exv10w1






Exhibit
10.1 

October
31, 2008


Quiksilver, Inc.

Pilot S.A.S.

Meribel S.A.S.

Quiksilver Americas, Inc.


c/o Quiksilver, Inc.

15202 Graham Street

Huntington Beach, CA 92649

Attention:     Bob McKnight,

                       Chief Executive Officer




Re:       Acquisition of Rossignol Business/Revised Offer Letter




Dear Sir:



Reference is made to the offer letter, dated August 25, 2008 (the “Initial Offer Letter”),
whereby, among other things, Chartreuse et Mont Blanc LLC, a Delaware limited liability company
(the “Purchaser”), submitted an irrevocable and binding offer (the “Initial Offer”)
for the Purchaser to enter into a stock purchase agreement with Quiksilver, Inc., a Delaware
corporation, Pilot S.A.S., a French société par actions simplifiée, Meribel S.A.S., a French
société par actions simplifiée, and Quiksilver Americas, Inc., a California Corporation
(collectively, the “Seller”), in the form attached to the Initial Offer Letter and to
consummate the acquisition of the companies comprising the “Rossignol” group and other transactions
contemplated by such stock purchase agreement.



In furtherance of our recent discussions, and in consideration of the representations, warranties,
covenants and agreements contained herein, and for other good and valuable consideration, the
receipt and sufficiency of which are hereby acknowledged, the parties hereto, each intending to be
legally bound, hereby agree that the Initial Offer Letter (including, without limitation, the
Initial Offer) is hereby amended and restated in its entirety with the terms and conditions set
forth in this letter agreement (the “Revised Offer Letter”), including, without limitation,
the Revised Offer (as such term is defined below) (without prejudice, however, to the rights of the
Seller or the Purchaser in the event of a breach or violation of the Initial Offer Letter by the
other party on or prior to the date hereof).



The Purchaser hereby submits the following irrevocable and binding offer (the “Revised
Offer”) for the Purchaser (and/or one or more of its Affiliates and/or any Person in which any
equity owner of the Purchaser directly or indirectly owns an equity interest) to enter into a stock
purchase agreement with the Seller in the form attached hereto as Annex I (together with
the Exhibits and the Disclosure Schedule attached hereto as Annex II, as supplemented or
amended in accordance with the terms hereof, the “Stock Purchase Agreement”) and consummate
the Transaction (as such term is defined in the Stock Purchase Agreement), upon the terms and
subject to the conditions set forth herein.



 









 





Capitalized terms used in this Revised Offer Letter and not otherwise defined herein shall have the
respective meanings ascribed thereto in the Stock Purchase Agreement.




	1.	 	Execution of Stock Purchase Agreement
	 
	 	 	The Purchaser hereby irrevocably undertakes to the Seller to execute and deliver the Stock
Purchase Agreement and consummate the Transaction upon the terms set forth herein and in the
Stock Purchase Agreement on the fifth (5th) Business Day following the later of (i) the
Seller’s acceptance of the Revised Offer and (ii) the satisfaction of the following
conditions, or the written waiver (A) by the Purchaser in its sole discretion of the
conditions set forth in Sections 1(a) through 1(c), 1(g) and 1(h) below, and (B) by the
Purchaser and the Seller of the other conditions set forth in this Section 1 (such later
date, the “Execution Date”):






	 	(a)	 	from the date of the Initial Offer Letter through the Execution Date, no event,
change, occurrence or circumstance shall have occurred or existed that, individually or
in the aggregate with any other event, change, occurrence or circumstance, has had or
could reasonably be expected to (i) have a material adverse effect on the assets,
properties, operations or condition (financial or otherwise) of the Acquired Companies,
taken as a whole, or the Business, taken as a whole, or (ii) prevent the Seller to, on
the Execution Date, complete the Closing or otherwise consummate the Transaction;
provided that such material adverse effect described in the immediately
preceding clause (i) shall not include any effect (an “Excluded Effect”)
resulting from: (A) any change in general economic or business conditions or
industry-wide financial conditions generally, or in local, regional, national or
international conditions generally affecting the Acquired Companies or the Business
(other than any such change which disproportionately affects the Acquired Companies,
taken as a whole, or the Business, taken as a whole, as compared to other companies
operating in the industry in which the Acquired Companies operate); (B) any engagement
in hostilities by any Member State of the European Union or the United States, whether
or not pursuant to the declaration of a national emergency or war, or the occurrence of
any military or terrorist attack upon any Member State of the European Union or the
United States (other than any such effect which disproportionately affects the Acquired
Companies, taken as a whole, or the Business, taken as a whole, as compared to other
companies operating in the industry in which the Acquired Companies operate); or (C)
the execution and performance of the Initial Offer Letter, the Revised Offer Letter or
the Stock Purchase Agreement, or the public announcement of the Transaction (including
the Transaction contemplated by the Initial Offer Letter and the Revised Offer Letter);
	 
	 	(b)	 	the representations and warranties set forth in ARTICLE 4 of the Stock Purchase
Agreement shall have been true and correct as of the date of the Initial Offer Letter
and shall be true and correct on and as of the Execution Date as though made on and as
of the Execution Date (except to the extent any such representation or warranty
expressly speaks as of an earlier date, which representations and warranties shall be
true and correct as of such date in the same




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	 	 	 	manner as specified above), other than breaches or inaccuracies which, individually
or in the aggregate, do not constitute and would not reasonably be expected to (i)
have a material adverse effect on the assets, properties, operations or condition
(financial or otherwise) of the Acquired Companies, taken as a whole, or the
Business, taken as a whole, or (ii) prevent the Seller to, on the Execution Date,
complete the Closing or otherwise consummate the Transaction, provided that
any material adverse effect described in the immediately preceding clause (i) shall
not include any Excluded Effect, and the Purchaser shall have received a certificate
to such effect signed on behalf of the Parent by an executive officer of the Parent;
	 
	 	(c)	 	the Seller shall have performed in all material respects all obligations
required to be performed by the Seller under the Initial Offer Letter and this Revised
Offer Letter at or prior to the Execution Date, and the Purchaser shall have received a
certificate to such effect signed on behalf of the Parent by an executive officer of
the Parent;
	 
	 	(d)	 	no court or Governmental Body of competent jurisdiction shall have enacted,
issued, promulgated, enforced or entered any statute, Law, ordinance, rule, regulation,
judgment, decree, injunction or other order that is in effect and specifically enjoins
or otherwise prohibits the consummation of the Transaction;
	 
	 	(e)	 	all Antitrust Clearances shall have been obtained and shall be in full force
and effect, and there shall not have been commenced and continuing, or in effect, any
investigation, order, decision, judgment, decree, ruling or injunction (preliminary or
permanent) by any Governmental Body in the United States pursuant to any Antitrust Law;
	 
	 	(f)	 	the Comité central d’entreprise of Skis Rossignol – Club Rossignol S.A.S. (the
“Works Council”) shall have delivered to the Seller its opinion (avis) (the
“WC Opinion”) with respect to the Transaction contemplated by this Revised
Offer Letter;
	 
	 	(g)	 	the consents, approvals and releases of Encumbrances set forth on Annex
III shall have been obtained, and shall be in full force and effect, in each case
to the Purchaser’s reasonable satisfaction; and
	 
	 	(h)	 	(i) Eurofactor (the “Lender”) shall have performed all obligations to
be performed by it on or before the Closing Date pursuant to the terms of that certain
Factoring Agreement (contrat d’affacturage), dated as of
October 30, 2008 (the
“Company Factoring Agreement”), by and between the Lender and the Company,
(ii) the Company shall have performed all obligations to be performed by it on or
before the Closing Date pursuant to the terms of the Company
Factoring Agreement,
(iii) the Lender shall have performed all obligations to be performed by it on or
before the Closing Date pursuant to the terms of that certain Factoring Agreement
(contrat d’affacturage), dated as of October 30,
2008 (the “Dynastar Factoring
Agreement” and, together with the Company Factoring Agreement, the




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	 	 	 	“Factoring Agreements”), by and between the Lender and Skis Dynastar SAS,
French société par actions simplifiée that is wholly owned by the Company
(“Dynastar”), and (iv) Dynastar shall have performed all obligations to be
performed by it on or before the Closing Date pursuant to the terms of the Dynastar
Factoring Agreement, copies of which Factoring Agreements are attached hereto as
Annex IV






	2.	 	Financing
	 
	 	 	The Purchaser hereby undertakes and confirms that:






	 	(a)	 	As of the Execution Date, pursuant to the Commitment Letters (as hereinafter
defined), the Note and the debt financing (the “Debt
Financing”) contemplated by the Factoring Agreements, it will have funds in an
amount sufficient to enable it to pay in full any and all cash payments (including the
payment of fees and expenses) to be made by it as of such date in connection with the
consummation of the Transaction. Simultaneously with the Closing, the Purchaser will
cause any borrower under the Note to execute and deliver to the Parent the Note;
	 
	 	(b)	 	Concurrently with the execution of the Initial Offer Letter, it delivered to
the Seller correct and complete copies of two executed commitment letters, each dated
the date thereof (as amended pursuant to those certain executed acknowledgement and
consent to amendment letters delivered to the Seller as of the date hereof, the
“Commitment Letters”), from certain investors in the Purchaser (the
“Providers”) to provide financing in an aggregate amount of at least twenty
five million euros (€25,000,000) to fund a portion of the payments required to be
made at Closing under the Stock Purchase Agreement, to the Seller or its Affiliates or
any creditors of the Acquired Companies (the “Investor Financing”). Each
Commitment Letter in the form so delivered is valid and in full force and effect, any
commitment it contains has not been withdrawn, terminated or otherwise amended or
modified in any respect, and no event has occurred, and no facts or circumstances
currently exist, that, with or without notice, lapse of time or both, would constitute
a default or a breach on the part of the Purchaser under any term or condition of any
of the Commitment Letters. Except as set forth in the Commitment Letters, there are no
conditions precedent to the obligations of the Providers to fund their respective
portions of the Investor Financing;
	 
	 	(c)	 	It shall, and shall cause its Affiliates to use, their commercially reasonable
efforts to (i) take, or cause to be taken, all appropriate actions necessary under
applicable Law, and to execute and deliver, or cause to be executed and delivered, such
instruments and documents as may be required, to consummate as promptly as reasonably
practicable (A) the Investor Financing on the terms and subject only to the conditions
contained in the Commitment Letters and (B) the Debt Financing on the terms and subject
only to the conditions of the terms thereof, and (ii) refrain from taking, directly or
indirectly, any action that is reasonably likely to result in the failure of any of the
conditions contained in the Commitment Letters or in any definitive agreement related to the Investor Financing or the Debt
Financing;




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	 	(d)	 	Without the Parent’s prior written consent (which consent shall not be
unreasonably withheld or delayed), the Purchaser shall not agree to or permit any
amendment, supplement or other modification of, or waive any of its rights under, the
Commitment Letters or the definitive agreements relating to the Investor Financing; and
	 
	 	(e)	 	The parties hereto acknowledge and agree that the Company and Dynastar have
entered into the Factoring Agreements solely at the request of the Purchaser and in
view of the completion of the Transaction; the Purchaser agrees to indemnify and hold
the Seller and its Affiliates (including, prior to the Closing, any Acquired Company)
harmless from and against any and all Losses suffered or incurred by them arising from
or in connection with the Factoring Agreements, other than any Losses arising from or
in connection with any breach of any Factoring Agreement by any of the Parent
Indemnified Persons (including any of the Acquired Companies) prior to the Closing.






	3.	 	Acceptance of the Revised Offer
	 
	 	 	Should the Seller accept the Revised Offer, and without prejudice to the rights of the Works
Council under applicable Law, the Seller and the Purchaser shall use their commercially
reasonable efforts to consummate the Transaction as
promptly as reasonably practicable.
	 
	 	 	The Revised Offer and the provisions of this Revised Offer Letter shall remain irrevocable
and binding on the Purchaser through 6:00 p.m., New York City Time, on January 31, 2009 (the
“Expiration Time”); provided, however, that if as of such time,
either of the conditions precedent set forth in Section 1(e) or 1(f) hereof shall have not
been satisfied or waived in accordance with their terms, then the Expiration Time shall be
automatically extended until 6:00 p.m., New York City Time, on April 30, 2009.
	 
	 	 	If at or prior to the Expiration Time, the Revised Offer shall have not been accepted by the
Seller or the conditions precedent set forth in Section 1 of this Revised Offer Letter shall
have not been satisfied or waived in accordance with their terms, then the Revised Offer and
the provisions of this Revised Offer Letter (and any and all rights and obligations set
forth herein) shall automatically expire and terminate and be of no further force or effect,
without prejudice, however, to (i) the rights of the Seller or the Purchaser in the event of
a breach or violation hereof by the other party, and (ii) the provisions of the
Confidentiality Agreement, which shall survive the termination of this Revised Offer Letter
in accordance with their terms.
	 
	4.	 	Access
	 
	 	 	From and after the date hereof until the earlier of (a) the Expiration Time (as extended
pursuant to Section 3 hereof, as the case may be) and (b) the Execution Date (such period,
the “Revised Offer Period”), subject to the requirements of applicable Law




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	 	 	(including any Antitrust Law (as hereinafter defined)), the Seller shall procure that the
Acquired Companies afford to the Purchaser and its officers, employees, accountants, legal
counsel, financial advisors, consultants, representatives and financing sources (and their
respective legal counsel) reasonable access during normal business hours to the personnel,
properties, Contracts and books and records of the Acquired Companies, and shall furnish
promptly to the Purchaser all other information concerning the Business, properties,
operations and personnel of the Acquired Companies as the Purchaser may from time to time
reasonably request, all for the sole purpose of preparing for the Closing, should the
Revised Offer be accepted by the Seller. Information obtained by the Purchaser under this
Section 4 shall be subject to the Confidentiality Agreement.
	 
	5.	 	Certain Filings and Notifications; Other Actions
	 
	 	 	During the Revised Offer Period and without prejudice to the right of the Seller hereunder
to not accept the Revised Offer:






	 	(a)	 	Each of the Seller and the Purchaser shall continue to cooperate and otherwise
comply with Sections 5(a), 5(b) and 5(d) of the Initial Offer Letter, which sections
are hereby incorporated herein mutatis mutandis.
	 
	 	(b)	 	Subject to applicable Law, confidentiality obligations and/or the preservation
of any applicable attorney-client privilege, each of the Seller and the Purchaser
shall, upon any reasonable request by the other, use commercially reasonable efforts to
furnish the other with all information concerning itself, its Subsidiaries, directors
(or Persons in similar positions), officers, stockholders, equity owners or Affiliates
and such other matters as may be reasonably necessary or advisable in connection with
the WC Opinion or any Required Filing (as such term is defined in the Initial Offer
Letter) that was or will be filed, made or effected by or on behalf of the Seller or
the Purchaser or any of their respective Subsidiaries or Affiliates to any Governmental
Body in connection with the Stock Purchase Agreement or the Transaction (including the
Transaction contemplated by the Initial Offer Letter and the Revised Offer Letter).
	 
	 	(c)	 	Without limiting, and in furtherance of the foregoing, and without prejudice to
the rights of the Works Council under applicable Law, the Seller shall use reasonable
best efforts to obtain the WC Opinion from the Works Council, as required by applicable
Law, in connection with the Transaction, as promptly as practicable after the date
hereof; provided that the Purchaser shall fully cooperate with the Seller in
order to obtain the WC Opinion, including in the preparation of any notifications to,
and any information to be presented in meetings (to which one or more appropriate
representatives of the Purchaser and/or any Affiliate of the Purchaser shall
participate at the Parent’s reasonable request, provided that the Works Council shall
not have prohibited such participation) with, or otherwise reasonably requested by or
delivered to, the Works Council.
	 
	 	(d)	 	Subject to applicable Law, each of the Seller and the Purchaser shall be
entitled to timely participate in and reasonably contribute to all material actions,
meetings,




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	 	 	 	documents, communications or other information exchanges (in whatever form), whether
with Governmental Bodies or not, relating to the WC Opinion or Required Filings (as
such term is defined in the Initial Offer Letter) filed, made or effected by or on
behalf of such Party to obtain Antitrust Clearances, and the Seller and the
Purchaser shall generally do all things reasonably necessary or advisable
(including, without limitation, (x) by providing reasonable advance notice and
regular and reasonably detailed information and (y) by taking account of any
reasonable suggestions or comments made by the other) in furtherance thereof.
Subject to any applicable confidentiality obligations and the preservation of any
applicable attorney-client privilege, each of the Seller and the Purchaser shall use
its commercially reasonable efforts to keep the other apprised of the conduct and
status of matters (i) concerning the Purchaser, relating to Antitrust Clearances and
(ii) concerning the Seller, relating to the WC Opinions, including, in each case,
promptly furnishing the other with copies of notices or other communications
received by the Seller or the Purchaser, as the case may be, from any Governmental
Body or the Works Council, respectively, with respect to the Stock Purchase
Agreement or the Transaction.
	 
	 	(e)	 	Without limiting, and in furtherance of, the foregoing, each of the Seller
(jointly and severally), on the one hand, and the Purchaser, on the other hand, shall
pay one-half of any and all filing and similar fees payable in connection with any
notifications, filings, approval applications or the like required to be filed under
Antitrust Laws with respect to the Transaction (including fees payable with respect to
the Transaction contemplated by the Initial Offer Letter).






	6.	 	Certain Pre-Execution Covenants
	 
	 	 	During the Revised Offer Period, except pursuant to and in accordance with this Revised
Offer Letter, the Restructuring, the Factoring Agreements or the Stock Purchase Agreement,
and without prejudice to the right of the Seller hereunder to not accept the Revised Offer:






	 	(a)	 	The Seller shall operate, and shall cause operation of, the Business and the
Acquired Companies in the ordinary course and consistent with past practice in all
material respects and, without limiting the foregoing, shall obtain the Purchaser’s
written consent (which consent shall not be unreasonably withheld or delayed) prior to
(i) entering into a material transaction referred to in Section 4.3.11 of the Stock
Purchase Agreement, or (ii)(A) changing any method of accounting or accounting
practice, (B) making (other than in the ordinary course of business) or changing any
material election with respect to Taxes, except, with respect to subclauses (A) and
(B), as required by Law or accounting pronouncements, or (C) entering into any closing
agreement, settling any material Tax Audit or surrendering any right to claim a
material refund of Taxes, in each case with respect to the Business or any Acquired
Company that would give rise to a Tax liability associated with any taxable period
following the Closing Date.




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	 	(b)	 	The Seller shall cause any and all proceeds (whether in the form of cash or
property) of any sale or transfer of any Non-Operational Property to be retained by the
Acquired Companies.
	 
	 	(c)	 	The Parent shall (i) use its commercially reasonable efforts to obtain any and
all consents, approvals and releases of Encumbrances that are required to be obtained
or effected in connection with the entry into or consummation of the Transaction by the
Seller or any of its Affiliates, including, without limitation, each of the consents,
approvals and releases of Encumbrances listed on Annex III hereto;
provided that the Purchaser shall reasonably cooperate with the Parent in good
faith, including participating in meetings, providing information or otherwise
reasonably facilitating the Parent’s efforts, in furtherance thereof, and (ii) notify,
as soon as reasonably practicable, each of BNP Paribas (Canada), HSBC Bank Canada and
Société Générale (Canada Branch), of the contemplated sale of Skis Rossignol Canada Ltd
and Skis Dynastar Canada Ltd pursuant to the Transaction. For the avoidance of doubt,
the failure to obtain any consents, approvals and releases of Encumbrances other than
those listed on Annex III hereto shall not be considered to constitute a
failure of the conditions set forth in Sections 1(c) and 1(g).
	 
	 	(d)	 	The Purchaser shall use its commercially reasonable efforts, at the Parent’s
request, to release the Seller and its Affiliates (other than the Acquired Companies)
from any and all Guarantee Liabilities; provided, however, that nothing
contained in this Section 6(d) shall be deemed to require the Purchaser to serve as a
guarantor or otherwise incur any liabilities with respect to any Guarantee Liabilities
on terms that are less favorable to the Purchaser than the terms on which the Seller or
any of its Affiliates (as applicable) serves as a guarantor with respect to such
Guarantee Liabilities; provided, further, that, in the event that the
Seller or any of its Affiliates shall permit or agree to any amendment or modification
to, or waiver under, the terms of their respective obligations with respect to any
Guarantee Liability without the prior written consent of the Purchaser (which consent
shall not be unreasonably withheld or delayed), the Purchaser shall automatically, and
irrevocably and unconditionally, be forever released and discharged from any and all of
its obligations under this Section 6(d) and Section 6.1(b) of the Stock Purchase
Agreement with respect to such Guaranty Liability.




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	7.	 	Transition Services; Roxy License Agreement
	 
	 	 	During the Revised Offer Period, the Seller and the Purchaser shall use their respective
best efforts to negotiate in good faith and mutually agree upon and, simultaneously with the
Closing, enter into (and cause their relevant Affiliates to enter into) the Roxy License
Agreement and the Transition Services Agreement.
	 
	8.	 	Amendment of Stock Purchase Agreement; Disclosure Schedule Updates
	 
	 	 	The Stock Purchase Agreement may not be amended, modified, supplemented or altered in any
respect without the prior written consent of the Parent and the Purchaser; provided that,
during the Revised Offer Period, the Seller shall have the right to amend or supplement the
Disclosure Schedule contained in Annex II hereto solely in order to include or
reflect (i) immaterial changes affecting the Business which have occurred since the date of
the Initial Offer Letter in the ordinary course of business and consistent with past
practice (if any), (ii) the sale or transfer of any Non-Operational Property, and (iii) the
change to the Transaction structure contemplated by this Revised Offer Letter, compared to
the Transaction structure contemplated by the Initial Offer Letter. The Disclosure Schedule
and the representations and warranties made by the Seller under the Stock Purchase Agreement
shall be deemed for all purposes to include and reflect such supplements and amendments as
of the date hereof and at all times thereafter, including on the Execution Date; provided
that any amendment or supplement to the Disclosure Schedule after the date of the Initial
Offer Letter (other than amendments or supplements arising from the change to the
Transaction structure contemplated by this Revised Offer Letter, compared to the Transaction
structure contemplated by the Initial Offer Letter) shall not be taken into account in the
determination of whether the condition set forth in Section 1(b) hereof has been satisfied.
	 
	9.	 	Confidentiality; Announcements
	 
	 	 	The provisions of the Confidentiality Agreement shall remain binding and in full force and
effect until the Execution Date. The information contained herein (including the Annexes
hereto) shall be subject to the Confidentiality Agreement until the Execution Date and, for
that sole purpose and only to that extent, the terms of the Confidentiality Agreement are
incorporated herein by reference. Except to the extent required by applicable Law, and
subject to the terms of the Confidentiality Agreement, the Purchaser and the Parent will
mutually agree on the nature, content and timing of any and all publicity, public
announcements, press releases, or other public disclosures regarding this Offer Letter, the
Transaction or the transactions contemplated herein (including, but not limited to, on any
website). Nothing contained herein shall restrict the ability of any Party to disclose any
information relating to this Revised Offer Letter and the transactions contemplated hereby
(including the Transaction) as required by applicable Law, stock exchange or securities
market rules or the rules of any self-regulatory body having competent jurisdiction.




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	10.	 	Non-Solicitation; Transaction Fee






	 	(a)	 	In consideration for the Purchaser submitting the Revised Offer and undertaking
the actions set forth in this Revised Offer Letter, from and after the date hereof
until the Expiration Time (as extended pursuant to Section 3 hereof, as the case may
be) (such period, the “No Shop Period”), the Seller shall not, and it shall use
its reasonable best efforts to cause each of its Affiliates (including the Acquired
Companies), directors (and Persons in similar positions), officers, employees, agents
and representatives not to, (i) solicit, initiate or knowingly encourage any inquiry,
expression of interest, proposal or offer from any Person (other than the Purchaser, an
Affiliate of the Purchaser (or any other Person having an economic interest in the
Purchaser, directly or indirectly), a Provider, any Person providing financing to the
Purchaser for the Transaction or their respective Affiliates, each a “Purchaser
Party”), relating to the Transaction or any competing transaction or other
transaction involving the acquisition, directly or indirectly, of a significant
interest in the Acquired Companies or all or a substantial portion of the assets of the
Acquired Companies (any such competing or other transaction, a “Competing
Transaction”) or (ii) engage in any discussions or negotiations, enter into any
agreement, or provide any non-public information concerning the Acquired Companies or
any of their assets to, any Person (other than a Purchaser Party) relating to an actual
or potential Competing Transaction. During the No Shop Period, the Seller will cease,
and will cause to be ceased, any and all then existing discussions and negotiations
with, including the provision of any non-public information concerning the Acquired
Companies or any of their assets to, any Person (other than a Purchaser Party) with
respect to any actual or potential Competing Transaction.
	 
	 	(b)	 	In the event that, during the No Shop Period, the Seller enters into a
definitive agreement with any Person (other than a Purchaser Party) in relation to a
Competing Transaction, the Purchaser shall have the right to terminate the Revised
Offer and the provisions of this Revised Offer Letter and, within five Business Days
after such termination, the Seller (jointly and severally) shall pay to the Purchaser
ten million euros (€10,000,000) as liquidated damages for such breach or
noncompliance, provided that the Purchaser shall not be in material breach of
its obligations hereunder at the time of any such termination; provided,
further, that any amount of damages paid by the Seller to the Purchaser under
this Section 10 shall be reduced by any amount (the “Letter of Intent Amount”)
paid by the Parent or the Seller pursuant to Section 9 of that certain letter of intent
between the Parent and Macquarie Capital (USA) Inc., dated July 1, 2008 or, should any
payment hereunder be made prior to, and be greater than, the Letter of Intent Amount,
the Purchaser shall pay the Letter of Intent Amount to the Seller.
	 
	 	(c)	 	Without limiting the foregoing, in the event that (i) the Closing shall not
have occurred during the No-Shop Period as a result of a failure by the Seller to
satisfy the condition set forth in Section 1(c) hereof, whereas at such time all of the
other conditions set forth in Section 1 hereof (other than Section 1(b) hereof) have
been satisfied or waived in writing by the Purchaser, (ii) the Revised Offer and the





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	 	 	 	provisions of this Revised Offer Letter shall not have been terminated by the
Purchaser pursuant to Section 10(b) hereof, (iii) during the No-Shop Period, the
Seller shall have committed a breach of its obligations pursuant to Section 10(a)
hereof and (iv) within 12 months after the Expiration Time, the Seller or any of its
Affiliates shall have entered into a definitive agreement with respect to, or
otherwise consummated, a Competing Transaction, as a condition precedent to such
entry into a definitive agreement or consummation of a Competing Transaction
(whichever occurs first), the Seller (jointly and severally) shall pay to the
Purchaser ten million euros (€10,000,000).
	 
	 	(d)	 	Notwithstanding anything to the contrary contained in this Revised Offer
Letter, the provisions of this Section 10 shall survive any expiration or termination
of the Revised Offer or the provisions of this Revised Offer Letter for any reason
whatsoever.






	11.	 	Specific Performance
	 
	 	 	Each of the Seller and the Purchaser agrees that it could be irreparably injured by a breach
of this Revised Offer Letter by the other party, that money damages will not be an adequate
and/or fully sufficient remedy for any breach of this Revised Offer Letter and that, in
addition to all other remedies available at law, each of the Seller and the Purchaser shall
be entitled to seek injunctive relief and specific performance (including in respect of the
Seller, causing the Purchaser to enforce its rights under the Commitment Letters) as a
remedy for any such breach.





This Revised Offer Letter is made pursuant to, and shall be construed and enforced in accordance
with, the laws of the State of New York applicable to contracts made and performed in such state.
Sections 8.5, 8.7 (subject to Section 8 hereof), 8.8, 8.10, 8.11 (subject to Section 5(g) hereof)
and 8.13 of the Stock Purchase Agreement are incorporated herein by reference and shall be deemed
to be Sections of this Revised Offer Letter (as if they were in effect) for all purposes. For the
avoidance of doubt, any assignment by the Purchaser of its rights and obligations hereunder (in
whole or in part) to one or more of its Affiliates and/or any Person in which any equity owner of
the Purchaser directly or indirectly owns an equity interest shall be subject to the terms and
conditions set forth in Section 8.5 of the Stock Purchase Agreement with respect to an assignment
of Purchaser’s rights and obligations thereunder.



Please acknowledge your receipt of, and your agreement with, the terms and conditions hereof by
countersigning this Revised Offer Letter in the space provided below and returning an executed
original of this Revised Offer Letter to us. Notwithstanding any of the foregoing, we understand
and agree that nothing herein imposes any obligation on the Seller to agree to or execute the Stock
Purchase Agreement or any other document in connection with the Transaction or a similar
transaction and that, unless and until the Stock Purchase Agreement has been executed by the Seller
and the Purchaser, neither the Seller nor any of its Affiliates (including the Acquired Companies)
or their respective directors, officers, employees or representatives, will be under any obligation
or incur any liability of any kind whatsoever with respect to the Transaction or any such similar
transaction by virtue of this Revised Offer Letter



- 11 -









 





(including the Annexes hereto), except for the obligations of the Seller set forth in this Revised
Offer Letter.



[remainder of page intentionally left blank]





- 12 -









 








We look forward to the possibility of working together with you towards the successful completion
of the Transaction in accordance with this Revised Offer Letter and the Stock Purchase Agreement.



	 	 	 	 	 
	Very truly yours,	 	 
	 
	 	 	 	 
	CHARTREUSE ET MONT BLANC LLC

	 	 
	By:
	 	 	 	 
	 

	 	 

Name:
	 	 
	 

	 	Title:	 	 






	 	 	 	 	 	 	 	 	 	 	 
	ACKNOWLEDGED AND AGREED:	 	 	 	 	 	 	 	 
	 
	 	 	 	 	 	 	 	 	 	 
	QUIKSILVER, INC.	 	 	 	PILOT S.A.S.	 	 
	 
	 	 	 	 	 	 	 	 	 	 
	By:

	 	 	 	 	 	By:	 	 	 	 
	 

	 	 

Name: Charles S. Exon
	 	 	 	 	 	 

Name: Sébastien Loux
	 	 
	 

	 	Title: Chief Administrative Officer and
General Counsel
	 	 	 	 	 	Title: Président	 	 
	 
	 	 	 	 	 	 	 	 	 	 
	QUIKSILVER AMERICAS, INC.	 	 	 	MERIBEL S.A.S.	 	 
	 
