exv10w1






Exhibit 10.1




 





CREDIT AGREEMENT




Dated as of July 31, 2009




among




QUIKSILVER AMERICAS, INC.,

as Borrower




QUIKSILVER, INC.,

as a Guarantor




RHÔNE GROUP L.L.C.,

as Administrative Agent




and




The Lenders Party Hereto




RHÔNE GROUP L.L.C.,

as Sole Lead Arranger and Sole Bookrunner




 





 









 





TABLE OF CONTENTS




	 	 	 	 	 
	Section
	 	Page
	ARTICLE I
	 	 	 	 
	 
	 	 	 	 
	DEFINITIONS AND ACCOUNTING TERMS
	 	 	 	 
	 
	 	 	 	 
	1.01 Defined Terms
	 	 	1	 
	1.02 Other Interpretive Provisions
	 	 	33	 
	1.03 Accounting Terms
	 	 	34	 
	1.04 Rounding
	 	 	34	 
	1.05 Times of Day
	 	 	34	 
	1.06 Currency Equivalents Generally
	 	 	34	 
	1.07 Certifications
	 	 	35	 
	 
	 	 	 	 
	ARTICLE II
	 	 	 	 
	 
	 	 	 	 
	THE COMMITMENTS AND LOANS
	 	 	 	 
	 
	 	 	 	 
	2.01 Loans
	 	 	35	 
	2.02 Borrowing of Loans
	 	 	35	 
	2.03 [Reserved]
	 	 	35	 
	2.04 [Reserved]
	 	 	35	 
	2.05 Prepayments
	 	 	35	 
	2.06 [Reserved]
	 	 	36	 
	2.07 Repayment of Loans
	 	 	37	 
	2.08 Interest
	 	 	37	 
	2.09 Exchange Rate MakeWhole; Repayment Fee; Closing Fee
	 	 	37	 
	2.10 Computation of Interest and Fees
	 	 	38	 
	2.11 Evidence of Debt
	 	 	38	 
	2.12 Payments Generally; Administrative Agent’s Clawback
	 	 	38	 
	2.13 Sharing of Payments by Lenders
	 	 	39	 
	 
	 	 	 	 
	ARTICLE III
	 	 	 	 
	 
	 	 	 	 
	TAXES, YIELD PROTECTION AND ILLEGALITY
	 	 	 	 
	 
	 	 	 	 
	3.01 Taxes
	 	 	40	 
	3.02 [Reserved]
	 	 	43	 
	3.03 [Reserved]
	 	 	43	 
	3.04 Increased Costs
	 	 	43	 
	3.05 [Reserved]
	 	 	44	 
	3.06 Mitigation Obligations; Replacement of Lenders
	 	 	44	 
	3.07 Survival
	 	 	44	 






i









 







	 	 	 	 	 
	Section
	 	Page
	ARTICLE IV
	 	 	 	 
	 
	 	 	 	 
	CONDITIONS PRECEDENT TO LOANS
	 	 	 	 
	 
	 	 	 	 
	4.01 Conditions of Loans
	 	 	44	 
	 
	 	 	 	 
	ARTICLE V
	 	 	 	 
	 
	 	 	 	 
	REPRESENTATIONS AND WARRANTIES
	 	 	 	 
	 
	 	 	 	 
	5.01 Existence, Qualification and Power
	 	 	49	 
	5.02 Authorization; No Contravention
	 	 	49	 
	5.03 Governmental Authorization; Other Consents
	 	 	49	 
	5.04 Binding Effect
	 	 	50	 
	5.05 Financial Statements; No Material Adverse Effect
	 	 	50	 
	5.06 [Reserved]
	 	 	51	 
	5.07 [Reserved]
	 	 	51	 
	5.08 Ownership of Property; Liens
	 	 	51	 
	5.09 [Reserved]
	 	 	51	 
	5.10 [Reserved]
	 	 	51	 
	5.11 Taxes
	 	 	51	 
	5.12 ERISA Compliance
	 	 	51	 
	5.13 [Reserved]
	 	 	52	 
	5.14 Disclosure
	 	 	52	 
	5.15 Compliance with Laws
	 	 	52	 
	5.16 Compliance with Sarbanes-Oxley Act
	 	 	52	 
	5.17 Intellectual Property
	 	 	52	 
	5.18 Labor Matters
	 	 	53	 
	5.19 Security Documents
	 	 	53	 
	5.20 Environmental Matters
	 	 	54	 
	5.21 Absence of Insolvency Proceedings
	 	 	54	 
	5.22 Capitalization
	 	 	54	 
	5.23 No Amendment to Services Fee Agreement
	 	 	54	 
	5.24 Compliance with Money Laundering Laws
	 	 	54	 
	5.25 No Default
	 	 	55	 
	 
	 	 	 	 
	ARTICLE VI
	 	 	 	 
	 
	 	 	 	 
	AFFIRMATIVE COVENANTS
	 	 	 	 
	 
	 	 	 	 
	6.01 Financial Statements
	 	 	55	 
	6.02 Certificates; Other Information
	 	 	56	 
	6.03 Notices
	 	 	57	 
	6.04 Payment of Obligations
	 	 	58	 
	6.05 Preservation of Existence, Etc
	 	 	58	 
	6.06 Maintenance of Properties
	 	 	58	 
	6.07 Maintenance of Insurance
	 	 	58	 
	6.08 Compliance with Laws
	 	 	59	 
	6.09 Books and Records; Accountants
	 	 	59	 
	6.10 Inspection Rights
	 	 	59	 
	6.11 Use of Proceeds
	 	 	59	 






ii









 






	 	 	 	 	 
	Section
	 	Page
	6.12 Additional Loan Parties
	 	 	59	 
	6.13 Information Regarding the Collateral
	 	 	60	 
	6.14 Environmental Laws
	 	 	60	 
	6.15 Further Assurances
	 	 	60	 
	6.16 Post-Closing Matters
	 	 	61	 
	 
	 	 	 	 
	ARTICLE VII
	 	 	 	 
	 
	 	 	 	 
	NEGATIVE COVENANTS
	 	 	 	 
	 
	 	 	 	 
	7.01 Liens
	 	 	61	 
	7.02 Investments
	 	 	61	 
	7.03 Indebtedness
	 	 	61	 
	7.04 Fundamental Changes
	 	 	62	 
	7.05 Dispositions
	 	 	62	 
	7.06 Restricted Payments
	 	 	62	 
	7.07 Prepayments of Subordinated Indebtedness
	 	 	63	 
	7.08 Change in Nature of Business
	 	 	63	 
	7.09 Transactions with Affiliates
	 	 	63	 
	7.10 Burdensome Agreements
	 	 	64	 
	7.11 ERISA
	 	 	64	 
	7.12 Amendment of Organization Documents
	 	 	64	 
	7.13 Fiscal Year
	 	 	64	 
	7.14 Financial Covenants
	 	 	64	 
	7.15 Restrictions on QS Holdings
	 	 	65	 
	 
	 	 	 	 
	ARTICLE VIII
	 	 	 	 
	 
	 	 	 	 
	EVENTS OF DEFAULT AND REMEDIES
	 	 	 	 
	 
	 	 	 	 
	8.01 Events of Default
	 	 	66	 
	8.02 Remedies Upon Event of Default
	 	 	68	 
	8.03 Application of Funds
	 	 	69	 
	 
	 	 	 	 
	ARTICLE IX
	 	 	 	 
	 
	 	 	 	 
	ADMINISTRATIVE AGENT AND LENDERS
	 	 	 	 
	 
	 	 	 	 
	9.01 Appointment and Authority
	 	 	69	 
	9.02 Rights as a Lender
	 	 	70	 
	9.03 Exculpatory Provisions
	 	 	70	 
	9.04 Reliance by Administrative Agent
	 	 	71	 
	9.05 Delegation of Duties
	 	 	71	 
	9.06 Resignation of Administrative Agent
	 	 	72	 
	9.07 Non-Reliance on Administrative Agent and Other Lenders
	 	 	72	 
	9.08 No Other Duties, Etc
	 	 	72	 
	9.09 Administrative Agent May File Proofs of Claim
	 	 	73	 
	9.10 Collateral and Guaranty Matters
	 	 	73	 
	9.11 Notice of Transfer
	 	 	74	 
	9.12 Agency for Perfection
	 	 	74	 
	9.13 Indemnification of Administrative Agent
	 	 	74	 






iii









 






	 	 	 	 	 
	Section
	 	Page
	9.14 Relation among Lenders
	 	 	74	 
	9.15 Defaulting Lender
	 	 	74	 
	9.16 Actions in Concert
	 	 	75	 
	 
	 	 	 	 
	ARTICLE X
	 	 	 	 
	 
	 	 	 	 
	MISCELLANEOUS
	 	 	 	 
	 
	 	 	 	 
	10.01 Amendments, Etc
	 	 	75	 
	10.02 Notices; Effectiveness; Electronic Communications
	 	 	76	 
	10.03 No Waiver; Cumulative Remedies
	 	 	77	 
	10.04 Expenses; Indemnity; Damage Waiver
	 	 	77	 
	10.05 Reinstatement; Payments Set Aside
	 	 	79	 
	10.06 Successors and Assigns
	 	 	79	 
	10.07 Treatment of Certain Information; Confidentiality
	 	 	82	 
	10.08 [Reserved]
	 	 	83	 
	10.09 Interest Rate Limitation
	 	 	83	 
	10.10 Counterparts; Integration; Effectiveness
	 	 	83	 
	10.11 Survival
	 	 	83	 
	10.12 Severability
	 	 	83	 
	10.13 Replacement of Lenders
	 	 	84	 
	10.14 Foreign Subsidiaries
	 	 	84	 
	10.15 Issue Price
	 	 	84	 
	10.16 Governing Law; Jurisdiction; Etc.
	 	 	85	 
	10.17 Waiver of Jury Trial
	 	 	86	 
	10.18 No Advisory or Fiduciary Responsibility
	 	 	86	 
	10.19 USA PATRIOT Act Notice
	 	 	87	 
	10.20 Foreign Asset Control Regulations
	 	 	87	 
	10.21 Time of the Essence
	 	 	87	 
	10.22 Press Releases
	 	 	87	 
	10.23 [Reserved]
	 	 	88	 
	10.24 No Strict Construction
	 	 	88	 
	10.25 Attachments
	 	 	88	 
	10.26 Conflict of Terms
	 	 	88	 
	 
	SIGNATURES
	 	 	S-1	 






iv









 






	 	 	 
	SCHEDULES
	 	 
	1.01
2.01

	 	Subsidiary Guarantors
Commitments and Applicable Percentages
	4.01(a)(ix)

	 	Closing Date Security Documents
	4.01(a)(x)

	 	Other Closing Date Loan Documents
	5.01

	 	Loan Parties’ Organizational Information
	5.05

	 	Material Liabilities or Obligations
	5.22

	 	Capitalization
	6.16

	 	PostClosing Matters
	7.01

	 	Existing Liens
	7.02

	 	Existing Investments
	7.03(a)

	 	Existing Indebtedness
	7.03(l)

	 	Existing Indebtedness of Quiksilver Japan K.K.
	7.10

	 	Contractual Obligations
	10.02

	 	Administrative Agent’s Office; Certain Addresses for Notices
	10.15

	 	Issue Prices






	 	 	 
	EXHIBITS
	 	 
	A

	 	Form of Loan Notice
	B

	 	Form of Note
	C

	 	Form of Compliance Certificate
	D

	 	Form of Assignment and Assumption
	E

	 	Form of Facility Guaranty
	F

	 	Form of Security Agreement
	G

	 	Form of Intellectual Property Security Agreement
	H

	 	Form of Pledge Agreement
	I

	 	Copyright Security Agreement
	J

	 	Patent Security Agreement
	K

	 	Trademark Security Agreement






v









 






CREDIT AGREEMENT




          This CREDIT AGREEMENT is entered into as of July 31, 2009, among QUIKSILVER AMERICAS, INC., a
California corporation (the “Borrower”); QUIKSILVER, INC., a Delaware corporation (the
“Parent”); each lender from time to time party hereto (collectively, the “Lenders”
and individually, a “Lender”); and RHÔNE GROUP L.L.C., as Administrative Agent.



          The Borrower has requested that the Lenders provide a term loan facility, and the Lenders have
indicated their willingness to provide a term loan facility on the terms and conditions set forth
herein.



          In consideration of the mutual covenants and agreements herein contained, the parties hereto
agree as follows:



ARTICLE I




DEFINITIONS AND ACCOUNTING TERMS




          1.01 Defined Terms. As used in this Agreement, the following terms shall have the meanings set forth below:



          “54th Street” means 54th Street Holdings S.à r.l., a Luxembourg private limited
liability company, having its registered office at 9-11 rue Louvigny, L-1946 Luxembourg, and being
registered with the Luxembourg trade and companies registry under number B 147.206.



          “ABL Agent” means Bank of America, N.A., in its capacity as administrative agent for
the lenders under the ABL Credit Agreement, together with any successor agent.



          “ABL Credit Agreement” means that certain Credit Agreement dated as of the Closing
Date among the Borrower, the other borrowers party thereto, the Parent, the other guarantors party
thereto, the lenders party thereto, the ABL Agent, Bank of America, N.A. and General Electric
Capital Corporation, as co-collateral agents, and the other agents party thereto, and any
refinancings, refundings, renewals or extensions thereof permitted hereunder.



          “ABL Facility” means the credit facilities made available pursuant to the ABL Credit
Agreement.



          “ABL Intercreditor Agreement” means that certain Intercreditor Agreement, dated as of
the Closing Date, among the Administrative Agent, the Euro Term Loan Agent, the ABL Agent and the
Collateral Agent.



          “Acquisition” means, with respect to any Person, (a) an investment in, or a purchase
of a Controlling interest in, the Equity Interests of any other Person, (b) a purchase or other
acquisition of all or substantially all of the assets or properties of, another Person or of any
business unit of another Person, or (c) any merger or consolidation of such Person with any other
Person or other transaction or series of transactions resulting in the acquisition of all or
substantially all of the assets, or a Controlling interest in the Equity Interests, of any Person.



          “Administrative Agent” means Rhône Group L.L.C., in its capacity as administrative
agent under any of the Loan Documents, or any successor administrative agent.



 









 





          “Administrative Agent’s Office” means the Administrative Agent’s address and, as
appropriate, account as set forth on Schedule 10.02, or such other address or account as
the Administrative Agent may from time to time notify the Borrower and the Lenders.



          “Administrative Questionnaire” means an Administrative Questionnaire in a form
supplied by the Administrative Agent.



          “Affiliate” means, with respect to any Person, another Person that directly, or
indirectly through one or more intermediaries, Controls or is Controlled by or is under common
Control with the Person specified.



          “Aggregate Commitments” means the Commitments of all the Lenders. As of the Closing
Date, the Aggregate Commitments are $125,000,000.



          “Agreement” means this Credit Agreement.



          “Americas Consolidated” means, when used to modify a financial term, test, statement,
or report of the Parent, the application or preparation of such term, test, statement or report (as
applicable) based upon the financial condition or operating results of the Parent and the Americas
Subsidiaries, calculated or prepared (as the case may be) as if such entities were a consolidated
group.



          “Americas Consolidated EBITDA” means, at any date of determination, an amount equal to
Americas Consolidated Net Income for the most recently completed Measurement Period, plus
(a) without duplication and to the extent deducted in calculating such Americas Consolidated Net
Income, the sum of: (i) Americas Consolidated Interest Charges for such Measurement Period, (ii)
the provision for federal, state, local and foreign income Taxes for such Measurement Period, (iii)
amounts attributable to depreciation and amortization expense for such Measurement Period, (iv) all
non-cash charges, expenses or losses, including any impairment charge or write-off of assets (other
than the write-off or write-down of current assets) pursuant to GAAP, (v) any non-cash stock
compensation expenses, (vi) costs, fees and expenses in connection with the Loan Documents, the ABL
Facility and the Euro Term Loans and the other transactions occurring on or about the Closing Date,
(vii) costs, fees and expenses in connection with any Acquisition or Disposition permitted
hereunder and occurring after the Closing Date, (viii) any expenses or charges incurred in
connection with any issuance (or proposed issuance) of Indebtedness or Equity Interests or any
refinancing transaction (or proposed refinancing transaction) or any amendment or other
modification (or proposed amendment or modification) of any Indebtedness, and (ix) non-recurring
costs, fees and expenses of restructuring advisors, in each case of or by the Parent and the
Americas Subsidiaries for such Measurement Period, minus (b) without duplication all cash
payments made during such period on account of reserves, restructuring charges and other non-cash
charges added to Americas Consolidated Net Income pursuant to clause (a)(iv) above in respect of a
previous Measurement Period. For the purposes of calculating Americas Consolidated EBITDA for any
Measurement Period, (i) the Americas Consolidated EBITDA of any Person acquired by the Parent or
its Americas Subsidiaries during such Measurement Period shall be included on a pro forma basis for
such period (assuming the consummation of such Acquisition and the incurrence or assumption of any
Indebtedness in connection therewith occurred on the first day of such Measurement Period, but
excluding any adjustments giving effect to expected costs savings or synergies), and (ii) the
Americas Consolidated EBITDA of any Person Disposed of by the Parent or its Americas Subsidiaries
during such Measurement Period shall be excluded for such Measurement Period (assuming the
consummation of
such Disposition and the repayment of any Indebtedness in connection therewith occurred on the
first day of such period).



2









 





          “Americas Consolidated Interest Charges” means, for any Measurement Period and without
duplication, the sum of (a) all interest expense, premium payments amortization, debt discount
amortization, fees amortization, charges and related expenses amortization, in each case to the
extent treated as interest expense in accordance with GAAP, including, without limitation, all
commissions, discounts and other fees and charges owed with respect to letters of credit and
bankers’ acceptance financing and net costs or net gains under Swap Contracts to the extent such
net costs or net gains are allocable to such period, and (b) the portion of rent expense with
respect to such period under Capital Lease Obligations that is treated as interest in accordance
with GAAP, in each case of or by the Parent and its Americas Subsidiaries for the most recently
completed Measurement Period, all as determined on an Americas Consolidated basis.



          “Americas Consolidated Net Income” means, as of any date of determination, the net
income of the Parent and its Americas Subsidiaries for the most recently completed Measurement
Period, all as determined on an Americas Consolidated basis in accordance with GAAP (other than
with respect to standards requiring or otherwise related to inclusion of Subsidiaries other than
Americas Subsidiaries); provided, however, that there shall be excluded (a) items
classified as unusual, non-recurring or extraordinary gains or losses (and the tax effects of such
items) for such Measurement Period, (b) gains and losses realized upon the sale or other
disposition of any property that is not sold or otherwise disposed of in the ordinary course of
business (and the tax effects of such sale), (c) the cumulative effect of a change in accounting
principles, (d) the income (or loss) of such Person which is not a Loan Party or a Subsidiary
during such Measurement Period in which any other Person has a joint interest with a Loan Party or
any of its Subsidiaries, except to the extent of the amount of cash dividends or other
distributions actually paid in cash to such Person during such period, and (e) the income (or loss)
of such Person during such Measurement Period and accrued prior to the date it becomes a Subsidiary
of a Person or any of such Person’s Subsidiaries or is merged into or consolidated with a Person or
any of its Subsidiaries or that Person’s assets are acquired by such Person or any of its
Subsidiaries.



          “Americas Leverage Ratio” means, as of any date of determination, the ratio of (a)
without duplication, the aggregate outstanding principal amount of all Indebtedness of the Parent
and its Americas Subsidiaries described in clauses (a), (b), (d), (e), (f), (g) and (h) of the
definition of “Indebtedness” on such date (including such items that are Permitted Specified
Subsidiary Indebtedness), determined on an Americas Consolidated basis, to (b) Americas
Consolidated EBITDA for the most recently ended Measurement Period.



          “Americas Subsidiaries” means, collectively, (a) the Borrower and each direct or
indirect Domestic Subsidiary of the Borrower, (b) the European Borrower and each direct or indirect
Subsidiary of the European Borrower organized under the laws of Canada or any province thereof, (c)
QS Mexico Holdings and each direct or indirect Subsidiary of QS Mexico Holdings organized under the
laws of Mexico and (d) each direct or indirect Subsidiary of the Parent organized under the laws of
Brazil. For the avoidance of doubt, as of the Closing Date, each of Quiksilver Canada Corp., QS
Retail Canada Corp., Quiksilver Brazil, Quiksilver Industria e Comercio de Artigos Esportivos
Ltda., QS Mexico Holdings, Quiksilver Mexico, S. de R. L. de C.V. and Quiksilver Mexico Service, S.
de R. L. de C.V. shall be deemed an “Americas Subsidiary”.



          “Applicable Percentage” means, with respect to any Lender at any time, the percentage
(carried out to the ninth decimal place) obtained by dividing (x) the outstanding principal
balance of such Lender’s Loans by (y) the aggregate outstanding principal balance of the Loans.



          “Arranger” means Rhône Group L.L.C., in its capacity as sole lead arranger.



3









 





          “Assignment and Assumption” means an assignment and assumption entered into by a
Lender and an Eligible Assignee (with the consent of any party whose consent is required by
Section 10.06(b)), and accepted by the Administrative Agent, in substantially the form of
Exhibit D or any other form approved by the Administrative Agent.



          “Attributable Indebtedness” means, on any date, (a) in respect of any Capital Lease
Obligation of any Person, the capitalized amount thereof that would appear on a balance sheet of
such Person prepared as of such date in accordance with GAAP, and (b) in respect of any Synthetic
Lease Obligation (other than any Capital Lease Obligation), the capitalized amount of the remaining
lease or similar payments under the relevant lease or other applicable agreement or instrument that
would appear on a balance sheet of such Person prepared as of such date in accordance with GAAP if
such lease, agreement or instrument were accounted for as a capital lease.



          “Audited Financial Statements” means the audited Consolidated balance sheet of the
Parent and its Subsidiaries for the Fiscal Year ended October 31, 2008, and the related
Consolidated statements of income or operations and cash flows for such Fiscal Year of the Parent
and its Subsidiaries, including the notes thereto.



          “Borrower” has the meaning specified in the introductory paragraph hereto.



          “Borrowing” means the borrowing of Loans made by the Borrower pursuant to Section
2.01.



          “Brazil JV Agreement” means the Joint Venture Agreement of Quiksilver Brazil dated
November 1, 2004 by and among QS Holdings, Alfio Lagnado and With Quik, LLC, as amended.



          “Business Day” means any day other than a Saturday, Sunday or other day on which
commercial banks are authorized to close under the Laws of, or are in fact closed in, New York.



          “Capital Lease Obligations” means, with respect to any Person for any period, the
obligations of such Person to pay rent or other amounts under any lease of (or other arrangement
conveying the right to use) real or personal property, or a combination thereof, which obligations
are required to be classified and accounted for as a capital lease on a balance sheet of such
Person under GAAP and the amount of which obligations shall be the capitalized amount thereof
determined in accordance with GAAP.



          “CFC” means (a) a Subsidiary that is a controlled foreign corporation under Section
957 of the Code, (b) a Subsidiary substantially all of the assets of which consist of Equity
Interests in Subsidiaries described in clause (a) of this definition, or (c) an entity treated as
disregarded for United States federal income tax purposes that owns more than 66% of the voting
Equity Interests of a Subsidiary described in clauses (a) or (b) of this definition.



          “Change in Law” means the occurrence, after the date of this Agreement, of any of the
following: (a) the adoption or taking effect of any law, rule, regulation or treaty, (b) any change
in any law, rule, regulation or treaty or in the administration, interpretation or application
thereof by any Governmental Authority or (c) the making or issuance of any request, guideline or
directive (whether or not having the force of law) by any Governmental Authority.



          “Change of Control” means:



4









 






          (a) any “person” or “group” (as such terms are used in Sections 13(d) and 14(d) of the
Securities Exchange Act of 1934, but excluding any employee benefit plan of such person or
its subsidiaries, and any person or entity acting in its capacity as trustee, agent or other
fiduciary or administrator of any such plan) other than Rhône Capital III L.P. and its
Affiliates becomes the “beneficial owner” (as defined in Rules 13d-3 and 13d-5 under the
Securities Exchange Act of 1934), directly or indirectly, of more than 35% of the Equity
Interests of the Parent entitled to vote for members of the board of directors or equivalent
governing body of the Parent on a fully-diluted basis; or




          (b) during any period of twelve (12) consecutive months, a majority of the members of
the board of directors or other equivalent governing body of the Parent cease to be composed
of individuals (i) who were members of that board or equivalent governing body on the first
day of such period, (ii) whose election or nomination to that board or equivalent governing
body was approved by individuals referred to in clause (i) above constituting at the time of
such election or nomination at least a majority of that board or equivalent governing body
or (iii) whose election or nomination to that board or other equivalent governing body was
approved by individuals referred to in clauses (i) and (ii) above constituting at the time
of such election or nomination at least a majority of that board or equivalent governing
body; or




          (c) the Parent fails at any time to own, directly or indirectly, 100% of the Equity
Interests of the Borrower free and clear of all Liens (other than (i) Liens under the
Security Documents, (ii) Liens securing obligations in respect of the Euro Term Loan Credit
Agreement and the loan documents relating thereto and (ii) Liens securing obligations in
respect of the ABL Facility), except where such failure is as a result of a transaction
permitted by the Loan Documents.



          “Closing Date” means July 31, 2009.



          “Code” means the Internal Revenue Code of 1986, and the regulations promulgated
thereunder, as amended and in effect.



          “Collateral” means any and all “Collateral” as defined in any applicable Security
Document and all other property of any Loan Party that is or is intended under the terms of the
Security Documents to be subject to Liens in favor of the Administrative Agent (for the benefit of
itself and the other Credit Parties) or the Collateral Agent (for the benefit of the Credit
Parties).



          “Collateral Agency Agreement” means that certain Collateral Agency Agreement dated as
of the Closing Date among the Administrative Agent, the Euro Term Loan Agent and the Collateral
Agent.



          “Collateral Agent” means Rhône Group L.L.C., in its capacity as collateral sub-agent
for the Administrative Agent and the Euro Term Loan Agent.



          “Commitment” means, as to each Lender, its obligation to make Loans to the Borrower
pursuant to Section 2.01 in an aggregate principal amount equal to the amount set forth
opposite such Lender’s name on Schedule 2.01.



          “Compliance Certificate” means a certificate substantially in the form of Exhibit
C.



          “Consent” means (a) actual written consent given by a Lender from whom such consent is
sought; or (b) the passage of ten (10) Business Days from receipt of written notice to a Lender
from the



5









 







Administrative Agent of a proposed course of action to be followed by the Administrative Agent
without such Lender’s giving the Administrative Agent written notice that such Lender objects to
such course of action.



          “Consolidated” means, when used to modify a financial term, test, statement, or report
of a Person, the application or preparation of such term, test, statement or report (as applicable)
based upon the consolidation, in accordance with GAAP, of the financial condition or operating
results of such Person and its Subsidiaries.



          “Contractual Obligation” means, as to any Person, any provision of any agreement,
instrument or other undertaking to which such Person is a party or by which it or any of its
property is bound.



          “Control” means the possession, directly or indirectly, of the power to direct or
cause the direction of the management or policies of a Person, whether through the ability to
exercise voting power, by contract or otherwise. “Controlling” and “Controlled” have meanings
correlative thereto.



          “Copyright” has the meaning specified in the Intellectual Property Security Agreement.



          “Copyright Security Agreement” means the Copyright Security Agreement dated as of the
Closing Date among certain Loan Parties and the Collateral Agent, in substantially the form
attached hereto as Exhibit I or otherwise in a form reasonably satisfactory to the
Administrative Agent.



          “Credit Party” or “Credit Parties” means (a) individually, (i) each Lender,
(ii) the Administrative Agent, (iii) the Collateral Agent, (iv) the Arranger, (v) each beneficiary
of each indemnification obligation undertaken by any Loan Party under any Loan Document, and (vi)
the successors and assigns of each of the foregoing, and (b) collectively, all of the foregoing.



          “Credit Party Expenses” means: all reasonable and documented out-of-pocket expenses
incurred by any of the Administrative Agent, the Collateral Agent, the Arranger and their
respective Affiliates and the Lenders, in connection with this Agreement and the other Loan
Documents, including, without limitation (but, in any event, subject to the limitations described
herein below): (a) the reasonable and documented fees, charges and disbursements of (i) counsel for
the Administrative Agent, the Collateral Agent and the Arranger (limited to not more than one
primary counsel and necessary local counsel (limited to one local counsel per jurisdiction)), (ii)
outside consultants for the Administrative Agent and the Collateral Agent, and (iii) all such
out-of-pocket expenses incurred during any workout or restructuring negotiations in respect of the
Obligations, and (b) all reasonable and documented out-of-pocket expenses incurred in connection
with (i) the preparation, negotiation, administration, management, execution and delivery of this
Agreement and the other Loan Documents or any amendments, modifications or waivers of the
provisions thereof (whether or not the transactions contemplated hereby or thereby shall be
consummated), (ii) the enforcement or protection of their rights in connection with this Agreement
or the other Loan Documents or efforts to preserve, protect, collect, or enforce the Collateral or
in connection with any proceeding under any Debtor Relief Laws, or (iii) any workout or
restructuring negotiations in respect of any Obligations; provided that, notwithstanding
anything to the contrary contained herein, the aggregate amount included in the definition of
Credit Party Expenses on account of fees of Lazard Frères & Co. and its Affiliates shall be limited
to $1,500,000 (excluding reasonable and documented fees of Lazard Frères & Co. and its Affiliates
incurred by the Administrative Agent, the Collateral Agent, the Arranger and their respective
Affiliates while an Event of Default exists or in connection with any amendment or waiver of this
Agreement, the Euro Term Loan Credit Agreement or the French Credit Agreement).



6









 





          “DC Shoes” means DC Shoes, Inc., a California corporation.



          “DC Shoes Business” means the business conducted by DC Shoes, Emerald Coast and DC
Shoes Australia Pty. Ltd.



          “Debtor Relief Laws” means the Bankruptcy Code of the United States, and all other
liquidation, conservatorship, bankruptcy, assignment for the benefit of creditors, moratorium,
rearrangement, receivership, insolvency, reorganization, or similar debtor relief Laws of the
United States or other applicable jurisdictions from time to time in effect and affecting the
rights of creditors generally.



          “Default” means any event or condition that constitutes an Event of Default or that,
with the giving of any notice, the passage of time, or both, would be an Event of Default.



          “Default Rate” means, with respect to any Loan, an interest rate equal to the interest
rate otherwise applicable to such Loan plus two percent (2%) per annum.



          “Defaulting Lender” means any Lender that (a) has failed to pay over to the
Administrative Agent or any other Lender any other amount required to be paid by it hereunder
within one Business Day of the date when due, unless the subject of a good faith dispute, or (b)
has been deemed insolvent or become the subject of any proceeding under any Debtor Relief Law.



          “Disposition” or “Dispose” means the sale, transfer, license, lease or other
disposition (including any sale and leaseback transaction (whether in one transaction or in a
series of transactions) of any property by any Person, including any sale, assignment, transfer or
other disposal, with or without recourse, of any notes or accounts receivable or any rights and
claims associated therewith, provided, however, that dispositions of assets (other
than licenses) in a single transaction or series of related transactions with an aggregate fair
market value in any fiscal year of less than $2,500,000 (with unused amounts in any fiscal year
being carried over to the next succeeding fiscal year subject to a maximum of $5,000,000 in such
next succeeding fiscal year) shall not be deemed to be a Disposition.



          “Disqualified Stock” means any Equity Interest that, by its terms (or by the terms of
any security into which it is convertible, or for which it is exchangeable, in each case at the
option of the holder thereof), or upon the happening of any event, matures or is mandatorily
redeemable (other than solely for Equity Interests that do not constitute Disqualified Stock),
pursuant to a sinking fund obligation or otherwise, or redeemable (other than solely for Equity
Interests that do not constitute Disqualified Stock) at the option of the holder thereof, in whole
or in part, on or prior to the date that is 91 days after the Maturity Date; provided,
however, that (i) only the portion of such Equity Interests which so matures or is so
mandatorily redeemable, is so convertible or exchangeable or is so redeemable at the option of the
holder thereof prior to such date shall be deemed to be Disqualified Stock and (ii) with respect to
any Equity Interests issued to any employee or to any plan for the benefit of employees of the
Parent or its Subsidiaries or by any such plan to such employees, such Equity Interest shall not
constitute Disqualified Stock solely because it may be required to be repurchased by the Parent or
one of its Subsidiaries in order to satisfy applicable statutory or regulatory obligations or as a
result of such employee’s termination, resignation, death or disability and if any class of Equity
Interest of such Person that by its terms authorizes such Person to satisfy its obligations
thereunder by delivery of an Equity Interest that is not Disqualified Stock, such Equity Interests
shall not be deemed to be Disqualified Stock. Notwithstanding the preceding sentence, any Equity
Interest that would constitute Disqualified Stock solely because the holders thereof have the right
to require a Loan Party to repurchase such Equity Interest upon the occurrence of a change of
control or an asset sale shall not constitute Disqualified Stock. The amount of Disqualified Stock
deemed to be outstanding at any time for purposes of this Agreement will be the



7









 







maximum amount that any Loan Party may become obligated to pay upon maturity of, or pursuant
to any mandatory redemption provisions of, such Disqualified Stock or portion thereof, plus accrued
dividends.



          “Dollar Equivalent Amount” has the meaning specified in Section 10.15.



          “Dollars” and “$” mean lawful money of the United States.



          “Domestic Availability” has the meaning specified in the ABL Credit Agreement.



          “Domestic Subsidiary” means any Subsidiary that is organized under the laws of any
political subdivision of the United States.



          “EC Insolvency Regulation” has the meaning specified in Section 5.01.



          “Eligible Assignee” means (a) a Lender or any of its Affiliates; (b) any investment
vehicle Controlled by Rhône Capital III L.L.C. and any limited partner (or affiliate of such
limited partner) of any such investment vehicle; and (c) any other Person (other than a natural
person) approved by (i) the Administrative Agent and (ii) the Borrower (each such approval not to
be unreasonably withheld or delayed).



          “Emerald Coast” means Emerald Coast SAS.



          “Environmental Laws” means any and all federal, state, local, and foreign statutes,
laws, including established common law, regulations, ordinances, judgments, orders, decrees,
governmental restrictions or requirements of any Governmental Authority regulating pollution or the
protection of heath or the environment or the release of any Hazardous Materials into the
environment.



          “Environmental Liability” means any liability, obligation, damage, loss, claim,
action, suit, judgment, order, fine, penalty, fee, expense, or cost (including any liability for
costs of environmental remediation) of the Parent or any of its Subsidiaries arising from or based
upon violation of or liability under any Environmental Law including those resulting from (a) the
generation, use, handling, transportation, storage, treatment or disposal or presence of any
Hazardous Materials, (b) exposure to any Hazardous Materials, or (c) the release or threatened
release of any Hazardous Materials into the environment.



          “Environmental Permit” means any permit, approval, license or other authorization
required under any Environmental Law.



          “Equity Interests” means, with respect to any Person, all of the shares of capital
stock of (or other ownership or profit interests in) such Person, and all of the warrants or
options for the purchase or acquisition from such Person of shares of capital stock of (or other
ownership or profit interests in) such Person (including partnership, member or trust interests
therein), whether voting or nonvoting.



          “ERISA” means the Employee Retirement Income Security Act of 1974.



          “ERISA Affiliate” means any trade or business (whether or not incorporated) under
common control with a Loan Party within the meaning of Section 414(b) or (c) of the Code (and
Sections 414(m) and (o) of the Code for purposes of provisions relating to Section 412 of the
Code).



