exv10w3






Exhibit 10.3




WARRANT AND REGISTRATION RIGHTS AGREEMENT




by and among




QUIKSILVER, INC.,




THE INITIAL WARRANT HOLDERS




and




RHÔNE CAPITAL III L.P.




Dated as of July 31, 2009




 









 





TABLE OF CONTENTS




	 	 	 	 	 	 	 	 	 
	 	 	 	 	 	 	Page	 
	 
	 	 	 	 	 	 	 	 
	1.	 	DEFINITIONS	 	 	1	 
	 
	 	 	 	 	 	 	 	 
	2.	 	ORIGINAL ISSUE OF WARRANTS	 	 	6	 
	 
	 	2.1.	 	Form of Warrant Certificates	 	 	6	 
	 
	 	2.2.	 	Execution and Delivery of Warrant Certificates	 	 	6	 
	 
	 	 	 	 	 	 	 	 
	3.	 	EXERCISE PRICE; EXERCISE OF WARRANTS AND EXPIRATION OF WARRANTS	 	 	7	 
	 
	 	3.1.	 	Exercise Price	 	 	7	 
	 
	 	3.2.	 	Exercise of Warrants	 	 	7	 
	 
	 	3.3.	 	Expiration of Warrants	 	 	7	 
	 
	 	3.4.	 	Method of Exercise; Payment of Exercise Price	 	 	7	 
	 
	 	3.5.	 	Transferability of the Warrants	 	 	8	 
	 
	 	3.6.	 	Compliance with the Securities Act	 	 	9	 
	 
	 	3.7.	 	Exercise for Series A Preferred Stock	 	 	10	 
	 
	 	 	 	 	 	 	 	 
	4.	 	REGISTRATION RIGHTS AND PROCEDURES AND LISTING	 	 	10	 
	 
	 	4.1.	 	Demand Registration Rights	 	 	10	 
	 
	 	4.2.	 	Piggy-Back Registration Rights	 	 	13	 
	 
	 	4.3.	 	Expenses of Registration and Selling	 	 	14	 
	 
	 	4.4.	 	Obligations of the Company	 	 	14	 
	 
	 	4.5.	 	Suspension of Sales	 	 	17	 
	 
	 	4.6.	 	Furnishing Information	 	 	17	 
	 
	 	4.7.	 	Indemnification	 	 	17	 
	 
	 	4.8.	 	Contribution	 	 	19	 
	 
	 	4.9.	 	Representations, Warranties and Indemnities to Survive	 	 	19	 
	 
	 	4.10.	 	Lock-Up Agreements	 	 	19	 






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TABLE OF CONTENTS

(continued)




	 	 	 	 	 	 	 	 	 
	 	 	 	 	 	 	Page	 
	 
	 	 	 	 	 	 	 	 
	 
	 	4.11.	 	Rule 144 Reporting	 	 	20	 
	 
	 	 	 	 	 	 	 	 
	5.	 	ADJUSTMENTS	 	 	20	 
	 
	 	5.1.	 	Adjustments for Cash Dividends	 	 	20	 
	 
	 	5.2.	 	Adjustments Upon Certain Transactions	 	 	20	 
	 
	 	5.3.	 	Dividends and Distributions	 	 	21	 
	 
	 	5.4.	 	Issuer Tender Offers	 	 	22	 
	 
	 	5.5.	 	Consolidation, Merger or Sale	 	 	23	 
	 
	 	5.6.	 	Preemptive Rights	 	 	24	 
	 
	 	5.7.	 	Consent Upon Certain Issuances	 	 	24	 
	 
	 	5.8.	 	Affiliate Transactions	 	 	24	 
	 
	 	5.9.	 	Fractional Shares	 	 	24	 
	 
	 	5.10.	 	Notice of Adjustment	 	 	24	 
	 
	 	 	 	 	 	 	 	 
	6.	 	WARRANT TRANSFER BOOKS	 	 	25	 
	 
	 	 	 	 	 	 	 	 
	7.	 	WARRANT HOLDERS	 	 	25	 
	 
	 	7.1.	 	No Voting Rights	 	 	25	 
	 
	 	7.2.	 	Right of Action	 	 	26	 
	 
	 	7.3.	 	Agent	 	 	26	 
	 
	 	 	 	 	 	 	 	 
	8.	 	REPRESENTATIONS AND WARRANTIES	 	 	26	 
	 
	 	8.1.	 	Representations and Warranties of the Company	 	 	26	 
	 
	 	8.2.	 	Representations and Warranties of the Holders	 	 	27	 
	 
	 	 	 	 	 	 	 	 
	9.	 	COVENANTS	 	 	28	 
	 
	 	9.1.	 	Reservation of Common Stock for Issuance on Exercise of Warrants	 	 	28	 
	 
	 	9.2.	 	Notice of Dividends	 	 	28	 
	 
	 	9.3.	 	HSR Act Compliance	 	 	29	 






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TABLE OF CONTENTS

(continued)




	 	 	 	 	 	 	 	 	 
	 	 	 	 	 	 	Page	 
	 
	 	 	 	 	 	 	 	 
	 
	 	9.4.	 	Board Representation	 	 	29	 
	 
	 	9.5.	 	Stockholder Approval	 	 	30	 
	 
	 	9.6.	 	Certain Other Events	 	 	30	 
	 
	 	9.7.	 	Transfers	 	 	31	 
	 
	 	 	 	 	 	 	 	 
	10.	 	MISCELLANEOUS	 	 	31	 
	 
	 	10.1.	 	Payment of Taxes	 	 	31	 
	 
	 	10.2.	 	Surrender of Certificates	 	 	31	 
	 
	 	10.3.	 	Mutilated, Destroyed, Lost and Stolen Warrant Certificates	 	 	31	 
	 
	 	10.4.	 	Removal of Legends	 	 	32	 
	 
	 	10.5.	 	Notices	 	 	32	 
	 
	 	10.6.	 	Applicable Law	 	 	33	 
	 
	 	10.7.	 	Persons Benefiting	 	 	33	 
	 
	 	10.8.	 	Counterparts	 	 	33	 
	 
	 	10.9.	 	Amendments	 	 	33	 
	 
	 	10.10.	 	Headings	 	 	33	 
	 
	 	10.11.	 	Entire Agreement	 	 	33	 
	 
	 	10.12.	 	Limitation of Liability	 	 	33	 






SIGNATURES




	 	 	 	 	 	 	 
	EXHIBIT A —
	 	Form of Warrant Certificate and Form of Reverse of Warrant Certificate	 	 	A-1	 
	EXHIBIT B —
	 	Form of Reverse of Warrant Certificate	 	 	B-1	 
	EXHIBIT C —
	 	Certificate of Designations of the Series A Preferred Stock	 	 	C-1	   
	SCHEDULE 8.1 — Capitalization
	 	 	 	 







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WARRANT AND REGISTRATION RIGHTS AGREEMENT




     AGREEMENT dated as of July 31, 2009 (the “Issuance Date”) by and among Quiksilver, Inc., a
Delaware corporation (the “Company”), the Initial Warrant Holders (defined below) and Rhône Capital
III L.P., a Delaware limited partnership (“Rhône Capital III”).



WITNESSETH:




     WHEREAS, the Company is issuing and delivering warrant certificates (the “Warrant
Certificates”) evidencing Warrants to purchase 25,653,831 shares, subject to adjustment, of its
Common Stock in connection with (i) the execution and delivery of a senior secured term loan
facility agreement dated July 31, 2009 among Quiksilver Americas, Inc., a California corporation,
the guarantors named therein including the Company, and Rhône Group LLC, as agent (the “Agent”) for
the lenders thereunder (the “Lenders”), pursuant to which the Lenders will make a term loan to
Quiksilver Americas, Inc. of $125,000,000 (the “U.S. Term Loan Agreement”), and (ii) the execution
and delivery of a senior secured term loan facility agreement dated the date hereof among Mountain
& Wave S.à r.l., a newly-formed, direct, wholly-owned subsidiary of the Company (the “European
Borrower”), the guarantors named therein including the Company and the Agent on behalf of the
Lenders, pursuant to which the Lenders will make a term loan to the European Borrower of
€20,000,000 (the “European Term Loan Agreement”);



     WHEREAS, subject to certain adjustments and limitations provided herein, the Warrants are
exercisable into Common Stock of the Company; and



     WHEREAS, to the extent of any adjustment that would require the approval of the Company’s
stockholders in order to comply with the New York Stock Exchange Listed Company Manual, the
Warrants will instead be exercisable for Series A Preferred Stock of the Company, on the terms set
forth herein.



     NOW, THEREFORE, in consideration of the foregoing and for the purpose of defining the terms
and provisions of the Warrants and the respective rights and obligations thereunder of the Company
and the Holders, the Company and the Initial Warrant Holders each hereby agree as follows:



1. DEFINITIONS.




     As used in this Agreement, the following terms shall have the following meanings:



          ABL Facility: the senior, secured asset-based revolving credit facility dated the
date hereof with respect to the Company and certain of its domestic subsidiaries.




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




 









 








          Agent: the meaning set forth in the preamble to this Agreement.




          Appointing Funds: Triton Onshore SPV L.P. and Triton Coinvestment SPV L.P.




          Board: the board of directors of the Company.




          Business Day: any day that is not a day on which banking institutions are authorized
or required to be closed in the state of New York.




          Cashless Exercise: the meaning set forth in Section 3.4(b).




          Certificate of Incorporation: the Company’s Amended and Restated Certificate of
Incorporation, as amended from time to time.




          Common Stock: the common stock, par value $0.01 per share, of the Company.




          Common Stock Equivalent: any warrant, right or option to acquire any shares of Common
Stock or any security convertible or exchangeable into shares of Common Stock.




          Company: the meaning set forth in the preamble to this Agreement and its successors
and assigns.




          Demand Registration: the meaning set forth in Section 4.1(a).




          DOJ: the meaning set forth in Section 9.3.




          Effective Issuance Price:




          (i) with respect to Common Stock issued for cash, the per share amount of the net cash
proceeds received by the Company for such Common Stock;




          (ii) with respect to Common Stock issued for other consideration, the per share amount of the
Fair Market Value of the net consideration;




          (iii) with respect to any option, warrant or other right to acquire Common Stock, whether
direct or indirect and whether or not conditional or contingent, the sum of the per share amount of
(a) the Fair Market Value of the net aggregate consideration, if any, received by the Company for
the issuance of such option, warrant or right divided by the number of shares of Common Stock into
which such option, warrant or right is exercisable at time of issuance, plus (b) the per share
amount of the net exercise price to the extent paid in cash and the per share Fair Market Value of
the net exercise price if paid in other consideration; and




          (iv) with respect to securities convertible or exchangeable into Common Stock, the net
consideration per security paid for such securities (to the extent paid in cash) or the net Fair
Market Value of the consideration per security paid for such securities if the price for such
securities is paid in other consideration, as of the date of their issuance divided by the number
of shares of Common Stock for which such securities are convertible or exchangeable.




          European Borrower: the meaning set forth in the preamble to this Agreement.




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          European Term Loan Agreement: the meaning set forth in the preamble to this
Agreement.




          Excess Shares: the meaning set forth in Section 3.7.




          Excess Tender Amount: the meaning set forth in Section 5.4.




          Exchange Act: the Securities Exchange Act of 1934, as amended.




          Excluded Securities: (i) the Qualifying Employee Stock, (ii) the Underlying Stock,
(iii) any shares of Common Stock or Common Stock Equivalents issued for non-cash consideration in
connection with any merger, consolidation, acquisition or similar business combination, (iv) any
shares of Common Stock issued pursuant to the commitments disclosed on Schedule 8.1 hereto, and (v)
any shares of Common Stock or Common Stock Equivalents issued in connection with any joint venture,
licensing, development or sponsorship activities in the ordinary course of business.




          ex-date: the meaning set forth in Section 5.3(a).




          Exercise Date: the meaning set forth in Section 3.2.




          Exercise Price: the meaning set forth in Section 3.1.




          Expenses: all expenses incurred by the Company and the Holders in effecting any
registration pursuant to this Agreement, including, without limitation, all registration and filing
fees, printing expenses, reasonable fees and disbursements of one counsel selected by Rhône Capital
III to represent all holders of Registrable Securities included in such registration, blue sky fees
and expenses, and expenses of the Company’s independent accountants in connection with any regular
or special reviews or audits incident to or required by any such registration, and all discounts,
selling commissions and stock transfer taxes applicable to the sale of Registrable Securities.




          Expiration Date: the meaning set forth in Section 3.3.




          Fair Market Value:




          (i) in the case of shares of stock where, at least four months prior to the issuance thereof,
other shares of the same class had already been listed on the New York Stock Exchange or the
National Association of Securities Dealers Automated Quotations, the average of the daily
volume-weighted average prices of such stock for the five consecutive trading days immediately
preceding the day as of which Fair Market Value is being determined;




          (ii) in the case of securities not covered by (i) above or other property, the fair market
value of such securities or such other property as determined by an Independent Financial Expert,
using one or more valuation methods that the Independent Financial Expert in its best professional
judgment determines to be most appropriate, assuming, in the case of securities, such securities
are fully distributed and, in the case of securities or other property, such items are




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to be sold in an arm’s-length transaction and there was no compulsion on the part of any party
to such sale to buy or sell and taking into account all relevant factors; and




          (iii) in the case of cash, the amount thereof.