	 	 	 	 	 	 	 	 	 	 
	By:

	 	 	 	 	 	By:	 	 	 	 
	 

	 	 

Name: Charles S. Exon
	 	 	 	 	 	 

Name: Pierre Lalande
	 	 
	 

	 	Title: Secretary
	 	 	 	 	 	Title: Président	 	 






 









 






ANNEX I




Stock Purchase Agreement





 









 








ANNEX II




Exhibits and Disclosure Schedule





 









 








ANNEX III




Certain Consents, Approvals and Releases of Encumbrances





 









 








ANNEX IV




Factoring Agreements





 













 





STOCK PURCHASE AGREEMENT




BY AND AMONG




QUIKSILVER, INC.,




PILOT S.A.S.,




MERIBEL S.A.S.,




QUIKSILVER AMERICAS, INC.




and




[                    ]




Dated as of [•]




 









 





TABLE OF CONTENTS




	 	 	 	 	 
	 	 	Page
	 
	ARTICLE 1. DEFINITIONS
	 	 	2	 
	 
	1.1 Defined Terms
	 	 	2	 
	1.2 General Interpretive Principles
	 	 	12	 
	 
	 	 	 	 
	ARTICLE 2. SALE AND PURCHASE OF THE SHARES
	 	 	13	 
	 
	2.1 Sale and Purchase of the Securities
	 	 	13	 
	2.2 Purchase Price
	 	 	14	 
	2.3 Remaining Offset Amount
	 	 	14	 
	2.4 Working Capital Adjustment
	 	 	17	 
	2.5 Access to Purchaser and Acquired Companies Information and Persons
	 	 	20	 
	2.6 Withholding Rights
	 	 	20	 
	 
	 	 	 	 
	ARTICLE 3. CLOSING
	 	 	21	 
	 
	3.1 Date and Place of Closing
	 	 	21	 
	3.2 Closing Transactions and Deliveries
	 	 	21	 
	 
	 	 	 	 
	ARTICLE 4. REPRESENTATIONS AND WARRANTIES OF THE PARENT, PILOT, MERIBEL AND QUIKSILVER AMERICAS
	 	 	23	 
	 
	4.1 Representations and Warranties Regarding the Parent, Pilot, Meribel,
Quiksilver Americas and the Acquired Companies
	 	 	23	 
	4.2 Representations and Warranties Regarding the Company and Rossignol US
	 	 	25	 
	4.3 Representations and Warranties Regarding the Acquired Companies
	 	 	28	 
	 
	 	 	 	 
	ARTICLE 5. REPRESENTATIONS AND WARRANTIES OF THE PURCHASER
	 	 	42	 
	 
	5.1 Organization and Good Standing
	 	 	42	 
	5.2 Power and Authority
	 	 	43	 
	5.3 Valid and Binding
	 	 	43	 
	5.4 No violation
	 	 	43	 
	5.5 Absence of Litigation
	 	 	43	 
	5.6 Consents
	 	 	44	 
	5.7 Ability to Evaluate and Bear Risks
	 	 	44	 
	5.8 Investigation by the Purchaser; Parent’s Liability
	 	 	44	 
	5.9 No Brokers
	 	 	45	 
	5.10 No Other Representations and Warranties
	 	 	45	 












 






	 	 	 	 	 
	 	 	Page
	 
	ARTICLE 6. COVENANTS
	 	 	45	 
	 
	6.1 Other Intercompany Arrangements
	 	 	45	 
	6.2 Insurance Policies
	 	 	46	 
	6.3 Tax Matters
	 	 	46	 
	6.4 Non-Competition; Non-Solicitation
	 	 	49	 
	6.5 Confidentiality
	 	 	50	 
	6.6 Company Options; Liquidity Agreements
	 	 	51	 
	6.7 Right to Continue Rossignol Apparel Business
	 	 	52	 
	 
	 	 	 	 
	ARTICLE 7. INDEMNIFICATION
	 	 	52	 
	 
	7.1 Indemnification by the Parent Indemnifying Persons
	 	 	52	 
	7.2 Indemnification by the Purchaser Indemnifying Persons
	 	 	54	 
	7.3 Survival; Cap
	 	 	54	 
	7.4 Computation of Losses; Additional Conditions and Limitations
	 	 	55	 
	7.5 Notice of Claims; Third-Party Claims
	 	 	60	 
	7.6 Resolution of Tax Calculation Disputes
	 	 	62	 
	7.7 Sole Remedy
	 	 	63	 
	7.8 Tax Effect of Indemnification Payments
	 	 	63	 
	 
	 	 	 	 
	ARTICLE 8. GENERAL PROVISIONS
	 	 	63	 
	 
	8.1 Cooperation
	 	 	63	 
	8.2 Confidentiality
	 	 	63	 
	8.3 Announcements
	 	 	63	 
	8.4 Joint and Several Liability
	 	 	64	 
	8.5 Absence of Third-Party Rights; Assignment
	 	 	64	 
	8.6 Entire Agreement
	 	 	64	 
	8.7 Waivers and Amendments
	 	 	64	 
	8.8 Severability
	 	 	65	 
	8.9 Interest
	 	 	65	 
	8.10 Notices and Communications
	 	 	65	 
	8.11 Costs
	 	 	66	 
	8.12 Specific Performance
	 	 	66	 
	8.13 Governing Law; Jurisdiction; Waiver of Jury Trial
	 	 	67	 
	8.14 Counterparts
	 	 	67	 






- ii - 









 





STOCK PURCHASE AGREEMENT




          This Stock Purchase Agreement (this “Agreement”) is made as of [•] by and among Quiksilver,
Inc., a Delaware corporation (the “Parent”), Pilot S.A.S., a French société par actions simplifiée
(“Pilot”), Meribel S.A.S., a French société par actions simplifiée (“Meribel”), and
Quiksilver Americas, Inc., a California corporation (“Quiksilver Americas”), acting jointly and
severally for the purposes hereof, on the one hand; and [                    ], a [                    ]1 (the
“Purchaser”), on the other hand. The Parent, Pilot, Meribel and Quiksilver Americas on the
one hand, and the Purchaser on the other hand, are hereinafter referred to collectively as the
“Parties” and individually as a “Party”. Capitalized terms used herein shall have
the respective meanings set forth in Section 1.1.




RECITALS




          The Parent indirectly owns and exercises full control over Pilot and Meribel, which together
own ordinary shares of Skis Rossignol-Club Rossignol S.A.S., a French société par actions
simplifiée (the “Company”), representing at least 99.46% of the Company’s share capital,
the remaining interest being held in treasury by the Company.




          The Parent owns all of the issued and outstanding shares of Quiksilver Americas, which owns
all of the issued and outstanding shares of Rossignol Ski Company, Inc., a Delaware corporation
(“Rossignol US”, and collectively with its direct and indirect Subsidiaries listed in
Schedule A hereto, the “North American Subsidiaries”).




          Pilot owns the Acquired Note.




          The Company, its direct and indirect Subsidiaries listed in Schedule A hereto
(collectively the “Company Subsidiaries”) and the North American Subsidiaries are
hereinafter referred to as the “Acquired Companies”.




          Prior to entering into this Agreement, the Purchaser and its representatives and advisors have
had access to a data room and to management presentations and have therefore been able to request,
obtain and review certain financial, accounting, tax, environmental, labor, legal, operational and
other documents and information regarding the Acquired Companies (such documents and information,
to the extent provided or made available to the Purchaser prior to the date hereof, and including
the tax and financial vendor due diligence prepared by Ernst & Young and dated June 6, 2008, the
“Due Diligence Information”).




          Subject to the terms and conditions of this Agreement, the Parent, Pilot, Meribel and
Quiksilver Americas wish to sell, respectively, and the Purchaser wishes to purchase, all of the
Company Shares, all of the North American Shares and the Acquired Note, all upon the terms and
subject to the conditions set forth herein. Such sale and purchase, together with the other
corporate, financing and other business transactions contemplated by this Agreement, are
hereinafter collectively referred to as the “Transaction”.






 




			
	1	 	Form of entity to be determined prior to Closing.




 









 










AGREEMENT




          NOW, THEREFORE, in consideration of the mutual representations, warranties and agreements
contained herein, and for other good and valuable consideration, the receipt and sufficiency of
which are hereby acknowledged, the Parties hereby agree as follows:




ARTICLE 1.

DEFINITIONS




          1.1 Defined Terms. For the purposes of this Agreement, the following terms and
expressions will have the meanings ascribed to them below:




          “Acquired Companies” has the meaning ascribed to in the recitals of this Agreement.




          “Acquired Company Cash” means cash and cash equivalents as determined in accordance
with GAAP, as in effect on the Closing Date, including cash in hand, positive bank balances, other
cash accounts, cash deposit accounts and readily marketable debt instruments of the Acquired
Companies, adjusted for outstanding checks and deposits in transit; provided, however, that
Acquired Company Cash shall not include any proceeds (whether in the form of cash or property) of
any sale or transfer of any Non-Operational Property, which proceeds shall be retained by the
Acquired Companies.




          “Acquired Note” means that certain promissory note, dated [                    ], in the aggregate
principal amount of forty million eight hundred sixteen thousand three hundred twenty seven euros
(€40,816,327), issued by the Company to Pilot.




          “Additional Company Shares” means (a) the shares of the Company created pursuant to
and in accordance with the Restructuring, and (b) any shares of the Company that are held in
treasury by the Company as of the Initial Offer Letter Date and are acquired by Meribel between
such date and the Closing Date pursuant to a Liquidity Agreement.




          “Affiliates” means, with respect to any Person, any other Person that, directly or
indirectly, through one or more intermediaries, controls, is controlled by or is under common
control with, such Person. For the purposes of this definition, “control”, when used with respect
to any specified Person, means the power to direct the management and policies of such Person,
directly or indirectly, whether through the ownership of voting securities, by contract or
otherwise, and the terms “controlling” and “controlled” have meanings correlative to the foregoing.




          “Agreement” has the meaning ascribed to it in the introductory paragraph of this
Agreement.




          “Antitrust Clearance(s)” has the following meaning:





          (a) the expiration or termination of any waiting period under the HSR Act that
is applicable to the Transaction; and



- 2 -









 






          (b) the expiration or termination of any waiting period under the Competition
Act (Canada) that is applicable to the Transaction; and




          (c) the issuance of a clearance decision (or if applicable under the relevant
national Law, deemed clearance) by the national competition authorities pursuant to
(i) the Austrian Cartel Act, as amended, (ii) the French Commercial Code, as
amended, (ii) the German Act Against Restraints in Competition, as amended and (iv)
the Spanish Defense of Competition Law as amended, if applicable; and




          (d) in the event that the whole or any part of the Transaction is referred to
the European Commission by the competent authorities of any Member State of the
European Union pursuant to Article 22 of the EC Merger Regulation the issuance of a
decision by the European Commission declaring the Transaction compatible with the
common market pursuant to Articles 6(1)(b), 6(2), 8(1) or 8(2) of the EC Merger
Regulation or the deemed declaration of the compatibility of the Transaction with
the common market pursuant to Article 10(6) of the EC Merger Regulation.



          “Auditor” has the meaning ascribed to it in Section 2.4(e).




          “Balance Sheet” means the proforma unaudited consolidated balance sheet of the
Acquired Companies and Tyax, a French société en nom collectif, at October 31, 2007, prepared on a
basis consistent with the Projections.




          “Bringdown Balance Sheet” means the pro forma unaudited consolidated balance sheet of
the Acquired Companies, as of [      ], 20082, prepared on a basis consistent with the
Projections.




          “Business” means the businesses carried out by the Acquired Companies.




          “Business Day” means any calendar day, except Saturdays, Sundays and official
holidays, on which banks generally are open for the transaction of business in Paris, France,
Huntington Beach, California and New York, New York.




          “Cap” has the meaning ascribed to it in Section 7.3(b).




          “Cash Consideration” has the meaning ascribed to it in Section 2.2.




          “Cash Deficiency” has the meaning ascribed to it in Section 2.3(g)(i).




          “Cash in the System” has the meaning ascribed to it in Section 2.3(c).




          “Closing” has the meaning ascribed to it in Section 3.1.






 




			
	2	 	Most recent fiscal quarter prior to Closing with respect
to which Parent consolidated financial information has been publicly disclosed
in the Parent’s SEC filings.




- 3 -









 










          “Closing Date” means the date hereof.




          “Code” means the United States Internal Revenue Code of 1986, as amended.




          “Company” has the meaning ascribed to it in the recitals of this Agreement.




          “Company Options” means the outstanding options (options d’achat d’actions), held by
certain current or former managers and employees of the Acquired Companies, to purchase up to
81,800 existing shares of the Company.




          “Company Shares” has the meaning ascribed to it in Section 4.2.3(a).




          “Company Subsidiaries” has the meaning ascribed to it in the recitals of this
Agreement.




          “Competing Business” has the meaning ascribed to it in Section 6.4(a).




          “Confidentiality Agreement” means that certain Confidentiality Agreement, entered into
by Parent and Macquarie Capital (USA) Inc. on May 5, 2008.




          “Contract” means any contract, undertaking, agreement, arrangement, commitment,
indemnity, indenture, instrument, lease or understanding, including any and all amendments,
supplements, and modifications thereto, to or under which any Acquired Company or any of their
respective assets is bound.




          “Deductible Amount” means, at any time after the Closing Date, an amount of one
million five hundred thousand euros (€1,500,000), adjusted from time to time in accordance with
Section 2.3, 2.4 and 7.1 hereof.




          “Disclosure Schedule” means the disclosure schedule of even date herewith prepared and
signed by the Parent and delivered to the Purchaser simultaneously with the execution and delivery
hereof.




          “Disputed Items” has the meaning ascribed to it in Section 2.4(e).




          “Dispute Notice” has the meaning ascribed to it in Section 2.4(d).




          “Due Diligence Information” has the meaning ascribed to it in the recitals of this
Agreement.




          “Encumbrances” means any and all liens, charges, security interests, options, claims,
mortgages, pledges, proxies, voting trusts or agreements, obligations, understandings or
arrangements or other restrictions on title or transfer or other rights in property (such as voting
rights or rights to receive dividends or distributions in respect of equity securities) of any
nature whatsoever, except where they are created solely under this Agreement or by applicable Law.




          “Environmental Claim” means any Proceeding filed since July 26, 2005, by any Person
alleging any liability for any (a) release or disposal, or the presence in the environment,




- 4 -









 







including, without limitation, the indoor environment, of any Hazardous Materials by or
attributable to the Acquired Companies at any location, or (b) any alleged violation of any
Environmental Laws by or attributable to the Acquired Companies.




          “Environmental Law” means all federal, state, local or foreign laws, statutes,
regulations, orders, ordinances, judgments or decrees, or codified common law governing or
regulating (a) releases or threatened releases of any Hazardous Materials in soil, surface water,
groundwater or air, (b) the use, treatment, storage, disposal, transport, or handling of Hazardous
Materials, or (c) the protection of the environment, human health or natural resources.




          “Estimated Working Capital Adjustment” has the meaning ascribed to it in Section
2.4(b).




          “Factoring Agreements” means, collectively (a) that certain Factoring Agreement
(contrat d’affacturage), dated as of October 30, 2008, by and between Eurofactor and the Company,
and (b) that certain Factoring Agreement (contrat d’affacturage), dated as of October 30, 2008, by
and between Eurofactor and Skis Dynastar SAS, French société par actions simplifiée that is wholly
owned by the Company.




          “Financial Statements” has the meaning ascribed to it in Section 4.3.8.




          “French Companies” has the meaning ascribed to it in Section 6.3(a).




          “Fundamental Representations” has the meaning ascribed to it in Section 7.3(a).




          “GAAP” means generally accepted accounting principles in the United States, as in
effect from time to time.




          “Governmental Body” means any court or government (federal, state, local, national,
foreign or provincial) or any political subdivision thereof, including without limitation, any
department, commission, board, bureau, agency or other regulatory, administrative or governmental
authority or instrumentality, and specifically excludes any trade union, works council, other
organized body, or group of individuals, whose purpose or mission, under a statutory provision or
otherwise, is to represent one or more employees of a Party or an Affiliate of a Party.




          “Governing Documents” means, with respect to any Person that is not a natural Person,
the certificate or articles of incorporation, memorandum and articles of association, by-laws, deed
of trust, formation or governing agreement and other charter or organizational documents or
instruments governing the business or affairs of such Person.




          “Guarantee Liabilities” has the meaning ascribed to it in Section 6.1(b).




          “Hazardous Materials” means any substance, gas, chemical, material, waste, mold, fungi
or toxic growth the presence, nature, quantity or concentration of which (a) is injurious to human
health, the environment or natural resources, or (b) is regulated by any Governmental Body.




- 5 -









 








          “Headquarters Lease Agreement” means the real estate lease agreement (contrat de
crédit-bail immobilier) dated March 14, 2007, by and between Natiocreditbail as lessor and the
Company as lessee, relating to the headquarters of the Company.




          “HSR Act” means the Hart-Scott-Rodino Antitrust Improvements Act of 1976, as amended.




          “Indebtedness” means, without duplication: (a) any liability for borrowed money, or
evidenced by an instrument for the payment of money, or incurred in connection with the acquisition
of any property (including any deferred purchase price), services or assets (including securities),
or relating to a capitalized lease obligation; (b) any obligations to reimburse the issuer of any
letter of credit, surety bond or performance bond or any guarantee of any liability described in
the immediately preceding clause (a), in each case to the extent drawn or not otherwise contingent;
and (c) any payments, fines, fees, penalties or other amounts applicable to or otherwise incurred
in connection with or as a result of any prepayment or early satisfaction of any obligation
described in clauses (a) and (b) above to the extent not contingent; excluding from the foregoing,
in each case, (i) trade liabilities and operating lease obligations, and accrued operating
liabilities, in each case incurred in the ordinary course of business consistent with past
practice, including, for the avoidance of doubt, payment obligations under (A) the Headquarters
Lease Agreement and (B) the hedging agreements listed on Schedule 4.3.9, and (ii)
arrangements for extended payment terms with respect to amounts that are not material to the
Business and are less than six (6) months.




          “Indemnitee” has the meaning ascribed to it in Section 7.5(a).




          “Indemnitor” has the meaning ascribed to it in Section 7.5(a).




          “Initial Offer Letter” means that certain letter agreement, dated the Initial Offer
Letter Date, by and among Chartreuse et Mont Blanc LLC, a Delaware limited liability company,
Parent , Pilot, Meribel and Quiksilver Americas.




          “Initial Offer Letter Date” means August 25, 2008.




          “Insurance Policy” means any insurance policy maintained by the Parent or any of its
Affiliates (other than the Acquired Companies) other than those the premiums of which are paid
directly by an Acquired Company.




          “Intellectual Property” means any and all of the following: (a) United States and
foreign trademarks, service marks, and trademark and service mark registrations and applications,
trade names, logos, trade dress and slogans, and all goodwill related to the foregoing; (b) patent
applications, patents, inventions, improvements, know-how, formula methodology, research and
development, business methods, processes, technology and Software in any jurisdiction, including
re-issues, continuations, divisions, continuations-in-part, renewals or extensions or any foreign
counterparts thereto; (c) trade secrets; (d) copyrights in writings, designs, Software, mask works
or other works, applications or registrations in any jurisdiction for the foregoing, other original
works of authorship and all moral rights related thereto; (e) database rights; and (f) Internet web
sites, web pages, domain names and applications and registrations pertaining thereto and all
intellectual property used in connection with or contained




- 6 -









 







in any Acquired Company’s web site(s) (for the avoidance of doubt, the foregoing does not
include (i) third-party websites linked to or from the websites of the Acquired Companies or (ii)
any off-the-shelf or “shrink-wrap” licensed software).




          “Intercompany Payable Amount” has the meaning ascribed to it in Section 2.3(b).




          “Intercompany Receivables” has the meaning ascribed to it in Section 2.3(b).




          “Interested Person” means the Purchaser, any significant direct or indirect equity or
debt provider of the Purchaser, and any Affiliate of the foregoing (other than the Acquired
Companies).




          “Jointly Controlled Tax Matter” means any Tax Matter that is neither a Parent
Controlled Tax Matter nor a Purchaser Controlled Tax Matter.




          “Knowledge of the Parent” means the knowledge, after reasonable inquiry, of any of Mr.
Joe Scirocco, Mr. David Morgan, Mr. Pierre Lalande or Mr. Charles Exon, and excluding, for the
avoidance of doubt, any other Person and in particular any other director, officer, manager or
employee of the Parent or any Affiliate of the Parent, including Pilot, Meribel, Quiksilver
Americas and any Acquired Company.




          “Law” means any statute, law, ordinance, rule, regulation, order, judgment or decree
enacted, adopted, issued, promulgated, administered or enforced by any Governmental Body.




          “Lease” has the meaning ascribed to it in Section 4.3.10(h).




          “Leased Property” has the meaning ascribed to it in Section 4.3.10(h).




          “Liquidity Agreement” means each liquidity agreement entered into between the Parent,
on the one hand, and each holder of a Company Option, on the other hand, in respect of (among other
things) shares of the Company deliverable to or acquired by such option holder through the exercise
of the Company Options, in each case as together with any and all amendments and modifications
thereto.




          “Listed Employees” has the meaning ascribed to it in Section 4.3.6(a).




          “Loss” or “Losses” means all losses, damages, liabilities, judgments,
obligations, fines, penalties, costs and expenses (including, subject to Section 7.5 and Section
7.6, settlement costs, court costs and any reasonable legal, expert and consultant fees and
expenses).




          “Material Intellectual Property” has the meaning ascribed to it in Section 4.3.3(a).




          “Meribel” has the meaning ascribed to it in the introductory paragraph of this
Agreement.




          “Non-Operational Properties” means the assets listed in Schedule C.




- 7 -









 








          “North American Shares” has the meaning ascribed to it in Section 4.2.3(b).




          “Note” has the meaning ascribed to it in Section 2.2.




          “Note Balance” means, at any time after the Closing Date, the then outstanding
principal amount under the Note, together with any and all accrued and unpaid interest thereon.




          “Notified Remaining Offset Amount” has the meaning ascribed to it in Section 2.3(e).




          “Offset Amount” means an amount equal to the amount by which (a) the sum of the
Intercompany Payable Amount, exceeds (b) the Intercompany Receivables.




          “Offset Amount Auditor” has the meaning ascribed to it in Section 2.3(f).




          “Offset Amount Dispute Notice” has the meaning ascribed to it in Section 2.3(e).




          “Offset Amount Disputed Items” has the meaning ascribed to it in Section 2.3(f).




          “Offset Amount Review Period” has the meaning ascribed to it in Section 2.3(e).




          “Owned Properties” has the meaning ascribed to it in Section 4.3.10(b).




          “Parent” has the meaning ascribed to it in the introductory paragraph of this
Agreement.




          “Parent Consolidated Financial Statements” means the audited annual consolidated
financial statements of the Parent as of October 31, 2007.




          “Parent Controlled Tax Matter” means any Tax Matter, in respect of which
indemnification may be sought hereunder, (a) in which Parent and Purchaser reasonably anticipate
the preponderance of any contingent tax liability arising from such Tax Matter represents a
liability associated with the period ending on or prior to the Closing Date or (b) is a Tax Matter
that Parent, any Parent Indemnifying Persons, any Acquired Company, or any of their Affiliates are
presently contesting, defending, or responding to.




          “Parent Indemnified Person” means the Parent, Pilot, Meribel, Quiksilver Americas, and
their respective Affiliates (other than the Acquired Companies from and after the Closing),
directors (or Persons in similar positions), officers, stockholders and equity owners and
successors and permitted assigns pursuant to Section 8.5.




          “Parent Indemnifying Person” means, jointly and severally, Parent, Pilot, Meribel,
Quiksilver Americas, and their respective successors or permitted assigns pursuant to Section 8.5.




          “Parent Losses” has the meaning ascribed to it in Section 7.2.




          “Party” has the meaning ascribed to it in the introductory paragraph of this
Agreement.




- 8 -









 








          “Permits” has the meaning ascribed to it in Section 4.3.14.




          “Person” means and includes a natural person, a corporation, an association, a
partnership, a limited liability company, a trust, a joint venture, an unincorporated organization
or a Governmental Body.




          “Pilot” has the meaning ascribed to it in the introductory paragraph of this
Agreement.




          “Pilot Group Tax Sharing Agreement” has the meaning ascribed to it in Section
4.3.5(o).




          “Proceeding” means any action, audit (including but not limited to statutory or
administrative audit, but excluding any Tax Audit), hearing, inquiry, investigation, claim,
complaint, litigation or suit (whether civil, administrative, or criminal) commenced, brought,
conducted or heard by or before any Governmental Body or arbitrator.




          “Projections” means the projections set forth in Exhibit B.




          “Property” has the meaning ascribed to it in Section 4.3.10(a).




          “Property Taxes” has the meaning ascribed to it in Section 6.3(d)(i).




          “Proposed Working Capital Adjustment” has the meaning ascribed to it in Section
2.4(c).




          “Purchase Price” has the meaning ascribed to it in Section 2.2.




          “Purchaser” has the meaning ascribed to it in the introductory paragraph of this
Agreement.




          “Purchaser Controlled Tax Matter” means any Tax Matter, in respect of which
indemnification may be sought hereunder, in which Parent and Purchaser reasonably anticipate the
preponderance of contingent tax liability arising from such Tax Matter represents a liability
associated with the period commencing on or after the Closing Date.




          “Purchaser Indemnified Person” means the Purchaser and its Affiliates (including the
Acquired Companies from and after the Closing), directors (or Persons in similar positions),
officers, stockholders and equity owners and successors and permitted assigns pursuant to Section
8.5.




          “Purchaser Indemnifying Person” means the Purchaser and its successors or permitted
assigns pursuant to Section 8.5.




          “Purchaser Losses” has the meaning ascribed to it in Section 7.1.




          “Quiksilver Americas” has the meaning ascribed to it in the introductory paragraph of
this Agreement.




- 9 -









 








          “Reference Rate” means, as of any date specified in this Agreement, the EUROS
Overnight Index Average (EONIA) rate published by the European Central Bank.




          “Registered Intellectual Property” means any and all of the following: (a) United
States and foreign trademarks, service marks, and trademark and service mark registrations and
applications; (b) patent applications and patents in any jurisdiction, including re-issues,
continuations, divisions, continuations-in-part, renewals or extensions; (c) copyright applications
or registrations in any jurisdiction; and (d) domain name applications and registrations.




          “Remaining Offset Amount” has the meaning ascribed to it in Section 2.3(c).




          “Restated Offer Letter” means that certain letter agreement, dated October 31, 2008,
by and among Chartreuse et Mont Blanc LLC, a Delaware limited liability company, Parent , Pilot,
Meribel and Quiksilver Americas.




          “Restricted Period” has the meaning ascribed to it in Section 6.4(a).




          “Restructuring” means the asset transfers and the other corporate, financing,
refinancing and other restructuring actions with respect to the Business or the Acquired Companies,
as applicable, in each case in accordance with the provisions set forth on Schedule B.




          “Review Period” has the meaning ascribed to it in Section 2.4(d).




          “Rossignol US” has the meaning ascribed to it in the recitals to this Agreement.




          “Roxy License Agreement” means a license agreement providing for (among other things)
the Purchaser or any of its Affiliates (including the Acquired Companies, or any of them) to use
the “Roxy” trademark and trade names from and after the Closing in connection with the manufacture,
distribution and sale of snow skis, snow ski boots, snow ski bindings and snow ski poles, which
agreement shall: (a) provide for a royalty rate equal to 5%; and (b) contain such other terms as
the Parent and the Purchaser shall mutually agree upon.




          “SEC” means the United States Securities and Exchange Commission.




          “Securities” means, collectively, the Shares and the Acquired Note.




          “Shares” means, collectively, the Company Shares and the North American Shares.




          “Software” means any and all (a) computer programs, including any and all software
implementations of algorithms, models and methodologies, whether in source code or object code
form, and all off-the-shelf or “shrink-wrap” software, (b) databases, compilations, and any other
electronic data files, including any and all collections of data, whether machine readable or
otherwise, but excluding individual customer data, (c) descriptions, flow-charts, technical and
functional specifications, and other work product used to design, plan, organize, develop, test,
troubleshoot and maintain any of the foregoing, (d) without limitation to the foregoing, the
software technology supporting any functionality contained on any Acquired




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Company’s Internet web site(s), and (e) all documentation, including technical, end-user,
training and troubleshooting manuals and materials, relating to any of the foregoing.




          “Statement of Adjustment” has the meaning ascribed to it in Section 2.4(c).




          “Statement of Offset Amount” has the meaning ascribed to it in Section 2.3(e).




          “Straddle Period” means a taxable year or period beginning on or before, and ending
after, the Closing Date.




          “Subsidiary” means, with respect to any specified Person, any other Person with
respect to which such specified Person (or any Subsidiary thereof) has the power to vote or direct
the voting of sufficient securities or other interests to elect a majority of the directors (or
Persons in similar positions) or governing body thereof.




          “Tax” means: (a) all taxes, charges, fees, duties, levies, penalties or other
assessments imposed by any federal, state, local or foreign governmental authority, including
income, gross receipts, excise, property, sales, gain, use, license, custom duty, unemployment,
capital stock, transfer, franchise, payroll, withholding, social security, minimum estimated,
profit, gift, severance, ad valorem, value added, disability, premium, recapture, credit,
occupation, service, leasing, employment, stamp and other taxes, including any interest, penalties
or additions attributable thereto or attributable to any failure to comply with any requirement
regarding Tax Returns; (b) any liability for the payment of any amounts of the type described in
the immediately preceding clause (a) as a result of being (or ceasing to be) a member of an
affiliated, consolidated, combined, unitary or aggregate group; and (c) all liabilities for taxes
of the type described in clauses (a) or (b) as a result of being a transferee of or successor to
any Person, by contract or otherwise.




          “Tax Audit” means any audit, assessment of Tax, other examination by any Taxing
Authority, or any proceeding or appeal of such proceeding relating to Taxes.




          “Taxing Authority” means any Governmental Body responsible for the imposition or
collection of any Tax.




          “Tax Benefit” means, with respect to a taxable year, the extent to which an
Indemnified Party’s cumulative liability for Taxes through the end of such taxable year, calculated
by excluding any Tax items attributable to any relevant Purchaser Loss or Parent Loss, as
applicable, from all taxable years, exceeds the Indemnified Person’s actual cumulative liability
for Taxes through the end of such taxable year, calculated by taking into account any Tax items
attributable to the Purchaser Loss or Parent Loss, as applicable, for all taxable years (to the
extent permitted by relevant Tax law and treating such Tax items as the last items claimed for any
taxable year).




          “Tax CPA” has the meaning ascribed to it in Section 7.6.




          “Tax Matter” means any Tax Audit or other Tax inquiry or contest (or claim of refund
arising from a contested Tax) in respect of any assessment, notice of deficiency, or other




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adjustment or proposed adjustment, or consent to any extension or waiver of the limitations
period applicable in respect thereof.




          “Tax Return” means any return, declaration, report, claim for refund, or information
return or statement relating to Taxes, including any such document prepared on a consolidated,
combined or unitary basis and also including any schedule or attachment thereto, and including any
amendment thereof.




          “Third-Party Indebtedness” has the meaning ascribed to it in Section 2.3(c).




          “Transaction” has the meaning ascribed to it in the recitals of this Agreement.




          “Transfer Taxes” means all sales, use, transfer, recording, privilege, documentary,
gains, registration, conveyance, stamp, duties or similar Taxes and fees.




          “Transition Services Agreement” means an agreement providing for (among other things)
certain mutually agreed services relating to the Business to be provided by Parent and/or its
Affiliates to the Purchaser and/or its Affiliates (including the Acquired Companies), and/or by the
Purchaser and/or its Affiliates (including the Acquired Companies) to the Parent and/or its
Affiliates, from and after the Closing, which agreement shall (a) have a term of not less than two
years; (b) provide for such services to be provided by Parent and/or its Affiliates to the
Purchaser and/or its Affiliates on economic terms that are no less favorable to the Purchaser than
the economic terms for such services used in the preparation of the Projections; and (c) contain
such other terms as the Parent and the Purchaser shall mutually agree upon.




          “Winter Sports Hardgoods Activity” means the manufacture, sale or distribution of snow
skis, snow ski boots, snow ski poles, snow ski bindings, snow ski goggles, snow boards, snow board
boots, snow board bindings or snow board goggles.




          “Working Capital” means, as determined as of any given time in accordance with GAAP
(as in effect as of the Closing Date) on a basis consistent with the Projections, an amount equal
to the sum of (a) any and all trade accounts receivable, other than accounts receivable from the
Parent or its Affiliates (excluding any and all value added or ad valorem Taxes applicable
thereto), of the Acquired Companies as of such time, (b) an amount equal to any and all inventory,
less any and all trade accounts payable, other than accounts payable to the Parent or its
Affiliates, of the Acquired Companies as of such time, and (c) any and all amounts payable pursuant
to the Transaction incentive bonus agreements referred to in paragraph (i) of Schedule
4.3.6(f).




          “Working Capital Adjustment” has the meaning ascribed to it in Section 2.4(a).




          “Working Capital Deficiency” has the meaning ascribed to it in Section 2.4(f)(iv).




          “Working Capital Surplus” has the meaning ascribed to it in Section 2.4(f)(iii).




          1.2 General Interpretive Principles. Unless the context otherwise requires, as used
in this Agreement: (i) an accounting term not otherwise defined herein has the meaning ascribed to
it in accordance with GAAP; (ii) “or” is not exclusive; (iii) “including” and its




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variants mean “including, without limitation” and its variants; (iv) words defined in the
singular have the parallel meaning in the plural and vice versa; (v) words of one gender shall be
construed to apply to each gender; (vi) the terms “hereof,” “herein,” “hereby,” “hereto,” and
derivative or similar words refer to this entire Agreement, including the Schedules and Exhibits
hereto; (vii) the terms “ARTICLE,” “Section,” “Exhibit” and “Schedule” refer to the specified
ARTICLE, Section, Exhibit or Schedule of or to this Agreement; and (viii) any grammatical form or
variant of a term defined in this Agreement shall be construed to have a meaning corresponding to
the definition of the term set forth herein.




               1.2.1 A reference to any Person includes such Person’s successors and permitted assigns.



               1.2.2 Any reference to “days” means calendar days unless Business Days are expressly
specified. If any action under this Agreement is required to be done or taken on a day that is not
a Business Day, then such action shall not be required to be done or taken on such day but on the
first succeeding Business Day thereafter.



               1.2.3 The Exhibits to this Agreement are incorporated herein by reference and made a part
hereof for all purposes.



               1.2.4 The headings and captions of the various Articles, Sections and other subdivisions
hereof (including the headings and captions of the subdivisions of the Disclosure Schedule) are for
convenience of reference only and shall not modify, define or limit any of the terms or provisions
of this Agreement.



               1.2.5 References herein to a material adverse effect on the “Business”, an asset or property
material to the “Business”, and similar expressions shall be to the Business, taken as a whole, and
not to any particular division or line of business of the Acquired Companies.



               1.2.6 The Parent and the Purchaser, each represented by legal counsel, have each participated
in the negotiation and drafting of this Agreement. If an ambiguity or question of intent or
interpretation should arise, this Agreement shall be construed as if drafted jointly by the
Parties, and no presumption or burden of proof shall arise favoring or burdening either Party by
virtue of the authorship of any of the provisions of this Agreement.



ARTICLE 2.

SALE AND PURCHASE OF THE SHARES




          2.1 Sale and Purchase of the Securities. Subject to the terms and conditions of this
Agreement, (i) Pilot and Meribel shall sell to the Purchaser, and the Purchaser shall purchase from
Pilot and Meribel, the Company Shares, (ii) Quiksilver Americas shall sell to the Purchaser, and
the Purchaser shall purchase from Quiksilver Americas, the North American Shares and (iii) Pilot
shall sell to the Purchaser, and the Purchaser shall purchase from Pilot, the Acquired Note, in
each case free and clear of all Encumbrances, together with all rights attaching to such
Securities.




