Document:

exv10w1

Exhibit 10.1

FIRST AMENDMENT TO CREDIT AGREEMENT

     This First Amendment to Credit Agreement (this “First Amendment”) dated as of August
27, 2010 is entered into among:

     QUIKSILVER AMERICAS, INC., a California corporation (the “Lead Borrower”);

     QUIKSILVER CANADA CORP., a Nova Scotia unlimited liability company (the “Canadian
Borrower”),

     the Persons named on Schedule 1.01 hereto (collectively, with the Lead Borrower, the
“Domestic Borrowers”);

     QUIKSILVER, INC., a Delaware corporation (the “Parent”);

     the Persons named on Schedule 1.02 hereto (collectively, the “Guarantors”);

     the Lenders party hereto;

     BANK OF AMERICA, N.A., as Administrative Agent, Swing Line Lender and L/C Issuer;

     BANK OF AMERICA, N.A. (acting through its Canada branch), as Canadian Agent, Swing Line Lender
and L/C Issuer; and

     BANK OF AMERICA, N.A. and GENERAL ELECTRIC CAPITAL CORPORATION, as Co-Collateral Agents;

	 	 	in consideration of the mutual covenants herein contained and benefits to be derived
herefrom.

WITNESSETH:

     Reference is made to that certain Credit Agreement dated as of July 31, 2009 (as amended,
modified, supplemented or restated and in effect from time to time, the “Credit Agreement”)
by and among (i) Quiksilver Americas, Inc., as the Lead Borrower for itself and the other Borrowers
party thereto, (ii) such other Borrowers, (iii) Quiksilver Canada Corp., as the Canadian Borrower,
(iv) the Guarantors party thereto, (v) the Administrative Agent, (vi) the Co-Collateral Agents and
(vii) the Lenders party thereto.

     The Borrowers have requested that certain modifications be made to the Credit Agreement to,
among other things, reduce the Aggregate Total Commitments and pricing. The Lenders have agreed to
such modifications on the terms set forth herein.

     NOW, THEREFORE, in consideration of the mutual agreements herein contained and benefits to be
derived herefrom, the parties hereto agree as follows:

	1.	 	Definitions. Capitalized terms used herein and not otherwise defined herein shall
have the meanings assigned to such terms in the Credit Agreement.

	2.	 	Amendment to Title Page. The reference to Joint Lead Arrangers and Joint Bookrunners
on the title page of the Credit Agreement shall mean and refer solely to Banc of America
Securities LLC as Sole Lead Arranger and Sole Bookrunner.

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	3.	 	Amendments to Article I. The provisions of Article I of the Credit Agreement are
hereby amended as follows:

	 	a.	 	The following definitions are hereby added to Article I in appropriate
alphabetical order:
	 
	 	 	 	“Additional Borrowing Base Reserve” means a Reserve with respect to the
Domestic Borrowing Base in the amount of the then outstanding principal amount of
term loans under the US Term Loan Credit Agreement to the extent such term loan has
not been repaid, refinanced or otherwise satisfied 90 days prior to its scheduled
maturity date.
	 
	 	 	 	“First Amendment Effective Date” means August 27, 2010.
	 
	 	b.	 	The definition of “Accelerated Borrowing Base Delivery Event” is hereby deleted
in its entirety and the following substituted in its stead:
	 
	 	 	 	“Accelerated Borrowing Base Delivery Event” means either (i) the occurrence
and continuance of any Event of Default, or (ii) the failure of the Borrowers to
maintain Domestic Availability at least equal to the greater of (x) fifteen percent
(15%) of the Total Loan Cap or (y) $15,000,000. For purposes of this Agreement, the
occurrence of an Accelerated Borrowing Base Delivery Event shall be deemed
continuing (i) so long as such Event of Default is continuing, and/or (ii) if the
Accelerated Borrowing Base Delivery Event arises as a result of the Domestic
Borrowers’ failure to maintain Domestic Availability as required in clause (ii) of
the immediately preceding sentence, until Domestic Availability has equaled or
exceeded the greater of (x) fifteen percent (15%) of the Total Loan Cap or (y)
$15,000,000, for sixty (60) consecutive calendar days, in which case an Accelerated
Borrowing Base Delivery Event shall no longer be deemed to be continuing for
purposes of this Agreement.
	 
	 	c.	 	The definition of “Adjustment Date” is hereby amended by the addition
of the following at the end thereof:
	 
	 	 	 	The first Adjustment Date after the First Amendment Effective Date shall be February
1, 2011.
	 
	 	d.	 	The definition of “Aggregate Domestic Commitments” is hereby amended by
deleting the last sentence of such definition and substituting the following in its
stead:
	 