          “ERISA Event” means (a) a Reportable Event with respect to a Plan; (b) a withdrawal by
a Loan Party or any ERISA Affiliate from a Pension Plan subject to Section 4063 of ERISA during a
plan



8









 







year in which it was a substantial employer (as defined in Section 4001(a)(2) of ERISA) or a
cessation of operations that is treated as such a withdrawal under Section 4062(e) of ERISA; (c) a
complete or partial withdrawal by a Loan Party or any ERISA Affiliate from a Multiemployer Plan
subject to Title IV of ERISA or notification that a Multiemployer Plan subject to Title IV of ERISA
is in reorganization; (d) the filing of a notice of intent to terminate, the treatment of a Plan
amendment as a termination under Sections 4041 or 4041A of ERISA, or the commencement of
proceedings by the PBGC to terminate a Pension Plan or Multiemployer Plan; (e) an event or
condition which constitutes grounds under Section 4042 of ERISA for the termination of, or the
appointment of a trustee to administer, any Pension Plan or Multiemployer Plan; or (f) the
imposition of any liability under Title IV of ERISA, other than for PBGC premiums due but not
delinquent under Section 4007 of ERISA, upon a Loan Party or any ERISA Affiliate.



          “Euro Term Loan Agent” means Rhône Group L.L.C., in its capacity as agent for the
lenders under the Euro Term Loan Credit Agreement, together with any successor agent.



          “Euro Term Loan Credit Agreement” means that certain Credit Agreement dated as of the
Closing Date among the Parent, the European Borrower, the lenders party thereto and the Euro Term
Loan Agent, and any refinancings, refundings, renewals or extensions thereof permitted hereunder.



          “Euro Term Loans” means the term loans in the original principal amount of €20,000,000
made pursuant to the Euro Term Loan Credit Agreement, together with all interest paid in kind, if
any, that has been added to the principal balance of such loans.



          “European Borrower” means Mountain & Wave S.à r.l., a Luxembourg private limited
liability company.



          “Euros” and “€” mean the single currency of the Participating Member States.



          “Event of Default” has the meaning specified in Section 8.01.



          “Exchange Rate Make-Whole Payment” has the meaning specified in Section 2.09.



          “Excluded Taxes” means, with respect to the Administrative Agent, any Lender, any
Participant or any other recipient of any payment to be made by or on account of any obligation of
any Loan Party hereunder, any (a) taxes imposed on or measured by its overall net income or net
profits (however denominated), and any franchise, excise or similar taxes imposed on it in lieu of
a net income tax by the taxing authority of any jurisdiction (or any political subdivision thereof)
under the laws of which such recipient is organized or in which its principal office is located or,
in the case of any Lender or any Participant, in which its applicable Lending Office is located, in
each case as a result of a present or former connection between such Lender or such Participant and
the jurisdiction or taxing authority imposing the tax, (b) branch profits taxes imposed by the
United States or any similar tax imposed by any other jurisdiction, and (c) taxes imposed on
amounts payable to such Lender or Participant (x) at the time such Lender or Participant becomes a
party to this Agreement (or designates a new Lending Office) or (y) is attributable to such
Lender’s or Participant’s failure or inability to comply with its obligations under Section
3.01, other than (A) additional United States federal withholding taxes that may be
imposed after the time such Lender or Participant becomes a party to the Agreement (or designates a
new lending office) as a result of a Change in Law, and (B) in the case of any assignment or
transfer by a Lender or Participant, to the extent that such assignor was entitled, at the time of
assignment, to receive a Gross-Up Payment pursuant to Section 3.01(a); provided,
however, that such assignee shall not be entitled to receive any additional amounts
pursuant to Section 3.01 in excess of the amount that such assignor would have been
entitled to receive in the absence of such assignment or transfer.



9









 





          “Executive Order” has the meaning specified in Section 10.20.



          “Existing Credit Agreement” means that certain Amended and Restated Credit Agreement
dated as of June 3, 2005, among, inter alia, the Borrower, the Parent, the several banks and other
financial institutions party thereto, Bank of America, N.A., as documentation agent, Union Bank of
California, N.A., as syndication agent, and JPMorgan Chase Bank, N.A., as administrative agent, as
amended.



          “Facility Guaranty” means a Guarantee of the Obligations made by a Guarantor in favor
of the Administrative Agent and the other Credit Parties, in substantially the form attached hereto
as Exhibit E or otherwise in a form reasonably satisfactory to the Administrative Agent.



          “Federal Funds Rate” means, for any day, the rate per annum equal to the
weighted average of the rates on overnight Federal funds transactions with members of the Federal
Reserve System arranged by Federal funds brokers on such day, as published by the Federal Reserve
Bank of New York on the Business Day next succeeding such day; provided that (a) if such
day is not a Business Day, the Federal Funds Rate for such day shall be such rate on such
transactions on the next preceding Business Day as so published on the next succeeding Business
Day, and (b) if no such rate is so published on such next succeeding Business Day, the Federal
Funds Rate for such day shall be the average rate (rounded upward, if necessary, to a whole
multiple of 1/100 of 1%) quoted for such day on such transactions by three Federal funds brokers of
recognized standing selected by the Administrative Agent.



          “Fiscal Month” means any fiscal month of any Fiscal Year, which month shall generally
end on the last day of each calendar month in accordance with the fiscal accounting calendar of the
Loan Parties.



          “Fiscal Quarter” means any fiscal quarter of any Fiscal Year, which quarters shall
generally end on the last day of each January, April, July and October of such Fiscal Year in
accordance with the fiscal accounting calendar of the Loan Parties.



          “Fiscal Year” means any period of twelve (12) consecutive months ending on October
31st of any calendar year.



          “Foreign Assets Control Regulations” has the meaning specified in Section
10.20.



          “Foreign Lender” means any Lender that is organized under the laws of a jurisdiction
other than that in which the Borrower is resident for tax purposes. For purposes of this
definition, the United States, each State thereof and the District of Columbia shall be deemed to
constitute a single jurisdiction.



          “Foreign Subsidiary” means each Subsidiary other than a Domestic Subsidiary.



          “French Credit Agreement” means the Facilities Agreement dated as of July 31, 2009
among, inter alia, Pilot SAS, a Société par Actions Simplifiée, and Na Pali, a Société par Actions
Simplifiée, as borrowers, the Parent and Pilot SAS, as original guarantors, and Crédit Lyonnais,
BNP Paribas and Société Générale Corporate & Investment Banking, as mandated lead arrangers, as
amended, restated, amended and restated, supplemented or otherwise modified from time to time.



          “GAAP” means generally accepted accounting principles in the United States set forth
in the opinions and pronouncements of the Accounting Principles Board and the American Institute of
Certified Public Accountants and statements and pronouncements of the Financial Accounting
Standards



10









 







Board or such other principles as may be approved by a significant segment of the accounting
profession in the United States, that are applicable to the circumstances as of the date of
determination, consistently applied.



          “Global Consolidated EBITDA” means, at any date of determination, an amount equal to
Global Consolidated Net Income of the Parent and its Subsidiaries on a Consolidated basis for the
most recently completed Measurement Period, plus (a) without duplication and to the extent
deducted in calculating such Global Consolidated Net Income, the sum of: (i) Global Consolidated
Interest Charges for such Measurement Period, (ii) the provision for federal, state, local and
foreign income Taxes for such Measurement Period, (iii) amounts attributable to depreciation and
amortization expense for such Measurement Period, (iv) all non-cash charges, expenses or losses,
including any impairment charge or write-off of assets (other than the write-off or write-down of
current assets) pursuant to GAAP, (v) any non-cash stock compensation expenses, (vi) costs, fees
and expenses in connection with the Loan Documents, the ABL Facility and the Euro Term Loans and
the other transactions occurring on or about the Closing Date, (vii) costs, fees and expenses in
connection with any Acquisition or Disposition permitted hereunder and occurring after the Closing
Date, (viii) any expenses or charges incurred in connection with any issuance (or proposed
issuance) of Indebtedness or Equity Interests or any refinancing transaction (or proposed
refinancing transaction) or any amendment or other modification (or proposed amendment or
modification) of any Indebtedness, and (ix) non-recurring costs, fees and expenses of restructuring
advisors, in each case of or by the Parent and its Subsidiaries for such Measurement Period,
minus (b) without duplication all cash payments made during such period on account of
reserves, restructuring charges and other non-cash charges added to Global Consolidated Net Income
pursuant to clause (a)(iv) above in respect of a previous Measurement Period. For the purposes of
calculating Global Consolidated EBITDA for any Measurement Period, (i) the Global Consolidated
EBITDA of any Person acquired by the Parent or its Subsidiaries during such Measurement Period
shall be included on a pro forma basis for such period (assuming the consummation of such
Acquisition and the incurrence or assumption of any Indebtedness in connection therewith occurred
on the first day of such Measurement Period, but excluding any adjustments giving effect to
expected costs savings or synergies), and (ii) the Global Consolidated EBITDA of any Person
Disposed of by the Parent or its Subsidiaries during such Measurement Period shall be excluded for
such Measurement Period (assuming the consummation of such Disposition and the repayment of any
Indebtedness in connection therewith occurred on the first day of such period).



          “Global Consolidated Interest Charges” means, for any Measurement Period and without
duplication, the sum of (a) all interest expense, premium payments amortization, debt discount
amortization, fees amortization, charges and related expenses amortization, in each case to the
extent treated as interest expense in accordance with GAAP, including, without limitation, all
commissions, discounts and other fees and charges owed with respect to letters of credit and
bankers’ acceptance financing and net costs or net gains under Swap Contracts to the extent such
net costs or net gains are allocable to such period, and (b) the portion of rent expense with
respect to such period under Capital Lease Obligations that is treated as interest in accordance
with GAAP, in each case of or by the Parent and its Subsidiaries for the most recently completed
Measurement Period, all as determined on a Consolidated basis.



          “Global Consolidated Net Income” means, as of any date of determination, the net
income of the Parent and its Subsidiaries for the most recently completed Measurement Period, all
as determined on a Consolidated basis in accordance with GAAP; provided, however,
that there shall be excluded (a) items classified as unusual, non-recurring or extraordinary gains
or losses (and the tax effects of such items) for such Measurement Period, (b) gains and losses
realized upon the sale or other disposition of any property that is not sold or otherwise disposed
of in the ordinary course of business (and the tax effects of such sales), (c) the cumulative
effect of a change in accounting principles, (d) the



11









 







income (or loss) of such Person which is not a Loan Party or a Subsidiary during such
Measurement Period in which any other Person has a joint interest with a Loan Party or any of its
Subsidiaries, except to the extent of the amount of cash dividends or other distributions actually
paid in cash to such Person during such period, and (e) the income (or loss) of such Person during
such Measurement Period and accrued prior to the date it becomes a Subsidiary of a Person or any of
such Person’s Subsidiaries or is merged into or consolidated with a Person or any of its
Subsidiaries or that Person’s assets are acquired by such Person or any of its Subsidiaries.



          “Global Leverage Ratio” means, as of any date of determination, the ratio of (a)
without duplication, the aggregate outstanding principal amount of all Indebtedness of the Parent
and its Subsidiaries described in clauses (a), (b), (d), (e), (f), (g) and (h) of the definition of
“Indebtedness” on such date (including such items that are Permitted Specified Subsidiary
Indebtedness), determined on a Consolidated basis, to (b) Global Consolidated EBITDA for the most
recently ended Measurement Period.



          “Governmental Authority” means the government of the United States or any other
nation, or of any political subdivision thereof, whether state or local, and any agency, authority,
instrumentality, regulatory body, court, central bank or other entity exercising executive,
legislative, judicial, taxing, regulatory or administrative powers or functions of or pertaining to
government (including any supra-national bodies such as the European Union or the European Central
Bank).



          “Gross-Up Payment” has the meaning specified in Section 3.01(a).



          “Guarantee” means, as to any Person, (a) any obligation, contingent or otherwise, of
such Person guaranteeing or having the economic effect of guaranteeing any Indebtedness or other
monetary obligation payable or performable by another Person (the “primary obligor”) in any manner,
whether directly or indirectly, and including any obligation of such Person, direct or indirect,
(i) to purchase or pay (or advance or supply funds for the purchase or payment of) such
Indebtedness or other monetary obligation, (ii) to purchase or lease property, securities or
services for the purpose of assuring the obligee in respect of such Indebtedness or other monetary
obligation of the payment or performance of such Indebtedness or other obligation, (iii) to
maintain working capital, equity capital or any other financial statement condition or liquidity or
level of income or cash flow of the primary obligor so as to enable the primary obligor to pay such
Indebtedness or other monetary obligation, or (iv) entered into for the purpose of assuring in any
other manner the obligee in respect of such Indebtedness or other monetary obligation of the
payment or performance thereof or to protect such obligee against loss in respect thereof (in whole
or in part), or (b) any Lien on any assets of such Person securing any Indebtedness or other
monetary obligation of any other Person, whether or not such Indebtedness or other obligation is
assumed by such Person (or any right, contingent or otherwise, of any holder of such Indebtedness
to obtain any such Lien); provided that the term “Guarantee” shall not include endorsements
for collection or deposit, in either case in the ordinary course of business. The amount of any
Guarantee shall be deemed to be an amount equal to the stated or determinable amount of the related
primary obligation, or portion thereof, in respect of which such Guarantee is made or, if not
stated or determinable, the maximum reasonably anticipated liability in respect thereof as
determined by the guaranteeing Person in good faith. The term “Guarantee” as a verb has a
corresponding meaning.



          “Guarantor” means the Parent, each Domestic Subsidiary listed on Schedule 1.01
annexed hereto and each other Domestic Subsidiary of any Loan Party that executes and delivers a
Facility Guaranty or Facility Guaranty supplement pursuant to Section 6.12.



          “Hazardous Materials” means all radioactive substances or wastes and all hazardous or
toxic substances, wastes or pollutants, including petroleum or petroleum distillates, asbestos or
asbestos-



12









 







containing materials, polychlorinated biphenyls, radon gas, infectious or medical wastes and
any other deleterious substance regulated under any Environmental Law.



          “Immaterial Subsidiary” means each Subsidiary of any Loan Party that is not a Material
Subsidiary.



          “Indebtedness” means, as to any Person at a particular time, without duplication, all
of the following, whether or not included as indebtedness or liabilities in accordance with GAAP:




          (a) all obligations of such Person for borrowed money and all obligations of such
Person evidenced by bonds, debentures, notes, loan agreements or other similar instruments;




          (b) the maximum amount of all direct or contingent obligations of such Person arising
under letters of credit (including standby and commercial), bankers’ acceptances, bank
guaranties, surety bonds and similar instruments;




          (c) net obligations of such Person under any Swap Contract;




          (d) all obligations of such Person to pay the deferred purchase price of property or
services (other than (i) trade accounts payable in the ordinary course of business, (ii)
deferred compensation and (iii) any purchase price adjustment or earn-out obligation);




          (e) indebtedness (excluding prepaid interest thereon) secured by a Lien on property
owned or being purchased by such Person (including indebtedness arising under conditional
sales or other title retention agreements), whether or not such indebtedness shall have been
assumed by such Person or is limited in recourse;




          (f) all Attributable Indebtedness of such Person;




          (g) all obligations of such Person in respect of Disqualified Stock; and




          (h) all Guarantees of such Person in respect of any of the foregoing.



          For all purposes hereof, the Indebtedness of any Person shall include the Indebtedness of any
partnership or joint venture (other than a joint venture that is itself a corporation or limited
liability company) in which such Person is a general partner or a joint venturer, unless such
Indebtedness is expressly made non-recourse to such Person and except to the extent such Person’s
liability for such Indebtedness is otherwise limited. The amount of any net obligation under any
Swap Contract on any date shall be deemed to be the Swap Termination Value thereof as of such date.



          “Indemnified Taxes” means Taxes other than Excluded Taxes.



          “Indemnitee” has the meaning specified in Section 10.04(b).



          “Information” has the meaning specified in Section 10.07.



          “Intellectual Property” has the meaning set forth in the Intellectual Property
Security Agreement.



          “Intellectual Property Security Agreement” means the Intellectual Property Security
Agreement dated as of the Closing Date among the Loan Parties and the Collateral Agent, in
substantially



13









 







the form attached hereto as Exhibit G or otherwise in a form reasonably satisfactory
to the Administrative Agent.



          “Intercreditor Agreements” means, collectively, the ABL Intercreditor Agreement and
the Term Loan Intercreditor Agreement.



          “Interest Payment Date” means the last Business Day of each calendar quarter and the
Maturity Date.



          “Investment” means, as to any Person, any direct or indirect acquisition or investment
by such Person, whether by means of (a) the purchase or other acquisition of Equity Interests of
another Person, (b) a loan, advance or capital contribution to, Guarantee or assumption of debt of,
or purchase or other acquisition of any other debt or equity interest in, another Person, or (c)
any Acquisition. For purposes of covenant compliance, the amount of any Investment shall be the
amount actually invested, without adjustment for subsequent increases or decreases in the value of
such Investment.



          “Investment Unit” has the meaning specified in Section 10.15.



          “IP Collateral” has the meaning specified in the Intellectual Property Security
Agreement.



          “IRS” means the United States Internal Revenue Service.



          “Laws” means each international, foreign, federal, state and local statute, treaty,
rule, guideline, regulation, ordinance, code and administrative or judicial precedent or authority,
including the interpretation or administration thereof by any Governmental Authority charged with
the enforcement, interpretation or administration thereof, and each applicable administrative
order, directed duty, license, authorization and permit of, and agreement with, any Governmental
Authority, in each case whether or not having the force of law.



          “Lender” has the meaning specified in the introductory paragraph hereto.



          “Lending Office” means, as to any Lender, the office or offices of such Lender
described as such in such Lender’s Administrative Questionnaire, or such other office or offices as
a Lender may from time to time notify the Borrower and the Administrative Agent.



          “Lien” means (a) any mortgage, deed of trust, pledge, hypothecation, assignment for
security, encumbrance, lien (statutory or other) or other security interest or preferential
arrangement in the nature of a security interest of any kind or nature whatsoever (including any
conditional sale, or other title retention agreement, any easement, right of way or other
encumbrance on title to real property, and any financing lease having substantially the same
economic effect as any of the foregoing) and (b) in the case of securities, any purchase option,
call or similar right of a third party with respect to such securities.



          “Loan” has the meaning specified in Section 2.01.



          “Loan Notice” means a notice substantially in the form of Exhibit A hereto.



          “Loan Documents” means this Agreement, each Note, the Security Documents, each
Facility Guaranty, the Side Agreement, the Services Fee Agreements and any other instrument or
agreement now or hereafter executed and delivered by any Loan Party in connection herewith.




14











 





          “Loan Parties” means, collectively, the Borrower and each Guarantor. “Loan
Party” means any one of such Persons.




          “Luxembourg Pledge Agreement” means the Share Pledge Agreement dated as of the Closing
Date among the Parent, the Administrative Agent and the European Borrower.




          “Material Adverse Effect” means (a) a material adverse change in, or a material
adverse effect upon, the operations, business, properties, liabilities, or condition (financial or
otherwise) of the Loan Parties taken as a whole; (b) a material impairment of the ability of any
Loan Party to perform its obligations under the Loan Documents; or (c) a material impairment of the
rights and remedies of the Administrative Agent or the Lenders under the Loan Documents.




          “Material Indebtedness” means Indebtedness (other than the Obligations) of the Loan
Parties in an aggregate principal amount exceeding $15,000,000. For purposes of determining the
amount of Material Indebtedness at any time, (x) the amount of the obligations in respect of any
Swap Contract at such time shall be calculated at the Swap Termination Value thereof and (y)
Indebtedness shall include undrawn committed or available amount and amounts owing to all creditors
under any combined or syndicated credit arrangement.




          “Material Subsidiary” means, as of any date, a Subsidiary that (a) has a net worth
(excluding in the determination thereof any Indebtedness of such Subsidiary to the Parent or
another Subsidiary) of at least 5% of the Parent’s consolidated net worth as of the last day of the
most recently ended Fiscal Quarter of the Parent for which financial statements are available,
(b) has annual revenue (or annualized revenue in the case of any Person that has not been a
Subsidiary for a full year) of at least 5% of the Parent’s consolidated revenue for the 12-month
period ended as of the most recently ended Fiscal Quarter of the Parent for which financial
statements are available, or (c) has annual net income (or annualized net income in the case of any
Person that has not been a Subsidiary for a full year) of at least 5% of the Parent’s consolidated
net income for the 12-month period ended as of the most recently ended Fiscal Quarter of the Parent
for which financial statements are available.




          “Maturity Date” means July 30, 2014.




          “Maximum Rate” has the meaning specified in Section 10.09.




          “Measurement Period” means, at any date of determination, the most recently completed
four Fiscal Quarters of the Parent for which financial statements are available.




          “Mexico JV Agreement” means the Joint Venture Agreement of QS Mexico Holdings dated
September 26, 2006 by and between the Borrower and PBM International LLC, as amended.




          “Money Laundering Laws” has the meaning specified in Section 5.24.




          “Moody’s” means Moody’s Investors Service, Inc. and any successor thereto.




          “Multiemployer Plan” means any employee benefit plan of the type described in
Section 3(37) of ERISA, to which a Loan Party or any ERISA Affiliate makes or is obligated to make
contributions, or during the preceding five (5) plan years, has made or been obligated to make
contributions.




          “Net Proceeds” means, with respect to any applicable Disposition by any Loan Party,
the excess, if any, of (a) the sum of cash and cash equivalents received in connection with such
Disposition




15









 







(including any cash or cash equivalents received by any Loan Party by way of deferred payment
pursuant to, or by monetization of, a note receivable or otherwise, but only as and when so
received) over (b) the sum of (i) the amount of any Indebtedness that is secured by the applicable
asset by a Lien permitted hereunder and that is repaid (or an escrow is established for the future
repayment thereof) in connection with such Disposition (other than Indebtedness under the Loan
Documents), (ii) the reasonable out-of-pocket fees and expenses incurred by such Loan Party in
connection with such transaction (including, without limitation, appraisals, and brokerage, legal,
title and recording or transfer tax expenses and commissions) paid by any Loan Party to third
parties, (iii) taxes paid or reasonably estimated to be actually payable in connection therewith,
(iv) amounts provided as a reserve against any liabilities under any indemnification obligations or
purchase price adjustment associated with such Disposition (provided that, to the extent and at the
time any such amounts are released from such reserve, such amounts shall constitute Net Proceeds),
and (v) any liabilities relating to the property subject to such Disposition that are retained by
any Loan Party or any of its Subsidiaries.




          “Non-Consenting Lender” has the meaning specified in Section 10.01.




          “Note” means a promissory note made by the Borrower in favor of a Lender evidencing
Loans made by such Lender, substantially in the form of Exhibit B.




          “Obligations” means all advances to, and debts (including principal, interest, fees,
costs, and expenses), liabilities, obligations, covenants and indemnities of, any Loan Party
arising under any Loan Document or otherwise with respect to any Loan, whether direct or indirect
(including those acquired by assumption), absolute or contingent, due or to become due, now
existing or hereafter arising and including interest, fees, costs and expenses that accrue after
the commencement by or against any Loan Party or any Subsidiary thereof of any proceeding under any
Debtor Relief Laws naming such Person as the debtor in such proceeding, regardless of whether such
interest and fees are allowed claims in such proceeding.




          “OFAC” means the Office of Foreign Assets Control of the U.S. Department of the
Treasury.




          “OFAC List” means the list of Specially Designated Nationals and Blocked Persons List
of OFAC and Annex I to the United States Executive Order 13224 – Blocking Property and Prohibiting
Transactions with Persons Who Commit, Threaten to Commit, or Support Terrorism.




          “Organization Documents” means, (a) with respect to any corporation, the certificate
or articles of incorporation and the bylaws (or equivalent or comparable constitutive documents
with respect to any non-U.S. jurisdiction); (b) with respect to any limited liability company, the
certificate or articles of formation or organization and operating agreement (or equivalent or
comparable constitutive documents with respect to any non-U.S. jurisdiction); and (c) with respect
to any partnership, joint venture, trust or other form of business entity, the partnership, joint
venture or other applicable agreement of formation or organization and any agreement, instrument,
filing or notice with respect thereto filed in connection with its formation or organization with
the applicable Governmental Authority in the jurisdiction of its formation or organization and, if
applicable, any certificate or articles of formation or organization of such entity.




          “Other Taxes” means all present or future stamp or documentary taxes or any other
excise or property taxes, charges or similar levies arising from any payment made hereunder or
under any other Loan Document or from the execution, delivery or enforcement of, or otherwise with
respect to, this Agreement or any other Loan Document, excluding, however, such
taxes imposed as a result of an




16









 







assignment (other than an assignment that occurs as a result of the Borrower’s request
pursuant to Section 3.06(b)).




          “Parent” has the meaning specified in the introductory paragraph hereto.




          “Participant” has the meaning specified in Section 10.06(d).




          “Participating Member States” means the member states of the European Communities that
adopt or have adopted the Euro as their lawful currency in accordance with the legislation of the
European Union relating to European Monetary Union.




          “Patriot Act” means USA Patriot Act (Title III of Pub. L. 107-56 (signed into law
October 26, 2001)).




          “Patent” has the meaning specified in the Intellectual Property Security Agreement.




          “Patent Security Agreement” means the Patent Security Agreement dated as of the
Closing Date among certain Loan Parties and the Collateral Agent, in substantially the form
attached hereto as Exhibit J or otherwise in a form reasonably satisfactory to the
Administrative Agent.




          “PBGC” means the Pension Benefit Guaranty Corporation.




          “PCAOB” means the Public Company Accounting Oversight Board.




          “Pension Plan” means any “employee pension benefit plan” (as such term is defined in
Section 3(2) of ERISA), other than a Multiemployer Plan, that is subject to Title IV of ERISA and
is sponsored or maintained by a Loan Party or any ERISA Affiliate or to which a Loan Party or any
ERISA Affiliate contributes or has an obligation to contribute, or in the case of a multiple
employer or other plan described in Section 4064(a) of ERISA, has made contributions at any time
during the immediately preceding five plan years.




          “Permitted Acquisition” means an Acquisition by any Loan Party or any Subsidiary
thereof in which all of the following conditions are satisfied:





          (a) no Default then exists or would immediately arise from the consummation of such
Acquisition;




          (b) such Acquisition shall have been approved by the Board of Directors of the Person
(or similar governing body if such Person is not a corporation) which is the subject of such
Acquisition and such Person shall not have announced that it will oppose such Acquisition or
shall not have commenced any action which alleges that such Acquisition shall violate
applicable Law;




          (c) the Borrower shall have furnished the Administrative Agent with at least ten (10)
days’ prior written notice of such intended Acquisition;




          (d) any assets acquired shall be utilized in, and if such Acquisition involves a
merger, consolidation or stock acquisition, the Person which is the subject of such
Acquisition shall be engaged in, a business otherwise permitted to be engaged in by the
Borrower under this Agreement;



17









 






          (e) the business and assets acquired in such Acquisition shall be free and clear of all
Liens (other than Permitted Encumbrances);




          (f) no Indebtedness shall be incurred or assumed by any Loan Party in connection with
or as a result of such Acquisition (other than Permitted Indebtedness); and




          (g) at the time of determination with respect to the specified Acquisition, the
Borrower shall have certified, and shall have delivered supporting documentation reasonably
satisfactory to the Administrative Agent, that Domestic Availability (as defined in the ABL
Credit Agreement as in effect on the date hereof) immediately preceding, and on a pro forma
basis on the date thereof and a projected basis for the twelve (12) months immediately
following, such Acquisition was, and is projected to be, equal to or greater than the
greater of (i) thirty percent (30%) of the Total Loan Cap (provided that, in the event of a
refinancing of the ABL Credit Agreement as in effect on the date hereof or following its
maturity, the Borrower and the Administrative Agent shall agree in good faith on a successor
availability test which preserves the economic effect of this clause (i)) and (ii)
$45,000,000.



          “Permitted Disposition” means any of the following:





          (a) Dispositions of inventory in the ordinary course of business;




          (b) (i) outbound licenses and sublicenses of Intellectual Property entered into or
existing as of the date hereof and (ii) outbound licenses and sublicenses of Intellectual
Property entered into following the date hereof in the ordinary course of business and on
arm’s length terms; provided that, in the case of outbound licenses and sublicenses
pursuant to clause (ii), unless the Administrative Agent otherwise consents in writing (such
consent not to be unreasonably withheld): (A) no such license or sublicense may be for an
initial term of more than five (5) years (not counting renewal terms), (B) each such license
or sublicense shall contain customary provisions for the termination of the license or
sublicense upon a change of control of the licensee or sublicensee and customary
prohibitions against assignment of such license or sublicense by the licensee or
sublicensee, and (C) the Loan Parties shall not, during any Fiscal Year, enter into any
license or sublicense granting use of trademarks and/or service marks and related logos
and/or slogans (a “Post-Closing Mark License”) if such license or sublicense
provides for payment of annual license fees with respect to such trademarks and service
marks reasonably expected to be paid, in the judgment of the Loan Party party to such
license or sublicense (excluding upfront fees), during its first Fiscal Year which, when
aggregated with the annual license fees (excluding upfront fees) reasonably expected to be
paid, in the judgment of the Loan Party party to such license or sublicense, during the
first year of all other Post-Closing Mark Licenses entered into by the Loan Parties during
that same Fiscal Year, exceed $3,500,000, after deducting such portion of any license fees
(excluding upfront fees) that are payable by a Loan Party, directly or indirectly, to the
owners of the licensed marks as relate to such license or sublicense, to the extent that
such Post-Closing Mark License is, in whole or in part, a sublicense. Notwithstanding the
foregoing:  (x) the license fees (including upfront fees) payable under any Post-Closing
Mark License which has a non-renewable term of one (1) year or less shall not be included
for purposes of the foregoing clause (C), and (y) if, in any Fiscal Year, the Administrative
Agent gives its consent to exceed $3,500,000 in annual license fees pursuant to clause (ii),
then the licensee fees are deemed to be reset at zero for that Fiscal Year, as of the date
such consent was provided;




          (c) licenses for the conduct of licensed departments within Stores in the ordinary
course of business;



18









 






          (d) Dispositions of equipment and other assets (including abandonment of Intellectual
Property) in the ordinary course of business that is substantially worn, damaged, obsolete
or, in the reasonable business judgment of a Loan Party, no longer used or necessary in its
business;




          (e) Dispositions among the Loan Parties (other than transfer of ownership rights in
Intellectual Property) (without regard to clause (b) above in this definition);




          (f) Dispositions of Real Estate (or of any Person or Persons created to hold such Real
Estate or the equity interests in such Person or Persons), including sale-leaseback
transactions involving any such Real Estate pursuant to leases on market terms, as long as
(i) such sale is made for fair market value; (ii) at least 75% of the consideration from
such Disposition is in the form of cash or cash equivalents; and (iii) an amount equal to
the Net Proceeds of such Disposition are applied to the Loans to the extent required by
Section 2.05(b);




          (g) Dispositions consisting of the compromise, settlement or collection of accounts
receivable in the ordinary course of business, consistent with past practices;




          (h) leases, subleases or space leases (and terminations of any of the foregoing), in
each case in the ordinary course of business and which do not materially interfere with the
business of the Parent and its Subsidiaries, taken as a whole;




          (i) Dispositions of cash, cash equivalents and Permitted Investments described in
clauses (a) through (i) of the definition of “Permitted Investments” contained in this
Agreement, in each case on ordinary business terms and, to the extent constituting a
Disposition, the making of Permitted Investments;




          (j) any Disposition of Real Estate to a Governmental Authority as a result of the
condemnation of such Real Estate as long as an amount equal to the Net Proceeds of such
Disposition are applied to the Loans to the extent required by Section 2.05(b);




          (k) [reserved]




          (l) to the extent constituting a Disposition, (i) transactions permitted by
Section 7.04, (ii) Restricted Payments permitted by Section 7.06 and (iii)
Liens permitted by Section 7.01;




          (m) Dispositions of Investments in joint ventures to the extent required by, or made
pursuant to customary buy/sell arrangements between, the joint venture parties set forth in
joint venture arrangements and similar binding arrangements as long as an amount equal to
the Net Proceeds of such Disposition are applied to the Loans to the extent required by
Section 2.05(b); and




          (n) other Dispositions, as long as (i) such Disposition is made for fair market value;
(ii) at least 75% of the consideration from such Disposition is in the form of cash or cash
equivalents; and (iii) an amount equal to the Net Proceeds of such Disposition are applied
to the Loans to the extent required by Section 2.05(b).