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          2.2 Purchase Price. The consideration to be paid by the Purchaser for the Securities
under this Agreement (the “Purchase Price”) shall be the aggregate of (a) a cash amount of
thirty million euros (€30,000,000) (the “Cash Consideration”), (b) a promissory note, in
the form attached as Exhibit A hereto, in the principal amount of ten million euros (€10,000,000)
(the “Note”), (c) plus the amount of Cash in the System, minus the Remaining Offset Amount
pursuant to Section 2.3, (d) minus the amount of the Working Capital Adjustment (if any) pursuant
to Section 2.4. The Purchase Price shall be allocated as described in Schedule 2.2.3




          2.3 Remaining Offset Amount. The Parties acknowledge and agree that the Purchase
Price has been determined on the basis of a valuation of forty million euros (€40,000,000) for the
Acquired Companies on a cash free, debt-free basis and in furtherance thereof, agree that, at or
prior to the Closing, the following actions and payments shall be taken and made:





          (a) the Parent, Pilot and Meribel shall proceed with and consummate the Restructuring;
provided that the Parent agrees to set the terms and parameters of the
Restructuring in such a manner as to cause the Notified Remaining Offset Amount to consist
solely of Third-Party Indebtedness and to not exceed thirty million euros (€30,000,000);




          (b) all amounts, if any, owed by the Parent or its Affiliates (other than the Acquired
Companies) to any of the Acquired Companies which remain outstanding as of the Closing (but
after the Restructuring) (such amounts, collectively, the “Intercompany
Receivables”), shall be offset against all amounts other than the Acquired Note, owed by
any of the Acquired Companies to the Parent or any of its Affiliates (other than the
Acquired Companies) which remain outstanding as of the Closing (but after the
Restructuring), including, without limitation (i) trade liabilities payable by any Acquired
Company to the Parent or its Affiliates (other than the Acquired Companies) and (ii) all
Indebtedness other than the Acquired Note, payable by any Acquired Company to the Parent or
its Affiliates (other than the Acquired Companies) (such amounts, collectively, the
“Intercompany Payable Amount”); provided; however, that it is the
intent of the Parties that the amount of such setoff pursuant to this Section 2.3(b) shall,
following the application of Acquired Company Cash less Cash in the System pursuant to
Section 2.3(c), be equal to zero;




          (c) all Acquired Company Cash except an amount of five hundred thousand euros
(€500,000) (“Cash in the System”) shall be used to pay the Offset Amount and any
Indebtedness owed to any Person other than the Parent, its Affiliates and the Acquired
Companies (excluding, for the avoidance of doubt, any and all Indebtedness arising from or
in connection with the Factoring Agreements) (the “Third-Party Indebtedness”). The
amount by which the sum of the Offset Amount and the Third-Party Indebtedness exceeds an
amount equal to the Acquired Company Cash less the amount of





 




			
	3	 	Parties’ respective tax specialists to reasonably agree
Schedule 2.2 prior to the Closing so as to reflect agreed Purchase Price
allocation.




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Cash in the System shall hereinafter be referred to as the “Remaining Offset
Amount”; and





          (d) on the Closing Date, the Purchaser shall pay, on behalf of the relevant Acquired
Companies, the Notified Remaining Offset Amount to the applicable third party or the
applicable Affiliate of the Parent, as designated by the Parent, by wire transfer of
immediately available funds.




          (e) For purposes of the payments referred to in paragraphs (b) through (d) above, the
Parent delivered to the Purchaser, on the third (3rd) Business Day prior to the date hereof,
a certificate signed by a senior officer of the Parent setting forth its good faith
determination of the amount of the Intercompany Receivables, the Intercompany Payable
Amount, the Acquired Company Cash and the Third-Party Indebtedness expected to be
outstanding as of the Closing Date, together with Parent’s good faith determination that,
based on such Intercompany Receivables, Intercompany Payable Amount, Acquired Company Cash
and Third-Party Indebtedness, the Remaining Offset Amount does not exceed thirty million
euros (€30,000,000) (the “Notified Remaining Offset Amount”), which certificate
specified the amount of each separate component of, and the calculation made to derive, the
Notified Remaining Offset Amount. As promptly as practicable following the Closing but in
no event later than 60 days thereafter, the Purchaser shall deliver to the Parent a
statement (the “Statement of Offset Amount”) containing a certificate signed by a
senior officer of the Purchaser setting forth in good faith its determination of the amount
of the Intercompany Receivables, the Intercompany Payable Amount, the Acquired Company Cash
and the Third-Party Indebtedness as of the close of business on the Closing Date (before
giving effect to any set-off contemplated in paragraphs (b) through (d) above but after the
Restructuring), the resulting Remaining Offset Amount, which Statement of Offset Amount
shall specify the amount of each separate component of, and the calculation made to derive,
the Remaining Offset Amount. Upon receipt of the Statement of Offset Amount, the Parent
shall have the right during the succeeding 60-day period (the “Offset Amount Review
Period”) to examine the Statement of Offset Amount in accordance with Section 2.5. If
the Parent objects to the amount of the Intercompany Receivables, the Intercompany Payable
Amount, the Acquired Company Cash, the Third-Party Indebtedness or the Remaining Offset
Amount set forth in the Statement of Offset Amount or the method of the calculation thereof,
it shall so notify the Purchaser in writing (such notice, an “Offset Amount Dispute
Notice”) on or before the last day of the Offset Amount Review Period, setting forth a
specific description of its objection and the amount and method of calculation of the
adjustment to the Purchaser’s determination of the Intercompany Receivables, the
Intercompany Payable Amount, the Acquired Company Cash, the Third-Party Indebtedness and the
Remaining Offset Amount which the Parent believes should be made. If no Offset Amount
Dispute Notice is delivered within the Offset Amount Review Period, the Statement of Offset
Amount, including the amount and calculation of the Remaining Offset Amount set forth
therein, shall be deemed to have been accepted and shall be binding on the Parties.




          (f) If an Offset Amount Dispute Notice is delivered within the Offset Amount Review
Period, the Parent and the Purchaser shall use reasonable efforts to



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resolve in good faith their differences and agree upon any amendments to the Statement
of Offset Amount within 30 days of receipt of the Offset Amount Dispute Notice by the
Purchaser. Any items referred to in the Offset Amount Dispute Notice which are not resolved
by the mutual agreement of the Purchaser and the Parent within such 30-day period (the
“Offset Amount Disputed Items”) shall be submitted for resolution to an
internationally recognized independent certified public accounting firm that shall be
mutually acceptable to the Parent and the Purchaser (the “Offset Amount Auditor”).
If, within 10 days after the expiration of such 30-day period, the Parent and the Purchaser
shall not have succeeded in appointing an Offset Amount Auditor which shall have accepted to
perform its mission, either Party shall be entitled to request the designation of an Offset
Amount Auditor by the American Arbitration Association. The Parent and the Purchaser shall
immediately notify the Offset Amount Auditor of any unresolved Offset Amount Disputed Items
and instruct the Offset Amount Auditor to limit its examination to any such unresolved
Offset Amount Disputed Items, to resolve them, and to notify the Parent and the Purchaser in
writing of (i) its decisions regarding the unresolved Offset Amount Disputed Items and (ii)
after taking such decisions into account, the definitive Intercompany Receivables,
Intercompany Payable Amount, Acquired Company Cash, Third-Party Indebtedness and Remaining
Offset Amount. The Parties shall instruct the Auditor to deliver such notification within 30
days after receiving the unresolved Offset Amount Disputed Items. Each of the Parent and the
Purchaser shall respond promptly to any reasonable request for information of the Offset
Amount Auditor, and shall be authorized to provide the Offset Amount Auditor with any oral
or written statements, explanations or information regarding the Offset Amount Disputed
Items, provided that a Party shall receive timely any written material
prepared by the other Party and provided by such Party to the Offset Amount Auditor to
support such statements, explanations or information. Absent manifest error, the decisions
of the Offset Amount Auditor shall be final, conclusive and binding upon the Parties, which
shall not have the right to appeal any such decisions. The fees and expenses charged by the
Offset Amount Auditor in connection with its mission hereunder shall be borne equally by the
Parties.




          (g) No later than five Business Days following the final determination of the
Intercompany Receivables, the Intercompany Payable Amount, the Acquired Company Cash, the
Third-Party Indebtedness and the Remaining Offset Amount (the “Definitive Remaining
Offset Amount”) pursuant to paragraph (e) or (f) above, as applicable:




          (i) if the Definitive Remaining Offset Amount is greater than the Notified
Remaining Offset Amount, the then outstanding Deductible Amount shall be reduced by
an amount equal to the excess of the Definitive Remaining Offset Amount over the
Notified Remaining Offset Amount (the “Cash Deficiency”); provided
that (A) in the event that the Cash Deficiency is greater than the then
outstanding Deductible Amount, but less than the sum of the then outstanding
Deductible Amount and the then outstanding Note Balance, then the entire Deductible
Amount shall be reduced to zero and in addition, the Purchase Price shall be reduced
by an amount equal to the excess of the Cash Deficiency over such then outstanding
Deductible Amount, in the form of a reduction of the then outstanding Note Balance
equal to such excess; provided, further, that (B) in



- 16 -









 







the event that the Cash Deficiency is greater than the sum of the then
outstanding Deductible Amount and the then outstanding Note Balance, then the entire
Deductible Amount shall be reduced to zero and in addition, the Purchase Price shall
be reduced by an amount equal to the excess of the Cash Deficiency over the then
outstanding Deductible Amount, if the form of (x) an offset of the entire Note
Balance against such excess and, in addition, (y) payment by the Parent to the
Purchaser in cash (by wire transfer of immediately available funds to a bank
account(s) designated by the Purchaser at least three Business Days prior to the due
date) of an amount equal to the excess of the Cash Deficiency over the sum of such
then outstanding Deductible Amount and such then outstanding Note Balance;
provided, further, that (C) in the event that the Cash Deficiency is
greater than the then outstanding Deductible Amount, and at such time the Note is no
longer outstanding or shall no longer be held exclusively by the Parent or one or
more of its Affiliates, then the entire Deductible Amount shall be reduced to zero
and in addition, the Purchase Price shall be reduced by an amount equal to the
excess of the Cash Deficiency over such then outstanding Deductible Amount, in the
form of payment by the Parent to the Purchaser in cash (by wire transfer of
immediately available funds to a bank account(s) designated by the Purchaser at
least three Business Days prior to the due date) of an amount equal to the excess of
the Cash Deficiency over such then outstanding Deductible Amount.




          (ii) if the Notified Remaining Offset Amount is greater than the Definitive
Remaining Offset Amount, the Purchase Price shall be increased by an amount equal to
the excess of the Notified Remaining Offset Amount over the Definitive Remaining
Offset Amount, and the Purchaser shall pay such excess in cash by wire transfer of
immediately available funds to the bank account(s) designated by the Parent at least
three Business Days prior to the due date.




          (h) Any Taxes incurred as a result of the actions and payments taken and made pursuant
to this Section 2.3 relating to the settlement of the Intercompany Receivables, the
Intercompany Payable Amount and/or the Third-Party Indebtedness or the Restructuring shall
be borne exclusively by the Parent or Affiliates of the Parent other than any of the
Acquired Companies.



          2.4 Working Capital Adjustment.





          (a) In the event that the Working Capital of the Acquired Companies as of the close of
business on the Closing Date is less than two hundred million euros (€200,000,000), then the
Deductible Amount and/or the Purchase Price shall be decreased by an aggregate amount equal
to such deficiency (the “Working Capital Adjustment”). If the Working Capital of
the Acquired Companies as of the close of business on the Closing Date is equal to, or more
than two hundred million euros (€200,000,000), the Working Capital Adjustment shall be equal
to zero and the Deductible Amount and the Purchase Price shall not be adjusted pursuant to
this Section 2.4.




          (b) The Parent delivered to the Purchaser on the third Business Day prior to the date
hereof a certificate signed by a senior officer of the Parent setting forth



- 17 -









 







in good faith the amount of the estimated Working Capital Adjustment, if any (the
“Estimated Working Capital Adjustment”), which certificate specified each separate
component of, and the calculation made to derive, the Estimated Working Capital Adjustment.
On the Closing Date, the then outstanding Deductible Amount shall be decreased by an amount
equal to the Estimated Working Capital Adjustment, if the Estimated Working Capital
Adjustment results in a decrease to Deductible Amount and/or the Purchase Price pursuant to
Section 2.4(a); provided that in the event that the Estimated Working Capital Adjustment
exceeds such then outstanding Deductible Amount, then the entire Deductible Amount shall be
reduced to zero and in addition, the Purchase Price payable by the Purchaser at the Closing
shall be reduced by an amount equal to the excess of the Estimated Working Capital
Adjustment over such then outstanding Deductible Amount.




          (c) As promptly as practicable following the Closing but in no event later than 60 days
thereafter, the Purchaser shall deliver to the Parent a statement (the “Statement of
Adjustment”) (i) containing a certificate signed by a senior officer of the Purchaser
setting forth in good faith the amount of the Working Capital Adjustment, if any (the
“Proposed Working Capital Adjustment”), which shall specify each separate component
of, and the calculation made to derive, the Proposed Working Capital Adjustment, and (ii)
indicating the amount of each adjustment to be made to the Estimated Working Capital
Adjustment (if any).




          (d) Upon receipt of the Statement of Adjustment, the Parent shall have the right during
the succeeding 60-day period (the “Review Period”) to examine the Statement of
Adjustment in accordance with Section 2.5. If the Parent objects to the amount of the
Proposed Working Capital Adjustment set forth in the Statement of Adjustment or the method
of the calculation thereof, it shall so notify the Purchaser in writing (such notice, a
“Dispute Notice”) on or before the last day of the Review Period, setting forth a
specific description of its objection and the amount and method of calculation of the
adjustment(s) to the Proposed Working Capital Adjustment which the Parent believes should be
made. If no Dispute Notice is delivered within the Review Period, the Statement of
Adjustment, including the amount and calculation of the Proposed Working Capital Adjustment
set forth therein, shall be deemed to have been accepted and shall be binding on the
Parties, and the Proposed Working Capital Adjustment shall be deemed to be the Working
Capital Adjustment for all purposes under this Agreement.




          (e) If a Dispute Notice is delivered within the Review Period, the Parent and the
Purchaser shall use reasonable efforts to resolve in good faith their differences and agree
upon any amendments to the Statement of Adjustment within 30 days of receipt of the Dispute
Notice by the Purchaser. Any items referred to in the Dispute Notice which are not resolved
by the mutual agreement of the Purchaser and the Parent within such 30-day period (the
“Disputed Items”) shall be submitted for resolution to an internationally recognized
independent certified public accounting firm that shall be mutually acceptable to the Parent
and the Purchaser (the “Auditor”). If, within 10 days after the expiration of such
30-day period, the Parent and the Purchaser shall not have succeeded in appointing an
Auditor which shall have accepted to perform its mission,



- 18 -









 







either Party shall be entitled to request the designation of an Auditor by the American
Arbitration Association. The Parent and the Purchaser shall immediately notify the Auditor
of any unresolved Disputed Items and instruct Auditor to limit its examination to any such
unresolved Dispute Items and resolve such unresolved Disputed Items, and to notify the
Parent and the Purchaser in writing of (i) its decisions regarding the unresolved Disputed
Items and (ii) after taking such decisions into account, the final Working Capital
Adjustment and the final adjustment(s), if any, to the Proposed Working Capital Adjustment.
The Parties shall instruct the Auditor to deliver such notification within 30 days after
receiving notice of the unresolved Disputed Items. The Parties shall respond promptly to any
reasonable request for information of the Auditor, and shall be authorized to provide the
Auditor with any oral or written statements, explanations or information regarding the
unresolved Disputed Items, provided that a Party shall receive timely any written material
prepared by the other Party and provided by such Party to the Auditor to support such
statements, explanations or information. Absent manifest error, the decisions of the Auditor
shall be final, conclusive and binding upon the Parties, which shall not have the right to
appeal any such decisions. The fees and expenses charged by the Auditor in connection with
its mission hereunder shall be borne equally by the Parties.




          (f) After the final determination of the Working Capital Adjustment pursuant to this
Section 2.4, as provided in Section 2.4(g):




          (i) if the final Working Capital Adjustment results in no decrease of the
Deductible Amount or the Purchase Price pursuant to Section 2.4(a), and the
Estimated Working Capital led to no downward adjustment to the Deductible Amount or
the Purchase Price, then the Deductible Amount and the Purchase Price shall not be
adjusted pursuant to this Section 2.4;




          (ii) if the final Working Capital Adjustment results in no decrease of the
Deductible Amount or the Purchase Price pursuant to Section 2.4(a), and the
Estimated Working Capital led to a downward adjustment to the Deductible Amount, (A)
the Deductible Amount shall be increased by any amounts by which it shall have been
previously decreased pursuant to Section 2.4(b), and (B) the Purchaser shall pay to
the Parent an amount in cash equal to any amounts by which the Purchase Price
payable by the Purchaser at the Closing shall have been previously reduced pursuant
to Section 2.4(b).




          (iii) if the final Working Capital Adjustment results in a decrease of the
Deductible Amount and/or the Purchase Price pursuant to Section 2.4(a), and the
Estimated Working Capital led to a downward adjustment to the Deductible Amount
and/or the Purchase Price pursuant to Section 2.4(b) by an aggregate amount in
excess of the final Working Capital Adjustment (such excess, the “Working
Capital Surplus”), (A) if the Purchase Price payable by the Purchaser at the
Closing shall have been previously reduced pursuant to Section 2.4(b), the Purchaser
shall pay to the Parent an amount in cash equal to the lesser of (x) such amounts by
which the Purchase Price shall have been so reduced pursuant to Section 2.4(b), and
(y) the Working Capital Surplus; and



- 19 -









 






(B) the Deductible Amount shall be increased by the lesser of (x) any amounts
by which it has been previously decreased pursuant to Section 2.4(b), and (y) the
excess (if any) of the Working Capital Surplus over the sum of any amounts of
Working Capital Surplus paid in cash by the Purchaser pursuant to the immediately
preceding clause (A); and




          (iv) if the final Working Capital Adjustment results in a decrease of the
Deductible Amount and/or the Purchase Price pursuant to Section 2.4(a), and the
Estimated Working Capital led to a downward adjustment to the Deductible Amount
and/or the Purchase Price pursuant to Section 2.4(b) by an aggregate amount equal
to, or lower than the final Working Capital Adjustment (such deficiency, the
“Working Capital Deficiency”), (A) the then outstanding Deductible Amount
shall be decreased by an amount equal to the Working Capital Deficiency,
provided that in the event that the Working Capital Deficiency
exceeds such then outstanding Deductible Amount, then the entire Deductible Amount
shall be reduced to zero and in addition, the Purchase Price shall be reduced by an
amount equal to the excess of the Working Capital Deficiency over such then
outstanding Deductible Amount, in the form of payment by the Parent to the Purchaser
in cash of an amount equal to the excess of the Working Capital Deficiency over such
then outstanding Deductible Amount.




          (g) Any amount required to be paid in cash to the Purchaser or to the Parent pursuant
to paragraph (f) of this Section 2.4 shall be paid within five Business Days of the final
determination of the Working Capital Adjustment by wire transfer of immediately available
funds to the bank account(s) designated by the Parent or the Purchaser, as applicable, at
least three Business Days prior to the due date. Any adjustment to the Deductible Amount
pursuant to paragraph (f) of this Section 2.4 shall become effective on the Business Day
following the date of the final determination of the Working Capital Adjustment pursuant to
this Section 2.4.



          2.5 Access to Purchaser and Acquired Companies Information and Persons. For purposes
of Sections 2.3 and 2.4, the Purchaser shall provide, and shall cause each of the Acquired
Companies to provide, the Auditor, the Offset Amount Auditor, the Parent, its executive officers,
accountants, independent auditors and other authorized representatives, (i) reasonable access
(during normal business hours and upon reasonable notice, and subject to reasonable confidentiality
undertakings) to the working papers, books, records, accounts, executive officers, other personnel
and, (ii) subject to the execution of customary release letters, independent auditors of the
Purchaser and the Acquired Companies in order to obtain a description of the methodology,
procedures, audits and analyses undertaken in connection with the preparation of the Statement of
Adjustment and/or the Statement of Offset Amount and otherwise to verify the accuracy of the
Purchaser’s determination of the Working Capital, Intercompany Receivables, Intercompany Payable
Amount, Acquired Company Cash and Third-Party Indebtedness.




          2.6 Withholding Rights. Each of the Purchaser and the Parent acknowledge and agree
that no payment hereunder to be made by, or received from, the Purchaser (or its




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Affiliates), on the one hand, and the Parent (or its Affiliates), on the other, is anticipated
to be subject to deduction or withholding under applicable law in respect of any Tax. If the
Purchaser or the Parent should become aware of any factual basis leading to a contrary conclusion,
the relevant party shall provide prompt notice to the other party and the Purchaser and the Parent
shall cooperate in good faith to implement appropriate arrangements to avoid the imposition, or
mitigate the amount of, any withholding tax under applicable law. In the event of the imposition of
any such withholding or deduction for which Purchaser (or its Affiliates, including the Acquired
Companies from and after the Closing Date) may be liable, without limiting the provisions of
ARTICLE 7, the Parent shall indemnify and hold the Purchaser and its Affiliates harmless,
provided that the Purchaser and its Affiliates shall use their commercially
reasonable efforts, in consultation with the Parent, to contest or otherwise mitigate, the amount
of any such withholding or deduction that is ultimately due and payable. Notwithstanding the
foregoing, in the event that the Purchaser is not Chartreuse et Mont-Blanc LLC (or not otherwise a
company that is resident in France under the United States – France Income Tax Treaty or Luxembourg
under the United States — Luxembourg Income Tax Treaty), then Purchaser shall be liable for, and
shall indemnify and hold Parent harmless against, any deduction or withholding that may arise under
applicable Law in respect of any Tax that would not have so arisen if Chartreuse et Mont-Blanc LLC
(or such other company that is resident in France under the United States – France Income Tax
Treaty or Luxembourg under the United States — Luxembourg Income Tax Treaty) had been the
Purchaser.




ARTICLE 3.

CLOSING




          3.1 Date and Place of Closing. Subject to the delivery of the documents, instruments
and other closing deliveries contemplated by Section 3.2, the closing of the sale and purchase of
the Securities pursuant to this Agreement (the “Closing”) shall occur on the Closing Date
as promptly as practicable after the completion of the Restructuring at the offices of Willkie Farr
& Gallagher LLP, 21-23 rue de la Ville l’Evêque, Paris, France.




          3.2 Closing Transactions and Deliveries. On the Closing Date:





          3.2.1 The Parent shall deliver or cause to be delivered to the Purchaser:




          (a) duly executed transfer forms (ordres de mouvement) relating to the Company Shares
in favor of the Purchaser;




          (b) the share transfers registry (registre de mouvements de titres) together with the
individual shareholders’ accounts (comptes individuels d’actionnaires), reflecting the
transfer of the Company Shares to the Purchaser, as well as the statutory books and records
of the Company (and each of the other Acquired Companies, to the extent requested by the
Purchaser prior to the Closing);




          (c) written evidence that the Company’s works council (comité d’entreprise) has given
its opinion with respect to the transfer of the Company Shares to the Purchaser;




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          (d) certificates representing the North American Shares accompanied by stock powers for
transfer of such certificates and the North American Shares duly executed in blank;




          (e) a pay-off letter from each Person to whom any Third-Party Indebtedness is owed, in
each case in form and substance reasonably satisfactory to the Purchaser, evidencing that,
upon payment on the Closing Date of the respective amounts set forth in such payoff letters,
all Third-Party Indebtedness owed to such Persons will be paid in full and all of the
Acquired Companies will be released in full from their obligations to such Person in
relation to any and all Third-Party Indebtedness owed to such Person;




          (f) the written resignations of such directors (or Persons in similar positions) and
mandataires sociaux of the Acquired Companies as are listed in Schedule 3.2.1(f)
(including, to the extent customary in the jurisdiction of the relevant Acquired Companies,
acknowledgements from such individuals that they have no claims in their capacities as
directors (or Persons in similar positions) or mandataires sociaux against any of the
Acquired Companies for loss of office or otherwise, including redundancy and unfair
dismissal);




          (g) evidence, in form and substance reasonably satisfactory to the Purchaser, that the
Restructuring has been completed in accordance with the provisions set forth on Schedule B;




          (h) an instrument of transfer, duly executed by Pilot, relating to the Acquired Note in
favor of the Purchaser; and




          (i) a non-foreign status affidavit signed by Quiksilver Americas dated as of the
Closing Date, sworn under penalties of perjury and in form and substance required under the
Treasury Regulations issued pursuant to Section 1445 of the Code.



               3.2.2 The Purchaser shall:




          (a) pay in cash, by wire transfer of immediately available funds to the bank account(s)
designated by the Parent no later than the third Business Day prior to the Closing Date, an
amount equal to (i) the Cash Consideration, less (ii) the Notified Remaining Offset Amount,
plus (iii) the amount of Cash in the System;




          (b) deliver or cause to be delivered to the Parent an original counterpart of the Note,
duly executed by the issuer thereunder; and




          (c) pay on behalf, and for the benefit of, the relevant Acquired Companies, the
Notified Remaining Offset Amount in accordance with Section 2.3(d).



               3.2.3 The Parties shall execute all instruments and documents and otherwise take all actions
as shall be necessary or required by Law and this Agreement to transfer the Securities and
consummate the Transaction as provided in this Agreement.



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ARTICLE 4.

REPRESENTATIONS AND WARRANTIES

OF THE PARENT, PILOT, MERIBEL AND QUIKSILVER AMERICAS




          Except as set forth in the attached Disclosure Schedule or pursuant to the Factoring
Agreements, each of the Parent, Pilot, Meribel, and Quiksilver Americas hereby jointly and
severally represents and warrants to the Purchaser that all of the statements contained in this
ARTICLE 4 were true, accurate and correct as of the Initial Offer Letter Date and are true,
accurate and correct as of the Closing Date, unless the statement refers to only one such date or
another specified date, in which case it is made solely at such one or specified date. For purposes
of the representations and warranties of the Parent, Pilot, Meribel and Quiksilver Americas
contained in this ARTICLE 4, disclosure in any section of the Disclosure Schedule of any facts or
circumstances shall be deemed to be adequate response and disclosure of such facts or circumstances
with respect to any representations or warranties by the Parent, Pilot, Meribel and Quiksilver
Americas contained in this ARTICLE 4 calling for disclosure of such information, whether or not
such disclosure is specifically associated with or purports to respond to one or more such
representations or warranties, provided that it is reasonably apparent on the face of such
disclosure that it applies to such representations and warranties. The inclusion of any information
in the Disclosure Schedule shall not be deemed to be an admission or evidence of the materiality of
such item, nor shall it establish a standard of materiality for any purpose whatsoever.




          4.1 Representations and Warranties Regarding the Parent, Pilot, Meribel, Quiksilver
Americas and the Acquired Companies.




               4.1.1 Organization and Good Standing. Each of the Parent, Pilot, Meribel and
Quiksilver Americas is a legal entity having the corporate form specified in this Agreement, duly
organized and incorporated and validly existing under the Laws of its jurisdiction of
incorporation.



               4.1.2 Power and Authority. On the Closing Date:




          (a) Each Person signing this Agreement on behalf of the Parent, Pilot, Meribel and
Quiksilver Americas has all requisite power and authority to execute and deliver this
Agreement and bind each of the Parent, Pilot, Meribel and Quiksilver Americas (as
applicable) under this Agreement.




          (b) Each of the Parent, Pilot, Meribel and Quiksilver Americas has full corporate power
and authority to execute and deliver this Agreement and to consummate the Transaction.




          (c) The execution, delivery and performance of this Agreement and the consummation of
the Transaction by each of the Parent, Pilot, Meribel and Quiksilver Americas have been duly
and validly authorized by all requisite action and no other corporate action on the part of
any of the Parent, Pilot, Meribel or Quiksilver Americas is necessary to authorize the
execution, delivery and performance by any of them of this Agreement and the consummation of
the Transaction.



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               4.1.3 Valid and Binding. On the Closing Date, this Agreement has been duly executed
and delivered by each of the Parent, Pilot, Meribel and Quiksilver Americas and, assuming due and
valid authorization, execution and delivery hereof by the Purchaser, as of such date, this
Agreement constitutes a valid and binding obligation of each of the Parent, Pilot, Meribel and
Quiksilver Americas, enforceable against each of them in accordance with its terms, except as
limited by applicable bankruptcy, insolvency, reorganization, moratorium, fraudulent conveyance and
other similar laws of general application affecting enforcement of creditors’ rights generally.



               4.1.4 No Violation. Except as set forth in Schedule 4.1.4, neither the
execution and delivery of this Agreement, nor the consummation of the Transaction, nor the
compliance with or fulfillment of the terms, conditions or provisions hereof by any of the Parent,
Pilot, Meribel or Quiksilver Americas does or will:




          (a) conflict with or violate any provision of its or any Acquired Company’s Governing
Documents;




          (b) conflict with, breach, constitute a default or an event of default under any of the
terms of, result in the termination of, accelerate the maturity of, any agreement or
instrument to which it or an Acquired Company is a party or by which any of its or any
Acquired Company’s assets or properties may be bound; or




          (c) subject to making filings required to achieve, and the receipt of, Antitrust
Clearance, constitute a violation by it or any Acquired Company of any Laws to which it is
subject or to which any of its or any Acquired Company’s assets or properties are subject,
or otherwise require consents, approvals, authorizations, registrations or filings by, or
with, a Governmental Body,


excluding from the foregoing clauses (b) and (c) such violations, breaches or defaults which (i)
would not, individually or in the aggregate, have a material adverse effect on the ability of any
of the Parent, Pilot, Meribel or Quiksilver Americas to consummate the Transaction, or (ii) would
become applicable as a result of the business or activities in which the Purchaser is or proposes
to be engaged or as a result of any acts or omissions by, or the status of any facts pertaining to,
the Purchaser.




               4.1.5 Consents. Except for Antitrust Clearances, neither the Parent, nor Pilot, nor
Meribel, nor Quiksilver Americas is subject to the making of any filings, or otherwise required to
obtain any consent, approval, authorization, registration or make any filing by, or with, a
Governmental Body, which would condition the execution, delivery or performance by any of them of
this Agreement.



               4.1.6 Taxes.




          (a) Each of Parent, Pilot, Meribel, and Quiksilver Americas has filed all material
income Tax Returns that it was required to file for each taxable period during which any of
the Acquired Companies was a member of the group. All such Tax Returns were true, correct
and complete in all material respects.



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          (b) All material income Taxes owed by any of Parent, Pilot, Meribel or Quiksilver
Americas (whether or not shown on any Tax Return) (i) have been paid for each taxable period
during which any of the Acquired Companies were a member of the group or (ii) are being
contested in good faith by appropriate proceedings.



          4.2 Representations and Warranties Regarding the Company and Rossignol US.




               4.2.1 Ownership and Possession of Securities.




          (a) As of the Initial Offer Letter Date, Meribel was the sole record and beneficial
owner of all the issued and outstanding shares of the Company, with the exception of a
maximum of 81,800 shares held in treasury by the Company, and had good and valid title to
all such shares, free and clear of all Encumbrances. As of the Closing Date, and immediately
after the Restructuring, Pilot and Meribel are the sole record and beneficial owners of all
the issued and outstanding shares of the Company, with the exception of a maximum of 81,800
shares held in treasury by the Company, and have good and valid title to all the Company
Shares, free and clear of all Encumbrances, except for any Encumbrances created by this
Agreement.




          (b) Quiksilver Americas is the sole record and beneficial owner of all the issued and
outstanding shares of capital stock of Rossignol US and has good and valid title to the
North American Shares, free and clear of all Encumbrances, except for any Encumbrances
created by this Agreement.




          (c) Pilot is the sole record and beneficial owner of the Acquired Note and has good and
valid title to the Acquired Note, free and clear of all Encumbrances, except for any
Encumbrances created by this Agreement.



               4.2.2 Good Title Conveyed




          (a) The duly executed transfer forms (ordres de mouvement) relating to the Company
Shares, to be delivered to the Purchaser pursuant to Section 3.2.1(a), will be sufficient
for the Company, acting as account holder, to record the name of the Purchaser as owner of
the Company Shares, and, upon such delivery of such executed transfer forms and the
recording of the name of the Purchaser as owner of the Company Shares in the Company’s
statutory registers pursuant to such transfer order, the Purchaser will acquire good, valid
and marketable title to the Company Shares, free and clear of all Encumbrances.




          (b) Upon the delivery of the certificates representing the North American Shares,
accompanied by stock powers for transfer of such certificates and the North American Shares
duly executed in blank, pursuant to Section 3.2.1(c), the Purchaser will acquire good, valid
and marketable title to the North American Shares, free and clear of all Encumbrances.




          (c) Upon the delivery of the instrument of transfer relating to the Acquired Note
pursuant to Section 3.2.1(h), the Purchaser will acquire good, valid and



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marketable title to the Acquired Note, free and clear of all Encumbrances, provided
that such transfer shall be enforceable against third parties subject to the delivery of
notice thereof by the Purchaser to the Company, in the manner prescribed by article 1690 of
the French Civil Code.



