**OPERATING AGREEMENT****OF****CSI CANADA LLC**     THIS OPERATING AGREEMENT (this ***“Agreement”***) of CSI Canada LLC (the ***“Company”***), dated asof January 28, 2010, by and among Claire’s Canada Corp., as the initial member of the Company, andany person subsequently admitted to the Company pursuant to this Agreement as set forth on ScheduleI to this Agreement (each, a ***“Member”***and collectively, ***“Members”***).     **WHEREAS,**the Company was formed on January 28, 2010 pursuant to the Delaware Limited LiabilityCompany Act, 6 Del. C. §§ 18-101, *et seq.,*as amended from time to time (the ***“Delaware Act”***); and     **WHEREAS,**the Company and the initial Member desire to enter into this Agreement in order toset forth the operating procedures of the Company.     **NOW, THEREFORE,**the agreement governing the Company is as follows:     **1. ****Name.** The name of the Company is “CSI Canada LLC”.     **2. ****Purpose.** The Company is organized for the purpose of engaging in any and allactivities permitted under applicable law, including without limitation engaging in themanufacture, sale, and distribution of paper products and engaging in any related business,including entering into any partnership, limited liability company, joint venture or other similararrangement or owning interests in any entity engaged in any of the foregoing activities. TheCompany will have the power to engage in all actions, proceedings, activities, and transactionsthat the Management Board may deem necessary or advisable in connection with the foregoingpurposes.     **3. ****Registered Office and Registered Agent.** The registered office of the Companyin the State of Delaware is Corporation Trust Center, 1209 Orange Street, Wilmington,Delaware, U.S. The name and address of the registered agent of the Company for service of processon the Company in the State of Delaware is The Corporation Trust Company.     **4. ****Members.** The name and the address of each Member is set forth on Schedule I hereto.Schedule I may be amended from time to time to reflect the withdrawal of Members, the admission ofadditional Members, the transfers of interests or the change in a security issued to a Member (a***“Unit”***) representing the percentage that is set forth opposite such Member’s name on Schedule I (a***“Unit Percentage**”*), as such schedule shall be amended from time to time. Any person or entity shallbe deemed admitted to the Company as a Member upon its execution of a counterpart signature page tothis Agreement.     **5. ****Management Board.**          **5.1***Formation**.*The Company hereby establishes a management board for the Company(the ***“Management Board”***), which will manage the business and affairs of the Company and have all ofthe powers of a board of directors of a Delaware corporation. The

 

2Management Board is, to the extent of its rights and powers set forth in this Agreement, anagent of the Company and the actions of the Company by and through the Management Board taken inaccordance with those rights and powers will bind the Company. Except as authorized by theManagement Board or as set forth in this Agreement, no Member may participate in the management andcontrol of the Company nor may any Member act on behalf of the Company in connection with anymatter in connection with the Company. The Management Board will initially consist of David Ovisand J. Per Brodin. By signing this Agreement, the initial Member will be deemed to have voted forthe election of the foregoing persons to serve as the initial Management Board members. The namesand mailing addresses of the members of the Management Board will be set forth in the books andrecords of the Company. The number of members of the Management Board will be fixed as establishedby the Management Board from time to time and may be no fewer than one member and no more than tenmembers.          **5.2***Meetings**.*Meetings of the Management Board may be called by the Chairman of theManagement Board or by any member of the Management Board on at least two business days’ priorwritten notice to each member of the Management Board, which notice will contain the time and placeof the meeting. A majority of the members of the Management Board will constitute a quorum for thetransaction of business by the Management Board. All actions of the Management Board will requirethe affirmative vote of a majority of the members of the Management Board. Decisions made by theManagement Board at any meeting, however convened, will be as valid as though held after due noticeif, either before or after the meeting, each member of the Management Board signs a written waiverof notice or a consent to the holding of the meeting or written approval of the minutes of themeeting.          **5.3***Telephone Meetings and Unanimous Written Consent**.*Meetings of the ManagementBoard may be held by telephone conference or similar communications equipment by means of which allpersons participating in the meeting can hear each other and participate in the conversation. Anyaction required or permitted to be taken by the Management Board may be taken without a meeting andwithout prior notice if all of the voting members of the Management Board consent in writing tothat action. The consents will be filed with the minutes of the proceedings of the Management Boardand will have the same force and effect as a unanimous vote of the Management Board.          **5.4***Committees of the Board**.*The Management Board may designate an executivecommittee and other committees, each consisting of one or more members of the Management Board.Each committee (including its members) will serve at the pleasure of the Management Board and willkeep minutes of its meetings and report the same to the Management Board. A majority of all thevoting members of a committee will constitute a quorum for the transaction of business, and thevote of majority of all the voting members of a committee will be the act of the committee. Inother respects each committee will conduct its business in the same manner as the Management Boardconducts its business pursuant to this Section 5. Each committee will adopt whatever other rulesof procedure it determines for the conduct of its activities.          **5.5***Chairman**.*The Management Board may, if it so determines, elect from among itsmembers a Chairman of the Board. The Chairman of the Board, if any, will preside at all meetings ofthe Management Board and of the Members at which the Chairman is present and will have and mayexercise such powers as may, from time to time, be assigned to him or her by the Management Boardor as may be provided by applicable law.