          “Permitted Encumbrances” means any of the following:




19









 









          (a) Liens imposed by law for Taxes that are not overdue for a period of more than
thirty (30) days or are being contested in compliance with Section 6.04;




          (b) carriers’, warehousemen’s, mechanics’, materialmen’s, repairmen’s and other like
Liens imposed by applicable Law, arising in the ordinary course of business and securing
obligations that are not overdue by more than thirty (30) days or are being contested in
compliance with Section 6.04;




          (c) pledges and deposits made in the ordinary course of business in compliance with
workers’ compensation, unemployment insurance and other social security or similar laws or
regulations, other than any Lien imposed by ERISA;




          (d) deposits to secure or relating to the performance of bids, trade contracts,
government contracts and leases (other than Indebtedness), statutory obligations, surety,
stay, customs and appeal bonds, performance bonds and other obligations of a like nature
incurred in the ordinary course of business;




          (e) Liens in respect of judgments that do not constitute an Event of Default hereunder;




          (f) easements, covenants, conditions, restrictions, building code laws, zoning
restrictions, rights-of-way and similar encumbrances on real property imposed by law or
arising in the ordinary course of business that do not secure any monetary obligations and
do not materially detract from the value of the affected property or materially interfere
with the ordinary conduct of business of the Parent and its Subsidiaries, taken as a whole,
and such other minor title defects or survey matters that are disclosed by current surveys
that, in each case, do not materially interfere with the ordinary conduct of business of the
Parent and its Subsidiaries, taken as a whole;




          (g) Liens existing on the date hereof and listed on Schedule 7.01 and any
renewals or extensions thereof, provided that (i) the property covered thereby is
not changed other than after-acquired property affixed or incorporated thereto and proceeds
or products thereof, (ii) the amount secured or benefited thereby is not increased except to
the extent permitted hereunder, and (iii) any renewal or extension of the obligations
secured or benefited thereby is permitted hereunder;




          (h) Liens on fixed or capital assets acquired by any Loan Party securing purchase money
Indebtedness permitted hereunder of any Loan Party to finance the acquisition of any fixed
or capital assets, including Capital Lease Obligations and Synthetic Lease Obligations, and
any Indebtedness permitted hereunder assumed in connection with the acquisition of any such
assets or secured by a Lien on any such assets prior to the acquisition thereof, and
extensions, renewals and replacements of any such Indebtedness permitted hereunder that do
not increase the outstanding principal amount thereof so long as (i) such Liens and the
Indebtedness secured thereby are incurred prior to or within one hundred and eighty (180)
days after such acquisition (other than refinancing thereof permitted hereunder), (ii) the
Indebtedness secured thereby does not exceed the cost of acquisition of such fixed or
capital assets and (iii) such Liens shall not extend to any other property or assets of the
Loan Parties, replacements thereof and additions and accessions to such property and the
proceeds and the products thereof and customary security deposits;




          (i) Liens under the Security Documents for the benefit of the Credit Parties;



20









 






          (j) landlords’ and lessors’ Liens in respect of rent not in default for more than
thirty (30) days;




          (k) possessory Liens in favor of brokers and dealers arising in connection with the
acquisition or disposition of Investments owned as of the date hereof and other Permitted
Investments, provided that such Liens (i) attach only to such Investments or other
Investments held by such broker or dealer and (ii) secure only obligations incurred in the
ordinary course and arising in connection with the acquisition or disposition of such
Investments and not any obligation in connection with margin financing;




          (l) Liens arising solely by virtue of any statutory or common law provisions relating
to banker’s liens, liens in favor of securities intermediaries, rights of setoff or similar
rights and remedies as to deposit accounts or securities accounts or other funds maintained
with depository institutions or securities intermediaries;




          (m) Liens (if any) arising from precautionary UCC filings regarding “true” operating
leases or consignment of goods to a Loan Party;




          (n) voluntary Liens on property in existence at the time such property is acquired
pursuant to a Permitted Investment or on such property of a Subsidiary of a Loan Party in
existence at the time such Subsidiary is acquired pursuant to a Permitted Investment;
provided that such Liens are not incurred in connection with, or in anticipation of,
such Permitted Investment and do not attach to any other assets of any Loan Party or any
Subsidiary;




          (o) Liens in favor of customs and revenues authorities imposed by applicable Law
arising in the ordinary course of business in connection with the importation of goods;




          (p) Liens (i) on cash advances in favor of the seller of any property to be acquired in
any Permitted Acquisition or other Permitted Investment to be applied against the purchase
price for such Permitted Acquisition or other Permitted Investment, (ii) consisting of an
agreement to transfer any property in a Permitted Disposition, in each case, solely to the
extent such Acquisition or Disposition, as the case may be, would have been permitted on the
date of the creation of such Lien, and (iii) on any cash earnest money deposits made by the
Parent or any of its Subsidiaries in connection with any letter of intent or purchase
agreement permitted hereunder;




          (q) any interest or title of a lessor or sublessor under leases or subleases or secured
by a lessor’s or sublessor’s interests under leases entered into by the Parent or any of its
Subsidiaries in the ordinary course of business;




          (r) Liens in favor of the licensor or sublicensor in respect of inbound licensing of
Intellectual Property in the ordinary course of business;




          (s) Liens arising out of conditional sale, title retention, consignment or similar
arrangements for sale of goods (including under Article 2 of the UCC) and Liens that are
contractual rights of set-off relating to purchase orders and other similar agreements
entered into by the Parent or any of its Subsidiaries;




          (t) Liens on insurance policies and the proceeds thereof securing the financing of the
premiums with respect thereto incurred in the ordinary course of business;



21









 






          (u) Liens arising out of sale and leaseback transactions permitted hereunder and
securing Permitted Indebtedness incurred for the construction or acquisition or improvement
of, or to finance or to refinance, any Real Estate owned by any Loan Party (including
therein any Permitted Indebtedness incurred in connection with sale-leaseback transactions
permitted hereunder);




          (v) Liens securing Indebtedness in respect of (i) the ABL Credit Agreement;
provided such Liens (to the extent such Liens encumber Collateral) are subject to
the ABL Intercreditor Agreement (or, in the case of any refinancing thereof permitted
hereunder, another intercreditor agreement containing terms that are at least as favorable
to the Credit Parties as those contained in the ABL Intercreditor Agreement) and the
Indebtedness secured by such Liens is permitted to be incurred pursuant to clause (a)(i) of
the definition of “Permitted Indebtedness”, and (ii) the Euro Term Loan Credit Agreement;
provided such Liens (to the extent such Liens encumber Collateral) are subject to
the Term Loan Intercreditor Agreement (or, in the case of any refinancing thereof permitted
hereunder, another intercreditor agreement containing terms that are at least as favorable
to the Credit Parties as those contained in the Term Loan Intercreditor Agreement);




          (w) leases or subleases granted to others in the ordinary course of business which do
not interfere in any material respect with the business of the Parent and its Subsidiaries,
taken as a whole;




          (x) Liens on specific items of inventory or other goods and the proceeds thereof
securing such Person’s obligations in respect of documentary letters of credit or banker’s
acceptances issued or created for the account of such Person to facilitate the purchase,
shipment or storage of such inventory or goods (in each case, to the extent such items
constitute Permitted Indebtedness);




          (y) outbound licenses of Intellectual Property permitted under clause (b) or (e) of the
definition of “Permitted Dispositions”; and




          (z) other Liens securing obligations outstanding in an aggregate principal amount not
to exceed $10,000,000.



          “Permitted Indebtedness” means any of the following:





          (a) (i) Indebtedness in respect of the ABL Credit Agreement and any refinancings,
refundings, renewals, extensions or replacements thereof; provided that (A) the
aggregate principal amount of any Indebtedness in respect of the ABL Credit Agreement or any
refinancing, refunding, renewal, extension or replacement thereof shall not exceed
$250,000,000 at any time or (B) any Indebtedness in respect of the ABL Credit Agreement or
any refinancing, refunding, renewal, extension or replacement thereof shall not have an
earlier maturity date than the ABL Facility in effect on the date hereof or a decreased
weighted average life than the ABL Facility in effect on the date hereof; (ii) Indebtedness
in respect of the Euro Term Loan Credit Agreement; and (iii) any other Indebtedness listed
on Schedule 7.03(a) and, in the case of the foregoing clauses (ii) and (iii), any
refinancings, refundings, renewals, extensions or replacements of any such Indebtedness;
provided that (x) the amount of such Indebtedness is not increased at the time of
such refinancing, refunding, renewal, extension or replacement, and (y) the result of such
refinancing, refunding, renewal, extension or replacement shall not be an earlier maturity
date or decreased weighted average life of such Indebtedness;



22









 






          (b) the Obligations;




          (c) Indebtedness permitted to be incurred pursuant to the Senior Note Indenture (as in
effect on the date hereof (and without regard to any waivers or consents that may be
obtained thereunder after the date hereof) (for the avoidance of doubt, any Indebtedness,
including any Specified Subsidiary Permitted Indebtedness, that reduces the availability of
borrowing baskets under the terms of the Senior Note Indenture shall reduce the availability
of such baskets for purposes of this clause (c) as well)); and




          (d) other Indebtedness; provided, that, at the time of incurrence of such
Indebtedness (i) the Global Leverage Ratio shall not exceed 5.00 to 1.00 and (ii) the
Americas Leverage Ratio shall not exceed 5.00 to 1.00, in each case after giving pro forma
effect to such incurrence of Indebtedness (and application of proceeds therefrom) as if such
Indebtedness had been incurred (and such proceeds were applied) on the first day of the
relevant Measurement Period.



          “Permitted Investments” means any of the following:





          (a) readily marketable obligations issued or directly and fully guaranteed or insured
by the United States of America or any agency or instrumentality thereof having maturities
of not more than one year from the date of acquisition thereof; provided that the
full faith and credit of the United States of America is pledged in support thereof;




          (b) commercial paper issued by any Person organized under the laws of any state of the
United States of America and rated, at the time of acquisition thereof, at least “Prime-2”
(or the then equivalent grade) by Moody’s or at least “A-2” (or the then equivalent
grade) by S&P, in each case with maturities of not more than one year from the date of
acquisition thereof;




          (c) time deposits with, or insured certificates of deposit or bankers’ acceptances of,
any commercial bank that (i) (A) is a Lender or (B) is organized under the laws of the
United States of America, any state thereof or the District of Columbia or is the principal
banking subsidiary of a bank holding company organized under the laws of the United States
of America, any state thereof or the District of Columbia, and is a member of the Federal
Reserve System, (ii) issues (or the parent of which issues) commercial paper rated, at the
time of acquisition thereof, as described in clause (b) of this definition and (iii) has
combined capital and surplus of at least $500,000,000, in each case with maturities of not
more than one year from the date of acquisition thereof;




          (d) fully collateralized repurchase agreements with a term of not more than thirty (30)
days for securities described in clause (a) above (without regard to the limitation on
maturity contained in such clause) and entered into with a financial institution satisfying
the criteria described in clause (c) above at the time of acquisition thereof or with any
primary dealer and having a market value at the time that such repurchase agreement is
entered into of not less than 100% of the repurchase obligation of such counterparty entity
with whom such repurchase agreement has been entered into;




          (e) securities with maturities of one year or less from the date of acquisition issued
or fully guaranteed by any state, commonwealth or territory of the United States or province
or territory of Canada, by any political subdivision or taxing authority of any such state,
commonwealth or territory or by any foreign government, the securities of which state,



23









 







commonwealth, territory, political subdivision, taxing authority or foreign government
(as the case may be) are rated at least A by S&P or A by Moody’s;




          (f) securities with maturities of six months or less from the date of acquisition
backed by standby letters of credit issued by any Lender or any commercial bank satisfying
the requirements of clause (c) of this definition;




          (g) marketable short-term money market and similar securities or funds having, at the
time of acquisition thereof, a rating of at least A-2 from S&P (or, if at any time S&P shall
not be rating such obligations, an equivalent rating from another nationally recognized
rating service);




          (h) shares of investment companies that are registered under the Investment Company Act
of 1940 and invest primarily in one or more of the types of securities described in clauses
(a) through (g) above;




          (i) in the case of investments by any Foreign Subsidiary or investments made in a
country outside the United States of America, other customarily utilized high-quality
investments in the country where such Foreign Subsidiary is located or in which such
investment is made;




          (j) Investments existing on the Closing Date and set forth on Schedule 7.02,
and any modification, renewal or extension thereof; provided that, the amount of any
Investment permitted pursuant to this clause is not increased from the amount of such
Investment on the Closing Date except pursuant to the terms of such Investment as of the
Closing Date or as otherwise permitted by Section 7.02;




          (k) Investments by any Loan Party in any other Loan Party; provided that, for
purposes of this clause (k), with respect to the Parent, the definition of “Acquisition”
shall exclude clause (c) thereof;




          (l) so long as at the time of determination with respect to an Investment to be made
pursuant to this clause (l) the Borrower shall have certified, and shall have delivered
supporting documentation reasonably satisfactory to the Administrative Agent, that Domestic
Availability (as defined in the ABL Credit Agreement as in effect on the date hereof)
immediately preceding, and on a pro forma basis on the date thereof and a projected basis
for the twelve (12) months immediately following, such Investment was, and is projected to
be, equal to or greater than the greater of (a) thirty percent (30%) of the Total Loan Cap
(provided that, in the event of any refinancing of the ABL Credit Agreement as in effect on
the date hereof or following its maturity, the Borrower and the Administrative Agent shall
agree in good faith on a successor availability test which preserves the economic effect of
this clause (a)) and (b) $45,000,000, Investments (i) to refinance Indebtedness of
Quiksilver Japan K.K. outstanding on the date hereof and listed on Schedule 7.03(l),
provided that (A) the aggregate amount of such refinancing shall not exceed $20,000,000 and
(B) if the aggregate amount of such Investment pursuant to this clause (i) exceeds
$5,000,000, substantially simultaneously with and as a condition to the extension of such
funds, the shares of Quiksilver Japan K.K. shall be transferred to the European Borrower,
54th Street or a Wholly-Owned Subsidiary of 54th Street and Quiksilver Japan K.K. shall
enter into a guarantee and pledge over all its assets (subject to customary exceptions) in
favor of the Euro Term Loan Agent for the benefit of the lenders under the Euro Term Loan
unless the Euro Term Loan Agent or requisite lenders under the Euro Term Loan Credit
Agreement shall otherwise agree; (ii) to provide for the payment of the cash portion



24









 







of the exercise price payable by QS Holdings (or its successor) upon exercise of its
buyout rights pursuant to the Brazil JV Agreement, provided that the aggregate amount of
such buyout shall not exceed the cash portion of the Agreed Value for the relevant Tranche
(as defined in the Brazil JV Agreement) on the terms in effect as of the date hereof and,
substantially simultaneously with and as a condition to the extension of such funds, the
 shares of Quiksilver Brazil shall, to the extent not already held by the European Borrower,
54th Street or a Wholly-Owned Subsidiary of 54th Street, be transferred to the European
Borrower, 54th Street or a Wholly-Owned Subsidiary of 54th Street and Quiksilver Brazil
shall enter into a guarantee and pledge over all its assets (subject to customary
exceptions) in favor of the Euro Term Loan Agent for the benefit of the lenders under the
Euro Term Loan unless the Euro Term Loan Agent or requisite lenders under the Euro Term Loan
Credit Agreement shall otherwise agree; (iii) to provide for the payment of the cash portion
of the exercise price payable by the Borrower upon exercise of its buyout rights or its put
obligations pursuant to the Mexico JV Agreement on the terms in effect as of the date hereof
and, substantially simultaneously with and as a condition to the extension of such funds, QS
Mexico Holdings shall enter into a guarantee and pledge over all its assets (subject to
customary exceptions) in favor of the Euro Term Loan Agent for the benefit of the lenders
under the Euro Term Loan unless the Euro Term Loan Agent or requisite lenders under the Euro
Term Loan Credit Agreement shall otherwise agree; (iv) by any Loan Party in any Wholly-Owned
Subsidiary that is not a Loan Party, excluding Investments made pursuant to clauses (i),
(ii), (iii) and (v), provided that all such Investments pursuant to this clause (iv) shall
not exceed $10,000,000 in the aggregate at any one time outstanding; and (v) by any Loan
Party in any Person, excluding Investments made pursuant to clauses (i), (ii), (iii) and
(iv), provided that all such Investments pursuant to this clause (v) shall not exceed
$10,000,000 in the aggregate at any one time outstanding;




          (m) Investments consisting of extensions of credit in the nature of accounts receivable
or notes receivable arising from the grant of trade credit in the ordinary course of
business, and Investments received in satisfaction or partial satisfaction thereof from
financially troubled account debtors and other credits to suppliers in the ordinary course
of business;




          (n) Guarantees constituting Permitted Indebtedness;




          (o) Investments in Swap Contracts not prohibited hereunder; provided that such
obligations are (or were) entered into in the ordinary course of business for the purposes
of directly mitigating risks associated with fluctuations in interest rates or foreign
exchange rates, and not for purposes of speculation or taking a “market view”;




          (p) Investments received in connection with the bankruptcy or reorganization of, or
settlement of delinquent accounts and disputes with, customers and suppliers, in each case
in the ordinary course of business;




          (q) (i) advances of payroll payments to employees in the ordinary course of business
and (ii) other loans and advances to officers, directors and employees of the Loan Parties
and Subsidiaries in the ordinary course of business in an aggregate amount not to exceed
$5,000,000 at any time outstanding; provided, however, that an individual’s
use of a cashless exercise procedure to pay the exercise price and required tax withholding
(or either of them) in connection with his exercise of a compensatory option to purchase
Equity Interests issued by the Parent shall not give rise to a loan or advance for the
purposes of this clause (q) to the extent that all funds representing full payment of such
option exercise price and required tax withholding are actually remitted to the Parent
before the close of business on either (x) the date of exercise of the stock option or (y)
the date of issuance of the Equity Interests pursuant to the option exercise;



25









 






          (r) Investments constituting Permitted Acquisitions and earnest money deposits made in
connection with any letter of intent or purchase agreement permitted hereunder;




          (s) capital contributions made by any Loan Party to another Loan Party;




          (t) Investments received by any Loan Party from purchasers of any assets pursuant to
Permitted Dispositions;




          (u) Investments of any Person existing at the time such Person becomes a Subsidiary of
any Loan Party pursuant to a Permitted Acquisition or other Permitted Investment or as a
result of a fundamental change transaction in accordance with Section 7.04 so long
as such Investments were not made in contemplation of such Person becoming a Subsidiary or
of such fundamental change transaction;




          (v) Guarantees of leases (other than Capital Lease Obligations or Synthetic Lease
Obligations) or other obligations that do not constitute Indebtedness, in each case entered
into in the ordinary course of business;




          (w) Investments consisting of Dispositions permitted under Section 7.05; and




          (x) purchases of inventory, supplies and materials and, to the extent a Permitted
Disposition under clause (b) or (e) of the definition of “Permitted Disposition”, the
licensing or contribution of Intellectual Property pursuant to joint marketing arrangements
with other Persons, in each case in the ordinary course of business.



          “Permitted Specified Subsidiary Encumbrances” means any of the following:





          (a) Liens imposed by law for Taxes that are not overdue for a period of more than
thirty (30) days or are being contested in compliance with Section 6.04;




          (b) carriers’, warehousemen’s, mechanics’, materialmen’s, repairmen’s and other like
Liens imposed by applicable Law, arising in the ordinary course of business and securing
obligations that are not overdue by more than thirty (30) days or are being contested in
compliance with Section 6.04;




          (c) pledges and deposits made in the ordinary course of business in compliance with
workers’ compensation, unemployment insurance and other social security or similar laws or
regulations, other than any Lien imposed by ERISA;




          (d) deposits to secure or relating to the performance of bids, trade contracts,
government contracts and leases (other than Indebtedness), statutory obligations, surety,
stay, customs and appeal bonds, performance bonds and other obligations of a like nature
incurred in the ordinary course of business;




          (e) Liens in respect of judgments that do not constitute an Event of Default hereunder;




          (f) easements, covenants, conditions, restrictions, building code laws, zoning
restrictions, rights-of-way and similar encumbrances on real property imposed by law or
arising in the ordinary course of business that do not secure any monetary obligations and
do not materially detract from the value of the affected property or materially interfere
with the ordinary



26









 







conduct of business of the Specified Subsidiary and its Subsidiaries, taken as a whole,
and such other minor title defects or survey matters that are disclosed by current surveys
that, in each case, do not materially interfere with the ordinary conduct of business of the
Specified Subsidiary and its Subsidiaries, taken as a whole;




          (g) Liens on fixed or capital assets acquired by any Specified Subsidiary securing
purchase money Indebtedness permitted hereunder of any Specified Subsidiary to finance the
acquisition of any fixed or capital assets, including Capital Lease Obligations and
Synthetic Lease Obligations, so long as (i) such Liens and the Indebtedness secured thereby
are incurred prior to or within one hundred and eighty (180) days after such acquisition
(other than refinancing thereof permitted hereunder), (ii) the Indebtedness secured thereby
does not exceed the cost of acquisition of such fixed or capital assets and (iii) such Liens
shall not extend to any other property or assets of the Specified Subsidiary, replacements
thereof and additions and accessions to such property and the proceeds and the products
thereof and customary security deposits;




          (h) landlords’ and lessors’ Liens in respect of rent not in default for more than
thirty (30) days;




          (i) possessory Liens in favor of brokers and dealers arising in connection with the
acquisition or disposition of Investments owned as of the date hereof and other Permitted
Investments by a Specified Subsidiary, provided that such Liens (a) attach only to
such Investments or other Investments held by such broker or dealer and (b) secure only
obligations incurred in the ordinary course and arising in connection with the acquisition
or disposition of such Investments and not any obligation in connection with margin
financing;




          (j) Liens arising solely by virtue of any statutory or common law provisions relating
to banker’s liens, liens in favor of securities intermediaries, rights of setoff or similar
rights and remedies as to deposit accounts or securities accounts or other funds maintained
with depository institutions or securities intermediaries;




          (k) Liens (if any) arising from precautionary UCC filings regarding “true” operating
leases or consignment of goods to a Specified Subsidiary;




          (l) Liens in favor of customs and revenues authorities imposed by applicable Law
arising in the ordinary course of business in connection with the importation of goods;




          (m) any interest or title of a lessor or sublessor under leases or subleases or secured
by a lessor’s or sublessor’s interests under leases entered into in the ordinary course of
business;




          (n) Liens in favor of the licensor or sublicensor in respect of inbound licensing of
Intellectual Property in the ordinary course of business granted by a Specified Subsidiary;




          (o) Liens arising out of conditional sale, title retention, consignment or similar
arrangements for sale of goods (including under Article 2 of the UCC) and Liens that are
contractual rights of set-off relating to purchase orders and other similar agreements
entered into by any Specified Subsidiary;



27









 






          (p) Liens on insurance policies and the proceeds thereof securing the financing of the
premiums with respect thereto incurred in the ordinary course of business;




          (q) leases or subleases granted to others in the ordinary course of business which do
not interfere in any material respect with the business of the Specified Subsidiary and its
Subsidiaries, taken as a whole;




          (r) Liens on specific items of inventory or other goods and the proceeds thereof
securing such Person’s obligations in respect of documentary letters of credit or banker’s
acceptances issued or created for the account of such Person to facilitate the purchase,
shipment or storage of such inventory or goods (in each case, to the extent such items
constitute Permitted Indebtedness); and




          (s) outbound licenses of Intellectual Property permitted under clause (b) or (e) of the
definition of “Permitted Dispositions”.



          “Permitted Specified Subsidiary Indebtedness” means any of the following:





          (a) Indebtedness in respect of the ABL Credit Agreement and the Euro Term Loan Credit
Agreement and any other Indebtedness outstanding on the date hereof and listed on
Schedule 7.03 and, in each case, any refinancings, refundings, renewals or
extensions of any of the foregoing Indebtedness; provided that (i) the amount of
such Indebtedness is not increased at the time of such refinancing, refunding, renewal or
extension except by an amount equal to a premium or interest paid, and (ii) the result of
such extension, renewal or replacement shall not be an earlier maturity date or decreased
weighted average life of such Indebtedness;




          (b) Indebtedness of any Specified Subsidiary to any other Specified Subsidiary, other
than Indebtedness of Quiksilver Brazil or Quiksilver Industria e Comercio de Artigos
Esportivos Ltda. to any other Specified Subsidiary;




          (c) Indebtedness in respect of performance bonds, bid bonds, customs and appeal bonds,
surety bonds, performance and completion guarantees and similar obligations, or, to the
extent in connection with purchases from suppliers, obligations in respect of letters of
credit, bank guarantees or similar instruments related thereto, in each case provided in the
ordinary course of business;




          (d) Indebtedness constituting indemnification obligations or obligations in respect of
purchase price or other similar adjustments in connection with Permitted Dispositions;




          (e) Guarantees of any Indebtedness described in clause (a) hereof;




          (f) obligations in respect of cash management services, netting services, automatic
clearinghouse arrangements, overdraft protections and similar arrangements;




          (g) Indebtedness in respect of letters of credit, bank guarantees, bankers’
acceptances, warehouse receipts or similar instruments issued or created in the ordinary
course of business in respect of workers compensation claims, health, disability or other
employee benefits or property, casualty or liability insurance or self-insurance or other
Indebtedness with respect to reimbursement-type obligations regarding workers compensation
claims; provided that any reimbursement obligations in respect thereof are
reimbursed within thirty (30) days following the incurrence thereof;



28









 






          (h) (i) purchase money Indebtedness of any Specified Subsidiary organized in Canada or
any province thereof to finance the acquisition of any fixed or capital assets, including
Capital Lease Obligations and Synthetic Lease Obligations, in an aggregate principal amount
for all such Specified Subsidiaries not to exceed $10,000,000 at any time outstanding; and
(ii) purchase money Indebtedness of any Specified Subsidiary (other than any Specified
Subsidiary organized in Canada or any province thereof) to finance the acquisition of any
fixed or capital assets, including Capital Lease Obligations and Synthetic Lease
Obligations, in an aggregate principal amount for all such Specified Subsidiaries not to
exceed $10,000,000 at any time outstanding;




          (i) obligations (contingent or otherwise) of any Specified Subsidiary existing or
arising under any Swap Contract, provided that such obligations are (or were)
entered into by such Specified Subsidiary in the ordinary course of business for the purpose
of directly mitigating risks associated with fluctuations in interest rates or foreign
exchange rates, and not for purposes of speculation or taking a “market view”; and




          (j) without duplication of any Indebtedness described in clause (a) through (i) above,
other Indebtedness in an aggregate principal amount not to exceed $10,000,000 at any time
outstanding.



          “Person” means any natural person, corporation, limited liability company, trust,
joint venture, association, company, partnership, limited partnership, Governmental Authority or
other entity.




          “PIK Amounts” has the meaning specified in Section 2.08(d).




          “PIK Election” has the meaning specified in Section 2.08(d).




          “Plan” means any “employee benefit plan” (as such term is defined in Section 3(3) of
ERISA including, for purposes of clarity, a Pension Plan and a Multiemployer Plan) established,
maintained or contributed to by a Loan Party or, with respect to any such plan that is subject to
Section 412 of the Code or Title IV of ERISA, any ERISA Affiliate.




          “Pledge Agreements” means, collectively, (a) the Pledge Agreement dated as of the
Closing Date among the Loan Parties party thereto and the Collateral Agent, in substantially the
form attached hereto as Exhibit H or otherwise in a form reasonably satisfactory to the
Administrative Agent, and (b) the Luxembourg Pledge Agreement.




          “Post-Closing Mark License” has the meaning set forth in clause (b) of the definition
of “Permitted Disposition”.




          “QS Holdings” means QS Holdings S.à r.l., a Luxembourg private limited liability
company.




          “Real Estate” means all land, together with the buildings, structures, parking areas,
and other improvements thereon, now or hereafter owned or leased by any Loan Party or any
Subsidiary, including all easements, rights-of-way, and similar rights relating thereto.




          “Register” has the meaning specified in Section 10.06(c).




          “Registered Public Accounting Firm” has the meaning specified by the Securities Laws
and shall be independent of the Parent and its Subsidiaries as prescribed by the Securities Laws.




29









 








          “Related Parties” means, with respect to any Person, such Person’s Affiliates and the
partners, directors, officers, employees, agents and advisors of such Person and of such Person’s
Affiliates.




          “Reportable Event” means any of the events set forth in Section 4043(c) of ERISA,
other than events for which the 30-day notice period has been waived.




          “Required Lenders” means, as of any date of determination, Lenders holding in the
aggregate more than 50% of the aggregate outstanding principal amount of all Loans;
provided that the portion of the aggregate outstanding principal amount of all Loans held
or deemed held by any Defaulting Lender shall be excluded for purposes of making a determination of
Required Lenders.




          “Responsible Officer” means the chief executive officer, president, chief financial
officer, treasurer or assistant treasurer of a Loan Party or any of the other individuals
designated in writing to the Administrative Agent by an existing Responsible Officer of a Loan
Party as an authorized signatory of any certificate or other document to be delivered hereunder.
Any document delivered hereunder that is signed by a Responsible Officer of a Loan Party shall be
conclusively presumed to have been authorized by all necessary corporate, partnership and/or other
action on the part of such Loan Party and such Responsible Officer shall be conclusively presumed
to have acted on behalf of such Loan Party.




          “Restricted Payment” means any dividend or other distribution (whether in cash,
securities or other property) with respect to any Equity Interest of any Loan Party, or any payment
(whether in cash, securities or other property), including any sinking fund or similar deposit, on
account of the purchase, redemption, retirement, defeasance, acquisition, cancellation or
termination of any such Equity Interest, or on account of any return of capital to such Loan
Party’s stockholders, partners or members (or the equivalent of any thereof).




          “S&P” means Standard & Poor’s Ratings Services, a division of The McGraw-Hill
Companies, Inc., and any successor thereto.




          “Sarbanes-Oxley” means the Sarbanes-Oxley Act of 2002, as amended and in effect from
time to time.




          “SEC” means the Securities and Exchange Commission, or any Governmental Authority
succeeding to any of its principal functions.




          “Securities Laws” means the Securities Act of 1933, the Securities Exchange Act of
1934, Sarbanes-Oxley, and the applicable accounting and auditing principles, rules, standards and
practices promulgated, approved or incorporated by the SEC or the PCAOB.




          “Security Agreement” means the Security Agreement dated as of the Closing Date among
the Loan Parties and the Collateral Agent, in substantially the form attached hereto as Exhibit
F or otherwise in a form reasonably satisfactory to the Administrative Agent.




          “Security Documents” means the Security Agreement, the Pledge Agreements, the
Intellectual Property Security Agreement, the Copyright Security Agreement, the Patent Security
Agreement, the Trademark Security Agreement and each other security agreement or other instrument
or document executed and delivered by any Loan Party to the Administrative Agent pursuant to this
Agreement or any other Loan Document granting a Lien on any asset of any Loan Party to secure any
of the Obligations.




30









 








          “Senior Note Indenture” means the Indenture, dated as of July 22, 2005, between the
Parent, as issuer, and Wilmington Trust Company, as trustee, in connection with the issuance of the
Senior Notes, together with all instruments and other agreements entered into by the Parent or any
Subsidiary in connection therewith, and any refinancings, refundings, renewals, extensions or
replacements of any of the foregoing; provided that (i) the amount of Indebtedness
thereunder is not increased at the time of such refinancing, refunding, renewal, extension or
replacement except by an amount equal to a premium or other amount paid, and fees and expenses
incurred, in connection with such refinancing, refunding, renewal, extension or replacement, and
(ii) the result of such refinancing, refunding, extension, renewal or replacement shall not be an
earlier maturity date or decreased weighted average life of such Indebtedness.




          “Senior Notes” means the senior unsecured notes issued by the Parent pursuant to the
Senior Note Indenture.




          “Services Fee Agreements” means (a) the DC Shoes, Inc. License and Services Agreement
dated as of July 30, 2009 by and between DC Shoes and Emerald Coast, and (b) the DC Shoes, Inc.
License and Services Fee Agreement dated as of July 31, 2009, by and between DC Shoes, Inc. and DC
Shoes Australia Pty. Ltd.




          “Side Agreement” means the agreement dated as of July 30, 2009 by and among 54th
Street, the Administrative Agent, the Euro Term Loan Agent, Quiksilver Canada Corp. and Quiksilver
Indústria e Comércio de Artigos Esportivos Ltda.




          “Solvent” and “Solvency” means, with respect to any Person on a particular
date, that on such date (a) at fair valuation, all of the properties and assets of such Person are
greater than the sum of the debts, including contingent liabilities, of such Person, (b) the
present fair saleable value of the properties and assets of such Person is not less than the amount
that would be required to pay the probable liability of such Person on its debts as they become
absolute and matured, (c) such Person does not intend to, and does not believe that it will, incur
debts beyond such Person’s ability to pay as such debts mature, and (d) such Person is not engaged
in a business or a transaction, and is not about to engage in a business or transaction, for which
such Person’s properties and assets would constitute unreasonably small capital after giving due
consideration to the prevailing practices in the industry in which such Person is engaged. The
amount of all guarantees or other contingent liabilities at any time shall be computed as the
amount that, in light of all the facts and circumstances existing at the time, can reasonably be
expected to become an actual or matured liability.




          “Specified Subsidiary” means each of Quiksilver Canada Corp., QS Retail Canada Corp.,
Quiksilver Brazil and Quiksilver Industria e Comercio de Artigos Esportivos Ltda.




          “Store” means any retail store (which may include any real property, fixtures,
equipment, inventory and other property related thereto) operated, or to be operated, by any Loan
Party.




          “Subordinated Indebtedness” means Indebtedness which is expressly subordinated in
right of payment to the prior payment in full of the Obligations.




          “Subsidiary” of a Person means a corporation, partnership, joint venture, limited
liability company or other business entity of which a majority of the Equity Interests having
ordinary voting power for the election of directors or other governing body are at the time
beneficially owned, or the management of which is otherwise controlled, directly, or indirectly
through one or more intermediaries, or both, by such Person. Unless otherwise specified, all
references herein to a “Subsidiary” or to “Subsidiaries” shall refer to a Subsidiary or
Subsidiaries of a Loan Party.




31









 








          “Swap Contract” means (a) any and all rate swap transactions, basis swaps, credit
derivative transactions, forward rate transactions, commodity swaps, commodity options, forward
commodity contracts, equity or equity index swaps or options, bond or bond price or bond index
swaps or options or forward bond or forward bond price or forward bond index transactions, interest
rate options, forward foreign exchange transactions, cap transactions, floor transactions, collar
transactions, currency swap transactions, cross-currency rate swap transactions, currency options,
spot contracts, or any other similar transactions or any combination of any of the foregoing
(including any options to enter into any of the foregoing), whether or not any such transaction is
governed by or subject to any master agreement, and (b) any and all transactions of any kind, and
the related confirmations, which are subject to the terms and conditions of, or governed by, any
form of master agreement published by the International Swaps and Derivatives Association, Inc., or
any other master agreement (any such master agreement, together with any related schedules, a
“Master Agreement”), including any such obligations or liabilities under any Master Agreement.




          “Swap Termination Value” means, in respect of any one or more Swap Contracts, after
taking into account the effect of any legally enforceable netting agreement relating to such Swap
Contracts, (a) for any date on or after the date such Swap Contracts have been closed out and
termination value(s) determined in accordance therewith, such termination value(s), and (b) for any
date prior to the date referenced in clause (a), the amount(s) determined as the mark-to-market
value(s) for such Swap Contracts, as determined based upon one or more mid-market or other readily
available quotations provided by any recognized dealer in such Swap Contracts (which may include a
Lender or any Affiliate of a Lender).




          “Synthetic Lease Obligation” means the monetary obligation of a Person under (a) a
so-called synthetic, off-balance sheet or tax retention lease, or (b) an agreement for the use or
possession of property (including sale and leaseback transactions), in each case, creating
obligations that do not appear on the balance sheet of such Person but which, upon the application
of any Debtor Relief Laws to such Person, would be characterized as the indebtedness of such Person
(without regard to accounting treatment).




          “Taxes” means all present or future taxes, levies, imposts, duties, deductions,
withholdings, assessments, fees or other charges imposed by any Governmental Authority, including
any interest, additions to tax or penalties applicable thereto.




          “Term Loan Intercreditor Agreement” means that certain Collateral Agency Agreement,
dated as of the Closing Date, among the Administrative Agent, the Euro Term Loan Agent and the
Collateral Agent.




          “Termination Date” means the earlier to occur of (i) the Maturity Date and (ii) the
date on which the maturity of the Obligations is accelerated (or deemed accelerated) in accordance
with Article VIII.




          “Total Loan Cap” has the meaning specified in the ABL Credit Agreement as in effect on
the date hereof.




          “Trademark” has the meaning specified in the Intellectual Property Security Agreement.




          “Trademark Security Agreement” means the Trademark Security Agreement dated as of the
Closing Date among certain Loan Parties and the Collateral Agent, in substantially the form
attached hereto as Exhibit K or otherwise in a form reasonably satisfactory to the
Administrative Agent.




32









 








          “Trading with the Enemy Act” has the meaning specified in Section 10.20.




          “UCC” or “Uniform Commercial Code” means the Uniform Commercial Code as in
effect from time to time in the State of New York; provided that, if a term is defined in
Article 9 of the Uniform Commercial Code differently than in another Article thereof, the term
shall have the meaning set forth in Article 9; provided, further, that, if by
reason of mandatory provisions of law, perfection, or the effect of perfection or non-perfection,
of a security interest in any Collateral or the availability of any remedy hereunder is governed by
the Uniform Commercial Code as in effect in a jurisdiction other than the State of New York,
“Uniform Commercial Code” means the Uniform Commercial Code as in effect in such other jurisdiction
for purposes of the provisions hereof relating to such perfection or effect of perfection or
non-perfection or availability of such remedy, as the case may be.




          “Unfunded Pension Liability” means the excess of a Pension Plan’s benefit liabilities
under Section 4001(a)(16) of ERISA, over the current value of that Pension Plan’s assets,
determined in accordance with the assumptions used for funding the Pension Plan pursuant to Section
412 of the Code for the applicable plan year.




          “United States” and “U.S.” mean the United States of America.




          “Warrant Agreement” means the Warrant and Registration Rights Agreement, dated as of
the Closing Date by and among the Parent, Rhône Capital III L.P. and the initial Warrant holders
party thereto.




          “Warrants” means those certain Warrants to purchase shares of common stock or Series A
convertible preferred stock of the Parent issued to Romolo Holdings C.V., Triton SPV L.P., Triton
Onshore SPV L.P., Triton Offshore SPV L.P. and Triton Coinvestment SPV L.P. on the Closing Date.




          “Wholly Owned Subsidiary” means, with respect to any Person, any corporation,
partnership or other entity of which all of the Equity Interests (other than, in the case of a
corporation, directors’ qualifying shares) are directly or indirectly owned or controlled by such
Person or one or more Wholly Owned Subsidiaries of such Person or by such Person and one or more
Wholly Owned Subsidiaries of such Person.