               4.2.3 Capitalization; Subsidiaries




          (a) On the Closing Date, and immediately after the Restructuring, the share capital of
the Company consists of (i) 14,997,843 ordinary shares (actions ordinaires) owned by Meribel
as of the Initial Offer Letter Date, (ii) the Additional Company Shares (together with the
shares described in the immediately preceding clause (i), the “Company Shares”), and
(iii) a maximum of 81,000 ordinary shares (actions ordinaires) held in treasury by the
Company. The Company Shares are free and clear of all Encumbrances, have been validly
issued and are fully paid and nonassessable, and were not issued in violation of any
preemptive or similar rights. Except for the Company Shares, the Company Options and the
ordinary shares held in treasury by the Company, (i) there are no shares or other equity
interests of the Company issued or outstanding, (ii) there are no securities, options,
warrants, calls, preemptive or subscription rights (other than the statutory droit
préférentiel de souscription) or other rights, agreements, arrangements or commitments of
any kind, that could require the Company to issue, sell or otherwise cause to become
outstanding, any shares or other equity interest of the Company, or require the Company to
grant or enter into any such option, warrant, call, preemptive, subscription or other right,
agreement, arrangement or commitment, and (iii) there are no securities convertible into,
exchangeable for, or carrying the right to acquire, or any voting agreements with respect
to, or restrictions on transfer of (other than under applicable securities Laws or pursuant
to this Agreement), any shares or other equity interests of the Company. There are no
bonds, debentures, notes or other Indebtedness of the Company having the right to vote or
consent (or, convertible into, or exchangeable for, securities having the right to vote or
consent) on any matters requiring a vote of the holders of shares or other equity interests
of the Company under applicable Law.




          (b) The authorized capital stock of Rossignol US consists of 5,000 shares of common
stock, of which 2,142.86 shares (the “North American Shares”) are issued and
outstanding. The North American Shares are free and clear of all Encumbrances, have been
validly issued and are fully paid and nonassessable, and were not issued in violation of any
preemptive or similar rights. Except for the North American Shares, (i) there are no shares
of capital stock or other equity interests of Rossignol US issued or outstanding, (ii) there
are no securities, options, warrants, calls, preemptive or subscription rights or other
rights, agreements, arrangements or commitments of any kind, that could require Rossignol US
to issue, sell or otherwise cause to become outstanding, any shares of capital stock or
other equity interest of Rossignol US, or require Rossignol US to grant or enter into any
such option, warrant, call, pre-emptive, subscription or other right, agreement, arrangement
or commitment and (iii) there are no securities convertible into, exchangeable for, or
carrying the right to acquire, or any voting agreements with respect to, or restrictions on
transfer of (other than under applicable securities Laws or pursuant to this Agreement), any
capital stock or other equity interests of Rossignol US. There are no bonds, debentures,
notes or other



- 26 - 









 







Indebtedness of Rossignol US having the right to vote or consent (or, convertible into,
or exchangeable for, securities having the right to vote or consent) on any matters
requiring a vote of the holders of shares or other equity interests of Rossignol US under
applicable Law.




          (c) Schedule 4.2.3(c) sets forth for each Acquired Company (other than the
Company and Rossignol US), as of the Closing Date, and immediately after the consummation of
the Restructuring: (i) the number of shares, capital stock or other equity interests that
such Acquired Company is authorized to issue, (ii) the number of such Acquired Company’s
issued and outstanding shares, capital stock or other equity interests, the names of the
record holders thereof and the number of such shares, capital stock or other equity
interests held by each such holder and (iii) the number of such Acquired Company’s shares,
capital stock or other equity interests held in treasury. All issued and outstanding
shares, capital stock or other equity interests of each such Acquired Company are free and
clear of all Encumbrances, have been validly issued and are fully paid and nonassessable,
and were not issued in violation of any preemptive or similar rights. Except as set forth
in Schedule 4.2.3(c), (A) there are no shares, capital stock or other equity interests of
any such Acquired Company issued or outstanding, (B) there are no securities, options,
warrants, calls, preemptive or subscription rights (other than, as applicable, the statutory
droit préférentiel de souscription) or other rights, agreements, arrangements or commitments
of any kind, that could require any such Acquired Company to issue, sell or otherwise cause
to become outstanding, any shares, capital stock or other equity interests thereof, or
require such Acquired Company to grant or enter into any such option, warrant, call,
preemptive, subscription or other right, agreement, arrangement or commitment, and (C) there
are no securities convertible into, exchangeable for, or carrying the right to acquire, or
any voting agreements with respect to, or restrictions on transfer of (other than under
applicable securities Laws or pursuant to this Agreement), any shares, capital stock or
other equity interests of any such Acquired Company. There are no bonds, debentures, notes
or other Indebtedness of any such Acquired Company having the right to vote or consent (or,
convertible into, or exchangeable for, securities having the right to vote or consent) on
any matters requiring a vote of the holders of shares or other equity interests of any such
Acquired Company under applicable Law. Neither the Company nor any Company Subsidiary
directly or indirectly owns, controls or has any investment or other ownership interest in
any Person other than the Company Subsidiaries as described in Schedule 4.2.3(c), and
neither Rossignol US nor any North American Subsidiary directly or indirectly owns, controls
or has any investment or other ownership interest in any Person other than the North
American Subsidiaries as described in Schedule 4.2.3(c).




          (d) Except as set forth in Schedule 4.2.3(d) or as expressly contemplated by
the Restructuring, none of the Acquired Companies: (i) has agreed or is obligated to make
any future debt or equity investment in or capital contribution to any Person; (ii) is or
has been a shareholder, participant or member of any Person (including any association,
“groupement d’intérêt économique”, “société civile”, “société de personnes”, “société en
participation” or “société en nom collectif”) in respect of which it has or could have any
future liability in its capacity as a shareholder, participant or member of such Person ,
including any obligation to contribute to the equity, capital or



- 27 - 









 







share capital of such Person or to fund or participate in the payment of its debts; or
(iii) can, by virtue of any act or omission as a director, manager or other “mandataire
social” or as a “de facto” manager of another Person, be held liable to pay all or any part
of the debts of such Person.




          (e) Parent has provided or made available to the Purchaser true, accurate and complete
copies of each Liquidity Agreement. Other than this Agreement, the Liquidity Agreements and
the Board decisions setting out the respective terms and conditions of the Company Options,
there are no Contracts, agreements, arrangements or understandings (whether written or oral)
by or among, or otherwise binding upon, the Parent or any of its Affiliates (including any
Acquired Company), on the one hand, and any holder of Company Options, on the other hand,
with respect to the Company Options. Neither Parent nor any of its Affiliates (including any
Acquired Company) is in breach or default under any of the Liquidity Agreements and, to the
Knowledge of the Parent, (i) no other party to any Liquidity Agreement is in breach or
default thereunder, and no event has occurred which, with due notice or lapse of time or
both, would constitute such a breach or default, and (ii) neither the Parent, Pilot,
Meribel, Quiksilver Americas, nor any Acquired Company has received any written notice of
any breach or default with respect to any Liquidity Agreement. From and after the Closing:
(A) no capital stock, shares or other equity interests of the Purchaser or any of its
Affiliates (including, from and after the Closing, any Acquired Company) will be issuable or
otherwise deliverable upon exercise of any Company Option, except shares of the Company that
are currently held in treasury and will be transferred to the Purchaser pursuant to Section
6.6; and (B) neither the Purchaser nor any of its Affiliates (including, from and after the
Closing, any Acquired Company) will have any liability or obligation under, pursuant to or
in connection with any Company Option or Liquidity Agreement, except (x) liabilities and
obligations arising from the terms and conditions of the Company Options and (y) liabilities
and obligations pursuant to Section 6.6 hereof.



          4.3 Representations and Warranties Regarding the Acquired Companies.




               4.3.1 Organization and Good Standing.




          (a) Schedule 4.3.1(a) sets forth the name, jurisdiction of incorporation or
organization and authorized share or equity capital of each Acquired Company and the
respective jurisdictions in which each Acquired Company is qualified to do business.




          (b) Except as set forth in Schedule 4.3.1(b), each Acquired Company is (i) duly
organized, validly existing and in good standing under the laws of its jurisdiction of
incorporation or organization, and (ii) duly qualified or licensed to do business as a
foreign corporation in good standing in every jurisdiction in which such qualification is
required, except where the failure to be so licensed or qualified is not and would not
reasonably be expected to be material to the operations of such Acquired Company.



               4.3.2 Sufficiency of Assets; Title and Interest. Except as set forth in Schedule
4.3.2, one or more Acquired Companies owns (and has good, valid and marketable title



- 28 - 









 







in, to and under) all right, title and interest in, to and under, or has a valid leasehold
interest in, all of the properties and assets (whether real, personal, tangible, intangible or
mixed) which constitute the material properties and assets that are used in connection with the
operations of the Business, and such properties and assets are sufficient for the Purchaser to
conduct the Business from and after the Closing Date, as it has been conducted in all material
respects by the Parent and its Affiliates (including the Acquired Companies) prior to the Closing
Date.



               4.3.3 Intellectual Property.




          (a) Schedule 4.3.3(a) sets forth a true, accurate and complete list (including
the registration numbers, if any, and respective owners) of all Registered Intellectual
Property used or held for use in connection with the Business. One or more of the Acquired
Companies owns all right, title and interest in, to and under, or has valid licenses to use,
any and all Intellectual Property that is material to the Acquired Companies, taken as a
whole, or the Business (the “Material Intellectual Property”).




          (b) Except as set forth on Schedule 4.3.3(b), (i) the conduct of the Business
and the use of the Material Intellectual Property by the Acquired Companies does not violate
or infringe any intellectual property or other proprietary rights of any other Person in any
material respect; (ii) no Acquired Company has received any written notice from any Person
pertaining to or challenging any Acquired Company’s ownership or right of an Acquired
Company to use any of the Material Intellectual Property and, to the Knowledge of the
Parent, there is no existing fact or circumstance that would be reasonably expected to give
rise to any such challenge; and (iii) to the Knowledge of the Parent, no third party is
infringing upon any of the Material Intellectual Property.




          (c) All renewal fees, maintenance fees, and other fees in respect of the Material
Intellectual Property owned by the Acquired Companies that have become due on or prior to
the Initial Offer Letter Date or the Closing Date have been paid in full, except where the
failure to pay would not reasonably be expected to result in any significant cost to any of
the Acquired Companies or a material adverse effect on the Business.




          (d) Schedule 4.3.3(d) sets forth the licenses pursuant to which the Acquired
Companies grant to any other Person the right to use Material Intellectual Property and
pursuant to which any other Person grants to the Acquired Companies the right to use
Material Intellectual Property owned by any Person other than the Acquired Companies. None
of the Acquired Companies is in material breach or default with respect to any of such
material licenses and to the Knowledge of the Parent (i) no other party thereto is in
material breach or default with respect to such licenses, and (ii) no event has occurred
which, with due notice or lapse of time or both, would constitute such a default, except, in
each case, where such default would not reasonably be expected to result in any significant
cost to any of the Acquired Companies or a material adverse effect on the Business.




          (e) Schedule 4.3.3(e) sets forth a true, accurate and complete list of all
material Software used by the Acquired Companies in the operation of the Business. The



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Acquired Companies have not installed any unlicensed copies of any mass market software
that is available in consumer retail stores or otherwise commercially available and subject
to “shrink-wrap” or “click-through” license agreements on any Acquired Company’s computers
or computer systems.



               4.3.4 Environmental Matters. Except as set forth in Schedule 4.3.4 and for
any matter that is not and would not be expected to be material to the operations of the Acquired
Companies, taken as a whole, or the Business:




          (a) (i) each of the Acquired Companies has complied with all applicable Environmental
Laws, (ii) no Acquired Company is subject to any pending Environmental Claim, (iii) no
Acquired Company has received any written notice of violation of any Environmental Laws from
any Governmental Body or other Person, and (iv) the Acquired Companies have obtained all
Permits required under Environmental Laws for the conduct of the Business;




          (b) there has been no occurrence of any accident or incident that remains outstanding,
uncured or unresolved resulting in damage to the environment on any property owned or leased
by an Acquired Company from any act, activity or failure to act of an Acquired Company;




          (c) to the Knowledge of the Parent, (i) there is no pending or threatened Environmental
Claim against any of the Acquired Companies or otherwise relating to any of the Properties
or the Non-Operational Properties, and (ii) there are no past or present actions,
activities, circumstances, conditions, events or incidents, including, without limitation,
the release, emission, discharge, presence or disposal of any Hazardous Materials, that
would reasonably be expected to form the basis of any Environmental Claim relating to the
Business or any of the Properties or against any of the Acquired Companies.




          (d) to the Knowledge of the Parent, there has been no release or threatened release of
any Hazardous Material on any property owned or leased by an Acquired Company that remains
outstanding, uncured or unresolved for which an Acquired Company is or may be legally or
contractually liable;




          (e) to the Knowledge of the Parent, none of the Properties has contained any
polychlorinated biphenyls, asbestos, asbestos-containing material or urea formaldehyde
insulation;




          (f) none of the Acquired Companies has any obligation under any agreement with any
Person or pursuant to an order of a Governmental Body to conduct any site investigation or
cleanup of or with respect to Hazardous Materials, and none of the Acquired Companies has
assumed or undertaken (either expressly or by operation of law) any liability or corrective,
investigatory or remedial obligation of any other Person relating to any Environmental Law.



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               4.3.5 Tax Matters.




          (a) All material Tax Returns required to be filed by or with respect to each Acquired
Company on or prior to the Initial Offer Letter Date or the Closing Date have been filed
(and in the case of any U.S. or French income tax returns for the 2006, and subsequent,
taxable year, timely filed) with appropriate Taxing Authorities, and such Tax Returns are
true, correct and complete in all material respects.




          (b) All material Taxes required to be paid by the Acquired Companies that were due and
payable prior to the Initial Offer Letter Date or the Closing Date (whether or not shown as
due on such Tax Returns) have been paid in full or will be paid within the required time
periods, or are being contested in good faith by appropriate proceedings (and have been
disclosed to Purchaser). Any liability of the Acquired Companies for Taxes not yet due or
payable for periods through the Closing Date have been adequately provided for in accordance
with GAAP in the Bringdown Balance Sheet.




          (c) Except as set forth in Schedule 4.3.5(c), there are no material pending Tax
Audits related to the liability of any Acquired Company for Taxes and no written notice of
any proposed, material Tax Audit, request for information relating to material Tax matters,
notice of deficiency or proposed adjustment for any amount of material Tax has been received
with respect to any Acquired Company that has not been previously resolved.




          (d) Except as set forth in Schedule 4.3.5(d), no material claim has been made
by any Taxing Authority in writing in a jurisdiction where any Acquired Company has not
filed a Tax Return that it is or may be subject to Tax by such jurisdiction which has not
been previously resolved.




          (e) There is no outstanding request for any extension of time within which to pay any
material Taxes or file any material Tax Returns with respect to the Acquired Companies.




          (f) There has been no waiver or extension of any applicable statute of limitations for
the assessment or collection of any material Taxes with respect to the Acquired Companies in
respect of any on-going Tax Audit.




          (g) There are no material pending requests for rulings or closing agreements by or on
behalf of any Acquired Company with respect to Taxes (other than a request for determination
of the status of a qualified pension plan).




          (h) All material Taxes relating to the Acquired Companies required to have been
withheld or collected and paid have been withheld and paid over to the appropriate Taxing
Authorities or have been adequately provided for in the books and records of the Acquired
Companies.




          (i) Neither Rossignol US nor any of its Subsidiaries (i) is a party to any Tax sharing
agreement or similar arrangement (other than any Tax sharing agreements solely among Parent,
Rossignol US, and/or their subsidiaries) or (ii) has any liability for the Taxes of any
Person (other than as a member of a group the common



- 31 - 









 







parent of which was the Parent) under Reg. § 1.1502-6 promulgated under the Code (or
any similar provision of state, local, or foreign law).




          (j) No Acquired Company has engaged in any “reportable transaction” or “listed
transaction,” as defined under Treasury Regulation sections 1.6011-4(b) and 301.6111-2(b),
respectively, or any other transaction the principal purpose of which was the evasion of
Taxes.




          (k) No Acquired Company has distributed stock of another Person, or has had its stock
distributed by another Person, in a transaction that was purported or intended to be
governed in whole or in part by Section 355 or Section 361 of the Code.




          (l) No Acquired Company will be required to include any material item of income in, or
exclude any material item of deduction from, taxable income for any taxable period (or
portion thereof) ending after the Closing Date as a result of (i) any change in method of
accounting for a taxable period ending on or prior to the Closing Date, (ii) any “closing
agreement” as described in Section 7121 of the Code (or any corresponding or similar
provision of state, local or foreign Law) executed on or prior to the Closing Date, (iii)
any installment sale or open transaction disposition made on or prior to the Closing Date,
(iv) any prepaid amount received on or prior to the Closing Date, or (v) the Restructuring
that is not otherwise covered by the indemnity provision of Section 7.1(c) hereof.




          (m) No Acquired Company has a permanent establishment outside of the national
jurisdiction in which it was formed.




          (n) All material transactions between any Acquired Company, on the one hand, and the
Parent or any of its Affiliates (including any other Acquired Company), on the other, have
been effected on terms and conditions which were not materially more or less favorable to
the relevant Acquired Companies than would have been obtained in arm’s length transactions
with independent third parties.




          (o) The Company Subsidiaries listed on Schedule 4.3.5(o) have opted for tax
consolidation with Pilot as the parent company of the tax consolidated group. Schedule
4.3.5(o) sets forth a true, accurate and complete copy of the tax-sharing agreement
(convention d’intégration) among such Acquired Companies and Pilot (the “Pilot Group Tax
Sharing Agreement”). Except in respect of such arrangements or as otherwise disclosed
on Schedule 4.3.5(o), none of such Acquired Companies: (i) is or has ever been part
of a tax group (intégration fiscale) with or including the Parent or any of its Affiliates
(other than the Acquired Companies) or any other Person; or (ii) is or has ever been a party
to, or bound by, any Contract or other arrangement with any other Person relating to the
allocation, payment or sharing of Taxes in respect of which such Acquired Company could have
any liability after the Closing Date.




          (p) Except for the loss of the current tax group relief (intégration fiscale), of which
Pilot is a parent company, the sale and purchase of the Company Shares and the consummation
of the other transactions contemplated hereby will not



- 32 - 









 







result in the modification or loss of any favorable Tax regime applicable to any of the
Acquired Companies. In particular, the sale and purchase of the Company Shares shall not
result in any Acquired Company losing any right it may have to carry forward available tax
losses other than any such losses incurred by the Company Subsidiaries listed on Schedule
4.3.5(p) and transferred to the tax group of which Pilot is the parent company.




          (q) In the event of sale or disposition by the Company or any French Company of the
shares or other securities of any Subsidiary or any other asset, the capital gain
(plus-value) resulting from such sale or disposition will be calculated by reference to the
corresponding value appearing in the statutory accounts (comptes sociaux) of the Acquired
Companies.




          (r) Schedule 4.3.5(r) indicates, with respect to each of the Acquired
Companies, the most recent fiscal year for which the Tax Return pertaining to income Taxes
(impôts sur les sociétés or the equivalent in any jurisdiction other than France) owed by or
on behalf of such Acquired Company has been audited by the relevant Governmental Body or is
closed by the applicable statute of limitations generally applicable to income Taxes in
jurisdiction of the relevant Acquired Company.




          (s) Except as set forth in Schedule 4.3.5(s), none of the Acquired Companies
(i) organized in France, is, or has been considered to be, a real estate company (société à
prépondérance immobilière) for purposes of Section 726-I-2 of the French Tax Code and (ii)
incorporated in the United States is, or has been considered to be, a “United States real
property holding corporation” within the meaning of Section 897 of the Code (during the
applicable period specified in Section 897 of the Code).




          (t) There are no material Encumbrances for Taxes (other than Taxes not yet due and
payable) upon any of the assets of the Acquired Companies.



               4.3.6 Employment Matters.




          (a) Schedule 4.3.6(a) sets forth a true, accurate and complete list of all: (i)
directors (or Persons in similar positions), including mandataires sociaux, of each of the
Acquired Companies as of the Initial Offer Letter Date; (ii) collective bargaining
agreements applicable to the employees of the Acquired Companies; and (iii) employees of the
Acquired Companies entitled to an annual salary or other compensation in excess of
€80,000 (the “Listed Employees”).




          (b) Except as disclosed in Schedule 4.3.6(b), each of the Acquired Companies
has complied in all material respects with (A) all applicable Laws relating to (i)
employment (including such Laws with respect to work time reduction and health and safety at
the work place, consultation with employees and employee representatives), (ii) employment
practices and (iii) terms and conditions of employment, including without limitation
performance of obligations regarding employee benefits and entitlements, and (B) the terms
of all applicable collective bargaining agreements applicable to any of the Acquired
Companies, and there are no claims (in writing) pending against any of the



- 33 - 









 







Acquired Companies alleging that any Acquired Company does not comply with such Laws
and collective bargaining agreements.




          (c) All payments due to employees of the Acquired Companies (including in connection
with any redundancy plan (plan social)) have been made or properly recorded as a liability
on the books of the appropriate Acquired Company (to the extent required by applicable
accounting principles), or are being contested in good faith by appropriate proceedings.




          (d) Except as disclosed in Schedule 4.3.6(d), since October 31, 2007, none of
the Acquired Companies has (i) paid or agreed to pay any bonuses or made or agreed to make
any increase in the rate of wages, salaries or other remuneration of any of its directors or
employees other than in the ordinary course of business and in a manner consistent with past
practice or as dictated by applicable Law or the applicable collective bargaining
agreements, or (ii) changed its hiring or termination policies or practices in any material
respect. There are no advances or other loans outstanding from any Acquired Company to any
employee thereof.




          (e) Except to the extent disclosed on Schedule 4.3.6(e), there are no
outstanding employment, severance or other contracts, arrangements or policies or any plans
or arrangements providing for termination payments, insurance coverage, disability benefits,
vacation benefits, retirement benefits, deferred compensation, profit sharing, bonuses,
stock options or other forms of incentive compensation or post-retirement benefits, in any
such case payable by one or more Acquired Companies or for or in respect of which any
Acquired Company is or might be liable, covering directors or employees or former directors
or employees of the Acquired Companies which provide for any individual or collective terms
and conditions beyond mandatory obligations under the applicable collective bargaining
agreements or the applicable requirements of Law.




          (f) Except as disclosed on Schedule 4.3.6(f), (i) there is no employee of any
Acquired Company who is or may be entitled to any compensation as a result of the
consummation of the sale of the Securities contemplated by this Agreement or otherwise as a
result of the Transaction, including, for the avoidance of doubt, as a result of the change
of control of any Acquired Company pursuant to the Transaction, and (ii) none of the Listed
Employee has indicated in writing his or her intent to terminate his or her employment as a
result of the transactions contemplated by this Agreement.




          (g) As of the Initial Offer Letter Date, there was no labor strike, slowdown or work
stoppage or lockout occurring or, to the knowledge of the Parent, threatened against or
affecting any of the Acquired Companies.




          (h) As of the Closing the Parent has made (or has caused the relevant Acquired
Companies to make) such notifications to and/or effected such consultations with, the
workers councils (comités d’entreprise) or equivalent bodies of the Acquired Companies as
are required by applicable Law in connection with the transactions contemplated by this
Agreement.



- 34 - 









 






          (i) There are no works councils at Rossignol Skis Deutschland GmbH, Rossignol
Österreich GmbH and/or Rossignol GmbH and none of said companies is subject to any
collective bargaining agreements with trade unions. Rossignol Skis Deutschland GmbH,
Rossignol Österreich GmbH and Rossignol GmbH have not awarded or promised any retirement
benefits or other post contractual benefits to existing or former employees or directors.



               4.3.7 Absence of Litigation.




          (a) Except as disclosed in Schedule 4.3.7(a) and for any matter that is not and
would not be expected to be material to the Business or operations of the Acquired Companies
taken as a whole, there is no Proceeding pending or, to the Knowledge of the Parent,
threatened by or against any Acquired Company. Without limiting, and in furtherance of, the
foregoing, there is no Proceeding pending or, to the Knowledge of the Parent, threatened
against or involving any Acquired Company that is aimed at preventing bankruptcy (mesures de
prévention des difficultés des entreprises under Book VI, Title I of the French Code de
Commerce), and no similar measures have been initiated with respect to any of the Acquired
Companies.




          (b) Except for Proceedings related to the review of the Transaction by any Governmental
Body under the Antitrust Laws, there is no Proceeding pending or, to the Knowledge of the
Parent, threatened against the Parent, Pilot, Meribel or Quiksilver Americas that,
individually or in the aggregate, would reasonably be expected to impede, hinder, delay or
prevent the ability of the Parent, Pilot or Quiksilver Americas to complete the Closing or
otherwise consummate the Transaction.



               4.3.8 Financial Statements. Parent has delivered to the Purchaser true and complete
copies of the Parent Consolidated Financial Statements and the Balance Sheet (collectively, the
“Financial Statements”). The Parent delivered to the Purchaser on or before the third
Business Day prior to the date hereof a true and complete copy of the Bringdown Balance Sheet. The
Financial Statements (i) have been prepared based on the books and records of the Parent and its
Subsidiaries, consistent with the Projections, in accordance with GAAP (with respect to the Parent
Consolidated Financial Statements, as in effect as of October 31, 2007 and, with respect to the
Balance Sheet, as in effect as of the date thereof) consistently applied throughout the periods
covered thereby, except, in the case of the Balance Sheet, for the omission of footnote disclosures
required by GAAP (as in effect as of the date of the Balance Sheet) and the omission of a statement
of shareholder’s equity and comprehensive income, and (ii) fairly present in all material respects
the financial position of the Parent on a consolidated basis as of the dates thereof and (in the
case of the Parent Consolidated Financial Statements) the results of operations, changes in
shareholders’ equity and comprehensive income, and cash flows for the periods covered thereby. The
Bringdown Balance Sheet (A) has been diligently prepared based on the books and records of the
Acquired Companies, taking into account the purposes for which they have been prepared (including
for the purpose of including the financial information contained therein in financial statements or
information of the Parent that is filed with or furnished to the SEC pursuant to securities Laws),
(B) fairly presents in all material respects the financial position of the Acquired Companies on a
consolidated basis as of the date thereof, and (C) except for the omission of footnote disclosures
required by GAAP (as in effect on the date of



- 35 - 









 







the Bringdown Balance Sheet), does not contain any material misstatement as to the financial
condition of the Acquired Companies, taken as a whole, as of the date thereof.



               4.3.9 Absence of Undisclosed Liabilities. Except as set forth in
Schedule 4.3.9 or pursuant to the Factoring Agreements or the Acquired Note, there are no
liabilities of the Acquired Companies, either accrued, absolute, contingent or otherwise, other
than those liabilities that: (a) are disclosed or reserved against on the Balance Sheet; or (b) are
not material and have arisen in the ordinary course of business consistent with past practice since
October 31, 2007; or (c) are not material to the operations of the Acquired Companies, taken as a
whole. Except as set forth in Schedule 4.3.9, no Acquired Company has any liability under any
exchange rate contract or interest rate protection agreement.



               4.3.10 Real Property.




          (a) Schedule 4.3.10(a) sets forth a true, accurate and complete list of the
addresses of all real property owned or leased by the Acquired Companies other than the
Non-Operational Properties (each, a “Property”; collectively, the
“Properties”).




          (b) Each Acquired Company, as applicable, has good, valid and marketable title in, to
and under all of the Properties designated in Schedule 4.3.10(a) as owned by such
Acquired Company (collectively, the “Owned Properties”) and all the Non-Operational
Properties and owns all right, title and interest in and to all leasehold estates and other
rights purported to be granted to them by the leases and other agreements relating to the
Properties as described in Schedule 4.3.10(a), in each case free and clear of any
Encumbrance except for: (i) any zoning or other restrictions or encumbrances established by
a Governmental Body; (ii) such utility and municipal easements and restrictions, if any, as
do not materially interfere with any Property used in the ordinary course of business; (iii)
any Encumbrances in respect of property Taxes that are not material or are not yet due; and
(iv) Encumbrances that, individually or in the aggregate, do not and would not be reasonably
expected to have a material adverse effect upon the Property or Properties affected thereby.
The Parent has provided or made available to the Purchaser copies of all existing surveys,
title insurance policies and their respective exception documents or evidence of ownership
chain (as relevant), to the extent in the possession or control of the Parent or any of its
Affiliates. Neither the Parent, Pilot, Meribel, Quiksilver Americas nor any Acquired Company
has received any notice that any building or structure, to the extent of the premises owned
or leased by an Acquired Company, or any appurtenance thereto or equipment therein, or the
operation or maintenance thereof, violates in any material respect any restrictive covenant
or any rule adopted by any Governmental Body. Neither the Parent, Pilot, Meribel, Quiksilver
Americas nor any Acquired Company has received written notice of any pending or threatened
condemnation proceeding, special assessment, tax certiorari or similar proceeding with
respect to any Property or Non-Operational Property. The applicable covenants, easements or
rights-of-way affecting the Properties do not impair in any material respect any Acquired
Company’s ability to use any Property in the operation of the Business as presently
conducted. Each Acquired Company has sufficient access to public roads, streets or the like
or valid perpetual easements over private streets, roads or



- 36 - 









 







other private property for such ingress to and egress from each Property to use each
Property in the operation of the Business.




          (c) Except as set forth in Schedule 4.3.10(c), neither the Parent, Pilot,
Meribel, Quiksilver Americas nor any Acquired Company has received any written notice (i) of
any pending or contemplated rezoning proceeding affecting any Property or Non-Operational
Property, or (ii) from any utility company or any Governmental Body of any fact or condition
that would be reasonably likely to result in any material or permanent discontinuation of
presently available sewer, water, electric, gas, telephone or other utilities or services
for any Property.




          (d) Except pursuant to the Transition Services Agreement, neither the Parent, Pilot,
Meribel, Quiksilver Americas nor any Acquired Company is party to any lease or license with
respect to any Owned Property or Non-Operational Property.




          (e) Except as set forth in Schedule 4.3.10(e), no part of any Owned Property or
Non-Operational Property, including, without limitation, any building or improvement
thereon, is subject to any purchase option, right of first refusal or first offer or other
similar right except such rights as may arise under applicable Law.




          (f) All brokerage commissions and other compensation and fees payable by the Company by
reason of the acquisition of any Owned Property or any Non-Operational Property have been
paid in full.




          (g) Each Acquired Company, as applicable, currently has a leasehold interest in those
Properties indicated in Schedule 4.3.10(a) as leased by such Acquired Company (each,
a “Leased Property”), and Schedule 4.3.10(g) sets forth a list of all
leases, licenses, permits, subleases and occupancy agreements, together with all amendments
and supplements thereto, through which such Acquired Company has rights in and to such
Leased Property (each, as may have been amended or supplemented, a “Lease”). Parent
has provided or made available to the Purchaser true, correct and complete copies of all
Leases.




          (h) Each Lease is in full force and effect. Neither Parent, Pilot, Meribel, Quiksilver
Americas, any Acquired Company nor any other party to a Lease has given to the other party
to such Lease notice of any material breach or default that remains uncured. No Acquired
Company is in material default under any Lease and, to the Knowledge of the Parent, no other
party to a Lease is in material default thereunder. To the Knowledge of the Parent, there
are no events which with the passage of time or the giving of notice or both would
constitute a material default by any Acquired Company or by any other party to such Lease.




          (i) Except pursuant to the Transition Services Agreement, as of the Closing Date
neither the Parent, Pilot, Meribel, Quiksilver Americas nor any of their respective
Affiliates (including any Acquired Company) is party to any sublease, license or other
agreement granting to any Person or entity (other than an Acquired Company)



- 37 - 









 







any right to the use, occupancy or enjoyment of any Leased Property or any portion
thereof.




          (j) Except as set forth in Schedule 4.3.10(j), there are no guaranties by or
from any of the Acquired Companies in favor of the lessors with respect to any Leased
Property.



               4.3.11 Absence of Certain Developments. Except as expressly contemplated by this
Agreement or pursuant to the Restructuring or the Factoring Agreements, and except as disclosed in
Schedule 4.3.11, from October 31, 2007 to the date of this Agreement, the Acquired Companies have
conducted the Business in the ordinary course consistent with past practice and there has not been:




          (a) any issuance, sale, delivery of, or agreement to issue, sell, or deliver, any
shares, capital stock, equity interests, bonds or other securities of any Acquired Company
(whether authorized and unissued or held in treasury), or grant of, or agreement to grant,
any options, warrants, or other rights of any Acquired Company calling for the issue, sale,
or delivery thereof;




          (b) any destruction of, damage to, or loss of, any asset of any Acquired Company that
is material to the Business (whether or not covered by insurance);




          (c) the declaration or making of, or any agreement to declare or make, any payment of
dividends or distribution of any asset of any kind whatsoever in respect of the shares,
capital stock or other equity interests of any Acquired Company (other than dividends or
distributions paid or payable to one or more Acquired Companies), nor any purchase,
redemption, or other acquisition or agreement to purchase, redeem, or otherwise acquire, any
of such shares, capital stock or other equity interests;




          (d) any agreement entered into granting any preferential rights to purchase any of the
material assets, properties or rights (tangible or intangible) of any Acquired Company
(including management and control thereof), or requiring the consent of any party to the
transfer and assignment of any such material assets, properties or rights (including
management and control thereof);




          (e) any agreement, commitment or obligation to make capital expenditures, after August
1, 2008, by the Acquired Companies exceeding (i) €4.6 million in the aggregate if the
Closing Date occurs on or prior to October 31, 2008, (ii) €5.7 million in the aggregate
if the Closing Date occurs after November 1, 2008 and on or prior to January 31, 2009, and
(iii) €11.9 million in the aggregate if the Closing Date occurs after February 1, 2009
and on or prior to April 30, 2009.