	 	 	 	As of the First Amendment Effective Date, the Aggregate Domestic Commitments are
$135,000,000.
	 
	 	e.	 	The definition of “Aggregate Total Commitments” is hereby amended by deleting
the last sentence of such definition and substituting the following in its stead:
	 
	 	 	 	As of the First Amendment Effective Date, the Aggregate Total Commitments are
$150,000,000.
	 
	 	f.	 	The definition of “Applicable Margin” is hereby deleted in its entirety and the
following substituted in its stead:
	 
	 	 	 	“Applicable Margin” means:

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          From and after the First Amendment Effective Date until the first Adjustment
Date after the First Amendment Effective Date, the percentages set forth in Level II
of the pricing grid below, unless the Average Daily Domestic Availability
requirements for Level II (or lower) have not been satisfied, in which event the
Applicable Margin shall be set at Level III. In no event shall the Applicable
Margin be set at Level I prior to the first Adjustment Date (even if the Average
Daily Domestic Availability requirements for Level I have been satisfied); and

          From and after the first Adjustment Date, the Applicable Margin shall be
determined from the following pricing grid based upon the Average Daily Domestic
Availability for the most recent Fiscal Quarter ended immediately preceding such
Adjustment Date; provided however, that notwithstanding anything to
the contrary set forth herein, upon the occurrence of an Event of Default, any Agent
may, and the Administrative Agent shall at the direction of the Required Lenders,
immediately increase the Applicable Margin to the percentage set forth in Level III
which shall apply for so long as such Event of Default is continuing (even if the
Average Daily Domestic Availability requirements for a different Level have been met
and without limiting the right of the Administrative Agent or the Required Lenders
to charge interest at the Default Rate as provided in Section 2.08(b));
provided further that, if any Borrowing Base Certificate is at any
time restated or otherwise revised (including as a result of an audit) or if the
information set forth in any such Borrowing Base Certificate otherwise proves to be
false or incorrect such that the Applicable Margin would have been higher than was
otherwise in effect during any period, without constituting a waiver of any Default
or Event of Default arising as a result thereof, interest due under this Agreement
shall be immediately and retroactively recalculated at such higher rate for any
applicable periods and shall be due and payable (to the extent not already paid) on
demand.

	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 
	 	 	Average Daily Domestic	 	LIBOR	 	Domestic Prime	 	Canadian Prime	 	BA Rate
	Level	 	Availability	 	Margin	 	Rate Margin	 	Rate Margin	 	Margin
	I	 	Equal to or greater
than 66%
 of the Total Loan Cap
	 	 	2.50	%	 	 	1.50	%	 	 	2.00	%	 	 	2.50	%
	II	 	Less than 66%, but
equal to or
greater
than 33%, of the Total 
Loan Cap
	 	 	2.75	%	 	 	1.75	%	 	 	2.25	%	 	 	2.75	%
	III	 	Less than 33% of the Total
 Loan Cap
	 	 	3.00	%	 	 	2.00	%	 	 	2.50	%	 	 	3.00	%

	 	g.	 	The definition of “Applicable Rate” is hereby deleted in its entirety and the
following substituted in its stead:
	 
	 	 	 	“Applicable Rate” means, (i) with respect to Commercial Letters of Credit,
at any time of calculation, a per annum rate equal to the Applicable Margin for
Loans which are LIBO Rate Loans minus 0.50%, and (ii) with respect to Standby
Letters of Credit, at any time of calculation, a per annum rate equal to the
Applicable Margin for Loans which are LIBO Rate Loans.

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	 	h.	 	The definition of “Appraisal Percentage” is hereby deleted in its entirety and
the following substituted in its stead:
	 
	 	 	 	“Appraisal Percentage” means ninety percent (90%).
	 
	 	i.	 	The definition of “Arrangers” is hereby deleted in its entirety and the
following substituted in its stead:
	 
	 	 	 	“Arrangers” means Banc of America Securities LLC, in its capacity as sole
lead arranger. All references to the “Arrangers” shall mean and refer to the
“Arranger”.
	 
	 	j.	 	The definition of “Availability Condition” is hereby deleted in its entirety
and the following substituted in its stead:
	 
	 	 	 	“Availability Condition” means at the time of determination with respect to
any specified transaction or payment, Domestic Availability immediately preceding,
and on a pro forma basis on the date thereof and a projected basis for the twelve
(12) months immediately following, such transaction or payment was, and is projected
to be, equal to or greater than the greater of (a) twenty percent (20%) of the Total
Loan Cap and (b) $20,000,000.
	 