          1.02 Other Interpretive Provisions. With reference to this Agreement and each other Loan
Document, unless otherwise specified herein or in such other Loan Document:




               (a) The definitions of terms herein shall apply equally to the singular and plural forms of
the terms defined. Whenever the context may require, any pronoun shall include the corresponding
masculine, feminine and neuter forms. The words “include,” “includes” and
“including” shall be deemed to be followed by the phrase “without limitation.” The word
“will” shall be construed to have the same meaning and effect as the word “shall.”
Unless the context requires otherwise, (i) any definition of or reference to any agreement,
instrument or other document (including any Organization Document) shall be construed as referring
to such agreement, instrument or other document as from time to time amended, restated, amended and
restated, supplemented or otherwise modified (subject to any restrictions on such amendments,
restatements, amendment and restatements, supplements or modifications set forth herein or in any
other Loan Document), (ii) any reference herein to any Person shall be construed to include such
Person’s successors and assigns, (iii) the words “herein,” “hereof” and
“hereunder,” and words of similar import when used in any Loan Document, shall be construed
to refer to such Loan Document in its entirety and not to any particular provision thereof, (iv)
all references in a Loan Document to Articles, Sections, Exhibits and Schedules shall be construed
to refer to Articles and Sections of, and Exhibits and Schedules to, the Loan Document in which
such references appear, (v) any



33









 







reference to any law shall include all statutory and regulatory provisions consolidating,
amending replacing or interpreting such law and any reference to any law or regulation shall,
unless otherwise specified, refer to such law or regulation as amended, modified or supplemented
from time to time, and (vi) the words “asset” and “property” shall be construed to
have the same meaning and effect and to refer to any and all tangible and intangible assets and
properties, including cash, securities, accounts and contract rights.



               (b) In the computation of periods of time from a specified date to a later specified date,
unless otherwise expressly provided, the word “from” means “from and including;”
the words “to” and “until” each mean “to but excluding;” and the word
“through” means “to and including.”



               (c) Article and Section headings used herein and in the other Loan Documents are for
convenience of reference only, are not part of this Agreement and shall not affect the construction
of, or be taken into consideration in interpreting, this Agreement or any other Loan Document.



               (d) Any other undefined term contained in any of the Loan Documents shall, unless the context
indicates otherwise, have the meaning provided for such term in the Uniform Commercial Code as in
effect in the State of New York to the extent the same are used or defined therein.



          1.03 Accounting Terms.




               (a) Generally. All accounting terms not specifically or completely defined herein
shall be construed in conformity with, and all financial data (including financial ratios and other
financial calculations) required to be submitted pursuant to this Agreement shall be prepared in
conformity with, GAAP applied on a consistent basis, as in effect from time to time, applied in a
manner consistent with that used in preparing the Audited Financial Statements, except as
otherwise specifically prescribed herein.



               (b) Changes in GAAP. If at any time any change in GAAP would affect the computation
of any financial ratio or requirement set forth in any Loan Document, and either the Borrower or
the Required Lenders shall so request, the Administrative Agent, the Lenders and the Borrower shall
negotiate in good faith to amend such ratio or requirement to preserve the original intent thereof
in light of such change in GAAP (subject to the approval of the Required Lenders); provided
that, until so amended, (i) such ratio or requirement shall continue to be computed in accordance
with GAAP prior to such change therein and (ii) the Borrower shall provide to the Administrative
Agent and the Lenders financial statements and other documents required under this Agreement or as
reasonably requested hereunder setting forth a reconciliation between calculations of such ratio or
requirement made before and after giving effect to such change in GAAP.



          1.04 Rounding. Any financial ratios required to be maintained by the Borrower pursuant to
this Agreement shall be calculated by dividing the appropriate component by the other component,
carrying the result to one place more than the number of places by which such ratio is expressed
herein and rounding the result up or down to the nearest number (with a rounding-up if there is no
nearest number).




          1.05 Times of Day. Unless otherwise specified, all references herein to times of day shall
be references to Eastern time (daylight or standard, as applicable).




          1.06 Currency Equivalents Generally. Any amount specified in this Agreement (other than in
Articles II, IX and X) or any of the other Loan Documents to be in Dollars
shall also include the equivalent of such amount in any currency other than Dollars, such
equivalent amount thereof in the



34









 






applicable currency to be determined by the Administrative Agent at such time on the basis of the
Spot Rate (as defined below) for the purchase of such currency with Dollars. For purposes of this
Section 1.06, the “Spot Rate” for a currency means the rate determined by the
Administrative Agent to be the rate quoted by the Person acting in such capacity as the spot rate
for the purchase by such Person of such currency with another currency through its principal
foreign exchange trading office at approximately 11:00 a.m. on the date two Business Days prior to
the date of such determination; provided that the Administrative Agent may obtain such spot
rate from another financial institution designated by the Administrative Agent if the Person acting
in such capacity does not have as of the date of determination a spot buying rate for any such
currency. Notwithstanding the foregoing, for purposes of determining compliance with
Sections 7.01, 7.02 and 7.03 with respect to any amount of Indebtedness or
Investment in a currency other than Dollars, no Default or Event of Default shall be deemed to have
occurred solely as a result of changes in rates of exchange occurring after the time such
Indebtedness or Investment is incurred; provided that, for the avoidance of doubt, the foregoing
provisions of this Section 1.06 shall otherwise apply to such Sections, including with
respect to determining whether any Indebtedness or Investment may be incurred at any time under
such Sections.




          1.07 Certifications. All certifications to be made hereunder by an officer or
representative of a Loan Party shall be made by such Person in his or her capacity solely as an
officer or a representative of such Loan Party, on such Loan Party’s behalf and not in such
Person’s individual capacity.




ARTICLE II




THE COMMITMENTS AND LOANS




          2.01 Loans. Subject to the terms and conditions set forth herein, each Lender severally
agrees to make loans (each such loan, a “Loan”) to the Borrower on the Closing Date in an
aggregate principal amount equal to such Lender’s Commitment. The aggregate amount of the Loans
shall not exceed the Aggregate Commitments.




          2.02 Borrowing of Loans.




               (a) The Borrowing of Loans shall be made upon the Borrower’s irrevocable notice to the
Administrative Agent. Such notice must be received by the Administrative Agent not later than
11:00 a.m. one Business Day prior to the requested date of such Borrowing of Loans. The Loan Notice
(whether telephonic or written) shall specify (i) the requested date of the Borrowing (which shall
be the Closing Date), and (ii) the principal amount of Loans to be borrowed.



               (b) Following receipt of the Loan Notice, the Administrative Agent shall promptly notify each
Lender of the contents of such Loan Notice. Each Lender shall make the amount of its Loan
available to the Administrative Agent in immediately available funds at the Administrative Agent’s
Office not later than 9:00 a.m. on the Closing Date. Upon satisfaction of the conditions set forth
in Section 4.01, the Administrative Agent shall use reasonable efforts to make all funds so
received available to the Borrower in like funds by no later than 9:00 a.m. on the Closing Date in
accordance with instructions provided to the Administrative Agent by the Borrower.



          2.03 [Reserved].




          2.04 [Reserved].




          2.05 Prepayments.





35









 








               (a) The Borrower may, upon notice to the Administrative Agent, at any time and from time to
time voluntarily prepay Loans in whole or in part without premium or penalty; provided that
(i) such notice must be received by the Administrative Agent not later than 11:00 a.m. on the date
of prepayment; (ii) any prepayment of Loans shall be in a principal amount of $1,000,000 or a whole
multiple of $1,000,000 in excess thereof or, if less, the entire principal amount thereof then
outstanding; and (iii) any voluntary prepayment of Loans made on or prior to the third anniversary
of the Closing Date shall be accompanied by any applicable Exchange Rate Make-Whole Payment. Each
such notice shall specify the date and amount of such prepayment. The Administrative Agent will
promptly notify each Lender of its receipt of each such notice, and of the amount of such Lender’s
Applicable Percentage of such prepayment. The Borrower shall make such prepayment and the payment
amount specified in such notice shall be due and payable on the date specified therein;
provided, that a notice of prepayment delivered by the Borrower may state that such notice
is conditioned upon the effectiveness of other credit facilities, in which case such notice may be
revoked by the Borrower (by notice to the Administrative Agent on or prior to the specified
effective date) if such condition is not satisfied. Any prepayment of a Loan shall be accompanied
by all accrued interest on the amount prepaid. Each such prepayment shall be applied to the Loans
of the Lenders in accordance with their respective Applicable Percentages.



               (b) If the aggregate Net Proceeds received by the Loan Parties on account of Dispositions of
any property or assets of a Loan Party described in clauses (f), (j), (m) and (n) of the definition
of Permitted Disposition exceeds $15,000,000 in any Fiscal Year, then the Borrower shall prepay the
Loans in an amount equal to such excess, no later than three (3) Business Days after receipt by any
Loan Party of such Net Proceeds, in each case without premium or penalty except to the extent
required by Section 2.09(b); provided, however, that such prepayment shall
not be required to the extent that such Net Proceeds have been utilized to prepay the loans or cash
collateralize other obligations under the ABL Credit Agreement. Notwithstanding the foregoing, in
the case of a Disposition of the DC Shoes Business, an amount equal to the Net Proceeds may be
utilized first, to prepay loans and/or cash collateralize other obligations under the ABL
Credit Agreement; second, in the event such Disposition of the DC Shoes Business is a
voluntary sale, to prepay the loans then outstanding under Facility A (as defined under the French
Credit Agreement); third, in the event such Disposition of the DC Shoes Business is a
voluntary sale, unless the NP Cash Collateral (as defined under the French Credit Agreement) has
been released prior to a Permitted Disposition of the DC Shoes Business, for the purpose of (x)
releasing the NP Cash Collateral and substituting the Parent in lieu of Na Pali thereunder or (y)
increasing the share capital of Quiksilver Europa SL by way of cash contribution (through a share
capital increase of Biarritz Holdings S.à r.l.), releasing the NP Cash Collateral and substituting
Quiksilver Europa SL in lieu of Na Pali thereunder; and fourth, to prepay the Loans or the
Euro Term Loans.



               (c) The Borrower shall prepay the Loans in an amount equal to the Net Proceeds received by a
Loan Party on account of any other event that results in a mandatory prepayment of the loans under
the ABL Credit Agreement (other than any mandatory prepayment relating to overadvance or borrowing
base matters under the ABL Credit Agreement) no later than three (3) Business Days after receipt by
any Loan Party of such Net Proceeds, in each case without premium or penalty except to the extent
required by Section 2.09(b); provided, however, that such prepayment shall
not be required to the extent that such Net Proceeds have been utilized to prepay the loans or cash
collateralize other obligations under the ABL Credit Agreement.



               (d) The Borrower shall prepay the Loans in full, without premium or penalty except to the
extent required by Section 2.09(b), upon the occurrence of a Change of Control.



          2.06 [Reserved].




36









 








          2.07 Repayment of Loans. The Borrower shall repay to the Administrative Agent, for the
account of the Lenders, on the Termination Date the aggregate principal amount of Loans outstanding
on such date. Once repaid or prepaid, Loans may not be reborrowed.




          2.08 Interest.




               (a) Subject to the provisions of Section 2.08(b) below, each Loan shall bear interest
on the outstanding principal amount thereof at a rate per annum equal to 15.0%.



               (b) (i) If any amount payable under this Agreement is not paid when due (after giving effect
to any applicable grace periods), whether at stated maturity, by acceleration or otherwise, such
overdue amount shall thereafter bear interest at a per annum rate equal to the Default Rate to the
fullest extent permitted by applicable Laws.




                    (ii) If any other Event of Default exists, then the Administrative Agent may,
and upon the request of the Required Lenders shall, notify the Borrower that all
outstanding Loans shall thereafter bear interest at a per annum rate equal to the
Default Rate to the fullest extent permitted by applicable Laws for so long as such
Event of Default is continuing.




                    (iii) Accrued and unpaid interest on past due amounts (including interest on
past due interest to the fullest extent permitted by applicable Laws) shall be due
and payable upon demand.



               (c) Interest on each Loan shall be due and payable in arrears on each Interest Payment Date
and at such other times as may be specified herein. Interest hereunder shall be due and payable in
accordance with the terms hereof before and after judgment, and before and after the commencement
of any proceeding under any Debtor Relief Law.



               (d) With respect to each Interest Payment Date, so long as no Event of Default has occurred
and is continuing, the Borrower may elect to (i) pay all interest due on such date in cash, or (ii)
pay up to 40% of the interest due on such date by adding such interest to the principal amount of
the outstanding Loans and the remaining portion of the interest in cash (such election, a “PIK
Election”; and such interest added to the principal amount of the outstanding Loans, the
“PIK Amounts”). The Borrower will give notice of the terms of such election to the
Administrative Agent at least three (3) Business Days prior to the applicable Interest Payment
Date; provided, however, that in the event no such notice is given to the
Administrative Agent, so long as no Event of Default has occurred and is continuing, the Borrower
shall be deemed to have elected to pay 40% of the interest due on such Interest Payment Date as a
PIK Amount.



          2.09 Exchange Rate Make-Whole; Repayment Fee; Closing Fee.




               (a) Exchange Rate Make-Whole. In the event that for any reason the Loans are
voluntarily prepaid in whole or in part pursuant to Section 2.05 on or prior to July 31,
2012, in each case the Borrower shall pay to the Administrative Agent, for the account of the
Lenders, an additional amount (each, an “Exchange Rate Make-Whole Payment”) equal to the
Dollar equivalent (calculated based on the exchange rate in effect on the date of such prepayment)
of the difference, if positive, between (x) the Euro equivalent (calculated based on a Dollar to
Euro exchange rate of 1.42) of the principal amount of the Loans and PIK Amounts, if any, being
voluntarily prepaid, and (y) the Euro equivalent (calculated based on the exchange rate in effect
on the date of such prepayment) of the principal amount of such Loans and PIK Amounts being
voluntarily prepaid; provided, however, in no



37









 







event shall the aggregate amount of all Exchange Rate Make-Whole Payments required to be made
by the Borrower hereunder exceed $18,750,000 plus 15.0% of the PIK Amounts voluntarily
prepaid on or prior to July 31, 2012.



               (b) Repayment Fee. Upon repayment of the Loans in full (whether at maturity or
otherwise), the Borrower shall pay to the Administrative Agent, for the account of the Lenders, an
amount (if positive) equal to (i) $1,500,000 minus (ii) the aggregate amount of all
Exchange Rate Make-Whole Payments made by the Borrower.



               (c) Closing Fee. On the Closing Date, the Borrower shall pay to the Administrative
Agent, for its own account, an amount equal to 3.0% of the Aggregate Commitments as of the Closing
Date.



          2.10 Computation of Interest and Fees. All computations of interest shall be made on the
basis of a 360-day year and actual days elapsed (which results in more interest being paid than if
computed on the basis of a 365-day year). Interest shall accrue on each Loan for the day on which
the Loan is made, and shall not accrue on a Loan, or any portion thereof, for the day on which the
Loan or such portion is paid.




          2.11 Evidence of Debt. The Loans made by each Lender shall be evidenced by one or more
accounts or records maintained by the Administrative Agent in the ordinary course of business. In
addition, each Lender may record in such Lender’s internal records, an appropriate notation
evidencing the date and amount of each Loan from such Lender, each payment and prepayment of
principal of any such Loan, and each payment of interest, fees and other amounts due in connection
with the Obligations due to such Lender. The accounts or records maintained by the Administrative
Agent and each Lender shall be conclusive absent manifest error of the amount of the Loans made by
the Lenders to the Borrower and the interest and payments thereon. Any failure to so record or any
error in doing so shall not, however, limit or otherwise affect the obligation of the Borrower
hereunder to pay any amount owing with respect to the Obligations. In the event of any conflict
between the accounts and records maintained by any Lender and the accounts and records of the
Administrative Agent in respect of such matters, the accounts and records of the Administrative
Agent shall control in the absence of manifest error. Upon the request of any Lender made through
the Administrative Agent (who shall notify the Borrower), the Borrower shall execute and deliver to
such Lender (through the Administrative Agent) a Note, which shall evidence such Lender’s Loans in
addition to such accounts or records. Each Lender may attach schedules to its Note and endorse
thereon the date, amount and maturity of its Loans and payments with respect thereto. Any failure
to so attach or endorse, or any error in doing so, shall not, however, limit or otherwise affect
the obligation of the Borrower hereunder to pay any amount owing with respect to the Obligations.
Upon receipt of an affidavit and indemnity of a Lender as to the loss, theft, destruction or
mutilation of such Lender’s Note and upon cancellation of such Note, the Borrower will issue, in
lieu thereof, a replacement Note in favor of such Lender, in the same principal amount thereof and
otherwise of like tenor (subject to adjustment in the case of any assignments of such Lender’s
Commitments), at such Lender’s expense.




          2.12 Payments Generally; Administrative Agent’s Clawback.




               (a) General. All payments to be made by the Borrower shall be made without condition
or deduction for any counterclaim, defense, recoupment or setoff. Except as otherwise expressly
provided herein, all payments by the Borrower hereunder shall be made to the Administrative Agent,
for the account of the respective Lenders to which such payment is owed, at the Administrative
Agent’s Office in Dollars and in immediately available funds not later than 2:00 p.m. on the date
specified herein. The Administrative Agent will promptly distribute to each Lender its Applicable



38









 







Percentage (or other applicable share as provided herein) of such payment in like funds as
received by wire transfer to such Lender’s Lending Office. All payments received by the
Administrative Agent after 2:00 p.m. shall be deemed received on the next succeeding Business Day
and any applicable interest shall continue to accrue. If any payment to be made by the Borrower
shall come due on a day other than a Business Day, payment shall be made on the next following
Business Day, and such extension of time shall be reflected in computing interest.



               (b) Payments by Borrower; Presumptions by Administrative Agent. Unless the
Administrative Agent shall have received notice from the Borrower prior to the time at which any
payment is due to the Administrative Agent for the account of the Lenders hereunder that the
Borrower will not make such payment, the Administrative Agent may assume that the Borrower has made
such payment on such date in accordance herewith and may, in reliance upon such assumption,
distribute to the Lenders the amount due. In such event, if the Borrower has not in fact made such
payment, then each of the Lenders severally agrees to repay to the Administrative Agent forthwith
on demand the amount so distributed to such Lender, in immediately available funds with interest
thereon, for each day from and including the date such amount is distributed to it to but excluding
the date of payment to the Administrative Agent, at the greater of the Federal Funds Rate and a
rate determined by the Administrative Agent in accordance with banking industry rules on interbank
compensation.



               (c) Obligations of Lenders Several. The obligations of the Lenders hereunder to make
Loans and to make payments pursuant to Section 10.04(c) are several and not joint. The
failure of any Lender to make any Loan or to make any payment under Section 10.04(c) on any
date required hereunder shall not relieve any other Lender of its corresponding obligation to do so
on such date, and no Lender shall be responsible for the failure of any other Lender to so make its
Loan or to make its payment under Section 10.04(c).



               (d) Funding Source. Nothing herein shall be deemed to obligate any Lender to obtain
the funds for any Loan in any particular place or manner or to constitute a representation by any
Lender that it has obtained or will obtain the funds for any Loan in any particular place or
manner.



          2.13 Sharing of Payments by Lenders. If any Lender shall, by exercising any right of
setoff or counterclaim or otherwise, obtain payment in respect of any principal of or interest on
principal of or interest on any of the Loans made by it resulting in such Lender’s receiving
payment of a proportion of the aggregate amount of such Loans and accrued interest thereon greater
than its pro rata share thereof as provided herein, then the Lender receiving such greater
proportion shall (a) notify the Administrative Agent of such fact, and (b) purchase (for cash at
face value) participations in the Loans of the other Lenders, or make such other adjustments as
shall be equitable, so that the benefit of all such payments shall be shared by the Lenders
ratably, provided that:




               (a) if any such participations or subparticipations are purchased and all or any portion of
the payment giving rise thereto is recovered, such participations or subparticipations shall be
rescinded and the purchase price restored to the extent of such recovery, without interest; and



               (b) the provisions of this Section shall not be construed to apply to (x) any payment made by
any Loan Party pursuant to and in accordance with the express terms of this Agreement or (y) any
payment obtained by a Lender as consideration for the assignment of or sale of a participation in
any of its Loans to any assignee or participant.



          Each Loan Party consents to the foregoing and agrees, to the extent it may effectively do so
under applicable law, that any Lender acquiring a participation pursuant to the foregoing
arrangements



39









 






may exercise against such Loan Party rights of setoff and counterclaim with respect to such
participation as fully as if such Lender were a direct creditor of such Loan Party in the amount of
such participation.




ARTICLE III




TAXES, YIELD PROTECTION AND ILLEGALITY




          3.01 Taxes.




               (a) Payments Free of Taxes. Any and all payments by or on account of any obligation
of the Borrower hereunder or under any other Loan Document shall be made free and clear of and
without reduction or withholding for any Indemnified Taxes or Other Taxes, provided that if
the Borrower shall be required by applicable law to deduct any Indemnified Taxes (including any
Other Taxes) from such payments, (i) the sum payable shall be increased as necessary so that after
making all required deductions (including deductions applicable to additional sums payable under
this Section 3.01(a)) the Administrative Agent or Lender, as the case may be, receives an
amount equal to the sum it would have received had no such deductions been made (the “Gross-Up
Payment”), (ii) the Borrower shall make such deductions and (iii) the Borrower shall timely pay
the full amount deducted to the relevant Governmental Authority in accordance with applicable Law.
Notwithstanding the foregoing, the Borrower shall not be obligated to make any portion of the
Gross-Up Payment that is (A) attributable to withholding taxes that could have been avoided by the
delivery of the properly completed and executed documentation required by subsection (e) of
this Section 3.01, (B) governed by subsection (i) of this Section 3.01 or
(C) attributable to the Administrative Agent’s or any such Lender’s or Participant’s own willful
misconduct or gross negligence.



               (b) Payment of Other Taxes by the Borrower. Without limiting or duplicating the
provisions of subsection (a) above, the Borrower shall pay any Other Taxes to the relevant
Governmental Authority in accordance with applicable Law.



               (c) The Borrower shall indemnify the Administrative Agent or each Lender, within 10 days after
written demand therefor, for the full amount of any Indemnified Taxes or Other Taxes (including
Indemnified Taxes or Other Taxes imposed or asserted on or attributable to amounts payable under
this Section 3.01) paid by the Administrative Agent or such Lender, as the case may be, on
or with respect to any assessment of Indemnified Taxes or Other Taxes imposed or asserted on or
attributable to amounts payable under this Section (other than such penalties or interest arising
through the gross negligence or willful misconduct of the Administrative Agent or such Lender). A
certificate as to the amount of such payment or liability delivered to the Borrower by a Lender or
the Administrative Agent on its own behalf or on behalf of a Lender shall be conclusive absent
manifest error.



               (d) Evidence of Payments. As soon as practicable after any payment of Indemnified
Taxes or Other Taxes by the Borrower to a Governmental Authority, the Borrower shall deliver to the
Administrative Agent the original or a certified copy of a receipt issued by such Governmental
Authority evidencing such payment or other reasonable documentation evidencing such payment.



               (e) Status of Lenders. Any non-U.S. Lender or Participant that is entitled to an
exemption from, or reduction of, withholding tax under the law of the jurisdiction in which the
Borrower is resident for tax purposes, or any treaty to which such jurisdiction is a party, with
respect to payments hereunder or under any other Loan Document shall not be entitled to the
Gross-Up Payment unless and until such Lender or Participant delivers to the Borrower (with a copy
to the Administrative Agent) (or, in the case of a Participant, to the Lender granting the
participation only), such properly



40









 







completed and executed documentation prescribed by applicable Law as will permit such payments
to be made without withholding or at a reduced rate of withholding. In addition, any Lender or
Participant, if requested by the Borrower or the Administrative Agent (or, in the case of a
Participant, the Lender granting the participation), shall deliver such other documentation
prescribed by applicable Law or reasonably requested by the Borrower or the Administrative Agent
(or, in the case of a Participant, the Lender granting the participation) as will enable the
Borrower or the Administrative Agent to determine whether or not such Lender or Participant is
subject to backup withholding or information reporting requirements. Furthermore, each Lender or
Participant shall provide new forms (or successor forms) upon the expiration or obsolescence of any
previously delivered forms and to promptly notify the Administrative Agent (or, in the case of a
Participant, the Lender granting the participation) of any change in circumstances which would
modify or render invalid any claimed exemption or reduction.



               (f) United States Withholding Taxes. Without limiting the provisions of subsection
(d) of this Section 3.01, any Lender or Participant that is entitled to an exemption
from, or reduction of, United States withholding tax shall deliver to the Borrower and the
Administrative Agent (or, in the case of a Participant, to the Lender granting the participation
only) in such number of copies as shall be requested by the recipient on or prior to the date on
which such Lender or Participant becomes a Lender or Participant under this Agreement (and from
time to time thereafter upon the request of the Borrower or the Administrative Agent or Lender
granting the participation), whichever of the following is applicable:




                    (i) duly completed copies of IRS Form W-8BEN claiming eligibility for benefits
of an income tax treaty to which the United States is a party,




                    (ii) duly completed copies of IRS Form W-8ECI,




                    (iii) duly completed copies of IRS Form W-8IMY (with proper attachments,




                    (iv) in the case of a Lender or Participant that is entitled to claim the
benefits of the exemption for portfolio interest under section 881(c) of the Code,
(x) a statement of the Lender or Participant, signed under penalty or perjury, to
the effect that such Lender or Participant is not (A) a “bank” within the meaning of
section 881(c)(3)(A) of the Code, (B) a “10 percent shareholder” of the Borrower
within the meaning of section 881(c)(3)(B) of the Code, or (C) a “controlled foreign
corporation” described in section 881(c)(3)(C) of the Code and (y) duly completed
copies of IRS Form W-8BEN or Form W-8IMY (with proper attachments)




                    (v) duly completed copies of IRS Form W-9, or




                    (vi) any other form prescribed by applicable Law as a basis for claiming
exemption from or a reduction in United States Federal withholding tax duly
completed together with such supplementary documentation as may be prescribed by
applicable Law to permit the Borrower (or Lender granting the participation) to
determine the withholding or deduction required to be made.



               (g) Non-United States Withholding Taxes. Without limiting the provisions of
subsection (e) of this Section 3.01, any Lender or a Participant that is entitled
to claim an exemption from withholding tax in a jurisdiction other than the United States agrees
with and in favor of the Administrative Agent and the Borrower, to deliver to the Administrative
Agent and the Borrower (or, in the case of a Participant, to the Lender granting the participation
only) any such form or forms, as may be



41









 







required under the laws of such jurisdiction as a condition to exemption from, or reduction
of, any non-United States withholding or backup withholding tax before receiving the Gross-Up
Payment.



               (h) Sale or Transfer. If a Lender or Participant claims exemption from, or reduction
of, withholding tax and such Lender, or Participant sells, assigns, grants a participation in, or
otherwise transfers all or part of the Obligations of Loan Parties to such Lender or Participant,
such Lender or Participant agrees to notify the Administrative Agent (or, in the case of a sale of
a participation interest, the Lender granting the participation) of the percentage amount in which
it is no longer the beneficial owner of Obligations of Loan Parties to such Lender or Participant.
To the extent of such percentage amount, the Administrative Agent will treat such Lender’s or such
Participant’s documentation provided pursuant to subsections (e), (f) or (g) of
this Section 3.01 as no longer valid. With respect to such percentage amount, such
Participant or assignee may provide new documentation, pursuant to subsections (e),
(f) or (g) of this Section 3.01, as applicable.



               (i) Indemnification by Lenders/Participants. If the IRS or any other Governmental
Authority of the United States or other jurisdiction asserts a claim that the Administrative Agent
(or, in the case of a Participant, the Lender granting the participation) did not properly withhold
tax from amounts paid to or for the account of any Lender or any Participant due to a failure on
the part of the Lender or any Participant (because the appropriate form was not delivered, was not
properly executed, or because such Lender failed to notify the Administrative Agent (or such
Participant failed to notify the Lender granting the participation) of a change in circumstances
which rendered the exemption from, or reduction of, withholding tax ineffective, or for any other
reason) such Lender shall indemnify and hold the Administrative Agent harmless (or, in the case of
a Participant, such Participant shall indemnify and hold the Lender granting the participation
harmless) for all amounts paid, directly or indirectly, by the Administrative Agent (or, in the
case of a Participant, the Lender granting the participation), as tax or otherwise, including
penalties and interest, and including any taxes imposed by any jurisdiction on the amounts payable
to the Administrative Agent (or, in the case of a Participant, the Lender granting the
participation) under this Section 3.01, together with all costs and expenses (including
attorneys fees and expenses). The obligation of the Lenders and the Participants under this
subsection shall survive the payment of all Obligations and the resignation or replacement of the
Administrative Agent.



               (j) Exemption or Reduction of Taxes. If a Lender or Participant is entitled to a
reduction with respect to any Indemnified Taxes or Other Taxes, the Administrative Agent or the
Borrower (or, in the case of a Participant, the Lender granting the participation) may withhold
from any interest payment to such Lender or Participant an amount equivalent to the applicable
Indemnified Tax or Other Tax after taking into account such reduction. If the forms or other
documentation required by subsection (d), (e), or (f) of this Section
3.01, as applicable, are not delivered to the Administrative Agent or the Borrower (or, in the
case of a Participant, the Lender granting the participation) may withhold from any interest
payment to such Lender or Participant not providing such forms or other documentation an amount
equivalent to the applicable reduction in Indemnified Tax or Other Tax.



               (k) Treatment of Refunds. If the Administrative Agent or any Lender determines, in
its sole discretion, that it has received a refund of any Taxes or Other Taxes as to which it has
been indemnified by the Borrower or with respect to which the Borrower has paid additional amounts
pursuant to this Section 3.01, it shall pay to the Borrower an amount equal to such refund
(but only to the extent of indemnity payments made, or additional amounts paid, by the Borrower
under this Section 3.01 with respect to the Taxes or Other Taxes giving rise to such
refund), net of all out-of-pocket expenses incurred in connection with such refund of the
Administrative Agent or such Lender, as the case may be, and without interest (other than any
interest paid by the relevant Governmental Authority with respect to such refund), provided
that the Borrower, upon the request of the Administrative Agent or such Lender, agree to repay the
amount paid over to the Borrower (plus any penalties, interest or other charges imposed



42









 







by the relevant Governmental Authority, other than such penalties, interest, or other charges
imposed as a result of the willful misconduct or gross negligence of the Administrative Agent
hereunder) to the Administrative Agent or such Lender in the event the Administrative Agent or such
Lender is required to repay such refund to such Governmental Authority. This subsection shall not
be construed to require the Administrative Agent or any Lender to make available its tax returns
(or any other information relating to its taxes that it deems confidential) to the Borrower or any
other Person. Notwithstanding the foregoing, upon the reasonable request of the Borrower, a Lender
or the Administrative Agent as applicable, shall in its sole discretion, exercised in good faith,
use reasonable efforts to cooperate with the Borrower with a view to obtaining a refund of any
Taxes with respect to which the Borrower has paid any Gross-Up Payment pursuant to this Section
3.01 and which the Borrower, reasonably believes were not correctly or legally asserted by the
relevant Governmental Authority.



               (l) As of the date hereof, the Guarantor is treated as a corporation for U.S. federal income
tax purposes.



          3.02 [Reserved].




          3.03 [Reserved].




          3.04 Increased Costs.




               (a) Increased Costs Generally. If any Change in Law shall:




                    (i) impose, modify or deem applicable any reserve, special deposit, compulsory
loan, insurance charge or similar requirement against assets of, deposits with or
for the account of, or credit extended or participated in by, any Lender; or




                    (ii) subject any Lender to any tax of any kind whatsoever with respect to this
Agreement, or change the basis of taxation of payments to such Lender in respect
thereof (in each case, except for taxes imposed by way of withholding or deduction,
Indemnified Taxes, Other Taxes and amounts relating to the foregoing, which shall be
governed solely and exclusively by Section 3.01 and the imposition of, or
any change in the rate of, any Excluded Tax payable by such Lender);


and the result of any of the foregoing shall be to reduce the amount of any sum received or
receivable by such Lender hereunder (whether of principal, interest or any other amount) then, upon
request of such Lender and delivery of the certificate contemplated by Section 3.04(c), the
Borrower will pay to such Lender, within ten (10) days following receipt of such certificate by the
Borrower, such additional amount or amounts as will compensate such Lender for such additional
costs incurred or reduction suffered.




               (b) Capital Requirements. If any Lender determines that any Change in Law affecting
such Lender or any Lending Office of such Lender or such Lender’s holding company, if any,
regarding capital requirements has had, or would have, the effect of reducing the rate of return on
such Lender’s capital or on the capital of such Lender’s holding company, if any, as a consequence
of this Agreement, the Commitments of such Lender or the Loans made by, such Lender, to a level
below that which such Lender or such Lender’s holding company could have achieved but for such
Change in Law (taking into consideration such Lender’s policies and the policies of such Lender’s
holding company with respect to capital adequacy), then from time to time upon delivery of the
certificate contemplated by Section 3.04(c), the Borrower will pay to such Lender or such
Lender’s holding company, as the case may be, within ten (10) days following receipt of such
certificate by the Borrower, such additional amount or



43









 







amounts as will compensate such Lender or such Lender’s holding company, as the case may be,
for any such reduction suffered.



               (c) Certificates for Reimbursement. A certificate of a Lender setting forth the
amount or amounts necessary to compensate such Lender or its holding company, as the case may be,
and the method for calculating such amount or amounts, as specified in subsection (a) or
(b) of this Section and delivered to the Borrower shall be conclusive absent manifest
error. The Borrower shall pay such Lender the amount shown as due on any such certificate within
ten (10) days after receipt thereof.



               (d) Delay in Requests. Failure or delay on the part of any Lender to demand
compensation pursuant to the foregoing provisions of this Section 3.04 shall not constitute
a waiver of such Lender’s right to demand such compensation, provided that the Borrower
shall not be required to compensate a Lender pursuant to the foregoing provisions of this
Section 3.04 for any increased costs incurred or reductions suffered more than six (6)
months prior to the date that such Lender notifies the Borrower of the Change in Law giving rise to
such increased costs or reductions and of such Lender’s intention to claim compensation therefor
(except that, if the Change in Law giving rise to such increased costs or reductions is
retroactive, then the six (6)-month period referred to above shall be extended to include the
period of retroactive effect thereof).



          3.05 [Reserved].




          3.06 Mitigation Obligations; Replacement of Lenders.




               (a) Designation of a Different Lending Office. If any Lender requests compensation
under Section 3.04, or the Borrower is required to pay any additional amount to any Lender
or any Governmental Authority for the account of any Lender pursuant to Section 3.01, then
such Lender shall use reasonable efforts to designate a different Lending Office for funding or
booking its Loans hereunder or to assign its rights and obligations hereunder to another of its
offices, branches or affiliates, if, in the judgment of such Lender, such designation or assignment
(i) would eliminate or reduce amounts payable pursuant to Section 3.01 or Section
3.04, as the case may be, in the future, and (ii) in each case, would not subject such Lender
to any unreimbursed cost or expense and would not otherwise be disadvantageous to such Lender, it
being understood that the Borrower shall be given a reasonable opportunity to agree to reimburse
such costs, and/or expenses.



               (b) Replacement of Lenders. If any Lender requests compensation under Section
3.04, or if the Borrower is required to pay any additional amount to any Lender or any
Governmental Authority for the account of any Lender pursuant to Section 3.01, the Borrower
may replace such Lender in accordance with Section 10.13.



          3.07 Survival. All of the Borrower’s obligations under this Article III shall survive
repayment of all other Obligations hereunder.