          (f) any loan made by any Acquired Company to any Person, any guaranty made by any
Acquired Company of any Indebtedness of any other Person or the incurrence by any Acquired
Company of any Indebtedness, except in each case (i) Indebtedness incurred by or payable to
another Acquired Company or the Parent or an Affiliate of the Parent; (ii) Indebtedness
incurred prior to the Initial Offer Letter Date; and (iii) Indebtedness incurred by an
Acquired Company in the ordinary course of



- 38 - 









 







business consistent with past practice, pursuant to agreements or Contracts that will
leave the Purchaser and the Acquired Companies with no liability or obligation whatsoever
from and after the Closing Date; or




          (g) any agreement or commitment by the Parent or any of its Affiliates (including
Pilot, Meribel, Quiksilver Americas and any Acquired Company) to do any of the things
described in the preceding clauses (a) through (f).



               4.3.12 Contracts and Commitments.




          (a) Schedule 4.3.12 sets forth a complete and accurate list of:




          (i) (A) for the calendar year ended on December 31, 2007: the top twenty-five
(25) customers of the Business, and the aggregate sales to such customers
(identifying the approximate percent of total sales derived from each such
customer); and (B) for the fiscal year ended on October 31, 2007, the top
twenty-five (25) suppliers, in each case by Euro volume of the Business and the
aggregate Euro volume of purchases (broken down by principal categories) by the
Business from such suppliers for such period, together with a list of each Contract
(other than sale or purchase orders) between any Acquired Company and any such
customer or supplier;




          (ii) each Contract (other than open sales orders) that involves the performance
of services for or the delivery of goods or materials to the Acquired Companies
during the Acquired Companies’ most recently completed fiscal year of amount or
value in excess of €150,000 (or the equivalent thereof in another currency, based
on the prevailing exchange rate on the close of business on the fifth Business Day
preceding the Initial Offer Letter Date) or pursuant to which any Acquired Company
is obligated to purchase future services, goods or materials in an amount or value
that is reasonably expected to exceed €150,000 (or the equivalent thereof in
another currency, based on the prevailing exchange rate on the close of business on
the fifth Business Day preceding the Initial Offer Letter Date);




          (iii) each Contract that was not entered into in the ordinary course of
business that involves future expenditures or receipts in excess of €150,000 (or
the equivalent thereof in another currency, based on the prevailing exchange rate on
the close of business on the fifth Business Day preceding the Initial Offer Letter
Date) to which an Acquired Company is a party or is otherwise bound;




          (iv) each license or other Contract with respect to Material Intellectual
Property to which any Acquired Company is a party or is otherwise bound other than
with respect to commercially available, off-the-shelf software;




          (v) each representative, distribution, sponsorship or sales agency Contract
which is not terminable within one hundred and twenty (120)



- 39 - 









 







days after the date hereof to which any Acquired Company is a party or is
otherwise bound;




          (vi) each Contract containing (A) covenants limiting the freedom, ability or
right of any Acquired Company to engage in any line of business, to offer or sell
any product or service or to compete with any Person or in any geographic area or
(B) covenants of another Person not to compete with any Acquired Company;




          (vii) each sole source supply Contract for the purchase of any material raw
material, component or product that is otherwise not generally available and for
which no replacement is available at a reasonable cost and on a timeframe that would
not disrupt the operation of the Business, and that is used in the manufacture of
any product or the provision of any service of the Business;




          (viii) all agreements with respect to the proposed acquisition of any other
Person, business or line of business, or a material portion of the assets of another
Person, to which any Acquired Company is a party or is otherwise bound;




          (ix) each agreement to which any Acquired Company is a party or is otherwise
bound with respect to (A) the sharing, contingent or otherwise, of profits,
revenues, losses, costs or liabilities of any Person (not including, for the
avoidance of doubt, indemnification provisions entered into in the ordinary course
of business) or (B) the receipt or payment by any Acquired Company of royalties in
excess of €100,000 per year; and




          (x) any material contract, agreement, binding bid, binding proposal, or binding
quotation with any Governmental Body to which an Acquired Company is bound to or
under or is a party.




          (b) Except as disclosed in Schedule 4.3.12(b) and for any matter that is not
and would not be expected to be material to the operations of the Acquired Companies taken
as a whole, no Acquired Company is in breach or default under any of the Contracts described
above and, to the Knowledge of the Parent, (i) no other party thereto is in breach or
default with respect to any of the above Contracts, and no event has occurred which, with
due notice or lapse of time or both, would constitute such a breach or default; and (ii)
neither the Parent, Pilot, Meribel, Quiksilver Americas, nor any Acquired Company has
received any written notice of any breach or default with respect to any of the above
Contracts.



               4.3.13 Indebtedness. Schedule 4.3.13 sets forth a true, accurate and complete
list (including each related Contract, the principal amount, the maturity date and the
administrative agent or Person serving in a similar capacity thereunder) of all Indebtedness of
each Acquired Company outstanding as of the Initial Offer Letter Date. No Acquired Company is in
material breach or default with respect to any of the Contracts listed in Schedule 4.3.13
(except for such breaches or defaults that would not reasonably be expected to be material to the



- 40 - 









 







operations of the Business) and, to the Knowledge of the Parent, no other party thereto is in
material breach or default with respect to any such Contract (except for such breaches or defaults
that would not reasonably be expected to be material to the operations of the Business), and no
event has occurred which, with due notice or lapse of time or both, would constitute such a
default. Neither the Parent nor any of its Affiliates (including Pilot, Meribel, Quiksilver
Americas and any Acquired Company) has received any written notice of any material breach or
default with respect to any such Contract which remains uncured.



               4.3.14 Compliance with Laws. Except as set forth on Schedule 4.3.14 and for
any matter that is not and would not be expected to be material to the operations of the Acquired
Companies, taken as a whole, or the Business, (i) each Acquired Company is in compliance with, and
during the two (2) year period ended on the date hereof, has not received any written notice of any
violation or delinquency with respect to, any Laws applicable to the Business or any of the
Acquired Companies, and (ii) each Acquired Company (as applicable) possesses all licenses, permits,
registrations and government approvals (collectively, “Permits”) which are required in
order to conduct the Business as presently conducted. Schedule 4.3.14 sets forth a true,
accurate and complete list of all of the material Permits of the Acquired Companies, together with
a description (including the date of issuance and expiration, if any, and the status) thereof. Each
such Permit is valid and in full force and effect, and is not subject to any pending or, to the
Knowledge of the Parent, threatened administrative or judicial proceeding to revoke, cancel or
declare such Permit invalid in any material respect.



               4.3.15 Transactions with Affiliates. Schedule 4.3.15 sets forth a list as of
the Initial Offer Letter Date of each material agreement, commitment or arrangement (whether
written, oral or otherwise, but excluding the Transition Services Agreement, the Roxy License
Agreement, the Acquired Note and any agreement, commitment or arrangement expressly contemplated by
the Restructuring or otherwise contemplated by this Agreement) which is solely between or among one
or more of the Acquired Companies, on the one hand, and the Parent and/or any of its Affiliates
(other than any Acquired Company), on the other hand. To the Knowledge of the Parent, none of the
Affiliates, executive officers or directors (or Persons in similar positions) of the Parent or any
of its Affiliates (including any Acquired Company) has been a director (or Person in a similar
position) or officer of, or has had any direct or indirect interest in (excluding the ownership of
no more than 2% of the outstanding securities in any publicly traded company), any customer or
supplier of any Acquired Company.



               4.3.16 Product Warranty; Product Liability.




          (a) Except as set forth on Schedule 4.3.16(a), no Acquired Company has any
liability for replacement or repair of any products manufactured, sold or delivered by any
Acquired Company or other damages in connection therewith or any other customer or product
obligations not reserved against on the Balance Sheet, other than such liability that,
individually or in the aggregate, is not and would not reasonably be expected to be material
to the Business.




          (b) Except as set forth on Schedule 4.3.16(b) and except to the extent that
such liability has been reserved against on the Balance Sheet, no Acquired Company: (i) has
any material liability arising out of any injury to individuals or property as a result



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of the ownership, possession or use of any product designed, manufactured, assembled,
repaired, maintained, delivered, sold or installed, or services rendered, by or on behalf of
any Acquired Company or the Business; or (ii) has committed any act or failed to commit any
act, which would result in, and, to the Knowledge of the Parent, there has been no
occurrence which would give rise to or form the basis of, any material product liability or
material liability for breach of warranty (whether covered by insurance or not) on the part
of any Acquired Company with respect to products designed, manufactured, assembled,
repaired, maintained, delivered, sold or installed or services rendered by or on behalf of
any Acquired Company or the Business.



               4.3.17 Certain Antitrust Matters. As of the date hereof and as of the Closing, the
Acquired Companies (other than any Acquired Company formed under the laws of the United States) (a)
are each “foreign issuers” as defined by 16 C.F.R. §801(e)(2)(ii); (b) in the aggregate, hold
assets located in the United States (other than investment assets and voting or nonvoting
securities of another person) having a total fair market value of not more than $63,100,000, and
(c) in the aggregate, made sales in or into the United States of not more than $63,100,000 in its
fiscal year closed on October 31, 2007.



               4.3.18 No Brokers. No Person acting on behalf of the Parent, Pilot, Meribel,
Quiksilver Americas, any Acquired Company or any Affiliate thereof or under the authority of any of
the foregoing is or will be entitled to any brokers’ or finders’ fee or any other commission or
similar fee with respect to which the Purchaser or any of its Affiliates (including any Acquired
Company from and after the Closing) will be liable in connection with the Transaction.



               4.3.19 No Other Representations and Warranties. Except for the representations and
warranties contained in this ARTICLE 4, neither the Parent nor Pilot nor Meribel nor Quiksilver
Americas nor any of their respective Affiliates or other Person acting on behalf of any of them,
makes any representation or warranty or assurances, express or implied, in connection with the
Transaction.



ARTICLE 5.

REPRESENTATIONS AND WARRANTIES OF THE PURCHASER



The Purchaser represents and warrants to each of the Parent, Pilot, Meribel and Quiksilver Americas
that all of the statements contained in this ARTICLE 5 were true, accurate and complete as of the
Initial Offer Letter Date and are true, accurate and correct as of the Closing Date, unless the
statement refers to only one such date or another specified date, in which case it is made solely
at such one or specified date.




          5.1 Organization and Good Standing. The Purchaser is a legal entity having the
corporate form specified in this Agreement, duly organized and incorporated and validly existing
under the Laws of its jurisdiction of incorporation.




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          5.2 Power and Authority.





          (a) Each Person signing this Agreement on behalf of the Purchaser has all requisite
power and authority to execute and deliver this Agreement and bind the Purchaser under this
Agreement.




          (b) The Purchaser has full corporate power and authority to execute and deliver this
Agreement and to consummate the Transaction.




          (c) The execution, delivery and performance of this Agreement and the consummation of
the Transaction by the Purchaser have been duly and validly authorized by all requisite
action, and no other corporate action on the part of the Purchaser is necessary to authorize
the execution, delivery and performance by it of this Agreement and the consummation of the
Transaction.



          5.3 Valid and Binding. This Agreement has been duly executed and delivered by the
Purchaser and, assuming due and valid authorization, execution and delivery hereof by each of the
Parent, Pilot, Meribel and Quiksilver Americas, this Agreement constitutes a valid and binding
obligation of the Purchaser, enforceable against the Purchaser in accordance with its terms, except
as limited by applicable bankruptcy, insolvency, reorganization, moratorium, fraudulent conveyance
and other similar laws of general application affecting enforcement of creditors’ rights generally.




          5.4 No violation. Neither the execution and delivery of this Agreement, nor the
consummation of the Transaction, nor the compliance with or fulfillment of the terms, conditions or
provisions hereof, by the Purchaser does or will:





          (a) conflict with or violate any provision of its Governing Documents;




          (b) conflict with, breach, constitute a default or an event of default under any of the
terms of, result in the termination of, accelerate the maturity of, any agreement or
instrument to which it is a party or by which any of its assets or properties may be bound;
or




          (c) subject to making any filings required to achieve, and receipt of, Antitrust
Clearances, constitute a violation by it of any Laws to which it is subject or to which any
of its assets or properties are subject, or otherwise require consents, approvals,
authorizations, registrations or filings by, or with, a Governmental Body, excluding from
the foregoing clauses (b) and (c) such violations, breaches or defaults which would not,
individually or in the aggregate, have a material adverse effect on the Purchaser’s ability
to consummate the Transaction.



          5.5 Absence of Litigation. Except for Proceedings related to the review of the
Transaction by any Governmental Body under the Antitrust Laws, there is no Proceeding pending or,
to the knowledge of the Purchaser, threatened against the Purchaser or any of its Affiliates that,
individually or in the aggregate, would have or would reasonably be expected to impede, hinder,
delay or prevent the ability of the Purchaser to complete the Closing or otherwise consummate the
Transaction.





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          5.6 Consents. Except for Antitrust Clearances, the Purchaser is not subject to the
making of any filings, or otherwise required to obtain any consent, approval, authorization,
registration or make any filing by, or with, a Governmental Body, which would condition the
execution, delivery or performance by the Purchaser of this Agreement.




          5.7 Ability to Evaluate and Bear Risks. The Purchaser is able to bear the economic
risk of holding the Securities for an indefinite period, and has knowledge and experience in
financial and business matters such that it is capable of evaluating the risks of the investment in
the Securities.




          5.8 Investigation by the Purchaser; Parent’s Liability. The Purchaser has conducted
its own independent investigation, review and analysis of the business, operations, assets,
liabilities, results of operations, financial condition and prospects of the Acquired Companies,
which investigation, review and analysis was done by the Purchaser and its Affiliates and, to the
extent the Purchaser deemed appropriate, by its representatives. In entering into this Agreement,
the Purchaser acknowledges that it has relied solely upon the aforementioned investigation, review
and analysis and not on any factual representations, warranties or assurances of the Parent, Pilot,
Meribel, Quiksilver Americas or their respective Affiliates, directors, officers, employees,
representatives, advisors or counsel (except the specific representations and warranties of the
Parent, Pilot, Meribel, Quiksilver Americas set forth in ARTICLE 4), and the Purchaser:





          (a) acknowledges that none of the Parent, Pilot, Meribel, Quiksilver Americas, the
Acquired Companies or any of their respective directors, officers, shareholders, employees,
Affiliates, agents, advisors or representatives makes or has made any representation or
warranty, either express or implied, as to the accuracy or completeness of any of the
information (including the Due Diligence Information) provided or made available to the
Purchaser or its directors, officers, employees, Affiliates, controlling persons, agents or
representatives, and




          (b) agrees, to the fullest extent permitted by law, that none of the Parent, Pilot,
Meribel, Quiksilver Americas, the Acquired Companies or any of their respective directors,
officers, employees, shareholders, Affiliates, agents, advisors or representatives shall
have any liability or responsibility whatsoever to the Purchaser or its directors, officers,
employees, Affiliates, controlling persons, agents or representatives on any basis
(including in contract or tort) based upon any information provided or made available, or
statements made (including in materials furnished in the Due Diligence Information), to the
Purchaser or its directors, officers, employees, Affiliates, controlling persons, advisors,
agents or representatives (or any omissions therefrom), including, with respect only to (i)
the directors, officers, employees, shareholders, Affiliates, agents, advisors or
representatives of the Parent, Pilot, Meribel, Quikilvers Americas and the Acquired
Companies and (ii) the Acquired Companies (and not with respect to the Parent, Quiksilver
Americas, Meribel or Pilot), in respect of the specific representations and warranties set
forth in this Agreement;


except that, for the avoidance of doubt and notwithstanding anything to the contrary contained in
this Agreement, the foregoing limitations shall not apply to (x) the Parent, Pilot, Meribel and




- 44 -









 




Quiksilver Americas insofar as the Parent, Pilot, Meribel and Quiksilver Americas make the specific
representations and warranties set forth in ARTICLE 4, but always subject to the limitations and
restrictions contained in ARTICLE 7 or (y) any fraud, willful misconduct or intentional
misrepresentation.




          5.9 No Brokers. No Person acting on behalf of the Purchaser or any of its Affiliates
or under the authority of any of the foregoing is or will be entitled to any brokers’ or finders’
fee or any other commission or similar fee with respect to which the Parent or any of its
Affiliates will be liable in connection with the Transaction.




          5.10 No Other Representations and Warranties. Except for the representations and
warranties contained in this ARTICLE 5, neither the Purchaser nor any of its Affiliates or other
Person acting on its behalf, makes any representation or warranty or assurances, express or
implied, in connection with the Transaction.




ARTICLE 6.

COVENANTS




          6.1 Other Intercompany Arrangements.





          (a) As of the Closing Date and immediately after the Restructuring, the Parent shall
cause any and all agreements, commitments and arrangements (whether written, oral or
otherwise), including, but not limited to, any Tax sharing or similar arrangements, which
are solely between or among one or more of the Acquired Companies, on the one hand, and the
Parent and/or any of its Affiliates (other than any Acquired Company), on the other hand,
other than the Transition Services Agreement and the Roxy License Agreement, to be
terminated and of no further force or effect simultaneously with the consummation of the
Closing without any further action or liability on the part of any of the Acquired
Companies.




          (b) To the extent that the Parent and any of its Affiliates (excluding any Acquired
Company) have not, prior to the date hereof, been fully and finally released from any
liability as a guarantor (the “Guarantee Liabilities”) under any of the Contracts
designated as “Parent Guarantees” on Schedule 6.1(b), the Purchaser shall continue
to use commercially reasonable efforts to release the Parent and its Affiliates from such
obligations as guarantor under such Contracts in accordance with the Restated Offer Letter;
provided, however, that nothing contained in this Section 6.1(b) shall be deemed to require
the Purchaser to serve as a guarantor or otherwise incur any liabilities with respect to any
Guarantee Liabilities on terms that are less favorable to the Purchaser than the terms on
which the Parent or any of its Affiliates (as applicable) serves as a guarantor with respect
to such Guarantee Liabilities; provided, further, that, in the event that the Parent or any
of its Affiliates shall permit or agree to any amendment or modification to, or waiver
under, the terms of their respective obligations with respect to any Guarantee Liability
without the prior written consent of the Purchaser (which consent shall not be unreasonably
withheld or delayed), the Purchaser shall automatically, and irrevocably and
unconditionally, be forever released and discharged from any and all of its obligations
under this Section 6.1(b) with respect to such Guaranty Liability.



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          6.2 Insurance Policies.





          (a) The Purchaser shall not, and shall cause its Affiliates (including any Acquired
Company after the Closing) not to, assert, by way of claim, action, litigation or otherwise,
any right to any Insurance Policy or any benefit under any such Insurance Policy with
respect to any period from and after the Closing; provided that: (i) to the extent not
prohibited by the terms of such Insurance Policy, each Acquired Company shall retain, and
the Parent shall take such actions as shall be necessary to cause each Acquired Company to
retain, any and all rights and benefits (including any and all insurance coverage) that such
Acquired Company shall have had under such Insurance Policies with respect to any period
prior to the Closing; and (ii) if such retention of rights by an Acquired Company is
prohibited by the terms of such Insurance Policy, the Parent shall use commercially
reasonable efforts to cause such Acquired Company to retain, any and all rights and benefits
(including any and all insurance coverage) that such Acquired Company shall have had under
such Insurance Policies with respect to any period prior to the Closing. Subject to the
immediately preceding sentence, the Parent and its Affiliates (other than the Acquired
Companies) shall retain all right, title and interest in and to the Insurance Policies,
including the right to any credit or return premiums due, paid or payable in connection with
the termination thereof.




          (b) Subject to the provisions of Section 6.2(a), promptly upon the Closing, the
Purchaser shall release, and shall cause its Affiliates, including the Acquired Companies,
to release, all rights to all Insurance Policies or similar insurance which covered the
Acquired Companies prior to the Closing Date. All Insurance Policies issued prior to the
Closing Date in the name of or to the Acquired Companies shall remain with the Parent or its
Affiliates.



          6.3 Tax Matters.





          (a) The Company and its French Subsidiaries (collectively referred to herein as the
“French Companies”) have entered into a tax group with Pilot and the obligations of
the French Companies in connection with this tax group shall remain in force after the
Closing Date solely for events related to fiscal years during which the French Companies
were a member of Pilot’s tax group even if any such events occur after the Closing Date. No
French Company shall be entitled to any indemnification resulting from its exit from Pilot’s
tax group with respect to net operating losses and capital losses carry-overs which the
French Companies might have surrendered in the past to Pilot’s tax group.




          (b) The French Companies, as a result of their exit from Pilot’s tax group, shall
reimburse Pilot for the corporation tax advance payment which, if applicable and according
to Article 223 N-2 of the French Tax Code, shall be paid by Pilot on behalf of the French
Companies during the twelve month period following the opening of the fiscal year during
which the French Companies shall be subject to French corporation tax on a stand-alone basis
(less the amount already paid prior to the Closing Date by the French Companies to Pilot
pursuant to the tax consolidation agreement and corresponding to corporation tax advance
payments). This reimbursement shall occur no



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later than three days before the due date of payment of each corporation tax advance
payment by Pilot.




          (c) Except as provided herein,




          (i) The Parent shall file or cause to be filed when due all Tax Returns that
are required to be filed by or with respect to any Acquired Company on an
affiliated, consolidated, combined or unitary basis with Parent or at least one
Affiliate of Parent that is not an Acquired Company for taxable years or periods
ending on or before the Closing Date. All such Tax Returns shall be prepared in a
manner consistent with past practice. The Parent shall remit (or cause to be
remitted) any Taxes due in respect of such Tax Returns.




          (ii) Except as provided in Section 6.3(c)(i), the Purchaser shall file or cause
to be filed when due (taking into account extensions to file such returns) all Tax
Returns that are required to be filed by or with respect to any Acquired Company
after the Closing Date, and the Purchaser shall remit (or cause to be remitted) any
Taxes due in respect of such Tax Returns, provided, however, that (A) the Purchaser
shall furnish to the Parent a draft of any such Tax Return that relates to a taxable
period (or portion thereof) ending on or prior to the Closing Date, (B) the
Purchaser shall permit the Parent to have a reasonable opportunity to review and
comment upon any such Tax Return to the extent that such Tax Return relates to a
taxable period (or portion thereof) ending on or prior to the Closing Date, and (C)
the Parent shall pay the Purchaser an amount equal to the Pre-Closing Period Tax
Adjustment (as defined below) at least five (5) Business Days before the due date of
the relevant Tax Return. Parent will furnish to Purchaser all information and
records reasonably requested by Purchaser for use in preparation of all Tax Returns
required to be prepared and filed by Purchaser pursuant to this Section 6.3(c).




          (iii) Within 120 days after the Closing Date, the Purchaser shall cause the
Acquired Companies to prepare and provide to the Parent a package of Tax information
materials, including schedules and work papers required by the Parent to enable the
Parent to prepare and file all Tax Returns required to be prepared and filed by it
pursuant to this Section 6.3(c). The Purchaser shall prepare such package in good
faith in a manner consistent with the Parent’s past practice and shall provide any
further assistance to the Parent in connection with any such Tax Return preparation
and filing as may be reasonably requested by the Parent.




          (iv) For purposes of this Section 6.3(c), “Pre-Closing Period Tax Adjustment”
shall mean the difference between (i) the Tax liability indicated on the relevant
Tax Return for a taxable period ending on or prior to the Closing Date or allocable
to the portion of a Straddle Period ending on the Closing Date (as determined
pursuant to Section 6.3(d))and (ii) the sum of (x) the amount of estimated Taxes (or
other relevant payment) paid by or on behalf of the relevant Acquired Company prior
to the Closing Date in respect of such liability, (y) the



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amount of the accrual or reserve in respect of such liability as reflected on
the Bringdown Balance Sheet and (z) any Tax credits or refund of Taxes associated
with the filing of such Tax Return that are attributable to a taxable period ending
on or prior to the Closing Date or a portion of the Straddle Period ending on the
Closing Date.




          (d) In the case of any Taxes that are payable with respect to a Straddle Period, the
portion of any such Tax that is allocable to the portion of the Straddle Period ending on
the Closing Date shall be:




          (i) in the case of real, personal and intangible property Taxes (“Property
Taxes”), deemed to be the amount of such Taxes for the entire Straddle Period
multiplied by a fraction, the numerator of which is the number of days during the
Straddle Period prior to and including the Closing Date and the denominator of which
is the total number of days in the Straddle Period; and




          (ii) in the case of all income Taxes, deemed equal to the lesser of (x) the
amount which would be payable if the taxable year ended on the Closing Date or (y)
the Tax liability indicated on the relevant Tax Return for a taxable period ending
on the last day of the taxable year relating to the relevant Straddle Period; and




          (iii) in the case of all Taxes other than Property Taxes and income Taxes,
deemed equal to the amount which would be payable if the taxable year ended on the
Closing Date.




          (e) Post-Closing Actions which Affect the Parent’s Liability for Taxes.




          (i) The Purchaser shall not permit an Acquired Company to take any action which
could increase the Parent’s liability for Taxes (including any liability of any
Parent Indemnifying Person to indemnify a Purchaser Indemnified Person for Taxes
pursuant to this Agreement) other than (i) in the case of engaging in any business
activity with third-parties for profit or otherwise operating the Business in the
ordinary course, (ii) as a result of an election under Section 338(g) of the Code in
respect of which Purchaser (or the relevant Purchaser Indemnifying Person) shall
indemnify and hold Parent (or the relevant Parent Indemnified Person) harmless from
and in respect of any Tax or other reasonable cost incurred by Parent (or the
relevant Parent Indemnified Person) and associated with such Section 338(g)
election, and (iii) as required by Law, (including, for this purpose, any proposed
change in Law that has been officially proposed by a Governmental Body on or before
the Initial Offer Letter Date). The Parties hereto hereby acknowledge and agree that
an election under Section 338(h)(10) shall not be made.




          (ii) None of the Purchaser or any Affiliate of the Purchaser shall (or shall
cause or permit any Acquired Company to) amend, refile or



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otherwise modify any Tax Return relating in whole or in part to any Acquired
Company with respect to any taxable year or period ending on or before the Closing
Date (or with respect to any Straddle Period) without the prior written consent of
the Parent, such consent not to be unreasonably withheld or delayed.




          (iii) None of the Purchaser or any Affiliate of the Purchaser shall (or shall
cause or permit any Acquired Company to) carryback for any purpose to any taxable
period, or portion thereof, of any Acquired Company or the Parent or any Affiliate
of the Parent ending before, or which includes, the Closing Date any operating
losses, net operating losses, capital losses, tax credits or similar items arising
in, resulting from, or generated in connection with a taxable year of the Purchaser
or any Affiliate of the Purchaser, or portion thereof, ending on or after the
Closing Date.




          (f) After the Closing Date, each of the Parent and the Purchaser shall (and shall cause
their respective Affiliates to) assist the other Party in preparing any Tax Returns which
such other Party is responsible for preparing and filing in accordance with Section 6.3(c)
and cooperate fully in preparing for any audits of, or disputes with Taxing Authorities
regarding, any Tax Returns of any Acquired Company.



          6.4 Non-Competition; Non-Solicitation.





          (a) Each of the Parent, Pilot, Meribel and Quiksilver Americas hereby acknowledges that
the agreements and covenants contained in this Section 6.4 are essential to protect the
value of the Business being acquired by the Purchaser and serve as an inducement for the
Purchaser to enter into this Agreement. During the period (the “Restricted Period”)
commencing on the Closing Date and ending on the third anniversary of the Closing Date,
except as contemplated by the Transition Services Agreement, the Parent shall not, and shall
cause its Affiliates (including Pilot, Meribel and Quiksilver Americas) not to, directly or
indirectly conduct or otherwise engage or participate (whether for itself or through or on
behalf of or in conjunction with any Person, as an agent, consultant, shareholder, director
(or Person in a similar position), officer, member, manager, partner, joint venturer,
investor or in any other capacity or otherwise) in any Winter Sports Hardgoods Activity in
any geographic area in which any Acquired Company directly or indirectly conducts or engages
in Winter Sports Hardgoods Activities as of the Closing Date; provided, however, that: (i)
the foregoing shall not prohibit the acquisition and ownership by the Parent or any of its
Affiliates of equity securities of a publicly traded company in an amount not to exceed 2%
of the issued and outstanding shares of such company; and (ii) the foregoing shall not
prohibit the acquisition, ownership and operation by the Parent or any of its Affiliates,
directly or indirectly, of a group of companies (collectively, a “Competing
Business”) in which the Winter Sports Hardgoods Activities represent no more than the
greater of (A) five percent (5%) of the consolidated revenues of such Competing Business for
its fiscal year immediately preceding such acquisition or the commencement of such ownership
or operations by the Parent or any of its Affiliates or (B) €25,000,000 in revenues of
such Competing Business for the fiscal year immediately preceding such acquisition or the
commencement of such ownership or operations by the Parent or any of its Affiliates,



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provided that the limitations contained in the immediately preceding clauses (A) and
(B) shall not prohibit the acquisition of a Competing Business by the Parent or any of its
Affiliates in the event that all Winter Sports Hardgoods Activities of such Competing
Business shall have been completely divested and no longer directly or indirectly owned or
operated by the Parent or any of its Affiliates within 180 Business Days after the date of
such acquisition; and (iii) the Parent and its Affiliates shall not be restricted from
conducting or engaging or participating in the Winter Sports Hardgoods Activities described
in Schedule 6.5(a). For the avoidance of doubt, nothing herein shall prevent or be
deemed to prevent the completion of any transaction involving a change of control of the
Parent, including any transaction in which the Person acquiring control of the Parent
operates a Competing Business.




          (b) During the Restricted Period, except as contemplated by the Transition Services
Agreement, the Parent shall not, and shall cause its controlled Affiliates (including Pilot,
Meribel and Quiksilver Americas) not to, directly or indirectly: (i) except in the ordinary
course of business, intentionally solicit or divert any business or clients or customers
away from any Acquired Company; (ii) except in the ordinary course of business,
intentionally induce any customers, clients, suppliers, agents or other Persons under
contract or otherwise associated or doing business with any Acquired Company, to reduce or
alter any such association or business with such Acquired Company; or (iii) solicit any
Listed Employee (other than any Listed Employee whose employment with any Acquired Company
has been terminated by such Acquired Company) to (A) terminate such employment or (B) accept
employment, or enter into any consulting arrangement, with any Person other than the
Purchaser or any of its Affiliates; provided, however, that, for the purposes of this
Section 6.4(b), such solicitation, diversion or inducement described in the foregoing
clauses (i), (ii) and (iii) shall not include any general advertisement by either of the
Parent or any of its Affiliates for employment by it, to the extent that such general
advertisement is directed at the general public and not at any (A) director (or Person in a
similar position), officer or employee of the any Acquired Company, or (B) customers,
clients, suppliers, agents or other Persons under contract or otherwise associated or doing
business with any Acquired Company.



          6.5 Confidentiality. From and after the Closing Date, the Parent shall not, and shall
cause its Affiliates (including Pilot, Meribel and Quiksilver Americas) not to, disclose, furnish
or make available to any Person (other than the directors, officers, employees, Affiliates,
representatives and agents of the Parent and its Affiliates who need to know such information in
connection with the performance of the Parent’s and/or its Affiliates’ obligations under this
Agreement) or utilize any nonpublic information of any of the Acquired Companies; provided,
however, that the provisions of this Section 6.5 shall not apply to any such information that (a)
is or becomes available to the public through no fault of the Parent or any of its Affiliates, (b)
is required to be disclosed by applicable Law, by the regulations of any relevant stock exchange,
by any court or other judicial authority or pursuant to any enquiry or investigation by any
Governmental Body, provided that prior to any such required disclosure Parent shall promptly notify
the Purchaser thereof so that the Purchaser may seek a protective order or other appropriate remedy
in respect of such required disclosure, or (c) is used by the Parent or its Affiliates (other than
the Acquired Companies) in the ordinary course of their business



- 50 -









 






operations after the Closing Date, to the extent that such information is applicable and
reasonably necessary to the Parent’s or such Affiliates’ continuing business operations (other than
any such operations in breach or violation of the provisions of Section 6.4); and provided,
further, that the Parent shall be free to make such filings with the SEC as are required under, and
in accordance with, applicable Law.




          6.6 Company Options; Liquidity Agreements.





          (a) Upon the exercise of any Company Options in accordance with the terms thereof, (i)
Meribel shall immediately acquire, and the Parent shall cause Meribel to immediately
acquire, any and all shares of the Company which are required to be delivered to the holder
of such Company Options as a result of such exercise, pursuant to and in accordance with the
terms of the relevant Liquidity Agreement, and (ii) immediately upon such acquisition,
Meribel shall sell to the Purchaser, and the Purchaser shall purchase from Meribel, any and
all such shares, for a price (the “Option Share Price”) equal to (x) the strike
price paid to the Company by the relevant Company Option holder in connection with the
exercise of such Company Options, plus (y) fifty percent (50%) of the excess of the price
payable for such shares under the relevant Liquidity Agreement over such strike price.