          French Facility: the French term and revolving credit facilities with respect to
certain of the Company’s French subsidiaries, including (i) the term loan facility dated the date
hereof with respect to Pilot SAS; (ii) the term loan facility dated the date hereof with respect to
Na Pali; and (iii) the revolving credit facility dated the date hereof with respect to Na Pali.




          FTC: the meaning set forth in Section 9.3.




          Holders: the Initial Warrant Holders and any assignee or transferee of such Initial
Warrant Holders and, unless otherwise provided or indicated herein, the holders of the Registrable
Securities.




          HSR Act: the meaning set forth in Section 9.3.




          Independent Financial Expert: a nationally recognized investment banking firm
mutually agreed by the Company and Rhône Capital III, which firm does not have a material financial
interest or other material economic relationship with either the Company or Rhône Capital III or
their respective Affiliates. If the Company and Rhône Capital III are unable to agree on an
Independent Financial Expert, each of them shall promptly choose a separate Independent Financial
Expert who shall promptly choose a third Independent Financial Expert who shall serve as the
Independent Financial Expert hereunder, provided that such third Independent Financial Expert does
not have any of the relationships with the Company or Rhône Capital III described in this
definition.




          Initial Warrant Holders: each of (i) Romolo Holdings C.V., (ii) Triton SPV L.P.,
(iii) Triton Onshore SPV L.P., (iv) Triton Offshore SPV L.P. and (v) Triton Coinvestment SPV L.P.




          Issuance Date: the meaning set forth in the preamble to this Agreement.




          Lenders: the meaning set forth in the preamble to this Agreement.




          Maximum Number of Shares: the meaning set forth in Section 4.1(c).




          Person: any individual, corporation, partnership, joint venture, association, joint
stock company, trust, unincorporated organization or government or any agency or political
subdivision thereof.




          Per Warrant Cap: the meaning set forth in Section 3.7.




          Piggyback Registration: the meaning set forth in Section 4.2(a).




          Premium Per Pro Forma Share: the meaning set forth in Section 5.4.




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          Prospectus: the prospectus included in any Registration Statement, as amended or
supplemented by any prospectus supplement with respect to the terms of the offering of any of the
Registrable Securities covered by such Registration Statement and by all other amendments and
supplements to the prospectus, including post-effective amendments and all material incorporated by
reference in such prospectus.




          Qualifying Employee Stock: (i) rights and options issued in the ordinary course of
business under employee benefit plans and any Common Stock issued after the date hereof upon
exercise of such rights and options, and (ii) restricted stock and restricted stock units issued
after the date hereof in the ordinary course of business under employee benefit plans and Common
Stock issued after the date hereof in settlement of any such restricted stock units.




          Recapitalization Event: the meaning set forth in Section 5.3(a).




          Register, registered, and registration: shall refer to a registration effected by
preparing and (a) filing a Registration Statement in compliance with the Securities Act and
applicable rules and regulations thereunder, and the declaration or ordering of effectiveness of
such Registration Statement or (b) filing a Prospectus and/or prospectus supplement in respect of
an appropriate effective Registration Statement on Form S-3.




          Registrable Securities: Common Stock, Series A Preferred Stock or other securities
issuable under the Warrants to the Initial Warrant Holders on the Issuance Date and at any time
during the term of this Agreement. Registrable Securities shall continue to be Registrable
Securities (whether they continue to be held by the Initial Warrant Holders or they are sold to
other Persons) until (i) they are sold pursuant to an effective Registration Statement under the
Securities Act, (ii) they may be sold by their holder pursuant to Rule 144 without limitation
thereunder on volume or manner of sale, or (iii) they shall have otherwise been transferred and new
securities not subject to transfer restrictions under any federal securities laws and not bearing
any legend restricting further transfer shall have been delivered by the Company, all applicable
holding periods shall have expired, and no other applicable and legally binding restriction on
transfer by the Holder thereof shall exist.




          Registration Rights: the rights of Holders set forth in Article 4 to have shares of
Registrable Securities registered under the Securities Act for sale under one or more effective
Registration Statements.




          Registration Statement: any registration statement filed by the Company under the
Securities Act pursuant to the Registration Rights, including the Prospectus, any amendments and
supplements to such registration statement, including post-effective amendments, and all exhibits
and all material incorporated by reference in such registration statement.




          Reorganization Event: the meaning set forth in Section 5.5.




          Required Stockholder Approval: any approval by the Company’s stockholders in
connection with an adjustment of the Warrants to comply with Section 312.03 of the New York Stock
Exchange Listed Company Manual.




          Rhône Capital III: the meaning set forth in the preamble to this Agreement.




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          Rhône Director: the meaning set forth in Section 9.4(a).




          Rule 144, Rule 405 and Rule 415: in each case, such rule promulgated under the
Securities Act (or any successor provision), as the same shall be amended from time to time.




          sale: the meaning set forth in Section 3.6(a).




          Scheduled Black-Out Period: the period from and including the last day of a fiscal
quarter of the Company to and including the Business Day after the day on which the Company
publicly releases its earnings for such fiscal quarter.




          SEC: the Securities and Exchange Commission.




          Securities Act: the Securities Act of 1933, as amended.




          Series A Preferred Stock: the meaning set forth in Section 3.7.




          Total Cap: the meaning set forth in Section 3.7.




          Underlying Stock: the shares of Common Stock or Series A Preferred Stock issuable or
issued upon the exercise of the Warrants.




          U.S. Term Loan Agreement: the meaning set forth in the preamble to this Agreement.




          Voting Securities: the Common Stock and any other securities of the Company of any
kind or class having power generally to vote in the election of directors.




          VWAP: the value weighted average price of a given security for a given trading day,
determined by calculating, for each trade on such day, the product of the price per share
multiplied by the number of shares for such trade, and by adding all such products and dividing
such sum by the total number of shares traded on such day.




          Warrant Certificates: the meaning set forth in the preamble to this Agreement and
substantially in the form attached hereto as Exhibit A.




          Warrants: the warrants issued by the Company from time to time pursuant to this
Agreement.




2. ORIGINAL ISSUE OF WARRANTS.




     2.1. Form of Warrant Certificates. The Warrant Certificates shall be in registered
form only and substantially in the form attached hereto as Exhibit A, shall be dated the date on
which signed by the Company and may have such legends and endorsements typed, stamped, printed,
lithographed or engraved thereon as provided in Section 3.5 or as may be required to comply with
any law or with any rule or regulation pursuant thereto or with any rule or regulation of any
securities exchange on which the Warrants may be listed.



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     2.2. Execution and Delivery of Warrant Certificates.



          (a) Simultaneously with the execution of this Agreement, Warrant Certificates evidencing
25,653,831 Warrants entitling the holders thereof to purchase an aggregate of 25,653,831 shares of
Common Stock, subject to adjustment and subject to Section 3.7, shall be executed by the Company
and delivered to the Initial Warrant Holders.




          (b) From time to time, the Company shall sign and deliver Warrant Certificates in required
denominations to Persons entitled thereto in connection with any exchange permitted under this
Agreement. The Warrant Certificates shall be executed on behalf of
the Company by its President, Chief Financial Officer, Chief
Administrative Officer, Secretary or
Executive Vice President, either manually or by facsimile signature printed thereon. In case any
officer of the Company whose signature shall have been placed upon any of the Warrant Certificates
shall cease to be such officer of the Company before issue and delivery thereof, such Warrant
Certificates may, nevertheless, be issued and delivered with the same force and effect as though
such person had not ceased to be such officer of the Company.




3. EXERCISE PRICE; EXERCISE OF WARRANTS AND EXPIRATION OF WARRANTS.




     3.1. Exercise Price. Each Warrant Certificate shall entitle the Holder thereof,
subject to the provisions of this Agreement, to purchase, except as provided in Section 3.4 and
Section 3.7 hereof, one share of Common Stock for each Warrant represented thereby, at an exercise
price (the “Exercise Price”) of $1.86 per share, subject to all adjustments made on or prior to the
date of exercise thereof as herein provided.



     3.2. Exercise of Warrants. The Warrants shall be exercisable in whole or in part from
time to time on any Business Day (each, an “Exercise Date”) beginning on the date hereof and ending
on the Expiration Date, in the manner provided for herein.



     3.3. Expiration of Warrants. Any unexercised Warrants shall expire and the rights of
the Holders of such Warrants to purchase Underlying Stock shall terminate at the close of business
on July 31, 2016 (the “Expiration Date”).



     3.4. Method of Exercise; Payment of Exercise Price.



          (a) In order to exercise a Warrant, the Holder thereof must (i) surrender the Warrant
Certificate evidencing such Warrant to the Company, with the form on the reverse of or attached to
the Warrant Certificate duly executed, and (ii) pay in full the Exercise Price then in effect for
the shares of Underlying Stock as to which a Warrant Certificate is submitted for exercise in the
manner provided in paragraph (b) of this Section.




          (b) Simultaneously with the exercise of each Warrant, payment in full of the Exercise Price
shall be delivered to the Company. Such payment shall be made (at the option of the Holder) (a) in
cash, by bank wire transfer in immediately available funds, or by certified or official bank check
drawn on a New York City bank, or (b) if at the time of such exercise, the Fair Market Value of the
shares of Common Stock exceeds the Exercise Price, by surrendering a number of Warrants (or
fractional portions thereof) having a value equal to the Exercise Price (a “Cashless Exercise”),
determined as provided in this Section 3.4(b). The value of each Warrant so surrendered in a
Cashless Exercise shall be equal to the Fair Market Value, at the time of such




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surrender, of that number of shares of Common Stock into which such Warrant is then
exercisable (or would be exercisable if Section 3.7 did not then apply with respect to such
exercise), less the Exercise Price.




          (c) If fewer than all the Warrants represented by a Warrant Certificate are surrendered, such
Warrant Certificate shall be surrendered and a new Warrant Certificate of the same tenor and for
the number of Warrants that were not surrendered shall promptly be executed and delivered to the
Person or Persons as may be directed in writing by the Holder and the Company shall register the
new Warrant in the name of such Person or Persons.




          (d) Upon surrender of a Warrant Certificate in conformity with the foregoing provisions, the
Company shall instruct its transfer agent to transfer to the Holder of such Warrant Certificate
appropriate evidence of ownership of any shares of Underlying Stock or other securities or property
(including cash) to which the Holder is entitled, registered or otherwise placed in, or payable to
the order of, such name or names as may be directed in writing by the Holder, and shall deliver
such evidence of ownership and any other securities or property (including cash) to the Person or
Persons entitled to receive the same, together with an amount in cash in lieu of any fraction of a
share as provided in Section 5.9. Upon payment of the Exercise Price therefor, a Holder shall be
deemed to own and have all of the rights associated with any Underlying Stock or other securities
or property (including cash) to which it is entitled pursuant to this Agreement upon the surrender
of a Warrant Certificate in accordance with this Agreement. If the Holder shall direct that such
securities be registered in a name other than that of the Holder, such direction shall be tendered
in conjunction with a signature guarantee from an eligible guarantor institution participating in a
signature guarantee program approved by the Securities Transfer Association.




     3.5. Transferability of the Warrants. The Warrants may not, whether directly or as a
result of the transfer of the equity interests in the Initial Warrant Holders, be transferred to
any Person, other than (i) to Affiliates of Rhône Capital III or (ii) with the prior written
consent of the Company. Subject to Section 10.4, each certificate representing the Warrants shall
bear the following legend:




THESE WARRANTS MAY ONLY BE TRANSFERRED WITH THE PRIOR CONSENT OF
QUIKSILVER, INC. THE SECURITIES ISSUABLE UPON THE EXERCISE HEREOF
HAVE NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, AS
AMENDED, OR QUALIFIED UNDER APPLICABLE STATE SECURITIES LAWS. SUCH
SECURITIES MAY BE OFFERED, SOLD OR TRANSFERRED ONLY IN COMPLIANCE
WITH THE REQUIREMENTS OF SUCH ACT AND OF ANY APPLICABLE STATE
SECURITIES LAWS AND SUBJECT TO THE PROVISIONS OF THE WARRANT AND
REGISTRATION RIGHTS AGREEMENT DATED AS OF JULY 31, 2009 BY AND AMONG
QUIKSILVER, INC. (THE “COMPANY”), THE INITIAL WARRANT HOLDERS AND
RHÔNE CAPITAL III L.P. A COPY OF SUCH WARRANT



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AND REGISTRATION RIGHTS AGREEMENT IS AVAILABLE AT THE OFFICES OF THE
COMPANY.



     3.6. Compliance with the Securities Act.



          (a) No Registrable Securities may be sold, transferred or otherwise disposed of (any such
sale, transfer or other disposition, a “sale”), except in compliance with this Section 3.6.




          (b) A Holder may sell its Registrable Securities to a transferee (subject to Section 9.7) that
is an “accredited investor” or a “qualified institutional buyer”, as such terms are defined in
Regulation D and Rule 144A under the Securities Act, respectively, provided that each of the
following conditions is satisfied:





     (i) with respect to any “accredited investor” that is not an institution, such
transferee, as the case may be, provides certification establishing to the reasonable
satisfaction of the Company that it is an “accredited investor”;




     (ii) such transferee represents that it is acquiring the Registrable Securities for its
own account and that it is not acquiring such Registrable Securities with a view to, or for
offer or sale in connection with, any distribution thereof (within the meaning of the
Securities Act) that would be in violation of the securities laws of the United States or
any applicable state thereof, but subject, nevertheless, to the disposition of its property
being at all times within its control; and




     (iii) such Holder or transferee agrees to be bound by the provisions of this Section
3.6 with respect to any sale of the Registrable Securities.