ARTICLE IV




CONDITIONS PRECEDENT TO LOANS




          4.01 Conditions of Loans. The obligation of each Lender to make its Loan hereunder is
subject to satisfaction of the following conditions precedent:




               (a) The Administrative Agent’s receipt of the following, each of which shall be originals or
telecopies or other electronic image scan transmission (e.g., “pdf” or “tif” via e-mail)




44












 




(followed promptly by originals) unless otherwise specified, and each properly executed by a
Responsible Officer of the signing Loan Party (if applicable):





               (i) executed counterparts of this Agreement;




               (ii) a Note executed by the Borrower in favor of each Lender that has requested
a Note at least two (2) Business Days in advance of the Closing Date;




               (iii) such certificates of resolutions or other action, incumbency certificates
and/or other certificates of Responsible Officers of each Loan Party evidencing (A)
the authority of each Loan Party to enter into this Agreement and the other Loan
Documents to which such Loan Party is a party (including approvals by the board of
directors or similar governing body of each Loan Party) and (B) the identity,
authority and capacity of each Responsible Officer thereof authorized to act as a
Responsible Officer in connection with this Agreement and the other Loan Documents
to which such Loan Party is a party;




               (iv) copies of each Loan Party’s Organization Documents and a certificate of
good standing (where applicable, or such other customary functionally equivalent
certificates or abstracts, to the extent available in the applicable jurisdiction)
of such Loan Party’s jurisdiction of organization;




               (v) a favorable opinion of (A) Skadden, Arps, Slate, Meagher & Flom LLP,
special counsel to the Loan Parties, addressed to the Administrative Agent and each
Lender, as to customary matters relating to the Loan Documents as the Administrative
Agent may reasonably request, (B) AMMC Law, special Luxembourg counsel to the Loan
Parties, addressed to the Administrative Agent and each Lender, as to customary
matters relating to the Luxembourg Pledge Agreement as the Administrative Agent may
reasonably request, and (C) General Counsel of Quiksilver, Inc., as to (x) the due
execution and authorization and enforceability of the Side Agreement and Services
Fee Agreement and (y) the absence of a conflict with Material Indebtedness of the
Loan Parties other than the Senior Notes Indenture, the ABL Credit Agreement and the
Euro Term Loan Credit Agreement;




               (vi) a certificate signed by a Responsible Officer of the Borrower, certifying
that, as of the Closing Date after giving effect to the transactions contemplated
hereby, the Borrower and its Subsidiaries on a consolidated basis are Solvent;




               (vii) a payoff letter from the agent for the lenders under the Existing Credit
Agreement in customary form, evidencing that the Existing Credit Agreement has been,
or concurrently with the Closing Date is being, terminated, all obligations
thereunder are being paid in full, and all Liens securing obligations under the
Existing Credit Agreement have been, or concurrently with the Closing Date are
being, released;




               (viii) all Uniform Commercial Code financing statements required by Law to
create or perfect the Liens intended to be created under the Loan Documents, in form
for filing, and an executed copy of the shareholders’ register of the European
Borrower evidencing the inscription of the pledge made pursuant to the Luxembourg
Pledge Agreement;



45









 






               (ix) the Security Documents set forth on Schedule 4.01(a)(ix) hereto,
and certificates (if applicable) evidencing any stock being pledged under the Pledge
Agreements on the Closing Date, together with undated stock powers executed in
blank, each duly executed by the applicable Loan Parties;




               (x) all other Loan Documents set forth on Schedule 4.01(a)(x) hereto,
each duly executed by the applicable Loan Parties;




               (xi) certificate of Responsible Officers of the Borrower and the Parent
confirming that borrowing, guaranteeing or securing, as appropriate, the Obligations
in the manner contemplated by this Agreement and the other Loan Documents executed
on the Closing Date does not cause any borrowing, guarantee, security or similar
limit binding on any Loan Party to be exceeded;




               (xii) an executed copy of the Services Fee Agreements and the Side Agreement,
in each case in form and substance reasonably acceptable to the Administrative
Agent; and




               (xiii) results of searches or other evidence reasonably satisfactory to the
Administrative Agent (in each case dated as of a date reasonably close to the
Closing Date) indicating the absence of Liens on the assets of the Loan Parties,
except for Permitted Encumbrances and Liens for which termination statements and
releases are being tendered concurrently with such extension of credit or other
arrangements reasonably satisfactory to the Administrative Agent for the delivery of
such termination statements and releases have been made.



               (b) [reserved]



               (c) The Borrower or any Subsidiary shall have entered into (i) the Euro Term Loan Agreement
and received, or substantially simultaneously with the borrowing under this Agreement shall
receive, gross proceeds of the Euro Term Loans in a minimum amount of €20,000,000, and (ii) the
ABL Credit Agreement shall have been executed on terms and conditions substantially the same as
those set forth in the term sheet attached to the Commitment Letter, dated as of June 8, 2009 and
as amended as of June 24, 2009 (with such changes as the Administrative Agent shall reasonably
agree), by and among Bank of America, N.A., Bank of America Securities LLC, General Electric
Capital Corporation, GE Capital Markets, Inc., Parent and the Borrower and become effective
substantially simultaneously with the borrowing under this Agreement.



               (d) The conditions precedent set forth on Part I of Schedule 2 of the French Credit Agreement
shall have been satisfied (or waived by the Agent (as defined in the French Credit Agreement)).



               (e) (i) The Administrative Agent, the Euro Term Loan Agent, the Collateral Agent and the ABL
Agent shall have entered into the ABL Intercreditor Agreement and (ii) the Administrative Agent,
the Euro Term Loan Agent and the Collateral Agent shall have entered into the Term Loan
Intercreditor Agreement, in each case on terms reasonably satisfactory to the Administrative Agent.



               (f) There shall exist no action, suit, investigation, litigation or proceeding pending or, to
the knowledge of the Borrower or the Parent, threatened that (i) would reasonably be expected to
(A) have a material adverse effect on the business, assets, operations, properties, performance



46









 




or condition (financial or otherwise) of the Parent and its subsidiaries, taken as a whole, or
of the Borrower and its subsidiaries, taken as a whole, (B) adversely affect the ability of the
Loan Parties to perform their obligations under the Loan Documents in any material respect, or (C)
adversely affect the rights and remedies of the Administrative Agent and the Lenders under the Loan
Documents in any material respect; or (ii) purports to adversely affect in any material respect the
financing of the Loans or prevent the anticipated use of the proceeds thereof.




               (g) Since January 31, 2009, there shall not have been any event or occurrence that, either
individually or in the aggregate, has had or would reasonably be expected to have a material
adverse effect on the business, assets, operations, properties, performance or condition (financial
or otherwise) of the Parent and its Subsidiaries, taken as a whole, or the Borrower and its
Subsidiaries, taken as a whole.



               (h) The Administrative Agent shall have received a copy of the final legal and tax structure
memorandum from Skadden Arps Slate Meagher & Flom LLP and shall have determined that any material
differences between such final legal and tax structure memorandum as compared to the prior version
delivered to the Administrative Agent, with respect to settlement of intercompany payables that
have an impact on the liquidity of the Loan Parties, are reasonably acceptable to it, and, to the
extent the memorandum contemplates such settlement prior to the Closing Date, the Parent and its
Subsidiaries shall have taken such steps as are reasonably necessary to settle the intercompany
payables (other than trade payables incurred in the ordinary course of business) to the extent, in
the manner and on the timing set forth in such memorandum (and the Administrative Agent shall have
received a certification as to such steps having been taken by a Responsible Officer of the
Parent).



               (i) The Parent, pursuant to an agreement reasonably acceptable to the Administrative Agent,
shall have assigned to the Borrower all trademarks, service marks, trade names and logos related to
“QUIKSILVER” and “ROXY” (including the applications and registrations with respect thereto and all
goodwill connected with the use thereof and symbolized thereby) owned by the Parent in the United
States and Mexico.



               (j) The Administrative Agent shall have received copies of all material documents and
agreements executed by the Loan Parties pursuant to the Warrant Agreement with respect to the
Warrants, each in form and substance reasonably acceptable to the Administrative Agent, and the
Parent shall have (x) issued the Warrants to Romolo Holdings C.V., Triton SPV L.P., Triton Onshore
SPV L.P., Triton Offshore SPV L.P. and Triton Coinvestment SPV L.P., and (y) reserved authorized
and unissued shares of common stock of Parent in an amount sufficient to satisfy the full exercise
of the Warrants.



               (k) The board of directors of the Parent shall have granted all necessary approvals under the
Parent’s Organization Documents and Delaware General Corporation Law with respect to the
acquisition and exercise of the Warrants.



               (l) The number of directors on the Board of Directors of the Parent shall have been increased
by two and the newly created directorships shall have been filled by nominees of each of Triton
Onshore SPV L.P. and Triton Coinvestment SPV L.P.



               (m) The board of directors of the Parent shall have adopted an equity incentive plan for
members of current management and future hires, on terms reasonably acceptable to Administrative
Agent.



47









 





               (n) All necessary governmental and material third party consents and approvals to the
transactions contemplated by this Agreement to occur on the Closing Date shall have been obtained.



               (o) All fees and expenses required to be paid by the Borrower to any of the Administrative
Agent or the Arranger on or before the Closing Date shall have been paid in full, and all fees and
expenses required to be paid by the Borrower to the Lenders on or before the Closing Date shall
have been paid in full.



               (p) The Administrative Agent shall have concluded any legally-required background checks and
other investigations to ensure compliance with the Patriot Act and anti-money laundering laws.



               (q) The representations and warranties of the Borrower and each other Loan Party contained in
Article V or any other Loan Document shall be true and correct in all material respects on
and as of the Closing Date, except to the extent that such representations and warranties
specifically refer to an earlier date, in which case they shall be true and correct in all material
respects as of such earlier date, and the Administrative Agent shall have received a certification
thereof by a Responsible Officer of the Borrower.



               (r) No Default shall exist, or would result from the Loans or from the application of the
proceeds thereof, and the Administrative Agent shall have received a certification thereof by a
Responsible Officer of the Borrower.



               (s) The Administrative Agent shall have received a Loan Notice in accordance with the
requirements hereof.



               (t) Since June 8, 2009, there shall have been no material changes in governmental regulations
or policies affecting Parent or its Subsidiaries, the Borrower and its Subsidiaries or the Credit
Parties.



               (u) The Parent or its Subsidiaries shall not be a party to any binding agreement to dispose of
Collateral (including the DC Shoes Business) outside of the ordinary course of business.



               (v) The Parent shall have, and shall have caused its applicable Subsidiaries to, (i)
effectuate the creation of the European Borrower and 54th Street, (ii) cause the transfer of Equity
Interests in QS Holdings to the European Borrower, (iii) cause the transfer of Equity Interests in
Quiksilver Deluxe S.à r.l. previously held by QS Holdings to 54th Street, (iv) cause the transfer
of Equity Interests previously held by QS Holdings in Quiksilver Brazil to 54th Street and (v)
cause QS Holdings to assign to 54th Street all trademarks, service marks, trade names and logos
related to “QUIKSILVER” and “ROXY” (including the applications and registrations with respect
thereto and all goodwill connected with the use thereof and symbolized thereby) owned by QS
Holdings in Antigua, Argentina, Aruba, Bahamas, Barbados, Belize, Bermuda, Bolivia, Brazil, Canada,
Chile, Colombia, Costa Rica, Cuba, Dominican Republic, Ecuador, El Salvador, Grenada, Guatemala,
Guyana, Haiti, Honduras, Jamaica, Netherlands Antilles, Nicaragua, Panama, Paraguay, Peru, St.
Kitts & Nevis, St. Lucia, Suriname, Trinidad, Uruguay, and Venezuela, in each case free and clear
of all Liens other than Permitted Encumbrances.



               (w) On or prior to July 31, 2009, each of the lenders under the Pilot Facility Agreement (as
defined in the French Credit Agreement) shall have executed an amendment to the Pilot Facility
Agreement, in form and substance reasonably satisfactory to the Administrative Agent, extending



48









 







the maturity of the Pilot Facility Agreement to a date not earlier than September 29, 2009 and
including a waiver permitting the pledge by QS Holdings of all of its shares of 54th Street in
support of the obligations under the Euro Term Loan Credit Agreement.



               (x) On or prior to July 31, 2009, QS Holdings shall have been released from, and Biarritz
Holdings S.à r.l shall have assumed, any and all indebtedness owed by QS Holdings to Pilot SAS and
Q.S. Finance S.A.



ARTICLE V




REPRESENTATIONS AND WARRANTIES




          To induce the Credit Parties to enter into this Agreement and to make Loans hereunder, each of
the Parent and the Borrower represents and warrants to the Administrative Agent and the Lenders
that:




          5.01 Existence, Qualification and Power. Each Loan Party and the European Borrower (a) is
a corporation, limited liability company, private limited liability company, partnership or limited
partnership, duly organized or formed, validly existing and, where applicable, in good standing
under the Laws of the jurisdiction of its incorporation or organization, (b) has all requisite
power and authority and all requisite governmental licenses, permits, authorizations, consents and
approvals to (i) own or lease its assets and carry on its business and (ii) execute, deliver and
perform its obligations under the Loan Documents to which it is a party, and (c) is duly qualified
and is licensed and, where applicable, in good standing under the Laws of each jurisdiction where
its ownership, lease or operation of properties or the conduct of its business requires such
qualification or license; except in each case referred to in clause (b)(i) or (c), to the extent
that failure to do so would not reasonably be expected to have a Material Adverse Effect. The
European Borrower (x) has its “centre of main interests” (within the meaning of European Council
Regulation (EC) No. 1346/2000 of May 29, 2000 on insolvency proceedings (the “EC Insolvency
Regulation”)) in Luxembourg and (y) has no “establishment” (as such term is used in the EC
Insolvency Regulation) outside the Grand-Duchy of Luxembourg. 54th Street has its “centre of main
interests” (within the meaning of the EC Insolvency Regulation) in Luxembourg. Schedule
5.01 annexed hereto sets forth, in each case as of the Closing Date, each Loan Party’s name as
it appears in official filings in its state of organization, its state of organization,
organization type, organization number, if any, issued by its state of organization, and its
federal employer identification number.




          5.02 Authorization; No Contravention. The execution, delivery and performance by each Loan
Party of each Loan Document to which such Person is a party has been duly authorized by all
necessary corporate or other organizational action, and does not and will not (a) contravene the
terms of any of such Person’s Organization Documents; (b) conflict with or result in any breach,
termination, or contravention of, or constitute a default under, or require any payment to be made
under or permit any holder thereof to accelerate or require the repurchase of, (i) any Material
Indebtedness to which such Person is a party in a manner which would reasonably be expected to
result in a Material Adverse Effect or (ii) any order, injunction, writ or decree of any
Governmental Authority or any arbitral award to which such Person or its property is subject in a
manner which would reasonably be expected to result in a Material Adverse Effect; (c) result in or
require the creation of any Lien upon any asset of any Loan Party (other than Liens under the
Security Documents and other Permitted Encumbrances); or (d) violate any Law in a manner which
would reasonably be expected to result in a Material Adverse Effect.




          5.03 Governmental Authorization; Other Consents. No approval, consent, exemption,
authorization, or other action by, or notice to, or filing with, any Governmental Authority or any
other Person is necessary or required in connection with the execution, delivery or performance by,
or




49









 




enforcement against, any Loan Party of this Agreement or any other Loan Document, except for (a)
the perfection or maintenance of the Liens created under the Security Documents, (b) such as have
been obtained or made and are in full force and effect, and (c) those approvals, consents,
exemptions, authorizations or other actions, notices or filings, the failure of which to obtain or
make would not reasonably be expected to have a Material Adverse Effect.




          5.04 Binding Effect. This Agreement has been, and each other Loan Document, when
delivered, will have been, duly executed and delivered by each Loan Party that is party thereto.
This Agreement constitutes, and each other Loan Document when so delivered will constitute, a
legal, valid and binding obligation of such Loan Party, enforceable against each Loan Party that is
party thereto 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.




          5.05 Financial Statements; No Material Adverse Effect.




               (a) The Audited Financial Statements (i) were prepared in accordance with GAAP consistently
applied throughout the period covered thereby, except as otherwise expressly noted therein; and
(ii) fairly present in all material respects the financial condition of the Parent and its
Subsidiaries as of the date thereof and their results of operations for the period covered thereby
in accordance with GAAP consistently applied throughout the period covered thereby, except as
otherwise expressly noted therein.



               (b) The unaudited Consolidated balance sheet of the Parent and its Subsidiaries dated April
30, 2009, and the related Consolidated statements of income or operations and cash flows for the
Fiscal Quarter ended on that date (i) were prepared in accordance with GAAP consistently applied
throughout the period covered thereby, except as otherwise expressly noted therein, and (ii) fairly
present the financial condition of the Parent and its Subsidiaries as of the date thereof and their
results of operations for the period covered thereby, subject to the absence of footnotes and to
normal year-end audit adjustments.



               (c) Since January 31, 2009, there has been no event or circumstance, either individually or in
the aggregate, that has had or would reasonably be expected to have a material adverse effect on
the business, assets, operations, properties, performance or condition (financial or otherwise) of
the Parent and its Subsidiaries, taken as a whole, or the Borrower and its Subsidiaries, taken as a
whole.



               (d) The Consolidated forecasted balance sheet and statements of income and cash flows of the
Parent and its Subsidiaries delivered to the Administrative Agent prior to the Closing Date were
prepared in good faith on the basis of the assumptions stated therein, which assumptions were fair
in light of the conditions existing at the time of delivery of such forecasts, and represented, at
the time of delivery, the Loan Parties’ reasonable estimate of their future financial performance
(it being understood that such forecasted financial information is subject to significant
uncertainties and contingencies, many of which are beyond the control of the Loan Parties, that no
assurance is given that any particular forecasts will be realized, that actual results may differ
and that such differences may be material).



               (e) Except as disclosed in the notes to the Consolidated financial statements of Parent and
Subsidiaries as of, and for the 12 months ended, October 31, 2008 as filed with the SEC, or as
disclosed in any filing by Parent with the SEC under the Securities Exchange Act of 1934 since
October 31, 2008 or as set forth on Schedule 5.05, and except for liabilities incurred in
the ordinary course of business since April 30, 2009, there are no liabilities or obligations with
respect to the Parent or any of its



50









 




Subsidiaries of any nature whatsoever (whether absolute, accrued, contingent or otherwise and
whether or not due) which, either individually or in the aggregate, are material to the Parent and
its Subsidiaries, taken as a whole, or to the Borrower and its Subsidiaries, taken as a whole.




          5.06 [Reserved]. 




          5.07 [Reserved]. 




          5.08 Ownership of Property; Liens. Each of the Loan Parties has good record and marketable
title in fee simple to or valid leasehold interests in, all real property necessary or used in the
ordinary conduct of its business, except for such defects in title as would not, individually or in
the aggregate, reasonably be expected to have a Material Adverse Effect or where failure to have
such title or other interest would not, individually or in the aggregate, reasonably be expected to
have a Material Adverse Effect. Each of the Loan Parties has good title to, valid leasehold
interests in, or valid licenses to use all personal property and assets necessary for or used in
the conduct of its business, except where failure to have such title, interest or license would
not, individually or in the aggregate, reasonably be expected to have a Material Adverse Effect.
The property of each Loan Party is subject to no Liens, other than Permitted Encumbrances.




          5.09 [Reserved]. 




          5.10 [Reserved]. 




          5.11 Taxes. Except, in each case, as would not reasonably be expected to result in a
Material Adverse Effect, the Loan Parties have filed all Federal, state and other tax returns and
reports required to be filed, and have paid all Federal, state and other taxes, assessments, fees
and other governmental charges levied or imposed upon them or their properties, income or assets
otherwise due and payable; provided that no Loan Party need pay any such tax or assessment if such
amount is being contested in good faith by appropriate proceedings, for which adequate reserves
have been provided in accordance with GAAP.




          5.12 ERISA Compliance.




               (a) Except, in each case, as would not reasonably be expected to result in a Material Adverse
Effect: (i) each Plan is in compliance with the applicable provisions of ERISA, the Code and other
Federal or state Laws; (ii) each Plan that is intended to qualify under Section 401(a) of the Code
has received a favorable determination letter from the IRS or an application for such a letter is
currently being processed by the IRS with respect thereto and, to the knowledge of the Loan
Parties, nothing has occurred which would prevent, or cause the loss of, such qualification; (iii)
the Loan Parties and each ERISA Affiliate have made all required contributions to each Plan subject
to Section 412 of the Code, and no application for a funding waiver or an extension of any
amortization period pursuant to Section 412 of the Code has been made with respect to any Plan;
(iv) no Lien imposed under the Code or ERISA exists or is likely to arise on account of any Plan;
(v) there exists no accumulated funding deficiency with respect to any Plan, whether or not waived,
within the meaning of Section 412 of the Code or Section 302 of ERISA; and (vi) no Loan Party has
failed to make any contribution or payment to any Plan, or made any amendment to any Plan, which
has resulted, or could reasonably be expected to result, in the imposition of a Lien or the posting
of a bond or other security under Section 302(f) of ERISA or Section 401(a)(29) of the Code.



               (b) There has been no prohibited transaction or violation of the fiduciary responsibility
rules with respect to any Plan that has resulted or would reasonably be expected to result in



51









 







a Material Adverse Effect. As of the date hereof, there is no pending or, to the knowledge of
the Loan Parties threatened, litigation or governmental investigations or proceedings relating to
the Plans, which, either individually or in the aggregate, would reasonably be expected to have a
Material Adverse Effect



               (c) Except as would not reasonably be expected to result in a Material Adverse Effect: (i) no
ERISA Event has occurred or is reasonably expected to occur; (ii) no Pension Plan has any Unfunded
Pension Liability; (iii) neither any Loan Party nor any ERISA Affiliate has incurred, or reasonably
expects to incur, any liability under Title IV of ERISA with respect to any Pension Plan (other
than premiums due and not delinquent under Section 4007 of ERISA); (iv) neither any Loan Party nor
any ERISA Affiliate has incurred, or reasonably expects to incur, any liability (and no event has
occurred which, with the giving of notice under Section 4219 of ERISA, would result in such
liability) under Sections 4201 or 4243 of ERISA with respect to a Multiemployer Plan; and (v)
neither any Loan Party nor any ERISA Affiliate has engaged in a transaction that could be subject
to Sections 4069 or 4212(c) of ERISA.



          5.13 [Reserved].




          5.14 Disclosure. No (i) financial statement, certificate or other factual written
information (excluding projections, forward-looking information and information of a general
economic or general industry nature) furnished by or on behalf of any Loan Party to the
Administrative Agent or any Lender in connection with the transactions contemplated hereby and the
negotiation of this Agreement or delivered hereunder or under any other Loan Document (in each
case, as modified or supplemented by other information so furnished, and taken as a whole) or (ii)
filing by the Parent under the Securities Exchange Act of 1934 at any time since January 1, 2006
contains any material misstatement of fact or omits to state any fact necessary to make the
statements therein, in the light of the circumstances under which they were made, not materially
misleading; provided that, with respect to projected financial information, the Loan Parties
represent only that such information was prepared in good faith based upon assumptions believed to
be reasonable at the time (it being understood that such projected financial information is subject
to significant uncertainties and contingencies, many of which are beyond the control of the Loan
Parties, that no assurance is given that any particular projections will be realized, that actual
results may differ and that such differences may be material).




          5.15 Compliance with Laws. Each of the Loan Parties is in compliance with the requirements
of all Laws and all orders, writs, injunctions and decrees applicable to it or to its properties,
except in such instances in which (a) such requirement of Law or order, writ, injunction or decree
is being contested in good faith by appropriate proceedings diligently conducted or (b) the failure
to comply therewith, either individually or in the aggregate, would not reasonably be expected to
have a Material Adverse Effect. None of the Loan Parties or, to the knowledge of the Loan Parties,
none of any director, officer, agent or employee of the Loan Parties is currently subject to any
U.S. sanctions administered by OFAC or appears on the OFAC List.




          5.16 Compliance with Sarbanes-Oxley Act. Each of the Loan Parties is in compliance with
the requirements of the Sarbanes-Oxley Act of 2002 (including, without limitation, Section 402
thereof), except in such instances in which (a) such requirement is being contested in good faith
by appropriate proceedings diligently conducted or (b) the failure to comply therewith, either
individually or in the aggregate, would not reasonably be expected to have a Material Adverse
Effect.




          5.17 Intellectual Property. Except, in each case, as would not reasonably be expected to
have a Material Adverse Effect: (a) the Loan Parties own, or possess sufficient rights to use, all
of the Intellectual Property that is necessary for or used in the operation of their respective
businesses as currently conducted, without, to the knowledge of the Borrower, violation of the
rights of any other




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Person, (b) none of the Intellectual Property owned by a Loan Party is subject to any outstanding
order, judgment, award or decree limiting or adversely affecting such Loan Party’s use thereof or
rights thereto in connection with its business as currently conducted and, to the knowledge of the
Borrower, all of the rights of the Loan Parties in and to such Intellectual Property are valid and
enforceable and all such Intellectual Property that is registered or issued is subsisting, and (c)
to the knowledge of the Borrower (i) the conduct of such Loan Party’s business does not infringe
upon, dilute, misappropriate or otherwise violate any rights held by any other Person, and (ii) no
other Person is infringing upon, diluting, misappropriating or otherwise violating any Intellectual
Property of the Loan Parties. The Intellectual Property owned by each Loan Party is not subject to
any Liens, other than Permitted Encumbrances. No claim, litigation, arbitration, opposition,
cancellation or other proceeding against any Loan Party concerning the ownership, validity,
registerability, enforceability, infringement, dilution, misappropriation or other violation of the
use of or the licensed right to use any Intellectual Property is pending or, to the knowledge of
the Borrower, threatened, which, either individually or in the aggregate, would reasonably be
expected to have a Material Adverse Effect.




          5.18 Labor Matters. Except, in each case, as would not reasonably be expected to have a
Material Adverse Effect: (a) there are no strikes, lockouts, slowdowns or other labor disputes
against any Loan Party pending or, to the knowledge of any Loan Party, threatened; and (b) and the
Parent’s Subsidiaries have complied with all obligations to consult with their workers’ counsels in
connection with the transactions contemplated to occur on or before the Closing Date.




          5.19 Security Documents.




               (a) The Security Agreement creates in favor of the Collateral Agent, for the benefit of the
Administrative Agent and the other Credit Parties, a valid and enforceable security interest in the
Collateral (as defined in the Security Agreement); the Intellectual Property Security Agreement
creates in favor of the Collateral Agent, for the benefit of the Administrative Agent and the other
Credit Parties, a valid and enforceable security interest in the IP Collateral (as defined in the
Intellectual Property Security Agreement); and the Luxembourg Pledge Agreement creates in favor of
the Administrative Agent, for the benefit of the Credit Parties, a valid and enforceable security
interest in the Shares (as defined in the Luxembourg Pledge Agreement), in each case the
enforceability of which is 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. The UCC financing statements
and other filings delivered by the Loan Parties on the Closing Date are in appropriate form for
filing in the applicable offices. Upon such filings and/or the obtaining of “control” (as such
term is defined in the UCC) to the extent required by the Loan Documents (and, in the case of
Intellectual Property that is issued by, or registered or applied for in, the United States Patent
and Trademark Office or the United States Copyright Office and constituting IP Collateral, the
filing and recordation of the Patent Security Agreement and the Trademark Security Agreement with
the United States Patent and Trademark Office and the Copyright Security Agreement with the United
States Copyright Office and the taking of any actions and the filing and recording of any documents
necessary to perfect the security interest in the IP Collateral in Canada and Luxembourg (including
with respect to IP Collateral registered or pending in the Benelux Office of Intellectual
Property), the Collateral Agent will have a perfected Lien on, and security interest in, to and
under all right, title and interest of the grantors thereunder in all Collateral that may be
perfected in the United States, Canada and Luxembourg (including with respect to IP Collateral
registered or pending in the Benelux Office of Intellectual Property) by filing, recording or
registering a financing statement or analogous document (including without limitation the proceeds
of such Collateral subject to the limitations relating to such proceeds in the UCC) (it being
understood that subsequent recordings in the United States Patent and Trademark Office and the
United States Copyright Office (and the applicable offices or registries in Canada and Luxembourg,
including the Benelux Office of Intellectual Property)



53









 







may be necessary to perfect a Lien on registered trademarks, trademark applications, patents,
patent applications and copyrights acquired by the Loan Parties after the date hereof). Upon entry
of the Pledge (as defined in the Luxembourg Pledge Agreement) in the register of the shareholders
of the European Borrower as set forth in the Luxembourg Pledge Agreement, the Administrative Agent
will have a perfected pledge of, and first-priority security interest in, the Shares (as defined in
the Luxembourg Pledge Agreement). Such Lien and security interest will be prior to any other Lien
on any of the Collateral, except in the case of Permitted Encumbrances.



               (b) Notwithstanding anything to the contrary herein, the Loan Parties shall have no obligation
to perfect Liens in the IP Collateral or any other Intellectual Property in any jurisdiction other
than the United States, Canada or Luxembourg.



          5.20 Environmental Matters. Except as would not reasonably be expected to have a Material
Adverse Effect, as of the Closing Date: (a) there are no Hazardous Materials or underground storage
tanks in, on, or under any property of any Parent or any of its Subsidiaries, except those that are
in compliance with all Environmental Laws and with permits issued pursuant thereto; (b) there are
no outstanding releases of Hazardous Materials in, on, under or from any property of the Parent or
any of its Subsidiaries in violation of applicable Environmental Law; (c) there is no violation of
Environmental Laws, or with permits issued pursuant thereto by Parent or any of its Subsidiaries
which has not been fully resolved; (d) none of the Parent or any of its Subsidiaries has received
any written notice that remains outstanding from any Person (including but not limited to a
Governmental Authority) alleging liability of the Parent or any of its Subsidiaries under any
Environmental Law.




          5.21 Absence of Insolvency Proceedings. As of the Closing Date, neither the Parent nor any
of its Subsidiaries has instituted or consented to the institution of any proceeding under any
Debtor Relief Law, and no proceeding under any Debtor Relief Law relating to it or to all or any
material part of its property has been instituted without its consent.




          5.22 Capitalization. Schedule 5.22 sets forth, as of the Closing Date (after
giving effect to the transactions to occur on the Closing Date), (a) the ownership of the Borrower
and each Guarantor (other than the Parent), after giving effect to the transactions contemplated
hereby and (b) the number of all (i) authorized shares of common stock of the Parent, (ii)
outstanding shares of common stock of the Parent, (iii) authorized and unissued shares of common
stock of Parent reserved for issuance, and (iv) warrants, rights, options and convertible or
exchangeable securities of the Parent outstanding (and the number of shares of common stock of the
Parent into which or for which such items are exercisable, convertible or exchangeable).




          5.23 No Amendment to Services Fee Agreements. No provision of either Services Fee
Agreement has been amended, modified or waived in a manner materially adverse to the Credit
Parties.




          5.24 Compliance with Money Laundering Laws. The operations of the Loan Parties are
conducted in compliance in all material respects with applicable financial recordkeeping and
reporting requirements of the money laundering statutes of all jurisdictions in which any of them
operate, the rules and regulations thereunder and any related or similar rules, regulations or
guidelines, issued, administered or enforced by any governmental agency (collectively, the
“Money Laundering Laws”) and no action, suit or proceeding by or before any court or
governmental agency, authority or body or any arbitrator involving any Loan Party with respect to
the Money Laundering Laws which would be expected to have a Material Adverse Effect is pending or,
to the best knowledge of the Loan Parties, threatened.




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          5.25 No Default. As of the Closing Date, none of the Parent or any of its Subsidiaries
will be in material default under any Indebtedness.




ARTICLE VI




AFFIRMATIVE COVENANTS




          So long as any Lender shall have any Commitment hereunder, any Loan or other Obligation
hereunder shall remain unpaid or unsatisfied (other than contingent obligations for which a claim
has not then been asserted), the Loan Parties shall:




          6.01 Financial Statements. Deliver to the Administrative Agent (for distribution to each
Lender):




               (a) within ninety (90) days after the end of each Fiscal Year of the Parent, (i) a
Consolidated balance sheet of the Parent and its Subsidiaries as at the end of such Fiscal Year,
and the related Consolidated statements of income or operations and cash flows for such Fiscal
Year, setting forth in each case in comparative form the figures for the previous Fiscal Year, all
prepared in accordance with GAAP, such Consolidated statements to be audited and accompanied by a
report and opinion of a Registered Public Accounting Firm of nationally recognized standing or
otherwise reasonably acceptable to the Administrative Agent, which report and opinion shall be
prepared in accordance with generally accepted auditing standards and shall not be subject to any
“going concern” or like qualification or exception or any qualification or exception as to the
scope of such audit; and (ii) an Americas Consolidated and consolidating balance sheet of the
Parent and the Americas Subsidiaries as at the end of such Fiscal Year, and the related Americas
Consolidated and consolidating statements of income or operations of the Parent and the Americas
Subsidiaries and Americas Consolidated cash flows for such Fiscal Year, setting forth in each case
in comparative form the figures for the previous Fiscal Year (to the extent available), such
consolidating statements to be certified by a Responsible Officer of the Borrower or the Parent to
the effect that such statements are fairly stated in all material respects;



               (b) within forty-five (45) days after the end of each of the first three Fiscal Quarters of
each Fiscal Year of the Parent, (i) a Consolidated balance sheet of the Parent and its Subsidiaries
as at the end of such Fiscal Quarter, and the related Consolidated statements of income or
operations and cash flows for such Fiscal Quarter and for the portion of the Parent’s Fiscal Year
then ended, setting forth in each case in comparative form the figures for (A) such period set
forth in the projections delivered pursuant to Section 6.01(d) hereof (if applicable), (B)
the corresponding Fiscal Quarter of the previous Fiscal Year and (C) the corresponding portion of
the previous Fiscal Year, such Consolidated statements to be certified by a Responsible Officer of
the Parent or the Borrower as fairly presenting the financial condition, results of operations and
cash flows of the Parent and its Subsidiaries as of the end of such Fiscal Quarter in accordance
with GAAP, subject only to normal year-end audit adjustments and the absence of footnotes; and (ii)
an Americas Consolidated and consolidating balance sheet of the Parent and the Americas
Subsidiaries as at the end of such Fiscal Quarter, and the related Americas Consolidated and
consolidating statements of income or operations of the Parent and the Americas Subsidiaries and an
Americas Consolidated cash flows for such Fiscal Quarter and for the portion of the Parent’s Fiscal
Year then ended, setting forth in each case in comparative form the figures for (A) such period set
forth in the projections delivered pursuant to Section 6.01(d) hereof (to the extent
available), (B) the corresponding Fiscal Quarter of the previous Fiscal Year (to the extent
available) and (C) the corresponding portion of the previous Fiscal Year (to the extent available),
such Americas Consolidated statements to be certified by a Responsible Officer of the Borrower or
the Parent as fairly presenting in all material respects the financial condition, results of
operations and cash flows of the Parent and the Americas Subsidiaries as of the end of such Fiscal
Quarter;



55









 





               (c) within thirty (30) days after the end of each of the first two Fiscal Months of each
Fiscal Quarter of the Parent (commencing with the first such Fiscal Month which occurs after the
first full six (6) months following the Closing Date), a financial report for the immediately
preceding Fiscal Month in a format reasonably satisfactory to the Administrative Agent;



               (d) as soon as available and in any event no later than fifteen (15) days prior to the end of
the Fiscal Year ending on October 31, 2009, and no later than within forty-five (45) days prior to
the end of each Fiscal Year thereafter, a copy of the approved annual budget of the Parent and its
Subsidiaries for the immediately following Fiscal Year;



               (e) on Friday of any week during which Domestic Availability is less than $30,000,000, a
thirteen (13)-week cash flow forecast (it being agreed that for all purposes of this Section
6.01(e), if the Friday on which a report is due is not a Business Day, then such report shall
be required to be delivered no later than the immediately succeeding Business Day); and



               (f) (i) copies of any reports and other written information delivered to the administrative
agent under the ABL Credit Agreement and any agent under the French Credit Agreement and (ii) upon
the request of the Administrative Agent, to the lenders or their respective agents under the credit
facilities of certain Subsidiaries of the Parent organized in Japan and Australia.