          (b) In order to facilitate the completion of the transactions contemplated by the
Liquidity Agreements and the foregoing paragraph, the Parent and Meribel hereby give an
irrevocable power of attorney to the Purchaser, and the Purchaser agrees, to (i) complete,
date and sign on behalf of Meribel any transfer order (“ordre de mouvement”) or any other
appropriate documentation to effect the transfer of the shares of the Company related to the
exercise of Company Options to Meribel and the Purchaser, pursuant to the Liquidity
Agreements and the agreement set forth in paragraph (a) above, respectively, in each case on
the date on which such Company Options are exercised, and (ii) pay to the holders of Company
Options, on behalf of Meribel, the price payable to them pursuant to the Liquidity
Agreements. Such payment to the holder shall fully and finally discharge the Purchaser from
any obligation to pay the Option Share Price relating to the shares so acquired. Promptly
upon notice from the Purchaser that any Company Options have been exercised, Meribel shall
pay to the Purchaser, and the Parent shall cause Meribel to pay to the Purchaser, an amount
in immediately available funds equal to fifty percent (50%) of the excess of the Option
Share Price for the shares related to such Company Options, over the strike price of such
Company Options.




          (c) The Parties hereby acknowledge and agree that except as may result from the
foregoing paragraphs (a) and (b), and subject to compliance by the Company with the terms
and conditions of the Company Options (as such terms and conditions have been disclosed to
the Purchaser prior to the date hereof), the Parent and Meribel shall retain any and all
liabilities and obligations associated with Company Options, and none of the Purchaser or
its Affiliates (including the Acquired Companies from and after the Closing Date) shall
incur any liability or obligation in connection therewith, or in connection with the
Liquidity Agreements. Without limiting, and in furtherance, of the foregoing, the Parent
represents and warrants to the Purchaser that except for shares of the Company acquired by
the Purchaser upon the exercise of



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Company Options pursuant to paragraph (a) above, no capital stock, shares or other
equity interests of the Company or any of its Affiliates (including, from and after the
Closing, any Acquired Company) shall be issuable or required to be delivered at any time
from and after the Closing upon exercise of any Company Option.



          6.7 Right to Continue Rossignol Apparel Business. From the Closing until and
including July 31, 2009, the Purchaser shall cause the Acquired Companies to grant Parent and its
Affiliates, including Tyax, a French société en nom collectif, a non-exclusive, non-transferable,
royalty-free license to use the ROSSIGNOL trademark, logos and other associated Intellectual
Property rights currently used by Tyax, in connection with the marketing, sale and distribution of
Parent’s and its Affiliates’ inventory of apparel and related products and accessories in existence
as of the Closing Date and bearing such Intellectual Property (such inventory, the “Soft Good
Inventory”). All goods sold by Parent or its Affiliates under the ROSSIGNOL trademark shall be
maintained at a high-quality standard acceptable to the Acquired Companies. The Acquired Companies
acknowledge that the Soft Good Inventory meets the high quality standards of the Acquired
Companies. Parent and its Affiliates agree that they shall not (i) directly or indirectly, attack
any Acquired Company’s title in the ROSSIGNOL trademark or the validity of the license granted
hereunder; (ii) use the ROSSIGNOL trademark in any manner other than as licensed hereunder or (iii)
use the ROSSIGNOL trademark in any manner likely to dilute the ROSSIGNOL trademark or damage the
Acquired Companies’ reputations. The Parties agree to negotiate, if mutually desirable, a license
agreement with respect to the manufacture, marketing, sale and distribution of apparel and related
products and accessories for periods after the 2008/2009 season.




ARTICLE 7.

INDEMNIFICATION




          7.1 Indemnification by the Parent Indemnifying Persons. From and after the Closing,
the Parent Indemnifying Persons shall indemnify and hold the Purchaser Indemnified Persons harmless
from and against any and all Losses (“Purchaser Losses”) suffered or incurred by a
Purchaser Indemnified Person that arise out of or in connection with:





          (a) any breach or inaccuracy of any representation or warranty contained in ARTICLE 4
hereof (in each case disregarding all qualifications and exceptions relating to materiality,
material adverse effect or words of similar import); provided, however, that in the case of
any indemnification in respect of any breach of Section 4.3.5, the Parties hereto hereby
acknowledge and agree that the Parent Indemnifying Persons are not warranting, and Purchaser
Indemnified Persons shall not be entitled to seek indemnification in respect of, any tax
attribute or benefit of the Acquired Companies, such as asset basis, net operating losses,
tax credits, and any similar items or other tax benefits or entitlements that may be
reflected on the Tax Returns, or in the books, records, or files, of the Acquired Companies;




          (b) any breach of or failure to perform any covenant, agreement or obligation of any
Parent Indemnifying Person under this Agreement, the Initial Offer Letter or the Restated
Offer Letter;



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          (c) the Restructuring;




          (d) any (i) liabilities or obligations for Taxes with respect to any Acquired Company
related to a Tax period which ends on or before the Closing Date, (ii) liabilities or
obligations for Taxes with respect to any Acquired Company for any Straddle Period to the
extent allocable to the portion of such period ending on the Closing Date (as determined
pursuant to Section 6.3(d) hereof), (iii) Taxes imposed under Treasury Regulation Section
1.1502-6 (or under any similar provision of state, local or foreign law) by reason of any
Acquired Company or predecessor thereof having been a member of a consolidated, combined,
unitary, affiliated or other Tax group prior to the Closing, (iv) Taxes for which Parent,
Pilot, Meribel, Quiksilver Americas, or any of their Affiliates (other than any Acquired
Company) is responsible under Section 2.3(h) or Section 8.11, (v) liability of an Acquired
Company for Taxes under a Tax sharing or similar arrangement that was entered into on or
prior to the Closing Date and before the Closing or (vi) liability for Taxes resulting by
reason of any Acquired Company ceasing to be a member of a consolidated, combined, unitary,
affiliated, or other Tax group that includes Parent or an Affiliate of Parent that is not an
Acquired Company; provided, however, that (x) the Parent Indemnified Persons shall not be
required to indemnify a Purchaser Indemnified Person for any such Taxes to the extent such
Taxes are reflected as a reserve or accrual on the Bringdown Balance Sheet, except to the
extent taken into account in determining the Pre-Closing Period Tax Adjustment under Section
6.3(c)(iv) hereof and (y) in the case of any claim for indemnification in respect of any
income Tax, such Tax shall be determined after taking into account the utilization of any
available net operating losses and similar tax attributes arising during any taxable period
ending on or prior to the Closing Date to the extent not previously utilized by the Acquired
Companies prior to the settlement of the tax controversy giving rise to indemnification
hereunder;




          (e) any matter set forth on Schedule 7.1(e); or




          (f) any and all Indebtedness of the Acquired Companies that is outstanding as of the
Closing Date and shall not have been paid in full as part of the Remaining Offset Amount;
provided that any item of Remaining Offset Amount that has been finally determined pursuant
to Section 2.3 shall not give rise to further indemnification unless the statement of facts
forming the basis of such determination was incomplete, inaccurate or misleading;


provided that for so long as any amounts are outstanding under the Deductible Amount and/or the
Note, any indemnification payment owed by any Parent Indemnifying Persons pursuant to this Section
7.1 shall not be paid in cash by any Parent Indemnifying Person, but instead, shall be paid by way
of setoff against the then outstanding Deductible Amount; provided, further, that (i) in the event
that the amount of any indemnification payments owed by any Parent Indemnifying Persons pursuant to
this Section 7.1 is greater than the then outstanding Deductible Amount, but less than the sum of
the then outstanding Deductible Amount and the then outstanding Note Balance, then the entire
Deductible Amount shall be offset against such payments and in addition the Note Balance shall be
reduced by an amount equal to the excess of such indemnification payments over such then
outstanding Deductible Amount; (ii) in the event that the amount of any indemnification payments
owed by any Parent Indemnifying Persons


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pursuant to this Section 7.1 is greater than the sum of the then outstanding Deductible Amount and
the then outstanding Note Balance, then the entire Deductible Amount and the entire Note Balance
shall be offset against such payments and in addition, Parent Indemnifying Persons shall pay to the
Purchaser in cash (by wire transfer of immediately available funds to a bank account(s) designated
by the Purchaser) an amount equal to the excess of such indemnification payments over the sum of
such outstanding Note Balance and such outstanding Deductible Amount; and (iii) in the event that
any indemnification payments owed by the Parent Indemnifying Persons pursuant to this Section 7.1
are greater than the then outstanding Deductible Amount, and at such time the Note is no longer
outstanding or shall no longer be held exclusively by the Parent or one or more of its Affiliates,
then the entire Deductible Amount shall be offset against such payments, and in addition
indemnification payments in excess of such outstanding Deductible Amount shall be paid in cash (by
wire transfer of immediately available funds to a bank account(s) designated by the Purchaser).




          7.2 Indemnification by the Purchaser Indemnifying Persons. From and after the
Closing, the Purchaser Indemnifying Persons shall indemnify and hold the Parent Indemnified Persons
harmless from and against any and all Losses (“Parent Losses”) suffered or incurred by a
Parent Indemnified Person that arise out of or in connection with:





          (a) any breach or inaccuracy of any representation or warranty contained in ARTICLE 5
hereof (in each case disregarding all qualifications and exceptions relating to materiality,
material adverse effect or words of similar import);




          (b) any breach of or failure to perform any covenant, agreement or obligation of any
Purchaser Indemnifying Person under this Agreement, the Initial Offer Letter or the Restated
Offer Letter;




          (c) any and all Guarantee Liabilities arising after the Closing Date; provided that no
Purchaser Indemnifying Person shall have any obligation to indemnify or otherwise be liable
pursuant to this Section 7.2(c) for any Guaranty Liability to the extent arising from,
increased by or accelerated or caused to be less conditional pursuant to any amendments or
modifications of, or waivers under, such Guarantee Liabilities entered into, made or given
after the Closing Date without the prior written consent of the Purchaser (which consent
shall not be unreasonably withheld or delayed);




          (d) the Factoring Agreements, other than any Parent Losses arising from or in
connection with any breach of any Factoring Agreement by any of the Parent Indemnified
Persons (including any of the Acquired Companies) prior to the Closing; or




          (e) any post-Closing Tax elections affecting Parent Indemnified Persons that are made
without the Parent’s consent, including any election under section 338(g) of the Code or the
filing of an “entity classification” election with the Internal Revenue Service.



          7.3 Survival; Cap.





          (a) The representations and warranties contained in this Agreement shall survive the
Closing until March 31, 2010 and shall thereafter terminate (and any



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claim relating to the subject matter of any such representation or warranty must be
made on or before such date or such claim shall be deemed to have been waived), except that:
(i) the representations and warranties contained in Section 4.3.4 shall survive until the
fifth anniversary of the Closing Date (on or before the date of which anniversary any claim
for breach or inaccuracy of any such representation or warranty must be made or shall be
deemed to have been waived); (ii) the representations and warranties contained in Sections
4.1.6 and 4.3.5 shall survive until the 60th day after all claims relating to the subject
matter thereof shall have been barred by the relevant statutes of limitations, including
extensions (on or before which 60th day any claim for breach or inaccuracy of any such
representation or warranty must be made or shall be deemed to have been waived); (iii) the
representations and warranties contained in Section 4.3.6 shall survive until the second
anniversary of the Closing Date (on or before the date of which anniversary any claim for
breach or inaccuracy of any such representation or warranty must be made or shall be deemed
to have been waived); and (iv) the representations and warranties contained in Sections
4.1.1, 4.1.2, 4.2.1, 4.2.2, 4.2.3, 4.3.1, 4.3.18, 5.1, 5.2 and 5.10 (collectively, the
“Fundamental Representations”) shall survive the Closing (and any claim for breach
or inaccuracy of any such representation may be made) indefinitely. Each covenant contained
in this Agreement shall survive until it shall have been performed. No claim for
indemnification hereunder for any Purchaser Loss or Parent Loss may be asserted by a
Purchaser Indemnified Person or Parent Indemnified Person, respectively, after the
expiration of the period during which such claim may be made as provided herein; provided,
however, that claims asserted in writing by a Purchaser Indemnified Person or Parent
Indemnified Person (as the case may be) prior to such expiration shall not thereafter be
barred by such expiration.




          (b) In no event shall the aggregate liability of any or all of the Parent Indemnifying
Persons pursuant to Section 7.1(a) exceed twelve million five hundred thousand euros
(€12,500,000); provided that, in furtherance of, and not in limitation of, the foregoing
limitation, in no event shall the aggregate liability of any or all of the Parent
Indemnifying Persons to the Purchaser Indemnified Persons pursuant to Section 7.1(a) with
respect to breaches or inaccuracies of any of the representations or warranties contained in
ARTICLE 4 (other than the representations and warranties contained in Sections 4.1.6, 4.3.4,
4.3.5 and 4.3.6), exceed seven million five hundred thousand euros (€7,500,000), it being
understood that, subject to such twelve million five hundred thousand euros (€12,500,000)
limitation, such seven million five hundred thousand euros (€7,500,000) limitation may be
exceeded with respect to any breach or inaccuracy of any of the representations and
warranties contained in Sections 4.1.6, 4.3.4, 4.3.5 and 4.3.6. In no event shall the
aggregate liability of any or all of the Purchaser Indemnifying Persons to the Parent
Indemnified Persons pursuant to Section 7.2(a) exceed seven million five hundred thousand
euros (€7,500,000) (each of such limitation and the limitations set forth in the
immediately preceding sentence, a “Cap”). The provisions of this Section 7.3(b)
(including the limitations and each Cap set forth herein) shall not apply to any Purchaser
Loss or Parent Loss that arises out of or in connection with any breach or inaccuracy of any
Fundamental Representation.



          7.4 Computation of Losses; Additional Conditions and Limitations. The indemnification
obligations of the Parent Indemnifying Persons and the Purchaser Indemnifying



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Persons under this ARTICLE 7 shall be subject to the additional conditions and limitations set
forth in this Section 7.4.





          (a) With respect to any claim for indemnification by any Purchaser Indemnified Person
pursuant to this ARTICLE 7:




          (i) A Purchaser Loss shall be eligible for indemnification by the Parent
Indemnifying Persons pursuant to this ARTICLE 7 only to the extent that such
Purchaser Loss shall have been incurred by the relevant Purchaser Indemnified
Persons; provided, however, that, in the event that any claim for indemnification in
respect of such Purchaser Loss pursuant to this ARTICLE 7 shall have been made by
any Purchaser Indemnified Person prior to the expiration of the applicable period
hereunder by which such claim shall have been made but prior to the time (if at all)
that such Purchaser Loss shall have been incurred, notwithstanding such expiration
of such period, such claim shall remain subject to indemnification pursuant to this
ARTICLE 7 until such time as the amount of such Purchaser Loss that shall be
incurred shall have been determined and paid in full to the relevant Purchaser
Indemnified Persons;




          (ii) The Parent Indemnifying Persons shall not be held liable for
indemnification under Section 7.1(a) to the extent that any Purchaser Loss is caused
by any act or omission of a Purchaser Indemnified Person after the Closing Date,
including any change in the accounting methods or in the insurance coverage of the
Acquired Companies after such date.




          (iii) Purchaser Losses shall be determined without reduction for any Tax
Benefits available to the Purchaser Indemnified Person; provided, however, that to
the extent that the Purchaser Indemnified Person recognizes a Tax Benefit as a
result of any Purchaser Loss, the Purchaser Indemnified Person shall pay the amount
of such Tax Benefit (but not in excess of the indemnification payment or payments
actually received from the Parent Indemnifying Person with respect to such Purchaser
Loss) to the Parent Indemnifying Person as and when such Tax Benefits are actually
recognized by the Purchaser Indemnified Person;




          (iv) Purchaser Losses shall be determined net of any insurance proceeds,
indemnity payments and other compensation actually realized or received by the
Purchaser Indemnified Persons in respect of such Purchaser Losses from Persons other
than the Parent Indemnifying Persons. The relevant Purchaser Indemnified Persons
shall use their commercially reasonable efforts to obtain recovery in respect of any
Purchaser Losses from any Person other than the Parent Indemnifying Persons which is
available (if any) in respect of such Purchaser Losses; provided that the Purchaser
Indemnified Persons shall not be required to exhaust their remedies against such
Person prior to making a claim for indemnification pursuant to this ARTICLE 7;




          (v) No Parent Indemnifying Person shall be held liable pursuant to this ARTICLE
7 for any indirect, punitive, incidental or consequential



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loss (including any loss of profits) or damage to the image, reputation or
goodwill of a Purchaser Indemnified Person; provided, however, that the foregoing
shall not be construed as excluding any penalty or addition to Tax from the
computation of a Tax liability in respect of which a claim for indemnification may
be sought hereunder;




          (vi) A Purchaser Loss shall not include any Loss to the extent caused by the
failure of a Purchaser Indemnified Person that is or becomes aware of such Purchaser
Loss to take and cause the other relevant Parent Indemnified Persons to take, after
the Closing Date, all commercially reasonable actions under the then current
circumstances to mitigate such Purchaser Loss;




          (vii) In the event that a Purchaser Loss that is or may be subject to
indemnification pursuant to this ARTICLE 7 is curable, in whole or in part, the
Purchaser Indemnified Persons shall give the Parent Indemnifying Persons a
reasonable opportunity to so cure such Purchaser Loss prior to the Parent
Indemnifying Persons being obligated to indemnify the Purchaser Indemnified Persons
hereunder; provided, however, that, for the avoidance of doubt, any additional
Purchaser Losses suffered or incurred by the Purchaser Indemnified Persons during
the period that the Parent Indemnifying Persons seek or attempt to effect such cure
shall be subject to indemnification by the Parent Indemnifying Persons pursuant to
this ARTICLE 7; provided, further, that no indemnification shall be due under this
ARTICLE 7 with respect any Purchaser Loss that shall have been cured to the
satisfaction of the relevant Purchaser Indemnified Persons;




          (viii) Except to the extent taken into account in determining the Pre-Closing
Period Tax Adjustment under Section 6.3(c)(iv) hereof, Purchaser Losses shall be
determined net of any accrual or reserve in respect of such Purchaser Losses
reflected on the Balance Sheet so long as such accrual or reserve shall have not
been used, expended or exhausted and is set forth on the Bringdown Balance Sheet;
and




          (ix) The Parent Indemnifying Persons shall not be held liable for any
indemnification in respect of a breach of a representation or warranty made as of
the Initial Offer Letter Date if the same representation or warranty is true and
accurate as of the Closing, taking into account any additions or amendments made to
the Disclosure Schedule between the Initial Offer Letter Date and the date hereof to
the extent permitted under Section 8 of the Offer Letter, except those additions or
amendments which are, or would reasonably be expected to be, material to the
Acquired Companies, taken as a whole, or the Business.




          (b) With respect to any claim for indemnification by any Parent Indemnified Person
pursuant to this ARTICLE 7:




          (i) A Parent Loss shall be eligible for indemnification by the Purchaser
Indemnifying Persons pursuant to this ARTICLE 7 only to the extent



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that such Parent Loss shall have been incurred by the relevant Parent
Indemnified Persons; provided; however, that, in the event that any claim for
indemnification in respect of such Parent Loss pursuant to this ARTICLE 7 shall have
been made by any Parent Indemnified Person prior to the expiration of the applicable
period hereunder by which such claim shall have been made but prior to the time (if
at all) that such Parent Loss shall have been incurred, notwithstanding such
expiration of such period, such claim shall remain subject to indemnification
pursuant to this ARTICLE 7 until such time as the amount of such Parent Loss that
shall be incurred shall have been determined and paid in full to the relevant Parent
Indemnified Persons;




          (ii) The Purchaser Indemnifying Persons shall not be held liable for
indemnification under Section 7.2(a) to the extent that any Purchaser Loss is caused
by any act or omission of a Parent Indemnified Person after the Closing Date.




          (iii) Parent Losses shall be determined without reduction for any Tax Benefits
available to the Parent Indemnified Person; provided, however, that to the extent
that the Parent Indemnified Person recognizes a Tax Benefit as a result of any
Parent Loss, the Parent Indemnified Person shall pay the amount of such Tax Benefit
(but not in excess of the indemnification payment or payments actually received from
the Purchaser Indemnifying Person with respect to such Parent Loss) to the Purchaser
Indemnifying Person as and when such Tax Benefits are actually recognized by the
Parent Indemnified Person;




          (iv) Parent Losses shall be determined net of any insurance proceeds, indemnity
payments and other compensation actually realized or received by the Parent
Indemnified Persons in respect of such Parent Losses from Persons other than the
Purchaser Indemnifying Persons. The relevant Parent Indemnified Persons shall use
their commercially reasonable efforts to obtain recovery in respect of any Parent
Losses from any Person other than the Purchaser Indemnifying Persons which is
available (if any) in respect of such Parent Losses; provided that the Parent
Indemnified Persons shall not be required to exhaust their remedies against such
Person prior to making a claim for indemnification pursuant to this ARTICLE 7;




          (v) No Purchaser Indemnifying Person shall be held liable pursuant to this
ARTICLE 7 for any indirect, punitive, incidental or consequential loss (including
any loss of profits) or damage to the image, reputation or goodwill of a Parent
Indemnified Person; provided, however, that the foregoing shall not be construed as
excluding penalty or addition to Tax from the computation of a Tax liability in
respect of which a claim for indemnification may be sought hereunder;




          (vi) A Parent Loss shall not include any Loss to the extent caused by the
failure of a Parent Indemnified Person that is or becomes aware of such Parent Loss
to take and cause the other relevant Purchaser Indemnified



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Persons to take, after the Closing Date, all commercially reasonable actions
under the then current circumstances to mitigate such Parent Loss; and




          (vii) In the event that a Parent Loss that is subject to indemnification
pursuant to this ARTICLE 7 is curable, in whole or in part, the Parent Indemnified
Persons shall give the Purchaser Indemnifying Persons a reasonable opportunity to so
cure such Parent Loss prior to the Purchaser Indemnifying Persons being obligated to
indemnify the Parent Indemnified Persons hereunder; provided, however, that, for the
avoidance of doubt, any additional Parent Losses suffered or incurred by the Parent
Indemnified Persons during the period that the Purchaser Indemnifying Persons seek
or attempt to effect such cure shall be subject to indemnification by the Purchaser
Indemnifying Persons pursuant to this ARTICLE 7; provided, further, that no
indemnification shall be due under this ARTICLE 7 with respect any Parent Loss that
shall have been cured to the satisfaction of the relevant Parent Indemnified
Persons.




          (c) Miscellaneous.




          (i) The Parent Indemnifying Persons and Purchaser Indemnifying Persons shall
not be required to indemnify the Purchaser Indemnified Persons and Parent
Indemnified Persons, respectively, hereunder with respect to any Purchaser Losses or
Parent Losses resulting from any change in Law (including Environmental Laws and Tax
Laws and changes in Law with retroactive effects) after the Closing Date.




          (ii) If any Purchaser Loss is recovered by a Purchaser Indemnified Person, in
whole or in part, from any Person other than the Parent Indemnifying Persons
(including any insurer or Tax Authority) after indemnification of any Purchaser
Indemnified Person by any Parent Indemnifying Person in respect of such Purchaser
Loss pursuant to this ARTICLE 7, the amount of such Purchaser Loss so recovered from
such Person other than any Parent Indemnifying Person shall be promptly reimbursed
by such Purchaser Indemnified Person to the relevant Parent Indemnifying Persons.




          (iii) If any Parent Loss is recovered by a Parent Indemnified Person, in whole
or in part, from any Person other than the Purchaser Indemnifying Persons (including
any insurer or Tax Authority) after indemnification of any Parent Indemnified Person
by any Purchaser Indemnifying Person in respect of such Parent Loss pursuant to this
ARTICLE 7, the amount of such Parent Loss so recovered from such Person other than
any Purchaser Indemnifying Person shall be promptly reimbursed by such Parent
Indemnified Person to the relevant Purchaser Indemnifying Persons.




          (iv) In the event that a Parent Indemnifying Person has paid any amount to a
Purchaser Indemnified Person pursuant to this ARTICLE 7, and that a fact emerges
subsequently which would have given rise to a reduction of such amount pursuant to
this ARTICLE 7 if it had been known at the time of such



- 59 -









 







payment, such Purchaser Indemnified Person shall reimburse to such Parent
Indemnifying Person an amount equal to such reduction.




          (v) In the event that a Purchaser Indemnifying Person has paid any amount to a
Parent Indemnified Person pursuant to this ARTICLE 7, and that a fact emerges
subsequently which would have given rise to a reduction of such amount pursuant to
this ARTICLE 7 if it had been known at the time of such payment, such Parent
Indemnified Person shall reimburse to such Purchaser Indemnifying Person an amount
equal to such reduction.




          (vi) Any liability for indemnification pursuant to this ARTICLE 7 shall be
determined without duplication of recovery in respect of any Parent Loss or
Purchaser Loss (as the case may be) by reason of the state of facts giving rise to
such liability constituting a breach of more than one representation, warranty,
covenant or agreement; and in particular, the Parent Indemnifying Persons shall not
be held liable for any Purchaser Loss if and to the extent that such Purchaser Loss
was taken into account in the determination of the Purchase Price pursuant to
Section 2.3 or Section 2.4.



          7.5 Notice of Claims; Third-Party Claims.





          (a) Any Person (an “Indemnitee”) making a claim for indemnification under this
ARTICLE 7 shall notify the indemnifying party (an “Indemnitor”) of the claim in
writing promptly after receiving written notice of any action, lawsuit, Proceeding, Tax
Matter, investigation or other claim against it (if by a third party), describing the claim,
the amount thereof (if known and quantifiable) and the basis thereof; provided, however,
that the failure of the Indemnitee to give prompt notice shall not release the Indemnitor of
its indemnification obligations hereunder, except to the extent the Indemnitor shall have
been prejudiced by such failure. The Indemnitor shall be entitled to participate in the
defense of such action, lawsuit, Proceeding, Tax Matter, investigation or other claim giving
rise to an Indemnitee’s claim for indemnification at such Indemnitor’s expense, and, unless
such matters could reasonably be expected to result in Parent Losses or Purchaser Losses (as
the case may be) in excess of twice the Cap applicable to such Parent Losses or Purchaser
Losses or involve injunctive relief, at its option shall be entitled to assume and control
the defense thereof, including by appointing counsel of its choice reasonably acceptable to
the Indemnitee to be the lead counsel in connection with such defense; provided, however,
that the Indemnitee shall be entitled to participate in the defense of such claim and to
employ counsel of its choice for such purpose; provided, further, that the fees and expenses
of such separate counsel employed by the Indemnitee shall be borne solely by the Indemnitee.
If the Indemnitor shall control the defense of any such claim then the Indemnitor shall be
entitled to settle or compromise such claim; provided, however, that the Indemnitor shall
obtain the prior written consent of the Indemnitee before entering into any settlement or
compromise of a claim or ceasing to defend such claim unless (i) such settlement or
compromise expressly and unconditionally releases the Indemnitee from all liabilities and
obligations with respect to such claim, (ii) no injunctive or other equitable relief will be
imposed against the Indemnitee pursuant to or as a result of such settlement, compromise or
cessation and (iii)



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such settlement or compromise could not adversely affect any Tax liability of the
Indemnitee. If the Indemnitor elects to not control the defense of any such claim then the
Indemnitee shall be entitled to settle such claim; provided, however, that the Indemnitee
shall obtain the prior written consent of the Indemnitor before entering into any settlement
or compromise of such claim or ceasing to defend such claim, unless (i) such settlement or
compromise expressly and unconditionally releases the Indemnitor from all liabilities and
obligations with respect to such claim, (ii) no injunctive or other equitable relief will be
imposed against the Indemnitor pursuant to or as a result of such settlement or cessation,
(iii) Indemnitee waives its indemnification rights against Indemnitor in relation to the
relevant claim and (iv) such settlement or compromise could not adversely affect any Tax
liability of the Indemnitor, in which case the consent of Indemnitor shall not be required.
All consents and approvals required to be given under this Section 7.5(a) shall not be
unreasonably withheld, delayed or conditioned by the party from whom such consent or
approval is sought.




          (b) Each Indemnitor and Indemnitee shall reasonably cooperate in the defense or
prosecution of any action, lawsuit, Proceeding, Tax Matter, investigation or other claim
that may give rise to an indemnification obligation under this ARTICLE 7, which cooperation
shall include, to the extent reasonably requested by any such Indemnitor or Indemnitee, the
retention, and the prompt provision to the other, of records and information reasonably
relevant to such action, lawsuit, Proceeding, Tax Matter, investigation or other claim or to
such defense or prosecution, and making employees of such Indemnitor and/or Indemnitee (as
applicable) and its Affiliates available on a mutually convenient basis to provide
additional information and explanation of any materials provided hereunder.




          (c) No Parent Indemnified Party or Purchaser Indemnified Party shall knowingly take any
action which prejudices the defense of any claim subject to indemnification hereunder or
induces a third party to assert a claim subject to indemnification hereunder unless the
primary motive or purpose of such action is a legitimate business purpose (disregarding, for
the purpose of determining the legitimacy of such business purpose, the effect of any
indemnification rights under this ARTICLE 7).




          (d) As soon as reasonably practicable following the delivery of written notice of a Tax
Matter pursuant to Section 7.5(a) hereof, Parent and Purchaser shall make a determination as
to whether such Tax Matter constitutes a Parent Controlled Tax Matter, a Purchaser
Controlled Tax Matter, or a Jointly Controlled Tax Matter. Parent Indemnifying Persons shall
have the right, at their expense, to control, in whole or in part, any Parent Controlled Tax
Matter and Purchaser Indemnified Persons shall have the right, at their expense, to control,
in whole or in part, any Purchaser Controlled Tax Matter. Parent Indemnifying Persons and
the Purchaser Indemnified Persons, together, shall have the right, each covering its own
expenses, to control jointly any Jointly Controlled Tax Matter; provided, however, that in
the case of any particular Jointly Controlled Tax Matter, Parent Indemnifying Persons and
Purchaser Indemnified Persons may mutually agree, but are not compelled to reach agreement,
to designate the Tax Matter as either a Parent Controlled Tax Matter or a Purchaser
Controlled Tax Matter.



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          (e) In the case of a Parent Controlled Tax Matter, (i) the Parent, or the relevant
Parent Indemnifying Person, shall use good faith efforts in the defense or contest of such
Tax Matter and provide, or cause to be provided, to the Purchaser copies of all
correspondence received from or delivered to the Tax Authority in connection with such Tax
Matter, (ii) the Purchaser, or the relevant Purchaser Indemnified Person, shall have the
right to participate in any such Tax Matter at its own expense, and shall provide
cooperation and assistance to the Parent or the relevant Parent Indemnifying Person in
connection with such defense or contest as may be reasonably requested by the Parent or the
relevant Parent Indemnifying Person, and (iii) the Parent, or the relevant Parent
Indemnifying Person, shall not settle such Tax Matter without the consent of the Purchaser,
which consent shall not unreasonably be withheld or delayed.




          (f) In the case of a Purchaser Controlled Tax Matter, (i) the Purchaser, or the
relevant Purchaser Indemnified Person, shall use good faith efforts in the defense or
contest of such Tax Matter and provide, or cause to be provided, to the Parent copies of all
correspondence received from or delivered to the Tax Authority in connection with such Tax
Matter, (ii) the Parent, or the relevant Parent Indemnifying Person, shall have the right to
participate in any such Tax Matter at its own expense, and shall provide cooperation and
assistance to the Purchaser, or the relevant Purchaser Indemnified Person, in connection
with such defense or contest as may be reasonably requested by the Purchaser, or the
relevant Purchaser Indemnified Person, and (iii) the Purchaser, or the relevant Purchaser
Indemnified Person, shall not settle such Tax Matter without the consent of the Parent,
which consent shall not unreasonably be withheld or delayed.




          (g) In the case of a Jointly Controlled Tax Matter, (i) each of the Parent, or the
relevant Parent Indemnifying Person, on the one hand, and the Purchaser, or the relevant
Purchaser Indemnified Person, on the other, shall use good faith efforts cooperate, provide
assistance, and jointly defend or contest such Tax Matter and provide, or cause to be
provided, to each other copies of all correspondence received from or delivered to the Tax
Authority in connection with such Tax Matter, and (ii) neither the Parent, or the relevant
Parent Indemnifying Person, on the one hand, nor the Purchaser, or the relevant Purchaser
Indemnified Person, on the other, shall settle such Tax Matter without the consent of the
other party, which consent shall not unreasonably be withheld or delayed.