          (c) A Holder may sell its Registrable Securities (subject to Section 9.7) in accordance with
Regulation S under the Securities Act.




          (d) A Holder may sell its Registrable Securities (subject to Section 9.7) if:





     (i) such Holder gives written notice to the Company of its intention to effect such
sale, which notice shall describe the manner and circumstances of the proposed transaction
in reasonable detail;




     (ii) such notice includes a certification by the Holder to the effect that such
proposed sale may be effected without registration under the Securities Act or under
applicable Blue Sky laws; and




     (iii) such transferee complies with Sections 3.6(b)(ii) and 3.6(b)(iii).



          (e) Except for a sale in accordance with Section 3.6(f) and subject to Section 10.4, all stock
certificates issued pursuant to the exercise of the Warrants shall bear the following legend:




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THE SHARES REPRESENTED BY THIS CERTIFICATE HAVE NOT BEEN REGISTERED
UNDER THE SECURITIES ACT OF 1933, AS AMENDED, OR QUALIFIED UNDER
APPLICABLE STATE SECURITIES LAWS. SUCH SHARES MAY BE OFFERED, SOLD
OR TRANSFERRED ONLY IN COMPLIANCE WITH THE REQUIREMENTS OF SUCH ACT
AND OF ANY APPLICABLE STATE SECURITIES LAWS AND SUBJECT TO THE
PROVISIONS OF THE WARRANT AND REGISTRATION RIGHTS AGREEMENT DATED AS
OF JULY 31, 2009 BY AND AMONG QUIKSILVER, INC. (THE “COMPANY”), THE
INITIAL WARRANT HOLDERS AND RHÔNE CAPITAL III L.P. A COPY OF SUCH
WARRANT AND REGISTRATION RIGHTS AGREEMENT IS AVAILABLE AT THE
OFFICES OF THE COMPANY.



          (f) A Holder may sell its Registrable Securities in a transaction that is registered under the
Securities Act.




     3.7. Exercise for Series A Preferred Stock. So long as the Underlying Stock is that
of Quiksilver, Inc., Holders may not exercise any Warrants or be entitled to take delivery of any
shares of Common Stock issuable with respect to such Warrants to the extent (but only to the
extent) that, after such receipt of any shares of Common Stock upon the exercise of such Warrants,
Holders would be issued more than 25,653,831 shares of Common Stock in the aggregate (the “Total
Cap”), provided that in the event the Company (i) subdivides its outstanding Common Stock or (ii)
combines its outstanding Common Stock into a smaller number of shares, the Total Cap shall be
adjusted by multiplying (x) the Total Cap immediately prior to such subdivision or combination by
(y) a fraction, whose numerator shall be the number of shares that one share of Common Stock
immediately prior to such subdivision or combination equals immediately after such subdivision or
combination, and whose denominator shall be equal to one. So long as the Underlying Stock is that
of Quiksilver, Inc., each Warrant shall never be exercisable for more than a number of shares of
Common Stock equal to a fraction, whose numerator shall be the Total Cap and whose denominator
shall be 25,653,831 (the “Per Warrant Cap”). In the event that an adjustment pursuant to Article 5
would otherwise cause each Warrant to be exercisable for a number of shares of Common Stock that
exceeds the Per Warrant Cap (such excess, the “Excess Shares”), then each Warrant shall instead be
exercisable into a number of shares of Common Stock equal to the Per Warrant Cap plus a number of
shares of convertible non-voting preferred stock, par value $0.01 per share, of the Company on the
terms set forth in Exhibit C (the “Series A Preferred Stock”) that is convertible into the number
of Excess Shares.



4. REGISTRATION RIGHTS AND PROCEDURES AND LISTING.




     4.1. Demand Registration Rights.



          (a) Subject to the provisions hereof, Rhône Capital III may, on behalf of any Holder or
Holders, at any time from and after the Issuance Date request registration for resale under the
Securities Act of all or part of the Registrable Securities (a “Demand Registration”) by




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giving written notice thereof to the Company (which request shall specify the number of shares
of Registrable Securities to be offered by each Holder and whether such Registration Statement
shall be a “shelf” Registration Statement under Rule 415 promulgated under the Securities Act).
Subject to Section 4.1(e) below, upon receipt of such notice, the Company shall use commercially
reasonable efforts (i) to file a Registration Statement (which shall be a “shelf” Registration
Statement under Rule 415 promulgated under the Securities Act if requested pursuant to Rhône
Capital III’s request pursuant to the first sentence of this Section 4.1(a)) registering for resale
such number of Registrable Securities as requested to be so registered within 45 days in the case
of a registration on Form S-3 (and 60 days in the case of a registration on Form S-1) after Rhône
Capital III’s request therefor and (ii) to cause such Registration Statement to be declared
effective by the SEC as soon as reasonably practicable thereafter. Notwithstanding the foregoing,
the Company shall not be required to effect a registration pursuant to this Section 4.1(a): (i)
with respect to securities that are not Registrable Securities; (ii) during any Scheduled Black-Out
Period; (iii) if the aggregate offering price of the Registrable Securities to be offered is less
than $20,000,000, unless the Registrable Securities to be offered constitute all of the
then-outstanding Registrable Securities; or (iv) within 180 days after the effective date of a
prior registration in respect of the Company’s Common Stock, including, without limitation, a
Demand Registration (or, in the event that Holders were prevented from including any shares of
Common Stock requested to be included in a Piggy-Back Registration pursuant to Section 4.2(a) or
(b), within 90 days after the effective date of a prior registration in respect of the Company’s
Common Stock). If permitted under the Securities Act, such Registration Statement shall be one
that is automatically effective upon filing.




          (b) Rhône Capital III shall be entitled to request three Demand Registrations. A Registration
Statement shall not count as a permitted Demand Registration unless and until it has become
effective and Holders are able to register at least 50% of the Registrable Securities requested by
Rhône Capital III to be included in such registration. A Demand Registration shall not count
against the number of such registrations set forth in the immediately preceding sentence if, (i)
after the applicable Registration Statement has become effective, such Registration Statement or
the related offer, sale or distribution of Registrable Securities thereunder becomes the subject of
any stop order, injunction or other order or restriction imposed by the SEC or any other
governmental agency or court for any reason attributable to the Company and such interference is
not thereafter eliminated so as to permit the completion of the contemplated distribution of
Registrable Securities or (ii) in the case of an underwritten offering, the conditions specified in
the related underwriting agreement, if any, are not satisfied or waived for any reason attributable
to the Company or for any reason not attributable to the selling Holder or Holders or Rhône Capital
III or its Affiliates, and as a result of any such circumstances described in clause (i) or (ii),
less than all of the Registrable Securities covered by the Registration Statement are sold by the
selling Holder or Holders pursuant to the Registration Statement.




          (c) The Company may include in a Demand Registration shares of Common Stock for sale for its
own account or for the account of other security holders of the Company. If such Demand
Registration is in respect of an underwritten offering and the managing underwriters of the
requested Demand Registration advise the Company and Rhône Capital III that in their reasonable
opinion the number of shares of Common Stock proposed to be included in the Demand Registration
exceeds the number of shares of Common Stock that can be sold in




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such underwritten offering without materially delaying or jeopardizing the success of the
offering (including the offering price per share) (such maximum number of shares, the “Maximum
Number of Shares”), the Company will include in such Demand Registration only such number of shares
of Common Stock that in the reasonable opinion of the managing underwriters can be sold without
materially delaying or jeopardizing the success of the offering (including the offering price per
share), which shares of Common Stock will be so included in the following order of priority: (i)
first, the Registrable Securities of Rhône Capital III and all other Holders, pro rata on the basis
of the aggregate number of Registrable Securities requested to be included by each such Holder,
(ii) second, the shares of Common Stock the Company proposes to sell and (iii) third, any other
shares of Common Stock that have been requested to be so included.




          (d) If any of the Registrable Securities covered by a Demand Registration are to be sold in an
underwritten offering, the Company and Rhône Capital III shall mutually agree upon selection of the
managing underwriter or underwriters. If the Company and Rhône Capital III are unable to agree on
the managing underwriter or underwriters within a reasonable amount of time, the Company and Rhône
Capital III shall each select a managing underwriter and such underwriters shall serve as joint
managing underwriters in respect of such offering.




          (e) Notwithstanding the foregoing, if the Board determines in its good faith judgment that the
filing of a Demand Registration (i) would be seriously detrimental to the Company in that such
registration would interfere with a material corporate transaction or (ii) would require the
disclosure of material non-public information concerning the Company that at the time is not, in
the good faith judgment of the Board (excluding the Rhône Directors), in the best interests of the
Company to disclose and is not, in the opinion of the Company’s counsel, otherwise required to be
disclosed, then the Company shall have the right to defer such filing for the period during which
such registration would be seriously detrimental; provided, however, that (x) the Company may not
defer such filing for a period of more than 90 days after receipt of any demand by Rhône Capital
III, and (y) the Company shall not exercise its right to defer a Demand Registration or offers or
sales more than once in any 12-month period. The Company shall give written notice of its
determination to Rhône Capital III to defer the filing and of the fact the purpose for such
deferral no longer exists, in each case, promptly after the occurrence thereof.




          (f) Notwithstanding the foregoing, if the Board determines in its good faith judgment that
continuing offers and sales of Registrable Securities registered under a shelf Demand Registration
(i) would be seriously detrimental to the Company in that such offers and sales would interfere
with a material corporate transaction or (ii) would require the disclosure of material non-public
information concerning the Company that at the time is not, in the good faith judgment of the Board
(excluding the Rhône Directors), in the best interests of the Company to disclose and is not, in
the opinion of the Company’s counsel, otherwise required to be disclosed, then the Company shall
have the right to require the selling Holder or Holders to suspend such offers and sales for the
period during which such registration would be seriously detrimental; provided, however, that the
total number of days that any such suspension may be in effect in any 180-day period shall not
exceed 60 days. The Company shall give written notice of its determination to Rhône Capital III to
suspend the offers and sales and of the fact the purpose for such suspension no longer exists, in
each case, promptly after the occurrence thereof.





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          (g) Upon the date of effectiveness of any Demand Registration for an underwritten offering and
if such offering is priced promptly on or after such date, the Company shall use commercially
reasonable efforts to keep the Registration Statement effective until the earlier of (i) two years
(in the case of a shelf Demand Registration) or 90 days (in the case of any other Demand
Registration) from the effective date of such Registration Statement and (ii) such time as all of
the Registrable Securities covered by such Demand Registration have been sold pursuant to such
Demand Registration.




     4.2. Piggy-Back Registration Rights.



          (a) If at any time the Company has registered or has determined to register any of its
securities for its own account or for the account of other security holders of the Company on any
registration form (other than Form S-4 or S-8) which permits the inclusion of the Registrable
Securities (a “Piggyback Registration”), the Company will give Rhône Capital III written notice
thereof promptly (but in no event less than 15 days prior to the anticipated filing date) and,
subject to Section 4.2(c), shall include in such registration all Registrable Securities requested
to be included therein pursuant to the written request of Rhône Capital III on behalf of one or
more Holders received within 10 days after delivery of the Company’s notice. If a Piggyback
Registration is initiated as a primary underwritten offering on behalf of the Company and the
managing underwriters advise the Company and Rhône Capital III that in their reasonable opinion the
number of shares of Common Stock proposed to be included in such registration exceeds the Maximum
Number of Shares, the Company shall include in such registration: (i) first, the number of shares
of Common Stock that the Company proposes to sell; and (ii) second, the number of shares of Common
Stock requested to be included therein by holders of Common Stock, including Holders in respect of
whom Rhône Capital III has provided notice in accordance with this Section 4.2(a), pro rata among
all such holders on the basis of the number of Registrable Securities requested to be included
therein by all such holders or as such holders and the Company may otherwise agree.




          (b) If a Piggyback Registration is initiated as an underwritten registration on behalf of a
holder of shares of Common Stock other than Rhône Capital III, and the managing underwriters advise
the Company that in their reasonable opinion the number of shares of Common Stock proposed to be
included in such registration exceeds the Maximum Number of Shares, then the Company shall include
in such registration: (i) first, the number of shares of Common Stock requested to be included
therein by the holder(s) requesting such registration; (ii) second, the number of shares of Common
Stock requested to be included therein by other holders of shares of Common Stock including Rhône
Capital III (if Rhône Capital III has elected to include Registrable Securities in such Piggyback
Registration), pro rata among such holders on the basis of the number of shares of Common Stock
requested to be included therein by such holders or as such holders and the Company may otherwise
agree; and (iii) third, the number of shares of Common Stock that the Company proposes to sell.




          (c) If any Piggyback Registration is a primary or secondary underwritten offering, the Company
shall have the right to select, in its sole discretion, the managing underwriter or underwriters to
administer any such offering.




-13-









 








          (d) The Company shall not grant to any Person the right to request the Company to register any
Common Stock in a Piggyback Registration unless such rights are consistent with the provisions of
this Section 4.2.