          6.02 Certificates; Other Information. Deliver to the Administrative Agent (for
distribution to each Lender):




               (a) concurrently with the delivery of the financial statements referred to in Sections
6.01(a) and (b), a duly completed Compliance Certificate signed by a Responsible
Officer of the Borrower or the Parent;



               (b) promptly upon receipt, copies of any detailed audit reports or management letters
submitted to the board of directors (or the audit committee of the board of directors) of any Loan
Party by its Registered Public Accounting Firm in connection with any annual or interim audit of
any of them;



               (c) promptly after the same are available, copies of each financial statement or other report
which any Loan Party files with the SEC and in any case not otherwise required to be delivered to
the Administrative Agent pursuant hereto



               (d) within the time periods required by the Intellectual Property Security Agreement, such
notifications as are required pursuant to the provisions of the Intellectual Property Security
Agreement; and



               (e) promptly, such additional information regarding the financial condition or operations of
any Loan Party or any Subsidiary as the Administrative Agent or any Lender (through the
Administrative Agent) may from time to time reasonably request.


Documents required to be delivered pursuant to Section 6.01(a) or (b), or
Section 6.02(c) (to the extent any such documents are included in materials otherwise filed
with the SEC) may be delivered electronically and if so delivered, shall be deemed to have been
delivered on the date (i) on which the Parent posts such documents, or provides a link thereto on
the Parent’s website on the Internet at the website address listed on Schedule 10.02; or
(ii) on which such documents are posted on the Parent’s behalf on an Internet or intranet website,
if any, to which each Lender and the Administrative Agent has access (whether a commercial,
third-party website or whether sponsored by the Administrative Agent);




56









 







provided that the Borrower shall deliver paper copies of such documents to the
Administrative Agent or Lender that requests the Borrower to deliver such paper copies until a
written request to cease delivering paper copies is given by the Administrative Agent or such
Lender. The Administrative Agent shall have no obligation to request the delivery or to maintain
copies of the documents referred to above, and in any event shall have no responsibility to monitor
compliance by the Loan Parties with any such request for delivery, and each Lender shall be solely
responsible for requesting delivery to it or maintaining its copies of such documents.



Each Lender that is Controlled directly or indirectly by an investment fund Controlled by Rhône
Capital III L.L.C. that is intended to qualify as a “venture capital operating company” (within the
meaning of Labor Reg. § 2510.3-101), and that requires “management rights” (within the meaning of
Labor Reg. § 2510.3-101(d)(3)(ii)) in the Borrower or its Subsidiaries to continue its
qualification as such a venture capital operating company shall be provided, upon written request
from such Lender, with rights in regard to the management of the Borrower or its Subsidiaries to
the extent necessary to cause such Lender not to lose its status as such a venture capital
operating company by reason of the transactions contemplated by this Agreement. In any event,
without limiting the preceding sentence, until the earlier of the Maturity Date and the date the
Loans are assigned by such Lender, these rights shall include without limitation, upon written
request from such Lender: (i) reasonable advance notice of any significant business matter of the
Parent or the Borrower, provided that, such notice obligation shall be deemed satisfied so
long as any director appointed by such Lender serves on the Parent’s board of directors;
provided, further, that, in the event the immediately preceding proviso does not
apply, such Lender shall not be entitled to such notice if, based on the advice of the Borrower’s
counsel, any such disclosure (x) would violate applicable law or confidentiality obligations with
third parties or would jeopardize attorney-client privilege, (y) would require public disclosure of
information at a time when such information is not otherwise required to be disclosed or (z)
relates to any Investment, merger or Disposition of any significant assets or any other
extraordinary transaction, and (ii) upon reasonable advance notice to the Parent and the Borrower
and during normal business hours, the reasonable opportunity to consult with and discuss the
business and affairs of the Parent and the Borrower with the Parent’s and the Borrower’s officers
and senior employees and the reasonable opportunity to make recommendations with respect to the
business and affairs of the Parent and the Borrower, recognizing that the ultimate discretion with
respect to all such matters shall be retained by the Parent and the Borrower and their respective
boards of directors.




          6.03 Notices. Promptly, and in any event within five (5) Business Days after any
Responsible Officer of any Loan Party obtains knowledge thereof, notify the Administrative Agent:




               (a) of the occurrence of any Default;



               (b) of any matter that has resulted or would reasonably be expected to result in a Material
Adverse Effect;



               (c) of the occurrence of (i) any ERISA Event, (ii) a Pension Plan having any Unfunded Pension
Liability, or (iii) the imposition of any withdrawal liability under Section 4201 of ERISA under a
Multiemployer Plan;



               (d) of the discharge by any Loan Party of its present Registered Public Accounting Firm or any
withdrawal or resignation by such Registered Public Accounting Firm; and



               (e) of any casualty or other insured damage to any material portion of the Collateral or the
commencement of any action or proceeding for the taking of any interest in a material portion of
the Collateral under power of eminent domain or by condemnation or similar proceeding or if any
material portion of the Collateral is damaged or destroyed.



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Each notice pursuant to clauses (a) through (e) of this Section 6.03 shall be accompanied
by a statement of a Responsible Officer of the Borrower or the Parent setting forth details of the
event or occurrence referred to therein and stating what action the Borrower has taken and proposes
to take with respect thereto.




          6.04 Payment of Obligations. Pay and discharge as the same shall become due and payable:
(a) all Tax liabilities, assessments and governmental charges or levies upon it or its properties
or assets, and (b) all lawful claims (including, without limitation, claims of landlords,
warehousemen, customs brokers, and carriers) which, if unpaid, would by law become a Lien upon its
property, except, in each case, where (i) the validity or amount thereof is being contested in good
faith by appropriate proceedings, and such Loan Party has set aside on its books adequate reserves
with respect thereto in accordance with GAAP, or (ii) the failure to pay or discharge the same
would not reasonably be expected to result in a Material Adverse Effect.




          6.05 Preservation of Existence, Etc. (a) Preserve, renew and maintain in full force and
effect its legal existence and good standing under the Laws of the jurisdiction of its organization
except in a transaction permitted by Section 7.04 or 7.05; (b) take all reasonable
action to maintain all rights, privileges, permits, licenses and franchises necessary or desirable
in the normal conduct of its business, except (i) to the extent that failure to do so would not
reasonably be expected to have a Material Adverse Effect or (ii) pursuant to a transaction
permitted by Section 7.04 or 7.05; (c) preserve, renew, maintain and protect its
Intellectual Property in accordance with the requirements of the Intellectual Property Security
Agreement; and (d) maintain in all material respects the quality of products and services offered
under any material trademark or service mark at a level that is equal to or better than the level
of quality associated with such products and services as of the date hereof unless the Loan Party
that owns the applicable material trademark or service mark determines in its reasonable business
judgment that the standard of quality shall be modified and takes reasonable measures to ensure
that all licensed users of such trademarks or service marks employ substantially similar standards
of quality.




          6.06 Maintenance of Properties. With respect to each of themselves and, in the case of the
Parent, cause each of the European Borrower, QS Holdings, 54th Street and the Subsidiaries of 54th
Street to: (a) maintain, preserve and protect all of its tangible properties and equipment
necessary in the operation of its business in good working order and condition, ordinary wear and
tear and casualty or condemnation events excepted to the extent that failure to do so would not
reasonably be expected to have a Material Adverse Effect; and (b) make all necessary repairs
thereto and renewals and replacements thereof except where the failure to do so would not
reasonably be expected to have a Material Adverse Effect.




          6.07 Maintenance of Insurance.




               (a) Maintain with financially sound and reputable insurance companies (which insurance
companies are not Affiliates of the Loan Parties), insurance with respect to its properties and
business against loss or damage of the kinds customarily insured against by Persons engaged in the
same or similar business and operating in the same or similar locations or as is required by
applicable Law, of such types and in such amounts as are customarily carried under similar
circumstances by such other Persons.



               (b) In each case subject to Section 6.16: (i) fire and extended coverage policies
maintained with respect to any Collateral shall name the Administrative Agent as a loss payee; (ii)
commercial general liability policies shall be endorsed to name the Administrative Agent as an
additional insured. Business interruption policies shall name the Administrative Agent as a loss
payee; and (iii) each such policy referred to in this Section 6.07(b) shall also provide
that it shall not be canceled, modified or



58









 




not renewed (A) by reason of nonpayment of premium except upon such insurer endeavoring to
provide not less than thirty (30) days’ prior written notice thereof to the Administrative Agent or
(B) for any other reason except upon not less than thirty (30) days’ prior written notice thereof
by the insurer to the Administrative Agent.




          6.08 Compliance with Laws. With respect to each of themselves and, in the case of the
Parent, cause each of the European Borrower, QS Holdings, 54th Street and the Subsidiaries of 54th
Street to, comply with the requirements of all Laws and all orders, writs, injunctions and decrees
applicable to it or to its business or property, except in such instances in which (a) such
requirement of Law or order, writ, injunction or decree is being contested in good faith by
appropriate proceedings diligently conducted and with respect to which adequate reserves have been
set aside and maintained by the Loan Parties in accordance with GAAP; or (b) the failure to comply
therewith would not reasonably be expected to have a Material Adverse Effect.




          6.09 Books and Records; Accountants. With respect to each of themselves and, in the case
of the Parent, cause each of the European Borrower, QS Holdings, 54th Street and the Subsidiaries
of 54th Street to, maintain proper books of record and account, in which entries that are true and
correct in all material respects and in conformity with GAAP consistently applied shall be made of
all material financial transactions and matters involving the assets and business of the Loan
Parties.




          6.10 Inspection Rights.




               (a) Permit representatives and independent contractors of the Administrative Agent (acting in
consultation with the Administrative Agent) to visit and inspect any of its properties, to examine
its corporate, financial and operating records, and make copies thereof or abstracts therefrom, and
to discuss its affairs, finances and accounts with its directors, officers, and Registered Public
Accounting Firm, all at the expense of the Loan Parties and at such reasonable times during normal
business hours and as often as may be reasonably desired, upon reasonable advance notice to the
Borrower.



               (b) Notwithstanding anything to the contrary in this Section 6.10, none of the Parent
or any of its Subsidiaries will be required to disclose, permit the inspection, examination or
making of extracts, or discussion of, any documents, information or other matter that
(i) constitutes non-financial trade secrets or non-financial proprietary information unless and
until the Administrative Agent executes an appropriate non-disclosure agreement, (ii) in respect of
which disclosure to the Administrative Agent (or any representative) is then prohibited by Law or
any agreement binding on the Parent or any of its Subsidiaries or (iii) is subject to
attorney-client or similar privilege or constitutes attorney work-product



          6.11 Use of Proceeds. Use the proceeds of the Loans (a) to refinance Indebtedness of the
Parent and its Subsidiaries under the Existing Credit Agreement, (b) to finance transaction fees
and expenses related hereto, and (c) for other general corporate purposes of the Loan Parties and
their Subsidiaries, in each case to the extent not prohibited by the Loan Documents.




          6.12 Additional Loan Parties. Notify the Administrative Agent at the time that any Person
becomes a Material Subsidiary of any Loan Party, and promptly thereafter (and in any event within
thirty (30) days or such longer period as the Administrative Agent may agree): (a) cause any such
Person which is a Domestic Subsidiary that is a Wholly Owned Subsidiary and not an Immaterial
Subsidiary to (i) become a Guarantor by executing and delivering to the Administrative Agent a
Facility Guaranty (or a counterpart or supplement thereto), (ii) grant a Lien on such Person’s
assets to secure the Obligations to the extent required by, and subject to the limitations set
forth in, the Security Documents,




59









 




and (iii) deliver to the Administrative Agent documents of the types referred to in clauses (iii)
and (iv) of Section 4.01(a) and, if reasonably requested by the Administrative Agent,
customary opinions of counsel to such Person (which shall cover, among other things, the legality,
validity, binding effect and enforceability of the documentation referred to in this clause (a));
and (b) if any Equity Interests or Indebtedness of such Person are owned by any Loan Party, such
Loan Party shall pledge such Equity Interests and promissory notes evidencing such Indebtedness (if
any) to the extent and in the manner and format required by the Pledge Agreement or the Security
Agreement; provided that, in the case of any such Person that is a Foreign Subsidiary that
is a CFC no more than 66% of the total combined voting power of all classes of stock entitled to
vote in or of such Person shall be pledged or similarly hypothecated pursuant to this Section
6.12. In no event shall compliance with this Section 6.12 waive or be deemed a waiver
or Consent to any transaction giving rise to the need to comply with this Section 6.12 if
such transaction was not otherwise permitted by this Agreement.




          6.13 Information Regarding the Collateral. Furnish to the Administrative Agent at least
ten (10) days’ (or such shorter period as the Administrative Agent shall agree) prior written
notice of any change in: (i) any Loan Party’s legal name; (ii) the location of any Loan Party’s
chief executive office or its principal place of business; (iii) any Loan Party’s organizational
type or jurisdiction of organization; or (iv) any Loan Party’s Federal Taxpayer Identification
Number or organizational identification number assigned to it by its state of organization. The
Loan Parties agree not to effect or permit any change referred to in the preceding sentence unless
all filings have been made under the UCC or otherwise that are required in order for the Collateral
Agent to continue following such change, to have a valid, legal and perfected security interest in
the Collateral for its own benefit and the benefit of the other Credit Parties (to the extent a
security interest in such Collateral can be perfected by the filing of a financing statement under
the UCC).




          6.14 Environmental Laws. Except where the failure to do so would not reasonably be
expected to have a Material Adverse Effect, (a) conduct its operations in compliance with all
Environmental Laws; (b) obtain and renew all Environmental Permits required for its operations; and
(c) implement any and all investigation, remediation, removal and response actions to prevent or
remediate the release of any Hazardous Materials on, at, or from any of its Real Estate, except
where a requirement of Environmental Law is being contested in good faith and by proper proceedings
and adequate reserves have been set aside and are being maintained by the Loan Parties or any of
its Subsidiaries with respect to such circumstances in accordance with GAAP.




          6.15 Further Assurances.




               (a) Execute any and all further documents, financing statements, agreements and instruments,
and take all such further actions (including the filing and recording of financing statements and
other documents), that may be required under any applicable Law, or which the Administrative Agent
may reasonably request, to grant, preserve, protect or perfect the Liens created or intended to be
created by the Security Documents or the validity or priority of any such Lien, all at the expense
of the Loan Parties and to the extent required by, and subject to the limitations set forth in, the
Security Documents and this Agreement.



               (b) If any material personal property assets are acquired by any Loan Party after the Closing
Date (other than assets constituting Collateral under the Security Documents that become subject to
the Lien of the Security Documents upon acquisition thereof), notify the Administrative Agent
thereof (in the case of IP Collateral, within the time frames set forth in Section
6.02(d)), and the Loan Parties will cause such assets to be subjected to a perfected Lien
securing the Obligations and will take such actions as shall be necessary or shall be requested by
the Administrative Agent to grant and perfect such Liens, in each case to the extent required by,
and subject to the limitations



60









 




set forth in, the Security Documents and this Agreement, all at the expense of the Loan
Parties. In no event shall compliance with this Section 6.15(b) waive or be deemed a waiver
or Consent to any transaction giving rise to the need to comply with this Section 6.15(b)
if such transaction was not otherwise permitted by this Agreement.




               (c) If, after the Closing Date, any Loan Party acquires a fee interest in real property
located in the United States with a fair market value of $5.0 million or more (other than to the
extent such real property was financed through the incurrence of any Indebtedness permitted by
Section 7.03), such Loan Party shall notify the Administrative Agent and, if requested by
Required Lenders or Administrative Agent, take such actions and execute such documents as the
Administrative Agent shall reasonably require to create a mortgage Lien on such real property.



          6.16 Post-Closing Matters. Take the actions set forth on Schedule 6.16 by the
applicable date set forth for each such action thereon.




ARTICLE VII




NEGATIVE COVENANTS




          So long as any Lender shall have any Commitment hereunder or any Loan or other Obligation
hereunder shall remain unpaid or unsatisfied (other than contingent obligations for which a claim
has not been asserted):




          7.01 Liens. No Loan Party shall create, incur, assume or suffer to exist any Lien upon any
of its property, assets or revenues, whether now owned or hereafter acquired, other than, as to all
of the above, Permitted Encumbrances. Notwithstanding the foregoing, the European Borrower and
54th Street and Subsidiaries of 54th Street shall not be permitted to grant any security
interest in their respective shares or assets other than (i) pursuant to the Loan Documents, (ii)
pursuant to the Loan Documents (as defined in the Euro Term Loan Credit Agreement), (iii) pursuant
to the Loan Documents (as defined in the ABL Credit Agreement) and (iv) in the case of a Specified
Subsidiary, Permitted Specified Subsidiary Encumbrances.




          7.02 Investments. No Loan Party shall make any Investments, except Permitted Investments.




          7.03 Indebtedness. No Loan Party shall, nor shall it permit any Subsidiary to, incur any
Indebtedness, except Permitted Indebtedness. Notwithstanding the foregoing, other than intercompany
transfers among the Subsidiaries of 54th Street and transfers to the European Borrower
(including intermediate transfers to 54th Street in order to effectuate transfers to the
European Borrower), the European Borrower and 54th Street and Subsidiaries of
54th Street shall not be permitted to incur any Indebtedness other than (i) pursuant to
the Loan Documents (as defined in the Euro Term Loan Credit Agreement), (ii) pursuant to the Loan
Documents (as defined in the ABL Credit Agreement), and (iii) any Specified Subsidiary may incur
Permitted Specified Subsidiary Indebtedness. The accrual of interest and the accretion or
amortization of original issue discount on Indebtedness and the payment of interest in the form of
additional Indebtedness originally incurred in accordance with this Section 7.03 will not
constitute an incurrence of Indebtedness. For purposes of determining compliance with any
Dollar-denominated restriction on the incurrence of Indebtedness, the Dollar-equivalent principal
amount of Indebtedness denominated in a foreign currency shall be calculated based on (i) for
existing Indebtedness, the relevant exchange rate applied for purposes of preparing the most recent
balance sheet filed by the Parent with the SEC, and (ii) for the Indebtedness being incurred, the
relevant currency exchange rate in effect on the date such Indebtedness is incurred, in the case of
term debt, or first committed, in the case of




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revolving credit debt; provided that if such Indebtedness is incurred to extend, replace, refund,
refinance, renew or defease other Indebtedness denominated in a foreign currency, and such
extension, replacement, refunding, refinancing, renewal or defeasance would cause the applicable
Dollar-denominated restriction to be exceeded if calculated at the relevant currency exchange rate
in effect on the date of such extension, replacement, refunding, refinancing, renewal or
defeasance, such Dollar-denominated restriction shall be deemed not to have been exceeded so long
as the principal amount of such refinancing Indebtedness does not exceed the principal amount of
such Indebtedness being extended, replaced, refunded, refinanced, renewed or defeased based on the
relevant exchange rate applied for purposes of preparing the most recent balance sheet filed by the
Parent with the SEC.




          7.04 Fundamental Changes. No Loan Party shall merge, dissolve, liquidate, consolidate with
or into another Person, except that:




               (a) (i) any Loan Party (other than the Parent) or any Subsidiary which is a Loan Party may
merge or consolidate with or into any other Subsidiary which is a Loan Party, provided that
in any merger or consolidation involving the Borrower, the Borrower shall be the continuing or
surviving Person, and (ii) any Loan Party may Dispose of all or substantially all of its assets
(upon voluntary liquidation or otherwise) to another Loan Party other than the Parent;



               (b) any Loan Party may consummate any of following transactions, provided that such
transaction is otherwise permitted as a Permitted Investment, Permitted Acquisition or Permitted
Disposition: (i) any Subsidiary which is not a Loan Party may merge or consolidate with or into a
Loan Party, provided that a Loan Party shall be the continuing or surviving Person and that
any Indebtedness incurred as a result of such fundamental change is Permitted Indebtedness, and
(ii) so long as no Default exists or would immediately result therefrom, any Loan Party may merge
with or into or consolidate with any other Person or permit any other Person to merge with or into
or consolidate with it; provided that a Loan Party is the surviving Person; and



               (c) any Guarantor (other than the Parent) may liquidate or dissolve or change its legal form
if the Parent determines in good faith that such action is in the best interests of the Parent and
its Subsidiaries and is not materially disadvantageous to the Lenders.



          7.05 Dispositions. No Loan Party shall make any Disposition, except Permitted
Dispositions. To the extent any Collateral is Disposed of as permitted by this
Section 7.05 to any Person other than any Loan Party, such Collateral shall be sold free
and clear of the Liens created by the Loan Documents.




          7.06 Restricted Payments. No Loan Party shall declare or make any Restricted Payment,
except:




               (a) any Loan Party may make Restricted Payments to any other Loan Party; provided,
however, that any Restricted Payment made by any Loan Party to the Parent shall be
conditional upon, and made substantially simultaneously with, (i) a transfer by the Parent to a
Loan Party that is a Subsidiary of the Borrower or the Borrower, or (ii) a transfer by the Parent
to a Subsidiary that is not a Loan Party in connection with a Permitted Investment, in each case in
an amount equal to such Restricted Payment;



               (b) any Loan Party may declare and make dividend payments or other distributions payable
solely in its Equity Interests (other than Disqualified Stock not otherwise permitted by
Section 7.03);



62









 





               (c) to the extent constituting Restricted Payments, the Loan Parties may enter into and
consummate transactions permitted by Section 7.02 or 7.04;



               (d) in the case of the Parent, repurchases of Equity Interests in the Parent deemed to occur
upon exercise of stock options or warrants if such Equity Interests represent a portion of the
exercise price of such options or warrants;



               (e) the Parent may pay for and otherwise effect the repurchase, retirement or other
acquisition or retirement for value of Equity Interests of the Parent by any employee, director or
officer of the Parent or any of its Subsidiaries pursuant to any equity plan, stock option plan or
any other benefit plan or any agreement with any employee, director or officer of the Parent or any
of its Subsidiaries; provided that the aggregate amount of Restricted Payments made
pursuant to this clause (e) shall not exceed $5,000,000 in any fiscal year;



               (f) any Loan Party may (i) pay cash in lieu of fractional Equity Interests in connection with
any dividend, split or combination thereof or any Permitted Investment and (ii) honor any
conversion request by a holder of convertible Indebtedness and make cash payments in lieu of
fractional shares in connection with any such conversion; and



               (g) any Restricted Payments permitted under the Senior Notes Indenture as in effect on the
date hereof (and without regard to any waivers or consents that may be obtained thereunder after
the date hereof); provided that no such payments made to a Subsidiary or the shareholders
thereof that is not an Americas Subsidiary shall exceed $10,000,000 in the aggregate at any one
time outstanding when aggregated with any Investments made under clause (l)(v) of the definition of
“Permitted Investments”.



          7.07 Prepayments of Subordinated Indebtedness. No Loan Party shall voluntarily prepay,
redeem, purchase, defease or otherwise satisfy prior to the scheduled maturity thereof in any
manner any Subordinated Indebtedness, or make any payment in violation of any subordination terms
of any Subordinated Indebtedness, except refinancings and refundings of such Subordinated
Indebtedness to the extent permitted hereunder.




          7.08 Change in Nature of Business. No Loan Party shall engage in any line of business
substantially different from the lines of business conducted by such Loan Party on the date hereof
or any business reasonably related, ancillary, complementary or incidental thereto.




          7.09 Transactions with Affiliates. No Loan Party shall enter into, renew, extend or be a
party to any transaction of any kind with any Affiliate of any Loan Party, whether or not in the
ordinary course of business, other than on fair and reasonable terms substantially as favorable to
the Loan Parties as would be obtainable by the Loan Parties at the time in a comparable arm’s
length transaction with a Person other than an Affiliate, provided that the foregoing restriction
shall not apply to (a) a transaction between or among the Loan Parties not prohibited hereunder;
(b) transactions not otherwise prohibited hereunder between or among the Parent or any Subsidiary
or any entity that becomes a Subsidiary as a result of such transaction; (c) Restricted Payments
permitted under Section 7.06; (d) the transactions occurring on the Closing Date and the
payment of fees and expenses related thereto; (e) the issuance of Equity Interests in the Parent to
any officer, director, employee or consultant of the Parent or any of its Subsidiaries; (f)
transactions, arrangements, reimbursements and indemnities permitted between or among such parties
under this Agreement; (g) the payment of reasonable fees and out-of-pocket costs to directors, and
compensation and employee benefit arrangements paid to, and indemnities provided for the benefit
of, directors, officers or employees of the Parent or any of its Subsidiaries; (h) any issuances of
securities of the Parent (other than Disqualified Stock) or other payments, awards or grants in
cash, securities or



63









 






otherwise pursuant to, or the funding of, employment agreements, stock options and stock ownership
plans (in each case in respect of Equity Interests in the Parent) of the Parent or any of its
Subsidiaries; or (i) transactions not otherwise prohibited hereunder between the Parent or any
Subsidiary and Rhône Capital III L.P. or any of its Affiliates.




          7.10 Burdensome Agreements. No Loan Party shall enter into or permit to exist any
Contractual Obligation (other than (w) the Senior Note Indenture, (x) this Agreement or any other
Loan Document, (y) the ABL Credit Agreement or any document relating thereto, or (z) the Euro Term
Loan Credit Agreement or any document relating thereto) that limits the ability (i) of any Loan
Party to make Restricted Payments to any Loan Party or (ii) of the Loan Parties to create, incur,
assume or suffer to exist Liens on property of such Person in favor of the Administrative Agent
under the Loan Documents; provided, however, that none of the foregoing shall
prohibit (A) any negative pledge incurred or provided in favor of any holder of Indebtedness
described under clauses (h) and (u) of the definition of Permitted Encumbrances permitted hereunder
solely to the extent any such negative pledge relates to the property financed by or the subject of
such Indebtedness; (B) customary anti-assignment provisions in contracts restricting the assignment
thereof or in contracts for the Disposition of any assets or any Person, provided that the
restrictions in any such contract shall apply only to the assets or Person that is to be Disposed
of; (C) customary provisions in leases of real property that prohibit mortgages or pledges of the
lessee’s interest under such lease or restricting subletting or assignment of such lease; (D)
customary provisions in joint venture agreements and other similar agreements applicable to joint
ventures to the extent such joint ventures are not prohibited hereunder; (E) customary restrictions
arising under licenses and other contracts entered into in the ordinary course of business to the
extent permitted hereunder; (F) customary restrictions under Guarantees of the Parent in connection
with the French Credit Agreement; (G) Contractual Obligations which (x) exist on the date hereof
and (to the extent not otherwise permitted by this Section 7.10) are listed on Schedule
7.10 hereto and (y) to the extent Contractual Obligations permitted by clause (x) are set forth
in an agreement evidencing Indebtedness, are set forth in any agreement evidencing any permitted
renewal, extension or refinancing of such Indebtedness so long as such renewal, extension or
refinancing does not materially expand the scope of such Contractual Obligation in an manner
adverse to the Lenders; or (H) Contractual Obligations which are binding on a Subsidiary at the
time such Subsidiary first becomes a Subsidiary, so long as such Contractual Obligations were not
entered into in contemplation of such Person becoming a Subsidiary.




          7.11 ERISA. No Loan Party shall, and each Loan Party shall ensure that each ERISA
Affiliate shall not (a) terminate any Plan so as to incur any liability to the PBGC, (b) fail to
pay to any Plan any material contribution which it is obligated to pay under the terms of such Plan
for a period of 30 days, or (c) allow or suffer to exist any ERISA Event to the extent that the
occurrence or nonoccurrence of such event or condition is within the control of any Loan Party or
ERISA Affiliate and would reasonably be expected to result in a Material Adverse Effect.




          7.12 Amendment of Organization Documents. No Loan Party shall amend, modify or waive any
Loan Party’s rights under its Organization Documents (a) in a manner materially adverse to the
Credit Parties or (b) in any manner that would cause a Material Adverse Effect.




          7.13 Fiscal Year. No Loan Party shall change the Fiscal Year of any Loan Party without the
prior consent of the Administrative Agent, except as required by GAAP.




          7.14 Financial Covenants.




               (a) Minimum Americas Consolidated EBITDA. The Loan Parties shall not permit Americas
Consolidated EBITDA for any Measurement Period, calculated as of the last day of any




64












 




Measurement Period ending on any of the dates specified below, to be less than the correlative
amount indicated.




	 	 	 	 	 
	Measurement Period Ending	 	Americas Consolidated EBITDA
	January 31, 2010
	 	$	20,000,000	 
	April 30, 2010
	 	$	20,000,000	 
	July 31, 2010
	 	$	30,000,000	 
	October 31, 2010
	 	$	40,000,000	 
	January 31, 2011
	 	$	45,000,000	 
	April 30, 2011
	 	$	50,000,000	 
	July 31, 2011
	 	$	55,000,000	 
	October 31, 2011
	 	$	65,000,000	 
	January 31, 2012
	 	$	70,000,000	 
	April 30, 2012
	 	$	75,000,000	 
	July 31, 2012
	 	$	80,000,000	 
	October 31, 2012 and the last day of each Fiscal Quarter thereafter
	 	$	85,000,000	 






               (b) Availability. The Loan Parties shall not permit Domestic Availability at any time
to be less than seven and one half percent (7.5%) of the Total Loan Cap.



          7.15 Restrictions on QS Holdings. The Parent shall cause QS Holdings not to (i) issue, create, assume, incur, or otherwise become
liable for, or permit to exist, any Indebtedness (other than intercompany Indebtedness owed to
Quiksilver International Pty. Ltd., the European Borrower, 54th Street or one of its Subsidiaries
outstanding on the Closing Date), (ii) grant any Liens in respect of the Indebtedness or other
obligations of any other Person except pursuant to the documentation relating to the French Credit
Agreement (including the pledge of Equity Interests in Biarritz Holdings S.à r.l) and documentation
relating to the Euro Term Loan Credit Agreement, (iii) enter into any commitment to contribute
capital to, or purchase securities from, any other Person, (iv) undertake capital expenditures, (v)
to the fullest extent permitted by law, dissolve or liquidate or consolidate or merge with or into
any other entity in whole or in part or (vi) engage in any business other than (A) holding the
Equity Interests of 54th Street and Biarritz Holdings S.à r. l. and its other Subsidiaries as of
the Closing Date and intercompany receivables, (B) entry into, and performance of obligations
under, documentation relating to the French Credit Agreement on terms contemplated by the French
Credit Agreement as in effect on the date hereof or otherwise no more adverse to the Lenders than
such terms as in effect on the date hereof, (C) entry into, and performance of obligations under,
documentation relating to the Euro Term Loan Credit Agreement, (D) activities relating to
ownership, licensing and sublicensing of Intellectual Property and defense and prosecution thereof,
(E) maintenance of its existence, including the ability to incur fees, costs and expenses relating
to such maintenance, (F) participating in tax, accounting and other administrative matters as a
member of the consolidated group of the Parent and its Subsidiaries, (G) incurring fees, costs and
expenses for legal, tax and accounting issues of QS Holdings, (H) the performance of obligations
under and compliance with its Organization Documents, or any applicable law, ordinance, regulation,
rule, order, judgment, decree or permit, including, without limitation, as a result of or in
connection with the activities of the Borrower or its Subsidiaries, (I) activities relating to
intercompany Indebtedness outstanding on the Closing Date and (J) incurrence of, and compliance
with, tax obligations in connection with any of the foregoing. The Parent shall cause QS Holdings
to do all things necessary to observe organizational formalities and preserve its existence.