	 	k.	 	The definition of “Availability Reserves” is hereby amended by the addition of
the following text in the fifth to last line, immediately after the text “(x) Dilution
Reserves”:
	 
	 	 	 	and (xi) Additional Borrowing Base Reserve.
	 
	 	l.	 	The definition of “Cash Dominion Event” is hereby deleted in its entirety and
the following substituted in its stead:
	 
	 	 	 	“Cash Dominion Event” means either (i) the occurrence and continuance of any
Event of Default, or (ii) the failure of the Borrowers to maintain Domestic
Availability for three (3) consecutive Business Days at least equal to the greater
of (x) fifteen percent (15%) of the Total Loan Cap or (y) $15,000,000. For purposes
of this Agreement, the occurrence of a Cash Dominion Event shall be deemed
continuing (i) so long as such Event of Default is continuing, and/or (ii) if such
Cash Dominion Event arises as a result of the Borrowers’ failure to maintain
Domestic Availability as required under clause (ii) of the immediately preceding
sentence, until Domestic Availability is at least equal to the greater of (x)
fifteen percent (15%) of the Total Loan Cap or (y) $15,000,000 for sixty (60)
consecutive calendar days; in which case a Cash Dominion Event shall no longer be
deemed to be continuing for purposes of this Agreement; provided that a Cash
Dominion Event shall be deemed continuing (even if an Event of Default is no longer
continuing and/or Domestic Availability exceeds the required amount for sixty (60)
consecutive calendar days) at all times after a Cash Dominion Event has occurred and
been discontinued on three (3) occasions after the Closing Date.
	 
	 	m.	 	The definition of “Change in Law” is hereby amended by the addition of the
following text at the end thereof:
	 
	 	 	 	A Change in Law shall not include the application or effect of any regulations
promulgated and any interpretation or other guidance issued in connection with
Sections 1471 or 1472 of the Code.

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	 	n.	 	The definition of “Covenant Compliance Event” is hereby deleted in its entirety
and the following substituted in its stead:
	 
	 	 	 	“Covenant Compliance Event” means, as of any date, Domestic Availability at
any time is less than the greater of (x) fifteen percent (15%) of the Total Loan Cap
or (y) $15,000,000. For purposes hereof, the occurrence of a Covenant Compliance
Event shall be deemed continuing until Domestic Availability is at least equal to
the greater of (x) fifteen percent (15%) of the Total Loan Cap or (y) $15,000,000
for sixty (60) consecutive calendar days, in which case a Covenant Compliance Event
shall no longer be deemed to be continuing for purposes of this Agreement.
	 
	 	o.	 	 The definition of “Credit Card Advance Rate” is hereby deleted in its entirety
and the following substituted in its stead:
	 
	 	 	 	“Credit Card Advance Rate” means ninety percent (90%).
	 
	 	p.	 	The following text contained in the definition of “Eligible Assignee” is hereby
deleted in its entirety:
	 
	 	 	 	provided that notwithstanding the foregoing, “Eligible Assignee” shall not
include the Parent or any of its Subsidiaries or other Affiliates, or the US Term
Loan Agent or the Euro Term Loan Agent, or any of their respective Lender Affiliates
or Subsidiaries except in connection with the exercise of the purchase right, as set
forth in Section 5.4 of the Intercreditor Agreement
	 
	 	 	 	and the following substituted in its stead:
	 
	 	 	 	provided that notwithstanding the foregoing, “Eligible Assignee” shall not
include the Parent or any of its Subsidiaries or other Affiliates, or the US Term
Loan Agent or the Euro Term Loan Agent, or any of their respective Lender Affiliates
or Subsidiaries (except to the extent that the US Term Loan Agent or the Euro Term
Loan Agent is Bank of America, N.A. in connection with any Permitted
Amendment/Refinancing and except in connection with the exercise of the purchase
right, as set forth in Section 5.4 of the Intercreditor Agreement)
	 
	 	q.	 	The definition of “Excluded Taxes” is hereby amended by deleting the “.” at the
end of such definition and inserting the following in its stead:
	 
	 	 	 	, and (e) any tax that is attributable to any Lender’s failure or inability to take
any action (including entering into an agreement with the IRS), comply with any
information gathering or reporting requirements, or to provide the Lead Borrower
(with a copy to the Administrative Agent) with appropriate certification, in each
case, if such compliance or certificate is required to obtain exemption from any
United States federal withholding taxes under Sections 1471 or 1472 of the Code and
any regulations promulgated thereunder and any interpretation or other guidance
issued in connection therewith.
	 