     4.3. Expenses of Registration and Selling. All Expenses incurred in connection with
any registration, qualification or compliance hereunder shall be borne by the Company. All
Expenses (including, for the avoidance of doubt, any underwriting discount or commission applicable
to the sale by a Holder) incurred in connection with the sale of any securities registered
hereunder shall also be borne by the Company.



     4.4. Obligations of the Company. Whenever required to effect the registration of any
Registrable Securities, the Company shall, as expeditiously as reasonably practicable, subject to
the other provisions of this Article 4:



          (a) Prepare and file with the SEC a Registration Statement with respect to a proposed offering
of Registrable Securities and use commercially reasonable efforts to have such Registration
Statement declared effective as promptly as practicable.




          (b) Prepare and file with the SEC such amendments and supplements to the applicable
Registration Statement and the Prospectus or prospectus supplement used in connection with such
Registration Statement as may be necessary to comply with the provisions of the Securities Act with
respect to the disposition of all Registrable Securities covered by such Registration Statement.




          (c) Furnish to Rhône Capital III, the selling Holder or Holders and any underwriters such
number of copies of the applicable Registration Statement and each such amendment and supplement
thereto (including in each case all exhibits) and of a Prospectus, including a preliminary
prospectus, in conformity with the requirements of the Securities Act, and such other documents as
they may reasonably request in order to facilitate the disposition of Registrable Securities owned
or to be distributed by them.




          (d) Use commercially reasonable efforts to register and qualify the securities covered by such
Registration Statement under such other securities or Blue Sky laws of such jurisdictions as shall
be reasonably requested by Rhône Capital III, the selling Holder or Holders or any managing
underwriter(s), to keep such registration or qualification in effect for so long as such
Registration Statement remains in effect, and to take any other action which may be reasonably
necessary to enable such seller to consummate the disposition in such jurisdictions of the
securities owned by such selling Holder or Holders; provided that the Company shall not be required
in connection therewith or as a condition thereto to qualify to do business, to file a general
consent to service of process or become subject to taxation in any such states or jurisdictions.




          (e) Notify Rhône Capital III and the selling Holder or Holders at any time when a Prospectus
relating thereto is required to be delivered under the Securities Act of the happening of any event
as a result of which the applicable Prospectus, as then in effect, includes an untrue statement of
a material fact or omits to state a material fact required to be stated therein



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or necessary to make the statements therein, in the light of the circumstances under which
such statements were made, not misleading.




          (f) Give written notice to Rhône Capital III and the selling Holder or Holders:





     (i) when any Registration Statement filed pursuant to Section 4.1 or 4.2 or any
amendment thereto has been filed with the SEC and when such Registration Statement or any
post-effective amendment thereto has become effective;




     (ii) of any request by the SEC for amendments or supplements to any Registration
Statement or the Prospectus included therein or for additional information;




     (iii) of the issuance by the SEC of any stop order suspending the effectiveness of any
Registration Statement or the initiation of any proceedings for that purpose;




     (iv) of the receipt by the Company or its legal counsel of any notification with
respect to the suspension of the qualification of the Registrable Securities for sale in any
jurisdiction or the initiation or threatening of any proceeding for such purpose; and




     (v) of the happening of any event that requires the Company to make changes in any
effective Registration Statement or the Prospectus in order to make the statements therein
not misleading (in the case of the Prospectus, in the light of the circumstances under which
such statements were made) (which notice shall be accompanied by an instruction to suspend
the use of the Prospectus until the requisite changes have been made).



          (g) Use commercially reasonable efforts to prevent the issuance or obtain the withdrawal of
any order suspending the effectiveness of any Registration Statement referred to in Section
4.4(f)(iii) at the earliest practicable time.




          (h) Upon the occurrence of any event contemplated by Section 4.4(f)(v), reasonably promptly
prepare a post-effective amendment to such Registration Statement or a supplement to the related
Prospectus or file any other required document so that, as thereafter delivered to Rhône Capital
III, the selling Holder or Holders and any underwriters, the Prospectus will not contain an untrue
statement of a material fact or omit to state any material fact necessary to make the statements
therein, in the light of the circumstances under which they were made, not misleading. If the
Company notifies Rhône Capital III and the selling Holder or Holders in accordance with Section
4.4(f)(v) to suspend the use of the Prospectus until the requisite changes to the Prospectus have
been made, then the selling Holder or Holders and any underwriters shall suspend use of such
Prospectus and use commercially reasonable efforts to return to the Company all copies of such
Prospectus (at the Company’s expense) other than permanently filed copies then in the possession of
Rhône Capital III, the selling Holder or Holders or the underwriter.




          (i) Use commercially reasonable efforts to procure the cooperation of the Company’s transfer
agent in settling any offering or sale of Registrable Securities, including with respect to the
transfer of physical stock certificates into book-entry form in accordance with any



-15-









 






procedures reasonably requested by the selling Holder or Holders or any managing
underwriter(s).




          (j) Enter into an underwriting agreement in form, scope and substance as is customarily
entered into for similar underwritten offerings of equity securities by similar companies and take
all such other actions reasonably requested by Rhône Capital III on behalf of the selling Holder or
Holders or by the managing underwriter(s), if any, to expedite or facilitate the underwritten
disposition of such Registrable Securities, and in connection therewith as customary for any
similar underwritten offering, (i) make such representations and warranties to the selling Holder
or Holders and the managing underwriter(s), if any, with respect to the business of the Company and
its subsidiaries, and the Registration Statement, Prospectus and documents, if any, incorporated or
deemed to be incorporated by reference therein, in each case, in form, substance and scope as are
customarily made by the issuer in similar underwritten offerings of equity securities by similar
companies, and, if true, confirm the same if and when requested, (ii) use commercially reasonable
efforts to furnish underwriters opinions of counsel to the Company, addressed to the managing
underwriter(s), if any, covering the matters customarily covered in the opinions requested in
similar underwritten offerings of equity securities by similar companies, (iii) use commercially
reasonable efforts to obtain “cold comfort” letters from the independent certified public
accountants of the Company (and, if necessary, any other independent certified public accountants
of any business acquired by the Company for which financial statements and financial data are
included in the Registration Statement) who have certified the financial statements included in
such Registration Statement, addressed to each of the managing underwriter(s), if any, such letters
to be in customary form and covering matters of the type customarily covered in “cold comfort”
letters in connection with similar underwritten offerings of equity securities by similar
companies, (iv) if an underwriting agreement is entered into, the same shall contain
indemnification provisions and procedures customary in similar underwritten offerings of equity
securities by similar companies and consistent with the provisions of Section 4.7 hereof, and (v)
deliver such documents and certificates as may be reasonably requested by the selling Holder or
Holders, their counsel and the managing underwriter(s), if any, to evidence the continued validity
of the representations and warranties made pursuant to clause (i) above and to evidence compliance
with any customary conditions contained in the underwriting agreement or other agreement entered
into by the Company.




          (k) Make available for inspection by a representative of Rhône Capital III, the selling Holder
or Holders of at least 5,000,000 Registrable Securities and the managing underwriter(s), if any,
and their respective attorneys or accountants at the offices where normally kept, during reasonable
business hours, financial and other records, pertinent corporate documents and properties of the
Company, and cause the officers, directors and employees of the Company to supply all information
in each case reasonably requested by any such representative, managing underwriter(s), attorney or
accountant in connection with such Registration Statement.




          (l) Use commercially reasonable efforts to cause all Registrable Securities covered by a
Registration Statement to be listed on the national securities exchange or national market
interdealer quotation system on which the Common Stock is then listed, and enter into such
customary agreements including a supplemental listing application and indemnification agreement in
customary form (provided, however, that the applicable listing requirements are satisfied), and to
provide a transfer agent and registrar for such Registrable Securities covered by




-16-









 







such Registration Statement no later than the effective date of such Registration Statement.
The Company shall bear the cost of all reasonable expenses associated with any listing. A copy of
any opinion of counsel accompanying a listing application by the Company with respect to the
Registrable Securities shall be furnished to Rhône Capital III and the selling Holder or Holders.




          (m) Make reasonably available senior executives of the Company to participate in “road show”
and other marketing presentations from time to time as reasonably requested by the managing
underwriter or underwriters.




     4.5. Suspension of Sales. During any Scheduled Black-Out Period and upon receipt of
written notice from the Company that a Registration Statement, Prospectus or prospectus supplement
contains or may contain an untrue statement of a material fact or omits to state a material fact
required to be stated therein or necessary to make the statements therein not misleading or that
circumstances exist that make inadvisable use of such Registration Statement, Prospectus or
prospectus supplement, the selling Holder or Holders shall forthwith discontinue disposition of
Registrable Securities until termination of such Scheduled Black-Out Period or until the selling
Holder or Holders have received copies of a supplemented or amended Prospectus or prospectus
supplement, or until the selling Holder or Holders are advised in writing by the Company that the
use of the Prospectus and, if applicable, prospectus supplement may be resumed, and, if so directed
by the Company, the selling Holder or Holders shall deliver to the Company (at the Company’s
expense) all copies, other than permanent file copies then in the selling Holder’s or Holders’
possession, of the Prospectus and, if applicable, prospectus supplement covering such Registrable
Securities current at the time of receipt of such notice. The total number of days that any such
suspension may be in effect in any 180-day period shall not exceed 60 days.



     4.6. Furnishing Information. It shall be a condition precedent to the obligations of
the Company to take any action pursuant to Section 4.4 that the selling Holder or Holders and the
underwriters, if any, shall furnish to the Company such information regarding themselves, the
Registrable Securities held by them and the intended method of disposition of such securities as
shall be required to effect the registered offering of their Registrable Securities.



     4.7. Indemnification.



          (a) In connection with each registration pursuant to Article 4, the Company agrees to
indemnify and hold harmless each selling Holder, and each Person, if any, who controls any selling
Holder within the meaning of Section 15 of the Securities Act as follows:





     (i) against any and all loss, liability, claim, damage and expense whatsoever, as
incurred, arising out of an untrue statement or alleged untrue statement of a material fact
contained in the Registration Statement (or any amendment thereto), or the omission or
alleged omission therefrom of a material fact required to be stated therein or necessary to
make the statements therein not misleading or arising out of an untrue statement of a
material fact included in any preliminary prospectus or the Prospectus (or any amendment or
supplement thereto) or the omission or alleged omission therefrom of a material fact
necessary in order to make the statements therein, in the light of the circumstances under
which they were made, not misleading; and



-17-









 






     (ii) against any and all loss, liability, claim, damage and expense whatsoever, as
incurred, to the extent of the aggregate amount paid in settlement of any litigation, or
investigation or proceeding by any governmental agency or body, commenced or threatened, or
of any claim whatsoever based upon any such untrue statement or omission, or any such
alleged untrue statement or omission, if such settlement is effected with the written
consent of the Company, which shall not be unreasonably withheld;


provided, however, that, with respect to any selling Holder, this indemnity does not apply to any
loss, liability, claim, damage or expense to the extent arising out of an untrue statement or
omission or alleged untrue statement or omission made in reliance upon and in conformity with
written information furnished to the Company by such selling Holder expressly for use in the
Registration Statement (or any amendment thereto), or any preliminary prospectus or the Prospectus
(or any amendment or supplement thereto).




          (b) Each selling Holder agrees severally, and not jointly, to indemnify and hold harmless the
Company, its directors, each of its officers who signed a Registration Statement, and the other
selling Holders, and each Person, if any, who controls the Company and any other selling Holder
within the meaning of Section 15 of the Securities Act, against any and all loss, liability, claim,
damage and expense described in the indemnity contained in Section 4.7(a), as incurred, but only
with respect to untrue statements or omissions, or alleged untrue statements or omissions, made in
the Registration Statement (or any amendment thereto), or any preliminary prospectus or the
Prospectus (or any amendment or supplement thereto) in reliance upon and in conformity with written
information furnished to the Company by such selling Holder expressly for use in the Registration
Statement (or any amendment thereto), or any preliminary prospectus or the Prospectus (or any
amendment or supplement thereto).




          (c) Each indemnified party shall give prompt notice to each indemnifying party of any action
commenced against it in respect of which indemnity may be sought hereunder, but failure to so
notify an indemnifying party shall not relieve the indemnifying party from any liability it may
have under this Agreement, except to the extent that the indemnifying party is prejudiced thereby.
If it so elects, after receipt of such notice, an indemnifying party, jointly with any other
indemnifying parties receiving such notice, may assume the defense of such action with counsel
chosen by it, provided that the indemnified party shall be entitled to participate in (but not
control) the defense of such action with counsel chosen by it, the reasonable fees and expenses of
which shall be paid by the indemnifying party if there would be a conflict if one counsel were to
represent both the indemnified and the indemnifying party, and by the indemnified party in all
other circumstances. In no event shall the indemnifying party or parties be liable for a
settlement of an action with respect to which they have assumed the defense if such settlement is
effected without the written consent of the indemnifying party, or for the reasonable fees and
expenses of more than one counsel for (i) the Company, its officers, directors and controlling
persons as a group, and (ii) the selling Holders and their controlling persons as a group, in each
case, in connection with any one action or separate but similar or related actions in the same
jurisdiction arising out of the same general allegations or circumstances; provided that if, in the
reasonable judgment of an indemnified party a conflict of interest may exist between such
indemnified party and the Company or any other of such indemnified parties with respect to such
claim or any of such indemnified parties, the



-18-









 






indemnifying party shall be obligated to pay the reasonable fees and expenses of such
additional counsel or counsels.