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ARTICLE VIII




EVENTS OF DEFAULT AND REMEDIES 




          8.01 Events of Default. Any of the following shall constitute an “Event of Default”:




               (a) Non-Payment. The Borrower or any other Loan Party fails to pay when and as
required to be paid herein: (i) any amount of principal of any Loan, or (ii) any interest on any
Loan, which failure continues for three (3) Business Days, or (iii) any other amount payable
hereunder or under any other Loan Document, which failure continues for five (5) Business Days; or



               (b) Specific Covenants. Any Loan Party fails to perform or observe any term, covenant
or agreement contained in Article VII; or



               (c) Other Defaults. Any Loan Party fails to perform or observe any other covenant or
agreement (not specified in subsection (a) or (b) above) contained in any Loan
Document on its part to be performed or observed and such failure continues for thirty (30) days
after notice thereof by the Administrative Agent to the Borrower; or



               (d) Representations and Warranties. Any representation, warranty, certification or
statement of fact made or deemed made by or on behalf of the Borrower or any other Loan Party
herein, in any other Loan Document shall be incorrect or misleading in any material respect when
made or deemed made; or



               (e) Cross-Default; Cross-Acceleration. (i) Any Loan Party or any Subsidiary thereof
(A) fails to make any payment when due, after giving effect to any applicable grace period (whether
by scheduled maturity, required prepayment, acceleration, demand, or otherwise), in respect of any
Material Indebtedness; (B) fails to observe or perform any other agreement or condition relating to
any such Material Indebtedness (excluding Indebtedness under the French Credit Agreement) or
contained in any instrument or agreement evidencing, securing or relating thereto, or any other
event occurs, the effect of which default or other event is to cause, or to permit the holder or
holders of such Material Indebtedness (excluding Indebtedness under the French Credit Agreement)
(or a trustee or agent on behalf of such holder or holders) to cause, with the giving of notice if
required, such Indebtedness to be demanded or to become due or to be repurchased, prepaid, defeased
or redeemed (automatically or otherwise), or an offer to repurchase, prepay, defease or redeem such
Indebtedness to be made, in each case prior to its stated maturity; provided that any such
failure is unremedied and is not waived by the holders of such Indebtedness; provided,
further, that the foregoing clause (i)(B) shall not apply to (x) secured Indebtedness of a
Loan Party or a Subsidiary that becomes due upon the sale or transfer by such Loan Party or
Subsidiary of the property or assets securing such Indebtedness, or (y) scheduled payments,
defeasances or redemptions of Indebtedness on the dates set forth in the instruments and agreements
governing such Indebtedness; or (C) fails to observe or perform any other agreement or condition
relating to the French Credit Agreement or contained in any instrument or agreement evidencing,
securing or relating thereto, or any other event occurs, the effect of which default or other event
is to cause, or permit to cause, the lenders thereunder, with the giving of notice if required, to
declare the Indebtedness under the French Credit Agreement due and payable prior to its stated
maturity; provided that any such failure related to a non-payment agreement or condition is
unremedied and not waived by the lenders thereunder for 30 days following the relevant date on
which the failure occurred; or (ii) there occurs under any Swap Contract an Early Termination Date
(as defined in such Swap Contract) resulting from (A) any event of default under such Swap Contract
as to which a Loan Party or any Subsidiary thereof is the Defaulting Party (as defined in such Swap
Contract) or (B) any Termination Event (as so defined) under such Swap Contract as to which a Loan
Party or any Subsidiary thereof is an Affected Party (as so defined) and, in



66









 




either event, the Swap Termination Value owed by the Loan Party or such Subsidiary as a result
thereof is greater than $15,000,000; provided that such failure is unremedied and is not
waived by the applicable counterparty to such Swap Contract; or




               (f) Insolvency Proceedings, Etc. Any Loan Party or any of its Subsidiaries (other
than any Immaterial Subsidiary but including any group of two or more Immaterial Subsidiaries that
on a combined basis would be, as of the last day of the most recently ended Fiscal Quarter of the
Parent for which financial statements are available, a Material Subsidiary) institutes or consents
to the institution of any proceeding under any Debtor Relief Law, or makes an assignment for the
benefit of creditors; or applies for or consents to the appointment of any receiver, trustee,
custodian, conservator, liquidator, rehabilitator or similar officer for it or for all or any
material part of its property; or any receiver, trustee, custodian, conservator, liquidator,
rehabilitator or similar officer is otherwise appointed and the appointment continues undischarged,
undismissed or unstayed for sixty (60) calendar days; or any proceeding under any Debtor Relief Law
relating to any such Person or to all or any material part of its property is instituted without
the consent of such Person and continues undismissed or unstayed for sixty (60) calendar days, or
an order for relief is entered in any such proceeding; or



               (g) Judgments. There is entered against any Loan Party or any Subsidiary thereof one
or more final judgments for the payment of money in an aggregate amount (as to all such final
judgments) exceeding $10,000,000 (to the extent (i) not covered by independent third-party
insurance or (ii) not paid) and such final judgment is not, within sixty (60) days after the entry
thereof, satisfied, vacated, discharged or execution thereof stayed or bonded pending appeal, or
such judgment is not satisfied, vacated or discharged prior to the expiration of any such stay; or



               (h) ERISA. (i) One or more ERISA Events occur with respect to a Plan which
individually or in the aggregate has resulted or could reasonably be expected to result in
liability of any Loan Party or ERISA Affiliate in an aggregate amount in excess of $10,000,000 or
which would reasonably be expected to result in a Material Adverse Effect, or (ii) a Loan Party or
any ERISA Affiliate fails to pay when due, any installment payment with respect to its withdrawal
liability under Section 4201 of ERISA under a Multiemployer Plan in an aggregate amount in excess
of $10,000,000 or which would reasonably be expected to result in a Material Adverse Effect; or



               (i) Invalidity of Loan Documents. (i) Any material provision of any Loan Document,
at any time after its execution and delivery and for any reason other than as expressly permitted
hereunder or thereunder (including as a result of a transaction permitted under Section
7.04 or 7.05) or as a result of acts or omissions by the Administrative Agent or any
Lender or satisfaction in full of all the Obligations, ceases to be in full force and effect; or
any Loan Party or any Subsidiary contests in any manner the validity or enforceability of any
provision of any Loan Document; or any Loan Party denies that it has any or further liability or
obligation under any provision of any Loan Document, or purports to revoke, terminate or rescind
any provision of any Loan Document or seeks to avoid, limit or otherwise adversely affect any Lien
purported to be created under any Security Document; or (ii) any Lien purported to be created under
any Security Document shall cease to be, or shall be asserted by any Loan Party or any Subsidiary
not to be, a valid and perfected Lien on any Collateral (other than an immaterial portion of the
Collateral), with the priority required by the applicable Security Document other than pursuant to
the terms hereof or thereof (including as a result of a transaction permitted under Section
7.04 or 7.05) except to the extent resulting from the failure of the Administrative
Agent or the Collateral Agent to file UCC continuation statements or to maintain “control” (as such
term is defined in the UCC), as applicable; or



67









 





               (j) Guaranty. The termination or attempted termination by any Loan Party of any
Facility Guaranty except as expressly permitted or contemplated hereunder or under any other Loan
Document; or



               (k) Subordination. (i) The subordination provisions of the documents evidencing or
governing any Subordinated Indebtedness (the “Subordination Provisions”) shall, in whole or
in part, terminate, cease to be effective except in accordance with its terms; or (ii) the Borrower
or any other Loan Party shall disavow or contest in any manner (A) the effectiveness, validity or
enforceability of any of the Subordination Provisions, (B) that the Subordination Provisions exist
for the benefit of the Credit Parties, or (C) that all payments of principal of or premium and
interest on the applicable Subordinated Indebtedness, or realized from the liquidation of any
property of any Loan Party, shall be subject to any of the Subordination Provisions; or



               (l) Amendment to Services Fee Agreements. Any provision of either Services Fee
Agreement is amended, modified or waived in a manner materially adverse to the Credit Parties; or



               (m) Board of Directors. The board of directors of the Parent fails to nominate, or
the Parent fails to vote its proxies in favor of, any director proposed by Triton Onshore SPV L.P.
or Triton Coinvestment SPV L.P. in accordance with the Warrants; or



               (n) COMI. The “centre of main interests” (within the meaning of the EC Insolvency
Regulation) of the European Borrower or 54th Street is at any time not in Luxembourg; or



               (o) French Closing. The Closing Date (as defined in the French Credit Agreement) does
not occur on or prior to September 29, 2009 as a result of the failure of a condition precedent in
the French Credit Agreement; provided that if (i) the Parent has advised the Administrative
Agent in writing that it believes in good faith such condition precedent will be satisfied no later
than October 31, 2009, (ii) the lenders under the French Credit Agreement have entered into a new
extension through October 31, 2009 on terms substantially identical to the terms of the extension
delivered to the Administrative Agent on or prior to the date hereof in accordance with Section
4.01(w) and (iii) no other material amendments have been made to the French Credit Agreement (other
than ones to which the Administrative Agent has consented) and no material amendments to the French
Credit Agreement requested by the lenders under the French Credit Agreement are pending (other than
ones to which the Administrative Agent has consented) as of September 29, 2009, then no Event of
Default shall be deemed to occur under this Section 8.01(o) unless the Closing Date (as
defined in the French Credit Agreement) does not occur on or prior to October 31, 2009.



          8.02 Remedies Upon Event of Default. If any Event of Default occurs and is continuing, the Administrative Agent shall, at the request
of the Required Lenders, take any or all of the following actions:





               (a) declare the unpaid principal amount of all outstanding Loans, all interest accrued
and unpaid thereon, and all other amounts owing or payable hereunder or under any other Loan
Document to be immediately due and payable, without presentment, demand, protest or other
notice of any kind, all of which are hereby expressly waived by the Loan Parties; and




               (b) whether or not the maturity of the Obligations shall have been accelerated pursuant
hereto, proceed to protect, enforce and exercise all rights and remedies of the Credit
Parties under this Agreement, any of the other Loan Documents or applicable Law,



68









 






including, but not limited to, by suit in equity, action at law or other appropriate
proceeding, whether for the specific performance of any covenant or agreement contained in
this Agreement and the other Loan Documents or any instrument pursuant to which the
Obligations are evidenced, and, if such amount shall have become due, by declaration or
otherwise, proceed to enforce the payment thereof or any other legal or equitable right of
the Credit Parties;


provided, however, that upon the entry of an order for relief with respect to any
Loan Party or any Subsidiary thereof under the Bankruptcy Code of the United States of America, the
unpaid principal amount of all outstanding Loans and all interest and other amounts as aforesaid
shall automatically become due and payable, in each case without further act of the Administrative
Agent or any Lender.




          No remedy herein is intended to be exclusive of any other remedy and each and every remedy
shall be cumulative and shall be in addition to every other remedy given hereunder or now or
hereafter existing at law or in equity or by statute or any other provision of Law.




          8.03 Application of Funds. After the exercise of remedies provided for in Section 8.02 (or after the Loans have
automatically become immediately due and payable as set forth in the proviso to Section
8.02), any amounts received on account of the Obligations shall be applied by the
Administrative Agent in the following order:





               First, to payment of that portion of the Obligations constituting fees,
indemnities, Credit Party Expenses and other amounts (including amounts payable under
Article III) payable to the Administrative Agent in its capacity as such;




               Second, to payment of that portion of the Obligations constituting indemnities,
Credit Party Expenses, and other amounts (other than principal, interest and fees) payable
to the Lenders (including amounts payable under Article III), ratably among them in
proportion to the amounts described in this clause Second payable to them;




               Third, to payment of that portion of the Obligations constituting accrued and
unpaid interest on the Loans and other Obligations, ratably among the Lenders in proportion
to the respective amounts described in this clause Third payable to them;




               Fourth, to payment of that portion of the Obligations constituting unpaid
principal of the Loans, ratably among the Lenders in proportion to the respective amounts
described in this clause Fourth held by them;




               Fifth, to payment of all other Obligations, ratably among the Credit Parties in
proportion to the respective amounts described in this clause Fifth held by them;
and




               Last, the balance, if any, after all of the Obligations have been indefeasibly
paid in full, to the Loan Parties or as otherwise required by Law.



ARTICLE IX




ADMINISTRATIVE AGENT AND LENDERS




          9.01 Appointment and Authority.




               (a) Each Lender hereby irrevocably designates Rhône Group L.L.C. as Administrative Agent under
this Agreement and the other Loan Documents. The general administration of
the Loan Documents shall be by the Administrative Agent. The Lenders each hereby (a)
irrevocably



69









 




authorizes the Administrative Agent (i) to enter into the Loan Documents to which it is
a party, and (ii) at its discretion, to take or refrain from taking such actions as agent on its
behalf and to exercise or refrain from exercising such powers under the Loan Documents as are
delegated by the terms hereof or thereof, as appropriate, together with all powers reasonably
incidental thereto, and (b) agrees and consents to all of the provisions of the Security Documents.
All Collateral shall be held or administered by the Administrative Agent (or its duly-appointed
agent) for its own benefit and for the ratable benefit of the other Credit Parties. Any proceeds
received by the Administrative Agent from the foreclosure, sale, lease or other disposition of any
of the Collateral and any other proceeds received pursuant to the terms of the Security Documents
or the other Loan Documents shall be paid over to the Administrative Agent for application as
provided in this Agreement and the other Loan Documents. The Administrative Agent shall have no
duties or responsibilities except as set forth in this Agreement and the other Loan Documents, nor
shall it have any fiduciary relationship with any other Credit Party, and no implied covenants,
responsibilities, duties, obligations, or liabilities shall be read into the Loan Documents or
otherwise exist against the Administrative Agent.




               (b) The provisions of this Article IX are solely for the benefit of the Administrative
Agent and the Lenders, and no Loan Party or any Subsidiary thereof shall have rights as a third
party beneficiary of any of such provisions (other than the provisions of Section 9.06).



          9.02 Rights as a Lender. The Person serving as the Administrative Agent hereunder shall have the same rights and powers
in their capacity as a Lender as any other Lender and may exercise the same as though they it was
not the Administrative Agent and the term “Lender” or “Lenders” shall, unless otherwise expressly
indicated or unless the context otherwise requires, include the Person serving as the
Administrative Agent hereunder in its individual capacity. Such Person and its Affiliates may
accept deposits from, lend money to, act as the financial advisor or in any other advisory capacity
for and generally engage in any kind of business with the Loan Parties or any Subsidiary or other
Affiliate thereof as if such Person were not the Administrative Agent hereunder and without any
duty to account therefor to the Lenders.




          9.03 Exculpatory Provisions. The Administrative Agent shall not have any duties or obligations except those expressly set
forth herein and in the other Loan Documents. Without limiting the generality of the foregoing,
the Administrative Agent:





               (a) shall not be subject to any fiduciary or other implied duties, regardless of
whether a Default has occurred and is continuing;




               (b) shall not have any duty to take any discretionary action or exercise any
discretionary powers, except discretionary rights and powers expressly contemplated hereby
or by the other Loan Documents that the Administrative Agent is required to exercise as
directed in writing by the Required Lenders (or such other number or percentage of the
Lenders as shall be expressly provided for herein or in the other Loan Documents),
provided that the Administrative Agent shall not be required to take any action
that, in its respective opinion or the opinion of its counsel, may expose the Administrative
Agent to liability or that is contrary to any Loan Document or applicable Law; and




               (c) shall not, except as expressly set forth herein and in the other Loan Documents,
have any duty to disclose, and shall not be liable for the failure to disclose, any
information relating to the Loan Parties or any of its Affiliates that is communicated to or
obtained by the Person serving as the Administrative Agent or any of its Affiliates in any
capacity.



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The Administrative Agent shall not be liable to any Credit Party for any action taken or not taken
by it (i) with the Consent or at the request of the Required Lenders (or such other number or
percentage of the Lenders as shall be necessary, or as the Administrative Agent shall believe in
good faith shall be necessary, under the circumstances as provided in Sections 10.01 and
8.02) or (ii) in the absence of its own gross negligence or willful misconduct as
determined by a final and non-appealable judgment of a court of competent jurisdiction.




          The Administrative Agent shall not be deemed to have knowledge of any Default unless and until
notice describing such Default is given to the Administrative Agent by the Loan Parties or a
Lender. In the event that the Administrative Agent obtains such actual knowledge or receives such
a notice, the Administrative Agent shall give prompt notice thereof to each of the other Lenders.
Upon the occurrence of an Event of Default, the Administrative Agent shall take such action with
respect to such Default or Event of Default as shall be reasonably directed by the Required
Lenders. Unless and until the Administrative Agent shall have received such direction, the
Administrative Agent may (but shall not be obligated to) take such action, or refrain from taking
such action, with respect to any such Default or Event of Default as they shall deem advisable in
the best interest of the Credit Parties. In no event shall the Administrative Agent be required to
comply with any such directions to the extent that the Administrative Agent believes that its
compliance with such directions would be unlawful.




          The Administrative Agent shall not be responsible for or have any duty to ascertain or inquire
into (i) any statement, warranty or representation made in or in connection with this Agreement or
any other Loan Document, (ii) the contents of any certificate, report or other document delivered
hereunder or thereunder or in connection herewith or therewith, (iii) the performance or observance
of any of the covenants, agreements or other terms or conditions set forth herein or therein or the
occurrence of any Default, (iv) the validity, enforceability, effectiveness or genuineness of this
Agreement, any other Loan Document or any other agreement, instrument or document or the creation,
perfection or priority of any Lien purported to be created by the Security Documents, (v) the value
or the sufficiency of any Collateral, or (vi) the satisfaction of any condition set forth in
Article IV or elsewhere herein, other than to confirm receipt of items expressly required
to be delivered to the Administrative Agent.




          9.04 Reliance by Administrative Agent. The Administrative Agent shall be entitled to rely upon, and shall not incur any liability for
relying upon, any notice, request, certificate, consent, statement, instrument, document or other
writing (including, but not limited to, any electronic message, Internet or intranet website
posting or other distribution) believed by it to be genuine and to have been signed, sent or
otherwise authenticated by the proper Person. The Administrative Agent also may rely upon any
statement made to it orally or by telephone and believed by it to have been made by the proper
Person, and shall not incur any liability for relying thereon. In determining compliance with any
condition hereunder to the making of a Loan that by its terms must be fulfilled to the satisfaction
of a Lender, the Administrative Agent may presume that such condition is satisfactory to such
Lender unless the Administrative Agent shall have received written notice to the contrary from such
Lender prior to the making of such Loan. The Administrative Agent may consult with legal counsel
(who may be counsel for any Loan Party), independent accountants and other experts selected by it,
and shall not be liable for any action taken or not taken by it in accordance with the advice of
any such counsel, accountants or experts.




          9.05 Delegation of Duties. The Administrative Agent may perform any and all of its duties and exercise its rights and
powers hereunder or under any other Loan Document by or through any one or more sub-agents
appointed by the Administrative Agent. The Administrative Agent and any such sub-agent may perform
any and all of its duties and exercise its rights and powers by or through their respective Related
Parties. The exculpatory provisions of this Article shall apply to any such sub-agent and to the
Related Parties of the Administrative Agent and any such sub-agent, and shall apply to their
respective activities as the Administrative Agent.




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          9.06 Resignation of Administrative Agent. The Administrative Agent may at any time give written notice of its resignation to the Lenders
and the Borrower. Upon receipt of any such notice of resignation, the Required Lenders shall have
the right, in consultation with the Borrower, to appoint a successor, which shall be a bank with an
office in the United States, or an Affiliate of any such bank with an office in the United States
and shall, unless an Event of Default has occurred and is continuing at the time of such
appointment, be reasonably acceptable to the Borrower (whose consent shall not be unreasonably
withheld or delayed). Notwithstanding the foregoing, the Required Lenders shall have the right to
appoint a successor who is an Affiliate of Rhône Capital III L.L.C. upon prior written notice to
the Borrower but without consultation with the Borrower, and such successor need not be a bank with
an office in the United States or an Affiliate of any such bank with an office in the United
States. If no such successor shall have been so appointed by the Required Lenders and shall have
accepted such appointment within thirty (30) days after the retiring Administrative Agent gives
notice of its resignation, then the retiring Administrative Agent may on behalf of the Lenders,
appoint a successor Administrative Agent meeting the qualifications set forth above; provided that
if the Administrative Agent shall notify the Borrower and the Lenders that no qualifying Person has
accepted such appointment, then such resignation shall nonetheless become effective in accordance
with such notice and (a) the retiring Administrative Agent shall be discharged from its duties and
obligations hereunder and under the other Loan Documents (except that in the case of any Collateral
held by the Administrative Agent on behalf of the Lenders under any of the Loan Documents, the
retiring Administrative Agent shall continue to hold such Collateral until such time as a successor
Administrative Agent is appointed) and (b) all payments, communications and determinations provided
to be made by, to or through the Administrative Agent shall instead be made by or to each Lender
directly, until such time as the Required Lenders appoint a successor Administrative Agent as
provided for above in this Section. Upon the acceptance of a successor’s appointment as
Administrative Agent hereunder, such successor shall succeed to and become vested with all of the
rights, powers, privileges and duties of the retiring (or retired) Administrative Agent, and the
retiring Administrative Agent shall be discharged from all of its duties and obligations hereunder
or under the other Loan Documents (if not already discharged therefrom as provided above in this
Section). After the retiring Administrative Agent’s resignation hereunder and under the other Loan
Documents, the provisions of this Article and Section 10.04 shall continue in effect for
the benefit of such retiring Administrative Agent, its sub-agents and their respective Related
Parties in respect of any actions taken or omitted to be taken by any of them while the retiring
Agent was acting as Administrative Agent hereunder.




          9.07 Non-Reliance on Administrative Agent and Other Lenders. Each Lender acknowledges that it has, independently and without reliance upon the Administrative
Agent or any other Lender or any of their Related Parties and based on such documents and
information as it has deemed appropriate, made its own credit analysis and decision to enter into
this Agreement. Each Lender also acknowledges that it will, independently and without reliance
upon the Administrative Agent or any other Lender or any of their Related Parties and based on such
documents and information as it shall from time to time deem appropriate, continue to make its own
decisions in taking or not taking action under or based upon this Agreement, any other Loan
Document or any related agreement or any document furnished hereunder or thereunder. The
Administrative Agent shall not have any duty or responsibility to provide any Credit Party with any
other credit or other information concerning the affairs, financial condition or business of any
Loan Party that may come into the possession of the Administrative Agent.




          9.08 No Other Duties, Etc. Notwithstanding anything to the contrary in this Agreement or any of the other Loan Documents,
no Person who is or becomes an Arranger shall have any powers, rights, duties, responsibilities or
liabilities with respect to this Agreement and the other Loan Documents.




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          9.09 Administrative Agent May File Proofs of Claim. In case of the pendency of any proceeding under any Debtor Relief Law or any other judicial
proceeding relative to any Loan Party, the Administrative Agent (irrespective of whether the
principal of any Loan shall then be due and payable as herein expressed or by declaration or
otherwise and irrespective of whether the Administrative Agent shall have made any demand on the
Loan Parties) shall be entitled and empowered, by intervention in such proceeding or otherwise:





               (a) to file and prove a claim for the whole amount of the principal and interest owing
and unpaid in respect of the Loans and all other Obligations that are owing and unpaid and
to file such other documents as may be necessary or advisable in order to have the claims of
the Lenders, the Administrative Agent and the other Credit Parties (including any claim for
the reasonable compensation, expenses, disbursements and advances of the Lenders, the
Administrative Agent, such Credit Parties and their respective agents and counsel and all
other amounts due the Lenders, the Administrative Agent and such Credit Parties under
Section 10.04) allowed in such judicial proceeding; and




               (b) to collect and receive any monies or other property payable or deliverable on any
such claims and to distribute the same;


and any custodian, receiver, assignee, trustee, liquidator, sequestrator or other similar official
in any such judicial proceeding is hereby authorized by each Lender to make such payments to the
Administrative Agent and, if the Administrative Agent shall consent to the making of such payments
directly to the Lenders, to pay to the Administrative Agent any amount due for the reasonable
compensation, expenses, disbursements and advances of the Administrative Agent and its agents and
counsel, and any other amounts due the Administrative Agent under Section 10.04.




          Nothing contained herein shall be deemed to authorize the Administrative Agent to authorize or
consent to or accept or adopt on behalf of any Lender any plan of reorganization, arrangement,
adjustment or composition affecting the Obligations or the rights of any Lender or to authorize the
Administrative Agent to vote in respect of the claim of any Lender in any such proceeding.




          9.10 Collateral and Guaranty Matters. The Credit Parties irrevocably authorize the Administrative Agent, and Administrative Agent
agrees, at its option and in its discretion:




               (a) to release any Lien on any property granted to or held by the Administrative Agent under
any Loan Document (i) upon payment in full of all Obligations (other than contingent
indemnification obligations for which no claim has been asserted), (ii) that is Disposed of or to
be Disposed of as part of or in connection with any Disposition permitted hereunder or under any
other Loan Document, or (iii) if approved, authorized or ratified by the Required Lenders in
accordance with Section 10.01;



               (b) to subordinate any Lien on any property granted to or held by the Administrative Agent
under any Loan Document to the holder of any Lien on such property that is permitted by clause (h)
of the definition of Permitted Encumbrances; and



               (c) to release any Guarantor from its obligations under any Facility Guaranty and each other
applicable Loan Document if such Person ceases to be a Subsidiary as a result of a transaction
permitted hereunder.


Upon request by the Administrative Agent at any time, the Required Lenders (or such other number or
percentage of the Lenders as shall be expressly provided for herein or in the other Loan Documents)
will


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confirm in writing the Administrative Agent’s authority to release or subordinate its interest in
particular types or items of property, or to release any Guarantor from its obligations under the
Facility Guaranty and each other applicable Loan Document pursuant to this Section 9.10.
In each case as specified in this Section 9.10, the Administrative Agent will, at the Loan
Parties’ expense, execute and deliver to the applicable Loan Party such documents as such Loan
Party may reasonably request to evidence the release of such item of Collateral from the assignment
and Lien granted under the Security Documents or to subordinate its interest in such item, or to
release such Guarantor from its obligations under the Facility Guaranty, in each case in accordance
with the terms of the Loan Documents and this Section 9.10.




          9.11 Notice of Transfer. The Administrative Agent may deem and treat a Lender party to this Agreement as the owner of
such Lender’s portion of the Loans and Commitments for all purposes, unless and until, and except
to the extent, an Assignment and Assumption shall have become effective as set forth in Section
10.06.




          9.12 Agency for Perfection. The Administrative Agent and each Lender hereby appoints the Administrative Agent and each other
Lender as agent for the purpose of perfecting Liens for the benefit of the Administrative Agent and
the Lenders, in assets which, in accordance with Article 9 of the UCC or any other applicable Law
of the United States can be perfected only by possession. Should any Lender (other than the
Administrative Agent) obtain possession of any such Collateral, such Lender shall notify the
Administrative Agent thereof, and, promptly upon the Administrative Agent’s request therefor shall
deliver such Collateral to the Administrative Agent or otherwise deal with such Collateral in
accordance with the Administrative Agent’s instructions.




          9.13 Indemnification of Administrative Agent. The Lenders shall indemnify the Administrative Agent (to the extent not reimbursed by the Loan
Parties and without limiting the obligations of Loan Parties hereunder), ratably according to their
Applicable Percentages, from and against any and all liabilities, obligations, losses, damages,
penalties, actions, judgments, suits, costs, expenses or disbursements of any kind or nature
whatsoever that may be imposed on, incurred by, or asserted against the Administrative Agent in any
way relating to or arising out of this Agreement or any other Loan Document or any action taken or
omitted to be taken by the Administrative Agent in connection therewith; provided, that no Lender
shall be liable under this Section 9.13 for any portion of such liabilities, obligations,
losses, damages, penalties, actions, judgments, suits, costs, expenses or disbursements resulting
from the Administrative Agent’s gross negligence or willful misconduct as determined by a final and
nonappealable judgment of a court of competent jurisdiction.




          9.14 Relation among Lenders. The Lenders are not partners or co-venturers, and no Lender shall be liable for the acts or
omissions of, or (except as otherwise set forth herein in case of the Administrative Agent)
authorized to act for, any other Lender.




          9.15 Defaulting Lender





               (a) If for any reason any Lender shall fail or refuse to abide by its obligations under
this Agreement, and such failure is not cured within two (2) Business Days of receipt from
the Administrative Agent of written notice thereof, then, in addition to the rights and
remedies that may be available to the other Credit Parties, the Loan Parties or any other
party at law or in equity, and not at limitation thereof, such Defaulting Lender’s right to
participate in the administration of, or decision-making rights related to, the Obligations,
this Agreement or the other Loan Documents shall be suspended during the pendency of such
failure or refusal. Such decision-making and participation rights shall be restored only
upon the payment by the Defaulting Lender of the expenses or other amounts as to which it is
delinquent, together with



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interest thereon at the rate set forth in Section 2.08(b) hereof from the date
when originally due until the date upon which any such amounts are actually paid.




               (b) Each Defaulting Lender shall indemnify the Administrative Agent and each
non-Defaulting Lender from and against any and all loss, damage or expenses, including but
not limited to reasonable attorneys’ fees and funds advanced by the Administrative Agent or
by any non-Defaulting Lender, on account of a Defaulting Lender’s failure to perform its
obligations under the Loan Documents.



          9.16 Actions in Concert. Anything in this Agreement to the contrary notwithstanding, each Lender hereby agrees with each
other Lender that no Lender shall take any action to protect or enforce its rights arising out of
this Agreement or any other Loan Document (including exercising any rights of setoff) without first
obtaining the prior written consent of the Administrative Agent and the Required Lenders, it being
the intent of Lenders that any such action to protect or enforce rights under this Agreement and
the other Loan Documents shall be taken in concert and at the direction or with the consent of the
Administrative Agent or the Required Lenders.




ARTICLE X




MISCELLANEOUS




          10.01 Amendments, Etc. No amendment or waiver of any provision of this Agreement or any other Loan Document, and no
Consent to any departure by any Loan Party therefrom, shall be effective unless in writing signed
by the Required Lenders (or the Administrative Agent, with the Consent of the Required Lenders),
and the Borrower or the applicable Loan Party, as the case may be, and each such waiver or Consent
shall be effective only in the specific instance and for the specific purpose for which given;
provided, however, that no such amendment, waiver or consent shall:





               (a) postpone any date fixed by this Agreement or any other Loan Document for any
payment of principal, interest or fees due to the Lenders (or any of them) hereunder or
under any of the other Loan Documents without the written Consent of each Lender entitled to
such payment (whose consent shall be sufficient therefor without the consent of the Required
Lenders);




               (b) reduce the principal of, or the rate of interest specified herein on, any Loan, or
any fee payable hereunder, without the written Consent of each Lender entitled to such
amount (whose consent shall be sufficient therefor without the consent of the Required
Lenders); provided, however, that only the Consent of the Required Lenders
shall be necessary to amend the definition of “Default Rate” or to waive any obligation of
the Borrower to pay interest or other amounts at the Default Rate;




               (c) change Section 2.13 or Section 8.03 in a manner that would alter
the pro rata sharing of payments required thereby without the written Consent of each
Lender;




               (d) change any provision of this Section or reduce the percentage specified in the
definition of “Required Lenders” or any other provision hereof specifying the number or
percentage of Lenders required to amend, waive or otherwise modify any rights hereunder or
make any determination or grant any consent hereunder, without the written Consent of each
Lender;



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               (e) except as permitted hereunder or under any other Loan Document (including pursuant
to a transaction permitted under Section 7.04 or Section 7.05), release, or
limit the liability of, the Borrower without the written Consent of each Lender; or




               (f) except for Permitted Dispositions, release all or substantially all of the
Collateral from the Liens of the Security Documents without the written Consent of each
Lender;


and, provided further, that no amendment, waiver or Consent shall, unless in
writing and signed by the Administrative Agent in addition to the Lenders required above, affect
the rights or duties of the Administrative Agent under this Agreement or any other Loan Document.
Notwithstanding anything to the contrary herein, no Defaulting Lender shall have any right to
approve or disapprove any amendment, waiver or Consent hereunder.




          If any Lender does not Consent (a “Non-Consenting Lender”) to a proposed amendment,
waiver, consent or release with respect to any Loan Document that requires the Consent of each or
each affected Lender and that has been approved by the Required Lenders, the Borrower may replace
such Non-Consenting Lender in accordance with Section 10.13; provided that such
amendment, waiver, consent or release can be effected as a result of the assignment contemplated by
such Section (together with all other such assignments required by the Borrower to be made pursuant
to this paragraph).




          10.02
Notices; Effectiveness; Electronic Communications.




               (a) Notices Generally. Except in the case of notices and other communications
expressly permitted to be given by telephone (and except as provided in subsection (b)
below), all notices and other communications provided for herein shall be in writing and shall be
delivered by hand or overnight courier service, mailed by certified or registered mail or sent by
telecopier as follows, and all notices and other communications expressly permitted hereunder to be
given by telephone shall be made to the applicable telephone number, as follows:




               (i) if to the Loan Parties or the Administrative Agent, to the address,
telecopier number, electronic mail address or telephone number specified for such
Person on Schedule 10.02; and




               (ii) if to any other Lender, to the address, telecopier number, electronic mail
address or telephone number specified in its Administrative Questionnaire.


Notices sent by hand or overnight courier service, or mailed by certified or registered mail, shall
be deemed to have been given when received; notices sent by telecopier shall be deemed to have been
given when sent (except that, if not given during normal business hours for the recipient, shall be
deemed to have been given at the opening of business on the next Business Day for the recipient).
Notices delivered through electronic communications to the extent provided in subsection (b) below,
shall be effective as provided in such subsection (b).




               (b) Electronic Communications. Notices and other communications to the Lenders
hereunder may be delivered or furnished by electronic communication (including e-mail and Internet
or intranet websites) pursuant to procedures approved by the Administrative Agent, provided
that the foregoing shall not apply to notices to any Lender pursuant to Article II if such
Lender has notified the Administrative Agent that it is incapable of receiving notices under such
Article by electronic communication. The Administrative Agent or the Borrower may, in its
discretion, agree to accept notices and other communications to it hereunder by electronic
communications pursuant to procedures approved



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by it in writing, provided that approval of such procedures may be limited to
particular notices or communications.




          Unless the Administrative Agent otherwise prescribes in writing, (i) notices and other
communications sent to an e-mail address shall be deemed received upon the sender’s receipt of an
acknowledgement from the intended recipient (such as by the “return receipt requested” function, as
available, return e-mail or other written acknowledgement), provided that if such notice or other
communication is not sent during the normal business hours of the recipient, such notice or
communication shall be deemed to have been sent at the opening of business on the next Business Day
for the recipient, and (ii) notices or communications posted to an Internet or intranet website
shall be deemed received upon the deemed receipt by the intended recipient at its e-mail address as
described in the foregoing clause (i) of notification that such notice or communication is
available and identifying the website address therefor.




               (c) Change of Address, Etc. Each of the Loan Parties and the Administrative Agent may
change its address, telecopier or telephone number for notices and other communications hereunder
by notice to the Administrative Agent. Each other Lender may change its address, telecopier or
telephone number for notices and other communications hereunder by notice to the Borrower and the
Administrative Agent. In addition, each Lender agrees to notify the Administrative Agent from time
to time to ensure that the Administrative Agent has on record (i) an effective address, contact
name, telephone number, telecopier number and electronic mail address to which notices and other
communications may be sent and (ii) accurate wire instructions for such Lender.



               (d) Reliance by Administrative Agent and Lenders. The Administrative Agent and the
Lenders shall be entitled to rely and act upon any notices purportedly given by or on behalf of the
Loan Parties even if (i) such notices were not made in a manner specified herein, were incomplete
or were not preceded or followed by any other form of notice specified herein, or (ii) the terms
thereof, as understood by the recipient, varied from any confirmation thereof. The Loan Parties
shall indemnify the Administrative Agent, each Lender and the Related Parties of each of them from
all losses, costs, expenses and liabilities resulting from the reliance by such Person on each
notice purportedly given by or on behalf of the Loan Parties. All telephonic notices to and other
telephonic communications with the Administrative Agent may be recorded by the Administrative
Agent, and each of the parties hereto hereby consents to such recording.



          10.03 No Waiver; Cumulative Remedies. No failure by any Credit Party to exercise, and no delay by any such Person in exercising, any
right, remedy, power or privilege hereunder shall operate as a waiver thereof; nor shall any single
or partial exercise of any right, remedy, power or privilege hereunder or under any other Loan
Document preclude any other or further exercise thereof or the exercise of any other right, remedy,
power or privilege. The rights, remedies, powers and privileges provided herein and in the other
Loan Documents are cumulative and not exclusive of any rights, remedies, powers and privileges
provided by law. Without limiting the generality of the foregoing, the making of a Loan shall not
be construed as a waiver of any Default, regardless of whether any Credit Party may have had notice
or knowledge of such Default at the time.




          10.04
Expenses; Indemnity; Damage Waiver.




               (a) Costs and Expenses. The Borrower shall pay all Credit Party Expenses.



               (b) Indemnification by the Loan Parties. The Loan Parties shall indemnify the
Administrative Agent (and any sub-agent thereof), each other Credit Party, and each Related Party
of any of the foregoing Persons (each such Person being called an “Indemnitee”) against,
and hold each



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Indemnitee harmless from, any and all losses, claims, causes of action, damages, liabilities,
settlement payments, costs and related expenses (including the fees, charges and disbursements of
any counsel for any Indemnitee, but excluding Taxes, which shall be governed by Section
3.01), incurred by any Indemnitee or asserted against any Indemnitee by any third party or by
the Borrower or any other Loan Party arising out of, in connection with, or as a result of (i) the
execution or delivery of this Agreement, any other Loan Document or any agreement or instrument
contemplated hereby or thereby, the performance by the parties hereto of their respective
obligations hereunder or thereunder or the consummation of the transactions contemplated hereby or
thereby, or, in the case of the Administrative Agent (and any sub-agents thereof) and their Related
Parties only, the administration of this Agreement and the other Loan Documents, (ii) any actual or
alleged presence or release of Hazardous Materials on or from any property owned or operated by any
Loan Party or any of its Subsidiaries, or any Environmental Liability related in any way to any
Loan Party or any of its Subsidiaries, (iii) any claims of, or amounts paid by any Credit Party to
any Person which has entered into a control agreement with any Credit Party hereunder, or (iv) any
actual or prospective claim, litigation, investigation or proceeding relating to any of the
foregoing, whether based on contract, tort or any other theory, whether brought by a third party or
by the Borrower or any other Loan Party or any of the Loan Parties’ directors, shareholders or
creditors, and regardless of whether any Indemnitee is a party thereto, in all cases, whether or
not caused by or arising, in whole or in part, out of the comparative, contributory or sole
negligence of the Indemnitee; provided that such indemnity shall not, as to any Indemnitee,
be available to the extent that such losses, claims, damages, liabilities or related expenses are
determined by a court of competent jurisdiction by final and nonappealable judgment to have
resulted from the gross negligence, willful misconduct or bad faith of such Indemnitee.




               (c) Reimbursement by Lenders. Without limiting their obligations under Section
9.13 hereof, to the extent that the Loan Parties for any reason fail to indefeasibly pay any
amount required under subsection (a) or (b) of this Section to be paid by it, each
Lender severally agrees to pay to the Administrative Agent (or any such sub-agent) or such Related
Party, as the case may be, such Lender’s Applicable Percentage (determined as of the time that the
applicable unreimbursed expense or indemnity payment is sought) of such unpaid amount,
provided that the unreimbursed expense or indemnified loss, claim, damage, liability or
related expense, as the case may be, was incurred by or asserted against the Administrative Agent
(or any such sub-agent) in its capacity as such, or against any Related Party of any of the
foregoing acting for the Administrative Agent (or any such sub-agent) in connection with such
capacity. The obligations of the Lenders under this subsection (c) are subject to the
provisions of Section 2.12(c).



