in such capacity, the “Administrative Agent” and together with Foreign
Collateral Agent, each, an “Agent” and, collectively, the “Agents”).

BACKGROUND

A. WHEREAS, on August 31, 2010, Skullcandy, the Lenders, the Foreign Collateral
Agent and the Administrative Agent entered into, inter alia, that certain
Revolving Credit and Security Agreement (as same has been or may be amended,
modified, renewed, extended, replaced or substituted from time to time,
including pursuant to the Joinder (as defined below), the “Loan Agreement”) to
reflect certain financing arrangements between the parties thereto. AG became,
and assumed all of the obligations of, a Borrower under the Loan Agreement
pursuant to that certain Joinder to Revolving Credit and Security Agreement
dated as of April 22, 2011 among AG, Skullcandy, Lenders, Foreign Collateral
Agent and Administrative Agent (the “Joinder”). The Loan Agreement, the Joinder
and all Other Documents executed in connection therewith to the date hereof are
collectively referred to as the “Existing Financing Agreements.” All capitalized
terms not otherwise defined herein shall have the meaning ascribed thereto in
the Loan Agreement;

B. WHEREAS, Skullcandy International GmbH, an indirect subsidiary of Skullcandy
(“Skullcandy International”), and Skullcandy entered into the FX Agreement with
PNC in connection with certain foreign exchange transactions; and

C. WHERAES, the Borrowers have requested and the Agents and the Lenders have
agreed to modify certain terms and provisions of the Loan Agreement relating to
stock buybacks and the mechanics by which the Borrowers may request the
Incremental Revolving Facility, in each case on the terms and subject to the
conditions contained in this Amendment.

NOW THEREFORE, with the foregoing background hereinafter deemed incorporated by
reference herein and made part hereof, the parties hereto, intending to be
legally bound, promise and agree as follows:

1. Amendments to Loan Agreement.

(a) The following definition of “Permitted Buybacks” is hereby added to
Section 1.2 of the Loan Agreement in the appropriate alphabetical sequence:

“Permitted Buybacks” means, so long as no Default or Event of Default has
occurred and is continuing or would occur and the representations and warranties
of Borrowers set forth in Section 5.8(a) of this Agreement are true in correct
in all respective, in each case, after giving effect to such purchases,

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redemptions and/or other retirements, purchases, redemptions and/or other
retirements of Equity Interests of the Borrowers; provided, that, the amount of
Revolving Advances used for such purchases, redemptions and/or other retirements
does not exceed $28,000,000.

(b) Section 7.7 of the Loan Agreement is hereby amended and restated in its
entirety as follows:

“Dividends. Declare, pay or make any dividend or distribution on any Equity
Interests of any Borrower (other than dividends or distributions payable in its
stock, or split-ups or reclassifications of its stock) or apply any of its
funds, property or assets to the purchase, redemption or other retirement of any
Equity Interest, or of any options to purchase or acquire any Equity Interest of
any Borrower, in each case, other than Permitted Distributions and Permitted
Buybacks.”

2. Representations and Warranties of Borrowers. Each Borrower hereby:

(a) represents and warrants to the Lenders and the Agents that all
representations and warranties of the Borrowers set forth in the Loan Agreement
and all of the other Existing Financing Agreements are true and correct in all
material respects as of the date hereof (except to the extent any such
representations and warranties specifically relate to a specific date, in which
case such representations and warranties were true and correct in all material
respects on and as of such other specific date);

(b) reaffirms all of the covenants contained in the Loan Agreement (as amended
hereby) and covenants to abide thereby until termination of the Loan Agreement
in accordance with Section 13.2 thereof;

(c) represents and warrants to the Lenders and the Agents that, after giving
effect to this Amendment, no Default or Event of Default has occurred and is
continuing under any of the Existing Financing Agreements; and

(d) represents and warrants to the Lenders and the Agents that it has the
authority and legal right to execute, deliver and carry out the terms of this
Amendment, that such actions were duly authorized by all necessary corporate
action and that the officers executing this Amendment on its behalf were
similarly authorized and empowered, and that the execution, deliver and
performance by it of this Amendment do not contravene any provisions of its
certificate of incorporation or bylaws, or of any material contract or material
agreement to which it is a party or by which any of its properties are bound.