     4.8. Contribution.



          (a) If the indemnification provided for in or pursuant to Section 4.7 is due in accordance
with the terms hereof, but is held by a court to be unavailable or unenforceable in respect of any
losses, claims, damages, liabilities or expenses referred to therein, then each applicable
indemnifying party, in lieu of indemnifying such indemnified party, shall contribute to the amount
paid or payable by such indemnified party as a result of such losses, claims, damages, liabilities
or expenses in such proportion as is appropriate to reflect the relative fault of the indemnifying
party on the one hand and of the indemnified party on the other in connection with the statements
or omissions which result in such losses, claims, damages, liabilities or expenses as well as any
other relevant equitable considerations. The relative fault of the indemnifying party on the one
hand and of the indemnified party on the other shall be determined by reference to, among other
things, whether the untrue or alleged untrue statement of a material fact or the omission or
alleged omission to state a material fact relates to information supplied by the indemnifying party
or by the indemnified party, and by such party’s relative intent, knowledge, access to information
and opportunity to correct or prevent such statement or omission. In no event shall the liability
of the selling Holders be greater in amount than the amount for which such indemnifying party would
have been obligated to pay by way of indemnification if the indemnification provided for under
Section 4.7(a) had been available under the circumstances.




          (b) No Person guilty of fraudulent misrepresentation (within the meaning of Section 11(f) of
the Securities Act) shall be entitled to contribution from any Person who was not guilty of such
fraudulent misrepresentation. For purposes of this Section 4.8(b), each director of the Company,
each officer of the Company who signed a Registration Statement, and each Person, if any, who
controls the Company or a selling Holder within the meaning of Section 15 of the Securities Act
shall have the same rights to contribution as the Company or such selling Holder, as the case may
be.




     4.9. Representations, Warranties and Indemnities to Survive. The indemnity and
contribution agreements contained in this Article 4 and the representations and warranties of the
Company referred to in Section 4.4(j) shall remain operative and in full force and effect
regardless of (i) any termination of any underwriting or agency agreement, (ii) any investigation
made by or on behalf of the selling Holders, the Company or any underwriter or agent or controlling
Person or (iii) the consummation of the sale or successive resales of the Registered Securities.



     4.10. Lock-Up Agreements.



          (a) The Company agrees that, in connection with an underwritten offering in respect of which
Registrable Securities are being sold, if requested by the managing underwriter, it will not,
directly or indirectly, sell, offer to sell, grant any option for the sale of, or otherwise dispose
of any Common Stock or securities convertible into or exchangeable or exercisable for Common Stock
(subject to customary exceptions), other than any such sale or distribution of




-19-









 







Common Stock upon exercise of the Company’s Warrants, in the case of an underwritten offering
for a period of 90 days from the effective date of the registration statement pertaining to such
Registrable Securities or such shorter period to which the selling Holder or Holders are subject.




          (b) The lock-up agreements set forth in Section 4.10(a) shall be subject to customary
exceptions that may be contained in an underwriting agreement.




     4.11. Rule 144 Reporting. With a view to making available to the Holders the benefits
of certain rules and regulations of the SEC which may permit the sale of the Registrable Securities
to the public without registration, the Company agrees, so long as it is subject to the periodic
reporting requirements of the Exchange Act, to use commercially reasonable efforts to:



          (a) make and keep public information available, as those terms are understood and defined in
Rule 144(c)(1) or any similar or analogous rule promulgated under the Securities Act, at all times
after the effective date of this Agreement;




          (b) file with the SEC, in a timely manner, all reports and other documents required of the
Company under the Exchange Act; and




          (c) so long as the Holders own any Registrable Securities, furnish to such Holders forthwith
upon request: (i) in the event the Company is no longer subject to the reporting requirements of
Section 13 or 15(d) of the Exchange Act, a written statement by the Company as to its compliance
with the reporting requirements of Rule 144 under the Securities Act and of the Exchange Act; (ii)
in the event the Company is subject to the reporting requirements of Section 13 or 15(d) of the
Exchange Act, a copy of the most recent annual or quarterly report of the Company; and (iii) such
other reports and documents as the Holders may reasonably request in availing themselves of any
rule or regulation of the SEC allowing them to sell any such securities without registration.




5. ADJUSTMENTS.




     5.1. Adjustments for Cash Dividends. In the event that the Company shall pay a cash
dividend on Common Stock, the Exercise Price for each Warrant shall be reduced by the cash dividend
paid on each share of Common Stock.



     5.2. Adjustments Upon Certain Transactions. The Exercise Price and the number of
shares of Common Stock issuable upon exercise of each Warrant shall be adjusted in the event the
Company (i) pays a dividend or makes any other distribution with respect to its Common Stock solely
in shares of its Common Stock, (ii) subdivides its outstanding Common Stock, or (iii) combines its
outstanding Common Stock into a smaller number of shares. In such event, the number of shares of
Common Stock issuable upon exercise of each Warrant immediately prior to the record date for such
dividend or distribution or the effective date of such subdivision or combination shall be adjusted
so that the Holder of each Warrant shall thereafter be entitled to receive the number of shares of
Common Stock that such Holder would have owned or have been entitled to receive after the happening
of any of the events described above, had such Warrant been exercised immediately prior to the
happening of such event or any record date with respect thereto. In addition, upon an adjustment
pursuant to this Section 5.2, the Exercise Price



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for each share of Common Stock payable upon exercise of such Warrant shall be adjusted
(calculated to the nearest $.0001) so that it shall equal the product of the Exercise Price
immediately prior to such adjustment multiplied by a fraction, the numerator of which shall be the
number of shares of Common Stock issuable upon the exercise of each Warrant immediately prior to
such adjustment, and the denominator of which shall be the number of shares of Common Stock so
issuable immediately thereafter. Such adjustment shall become effective immediately after the
effective date of such event retroactive to the record date, if any, for such event. For avoidance
of doubt, the adjustment contemplated by this section can be expressed by formula as follows:



Ub = shares underlying each Warrant immediately before the adjustment

Ua = shares underlying each Warrant immediately after the adjustment

Pb = exercise price per share immediately before the adjustment

Pa = exercise price per share immediately after the adjustment

Ob = shares outstanding immediately before the transaction in question

Oa = shares outstanding immediately after the transaction in question

Ua = Ub x Oa / Ob

Pa = Pb x Ob / Oa




5.3.  Dividends and Distributions.




          (a) If the Company shall fix a record date for the payment of a dividend or the making of a
distribution with respect to the Common Stock (other than one subject to Section 5.1 or Section
5.2), including without limitation in connection with a Recapitalization Event (it being understood
that, if there is a distribution in connection with a Recapitalization Event and no record date is
set therefor, the effective date of such Recapitalization Event shall be deemed to be the record
date fixed by the Company for purposes of this Section 5.3), the Exercise Price immediately after
the record date for such dividend or distribution shall be determined by multiplying (x) the
Exercise Price in effect on such record date by (y) a fraction, the numerator of which shall be the
Fair Market Value per share of Common Stock as of the last trading day before the date (the
“ex-date”) on which the Common Stock first trades without the right to receive such dividend or
distribution less the Fair Market Value of the items distributed in respect of each share of Common
Stock in such dividend or distribution, and the denominator of which shall be the Fair Market Value
per share of Common Stock as of the last trading day before the ex-date. As used in this Section
5.3, “Recapitalization Event” means any consolidation, merger or similar extraordinary transaction
(other than any consolidation, merger or similar extraordinary transaction of the Company with an
unaffiliated third party), or any recapitalization or reclassification of the Common Stock. Upon
any adjustment of the Exercise Price pursuant to this Section 5.3, the total number of shares of
Common Stock purchasable upon the exercise of each Warrant shall be such number of shares
(calculated to the nearest hundredth) purchasable per Warrant immediately prior to such adjustment
multiplied by a fraction, the numerator of which shall be the Fair Market Value per share of Common
Stock as of the last trading date before the ex-date and the denominator of which shall be the Fair
Market Value per share of Common Stock as of the last trading date before the ex-date less the Fair
Market Value of the items distributed in respect of each share of Common Stock in such dividend or
distribution. For avoidance of doubt, the adjustment contemplated by Section 5.3(a) can be
expressed by formula as follows:




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Ub = shares underlying each Warrant immediately before the adjustment

Ua = shares underlying each Warrant immediately after the adjustment

Pb = exercise price per share immediately before the adjustment

Pa = exercise price per share immediately after the adjustment

M = average VWAP of the Common Stock for five trading days before ex-date

D = Fair Market Value of the dividend or distribution made per share of Common Stock

Ua = Ub x M / (M — D)

Pa = Pb x (M — D) / M




          (b) In the case of a Recapitalization Event where outstanding shares of Common Stock are
converted either solely or partially into shares of common stock of another company, each Warrant
shall become a Warrant to purchase a number of shares of common stock of the other company for an
Exercise Price per share calculated by (x) first, applying the rules in Sections 5.1 and 5.2, as
applicable, and 5.3(a) to determine an initially adjusted Exercise Price per share and number of
shares of Common Stock purchasable upon the exercise of each Warrant, (y) second, multiplying the
initially adjusted number of shares by the number of shares of common stock of the other company
into which each share of Common Stock of the Company shall be converted in the Recapitalization
Event to arrive at the final adjusted number of shares of common stock of the other company
purchasable upon exercise of each Warrant and (z) third, dividing the initially adjusted Exercise
Price per share of Common Stock by the number of shares of common stock of the other company into
which each share of Common Stock of the Company shall be converted in the Recapitalization Event to
arrive at the final adjusted Exercise Price per share of common stock of the other company. In any
case where this Section 5.3(b) applies, the second sentence of Section 5.5 shall also apply to the
Recapitalization Event as though it were a Reorganization Event.




          (c) Notwithstanding anything to the contrary contained herein, in the case of a
Recapitalization Event, to the extent that one or more of the adjustments set forth in Section 5.1
or Section 5.2 would be applicable to such Recapitalization Event, the adjustments set forth in
Sections 5.1, 5.2 and 5.3(a) shall be applied in the order in which the events described in such
Sections occur; provided, however, no adjustment pursuant to Section 5.1, 5.2 or 5.3(a), as
applicable, shall be made for an event in connection with such Recapitalization Event for which an
adjustment has already been made.




     5.4. Issuer Tender Offers. If a publicly-announced tender offer made by the Company
or any of its subsidiaries for all or any portion of the Common Stock shall expire and tendering
holders of Common Stock are paid aggregate consideration having a Fair Market Value when paid which
exceeds the aggregate Fair Market Value of the Common Stock acquired in such tender offer as of the
last trading date before the date on which such tender offer is first publicly announced (such
excess, the “Excess Tender Amount”), then the Exercise Price in effect immediately after the tender
offer expires shall be determined by multiplying (x) the Exercise Price in effect immediately prior
to such adjustment by (y) a fraction, the numerator of which shall be the Fair Market Value per
share of the Common Stock as of the last trading day before the date on which such tender offer is
first publicly announced less the Premium Per Pro Forma Share, and the denominator of which shall
be the Fair Market Value per share of Common Stock as of the last trading day before the date on
which such tender offer is first publicly announced. As used herein, “Premium Per Pro Forma Share”
means (x) the Excess Tender Amount divided



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by (y) the number of shares of Common Stock outstanding at expiration of the tender offer
after giving pro forma effect to the purchase of shares in the tender offer. Upon any adjustment
of the Exercise Price pursuant to this Section 5.4, the total number of shares of Common Stock
purchasable upon the exercise of each Warrant shall be such number of shares (calculated to the
nearest hundredth) purchasable per Warrant immediately prior to such adjustment multiplied by a
fraction, the numerator of which shall be the Fair Market Value per share of Common Stock as of the
last trading day before the date on which such tender offer is first publicly announced and the
denominator of which shall be the Fair Market Value per share of the Common Stock as of the last
trading day before the date on which such tender offer is first publicly announced less the Premium
Per Pro Forma Share. For avoidance of doubt, the adjustment contemplated by this section can be
expressed by formula as follows:



Ub = shares underlying each Warrant before the adjustment

Ua = shares underlying each Warrant after the adjustment

Pb = exercise price per share before the adjustment

Pa = exercise price per share after the adjustment

M = average VWAP of the Common Stock for five trading days before date tender offer is

announced

E = Excess Tender Amount (the aggregate premium paid in the tender offer)

Pr = Premium Per Pro Forma Share

Oa = Shares outstanding after giving effect to tender offer

Pr = E / Oa

Ua = Ub x M / (M — Pr)

Pa = Pb x (M — Pr) / M




     5.5. Consolidation, Merger or Sale. If any consolidation, merger or similar
extraordinary transaction of the Company with another Person (other than any subsidiary of the
Company), or the sale of all or substantially all of its assets, other than in any such case a
Recapitalization Event, shall be effected (a “Reorganization Event”), and in connection with such
Reorganization Event, the Common Stock shall be converted into or exchanged for or become the right
to receive cash, securities or other property, then, as a condition of such Reorganization Event,
lawful and adequate provisions shall be made by the Company whereby the Holder of each Warrant
shall thereafter have the right to purchase and receive on exercise of such Warrant, for an
aggregate price equal to the aggregate Exercise Price for all of the shares underlying the Warrant
as in effect immediately before such transaction (subject to adjustment thereafter as contemplated
by the succeeding sentence), the same kind and amount of cash, securities or other property as it
would have had the right to receive if it had exercised such Warrant immediately before such
transaction and been entitled to participate therein. In the event of any such Reorganization
Event, the Company shall make appropriate provision to ensure that applicable provisions of this
Agreement (including, without limitation, the provisions of Article 4 and this Article 5) shall
thereafter be binding on the other party to such transaction (or the successor in such transaction)
and applicable to any securities thereafter deliverable upon the exercise of Warrants. The Company
will not effect any such Reorganization Event unless, prior to the consummation thereof, the
successor entity (if other than the Company) resulting from such Reorganization Event or the entity
purchasing such assets shall assume by written instrument reasonably satisfactory in form and
substance to Rhône Capital III, executed and mailed or delivered to each Holder at the last address
of such Holder appearing on the books of



-23-









 







the Company, the obligation to deliver the cash, securities or property deliverable upon
exercise of Warrants. The Company shall notify the Holder of each Warrant of any such proposed
Reorganization Event reasonably prior to the consummation thereof so as to provide such Holder with
a reasonable opportunity prior to such consummation to exercise each Warrant in accordance with the
terms and conditions hereof; provided, however, that in the case of a transaction which requires
notice to be given to the holders of Common Stock of the Company, the Holder of each Warrant shall
be provided the same notice given to the holders of Common Stock of the Company.