               (d) Waiver of Consequential Damages, Etc. To the fullest extent permitted by
applicable Law, the Loan Parties shall not assert, and hereby waive, any claim against any
Indemnitee, on any theory of liability, for special, indirect, consequential or punitive damages
(as opposed to direct or actual damages) arising out of, in connection with, or as a result of,
this Agreement, any other Loan Document or any agreement or instrument contemplated hereby, the
transactions contemplated hereby or thereby, any Loan or the use of the proceeds thereof. No
Indemnitee shall be liable for any damages arising from the use by unintended recipients of any
information or other materials distributed to such unintended recipients by such Indemnitee through
telecommunications, electronic or other information transmission systems in connection with this
Agreement or the other Loan Documents or the transactions contemplated hereby or thereby other than
for direct or actual damages resulting from the gross negligence or willful misconduct of such
Indemnitee as determined by a final and nonappealable judgment of a court of competent
jurisdiction.



               (e) Payments. All amounts due under this Section shall be payable on demand
(accompanied by back-up documentation) therefor.



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               (f) Survival. The agreements in this Section shall survive the resignation of the
Administrative Agent, the assignment of any Loan by any Lender, the replacement of any Lender and
the repayment, satisfaction or discharge of all the other Obligations and the termination of this
Agreement.



          10.05 Reinstatement; Payments Set Aside. To the extent that any payment by or on behalf of the Loan Parties is made to any Credit Party,
or any Credit Party exercises its right of setoff, and such payment or the proceeds of such setoff
or any part thereof is subsequently invalidated, declared to be fraudulent or preferential, set
aside or required (including pursuant to any settlement entered into by such Credit Party in its
discretion) to be repaid to a trustee, receiver or any other party, in connection with any
proceeding under any Debtor Relief Law or otherwise, then (a) to the extent of such recovery, the
obligation or part thereof originally intended to be satisfied shall be revived and continued in
full force and effect as if such payment had not been made or such setoff had not occurred, and (b)
each Lender severally agrees to pay to the Administrative Agent upon demand its Applicable
Percentage (without duplication) of any amount so recovered from or repaid by the Administrative
Agent, plus interest thereon from the date of such demand to the date such payment is made at a
rate per annum equal to the Federal Funds Rate from time to time in effect. The obligations of the
Lenders under clause (b) of the preceding sentence shall survive the payment in full of the
Obligations and the termination of this Agreement.




          10.06
Successors and Assigns.




               (a) Successors and Assigns Generally. The provisions of this Agreement shall be
binding upon and inure to the benefit of the parties hereto and their respective successors and
assigns permitted hereby, except that no Loan Party may assign or otherwise transfer any of its
rights or obligations hereunder or under any other Loan Document without the prior written Consent
of the Administrative Agent and each Lender and no Lender may assign or otherwise transfer any of
its rights or obligations hereunder except (i) to an Eligible Assignee in accordance with the
provisions of Section 10.06(b), (ii) by way of participation in accordance with the
provisions of Section 10.06(d), or (iii) by way of pledge or assignment of a security
interest subject to the restrictions of Section 10.06(f) (and any other attempted
assignment or transfer by any party hereto shall be null and void). Nothing in this Agreement,
expressed or implied, shall be construed to confer upon any Person (other than the parties hereto,
their respective successors and assigns permitted hereby, Participants to the extent provided in
Section 10.06(d) and, to the extent expressly contemplated hereby, the Related Parties of
each of the Credit Parties) any legal or equitable right, remedy or claim under or by reason of
this Agreement.



               (b) Assignments by Lenders. Any Lender may at any time assign to one or more Eligible
Assignees all or a portion of its rights and obligations under this Agreement (including all or a
portion of the Loans at the time owing to it); provided that any such assignment shall be
subject to the following conditions:



                    (i) Minimum Amounts.




               (A) in the case of an assignment of the entire remaining amount
of the assigning Lender’s Loans at the time owing to it, or in the
case of an assignment to an Eligible Assignee, no minimum amount
need be assigned; and




               (B) in any case not described in subsection (b)(i)(A)
of this Section, the aggregate principal outstanding balance of the
Loans of the assigning Lender subject to each such assignment,
determined as of the date the Assignment and Assumption with respect
to such assignment is delivered to the Administrative Agent



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or, if “Trade Date” is specified in the Assignment and
Assumption, as of the Trade Date, shall not be less than $25,000,000
unless each of the Administrative Agent and the Borrower otherwise
consents (each such consent not to be unreasonably withheld or
delayed);




               (ii) Proportionate Amounts. Each partial assignment shall be made as
an assignment of a proportionate part of all the assigning Lender’s rights and
obligations under this Agreement with respect to the Loans or the Commitment
assigned;




               (iii) Required Consents. No consent shall be required for any
assignment except to the extent required by subsection (b)(i)(B) of this
Section and, in addition:




               (A) the consent of the Borrower (such consent not to be
unreasonably withheld or delayed) shall be required unless such
assignment is to an Eligible Assignee of the type described in
clauses (a) and (b) of the definition thereof; and




               (B) the consent of the Administrative Agent (such consent not
to be unreasonably withheld or delayed) shall be required unless
such assignment is to a Lender or an Affiliate of a Lender.




               (iv) Assignment and Assumption. The parties to each assignment shall
execute and deliver to the Administrative Agent an Assignment and Assumption. The
assignee, if it shall not be a Lender, shall deliver to the Administrative Agent an
Administrative Questionnaire.


Subject to acceptance and recording thereof by the Administrative Agent pursuant to subsection
(c) of this Section, from and after the effective date specified in each Assignment and
Assumption, the Eligible Assignee thereunder shall be a party to this Agreement and, to the extent
of the interest assigned by such Assignment and Assumption, have the rights and obligations of a
Lender under this Agreement, and the assigning Lender thereunder shall, to the extent of the
interest assigned by such Assignment and Assumption, be released from its obligations under this
Agreement (and, in the case of an Assignment and Assumption covering all of the assigning Lender’s
rights and obligations under this Agreement, such Lender shall cease to be a party hereto) but
shall continue to be entitled to the benefits of Sections 3.01, 3.04 and
10.04 with respect to facts and circumstances occurring prior to the effective date of such
assignment. Upon request, the Borrower (at their expense) shall execute and deliver a Note to the
assignee Lender. Any assignment or transfer by a Lender of rights or obligations under this
Agreement that does not comply with this subsection shall be treated for purposes of this Agreement
as a sale by such Lender of a participation in such rights and obligations in accordance with
Section 10.06(d).




               (c) Register. The Administrative Agent, acting solely for this purpose as an agent of
the Borrower, shall maintain at the Administrative Agent’s Office a copy of each Assignment and
Assumption delivered to it and a register for the recordation of the names and addresses of the
Lenders and Participants and the Commitments of, and principal amounts of and stated interest
thereon of the Borrowing owing to, each Lender and Participant pursuant to the terms hereof from
time to time (the “Register”). The Borrowing is a registered obligation and the right,
title and interest of any Lender, Participant or its assignees in and to such Obligation shall be
transferable only upon notation of such transfer in the Register. The entries in the Register
shall be conclusive, absent manifest error, and the Loan Parties, the Administrative Agent and the
Lenders shall treat each Person whose name is recorded in the Register pursuant to the terms hereof
as a Lender hereunder for all purposes of this Agreement,



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notwithstanding notice to the contrary. The Register shall be available for inspection by the
Borrower and any Lender at any reasonable time and from time to time upon reasonable prior notice.
This Section 10.06(c) shall be construed so that the Obligations are at all times
maintained in “registered form” within the meaning of Sections 163(f), 871(h)(2) and 881(c)(2) of
the Code and any regulations promulgated thereunder (and any other relevant or successor provisions
of the Code or such regulations).




               (d) Participations. Any Lender may at any time, without the consent of, or notice to,
the Loan Parties or the Administrative Agent, sell participations to any Person (other than a
natural person or the Loan Parties or any of the Loan Parties’ Affiliates or Subsidiaries) (each, a
“Participant”) in all or a portion of such Lender’s rights and/or obligations under this
Agreement (including all or a portion of its Loans); provided that (i) such Lender’s
obligations under this Agreement shall remain unchanged, (ii) such Lender shall remain solely
responsible to the other parties hereto for the performance of such obligations and (iii) the Loan
Parties, the Administrative Agent and the Lenders shall continue to deal solely and directly with
such Lender in connection with such Lender’s rights and obligations under this Agreement. Any
Participant shall agree in writing to comply with all confidentiality obligations set forth in
Section 10.07 as if such Participant was a Lender hereunder.



          Any agreement or instrument pursuant to which a Lender sells such a participation shall
provide that such Lender shall retain the sole right to enforce this Agreement and to approve any
amendment, modification or waiver of any provision of this Agreement; provided that such
agreement or instrument may provide that such Lender will not, without the consent of the
Participant, agree to any amendment, waiver or other modification described in the first proviso to
Section 10.01 that affects such Participant. Subject to subsection (e) of this
Section, the Loan Parties agree that each Participant shall be entitled to the benefits of
Sections 3.01 and 3.04 to the same extent as if it were a Lender and had acquired
its interest by assignment pursuant to Section 10.06(b); provided that such
Participant’s participation is recorded in the Register as set forth in Section 10.06(c) as
though it were a Lender.




               (e) Limitations upon Participant Rights. A Participant shall not be entitled to
receive any greater payment under Section 3.01 or 3.04 than the applicable Lender
would have been entitled to receive with respect to the participation sold to such Participant. A
Participant shall not be entitled to the benefits of Section 3.01 unless the Borrower is
notified of the participation sold to such Participant and such Participant complies, for the
benefit of the Loan Parties, with Section 3.01(e), (f) or (g), as
applicable, as though it were a Lender.



               (f) Certain Pledges. Any Lender may at any time pledge or assign a security interest
in all or any portion of its rights under this Agreement (including under its Note, if any) to
secure obligations of such Lender, including any pledge or assignment to secure obligations to a
Federal Reserve Bank; provided that no such pledge or assignment shall release such Lender
from any of its obligations hereunder or substitute any such pledgee or assignee for such Lender as
a party hereto.



               (g) Electronic Execution of Assignments. The words “execution,” “signed,”
“signature,” and words of like import in any Assignment and Assumption shall be deemed to include
electronic signatures or the keeping of records in electronic form, each of which shall be of the
same legal effect, validity or enforceability as a manually executed signature or the use of a
paper-based recordkeeping system, as the case may be, to the extent and as provided for in any
applicable law, including the Federal Electronic Signatures in Global and National Commerce Act,
the New York State Electronic Signatures and Records Act, or any other similar state laws based on
the Uniform Electronic Transactions Act.



          10.07 Treatment of Certain Information; Confidentiality. Each of the Credit Parties agrees to maintain the confidentiality of the Information (as defined
below), except that Information may



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be disclosed (a) to its Affiliates and to its and its Affiliates’ respective partners, directors,
officers, employees, agents, funding sources, attorneys, advisors and representatives (it being
understood that the Persons to whom such disclosure is made will be informed of the confidential
nature of such Information and instructed to keep such Information confidential), (b) to the extent
requested by any regulatory authority purporting to have jurisdiction over it (including any
self-regulatory authority, such as the National Association of Insurance Commissioners), (c) to the
extent required by applicable Laws or regulations or by any subpoena or similar legal process, (d)
to any other party hereto, (e) in connection with the exercise of any remedies hereunder or under
any other Loan Document or any action or proceeding relating to this Agreement or any other Loan
Document or the enforcement of rights hereunder or thereunder, (f) subject to an agreement
containing provisions substantially the same as those of this Section, to any assignee of or
Participant in, or any prospective assignee of or Participant in, any of its rights or obligations
under this Agreement, (g) with the consent of the Borrower or (h) to the extent such Information
(x) becomes publicly available other than as a result of a breach of this Section or (y) becomes
available to any Credit Party or any of their respective Affiliates on a non-confidential basis
from a source other than the Loan Parties (only if such Credit Party has no knowledge that such
source itself is not in breach of a confidentiality obligation).




          For purposes of this Section, “Information” means all information received from the
Loan Parties or any Subsidiary thereof relating to the Loan Parties or any Subsidiary thereof or
their respective businesses, other than any such information that is available to any Credit Party
on a non-confidential basis prior to disclosure by the Loan Parties or any Subsidiary thereof
(provided that if such information is furnished by a source known to such Credit Party to
be subject to a confidentiality obligation, such source, to the knowledge of such Credit Party, is
not in violation of such obligation by such disclosure). Any Person required to maintain the
confidentiality of Information as provided in this Section shall be considered to have complied
with its obligation to do so if such Person has exercised the same degree of care to maintain the
confidentiality of such Information as such Person would accord to its own confidential
information.




          Each of the Credit Parties acknowledges that (a) the Information may include material
non-public information concerning the Loan Parties or a Subsidiary, as the case may be, (b) it has
developed compliance procedures regarding the use of material non-public information and (c) it
will handle such material non-public information in accordance with applicable Law, including
Federal and state securities Laws.




          10.08
 [Reserved].




          10.09 Interest Rate Limitation. Notwithstanding anything to the contrary contained in any Loan Document, the interest paid or
agreed to be paid under the Loan Documents shall not exceed the maximum rate of non-usurious
interest permitted by applicable Law (the “Maximum Rate”). If the Administrative Agent or
any Lender shall receive interest in an amount that exceeds the Maximum Rate, the excess interest
shall be applied to the principal of the Loans or, if it exceeds such unpaid principal, refunded to
the Borrower. In determining whether the interest contracted for, charged, or received by the
Administrative Agent or a Lender exceeds the Maximum Rate, such Person may, to the extent permitted
by applicable Law, (a) characterize any payment that is not principal as an expense, fee, or
premium rather than interest, (b) exclude voluntary prepayments and the effects thereof, and (c)
amortize, prorate, allocate, and spread in equal or unequal parts the total amount of interest
throughout the contemplated term of the Obligations hereunder.




          10.10 Counterparts; Integration; Effectiveness
        . This Agreement may be executed in counterparts (and by different parties hereto in different
counterparts), each of which shall constitute an original, but all of which when taken together
shall constitute a single contract. This Agreement and the



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other Loan Documents constitute the entire contract among the parties relating to the subject
matter hereof and supersede any and all previous letters of intent, commitment letters, agreements
and understandings, oral or written, relating to the subject matter hereof, including any
confidentiality agreement. Except as provided in Section 4.01, this Agreement shall become
effective when it shall have been executed by the Administrative Agent and when the Administrative
Agent shall have received counterparts hereof that, when taken together, bear the signatures of
each of the other parties hereto. Delivery of an executed counterpart of a signature page of this
Agreement by telecopy or other electronic image scan transmission (e.g., “pdf” or “tif” via e-mail)
shall be as effective as delivery of a manually executed counterpart of this Agreement.




          10.11 Survival. All representations and warranties made hereunder and in any other Loan Document or other
document delivered pursuant hereto or thereto or in connection herewith or therewith shall survive
the execution and delivery hereof and thereof. Such representations and warranties have been or
will be relied upon by the Administrative Agent and the Lenders, regardless of any investigation
made by the Administrative Agent or any Lenders or on their behalf and notwithstanding that the
Administrative Agent and the Lenders may have had notice or knowledge of any Default at the time of
making the Loans, and shall continue in full force and effect as long as any Loan or any other
Obligation hereunder (other than contingent indemnity obligations for which claims have not been
asserted) shall remain unpaid or unsatisfied. Further, the provisions of Article III,
Article IX and Section 10.04 all survive and remain in full force and effect after
the termination of this Agreement or any provision hereof and repayment of all of the Obligations
(including, without limitation, those arising under Article III, Article IX and
Section 10.04) hereunder.




          10.12 Severability. If any provision of this Agreement or the other Loan Documents is held to be illegal, invalid or
unenforceable, (a) the legality, validity and enforceability of the remaining provisions of this
Agreement and the other Loan Documents shall not be affected or impaired thereby and (b) the
parties shall endeavor in good faith negotiations to replace the illegal, invalid or unenforceable
provisions with valid provisions the economic effect of which comes as close as possible to that of
the illegal, invalid or unenforceable provisions. The invalidity of a provision in a particular
jurisdiction shall not invalidate or render unenforceable such provision in any other jurisdiction.




          10.13 Replacement of Lenders. If any Lender requests compensation under Section 3.04, or if the Borrower is required
to pay any additional amount to any Lender or any Governmental Authority for the account of any
Lender pursuant to Section 3.01, or if any Lender is a Defaulting Lender or a
Non-Consenting Lender, then the Borrower may, at the Borrower’s sole expense and effort, upon
notice to such Lender and the Administrative Agent, require such Lender to assign and delegate,
without recourse (in accordance with and subject to the restrictions contained in, and consents
required by, Section 10.06), all of its interests, rights and obligations under this
Agreement and the related Loan Documents to an assignee that shall assume such obligations (which
assignee may be another Lender, if a Lender accepts such assignment), provided that:





               (a) such Lender shall have received payment of an amount equal to the outstanding
principal amount of its Loans and accrued interest thereon and all other amounts payable to
it hereunder and under the other Loan Documents from the assignee (to the extent of such
outstanding principal and accrued interest) or the Borrower (in the case of all other
amounts);




               (b) in the case of any such assignment resulting from a claim for compensation under
Section 3.04 or payments required to be made pursuant to Section 3.01, such
assignment will result in a reduction in such compensation or payments thereafter; and




               (c) such assignment does not conflict with applicable Laws.



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A Lender shall not be required to make any such assignment or delegation if, prior thereto, as a
result of a waiver by such Lender or otherwise, the circumstances entitling the Borrower to require
such assignment and delegation cease to apply.




          10.14 Foreign Subsidiaries. Notwithstanding any provision of any Loan Document to the contrary (including any provision that
would otherwise apply notwithstanding other provisions or that is the beneficiary of other
overriding language), (i) no more than 66% of the total combined voting power of all classes of
stock entitled to vote in or of any CFC shall be pledged or similarly hypothecated to guarantee or
support any Obligation of the Borrower, (ii) no CFC shall guarantee or support any Obligation of
the Borrower and (iii) no security or similar interest shall be granted in the assets of any CFC,
which security or similar interest guarantees or supports any Obligation of the Borrower. The
parties agree that any pledge, guaranty or security or similar interest made or granted in
contravention of this Section 10.14 shall be void ab initio.




          10.15 Issue Price. The parties hereto acknowledge and agree that, for U.S. federal income tax purposes, (A) the
making of (i) the Loans in an aggregate principal amount equal to $125,000,000, and (ii) the Euro
Term Loans in an aggregate principal amount equal to €20,000,000, and the issuance of the Warrants,
constitute components of an investment unit (an “Investment Unit”), (B) the net aggregate
“issue price” of the Investment Unit shall be the Investment Unit Issue Price, (C) the Investment
Unit Issue Price shall be allocated among each such component as follows: (i) to the Warrants, the
Warrants Issue Price, (ii) to the Loans, the Loan Issue Price and (iii) to the Euro Term Loans, the
Euro Term Loan Issue Price, and (D) each of the parties shall treat such components on a basis
consistent with the foregoing allocations (unless otherwise required by a final determination by
the IRS or a court of competent jurisdiction). Solely for purposes of this Section 10.15,
the defined terms set forth immediately below shall have the meanings ascribed to them as follows:





               “Euro Term Loan Issue Price” shall be an amount equal to the product of (x) a
percentage amount equal to the dollar-equivalent value of €20,000,000 (such amount to be
calculated based on the Euro-to-Dollar foreign exchange rate on the Closing Date) (the
“Dollar-Equivalent Amount”) divided by the sum of the Dollar-Equivalent Amount and
$125,000,000 and (y) the excess of the Investment Unit Issue Price over the Warrants Issue
Price.




               “Investment Unit Issue Price” shall be the amount identified on Schedule
10.15 as the Investment Unit Issue Price.




               “Loan Issue Price” shall be an amount equal to the product of (x) a percentage
amount equal to $125,000,000, divided by the sum of the Dollar-Equivalent Amount and
$125,000,000 and (y) the excess of the Investment Unit Issue Price over the Warrants Issue
Price.




               “Warrants Issue Price” shall be the fair market value of the Warrants
determined as of the Closing Date as set forth on Schedule 10.15.



          10.16 Governing Law; Jurisdiction; Etc. 




               (a) GOVERNING LAW. THIS AGREEMENT SHALL BE GOVERNED BY, AND CONSTRUED IN ACCORDANCE
WITH, THE LAWS OF THE STATE OF NEW YORK.



               (b) SUBMISSION TO JURISDICTION. EACH OF THE BORROWER AND THE PARENT IRREVOCABLY AND
UNCONDITIONALLY SUBMITS, FOR ITSELF AND ITS PROPERTY, TO THE NONEXCLUSIVE JURISDICTION OF THE
COURTS OF THE STATE OF NEW YORK SITTING IN NEW YORK COUNTY AND OF THE UNITED STATES DISTRICT



84









 




COURT OF THE SOUTHERN DISTRICT OF NEW YORK, AND ANY APPELLATE COURT FROM ANY THEREOF, IN ANY
ACTION OR PROCEEDING ARISING OUT OF OR RELATING TO THIS AGREEMENT OR ANY OTHER LOAN DOCUMENT, OR
FOR RECOGNITION OR ENFORCEMENT OF ANY JUDGMENT, AND EACH OF THE BORROWER AND THE PARENT IRREVOCABLY
AND UNCONDITIONALLY AGREES THAT ALL CLAIMS IN RESPECT OF ANY SUCH ACTION OR PROCEEDING MAY BE HEARD
AND DETERMINED IN SUCH NEW YORK STATE COURT OR, TO THE FULLEST EXTENT PERMITTED BY APPLICABLE LAW,
IN SUCH FEDERAL COURT. EACH OF THE BORROWER AND THE PARENT AGREES THAT A FINAL JUDGMENT IN ANY
SUCH ACTION OR PROCEEDING SHALL BE CONCLUSIVE AND MAY BE ENFORCED IN OTHER JURISDICTIONS BY SUIT ON
THE JUDGMENT OR IN ANY OTHER MANNER PROVIDED BY LAW. NOTHING IN THIS AGREEMENT OR IN ANY OTHER
LOAN DOCUMENT SHALL AFFECT ANY RIGHT THAT ANY CREDIT PARTY MAY OTHERWISE HAVE TO BRING ANY ACTION
OR PROCEEDING RELATING TO THIS AGREEMENT OR ANY OTHER LOAN DOCUMENT AGAINST ANY LOAN PARTY OR ITS
PROPERTIES IN THE COURTS OF ANY JURISDICTION.




               (c) WAIVER OF VENUE. EACH OF THE BORROWER AND THE PARENT IRREVOCABLY AND
UNCONDITIONALLY WAIVES, TO THE FULLEST EXTENT PERMITTED BY APPLICABLE LAW, ANY OBJECTION THAT IT
MAY NOW OR HEREAFTER HAVE TO THE LAYING OF VENUE OF ANY ACTION OR PROCEEDING ARISING OUT OF OR
RELATING TO THIS AGREEMENT OR ANY OTHER LOAN DOCUMENT IN ANY COURT REFERRED TO IN PARAGRAPH (B) OF
THIS SECTION. EACH OF THE BORROWER AND THE PARENT HEREBY IRREVOCABLY WAIVES, TO THE FULLEST EXTENT
PERMITTED BY APPLICABLE LAW, THE DEFENSE OF AN INCONVENIENT FORUM TO THE MAINTENANCE OF SUCH ACTION
OR PROCEEDING IN ANY SUCH COURT.



               (d) SERVICE OF PROCESS. EACH OF THE BORROWER AND THE PARENT IRREVOCABLY CONSENTS TO
SERVICE OF PROCESS IN THE MANNER PROVIDED FOR NOTICES IN SECTION 10.02. NOTHING IN THIS
AGREEMENT WILL AFFECT THE RIGHT OF ANY PARTY HERETO TO SERVE PROCESS IN ANY OTHER MANNER PERMITTED
BY APPLICABLE LAW.



               (e) ACTIONS COMMENCED BY LOAN PARTIES. EACH OF THE BORROWER AND THE PARENT AGREES THAT
ANY ACTION COMMENCED BY ANY LOAN PARTY ASSERTING ANY CLAIM OR COUNTERCLAIM ARISING UNDER OR IN
CONNECTION WITH THIS AGREEMENT OR ANY OTHER LOAN DOCUMENT SHALL BE BROUGHT SOLELY IN A COURT OF THE
STATE OF NEW YORK SITTING IN NEW YORK COUNTY OR ANY FEDERAL COURT SITTING THEREIN AS THE
ADMINISTRATIVE AGENT MAY ELECT IN ITS SOLE DISCRETION AND CONSENTS TO THE EXCLUSIVE JURISDICTION OF
SUCH COURTS WITH RESPECT TO ANY SUCH ACTION.



          10.17 Waiver of Jury Trial. EACH PARTY HERETO HEREBY IRREVOCABLY WAIVES, TO THE FULLEST EXTENT PERMITTED BY APPLICABLE LAW,
ANY RIGHT IT MAY HAVE TO A TRIAL BY JURY IN ANY LEGAL PROCEEDING DIRECTLY OR INDIRECTLY ARISING OUT
OF OR RELATING TO THIS AGREEMENT OR ANY OTHER LOAN DOCUMENT OR THE TRANSACTIONS CONTEMPLATED HEREBY
OR THEREBY (WHETHER BASED ON CONTRACT, TORT OR ANY OTHER THEORY). EACH PARTY HERETO (A) CERTIFIES
THAT NO REPRESENTATIVE, AGENT OR ATTORNEY OF ANY OTHER PERSON HAS REPRESENTED, EXPRESSLY OR
OTHERWISE, THAT SUCH OTHER PERSON WOULD NOT, IN THE EVENT OF LITIGATION, SEEK TO ENFORCE THE
FOREGOING WAIVER AND (B) ACKNOWLEDGES THAT IT AND THE OTHER PARTIES HERETO HAVE BEEN INDUCED TO
ENTER INTO THIS



85









 






AGREEMENT AND THE OTHER LOAN DOCUMENTS BY, AMONG OTHER THINGS, THE MUTUAL WAIVERS AND
CERTIFICATIONS IN THIS SECTION.




          10.18 No Advisory or Fiduciary Responsibility. In connection with all aspects of each transaction contemplated hereby, each of the Borrower and
the Parent acknowledge and agree that: (i) the credit facility provided for hereunder and any
related arranging or other services in connection therewith (including in connection with any
amendment, waiver or other modification hereof or of any other Loan Document) are an arm’s-length
commercial transaction between the Loan Parties, on the one hand, and the Credit Parties, on the
other hand, as the case may be, and each of the Loan Parties is capable of evaluating and
understanding and understands and accepts the terms, risks and conditions of the transactions
contemplated hereby and by the other Loan Documents (including any amendment, waiver or other
modification hereof or thereof); (ii) in connection with the transaction contemplated hereby and
the process leading to such transaction, each Credit Party is and has been acting solely as a
principal and except as otherwise expressly agreed, is not acting as an advisor, agent or
fiduciary, for the Loan Parties or any of their respective Affiliates, stockholders, creditors or
employees or any other Person; (iii) none of the Credit Parties has assumed or will assume an
advisory, agency or fiduciary responsibility in favor of the Loan Parties with respect to any of
the transactions contemplated hereby or the process leading thereto, including with respect to any
amendment, waiver or other modification hereof or of any other Loan Document (irrespective of
whether any of the Credit Parties has advised or is currently advising any Loan Party or any of its
Affiliates on other matters) and none of the Credit Parties has any obligation to any Loan Party or
any of its Affiliates with respect to the transactions contemplated hereby except those obligations
expressly set forth herein and in the other Loan Documents; (iv) the Credit Parties and their
respective Affiliates may be engaged in a broad range of transactions that involve interests that
differ from those of the Loan Parties and their respective Affiliates, and none of the Credit
Parties has any obligation to disclose any of such interests by virtue of any advisory, agency or
fiduciary relationship; and (v) the Credit Parties have not provided any legal, accounting,
regulatory or tax advice with respect to any of the transactions contemplated hereby (including any
amendment, waiver or other modification hereof or of any other Loan Document) and each of the Loan
Parties has consulted its own legal, accounting, regulatory and tax advisors to the extent it has
deemed appropriate. Each of the Borrower and the Parent hereby waives and releases, to the fullest
extent permitted by law, any claims that it may have against each of the Credit Parties based upon
or relating to any allegation that a Credit Party owes such Loan Party and its affiliates and
representatives (and their respective affiliates) any fiduciary duty with respect to any of the
transactions contemplated hereby, and agrees, to the fullest extent permitted by law, that no
Credit Party, or any of its Affiliates, managed funds or Affiliate-managed funds will have any
liability (whether direct or indirect) in respect of any claim for breach of fiduciary duty to any
such person or any other Person with respect to any of the transactions contemplated hereby,
including any stockholders, employees or creditors asserting a claim derivatively, in any such
Person’s name or otherwise on its behalf.




          10.19 USA PATRIOT Act Notice. Each Lender that is subject to the Patriot Act and the Administrative Agent (for itself and not
on behalf of any Lender) hereby notifies the Loan Parties that pursuant to the requirements of the
Patriot Act, it is required to obtain, verify and record information that identifies each Loan
Party, which information includes the name and address of each Loan Party and other information
that will allow such Lender or the Administrative Agent, as applicable, to identify each Loan Party
in accordance with the Act.




          10.20 Foreign Asset Control Regulations. Neither of the advance of the Loans nor the use of the proceeds of any thereof will violate the
Trading With the Enemy Act (50 U.S.C. § 1 et seq., as amended) (the “Trading With the Enemy
Act”) or any of the foreign assets control regulations of the United States Treasury Department
(31 CFR, Subtitle B, Chapter V, as amended) (the “Foreign Assets Control Regulations”) or
any enabling legislation or executive order relating thereto (which for the



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avoidance of doubt shall include, but shall not be limited to (a) Executive Order 13224 of
September 21, 2001 Blocking Property and Prohibiting Transactions With Persons Who Commit, Threaten
to Commit, or Support Terrorism (66 Fed. Reg. 49079 (2001)) (the “Executive Order”) and (b)
the Uniting and Strengthening America by Providing Appropriate Tools Required to Intercept and
Obstruct Terrorism Act of 2001 (Public Law 107-56)). Furthermore, none of the Parent or any of its
Subsidiaries (a) is or will become a “blocked person” as described in the Executive Order, the
Trading With the Enemy Act or the Foreign Assets Control Regulations or (b) engages or will engage
in any dealings or transactions, or be otherwise associated, with any such “blocked person” or in
any manner violative of any such order.




          10.21 Time of the Essence. Time is of the essence of the Loan Documents.




          10.22
Press Releases.




               (a) Each Credit Party executing this Agreement agrees that neither it nor its Affiliates will
in the future issue any press releases or other public disclosure using the name of any Lender or
Administrative Agent or its Affiliates or referring to this Agreement or the other Loan Documents
without at least two (2) Business Days’ prior notice to such Lender or Administrative Agent and
without the prior written consent of such Lender or Administrative Agent unless (and only to the
extent that) such Credit Party or Affiliate is required to do so under applicable Law and then, in
any event, such Credit Party or Affiliate will consult with such Lender or Administrative Agent
before issuing such press release or other public disclosure.



               (b) Each Credit Party agrees that neither it nor its Affiliates will in the future issue any
press releases or other public disclosure using the name of the Parent or its Subsidiaries without
at least two (2) Business Days’ prior notice to the Administrative Agent and without the prior
written consent of the Administrative Agent unless (and only to the extent that) such Credit Party
or Affiliate is required to do so under applicable Law and then, in any event, such Credit Party or
Affiliate will consult with the Borrower before issuing such press release or other public
disclosure. Subject to the foregoing, each Loan Party consents to the publication by Administrative
Agent or any Lender of advertising material relating to the financing transactions contemplated by
this Agreement using any Loan Party’s name, product photographs, logo or trademark. The
Administrative Agent or such Lender shall provide a draft reasonably in advance of any advertising
material to the Borrower for review and comment prior to the publication thereof. Administrative
Agent reserves the right to provide to industry trade organizations information necessary and
customary for inclusion in league table measurements.



          10.23
[Reserved].




          10.24  No Strict Construction. The parties hereto have participated jointly in the negotiation and drafting of this Agreement.
In the event an ambiguity or question of intent or interpretation arises, this Agreement shall be
construed as if drafted jointly by the parties hereto and no presumption or burden of proof shall
arise favoring or disfavoring any party by virtue of the authorship of any provisions of this
Agreement.




          10.25 Attachments. The exhibits and schedules attached to this Agreement are incorporated herein and shall be
considered a part of this Agreement for the purposes stated herein, except that in the event of any
conflict between any of the provisions of such exhibits (other than the Intercreditor Agreements)
and the provisions of this Agreement, the provisions of this Agreement shall prevail.




          10.26 Conflict of Terms. Except as otherwise provided in this Agreement or any of the other Loan Documents by specific
reference to the applicable provisions of this Agreement, if any



87









 






provision contained in this Agreement conflicts with any provision in any of the other Loan
Documents (other than the Intercreditor Agreements), the provision contained in this Agreement
shall govern and control. Unless otherwise defined therein, all capitalized terms contained in any
exhibit or schedule attached to this Agreement shall have the meanings assigned to such terms in
this Agreement.




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



	 	 	 	 	 
	 	QUIKSILVER AMERICAS, INC.,

as the Borrower

 	 
	 	By:  	 	 
	 	 	Name:  	 	 
	 	 	Title:  	 	 
	 
	 	QUIKSILVER, INC.,

as a Guarantor

 	 
	 	By:  	 	 
	 	 	Name:  	 	 
	 	 	Title:  	 	 
	 




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	 	RHÔNE GROUP L.L.C., as Administrative Agent

 	 
	 	By:  	 	 
	 	 	Name:  	 	 
	 	 	Title:  	 	 
	 




S-2









 





	 	 	 	 	 	 	 
	 	 	ROMOLO HOLDINGS C.V., as Lender	 	 
	 
	 	 	 	 	 	 
	 

	 	By:	 	 	 	 
	 

	 	Name:
	 	 

	 	 
	 

	 	Title:	 	 	 	 
	 
	 	 	 	 	 	 
	 	 	TRITON SPV L.P., as Lender	 	 
	 
	 	 	 	 	 	 
	 

	 	By:
	 	Triton GP SPV LLC, as General Partner	 	 
	 
	 	 	 	 	 	 
	 

	 	By:	 	 	 	 
	 

	 	Name:
	 	 

	 	 
	 

	 	Title:	 	 	 	 
	 
	 	 	 	 	 	 
	 	 	TRITON ONSHORE SPV L.P., as Lender	 	 
	 
	 	 	 	 	 	 
	 

	 	By:
	 	Triton GP SPV LLC, as General Partner	 	 
	 
	 	 	 	 	 	 
	 

	 	By:	 	 	 	 
	 

	 	Name:
	 	 

	 	 
	 

	 	Title:	 	 	 	 
	 
	 	 	 	 	 	 
	 	 	TRITON OFFSHORE SPV L.P., as Lender	 	 
	 
	 	 	 	 	 	 
	 

	 	By:
	 	Triton GP SPV LLC, as General Partner	 	 
	 
	 	 	 	 	 	 
	 

	 	By:	 	 	 	 
	 

	 	Name:
	 	 

	 	 
	 

	 	Title:	 	 	 	 
	 
	 	 	 	 	 	 
	 	 	TRITON COINVESTMENT SPV L.P., as Lender	 	 
	 
	 	 	 	 	 	 
	 

	 	By:
	 	Triton GP SPV LLC	 	 
	 
	 	 	 	 	 	 
	 

	 	By:	 	 	 	 
	 

	 	Name:
	 	 

	 	 
	 

	 	Title:	 	 	 	 







S-3