          7.6 Resolution of Tax Calculation Disputes. If the Parent and the Purchaser cannot
agree on the calculation of any amount relating to Taxes that is required to be made hereunder, the
Parent or the Purchaser (as the case may be) shall notify the other in writing of its request to
commence the dispute resolution procedures set forth in this Section 7.6 and such dispute shall be
resolved by an internationally recognized certified public accounting firm mutually acceptable to
each of the Parent and the Purchaser (the “Tax CPA”). The Parent and the Purchaser shall
immediately notify the Tax CPA of such dispute and the Tax CPA shall limit its examination to any
such dispute. Not later than 30 days after receiving notice of such dispute, the Tax CPA shall
resolve such dispute and notify the Parent and the Purchaser in writing of its decisions regarding
such dispute. The Parties shall respond promptly to any reasonable request for information made by
the Tax CPA, and shall provide the Tax CPA with any oral or written statements, explanations or
information regarding such dispute, provided that a Party shall



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receive timely any written material prepared by the other Party and provided by such Party to
the Tax CPA to support such statements, explanations or information. Absent manifest error, the
decisions of the Tax CPA shall be final, conclusive and binding upon the Parties. The fees and
expenses charged by the Tax CPA shall be borne equally by the Parties.




          7.7 Sole Remedy. The indemnities provided in this ARTICLE 7 shall constitute the sole
and exclusive remedy of any Party for Parent Losses and Purchaser Losses arising out of, resulting
from or incurred in connection with the breach of any representation, warranty, covenant or
agreement contained in this Agreement (including, for the avoidance of doubt, a breach of any
representation, warranty, covenant or agreement contained in the Offer Letter, but only after and
subject to the consummation of the Closing); provided, however, that the foregoing terms of this
Section 7.7 shall not apply to any fraud, intentional misrepresentation or willful breach committed
by a Party; provided, further, that the exclusive remedy set forth in this Section 7.7 does not
preclude a Party from bringing an action for specific performance to require the other Party to
perform its obligations under this Agreement.




          7.8 Tax Effect of Indemnification Payments. All indemnification payments made by the
Parent Indemnifying Persons to the Purchaser Indemnified Persons, or by the Purchaser Indemnifying
Persons to the Parent Indemnified Persons, pursuant to this Agreement shall be treated for all Tax
purposes as adjustments to the Purchase Price, unless otherwise required by applicable Law.




ARTICLE 8.

GENERAL PROVISIONS




          8.1 Cooperation. Each of the Parties hereby agrees to use its commercially reasonable
efforts to take all measures or to ensure that all measures necessary or useful are taken in a
timely manner for the completion of the transactions provided for in this Agreement. In the event
that after the Closing Date, any additional measures are necessary or desirable for the completion
of the Transaction, the parties shall use their respective commercially reasonable efforts to take
all such measures or to ensure that they are taken.




          8.2 Confidentiality. The provisions of the Confidentiality Agreement shall remain
binding and in full force and effect until the Closing and the Purchaser agrees to be bound by, and
to comply with the obligations of Macquarie Capital (USA) Inc. thereunder. The information
contained herein, in the Disclosure Schedule or delivered to the Purchaser or its authorized
representatives pursuant hereto shall be subject to the Confidentiality Agreement until the Closing
and, for that purpose and to that extent, the terms of the Confidentiality Agreement are
incorporated herein by reference. The Purchaser shall instruct its consultants, advisors and
representatives to treat the terms of this Agreement after the date hereof as strictly confidential
(unless compelled to disclose by judicial or administrative process or, in the opinion of legal
counsel, by other requirements of Law, including in compliance with the securities laws of the
United States or the rules of any self-regulatory body having jurisdiction over such Party).




          8.3 Announcements. Except to the extent required by applicable Law, and subject to
the terms of the Confidentiality Agreement, the Parties will mutually agree on the nature, content
and timing of any and all publicity, public announcements, press releases, or



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other public disclosures regarding this Agreement or the transactions specifically
contemplated herein (including, but not limited to, on any web site). Notwithstanding the
foregoing, the Purchaser also acknowledges that the Parent may disclose this Agreement and the
Transaction in filings with the SEC and the New York Stock Exchange (NYSE) without requiring any
consent from the Purchaser.




          8.4 Joint and Several Liability. Each of the Parent, Pilot, Meribel and Quiksilver
Americas agrees to be jointly and severally liable for the accuracy of all representations and
warranties of, and the due performance of all covenants, agreements and obligations to be performed
by, the Parent, Pilot and/or Quiksilver Americas under this Agreement.




          8.5 Absence of Third-Party Rights; Assignment. This Agreement shall inure to the
benefit of, and be binding upon, the Parties and their respective successors and assigns; provided
that no Party shall assign or delegate any of the rights or obligations under this Agreement
(except, at any time after the Closing, by operation of law in connection with a merger, a sale of
all or substantially all of the assets, or a liquidation of the Purchaser or its Affiliates)
without the prior written consent of each other Party, and any such purported assignment or
delegation without such consent shall be void and of no effect; provided, however, that the
Purchaser may (in its sole discretion), without the consent of any other Party, assign (in whole or
in part and whether by merger, operation of law or otherwise) (a) this Agreement and its rights
hereunder to its lenders and debt providers (and/or any administrative and/or collateral agent
therefor) for collateral security purposes, and (b) this Agreement and its rights and obligations
hereunder to one or more of its Affiliates or any Person in which any equity owner of the Purchaser
directly or indirectly owns an equity interest; provided, further, that (i) any such assignment
shall not adversely affect in any material respect the ability of the Purchaser to consummate the
Transaction and perform its obligations hereunder, and (ii) the Purchaser shall remain liable for,
and shall not be released from, any of its obligations under this Agreement. Except as set forth in
ARTICLE 7, nothing in this Agreement, express or implied, shall confer upon any Person other than a
Party or a Party’s permitted successors and assigns, any rights or remedies of any nature or kind
whatsoever under or by reason of this Agreement.




          8.6 Entire Agreement. This Agreement, the Disclosure Schedule, the Transition
Services Agreement, the Roxy License Agreement, the Initial Offer Letter, the Restated Offer Letter
and any other document or instrument executed and/or delivered by any Party to any other Party
pursuant to this Agreement set forth all of the promises, covenants, agreements, conditions and
undertakings among the Parties relating to the subject matter hereof and supersede all prior or
contemporaneous agreements and understandings, negotiations, inducements or conditions, express or
implied, oral or written (other than the Confidentiality Agreement) of the Parties with respect to
the subject matter hereof.




          8.7 Waivers and Amendments. No modification of or amendment to this Agreement shall
be valid unless set forth in an instrument in writing signed by Parent and the Purchaser. Any
waiver of any term or condition of this Agreement must be set forth in an instrument in writing
signed by the waiving Party and must refer specifically to the term or condition to be waived and
to the circumstances of such waiver. No such waiver shall be deemed to constitute a waiver
applicable either to other circumstances involving the same term or



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condition or to any other term or condition of this Agreement. Except as otherwise expressly
provided herein, no failure on the part of any Party to exercise, and no delay in exercising, any
right, power or remedy hereunder, or otherwise available in respect hereof at law or in equity, and
no custom or practice of the Parties at variance with the terms hereof, shall operate as a waiver
thereof, nor shall any single or partial exercise of such right, power or remedy by such Party
preclude any other or further exercise thereof or the exercise of any other right, power or remedy.




          8.8 Severability. If any term or other provision of this Agreement is held by a court
of competent jurisdiction to be invalid, illegal or incapable of being enforced under any rule of
Law in any particular respect or under any particular circumstances, such term or provision shall
nevertheless remain in full force and effect in all other respects and under all other
circumstances, and all other terms, conditions and provisions of this Agreement shall nevertheless
remain in full force and effect so long as the economic or legal substance of the Transaction is
not affected in any manner materially adverse to either Party. Upon such determination that any
term or other provision is invalid, illegal or incapable of being enforced, the Parties shall
negotiate in good faith to modify this Agreement so as to effect the original intent of the Parties
as closely as possible in an acceptable manner to the end that the Transaction is fulfilled to the
fullest extent possible.




          8.9 Interest. Except for the Note, any amount required to be paid hereunder which is
not paid by the due date for payment of such amount as provided herein shall bear interest at the
Reference Rate plus 30 basis points, inclusive of the due date and the actual date of payment.




          8.10 Notices and Communications. Except as otherwise specifically provided for
hereunder, all notices and communications provided for herein shall be deemed to have been duly
given if delivered to the following addresses:



If to the Purchaser, to:



[                                        ]

[                                        ]

[                                        ]

Attention: [                    ]

Facsimile: [                    ]



With copies to:



Willkie Farr & Gallagher LLP

787 Seventh Avenue

New York, NY 10019

Attention: William J. Grant, Esq.

Facsimile: (212) 728-9223



and




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Willkie Farr & Gallagher LLP

21-23 rue de la Ville l’Evêque

Paris, France

Attention: Eduardo J. Fernandez, Esq.

Facsimile: +33 1 4006 9606



If to the Parent, Pilot or Quiksilver Americas, to:



Quiksilver, Inc.,

15202 Graham Street,

Huntington Beach, California 92649

U.S.A.

Attention: Charles S. Exon

Facsimile: +1 714 889 3306



With a copy to:



Skadden, Arps, Slate, Meagher & Flom LLP

300 South Grand Avenue Suite 3400

Los Angeles, California 90071

Attention: Brian McCarthy, Esq.

Facsimile: +1 (213) 687 5600



or to such other addresses as the addressees shall indicate in accordance with the provisions of
this Section 8.10. All notices or communications given or made pursuant to this Agreement shall be
in writing and shall be deemed to have been duly given or made (i) on the date stated on the
receipt, if hand delivered or sent by overnight courier, against a receipt signed and dated by or
on behalf of the addressee, (ii) on the date of the first presentation to the addressee, if sent by
registered mail with return receipt requested, or (iii) on the day after the date of dispatch, if
sent by facsimile or telecopy (with a copy simultaneously sent by overnight courier, postage
prepaid, return receipt requested).




          8.11 Costs. Each Party shall be responsible for payment of all fees and costs
respectively incurred in connection with this Agreement and the Transaction, including the fees and
disbursements of their respective financial advisors, accountants, attorneys and other advisors,
whether or not mandated. The Purchaser and the Parent shall each be responsible for the payment of
50% of the Transfer Taxes incurred in connection with this Agreement and the Transaction.




          8.12 Specific Performance. Each Party agrees that it could be irreparably injured by
a breach of this Agreement by the other Party, that money damages will not be an adequate and/or
fully sufficient remedy for any breach of this Agreement and that, in addition to all other
remedies available at law, each Party shall be entitled to injunctive relief and specific
performance as a remedy for any such breach.




- 66 -









 








          8.13 Governing Law; Jurisdiction; Waiver of Jury Trial.





          (a) This Agreement is made pursuant to, and shall be construed and enforced in
accordance with, the laws of the State of New York applicable to contracts made and
performed in such state.




          (b) Each party hereto hereby irrevocably consents and agrees that any legal action,
suit or proceeding against it with respect to its rights or obligations or any other matter
under or arising out of or in connection with this Agreement (other than in connection with
the dispute to be resolved by the Auditor or the Tax Arbitrator pursuant to Section 2.4(e)
and Section 7.6, respectively) shall be brought in the United States District Court of the
Southern District of New York or in the courts of the State of New York, sitting in New York
County and, by execution and delivery of this Agreement, each Party, to the fullest extent
permitted by applicable law, hereby (i) irrevocably accepts and submits to the exclusive
jurisdiction of each of the aforesaid courts in person, generally and unconditionally with
respect to any such action, suit or proceeding and (ii) agrees not to commence any such
action, suit or proceeding in any jurisdiction other than those of the aforesaid courts,
waives any objection to the laying of venue of any such action, suit or proceeding therein
and agrees not to plead or claim that such action, suit or proceeding has been brought in an
inconvenient forum. Any and all service of process and any other notice in any such action,
suit or proceeding shall be effective against any Party if given to such Party as provided
in Section 8.10. Nothing herein contained shall be deemed to affect the right of any Party
to serve process in any other manner permitted by applicable Law.




          (c) EACH PARTY HERETO HEREBY IRREVOCABLY WAIVES ANY AND ALL RIGHTS IT MAY HAVE TO
DEMAND THAT ANY ACTION, PROCEEDING OR COUNTERCLAIM ARISING OUT OF OR IN ANY WAY RELATED TO
THIS AGREEMENT OR THE RELATIONSHIPS OF THE PARTIES HERETO BE TRIED BY JURY. THIS WAIVER
EXTENDS TO ANY AND ALL RIGHTS TO DEMAND A TRIAL BY JURY ARISING FROM ANY SOURCE INCLUDING,
BUT NOT LIMITED TO, THE CONSTITUTION OF THE UNITED STATES OR ANY STATE THEREIN, COMMON LAW
OR ANY APPLICABLE STATUTE OR REGULATIONS. EACH PARTY HERETO ACKNOWLEDGES THAT IT IS
KNOWINGLY AND VOLUNTARILY WAIVING ITS RIGHT TO DEMAND TRIAL BY JURY.



          8.14 Counterparts. This Agreement may be executed by the parties in one or more
counterparts or duplicate originals, each of which when so executed and delivered shall be deemed
an original, but all of which together shall constitute one and the same instrument, and all
signatures need not appear on any one counterpart. Any facsimile copies hereof or signature hereon
shall, for all purposes, be deemed originals.




[remainder of page intentionally left blank]





- 67 -









 








          IN WITNESS WHEREOF, the Parties hereto have duly executed this Stock Purchase Agreement as of
the date first written above.




	 	 	 	 	 
	 	QUIKSILVER, INC.

 	 
	 	By:  	 	 
	 	 	Name:  	 	 
	 	 	Title:  	 	 
	 



	 	 	 	 	 
	 	PILOT S.A.S.

 	 
	 	By:  	 	 
	 	 	Name:  	 	 
	 	 	Title:  	 	 
	 



	 	 	 	 	 
	 	MERIBEL S.A.S.

 	 
	 	By:  	 	 
	 	 	Name:  	 	 
	 	 	Title:  	 	 
	 



	 	 	 	 	 
	 	QUIKSILVER AMERICAS, INC.

 	 
	 	By:  	 	 
	 	 	Name:  	 	 
	 	 	Title:  	 	 
	 



	 	 	 	 	 
	 	[                                                            ]

 	 
	 	By:  	 	 
	 	 	Name:  	 	 
	 	 	Title:  	 	 
	 




- 68 -










 







THIS NOTE HAS NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED (THE “ACT”),
AND MAY NOT BE OFFERED OR SOLD UNLESS REGISTERED PURSUANT TO SUCH ACT OR UNLESS AN EXEMPTION FROM
SUCH REGISTRATION IS AVAILABLE. IN ADDITION, THIS NOTE MAY NOT BE TRANSFERRED TO ANY PERSON WHO IS
NOT AN ELIGIBLE PERSON (AS DEFINED IN THIS NOTE).




SUBORDINATED PROMISSORY NOTE




			
	 	 	 
	€[10,000,000]
	 	New York, New York
	 
	 	[___]1





W I T N E S S E T H :


          FOR VALUE RECEIVED, the undersigned, [                                        ]2 (the
“Company”),
hereby promises to pay to the order of PILOT S.A.S., a French société par actions simplifiée (the
“Initial Holder”), or its permitted assigns (any such permitted assigns, together with the
Initial Holder, the “Holder”), the principal sum of
[TEN MILLION EUROS]
(€[10,000,000]) on the dates specified herein, with interest on the unpaid balance of such amount
from the date hereof at the rate of interest specified herein.




          This note (this “Note”) is issued pursuant to Section 2.2 of the Stock Purchase
Agreement by and among Quiksilver, Inc., Pilot S.A.S., Meribel S.A.S., Quiksilver Americas, Inc.
and [                                        ]3, dated as of [                    ] 20084 (the “Stock Purchase
Agreement”).




1. DEFINITIONS




          Capitalized terms and other defined terms used in this Note shall (unless otherwise provided
elsewhere in this Note) have the meanings given to them in Annex 1 hereto.




          All references to Sections contained herein shall refer to Sections of this Note unless
otherwise stated or the context otherwise requires.




          Except as otherwise provided in this Note, all computations and determinations as to
accounting or financial matters (including financial covenants) shall be made in accordance with
GAAP consistently applied for all applicable periods, and all accounting or financial terms






 




			
	1	 	Insert Closing Date
	 
	2	 	Insert name of Purchaser
	 
	3	 	Insert name of Purchaser
	 
	4	 	Insert Closing Date




 









 









shall have the meanings ascribed to such terms by GAAP. All financial statements to be
delivered pursuant to this Note shall be prepared in accordance with GAAP.




          All other undefined terms contained in this Note shall, unless the context indicates
otherwise, have the meanings provided for by the Code as in effect in the State of New York to the
extent the same are used or defined therein.




          The words “include”, “includes”, “including” and “such as”
shall be construed as if followed by the phrase “without limitation.”




          The words “herein,” “hereof” and “hereunder” and other words of
similar import refer to this Note as a whole, as the same may from time to time be amended,
modified or supplemented and not to any particular section, subsection or clause contained in this
Note.




          Unless the context otherwise requires, each term stated in either the singular or plural shall
include the singular and the plural, and pronouns stated in the masculine, feminine or neuter
gender shall include the masculine, the feminine and the neuter.




          In the computation of periods of time from a specified date to a later specified date, the
word “from” means “from and including” and the words “to” and “until” each mean “to but excluding”
and the word “through” means “to and including”.




2. TERMS OF PAYMENT




          2.1. Principal. The Company shall pay the entire unpaid principal amount of this
Note, together with accrued and unpaid interest thereon through the date of such payment, on the
Maturity Date; provided, that, any amounts due and payable to Company pursuant to Section
9.1 hereof shall be set off against the Obligations immediately upon the final determination that
such amounts are due and payable to Company.




          2.2. Optional Prepayment. The Company may, at any time, upon three days’ prior
written notice, prepay the outstanding principal amount of this Note, without premium or penalty,
in whole or ratably in part, together with accrued and unpaid interest thereon, through the date of
such prepayment on the principal amount prepaid. Any such prepayment by the Company shall be
applied in the following order, in each case pro rata among all Notes based on their relative
principal amounts: (i) then due and payable fees and expenses under each Note; (ii) then due and
payable interest payments on each Note; and (iii) the principal of each Note.




          2.3. Interest.




          (a) Interest shall not accrue on this Note until January 1, 2011. From January 1, 2011,
interest shall accrue on the outstanding principal amount hereof at the Applicable Rate. The
Company shall make payments to the Holder of interest on the outstanding principal amount of this
Note quarterly in arrears on each March 31, June 30, September 30 and December 31, and on to the
Maturity Date, commencing March 31, 2011 (each of the foregoing, an “Interest Payment
Date”). All payments of interest hereunder shall be computed on the basis of a 360-day year and
the number of days elapsed.




-2-









 








          (b) If any payment on this Note becomes due and payable on a day other than a Business Day,
the maturity thereof shall be extended to the next succeeding Business Day and, with respect to
payments of interest thereon, shall be payable at the then Applicable Rate during such extension.




          (c) Interest on overdue amounts under this Note shall be increased by 2.0% per annum above the
rate otherwise applicable, which interest shall be due and payable on demand (before and after
judgment).




          (d) Notwithstanding anything to the contrary set forth in this Section 2.3, if at any time
until the Maturity Date the Applicable Rate exceeds the highest rate of interest permissible under
any law which a court of competent jurisdiction shall, in a final determination, deem applicable
hereto (the “Maximum Lawful Rate”), then, in such event, and so long as the Maximum Lawful
Rate would be so exceeded, the rate of interest payable hereunder shall be equal to the Maximum
Lawful Rate; provided, however, that, to the extent permitted by applicable law, if
at any time thereafter the Applicable Rate is less than the Maximum Lawful Rate, the Company shall
continue to pay interest hereunder at the Maximum Lawful Rate until such time as the total interest
received by Holder hereunder is equal to the total interest which Holder would have received had
the Applicable Rate been (but for the operation of this paragraph) the interest rate payable since
the date hereof. Thereafter, the interest rate payable hereunder shall be the Applicable Rate
unless and until the Applicable Rate again exceeds the Maximum Lawful Rate, in which event this
paragraph shall again apply. In no event shall the total interest received by Holder pursuant to
the terms hereof exceed the amount which Holder could lawfully have received had the interest due
hereunder been calculated for the full term hereof at the Maximum Lawful Rate. If the Maximum
Lawful Rate is calculated pursuant to this paragraph, such interest shall be calculated at a daily
rate equal to the Maximum Lawful Rate divided by the number of days in the year in which such
calculation is made. If a court of competent jurisdiction, notwithstanding the provisions of this
Section 2.4(d), shall make a final determination that Holder has received interest hereunder in
excess of the Maximum Lawful Rate, Holder shall, to the extent permitted by applicable law,
promptly apply such excess first to any interest due and not yet paid under its Note, then to the
principal amount of its Note (without premium or penalty), then to other unpaid Obligations and
thereafter shall refund any excess to the Company or as a court of competent jurisdiction may
otherwise order.




          2.4. Receipt of Payment. The Company shall make each payment under this Note not
later than 1:00 p.m. (New York City time) on the Business Day when due, in lawful money of the
European Union (Euros), in immediately available funds to Holder’s depository bank as designated by
Holder from time to time for deposit in Holder’s depositary account. For purposes only of
computing interest hereunder, all payments shall be applied by Holder to its Note on the day
payment has been received by Holder in immediately available funds as provided herein.




          2.5. Withholding Rights. Each of the Company and the Initial Holder acknowledge and
agree that no payment hereunder to be made by, or received from, the Company hereunder is
anticipated to be subject to deduction or withholding under applicable law in respect of any tax.
If the Company or the Holder should become aware of any factual basis leading to a contrary
conclusion, the relevant party shall provide prompt notice to the other party




-3-









 







and the Company and the Holder shall cooperate in good faith to implement appropriate
arrangements to avoid the imposition, or mitigate the amount of, any withholding tax under
applicable law. In the event of the imposition of any such withholding or deduction for which
Company may be liable the Holder shall indemnify and hold the Company harmless, provided that the
Company shall use its commercially reasonable efforts, in consultation with the Holder, to contest
or otherwise mitigate, the amount of any such withholding or deduction that is ultimately due and
payable. The foregoing is based on (i) the Initial Holder’s representation that it is tax resident
in France and, in light of the Company’s representation set forth in the next sentence, is eligible
to receive payments under the Note free of withholding tax and (ii) the Company’s representation
that it is tax resident in France and, in light of the Initial Holder’s representation set forth in
the next sentence, is eligible to make such payments free of withholding tax. The Company hereby
represents to the Initial Holder that the Company is tax resident in France and the Initial Holder
hereby represents to the Company that the Initial Holder is tax resident in France.




3. FINANCIAL STATEMENTS AND INFORMATION




          3.1. Reports and Notices. The Company covenants and agrees that, from and after the
date hereof and until all the Obligations have been paid in full, it shall deliver to Holder:




          (a) Within 90 days after the end of the first three fiscal quarters of each Fiscal Year, (i) a
copy of the unaudited balance sheets of the Company Parties as of the close of such quarter and
related statements of income and cash flows for that portion of the Fiscal Year ending as of the
close of such quarter, and (ii) a copy of the unaudited statements of income of the Company Parties
for such quarter, all prepared in accordance with GAAP (subject to normal year end adjustments) and
accompanied by the certification of the chief executive officer or chief financial officer of the
Company that all such financial statements present fairly in accordance with GAAP (subject to
normal year end adjustments) the financial position, the results of operations and the cash flows
of the Company Parties as of the end of such quarter and for the portion of the fiscal year then
ended.




          (b) Within 120 days after the close of each Fiscal Year, a copy of the annual audited
financial statements of the Company Parties, consisting of a balance sheet and statements of income
and retained earnings and cash flows, setting forth in comparative form in each case the figures
for the previous fiscal year (if any), which financial statements shall be prepared in accordance
with GAAP, certified by a firm of independent certified public accountants of recognized national
standing selected by the Company and reasonably acceptable to the Majority Holders.




          (c) As soon as practicable, but in any event within five (5) Business Days after the Company
becomes aware of the existence of any Default or Event of Default, telephonic or other written or
oral notice to the Holder specifying the nature of such Default or Event of Default, which notice,
if oral, shall be promptly confirmed in writing within five (5) days.




-4-









 





4. AFFIRMATIVE COVENANTS


          The Company covenants and agrees that, unless the Majority Holders shall otherwise consent in
writing, from and after the date hereof and until all the Obligations have been paid in full:


          4.1. Maintenance of Existence and Conduct of Business. The Company shall, and shall
cause each of the other Company Parties to, (a) do or cause to be done all things necessary to
preserve and keep in full force and effect its corporate existence, and its rights, licenses,
privileges and franchises; (b) continue to conduct its business substantially as now conducted or
as otherwise permitted hereunder; and (c) at all times, consistent with industry practices,
maintain, preserve and protect all of its trademarks, trade names, patents, copyrights, trade
secrets, know-how and other intellectual property (except where the failure to do so is not
reasonably likely to have a Material Adverse Effect), and preserve all the remainder of its
property, in use in the conduct of its business, and keep the same in good repair, working order
and condition (taking into consideration ordinary wear and tear) and from time to time make, or
cause to be made, all needful and proper repairs, renewals and replacements, betterments and
improvements thereto so that the business carried on in connection therewith may be properly and
advantageously conducted at all times.


          4.2. Books and Records. The Company shall, and shall cause each of the other Company
Parties to, keep adequate records and books of account with respect to its business activities, in
which proper entries, reflecting all of its financial transactions, are made in accordance with
GAAP.


5. NEGATIVE COVENANTS


          The Company covenants and agrees that, without the prior written consent of the Majority
Holders, from and after the date hereof and until all the Obligations have been paid in full:


          5.1. Mergers, etc. (a) The Company will not consolidate with or merge with or
amalgamate with any other Person unless:


     (i) the successor formed by such consolidation or amalgamation or the survivor
of such merger, as the case may be (in each case, the “Surviving Entity”),
shall be a solvent entity organized and existing under the laws of France, the
United States or any State thereof (including the District of Columbia), and such
Surviving Entity shall have executed and delivered to the Holder, prior to the
consummation of such consolidation, amalgamation or merger and in a manner
reasonably satisfactory to the Majority Holders, its assumption of the due and
punctual performance and observance of each term, covenant and condition of this
Note; and


     (ii) immediately after giving effect to such transaction, no Default or Event
of Default shall have occurred and be continuing.



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(b) The Company shall not sell, convey, transfer or lease all or substantially all
of its assets in a single transaction or series of transactions to any Person or
Persons.


(c) The Company will not permit any of its Subsidiaries to sell, convey, transfer or
lease all or substantially all of any such Subsidiary’s assets to the extent such
sale, conveyance, transfer or lease would constitute a sale, conveyance, transfer or
lease of all or substantially all of the Company’s and its Subsidiaries’ assets on a
consolidated basis.


          5.2. Transactions with Affiliates. The Company shall not, and shall not permit any
Company Party to, enter into or be a party to, or otherwise permit to exist, any transaction with
or for the benefit of any Affiliate of a Company Party, except upon fair and reasonable terms that
are no less favorable to such Company Party than the Company Party would obtain at the time of such
transaction in a comparable arm’s length transaction with a Person not an Affiliate of the Company
Party; provided, however, that the provisions of this Section 5.2 shall not apply
to (A) management fees paid to the Permitted Holders not to exceed [$500,000] in any fiscal year,
(B) the indemnification of directors and officers of each Company Party in accordance with
customary practices, (C) any issuance or repurchases of securities, or other payments, awards or
grants in cash, securities or otherwise, in each case pursuant to, or to provide for the funding
of, employment agreements, stock options and stock ownership plans established for directors and
officers of any Company Party in the ordinary course of business and approved by the board of
directors of the Company, (D) loans or advances to bona fide employees of any Company Party in the
ordinary course of business, (E) transactions solely among the Company and its Subsidiaries, (F)
the payment of fees to directors of any Company Party in the ordinary course of business, (G) any
employment agreements entered into by any Company Party in the ordinary course of business, (H) any
employee compensation, benefit plan or arrangement, any health, disability or similar insurance
plan which covers bona fide employees of any Company Party, (I) [the loan agreement between the
Company and its Affiliate — to be described when details are available] and (J) the payment of all
fees, expenses, bonuses and awards directly related to the transactions contemplated by the Stock
Purchase Agreement, including fees to the Permitted Holders, payable on the Closing Date or in
connection with bona fide financial advisory or investment banking services actually provided to
any Company Party by any Permitted Holder (to the extent such fees, expenses, bonuses, and amounts
relating to such bona fide financial advisory or investment banking services are on customary
market terms).


6. EVENTS OF DEFAULT; RIGHTS AND REMEDIES


          6.1. Events of Default. The occurrence of any one or more of the following events
(regardless of the reason therefor) shall constitute an “Event of Default” hereunder:


          (a) The Company shall fail to make any payment of principal of the Obligations when due and
payable, or declared due and payable, and such failure shall have remained unremedied for a period
of five (5) days after the same shall have become due and payable, or declared due and payable.


-6-









 








          (b) The Company shall fail to make any payment of interest on, or any other amount owing in
respect of (other than amounts in respect of principal), the Obligations when due and payable, or
declared due and payable, and such failure shall have remained unremedied for a period of thirty
(30) days after the Company has received notice of such failure from any Holder.




          (c) The Company shall fail to perform, keep or observe (or fail to cause any other Company
Party to perform, keep or observe, as the case may be) any other provision, covenant or agreement
of or contained in this Note and the same shall remain unremedied for a period ending thirty (30)
days after the Company shall receive written notice of any such failure from the Majority Holders.




          (d) An Event of Default shall occur under any other Note.




          (e) A case or proceeding shall have been commenced against any Material Company Party in a
court having competent jurisdiction, seeking a decree or order in respect of any Material Company
Party (i) under title 11 of the United States Code, as now constituted or hereafter amended, or any
other applicable Federal, state or foreign bankruptcy, insolvency, receivership or other similar
law, (ii) appointing a custodian, receiver, liquidator, assignee, trustee or sequestrator (or
similar official) of or for any Material Company Party or of any substantial part of the properties
of any Material Company Party, or (iii) ordering the winding-up or liquidation of the affairs of
any Material Company Party and such case or proceeding shall remain undismissed or undischarged for
sixty (60) consecutive days or such court shall enter a decree or order granting the relief sought
in such case or proceeding.




          (f) Any Material Company Party shall (i) file a petition seeking relief under title 11 of the
United States Code, as now constituted or hereafter amended, or any other applicable Federal, state
or foreign bankruptcy, insolvency, receivership or other similar law, (ii) consent to the
institution of proceedings thereunder or to the filing of any such petition or to the appointment
of or taking possession by a custodian, receiver, liquidator, assignee, trustee or sequestrator (or
similar official) of such Material Company Party or of any substantial part of the properties of
any Material Company Party, (iii) fail generally to pay its debts as such debts become due, (iv)
make a general assignment or arrangement for the benefit of creditors, or (v) take any corporate or
other organizational action in furtherance of any such action.




          (g) Any Material Company Party shall become unable, admit in writing its inability or fail
generally to pay its debts as they become due.




          (h) Any representation or warranty made by the Company in this Note or in any certificate,
instrument or written statement contemplated by or made or delivered pursuant to or in connection
with any of the Notes, shall prove to have been incorrect when made or deemed made in any material
respect.




          (i) A Change of Control shall have occurred.




          (j) Any Company Party shall default in making any payment of any principal of or interest on
any Indebtedness having an aggregate principal amount of €25,000,000 or more, after the period of
grace, if any, provided for in the instrument or agreement under which such




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Indebtedness is governed, or any other circumstance or event occurs which results in the
acceleration of the maturity of any Indebtedness of any Company Party having an aggregate principal
amount of €25,000,000 or more.




          6.2. Remedies. If any Event of Default specified in Section 6.1 shall have occurred
and be continuing, the Majority Holders may, by notice to the Company, declare all Obligations to
be forthwith due and payable, whereupon all such Obligations shall become and be due and payable,
without presentment, demand, protest or further notice of any kind, all of which are expressly
waived by the Company; provided, however, that upon the occurrence of an Event of
Default specified in Section 6.1(e) or Section 6.1(f) or Section 6.1(g) hereof, all Obligations
shall automatically become immediately due and payable without declaration, notice or demand.




          6.3. Waivers by the Company. Except as otherwise provided for in this Note, the
Company waives presentment, demand and protest and notice of presentment, dishonor, notice of
intent to accelerate and notice of acceleration. The Company acknowledges that it has been advised
by counsel of its choice with respect to this Note and the transactions evidenced by this Note.




7. REPRESENTATIONS AND WARRANTIES




          The Company hereby represents and warrants as of the Closing Date to the Holder as follows:




          7.1. Authorization. The execution, delivery and performance of this Note are within
the Company’s corporate or other organizational powers and have been duly authorized by all
necessary corporate (or other organizational) and, if required, stockholder or shareholder, action.
This Note has been duly executed and delivered by the Company and constitutes a legal, valid and
binding obligation of the Company, enforceable against the Company in accordance with its terms,
subject to applicable bankruptcy, insolvency, reorganization, moratorium or other laws affecting
creditors’ rights generally and subject to general principles of equity, regardless of whether
considered in a proceeding in equity or at law.