 

3          **5.6***Limitation on Liability**.*Members of the Management Board will not, solely byreason of being a member of the Management Board, be personally liable for the expenses,liabilities, or obligations of the Company, whether arising in contract, tort, or otherwise.          **5.7***Compensation and Reimbursement**.*Members of the Management Board will not receivecompensation for their services performed on behalf of the Company or other benefits they provideto the Company, unless otherwise established by Management Board in its sole discretion. Membersof the Management Board will be entitled to reimbursement for reasonable, documentedout-of-pocket expenses incurred by them in connection with attendance at meetings of theManagement Board or any committee conducting the business and affairs of the Company.          **5.8***Authority, Duties, and Obligations**.*The members of the Management Board willdevote as much of their time to the affairs of the Company as in the judgment of the members of theManagement Board the business reasonably requires, and the members of the Management Board will notbe obligated to do or perform any act or thing in connection with the Company not expressly setforth in this Agreement. Nothing in this Agreement will be deemed to preclude the members of theManagement Board from engaging directly or indirectly in any other business or from directly orindirectly purchasing, selling, holding, or otherwise dealing with any securities for the accountof any such other business, for its own accounts or for other clients.          **5.9***Certifications**.*Any person dealing with the Company may rely (without duty offurther inquiry) upon a certificate issued by the Company that is signed by any member of theManagement Board or any of the officers as to any of the following: (a) the identity of the members of the Management Board or an officer orother agent of the Company;  (b) the existence or nonexistence of any fact or facts that constitutes acondition precedent to acts by the Management Board or the Members;  (c) the person or persons authorized to execute and deliver anyinstrument or document of the Company; or  (d) any act or failure to act by the Company or any other matterwhatsoever involving the Company.     **6. ****Officers.**          **6.1***Appointment**.*The Company may have one or more of the following officers asdetermined by the Management Board from time to time: President, Secretary, Treasurer, and suchother officers as the Management Board may appoint, from time to time. Any officers may beappointed and removed at the will of the Management Board. If any officers are appointed by theManagement Board, they shall perform such functions as are specified by the Management Boardprovided that if a President, Secretary and/or Treasurer is appointed, each shall perform suchfunctions as are herein provided unless otherwise specified by the Management Board. Except asotherwise provided in this Agreement, one person may hold the offices and perform the duties of anytwo or more offices. Each officer will hold office for the term for which he or she is elected orappointed and until his or her successor is duly elected and qualified, or until his or her earlierdeath, resignation or removal.