	 	r.	 	The definition of “Fee Letter” is hereby amended by the addition of the
following text at the end thereof:

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	 	 	 	As of the First Amendment Effective Date, “Fee Letter” means the letter agreement,
dated August 11, 2010, among the Lead Borrower, the Parent, the Administrative Agent
and the Arranger.
	 
	 	s.	 	The definition of “LIBO Rate” is hereby amended by the deletion of the
following text contained in such definition:
	 
	 	 	 	, provided that there shall be a two percent (2%) floor on the LIBO Rate for LIBO
Rate Loans with a one (1) or two (2) month Interest Period, and provided further
that LIBO Rate Loans may be requested by the Lead Borrower or the Canadian Borrower
at the three (3) month LIBO Rate for one (1) or two (2) month Interest Periods
	 
	 	t.	 	The definition of “Maturity Date” is hereby deleted in its entirety and the
following substituted in its stead:
	 
	 	 	 	“Maturity Date” means August 27, 2014.
	 
	 	u.	 	The definition of “Payment Conditions” is hereby deleted in its entirety and
the following substituted in its stead:
	 
	 	 	 	“Payment Conditions” means, at the time of determination with respect to any
specified transaction or payment, that (a) no Default or Event of Default then
exists or would arise as a result of entering into such transaction or the making
such payment, and (b) the Availability Condition has been satisfied, and (c) the
Consolidated Fixed Charge Coverage Ratio, calculated for the Measurement Period most
recently ended for which financial statements have been (or were required to be)
delivered pursuant to Section 6.01 is (x) with respect to any Restricted
Payment, equal to or greater than 1.15:1.0, immediately preceding, and on a pro
forma basis on the date thereof, after giving effect to such dividend or repurchase
and (y) with respect to any Investments or Acquisitions or any voluntary
prepayments, repurchases, redemptions or defeasances of Permitted Indebtedness
(other than Subordinated Indebtedness), equal to or greater than 1.1:1.0, in each
case, immediately preceding, and on a pro forma basis on the date thereof, after
giving effect to such transaction or payment. Prior to undertaking any transaction
or payment which is subject to the Payment Conditions, the Lead Borrower shall
deliver to the Administrative Agent evidence of satisfaction of the conditions
contained in clauses (b) and (c) in the preceding sentence on a basis (including,
without limitation, giving due consideration to results for prior periods)
reasonably satisfactory to the Agents. For all calculations of the Consolidated
Fixed Charge Coverage Ratio during the first year following the First Amendment
Effective Date, Consolidated Interest Charges relating to the Term Loans shall be
calculated based on the amount of cash interest that would have been expended had
the Term Loans been at a $30,000,000 principal balance for the applicable
Measurement Period or, if less, the actual principal amount of Term Loans
outstanding during such Measurement Period or any portion thereof.
	 
	 	v.	 	The definition of “Permitted Amendment/Refinancing” is hereby deleted in its
entirety and the following substituted in its stead:
	 
	 	 	 	“Permitted Amendment/Refinancing” means, in respect of any Indebtedness, any
amendments, restatements, refinancings, refundings, renewals, extensions or
replacements of such Indebtedness; provided that (i) the principal amount of such
Indebtedness is not increased at the time of such amendment, restatement,
refinancing,

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	 	 	 	refunding, renewal, extension or replacement except by an amount equal to any
premium or other amount paid, interest then due, and fees and expenses incurred, in
connection with such amendment, restatement, refinancing, refunding, renewal,
extension or replacement and by an amount equal to any existing commitments
unutilized thereunder, (ii) the result of such amendment, restatement, refinancing,
refunding, renewal, extension or replacement shall not be an earlier maturity date
or decreased weighted average life of such Indebtedness, and (iii) the terms
relating to collateral (if any) and subordination (if any), financial covenants,
mandatory prepayments, events of default, and interest, fees and other amounts
payable, of any such amended, restated, refinanced, refunded, renewed, extended or
replacement Indebtedness, and of any agreement entered into and of any instrument
issued in connection therewith, are not materially less favorable, when taken as a
whole, to the Loan Parties or the Lenders than the terms of the agreements and
instruments governing the Indebtedness being so amended, restated, refinanced,
refunded, renewed, extended or replaced; provided that (A) the interest rates in
effect on the Term Loans may be increased by a spread of no more than four percent
(4%) per annum in the aggregate above the interest rates applicable to the Term
Loans in effect as of the Closing Date (excluding fluctuations in underlying rate
indices and increases resulting from the accrual of interest at the default rate),
of which no more than two percent (2%) per annum shall be cash pay, and the balance
(to the extent applicable) shall be capitalized and paid at or after the initial
maturity of the Term Loans, and (B) the foregoing shall not prevent any payment in
the form of equity securities (not constituting Indebtedness) in consideration of
any such amendment, restatement, refinancing, refunding, renewal, extension or
replacement. Notwithstanding anything to the contrary contained herein,
Indebtedness under a credit agreement to be entered into among Bank of America,
N.A., as administrative agent on behalf of certain lenders, certain lenders party
thereto and certain of the Loan Parties, substantially in accordance with the terms
of a certain Summary of Indicative Terms and Conditions dated as of August 12, 2010,
the net proceeds of which are used, directly or indirectly, to repay in full the
outstanding Term Loans, shall be deemed a Permitted Amendment/Refinancing for all
purposes hereunder.
	 