3. Conditions Precedent/Effectiveness Conditions. This Amendment shall be
effective upon the date of satisfaction of the following conditions precedent
(“Effective Date”) (all documents to be in form and substance reasonably
satisfactory to Agents and each Agent’s counsel):

(a) All representations and warranties of the Borrowers contained herein shall
be true and correct in all respects;

 

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(b) The Administrative Agent shall have received this Amendment fully executed
by the Borrowers, Foreign Collateral Agent and Lenders; and

(c) No Default or Event of Default shall have occurred and be continuing.

4. Further Assurances. Each Borrower hereby agrees to take all such actions and
to execute and/or deliver to the Agents and Lenders all such documents,
assignments, financing statements and other documents, as the Agents and the
Lenders may reasonably require from time to time, to the extent necessary to
effectuate and implement the purposes of this Amendment.

5. Payment of Expenses. The Borrowers shall pay or reimburse the Agents and the
Lenders for their reasonable attorneys’ fees and expenses in connection with the
preparation, negotiation and execution of this Amendment and the documents
provided for herein or related hereto in accordance with Section 16.9 of the
Loan Agreement.

6. Reaffirmation of Loan Agreement. Except as modified by the terms hereof, all
of the terms and conditions of the Loan Agreement and all of the other Existing
Financing Agreements are hereby reaffirmed and shall continue in full force and
effect as therein written.

7. Miscellaneous.

(a) Third Party Rights. No rights are intended to be created hereunder for the
benefit of any third party donee, creditor, or incidental beneficiary.

(b) Headings. The headings of any paragraph of this Amendment are for
convenience only and shall not be used to interpret any provision hereof.

(c) Modifications. No modification hereof or any agreement referred to herein
shall be binding or enforceable unless in writing and signed on behalf of the
party against whom enforcement is sought.

(d) Governing Law. The terms and conditions of this Amendment shall be governed
by the laws of the State of New York.

(e) Other Document. This Amendment shall constitute an Other Document under the
Loan Agreement, and the breach of any representation or warranty contained
herein or the failure to perform, keep or observe any term, provision, condition
or covenant contained herein shall constitute an Event of Default under the Loan
Agreement.

(f) Counterparts. This Amendment may be executed in any number of and by
different parties hereto on separate counterparts, all of which, when so
executed, shall be deemed an original, but all such counterparts shall
constitute one and the same agreement. Any signature delivered by a party by
facsimile or pdf transmission shall be deemed to be an original signature
hereto.

[SIGNATURES TO APPEAR ON FOLLOWING PAGE]

 

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IN WITNESS WHEREOF, the parties have caused this Amendment to be executed and
delivered by their duly authorized officers as of the date first above written.

 

BORROWERS:   SKULLCANDY, INC.         By:   /s/ Kyle Wescoat        

Name:

Title:

 

Kyle Wescoat

Chief Financial Officer

        AG ACQUISITION CORPORATION        

By:

 

/s/ Kyle Wescoat

       

Name:

Title:

 

Kyle Wescoat

Chief Financial Officer

    ADMIN. AGENT AND LENDER:   PNC BANK, NATIONAL ASSOCIATION        

By:

  /s/ Jeanette Vandenbergh        

Name:

Title:

 

Jeanette Vandenbergh

Vice President

   

FOREIGN COLLATERAL

AGENT AND LENDER:

  UPS CAPITAL CORPORATION        

By:

  /s/ William H. Talbot        

Name:

Title:

 

Will H. Talbot

Director

   

[SIGNATURE PAGE TO THIRD AMENDMENT TO

REVOLVING CREDIT AND SECURITY AGREEMENT]