 

4          **6.2***Delegation of Duties**.*The Management Board may delegate the duties and powers ofany officer of the Company to any other officer or to any Management Board member for a specifiedperiod of time for any reason that the Management Board may deem sufficient.          **6.3***Removal of Officers**.*An officer of the Company elected or appointed by theManagement Board may be removed with or without cause by resolution adopted by a majority of themembers then in office at any regular or special meeting of the Management Board or by a writtenconsent signed by all of the members then in office.          **6.4***Resignations**.*Any officer may resign at any time by giving written notice ofresignation to the Management Board, to the President, or to the Secretary. Any resignation willtake effect upon receipt of the notice or at any later time specified in the notice. Unlessotherwise specified in the notice, acceptance of a resignation will not be necessary to make theresignation effective.          **6.5***President**.*The President shall be the chief executive officer of the Companyand shall, subject to the supervision, direction and control of the Management Board, have thegeneral powers and duties of supervision, direction, management and control of the day-to-daybusiness and affairs of the Company and of the other officers of the Company, including, withoutlimitation, all powers necessary to direct and control the organizational and reportingrelationships within the Company, and shall have such other powers and perform such other duties asmay be prescribed by the Management Board.          **6.6***Secretary**.*The Secretary shall keep or cause to be kept at the principal place ofbusiness of the Company, a register or a duplicate register showing the name and address of theMember, the number and date of certificates issued in respect of the Member’s interest in theCompany, if any, and the number and date of cancellation of every certificate surrendered forcancellation. The Secretary shall have such other powers and perform such other duties as may beprescribed by the Management Board or the President.          **6.7***Treasurer**.*The Treasurer shall keep and maintain or cause to be kept andmaintained adequate and correct books and records of accounts of the properties and businesstransactions of the Company. The books of account shall at all times be open to inspection by theMember. The Treasurer shall deposit all monies and other valuables in the name and to the credit ofthe Company with such depositaries as may be designated by the Management Board. The Treasurershall disburse the funds of the Company as may be ordered by the Management Board, shall render tothe President and the Management Board, whenever the Management Board requests it, an account ofall of his or her transactions as chief financial officer and of the financial condition of theCompany and shall have other powers and perform such other duties as may be prescribed by theManagement Board or the President.**     7. Indemnification of Managers, Officers, Employees, and Agents.**          **7.1**Each person who was or is made a party or is threatened to be made a party to or isotherwise involved in any action, suit, or proceeding, whether civil, criminal, administrative, orinvestigative (a *“**proceeding**”),*by reason of the fact that he or she is or was a member of theManagement Board or an officer of the Company, or is or was serving at the request of the Companyas a manager, director, officer, employee, or agent of another limited liability company or of acorporation, partnership, joint venture, trust, or other enterprise, including service with respectto an employee benefit plan (an *“**Indemnitee**”),*whether the basis

 

5of such a proceeding is alleged action in an official capacity as a member of the Management Board,an officer, an employee, or an agent or in any other capacity while serving as a member of theManagement Board, an officer, an employee, or an agent, will be indemnified and held harmless bythe Company to the fullest extent authorized by the Delaware Act (including indemnification fornegligence or gross negligence but excluding indemnification (I) for acts or omissions involvingactual fraud or willful misconduct or (ii) with respect to any transaction from which theindemnitee derived an improper personal benefit), against all expense, liability, and loss(including attorneys’ fees, judgments, fines, excise taxes or penalties, and amounts paid insettlement) reasonably incurred or suffered by that indemnitee in connection with the foregoing.          **7.2**The right to indemnification conferred in Section 7.1 will include the right to be paid bythe Company the expenses (including attorneys’ fees) incurred in defending any proceeding inadvance of its final disposition (hereinafter an *“**advancement of expenses**”).*The rights toindemnification and to the advancement of expenses conferred in Section 7.1 and this Section 7.2will be contract rights and those rights will continue as to an indemnitee who has ceased to be amember of the Management Board, an officer, an employee, or an agent and will inure to the benefitof the indemnitee’s heirs, executors, and administrators.          **7.3**The rights to indemnification and to the advancement of expenses conferred in this Section7 will not be exclusive of any other right that any person may have or hereafter acquire under anystatute, agreement, vote of the Management Board, or otherwise.          **7.4**The Company may maintain insurance, at its expense, to protect itself and any member ofthe Management Board, officer, employee, or agent of the Company or another limited liabilitycompany, consultant, corporation, partnership, joint venture, trust, or other enterprise againstany expense, liability, or loss, whether or not the Company would have the power to indemnify thatperson against such expense, liability, or loss under the Delaware Act.          **7.5**The Company may, to the extent authorized from time to time by the Management Board, grantrights to indemnification and to advancement of expenses to any employee or agent of the Company tothe fullest extent of the provisions of this Section 7 with respect to the indemnification andadvancement of expenses of the members of the Management Board and officers of the Company.