	 	w.	 	The definition of “Permitted Investment” is hereby amended by inserting the
following immediately after clause (v) contained therein and immediately prior to the
proviso at the end of such definition:
	 
	 		 	(w) subject to the restrictions set forth in Section 7.07, the payment or
other satisfaction by the Loan Parties of Indebtedness owing by Mountain & Wave S.à
r.l. under the Euro Term Loan Credit Agreement and any Investment by any Loan Party
made to effect the payment or other satisfaction of Indebtedness owing by Mountain &
Wave S.à r.l. under the Euro Term Loan Credit Agreement;

	4.	 	Amendments to Article II. The provisions of Article II of the Credit Agreement are
hereby amended as follows:

	 	a.	 	As of the First Amendment Effective Date the grid in Section 2.09(a)(i) is
hereby deleted in its entirety and the following substituted in its stead:

	 	 	 	 	 
	Average Daily Total Domestic	 	 
	Outstandings	 	Domestic Commitment Fee
	Less than 50% of Aggregate Domestic Commitments
	 	 	0.50	%

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	Average Daily Total Domestic	 	 
	Outstandings	 	Domestic Commitment Fee
	Greater than or equal to 50% of Aggregate Domestic Commitments
	 	 	0.375	%

	 	b.	 	As of the First Amendment Effective Date the grid in Section 2.09(a)(ii) is
hereby deleted in its entirety and the following substituted in its stead:

	 	 	 	 	 
	Average Daily Total Canadian	 	 
	Outstandings	 	Canadian Commitment Fee
	Less than 50% of Aggregate Canadian Commitments
	 	 	0.50	%
	Greater than or equal to 50% of Aggregate Canadian Commitments
	 	 	0.375	%
	
	 	 	 	 

	 	c.	 	The provisions of Section 2.15 are hereby amended as follows:

	 	i.	 	The provisions of Section 2.15(a) of the Credit Agreement are
hereby amended by deleting the number “$50,000,000” appearing therein and
substituting the number “$100,000,000” in its stead and by deleting the number
“$10,000,000” appearing therein and substituting the number “$15,000,000” in
its stead.
	 
	 	ii.	 	Section 2.15(b) of the Credit Agreement is hereby deleted in
its entirety and the following substituted in its stead:

          (b)Lender Elections to Increase. Each Lender agreeing to
increase its Commitment is defined herein as an “Existing Increasing
Lender.

	 
	 	iii.	 	Section 2.15(c) of the Credit Agreement is hereby deleted in
its entirety and the following substituted in its stead:

          (c) Notification by Administrative Agent; Additional Commitment
Lenders. The Administrative Agent, in consultation with the Lead
Borrower, will use its reasonable efforts to arrange for Eligible Assignees
to become a Domestic Lender or Canadian Lender, as applicable, hereunder and
to issue commitments in an amount equal to the amount of the increase in the
Aggregate Total Commitments requested by the Lead Borrower (each such
Eligible Assignee issuing a commitment and becoming a Lender, an
“Additional Commitment Lender”), provided, however,
that without the consent of the Administrative Agent, at no time shall the
Commitment of any Additional Commitment Lender be less than $10,000,000.

	5.	 	Amendments to Article III. The provisions of Article III of the Credit Agreement are
hereby amended as follows:

	 	a.	 	The provisions of Section 3.01 of the Credit Agreement are hereby amended by
inserting the following at the end of such Section:
	 
	 	 	 	Each Lender shall promptly provide, upon reasonable request from the Lead Borrower
or the Administrative Agent, any additional information that the Lead Borrower or
the Administrative Agent needs in order for the Lead Borrower or the Administrative
Agent

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	 	 	 	to determine the amount of any applicable withholding taxes, including information
relating to compliance with Sections 1471 or 1472 of the Code and any regulations
promulgated thereunder and any interpretation or other guidance issued in connection
therewith.