     5.6. Preemptive Rights. Upon any issuance for cash of any shares of Common Stock, rights
or options to acquire Common Stock or securities convertible or exchangeable into Common Stock for
cash (in each case, other than issuances that result in adjustments pursuant to Section 5.2 or
Section 5.3), subject to obtaining any required approval of the Company’s stockholders to comply
with Section 312.03 of the New York Stock Exchange Listed Company Manual, any Initial Holder who
still holds at least 50% of the total Warrants issued to such Initial Holder on the Issuance Date
shall have additional subscription rights allowing such Initial Holder to maintain its
proportionate, as-if-exercised ownership interest in the Company (which, for this purpose, shall be
calculated taking into account any Warrants subsequently transferred to such Initial Holder by
another Initial Holder) based on the number of shares of Common Stock outstanding immediately prior
to such issuance. For the avoidance of doubt, obtaining such approval shall be a condition for the
Company to undertake any issuance subject to this Section 5.6. In the event that any issuance
subject to this Section 5.6 involves a public offering, such Initial Holders and the Company shall
negotiate in good faith as to the provision of such subscription rights so as not to materially
delay or jeopardize the success of such public offering. The foregoing shall not apply to any
issuance of Excluded Securities.



     5.7. Consent Upon Certain Issuances. So long as Rhône Capital III or any of its
Affiliates own any Warrants, the Company shall not issue shares of Common Stock, Common Stock
Equivalents (other than Excluded Securities) or rights or options to acquire Common Stock
Equivalents (other than Excluded Securities) at an Effective Issuance Price that is lower than the
Exercise Price (in each case, other than issuances that result in adjustments pursuant to Section
5.2 or Section 5.3) then in effect for all Warrants without the prior written consent of Rhône
Capital III in its sole discretion.



     5.8. Affiliate Transactions. In the event that the Company shall issue any shares of
Common Stock to, or repurchase any shares of Common Stock from, any Affiliate, other than Excluded
Securities, such issuance or repurchase shall be on terms no less favorable to the Company than
those obtainable by a party who is not an Affiliate.



     5.9. Fractional Shares. No fractional shares shall be issued upon exercise of any
Warrant. Instead, the Company shall pay to the Holder, in lieu of issuing any fractional share, a
sum in cash equal to such fraction multiplied by the Fair Market Value of a share of Common Stock,
as determined by the Company’s Chief Executive Officer, Chief Financial Officer or Board, on the
trading immediately prior to the date of exercise.



     5.10. Notice of Adjustment. Whenever the number of shares of Common Stock or other
stock or property issuable upon the exercise of each Warrant or the Exercise Price is



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adjusted, as herein provided, the Company shall promptly mail by first-class mail, postage
prepaid, to Rhône Capital III and each Holder notice of such adjustment or adjustments setting
forth the number of shares of Common Stock or other stock or property issuable upon the exercise of
each Warrant and the Exercise Price after such adjustment, setting forth a brief statement of the
facts requiring such adjustment and setting forth the computation by which such adjustment was
made.



6. WARRANT TRANSFER BOOKS.




     (a) Subject to Section 3.5:




     (i) The Company shall keep at its principal place of business a register in which the
Company shall provide for the registration of Warrant Certificates and of any exchanges of
Warrant Certificates as herein provided.




     (ii) At the option of the Holder, Warrant Certificates may be exchanged at such office
and upon payment of the charges hereinafter provided. Whenever any Warrant Certificates are
so surrendered for exchange, the Company shall execute and deliver the Warrant Certificates
that the Holder making the exchange is entitled to receive.




     (iii) All Warrant Certificates issued upon any registration of transfer or exchange of
Warrant Certificates shall be the valid obligations of the Company, evidencing the same
obligations, and entitled to the same benefits under this Agreement, as the Warrant
Certificates surrendered for such registration of transfer or exchange.




     (iv) Every Warrant Certificate surrendered for registration of exchange shall (if so
required by the Company) be duly endorsed, or be accompanied by a written instrument of
transfer in form satisfactory to the Company, duly executed by the Holder thereof or his
attorney duly authorized in writing.




     (v) No service charge shall be made to a Holder for any exchange of Warrant
Certificates, and the Company shall pay any taxes or other governmental charge that may be
imposed in connection with any registration of exchange of Warrant Certificates.




     (vi) Any Warrant Certificate when duly endorsed in blank shall be deemed negotiable and
when a Warrant Certificate shall have been so endorsed, the Holder thereof may be treated by
the Company and all other Persons dealing therewith as the absolute owner thereof for any
purpose and as the Person entitled to exercise the rights represented thereby.



7. WARRANT HOLDERS.




     7.1. No Voting Rights. Prior to the exercise of the Warrants, no Holder of a Warrant
Certificate, as such, shall be entitled to any rights of a stockholder of the Company, including
the right to vote or to consent.




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     7.2. Right of Action. All rights of action in respect of this Agreement are vested in
the Holders of the Warrants, and any Holder of Warrants, without the consent of the Holder of any
other Warrant, may, on such Holder’s own behalf and for such Holder’s own benefit, enforce, and may
institute and maintain any suit, action or proceeding against the Company suitable to enforce, or
otherwise in respect of, such Holder’s right to exercise or exchange such Holder’s Warrants in the
manner provided in this Agreement or any other obligation of the Company under this Agreement.



     7.3. Agent. The Warrant Holders appoint Rhône Capital III as their agent and
authorize Rhône Capital III to bind, and take all actions in connection with this Agreement on
behalf of, the Warrant Holders, including agreeing to amendments of this Agreement pursuant to
Section 10.9 herein. The Company shall be entitled to rely on direction by Rhône Capital III on
behalf of any Warrant Holder for all purposes hereunder.



8. REPRESENTATIONS AND WARRANTIES.




     8.1. Representations and Warranties of the Company. The Company hereby represents and
warrants that, as of the Closing Date:



          (a) Existence, Power and Ownership. It is a corporation duly organized, validly
existing and in good standing under the laws of the State of Delaware.




          (b) Authorization. It has the corporate power and authority to enter into this
Agreement and to perform its obligations under, and consummate the transactions contemplated by,
this Agreement and has by proper action duly authorized the execution and delivery of this
Agreement.




          (c) No Conflicts. None of the execution and delivery of this Agreement, the
consummation of the transactions contemplated herein or the performance of and compliance with the
terms and provisions hereof will: (i) violate or conflict with any provision of its Certificate of
Incorporation or by-laws; (ii) violate any law, regulation (including without limitation Regulation
G, T, U or X), order, writ, judgment, injunction, decree or permit applicable to it; (iii) violate
or materially conflict with any contractual provisions of, or cause an event of default under, any
indenture, loan agreement, mortgage, deed of trust, contract or other agreement or instrument to
which it is a party or by which it or any of its properties may be bound; or (iv) result in or
require the creation of any lien, security interest or other charge or encumbrance (other than
those contemplated in or in connection with this Agreement) upon or with respect to its properties.




          (d) Consents. Subject to the requirements of the HSR Act and, in the case of
exercise of the Warrants for Series A Preferred Stock, receipt of Required Stockholder Approval, no
consent, approval, authorization or order of, or filing, registration or qualification with, any
court or governmental authority or other Person is required in connection with the execution,
delivery or performance of this Agreement or the Warrants.




          (e) Enforceable Obligations. This Agreement has been duly executed and delivered
by the Company and assuming due authorization, execution and delivery hereof by the Initial Warrant
Holders and Rhône Capital III, constitutes a legal, valid and binding obligation of




-26-









 







 the Company, enforceable in accordance with its terms subject, as to
enforcement, to bankruptcy, insolvency, fraudulent transfer, reorganization, moratorium and similar
laws of general applicability relating to or affecting creditors’ rights and to general equity
principles. 




          (f) Capitalization. As of the date hereof, the Company’s authorized capital stock
consists of 185,000,000 shares of Common Stock and as of July 31, 2009, 128,269,163 shares of
Common Stock were issued and outstanding. As of the date hereof, 2,885,200 shares of Common Stock
are held in treasury and as of July 31, 2009, 15,743,332 shares of Common Stock are reserved for
issuance upon exercise of outstanding employee stock options, 1,715,421 shares of Common Stock are
reserved for issuance under the Company’s 2000 Stock Incentive Plan, as amended and restated, and
2,000,000 shares of Common Stock are reserved for issuance under the Company’s Employee Stock
Purchase Plan, as amended and restated. There are no Voting Securities authorized or outstanding
other than the Common Stock. There are no other classes of capital stock of the Company authorized
or outstanding. The outstanding shares of Common Stock are duly authorized, validly issued, fully
paid and non-assessable. There are no preemptive rights (other than as set forth in Section 5.6 of
this Agreement) or, except as set forth on Schedule 8.1, other outstanding rights, options,
warrants, conversion rights or agreements or commitments of any character relating to the Company’s
authorized and issued, unissued or treasury shares of capital stock, and the Company has not issued
any debt securities, other securities, rights or obligations that are currently outstanding and
convertible into or exchangeable for, or giving any Person a right to subscribe for or acquire,
capital stock of the Company.




          (g) Board Approvals. As of the date hereof, the Board has granted all necessary
approvals under the Company’s constituent documentation and Delaware General Corporation Law with
respect to the acquisition and exercise of the Warrants by the Initial Holders, including, without
limitation, for purposes of Section 203 thereunder. 




          (h) No Registration Requirement. None of the Company, its subsidiaries or any of
their respective Affiliates has directly, or through any agent, (i) sold, offered for sale,
solicited offers to buy or otherwise negotiated in respect of, any “security” (as defined in the
Securities Act) that is or would be integrated with the issuance of the Warrants in a manner that
would require the registration under the Securities Act of the Warrants or (ii) engaged in any form
of general solicitation or general advertising (as those terms are used in Regulation D under the
Securities Act) in connection with the offering of the Warrants or in any manner involving a public
offering within the meaning of Section 4(2) of the Securities Act. No securities of the Company or
any of its subsidiaries are of the same class (within the meaning of Rule 144A) as the Warrants and
listed on a national securities exchange registered under Section 6 of the Exchange Act, or quoted
in a U.S. automated inter-dealer quotation system. Assuming the accuracy of the representations
and warranties of the Holders in Section 8.2 hereof, it is not necessary in connection with the
offer, sale and delivery of the Warrants to the Initial Holders in the manner contemplated herein
to register any of the Warrants under the Securities Act.




     8.2. Representations and Warranties of the Holders. Each Holder, severally and not
jointly, hereby represents and warrants that:



-27-









 





          (a) Investment Intent. Holder acknowledges that neither the issuance or sale of
the Warrants, nor the issuance of the shares of Common Stock or Series A Preferred Stock issuable
upon the exercise thereof, have been registered under the Securities Act or under any state
securities laws. Holder (1) is acquiring the Warrants and the shares of Common Stock or Series A
Preferred Stock issuable upon the exercise thereof pursuant to an exemption from registration under
the Securities Act solely for investment with no present intention to distribute any of the
securities to any person in violation of the Securities Act or any other applicable securities
laws, and (2) will not sell or otherwise dispose of any of the Warrants or the shares of Common
Stock or Series A Preferred Stock issuable upon the exercise thereof, except in compliance with the
registration requirements or exemption provisions of the Securities Act and any other applicable
securities laws.




          (b) Accredited Investor Status. (1) Holder is an “accredited investor” as such term
is defined in Rule 501(a) promulgated under the Securities Act whose knowledge and experience in
financial and business matters are such that Holder is capable of evaluating the merits and risks
of its investment in the Warrants or the shares of Common Stock or Series A Preferred Stock
issuable upon the exercise thereof and (2)(a) Holder’s financial situation is such that Holder can
afford to bear the economic risk of holding the Warrants or the shares of Common Stock or Series A
Preferred Stock issuable upon the exercise thereof for an indefinite period of time, (b) Holder can
afford to suffer complete loss of its investment in the Warrants or the shares of Common Stock or
Series A Preferred Stock issuable upon the exercise thereof, (c) the Company has made available to
Holder all documents and information that Holder has requested relating to an investment in the
Company, and (d) Holder has had adequate opportunity to ask questions of, and receive answers from,
the Company as well as the Company’s officers, employees, agents and other representatives
concerning the Company’s business, operations, financial condition, assets, liabilities and all
other matters relevant to Holder’s investment in the Warrants or the shares of Common Stock or
Series A Preferred Stock issuable upon the exercise thereof.