          7.2. No Default. No Default or Event of Default exists as of the Closing
Date.




8. SUBORDINATION




          Notwithstanding anything to the contrary contained in this Note, the Holder hereby
subordinates all claims arising under, with respect to or out of this Note to all Senior
Indebtedness in the manner and to the extent hereinafter provided:




          8.1. The Company shall not make any payments to the Holder of this Note on account of any
Obligation in respect of this Note, including the principal of and interest on the Note and may not
purchase, redeem or otherwise retire or acquire this Note: (i) upon the maturity of all of the
Company’s Senior Indebtedness by lapse of time, acceleration (unless waived) or otherwise, unless
and until such Senior Indebtedness is first Paid in Full; or (ii) in the case of a Senior Default
relating to failure to pay any principal of, premium, if any, or interest or other amounts on the
Company’s Senior Indebtedness, when such Senior Indebtedness becomes due




-8-









 







and payable, whether at maturity or at a date fixed for prepayment or by declaration or
otherwise (a “Payment Default”), unless and until such Payment Default has been cured or
waived or otherwise has ceased to exist and any such acceleration has been rescinded or such Senior
Indebtedness has been Paid in Full.




          8.2. Upon (i) the happening of a Senior Default hereunder other than a Payment Default that
permits the Senior Lenders to accelerate the maturity of such Senior Indebtedness and (ii) written
notice of such Senior Default delivered to Holder (with a copy to the Company) by the
Senior Lenders or representatives of the Senior Lenders (a “Payment Blockage Notice”),
then, unless and until such Senior Default has been cured or waived or otherwise has ceased to
exist, no payment shall be made by the Company to the Holder on account of any Obligations.
Notwithstanding the preceding sentence (but subject to the other provisions of this Section 8),
unless the Senior Indebtedness in respect of which such Senior Default exists has been declared due
and payable in its entirety within 364 days after the Payment Blockage Notice is delivered as set
forth above (the “Payment Blockage Period”) (and such declaration has not been rescinded or
waived) or a Payment Default has occurred and is continuing, at the end of the Payment Blockage
Period, the Company shall be permitted to pay all sums not previously paid to the Holder of this
Note during the Payment Blockage Period due to the foregoing prohibitions and to resume all other
payments as and when due on this Note.



Any number of Payment Blockage Notices may be given; provided, however, that: (i) not more than
one Payment Blockage Notice shall be given within a period of any 540 consecutive days, and (ii) no
Senior Default that is not a Payment Default that existed upon the date of such Payment Blockage
Notice or the commencement of such Payment Blockage Period shall be made the basis for the
commencement of any other Payment Blockage Period unless such Senior Default shall have been cured
or waived for a period of not less than 90 days (it being acknowledged that any subsequent action,
or any subsequent breach of any financial covenants during the period after the delivery of such
initial Payment Blockage Notice that in either case, would give rise to a Non-Payment Default
pursuant to any provisions under which a Non-Payment Default previously existed or was continuing
shall constitute a new Non-Payment Default for this purpose).




          8.3. If any Event of Default has occurred and is continuing, the Holder will not exercise or
seek to exercise any rights or remedies with respect thereto, will not bring any action or
proceeding to recover the Obligations or to exercise any rights or remedies and will not accelerate
the maturity of the Obligations (except to the extent such acceleration occurs as a result of an
Event of Default under Section 6.1(e), Section 6.1(f) or Section 6.1(g)) unless (1) the Holder has
given notice of such Event of Default to the Senior Lenders or the agent or representative of the
Senior Lenders and at least 364 days have elapsed since the delivery of such notice or (2) the
Senior Indebtedness has been Paid in Full. Notwithstanding anything to the contrary expressed or
implied herein, this Section 8.3 shall not restrict or prevent the acceleration of the maturity of
the Obligations upon an Event of Default under Sections 6.1 (e), (f) or (g) or the accrual of
interest at the rate provided in Section 2.3 (c) following an Event of Default.




          8.4. In the case of any distribution of the assets of the Company to its creditors, under
bankruptcy law or by virtue of receivership or other court proceedings, assignment for the benefit
of creditors, liquidation, dissolution, or otherwise, all dividends and payments on account




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of the Obligations shall be payable to (or for the benefit of) the Senior Lenders, if any,
until all Senior Indebtedness (including, without limitation, interest accrued thereon after the
initiation of any proceeding under bankruptcy law or any other kind of insolvency proceeding,
whether or not any such Senior Lender would, under applicable law, be entitled to receive dividends
or payments with respect to such interest in such proceeding) has been Paid in Full, and the Holder
hereby assigns to the Senior Lenders all such dividends and payments to the extent of the unpaid
Senior Indebtedness. If any such dividends or payments come directly or indirectly into the
Holder’s control or possession, it will receive them as trustee for the benefit of such Senior
Lenders and will immediately pay them to (or for the benefit of) such Senior Lenders until the
Senior Indebtedness is Paid in Full.




          8.5. To the extent any payment of Senior Indebtedness is declared to be fraudulent or
preferential, set aside or required to be paid to any receiver, trustee in bankruptcy, liquidating
trustee, agent or other similar Person under any bankruptcy, insolvency, receivership, fraudulent
conveyance or similar law, then, if such payment is recovered by, or paid over to, such receiver,
trustee in bankruptcy, liquidating trustee, agent or similar Person, the Senior Indebtedness or
part thereof originally intended to be satisfied shall be deemed to be reinstated and outstanding
as if such payment had not occurred. It is further agreed that any diminution (whether pursuant to
court decree or otherwise, including without limitation for any of the reasons described in the
preceding sentence) of the Company’s obligations to make any distribution or payment pursuant to
any Senior Indebtedness, except to the extent such diminution occurs by reason of the repayment
(which has not been disgorged or returned) of such Senior Indebtedness in cash, shall have no force
or effect for purposes of the subordination provisions contained in this Section 8, with any
turnover of payments as otherwise calculated pursuant to this Section 8 to be made as if no such
diminution had occurred. The Company shall promptly give written notice to the Holder of any such
dissolution, winding-up, liquidation or reorganization of the Company; provided that any delay or
failure to give such notice shall have no effect on the subordination provisions contained in this
Section 8.




          8.6. If a distribution is made to the Holder that because of this Section 8 should not have
been made to the Holder, the Holder shall hold such distribution in trust for the Senior Lenders
and pay it over to them (or their designees) as their interests may appear, without defense,
offset, recoupment, deduction, or counterclaim of any kind, and such Senior Lenders shall apply all
such amounts on account of the applicable Senior Indebtedness, which shall be permanently reduced
by such amounts.




          8.7. The right of any present or future Senior Lender to enforce subordination of this Note
pursuant to the provisions of this Section 8 shall not at any time be prejudiced or impaired by any
act or failure to act on the part of the Company or any such Senior Lender, including, without
limitation, any forbearance, waiver, consent, compromise, amendment, extension, renewal, or taking
or release of security of or in respect of any Senior Indebtedness or by noncompliance by the
Company with the terms of such subordination regardless of any knowledge thereof the Holder may
have or otherwise be charged with having.




          8.8. Each present and future Senior Lender shall be an intended third party beneficiary of the
provisions of this Section 8. Each Senior Lender (or the representative or agent for each Senior
Lender) shall give notice to the Holder as provided herein of the address where




-10-









 





the Holder may provide notices under this Section 8 to the Senior Lenders or their
representative or agent.


          8.9. Notwithstanding anything to the contrary expressed or implied herein, the Company shall
not be restricted as a result of this Section 8 or the subordination provisions hereof from
exercising its right to reduce the Obligations by such payments as are due and payable to Company
pursuant to Section 9.1 hereof, and in the event the Company does exercise such right, the Holder
shall have no duties, obligations or liabilities as a result thereof to any Senior Lender under
this Section 8 or the subordination provisions hereof.


The failure to make a payment on account of any Obligations under this Note by reason of any
provision of this Section 8 shall not be construed as preventing the occurrence of a Default or an
Event of Default under Section 6.1 or in any way limit the rights of any Holder to pursue any other
rights or remedies with respect to this Note except as expressly provided in Section 8.3 herein.


This Section 8 defines the relative rights of Holder and Senior Lenders. Nothing in this Note
shall: (1) impair, as between the Company and Holder, the obligation of the Company, to pay, when
due, the Obligations; (2) affect the relative rights of Holder and creditors of the Company other
than their rights in relation to the Senior Lenders; or (3) prevent any Holder from exercising its
available remedies upon a Default or Event of Default, subject to the rights of the Senior Lenders
to receive distributions and payments otherwise payable to Holder as provided herein and subject to
Section 8.3 herein with respect to the exercise of remedies upon an Event of Default.


Subject to the payment in full in cash of all Senior Indebtedness of the Company, the Holder shall
be subrogated to the rights of the Senior Lenders to receive payments or distributions of assets of
the Company applicable to the Senior Indebtedness until all amounts owing on this Note shall be
paid in full, and for the purpose of such subrogation no such payments or distributions to the
Senior Lenders by or on behalf of the Company, or by or on behalf of the Holder by virtue of this
Section 8, which otherwise would have been made to the Holder shall, as between the Company and the
Holder, be deemed to be payment by the Company on account of such Senior Indebtedness, it being
understood that the provisions of this Section 8 are and are intended solely for the purpose of
defining the relative rights of the Holder, on the one hand, and the Senior Lenders, on the other
hand.


          8.10. In addition to the terms defined elsewhere in this Note, as used herein, the following
terms shall have the respective meanings set forth below:


     (i) “Hedging Agreements” means any swap, cap, collar, forward purchase
or similar agreements or arrangements dealing with interest rates.


     (ii) “Indebtedness” means any liability for borrowed money or for the
deferred purchase price of property or any other indebtedness that is evidenced by a
note, bond, debenture, or similar instrument (excluding any trade liability or
accrued liability but including accrued interest on any debt instrument), all
obligations, contingent or otherwise, in respect of bankers’ acceptances and letters


-11-









 





of credits and all obligations under capitalized leases. For the avoidance of
doubt, “Indebtedness” shall include all amounts historically classified by the
Acquired Companies (as such term is defined in the Stock Purchase Agreement) as
long-term debt or lines of credit in the Parent Consolidated Financial Statements
(as such term is defined in the Stock Purchase Agreement).


     (iii) “Paid in Full” means, with respect to the Senior Indebtedness,
the payment in full in cash of the Senior Indebtedness and the termination of all
commitments to extend credit (including the making of loans and the issuance of
letters of credit) under the documents evidencing or creating the Senior
Indebtedness.


     (iv) “Senior Default” means any event of default of, under or with
respect to any of the Senior Indebtedness, and any other event or condition the
occurrence or existence of which permits any Senior Lender to accelerate, or results
in the acceleration of, the maturity of the Senior Indebtedness.


     (v) “Senior Indebtedness” means (1) all obligations (including the
payment of the principal of, premium, if any, and interest (including any interest
accruing subsequent to the filing of a petition of bankruptcy at the rate provided
for in the documentation with respect thereto, whether or not such interest is an
allowed claim under applicable law) on any Indebtedness of the Company, whether
outstanding on the date hereof or thereafter created, incurred or assumed, unless,
in the case of any particular Indebtedness, the instrument creating or evidencing
the same or pursuant to which the same is outstanding expressly provides that such
Indebtedness shall be subordinate or pari passu in right of payment to this Note and
(2) all obligations of the Company with respect to Hedging Agreements relating to
Indebtedness referred to in the preceding clause (1). Without limiting the
generality of the foregoing, “Senior Indebtedness” shall also include all other
amounts owing in respect of all monetary obligations of every nature of the Company
to any Senior Lender in respect of such Senior Indebtedness, including, without
limitation, obligations to pay fees, principal and interest, reimbursement
obligations under letters of credit, expenses and indemnities. It is understood and
agreed that the aggregate principal amount of Senior Indebtedness shall not exceed
€180,000,000 at any one time outstanding (which Indebtedness, if incurred in
any currency other than Euro shall be calculated as if converted into Euro at the
conversion rate prevailing at the time of incurrence as reasonably determined by the
Company); provided, that this limitation shall not apply to Senior
Indebtedness referred to in clause (2).


     (vi) Senior Lender” means any holder of Senior Indebtedness.


9. MISCELLANEOUS


          9.1. Set-Off. Company shall not set off any amounts against and on account of the
Obligations due and payable to Holder under this Note, except that amounts due and payable to the
Company, to the extent such amounts are neither contested nor in dispute, under Section




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2.3, Section 2.4 and Article 7 of the Stock Purchase Agreement may be set-off against the
Obligations.




          9.2. Complete Agreement; Modification of Note. This Note constitutes the complete
agreement between the parties with respect to the subject matter hereof. No amendment or waiver of
any provision of this Note, nor consent to any departure by the Company therefrom, shall in any
event be effective unless the same shall be in writing and signed by the Majority Holders and any
other Holder whose consent is required under Section 9.5, and then such waiver or consent shall be
effective only in the specific instance and for the specific purpose for which given.




          9.3. Assignment. (a) Holder may not, without the written consent of the Company, not
to be unreasonably withheld, sell, assign, pledge, convey or transfer (an “Assignment”) to
any other Person all or any portion of or any participation right in its rights and obligations
under this Note and any such action without consent of the Company shall be null and void;
provided, that, notwithstanding the foregoing, (i) Holder may pledge or grant a security
interest in this Note as collateral without such consent in connection with any grant of all or
substantially all of the assets of Holder as collateral for indebtedness owed to a bank lender or
other financial institution and (ii) Holder may transfer this Note to its Affiliates without such
consent (provided, that at all times it owns the Note such Affiliate must remain an Affiliate of
the Initial Holder or the transfer to such Affiliate shall be deemed in breach of this Section
9.3). Any Assignment shall not be valid unless and until the Holder furnishes in writing to the
Company the name and address of the assignee. The Company shall establish and maintain a register
reflecting the name and address of the Holder and each subsequent assignee (excluding any person
holding a security interest herein).




          (b) Under no circumstances shall the Company be permitted to assign any of its obligations
under this Note and any attempt by the Company to assign such obligations shall be null and void
except in connection with a merger permitted under Section 5.1 hereof.




          (c) In the event that this Note is assigned in whole or in part, then the Company, at the
request of any Holder, will at such time execute a new note or notes (all such notes, together with
this Note, the “New Notes”) substantially equivalent to this Note, payable to each Holder,
for a principal amount equal to the principal owing to each Holder (it being understood that the
aggregate principal amount of all Notes shall not exceed the aggregate principal amount of this
Note). Upon any such assignment, this “Note” shall be deemed to refer to all such New Notes, and
“Holder” shall refer to each and every Holder of the New Notes.




          9.4. Fees and Expenses. If Holder shall employ counsel or other advisors for advice
or other representation or shall incur reasonable legal or other costs and expenses in connection
with (a) any amendment, modification or waiver, or consent requested by the Company with respect
to, this Note or Holder’s rights hereunder or (b) any litigation, contest, dispute, suit,
proceeding or action (whether instituted by Holder, the Company or any other Person) (including,
without limitation, any bankruptcy or insolvency proceeding) in any attempt to enforce any rights
of Holder against the Company, then, and in any such event, the attorneys’ and other parties’ fees
arising from such services, including those of any appellate proceedings, and all expenses, costs,
charges and other fees incurred by such counsel, and others, in any way




-13-









 







or respect arising in connection with or relating to any of the events or actions described in
this Section shall be payable, on demand, by the Company to Holder and shall be additional
obligations under this Note. Without limiting the generality of the foregoing, such expenses,
costs, charges and fees may include: paralegal fees, costs and expenses; court costs and expenses;
photocopying and duplicating expenses; court reporter fees, costs and expenses; long distance
telephone charges; air express charges; telegram charges; secretarial overtime charges; and
expenses for travel, lodging and food paid or incurred in connection with the performance of such
legal services.




          9.5. No Waiver by Holder. Holder’s failure, at any time or times, to require strict
performance by the Company of any provision of this Note shall not waive, affect or diminish any
right of Holder thereafter to demand strict compliance and performance therewith. Any suspension
or waiver by Holder of an Event of Default shall not suspend, waive or affect any other Event of
Default under this Note whether the same is prior or subsequent thereto and whether of the same or
of a different type. None of the undertakings, agreements, warranties, covenants and
representations of the Company contained in this Note and no Event of Default by the Company under
this Note shall be deemed to have been suspended or waived by Holder, unless such suspension or
waiver is by an instrument in writing signed by Holder (as such term is defined in the applicable
provision hereof) and directed to the Company specifying such suspension or waiver.
Notwithstanding the foregoing, the provisions of the Note may be amended, modified or waived with
the written consent of the Majority Holders, except, the following provisions of this Note may not
be amended without the consent of the Holder of this Note (in addition to the Majority Holders) if
the effect thereof is to: (a) extend the scheduled due date for any payment of principal of or
interest on any of the Notes, (b) defer the dates on which interest is payable on the Notes, (c)
decrease the Applicable Rate, (d) change the currency in which the Notes are payable, or (e) change
this Section 9.5 or Section 9.2.




          9.6. Remedies. Holder’s rights and remedies under this Note shall be cumulative and
non-exclusive of any other rights and remedies which Holder may have under any other agreement, by
operation of law or otherwise.




          9.7. WAIVER OF JURY TRIAL. THE PARTIES HERETO WAIVE ALL RIGHT TO TRIAL BY JURY IN ANY
ACTION OR PROCEEDING TO ENFORCE OR DEFEND ANY RIGHTS UNDER THIS NOTE.




          9.8. Severability. Wherever possible, each provision of this Note shall be
interpreted in such manner as to be effective and valid under applicable law, but if any provision
of this Note shall be prohibited by or invalid under applicable law, such provision shall be
ineffective to the extent of such prohibition or invalidity, without invalidating the remainder of
such provision or the remaining provisions of this Note.




          9.9. Parties. This Note shall be binding upon, and inure to the benefit of, the
successors of the Company and Holder and, subject to Section 9.3, the assigns of Holder.




          9.10. Authorized Signature. Until Holder shall be notified by the Company to the
contrary, the signature upon any document or instrument delivered pursuant hereto of any




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duly elected officer of the Company shall bind the Company and be deemed to be the act of the
Company.




          9.11. Governing Law. IN ALL RESPECTS, INCLUDING ALL MATTERS OF CONSTRUCTION, VALIDITY
AND PERFORMANCE, THIS NOTE AND THE OBLIGATIONS ARISING HEREUNDER SHALL BE GOVERNED BY, AND
CONSTRUED AND ENFORCED IN ACCORDANCE WITH, THE LAWS OF THE STATE OF NEW YORK APPLICABLE TO
CONTRACTS MADE AND PERFORMED IN SUCH STATE, WITHOUT REGARD TO THE PRINCIPLES THEREOF REGARDING
CONFLICT OF LAWS, AND ANY APPLICABLE LAWS OF THE UNITED STATES OF AMERICA. Holder and the Company
agree to submit to personal jurisdiction and to waive any objection as to venue in the federal and
state courts of the County of New York, State of New York. Service of process on the Company or
Holder in any action arising out of or relating to any of the Notes shall be effective if mailed to
such party in accordance with Section 9.13 hereof. Nothing herein shall preclude Holder or the
Company from bringing suit or taking other legal action in any other jurisdiction.




          9.12. Currency Conversion. If, for the purposes of obtaining judgment in any court, it
is necessary to convert a sum due hereunder in euros into another currency, the parties hereto
agree, to the fullest extent that they may effectively do so, that the rate of exchange used shall
be that at which in accordance with normal banking procedures, Holder could purchase (and remit in
New York City) euros with such other currency on the Business Day preceding that on which final
judgment is given. Company’s obligation in respect of any sum due hereunder shall, notwithstanding
any judgment in a currency other than euros, be discharged only to the extent that on the Business
Day following its receipt of any sum adjudged to be so due in such other currency, Holder may, in
accordance with normal banking procedures, purchase (and remit in New York City) euros with such
other currency; if the euros so purchased and remitted are less than the sum originally due to
Holder, Company agrees, as a separate obligation and notwithstanding any such judgment, to
indemnify Holder against such loss, and if the euros so purchased exceed the sum originally due in
euros, such excess shall be remitted to Company.




          9.13. Notices. All notices, requests, demands, approvals, consents, waivers and other
communications required or permitted to be given under this Note (each, a “Notice”) shall
be in writing and shall be (a) delivered personally, (b) mailed by first-class, registered or
certified mail, return receipt requested, postage prepaid, (c) sent by next-day or overnight mail
or delivery, or (d) sent by facsimile transmission, provided that the original copy thereof also is
sent by pre-paid, first class certified or registered mail or by next-day or overnight mail or
personal delivery:




          (i) if to the Company, to




          (ii) if to Holder, to




-15-









 







Pilot S.A.S.

26 rue Danièle Casanova

75002 Paris

France

Attn: Président

Facsimile: +33 5 59 26 9716



With a copy to:



Quiksilver, Inc.,

15202 Graham Street,

Huntington Beach, California 92649

U.S.A.

Attention: Charles S. Exon

Facsimile: +33 714 889 3306



And to:



Skadden, Arps, Slate, Meagher & Flom LLP

300 South Grand Avenue

Suite 3400

Los Angeles, California 90071



Attention: Brian McCarthy, Esq.

Facsimile: +1 (213) 687 5600



or, in each case at such other address as may be specified in a Notice to the Company or Holder, as
the case may be. Any Notice shall be deemed effective and given upon receipt (or intentional
refusal of receipt by the addressee of such Notice).




          9.14. Confidentiality. Holder agrees to keep confidential information obtained by it
pursuant to the Notes confidential in accordance with Holder’s customary practices and agrees that
it will only use such information in connection with the transactions contemplated hereby and not
disclose any of such information other than (a) to Holder’s and its affiliates’ respective
employees, representatives, directors, attorneys, auditors, agents, professional advisors, trustees
or affiliates who are advised of the confidential nature thereof (Holder being liable for any
breach of confidentiality by any person described in this clause (a)), (b) to the extent such
information presently is or hereafter becomes available to Holder on a non-confidential basis from
a person not an Affiliate of Holder and not known to Holder to be violating a confidentiality
obligation by such disclosure, (c) to the extent disclosure is required by any law, subpoena or
judicial order or process (provided that notice of such requirement or order shall be
promptly furnished to Company unless such notice is legally prohibited) or requested or required by
any Governmental Authority to whose jurisdiction Holder may be subject, (d) to the extent required
in connection with any litigation or other proceeding (including any bankruptcy or insolvency
proceeding) between or involving any Company Party and Holder with respect to this Note, (e) to any
prospective assignee bound by the provisions of this Section 9.14, (f) in connection with the
enforcement of any rights or remedies of Holder under this Note or (g) with Company’s prior written
consent.




-16-









 








          9.15. Section Titles. The Section titles contained in this Note are and shall be
without substantive meaning or content of any kind whatsoever and are not a part of the agreement
between the parties hereto.




          9.16. Exhibits, etc. All exhibits, schedules and annexes to this Note constitute part
of this Note and are hereby incorporated by this reference in this Note.




-17-









 








          IN WITNESS WHEREOF, this Note has been duly executed in New York, New York as of the date
first written above.




	 	 	 	 	 
	 	[                                                             ]5

 	 
	 
	 	By:  	 	 
	 	 	Name:  	 	 
	 	 	Title:  	 	 
	 



Acknowledged and Agreed:




PILOT S.A.S.



	 	 	 
	By:
	 	 
	 

	 	Name:
	 

	 	Title:








 




			
	5	 	Insert name of Purchaser




-18-









 




Annex 1


Certain
Definitions and Rules of Interpretation


          “Acquisition” shall mean the transaction whereby Quiksilver, Inc., Pilot S.A.S., Meribel S.A.S
and Quiksilver Americas, Inc. sell to the Purchaser (as defined in the Stock Purchase Agreement),
all of the Company Shares (as defined in the Stock Purchase Agreement) and all of the North
American Shares (as defined in the Stock Purchase Agreement).


          “Affiliate” shall mean, with respect to any Person, any other Person which directly or
indirectly controls, or is under common control with, or is controlled by, such Person; provided,
that the Company shall not be deemed to be an Affiliate of any Wholly-Owned Subsidiary of the
Company and no Wholly-Owned Subsidiary of the Company shall be deemed to be an Affiliate of any
other Wholly-Owned Subsidiary. As used in this definition, “control” (including, with its
correlative meanings, “controlled by” and “under common control with”) shall mean possession,
directly or indirectly, of power to direct or cause the direction of management or policies
(whether through ownership of securities or partnership or other ownership interests, by contract
or otherwise).


          “Applicable Rate” shall mean 8.0% per annum.


          “Assignment” shall have the meaning assigned to such term in Section 9.3(a) hereof.

          “Bankruptcy Code” shall mean the United States Federal Bankruptcy Code of 1978, as amended or
supplemented.


          “Beneficial Owner” shall have the meaning assigned to such term in Rules 13d-3 and 13d-5 under
the Exchange Act. The terms “Beneficially Owns” and “Beneficially Owned” have a corresponding
meaning.


          “Business Day” shall mean any day that is not a Saturday, a Sunday or a day on which banks are
required or permitted to be closed in the State of New York.


          “Change of Control” shall mean, at any time, the occurrence of any of the following: (i) any
“person” (including any group that is deemed to be a “person” but, in any event, excluding the
Permitted Holders) is or becomes the Beneficial Owner of more than 50.0% of the fully diluted
Voting Stock of the Company; or (ii) the sale, conveyance, transfer or lease of all or
substantially all of the assets of the Company and its Subsidiaries on a consolidated basis. The
terms “person” and “group” shall have the meanings ascribed to such terms in Section 13(d) of the
Exchange Act.


          “Closing Date” shall mean [___].3


          “Code”
shall mean the Uniform Commercial Code of the jurisdiction with respect to which such
term is used, as in effect from time to time.



 




			
	3	 	Insert Closing Date



 









 










          “Company” shall have the meaning ascribed thereto in the first paragraph of this Note,
together with its successors and assigns, including in connection with any permitted merger or
consolidation.




          “Company Party” shall mean the Parent and its Subsidiaries, individually and, in the plural
usage, collectively.




          “Default” shall mean any event or condition that constitutes an Event of Default or that would
become, with notice or lapse of time or both, an Event of Default.




          “Eligible Person” shall mean any person that the Holder hereof may assign, sell or transfer
(excluding any pledge of this Note as collateral) this Note to under Section 9.3(a).




          “Event of Default” shall have the meaning assigned to it in Section 6.1 hereof.




          “Exchange Act” shall mean the United States Securities Exchange Act of 1934, as amended, and
the rules and regulations of the SEC promulgated thereunder.




          “Fiscal Year” shall mean the fiscal year of the Company.




          “GAAP” shall mean generally accepted accounting principles in effect in the United States of
America or any other relevant jurisdiction from time to time and shall include, for the avoidance
of doubt International Financial Reporting Standards as in effect from time to time.




          “Governmental Authority” shall mean any government or political subdivision of the United
States or any other country or any agency, authority, board, bureau, central bank, commission,
department or instrumentality thereof or therein, including, without limitation, any court,
tribunal, grand jury or arbitrator, in each case whether foreign or domestic, or any entity
exercising executive, legislative, judicial, regulatory or administrative functions of or
pertaining to such government or political subdivision.




          “Hedging Agreements” shall have the meaning assigned to such term in Section 8.10 hereof.




          “Holder” shall, unless the context otherwise requires, mean, at any time, any holder of all or
any portion of the Note at such time.




          “Indebtedness” shall have the meaning assigned to such term in Section 8.10 hereof.




          “Initial Holder” shall have the meaning assigned to such term in paragraph 1 hereof.




          “Interest Payment Date” shall have the meaning assigned to such term in Section 2.3(a) hereof.




          “Jarden” shall mean Jarden Corporation.




A-2 









 








          “Laws” shall mean, collectively, all common law and all international, foreign, federal, state
and local statutes, treaties, rules, guidelines, regulations, ordinances, codes and administrative
or judicial precedents, including without limitation the interpretation thereof by any Governmental
Authority charged with the enforcement thereof.




          “Macquarie” shall mean Macquarie Capital Group Limited.




          “Majority Holders” shall mean the holders of at least a majority of the outstanding principal
amount of the Notes.




          “Material Adverse Effect” shall mean a material adverse effect on (i) the business, assets,
operations or financial or other condition of the Company Parties taken as a whole or (ii) the
Company’s ability to pay the Obligations in accordance with the terms thereof.




          “Material Company Party” shall mean any Company Party or group of Company Parties which has or
have annual revenues or total assets exceeding 10% of the total annual revenues or assets of the
Company Parties taken as a whole.




          “Maturity Date” shall mean the fourth anniversary of the Closing Date.




          “Maximum Lawful Rate” shall have the meaning assigned to it in Section 2.3(d) hereof.




          “New Notes” shall have the meaning assigned to such term in Section 9.3(c) hereof.




          “Note” shall have the meaning assigned to such term in the second paragraph hereof.




          “Notice” shall have the meaning assigned to such term in Section 9.13 hereof.




          “Obligations” shall mean all debts, liabilities, and obligations for monetary amounts (whether
or not such amounts are liquidated or determinable) owing by the Company to the Holder and arising
under this Note, and all covenants and duties regarding such amounts, of any kind or nature,
present or future, whether or not evidenced by any note, agreement or other instrument, arising
under this Note. This term includes, without limitation, principal, all interest, charges,
expenses, attorneys’ fees and any other sum chargeable to the Company under this Note (including
interest accruing during the pendency of any bankruptcy, insolvency, receivership or other similar
proceeding, regardless of whether allowed or allowable in such proceeding).




          “Paid in Full” shall have the meaning assigned to such term in Section 8.10 hereof.




          “Parent” shall mean[     ]6.






 




			
	6	 	Include details of Purchaser under the Stock Purchase
Agreement.




A-3 









 










          “Payment Blockage Notice” shall have the meaning assigned to such term in Section 8.2 hereof.




          “Payment Blockage Period” shall have the meaning assigned to such term in Section 8.2 hereof.




          “Payment Default” shall have the meaning assigned to such term in Section 8.1 hereof.




          “Permitted Holders” shall mean Macquarie, Jarden, and their respective Affiliates, and any
investment fund, partnership or other person sponsored by or formed at the direction of Macquarie,
Jarden, their respective Affiliates (unless such investment fund, partnership or other person is
not managed by a person that is an Affiliate or Related Person of Macquarie or Jarden). As used
herein, the term “Related Person” means (a) any controlling stockholder or 80% (or more) directly
or indirectly owned Subsidiary, of any Permitted Holder, or (b) any trust, corporation, partnership
or other entity if (x) the beneficiaries, stockholders, partners, members, owners or other persons
beneficially owning (as defined in Rule 13d-3 and Rule 13d-5 under the Exchange Act) in the
aggregate 80% or more of the voting equity of such trust, corporation, partnership or entity
consist of any one or more Permitted Holders or such other Permitted Holders referred to in clause
(a), or (y) a general partner or managing member or person otherwise controlling or having the
power to direct or cause the direction or the management and policies of such trust, corporation,
partnership or entity is any one or more of the Permitted Holders or such other persons referred to
in clause (a).




          “person” or “Person” shall mean any individual, corporation, company, voluntary association,
partnership, limited liability company, joint venture, trust, other entity, unincorporated
organization or government (or any agency, instrumentality or political subdivision thereof).




          “SEC” shall mean the United States Securities and Exchange Commission.




          “Securities Act” shall mean the United States Securities Act of 1933, as amended, and all
rules and regulations of the SEC promulgated thereunder.




          “Senior Default” shall have the meaning assigned to such term in Section 8.10 hereof.




          “Senior Indebtedness” shall have the meaning assigned to such term in Section 8.10 hereof.




          “Senior Lender” shall have the meaning assigned to such term in Section 8.10 hereof.




          “Stock” shall mean all shares, options, warrants, general or limited partnership interests,
limited liability company interests, participations or other equity securities or interests or
equivalents (regardless of how designated) of or in a corporation, partnership, limited liability
company or other entity, whether voting or nonvoting, including, without limitation, common



A-4 









 





stock, preferred stock, or any other “equity security” (as such term is defined in Rule 311-1
of the General Rules and Regulations promulgated by the SEC under the Exchange Act).


          “Stock Purchase Agreement” shall have the meaning assigned to it in the second paragraph
hereof.


          “Subsidiary” shall mean, with respect to any person, any corporation, partnership or other
entity (i) of which at least a majority of the securities or other ownership interests having by
the terms thereof ordinary voting power to elect a majority of the board of directors or other
persons performing similar functions of such corporation, partnership or other entity (irrespective
of whether or not at the time securities or other ownership interests of any other class or classes
of such corporation, partnership or other entity shall have or might have voting power by reason of
the happening of any contingency) is at the time directly or indirectly owned or controlled by such
person and/or one or more Subsidiaries of such person, or (ii) in which the management is directly
or indirectly controlled by such person or one or more Subsidiaries of such person.


          “Voting Stock” shall mean, with respect to any Person, the Stock of such Person that
ordinarily has voting power for the election of directors (or persons performing similar functions)
of such Person, whether at all times or only as long as no senior class of Stock has such voting
power by reason of any contingency.


          “Wholly-Owned Subsidiary” shall mean, with respect to any person, any corporation, partnership
or other entity of which all of the Stock (other than, in the case of a corporation, directors’
qualifying shares or nominee shares required under applicable law) is directly or indirectly owned
or controlled by such person and/or one or more Wholly-Owned Subsidiaries of such person.


A-5