	6.	 	Amendments to Article VI. The provisions of Article VI of the Credit Agreement are
hereby amended as follows:

	 	a.	 	The provisions of Section 6.02(c) of the Credit Agreement are hereby amended by
deleting the text “tenth (10th)” appearing therein and substituting the text
“fifteenth (15th)” in its stead.
	 
	 	b.	 	The provisions of Section 6.10(b) of the Credit Agreement are hereby amended by
deleting the text “thirty percent (30%)” appearing therein and substituting the text
“twenty-five percent (25%)” in its stead and by deleting the number “$45,000,000”
appearing therein and substituting the number “$25,000,000” in its stead.
	 
	 	c.	 	Section 6.13(f) of the Credit Agreement is hereby deleted in its entirety.

	7.	 	Amendments to Article VII. The provisions of Article VII of the Credit Agreement are
hereby amended as follows:

	 	a.	 	Section 7.07 of the Credit Agreement is hereby amended by deleting the “.” at
the end of such Section and inserting the following in its stead:
	 
	 	 	 	, and (f) the Loan Parties may prepay (and may make Investments in any Subsidiary to
effect prepayment of) up to an aggregate amount of $30,000,000 of the principal
amount outstanding under the Term Loans (together with accrued interest thereon)
with the use of cash on hand (but not, for the avoidance of doubt, with the proceeds
of a Borrowing), regardless of whether the Payment Conditions have been satisfied;
provided that at the time of determination with respect to any such
prepayment of the Term Loans (i) no Default or Event of Default then exists or would
arise as a result of the making of any such payment and (ii) the Availability
Condition is satisfied and evidence thereof reasonably satisfactory to the Agents
has been delivered to the Administrative Agent.
	 
	 	b.	 	Section 7.15(a) of the Credit Agreement is hereby amended by the addition of
the following text at the end thereof:
	 
	 	 	 	For all calculations of the Consolidated Fixed Charge Coverage Ratio during the
first year following the First Amendment Effective Date, Consolidated Interest
Charges relating to the Term Loans shall be calculated based on the amount of cash
interest that would have been expended had the Term Loans been at a $30,000,000
principal balance for the applicable Measurement Period or, if less, the actual
principal amount of Term Loans outstanding during such Measurement Period or any
portion thereof.
	 
	 	c.	 	Section 7.15(b) of the Credit Agreement is hereby deleted in its entirety.

	8.	 	Amendment to Schedules. Schedule 2.01 to the Credit Agreement is hereby
deleted in its entirety and a new Schedule 2.01 in the form annexed hereto substituted
in its stead.

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	9.	 	Commitment Reduction. On the First Amendment Effective Date, in accordance with
Section 2.06 of the Credit Agreement, the Aggregate Domestic Commitments shall be reduced to
$135,000,000 and any payments required to be made to the Domestic Lenders under such Section
2.06 shall be paid by the Domestic Borrowers. The Lenders waive the requirement contained in
said Section 2.06 that at least three Business Days prior written notice of such reduction be
furnished to the Administrative Agent.

	10.	 	Conditions to Effectiveness. This First Amendment shall become effective upon
satisfaction of each of the following conditions precedent:

	 	a.	 	This First Amendment shall have been duly executed and delivered by the Loan
Parties, the Agents and all of the Lenders, and the Administrative Agent shall have
received a fully executed copy hereof.
	 
	 	b.	 	The Administrative Agent shall have received reasonable and customary
opinions of counsel to the Borrowers and Guarantors, and evidence that all
requisite corporate and other action necessary for the valid execution, delivery and
performance by the Loan Parties of this First Amendment has been taken.
	 
	 	c.	 	The Borrowers shall have paid to the Administrative Agent fees in accordance
with the terms of the Fee Letter.
	 
	 	d.	 	As of the First Amendment Effective Date combined Domestic Availability and
Canadian Availability shall be equal to or greater than $40,000,000.

	11.	 	Confirmation of Representations and Warranties. Each Loan Party hereby represents
and warrants to the Agents and the Lenders that (a) the representations and warranties of such
Loan Party contained in Article III of the Credit Agreement, and in each other Loan Document
(after giving effect to the amendments set forth herein) to which it is a party are true and
correct in all material respects on and as of such date as though made on and as of such date,
except to the extent that such representations and warranties expressly relate solely to an
earlier date (in which case such representations and warranties are true and correct in all
material respects on and as of such date); (b) no Default or Event of Default has occurred and
is continuing or would result from the effectiveness of this First Amendment; and (c) no event
has occurred after July 30, 2010 that could reasonably be expected to have a material adverse
effect on the condition (financial or otherwise), operations, or assets of the Borrower and
Guarantors, taken as a whole.