 

6     **8. ****Dissolution****.**The Company will be dissolved and its affairs shall be wound up uponthe earlier to occur of: (a) determination by the Management Board; and (b) determination by theMembers.     **9. ****Capital Contributions; Issuance of Membership Interests; Membership InterestPercentages****.**Each Member (or the person who transferred to such Member the MembershipInterests held by such Member at the date hereof) has made a capital contribution to the Company inthe amount set forth in the books and records of the Company. Capital contributions shall becredited to each Member’s respective capital account. The Company will issue the MembershipInterests. Except for the applicable number of Membership Interests and Membership InterestPercentage and as otherwise provided herein, all issued and outstanding Membership Interests shallbe identical and shall entitle the holder thereof to the same rights, privilege and restrictions.Membership Interest Percentages shall be adjusted to reflect non *pro rata*additions to, orwithdrawals from, the Company.     **10. ****Additional Contributions****.**No Member will have any obligation to make additionalcapital contributions to the Company.     **11. ****Certification of Membership Membership Interests****.**The Company hereby irrevocablyelects that all Membership Interests in the Company shall be securities governed by Article 8 ofthe Uniform Commercial Code as in effect in the State of New York and each other applicablejurisdiction. Each Membership Interest Certificate evidencing Membership Interests in the Companyshall bear the following legend: “This certificate evidences a Membership Interest in CSI CanadaLLC and shall be a security governed by Article 8 of the Uniform Commercial Code as in effect inthe State of New York and, to the extent permitted by applicable law, Article 8 of the UniformCommercial Code of each other applicable jurisdiction.” This provision shall not be amended, andany purported amendment to this provision, shall be null and void.     **12. ****Transfer Restrictions****.**Notwithstanding any other provision in this Agreement, noconsent of the Members shall be required to permit (a) a Member to pledge its Membership Interestsas security for a loan to such Member or any affiliate of such Member, or (b) a pledgee of aMember’s Membership Interests in the Company to transfer such Membership Interests in connectionwith such pledgee’s exercise of its rights and remedies with respect thereto, or to permit suchpledgee to be substituted for such Member under the Agreement in connection with such pledgee’sexercise of such rights and remedies.     **13. ****Tax Status****.**At all times that the Company has only one member (who owns 100% ofthe limited liability company interests in the Company), it is the intention of the Member that theCompany be disregarded for federal, state, local and foreign income tax purposes and that theCompany be treated as a division of the Member.     **14. ****Admission of Additional or Substitute Members****.**The Company may admit additionalor substitute members at the Members’ discretion, the names of which will be inscribed on ScheduleI to this Agreement from time to time.     **15. ****Liability of the Members.** The Members will not have any liability for theobligations or liabilities of the Company except to the extent expressly provided in the DelawareAct.

 

7     **16. ****Benefits of Agreement****.**None of the provisions of this Agreement will be for thebenefit of or enforceable by any creditor of the Company or of any Member.     **17. ****Headings****.**The titles of Sections of this Agreement are for convenience ofreference only and will not define or limit any of the provisions of this Agreement.     **18. ****Governing Law****.**This Agreement will be governed by, and construed in accordancewith, the laws of the State of Delaware, without giving effect to conflicts of law principles ofsuch State.     **19. ****Amendments****.**This Agreement may be amended only by written instrument executed bythe Members.

 

8     **IN WITNESS WHEREOF**, the undersigned has duly executed this Operating Agreement as of thedate and year first written above.      **CLAIRE’S CANADA CORP.**