9. COVENANTS.




     9.1. Reservation of Common Stock for Issuance on Exercise of Warrants.



          (a) The Company covenants that it will at all times reserve and keep available, free from
preemptive rights and solely for the purpose of issue upon exercise of the Warrants as herein
provided, (i) out of its authorized but unissued Common Stock, such number of shares of Common
Stock as shall then be issuable upon the exercise of all Warrants issuable hereunder, and (ii) out
of its authorized but unissued preferred stock, par value $0.01 per share, such number of shares of
Series A Preferred Stock as shall then be issuable upon the exercise of all Warrants issuable
hereunder. The Company will not issue Series A Preferred Stock to any Persons other than the
Warrant Holders. The Company covenants that all shares of Common Stock and Series A Preferred
Stock which shall be issuable shall, upon such issue, be duly and validly issued and fully paid and
non-assessable.




     9.2. Notice of Dividends. At any time when the Company declares any dividend on its
Common Stock, it shall give notice to the Holders of all the then outstanding Warrants of any
such declaration not less than 15 days prior to the related record date for payment of the
dividend so declared.



-28-









 





     9.3. HSR Act Compliance. If Rhône Capital III or any Holder determines that a
notification under the Hart-Scott-Rodino Antitrust Improvements Act of 1976, as amended, and the
rules and regulations promulgated thereunder (the “HSR Act”), is required in connection with the
exercise of any Warrants by any Holder, the Company shall reasonably cooperate with such Holder by
(i) promptly effecting all necessary notifications and other filings under the HSR Act that are
required to be made by the Company and (ii) responding as promptly as reasonably practicable to all
inquiries or requests received from the United States Federal Trade Commission (the “FTC”), the
Department of Justice (“DOJ”) or any other governmental authority in connection with such
notifications and other filings. For the avoidance of doubt, nothing in this Section 9.3 shall
require that the Company or any of its subsidiaries commit to any divestiture, license, or hold
separate or similar arrangement with respect to the business, assets or properties of the Company
or any of its subsidiaries. Any such notifications and responses by the Company will be in full
compliance with the requirements of the HSR Act. The Company shall, to the extent legally
permissible, keep Rhône Capital III and such Holder reasonably apprised of the status of any
communications with, and any inquiries or requests for additional information from, the FTC, the
DOJ or such other governmental authority. The Company and Rhône Capital III shall share equally
the filing fees in connection with the above filings, and shall otherwise each bear their
respective costs and expenses in connection with the preparation of such filings and responses to
inquires or requests.



     9.4. Board Representation.



          (a) On the Issuance Date, the Company shall increase the number of directors on the Board by
two and each Appointing Fund shall have the right to designate a director (each, a “Rhône
Director”) who shall be appointed to the Board. The initial Rhône Directors shall be M. Steven
Langman and Andrew Sweet. Each Appointing Fund shall have the right to delegate its right to
appoint a director to an Affiliate of the Appointing Fund.




          (b) Subject to Section 9.4(d) and 9.4(f), in connection with each meeting of stockholders at
which directors are to be elected to serve on the Board, the Company shall take all necessary steps
to nominate each Rhône Director (or such alternative persons who are proposed by the Appointing
Funds and notified to the Company on or prior to any date set forth in the Company’s constituent
documents or applicable law for stockholder nominees) and to use its reasonable best efforts to
cause the Board to unanimously recommend that the stockholders of the Company vote in favor of
recommending each Rhône Director for election to the stockholders. If, for any reason, a candidate
designated as a Rhône Director is determined to be unqualified to serve on the Board, the
Appointing Fund shall have the right to designate an alternative Rhône Director to be so appointed.




          (c) Each appointed or elected Rhône Director will hold his or her office as a director of the
Company for such term as is provided in the Company’s constituent documents or until his or her
death, resignation or removal from the Board or until his or her successor has been duly elected
and qualified in accordance with the provisions of this Agreement, the Company’s constituent
documents and applicable law. If any Rhône Director ceases to serve as



-29-









 






a director of the Company for any reason during his or her term, the Company will use its
reasonable best efforts to cause the Board to fill the vacancy created thereby with a replacement
designated by the applicable Appointing Fund.




          (d) The Appointing Funds shall each have the right to designate a Rhône Director pursuant to
Sections 9.4(a) and 9.4(b) until such time as the Initial Warrant Holders have sold 33 1/3% of the
Underlying Stock issuable in respect of the Warrants on the Issuance Date (or Warrants exercisable
for such percentage of Underlying Stock), to any Person or Persons other than Affiliates of Rhône
Capital III or other Initial Warrant Holders. Thereafter, Triton Onshore SPV L.P. shall have the
right to designate one Rhône Director pursuant to Sections 9.4(a) and 9.4(b) until such time as the
Initial Warrant Holders have sold 66 2/3% of the Underlying Stock issuable in respect of the
Warrants on the Issuance Date (or Warrants exercisable for such percentage of Underlying Stock), to
any Person or Persons other than Affiliates of Rhône Capital III or other Initial Warrant Holders.
Thereafter, the right of Triton Onshore SPV L.P. to designate a Rhône Director hereunder shall
terminate.




          (e) The Company shall provide the same compensation and rights and benefits of indemnity to
the Rhône Directors as are provided to other non-employee directors.




          (f) Nothing in this Section 9.4 shall prevent the Board from acting in accordance with its
fiduciary duties or applicable law or from acting in good faith in accordance with its constituent
documents, while giving due consideration to the intent of this Agreement. The Board shall have no
obligation to appoint or nominate any Rhône Director upon written notice that such appointment or
nomination would violate applicable law or result in a breach by the Board of its fiduciary duties
to its stockholders; provided, however, that the foregoing shall not affect the right of the
Appointing Funds to designate an alternate Rhône Director.




     9.5. Stockholder Approval. The Company shall call a special meeting of stockholders
as promptly as practicable in the event that (i) the Company does not have a sufficient number of
authorized shares of Common Stock to issue Common Stock upon exercise of all unexercised Warrants
and to effect the conversion of any issued Series A Preferred Stock into Common Stock, in which
case stockholder approval to amend the Company’s Certificate of Incorporation to increase the
number of authorized shares of Common Stock shall be sought, or (ii) any or all of the Warrants are
exercised for Series A Preferred Stock, in which case stockholder approval for conversion of the
Series A Preferred Stock into Common Stock shall be sought, in each case in accordance with the
voting requirements set forth in the Company’s by-laws. In the event of a special meeting called
pursuant to clause (i) or (ii), the Company shall use its commercially reasonable efforts to obtain
such stockholder approval and the Holders shall vote any Common Stock they then hold in favor of
such approval.



     9.6. Certain Other Events. If any event occurs as to which the provisions of Article
5 are not strictly applicable or, if strictly applicable, would not fairly protect the rights of
the Holders in accordance with the essential intent and principles of such provisions, then the
Board shall make such adjustments in the application of such provisions, in accordance with such
essential intent and principles, as shall be reasonably necessary, in the good faith judgment of
the disinterested members of the Board, to protect such purchase rights as aforesaid.



-30-









 





     9.7. Transfers. Subject to compliance with applicable federal or state securities
laws, Common Stock issuable upon exercise of the Warrants shall be freely transferable; provided,
however, that Holders shall not transfer, individually or acting in concert with other Holders,
Common Stock representing 15% or more of the then-outstanding number of shares of Common Stock to
any one Person without the prior written approval of the Board. This Section 9.7 shall not apply
to transfers of Common Stock made pursuant to a bona fide underwritten public offering or
open-market transactions.



10. MISCELLANEOUS.




     10.1. Payment of Taxes. The Company shall pay all transfer, stamp and other similar
taxes that may be imposed in respect of the issuance or delivery of the Warrants or in respect of
the issuance or delivery by the Company of any securities upon exercise of the Warrants with
respect thereto. The Company shall also pay any tax or other charge imposed in connection with any
transfer involved in the issue of any certificate for shares of Common Stock or Series A Preferred
Stock or payment of cash to any Person other than the Holder of a Warrant Certificate surrendered
upon the exercise or purchase of a Warrant.



     10.2. Surrender of Certificates. Any Warrant Certificate surrendered for exercise or
purchase shall be promptly cancelled by the Company and shall not be reissued by the Company. The
Company shall destroy such cancelled Warrant Certificates.



     10.3. Mutilated, Destroyed, Lost and Stolen Warrant Certificates. If (a) any
mutilated Warrant Certificate is surrendered to the Company, or (b) the Company receives evidence
to its satisfaction of the destruction, loss or theft of any Warrant Certificate, and there is
delivered to the Company such appropriate affidavit of loss, applicable processing fee and a
corporate bond of indemnity as may be required by the Company to save it harmless, then, in the
absence of notice to the Company that such Warrant Certificate has been acquired by a bona fide
purchaser, the Company shall execute and deliver, in exchange for any such mutilated Warrant
Certificate or in lieu of any such destroyed, lost or stolen Warrant Certificate, a new Warrant
Certificate of like tenor and for a like aggregate number of Warrants.



     Upon the issuance of any new Warrant Certificate under this Section 10.3, the Company shall
pay any tax or other governmental charge that may be imposed in relation thereto and other expenses
in connection therewith.



     Every new Warrant Certificate executed and delivered pursuant to this Section 10.3 in lieu of
any destroyed, lost or stolen Warrant Certificate shall constitute an original contractual
obligation of the Company, whether or not the destroyed, lost or stolen Warrant Certificate shall
be at any time enforceable by anyone, and shall be entitled to the benefits of this Agreement
equally and proportionately with any and all other Warrant Certificates duly executed and delivered
hereunder.



     The provisions of this Section 10.3 are exclusive and shall preclude (to the extent lawful)
all other rights or remedies with respect to the replacement of mutilated, destroyed, lost or
stolen Warrant Certificates.



-31-









 





     10.4. Removal of Legends. In the event (i) the shares of Underlying Stock are
registered under the Securities Act or (ii) the Company is presented with an opinion of counsel
reasonably satisfactory to the Company that transfers of shares of Underlying Stock do not require
registration under the Securities Act, the Company shall direct its transfer agent, and the
transfer agent shall, upon surrender by a Holder of its certificates evidencing such shares of
Underlying Stock to the transfer agent, exchange such certificates for certificates without the
legends referred to in Section 3.6(e).



     10.5. Notices. Any notice, demand or delivery to the Company or Rhône Capital III
authorized by this Agreement shall be sufficiently given or made when mailed if sent by first-class
mail, postage prepaid, addressed to the Company or Rhône Capital III, as applicable, as follows:




	If to the Company: 	 	Quiksilver, Inc.

15202 Graham St.

Huntington Beach, CA 92649

Fax: (734) 477-1370

Attention: General Counsel
	 
	 	 	With a copy to:
	 
	 	 	Skadden, Arps, Slate, Meagher & Flom LLP

300 South Grand Avenue

Los Angeles, CA 90071-3144

Fax: (213) 621-5493

Attention: Brian J. McCarthy and K. Kristine Dunn
	 
	If to Rhône Capital III:    	 	Rhône Capital III L.P.

630 Fifth Avenue, 27th Floor

New York, NY 10111

Fax: (212) 218-6789

Attention: Baudoin Lorans and M. Allison Steiner
	 
	 	 	With a copy to:
	 
	 	 	Sullivan & Cromwell LLP

125 Broad Street

New York, New York 10004-2498

Fax: (212) 291-9116

Attention: Richard Pollack




or such other address as shall have been furnished to the party giving or making such notice,
demand or delivery.




          Any notice required to be given by the Company to the Holders pursuant to this Agreement shall
be made by mailing by registered mail, return receipt requested, to the Holders



-32-









 






at their respective addresses shown on the register of the Company. Any notice that is mailed
in the manner herein provided shall be conclusively presumed to have been duly given when mailed,
whether or not the Holder receives the notice.




     10.6. Applicable Law. This Agreement and each Warrant issued hereunder and all rights
arising hereunder shall be governed by the internal laws of the State of New York.



     10.7. Persons Benefiting. This Agreement shall be binding upon and inure to the
benefit of the Company and Rhône Capital III, and their successors, assigns, beneficiaries,
executors and administrators, and the Holders from time to time of the Warrants. Nothing in this
Agreement is intended or shall be construed to confer upon any Person, other than the Company,
Rhône Capital III and the Holders, any right, remedy or claim under or by reason of this Agreement
or any part hereof.



     10.8. Counterparts. This Agreement may be executed in any number of counterparts,
each of which shall be deemed an original, but all of which together constitute one and the same
instrument.



     10.9. Amendments.



          (a) Neither this Agreement nor any provisions hereof shall be waived, modified, changed,
discharged or terminated other than in accordance with Section 10.9(b) below.