	12.	 	Miscellaneous.

	 	a.	 	All terms and conditions of the Credit Agreement and the other Loan Documents,
as amended hereby, remain in full force and effect.
	 
	 	b.	 	The Borrowers shall pay on demand all reasonable and documented out-of-pocket
costs and expenses of the Agents incurred in connection with the preparation,
negotiation, execution and delivery of this First Amendment, including, without
limitation, reasonable and documented fees of their counsel (limited to (i) not more
than one primary counsel and necessary local counsel (limited to one local counsel per
jurisdiction) in the case of Bank of America, N.A., and (ii) not more than $10,000 to
be paid to counsel to GECC, inclusive of the fees, charges and disbursements).

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	 	c.	 	This First Amendment may be executed in several counterparts and by each party
on a separate counterpart, each of which when so executed and delivered, shall be an
original, and all of which together shall constitute one instrument. Delivery of an
executed counterpart of a signature page hereto by telecopy or other electronic image
scan transmission (e.g., “pdf” or “tif” via e-mail) shall be as effective as delivery
of a manually executed counterpart hereof.
	 
	 	d.	 	This First Amendment expresses the entire understanding of the parties with
respect to the matters set forth herein and supersedes all prior discussions or
negotiations hereon.
	 
	 	e.	 	Any determination that any provision of this First Amendment or any application
hereof is invalid, illegal or unenforceable in any respect and in any instance shall
not affect the validity, legality, or enforceability of such provision in any other
instance, or the validity, legality or enforceability of any other provisions of this
First Amendment.
	 
	 	f.	 	THIS FIRST AMENDMENT SHALL BE GOVERNED BY, AND CONSTRUED IN ACCORDANCE WITH,
THE LAWS OF THE STATE OF NEW YORK WITHOUT GIVING EFFECT TO THE CONFLICTS OF LAWS
PRINCIPLES THEREOF (OTHER THAN SECTION 5-1401 OF THE NEW YORK GENERAL OBLIATIONS LAW).

[SIGNATURE PAGES FOLLOW]

11

 

     IN WITNESS WHEREOF, the parties hereto have caused this First Amendment to be executed as
the date first above written.

	 	 	 	 	 
	 	QUIKSILVER AMERICAS, INC.,

as the Lead Borrower

 	 
	 	By:  	 	 
	 	 	Name:  	 	 
	 	 	Title:  	 	 
	 

	 	 	 	 	 
	 	DC SHOES, INC.,

as a Domestic Borrower

 	 
	 	By:  	 	 
	 	 	Name:  	 	 
	 	 	Title:  	 	 
	 

	 	 	 	 	 
	 	HAWK DESIGNS, INC.,

as a Domestic Borrower

 	 
	 	By:  	 	 
	 	 	Name:  	 	 
	 	 	Title:  	 	 
	 

	 	 	 	 	 
	 	MERVIN MANUFACTURING, INC.,

as a Domestic Borrower

 	 
	 	By:  	 	 
	 	 	Name:  	 	 
	 	 	Title:  	 	 
	 

	 	 	 	 	 
	 	QS WHOLESALE, INC.,

as a Domestic Borrower

 	 
	 	By:  	 	 
	 	 	Name:  	 	 
	 	 	Title:  	 	 

 

 

	 	 	 	 	 

	 	 	 	 	 
	 	QS RETAIL, INC.,

as a Domestic Borrower

 	 
	 	By:  	 	 
	 	 	Name:  	 	 
	 	 	Title:  	 	 
	 

	 	 	 	 	 
	 	QUIKSILVER, INC.,

as a Guarantor

 	 
	 	By:  	 	 
	 	 	Name:  	 	 
	 	 	Title:  	 	 

 

 

	 	 	 	 	 

	 	 	 	 	 
	 	QUIKSILVER CANADA CORP.,

as the Canadian Borrower

 	 
	 	By:  	 	 
	 	 	Name:  	 	 
	 	 	Title:  	 	 
	 

	 	 	 	 	 
	 	QS RETAIL CANADA CORP.,

as a Guarantor

 	 
	 	By:  	 	 
	 	 	Name:  	 	 
	 	 	Title:  	 	 

 

 

	 	 	 	 	 

	 	 	 	 	 
	 	BANK OF AMERICA, N.A., as Administrative Agent
and as a Co-Collateral Agent

 	 
	 	By:  	 	 
	 	 	Name:  	 	 
	 	 	Title:  	 	 
	 