          (b) With the consent of Rhône Capital III, the Company may from time to time (i) supplement or
amend this Agreement to cure any ambiguity, to correct or supplement any provision contained herein
which may be defective or inconsistent with any other provisions herein, or to make any other
provisions with regard to matters or questions arising hereunder and (ii) modify the Agreement for
the purpose of adding any provisions to or changing in any manner or eliminating any of the
provisions of this Agreement or modifying in any manner the rights of the Holders hereunder.




     10.10. Headings. The descriptive headings of the several Articles and Sections of
this Agreement are inserted for convenience and shall not control or affect the meaning or
construction of any of the provisions hereof.



     10.11. Entire Agreement. This Agreement constitutes the entire agreement and
supersedes all prior agreements and understandings, both written and oral, between the parties with
respect to the subject matter hereof. In the event of any conflict, discrepancy, or ambiguity
between the terms and conditions contained in this Agreement and any schedules or attachments
hereto, the terms and conditions contained in this Agreement shall take precedence.



     10.12. Limitation of Liability. No party to this Agreement shall be liable to any
other party for any consequential, indirect, special or incidental damages under any provision of
this Agreement or for any consequential, indirect, penal, special or incidental damages arising out
of any act or failure to act hereunder even if that party has been advised of or has foreseen the
possibility of such damages.




-33-











 





     IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be duly executed, as of
the day and year first above written.



	 	 	 	 	 
	 	QUIKSILVER, INC.

 	 
	 	By:  	 /s/ Charles S. Exon
 	 
	 	 	Name:  	Charles S. Exon 	 
	 	 	Title:  	Chief Administrative Officer 	 
	 
	 	ROMOLO HOLDINGS C.V.

 	 
	 	By:  	
 	 
	 	 	Name:  	 	 
	 	 	Title:  	 	 
	 
	 	TRITON SPV L.P.

 	 
	 	By:  	
 	 
	 	 	Name:  	 	 
	 	 	Title:  	 	 
	 
	 	TRITON ONSHORE SPV L.P.

 	 
	 	By:  	
 	 
	 	 	Name:  	 	 
	 	 	Title:  	 	 
	 
	 	TRITON OFFSHORE SPV L.P.

 	 
	 	By:  	
 	 
	 	 	Name:  	 	 
	 	 	Title:  	 	 
	 
	 	TRITON COINVESTMENT SPV L.P.

 	 
	 	By:  	
 	 
	 	 	Name:  	 	 
	 	 	Title:  	 	 



-34-









 






	 	 	 	 	 



	 	 	 	 	 
	 	RHÔNE CAPITAL III L.P.

 	 
	 	By:  	
 	 
	 	 	Name:  	 	 
	 	 	Title:  	 	 



-35-









 






	 	 	 	 	 



FORM OF FACE OF WARRANT CERTIFICATE



THESE WARRANTS MAY ONLY BE TRANSFERRED WITH THE PRIOR CONSENT OF QUIKSILVER, INC. THE SECURITIES
ISSUABLE UPON THE EXERCISE HEREOF HAVE NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, AS
AMENDED, OR QUALIFIED UNDER APPLICABLE STATE SECURITIES LAWS. SUCH SECURITIES MAY BE OFFERED, SOLD
OR TRANSFERRED ONLY IN COMPLIANCE WITH THE REQUIREMENTS OF SUCH ACT AND OF ANY APPLICABLE STATE
SECURITIES LAWS AND SUBJECT TO THE PROVISIONS OF THE WARRANT AND REGISTRATION RIGHTS AGREEMENT
DATED AS OF JULY 31, 2009 BY AND AMONG QUIKSILVER, INC. (THE “COMPANY”), THE INITIAL WARRANT
HOLDERS AND RHÔNE CAPITAL III L.P. A COPY OF SUCH WARRANT AND REGISTRATION RIGHTS AGREEMENT IS
AVAILABLE AT THE OFFICES OF THE COMPANY.




WARRANTS TO PURCHASE COMMON STOCK

OF QUIKSILVER, INC.




	 	 	 
	No.                     

	 	Certificate for                      Warrants






     This certifies that [HOLDER], or registered assigns, is the registered holder
of the number of Warrants set forth above. Each Warrant entitles the holder thereof (a “Holder”),
subject to the provisions contained herein and in the Warrant and Registration Rights Agreement
referred to below, to purchase from Quiksilver, Inc., a Delaware corporation (the “Company”), one
share of the Company’s common stock, par value $0.0l per share (“Common Stock”), subject to
adjustment upon the occurrence of certain events specified herein and in the Warrant and
Registration Rights Agreement, at the exercise price (the “Exercise Price”) of $1.86 per share,
subject to adjustment upon the occurrence of certain events specified herein and in the Warrant
Agreement (as defined below).



     This Warrant Certificate is issued under and in accordance with the Warrant and Registration
Rights Agreement, dated as of July 31, 2009 (the “Warrant Agreement”), by and among the Company,
the Initial Warrant Holders and Rhône Capital III, and is subject to the terms and provisions
contained in the Warrant Agreement, to all of which terms and provisions the Holder of this Warrant
Certificate consents by acceptance hereof. The Warrant Agreement is hereby incorporated herein by
reference and made a part hereof, including the representations and warranties of the Holder
pursuant to Section 8.2 of the Warrant Agreement. Reference is hereby made to the Warrant
Agreement for a full statement of the respective rights, limitations of rights, duties, obligations
and immunities thereunder of the Company, the Holders of the Warrants and Rhône Capital III.
Capitalized terms used but not otherwise defined herein shall have the meaning ascribed to such
terms in the Warrant Agreement.



     This Warrant Certificate shall terminate and be void as of the close of business on July 31,
2016 (the “Expiration Date”).



A-1









 





     As provided in the Warrant Agreement and subject to the terms and conditions therein set
forth, the Warrants shall be exercisable from time to time on any Business Day and ending on the
Expiration Date.



     The Exercise Price and the number of shares of Common Stock issuable upon the exercise of each
Warrant are subject to adjustment as provided in the Warrant Agreement.



     All shares of Common Stock issuable by the Company upon the exercise of the Warrants shall,
upon such issue, be duly and validly issued and fully paid and non-assessable.



     Under certain circumstances, as set forth in the Warrant Agreement, the Warrants are
exercisable for Series A Preferred Stock of the Company.



     In order to exercise a Warrant, the registered holder hereof must surrender this Warrant
Certificate at the principal place of business of the Company, with the Exercise Subscription Form
on the reverse hereof duly executed by the Holder hereof, with signature guaranteed as therein
specified, together with any required payment in full of the Exercise Price then in effect for the
share(s) of Underlying Stock as to which the Warrant(s) represented by this Warrant Certificate is
(are) submitted for exercise, all subject to the terms and conditions hereof and of the Warrant
Agreement. Any such payment of the Exercise Price shall be by cash, bank wire transfer in
immediately available funds, certified or official bank check drawn on a New York City bank payable
to the order of the Company or on a cashless basis as described in Section 3.4(b) of the Warrant
Agreement.



     The Company shall pay all transfer, stamp and other similar taxes that may be imposed in
respect of the issuance or delivery of the Warrants or in respect of the issuance or delivery by
the Company of any securities upon exercise of the Warrants. The Company shall also pay any tax or
other charge imposed in connection with any transfer involved in the issue of any certificate for
shares of Common Stock or other securities underlying the Warrants or payment of cash to any Person
other than the Holder of a Warrant Certificate surrendered upon the exercise or purchase of a
Warrant.



     No service charge shall be made to a Holder for any registration of exchange of the Warrant
Certificates, and the Company shall pay any tax or other governmental charge payable in connection
therewith.



     Each taker and holder of this Warrant Certificate by taking or holding the same, consents and
agrees that this Warrant Certificate when duly endorsed in blank shall be deemed negotiable and
that when this Warrant Certificate shall have been so endorsed, the holder hereof may be treated by
the Company and all other Persons dealing with this Warrant Certificate as the absolute owner
hereof for any purpose and as the Person entitled to exercise the rights represented hereby.



     This
Warrant Certificate and all rights arising hereunder shall be
governed by the internal laws of the State of New York.



     This Warrant Certificate and the Warrant Agreement are subject to amendment as provided in the
Warrant Agreement.



     Copies of the Warrant Agreement are on file at the principal place of business of the Company
and may be obtained by writing to the Company at the following address:



A-2









 




Quiksilver, Inc.

15202 Graham St.

Huntington Beach, CA 92649

Fax: (734) 477-1370

Attention: General Counsel




Dated: [ • ]




	 	 	 	 	 
	 	QUIKSILVER, INC.

 	 
	 	By:  	
 	 
	 	 	Name and Title: 	 
	 	 	 	 
	 	 	 
	 	By:  	
 	 
	 	 	Name and Title: 	 
	 	 	 	 



A-3









 






	 	 	 	 	 



EXHIBIT A




FORM OF REVERSE OF WARRANT CERTIFICATE




EXERCISE SUBSCRIPTION FORM




(To be executed only upon exercise of Warrant)



To: Quiksilver, Inc.





     The undersigned irrevocably exercises                      of the Warrants for the purchase of one
share (subject to adjustment in accordance with the Warrant Agreement) of Common Stock, par value
$0.01 per share, of Quiksilver, Inc., for each Warrant represented by the Warrant Certificate and
herewith makes payment of $                     (such payment being by cash, by bank wire transfer in
immediately available funds, or by certified or official bank check drawn on a New York City bank
payable to the order of Quiksilver, Inc. or on a cashless basis as described in Section 3.4(b) of
the Warrant Agreement), all at the Exercise Price and on the terms and conditions specified in the
Warrant Certificate and the Warrant Agreement therein referred to, surrenders this Warrant
Certificate and all right, title and interest therein to Quiksilver, Inc. and directs that the
shares of Common Stock deliverable upon the exercise of such Warrants be registered in the name and
delivered at the address specified below.



Date:                                         




	 	 	 	 	 
	 

	 	1
	 	 
	 

	 	

	 	 
	 

	 	(Signature of Owner)
	 	 
	 
	 	 	 	 
	 

	 	

	 	 
	 

	 	(Street Address)
	 	 
	 
	 	 	 	 
	 

	 	

	 	 
	

	 	(City)                                              (State)     (Zip Code)
	 	 
	
	 	 	 	 
	 

	 	Signature Guaranteed by:
	 	 
	 
	 	 	 	 
	
	 	 	 	 
	 

	 	 

	 	 








 




			
	1	 	The signature must correspond with the name as written
upon the face of the within Warrant Certificate in every particular, without
alteration or enlargement or any change whatever, and must be guaranteed by a
financial institution satisfactory to the Company.




A-4









 










Securities to be issued to:




Please insert social security or identifying number:




Name:




Street Address:




City, State and Zip Code:




Please insert social security or identifying number:




Name:




Street Address:




City, State and Zip Code:





A-5









 








EXHIBIT B




FORM OF REVERSE OF WARRANT CERTIFICATE




EXERCISE SUBSCRIPTION FORM



(To be executed only upon exercise of Warrant for Series A Preferred Stock in the event of an
adjustment requiring the approval of the stockholders of Quiksilver, Inc. in order to comply with
Section 312.03 of the New York Stock Exchange Listed Company Manual)



To: Quiksilver, Inc.




     The undersigned irrevocably exercises                      of the Warrants for the purchase of one
share of Series A Preferred Stock, par value $0.01 per share, of Quiksilver, Inc., for each Warrant
represented by the Warrant Certificate and herewith makes payment of $                     (such payment
being by cash, by bank wire transfer in immediately available funds, or by certified or official
bank check drawn on a New York City bank payable to the order of Quiksilver, Inc. or on a cashless
basis as described in Section 3.4(b) of the Warrant Agreement), all at the Exercise Price and on
the terms and conditions specified in the Warrant Certificate and the Warrant Agreement therein
referred to, surrenders this Warrant Certificate and all right, title and interest therein to
Quiksilver, Inc. and directs that the shares of Series A Preferred Stock deliverable upon the
exercise of such Warrants be registered in the name and delivered at the address specified below.
Due to an adjustment requiring the approval of the stockholders of Quiksilver, Inc. in order to
comply with Section 312.03 of the New York Stock Exchange Listed Company Manual, the undersigned
hereby irrevocably elects to receive the Series A Preferred Stock in lieu of Common Stock.



Date:                     







	 	 	 	 	 
	 

	 	2
	 	 
	 

	 	

	 	 
	 

	 	(Signature of Owner)
	 	 
	 
	 	 	 	 
	 

	 	

	 	 
	 

	 	(Street Address)
	 	 
	 
	 	 	 	 
	 

	 	

	 	 
	

	 	(City)                                             (State)     (Zip Code)
	 	 
	
	 	 	 	 
	 

	 	Signature Guaranteed by:
	 	 
	
	 	 	 	 
	 
	 	 	 	 
	 

	 	 

	 	 










 




			
	2	 	The signature must correspond with the name as written
upon the face of the within Warrant Certificate in every particular, without
alteration or enlargement or any change whatever, and must be guaranteed by a
financial institution satisfactory to the Company.




B-1









 










Funds to be issued to:




Please insert social security or identifying number:




Name:




Street Address:




City, State and Zip Code:




Please insert social security or identifying number:




Name:




Street Address:




City, State and Zip Code:




B-2









 








EXHIBIT C



CERTIFICATE OF DESIGNATIONS OF THE SERIES A PREFERRED STOCK