	 	 	 	 	 
	 	BANK OF AMERICA, N.A. (acting through its
Canada branch), as Canadian Agent

 	 
	 	By:  	 	 
	 	 	Name:  	 	 
	 	 	Title:  	 	 

 

 

	 	 	 	 	 

	 	 	 	 	 
	 	BANK OF AMERICA, N.A., as a Domestic Lender,
L/C Issuer and Swing Line Lender

 	 
	 	By:  	 	 
	 	 	Name:  	 	 
	 	 	Title:  	 	 
	 

	 	 	 	 	 
	 	BANK OF AMERICA, N.A. (acting through its
Canada branch), as a Canadian Lender, L/C
Issuer and Swing Line Lender

 	 
	 	By:  	 	 
	 	 	Name:  	 	 
	 	 	Title:  	 	 

 

 

	 	 	 	 	 

	 	 	 	 	 
	 	GENERAL ELECTRIC CAPITAL CORPORATION, as
Co-Collateral Agent

 	 
	 	By:  	 	 
	 	 	Name:  	 	 
	 	 	Title:  	 	 
	 

	 	 	 	 	 
	 	GENERAL ELECTRIC CAPITAL CORPORATION, as a
Domestic Lender

 	 
	 	By:  	 	 
	 	 	Name:  	 	 
	 	 	Title:  	 	 

 

 

	 	 	 	 	 

	 	 	 	 	 
	 	GENERAL ELECTRIC CAPITAL CORPORATION, as a
Canadian Lender

 	 
	 	By:  	 	 
	 	 	Name:  	 	 
	 	 	Title:  	 	 

 

 

	 	 	 	 	 

Schedule 1.01

DOMESTIC BORROWERS

	1.	 	Quiksilver Americas, Inc.

	2.	 	DC Shoes, Inc.

	3.	 	Hawk Designs, Inc.

	4.	 	Mervin Manufacturing, Inc.

	5.	 	QS Wholesale, Inc.

	6.	 	QS Retail, Inc.

 

 

Schedule 1.02

GUARANTORS OF OBLIGATIONS

	1.	 	Quiksilver, Inc.

GUARANTORS OF CANADIAN LIABILITIES

	2.	 	QS Retail Canada Corp.

 

 

Schedule 2.01

Domestic Commitments and Applicable Percentages

	 	 	 	 	 	 	 	 	 
	Domestic Lender	 	Commitment	 	Applicable Percentage
	Bank of America, N.A.
	 	$	67,500,000.00	 	 	 	50	%
	General Electric Capital
Corporation
	 	$	67,500,000.00	 	 	 	50	%
	TOTAL
	 	$	135,000,000.00	 	 	 	100	%

Canadian Commitments and Applicable Percentages

	 	 	 	 	 	 	 	 	 
	Canadian Lender	 	Commitment	 	Applicable Percentage
	Bank of America, N.A. (acting
through its Canada branch)
	 	$	7,500,000.00	 	 	 	50	%
	General Electric Capital
Corporation
	 	$	7,500,000.00	 	 	 	50	%
	TOTAL
	 	$	15,000,000.00	 	 	 	100	%exv4w1

Exhibit 4.1

(FACE OF NOTE)

THE HOLDER OF THIS SECURITY BY ITS ACCEPTANCE HEREOF IS DEEMED TO HAVE AGREED TO BE BOUND BY THE
PROVISIONS OF A REGISTRATION RIGHTS AGREEMENT AMONG AT&T INC. AND THE DEALER MANAGERS NAMED
THEREIN, DATED AS OF SEPTEMBER 2, 2010. AT&T INC. WILL PROVIDE A COPY OF THE REGISTRATION RIGHTS
AGREEMENT TO A HOLDER WITHOUT CHARGE UPON WRITTEN REQUEST TO ITS PRINCIPAL PLACE OF BUSINESS.

THIS SECURITY HAS NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED (THE “SECURITIES
ACT”), AND MAY NOT BE OFFERED, SOLD, PLEDGED OR OTHERWISE TRANSFERRED EXCEPT IN ACCORDANCE WITH THE
FOLLOWING SENTENCE. BY ITS ACQUISITION HEREOF OR OF A BENEFICIAL INTEREST HEREIN, THE ACQUIRER (1)
REPRESENTS THAT (A) IT AND ANY ACCOUNT FOR WHICH IT IS ACTING IS A “QUALIFIED INSTITUTIONAL BUYER”
(WITHIN THE MEANING OF RULE 144A UNDER THE SECURITIES ACT) AND THAT IT EXERCISES SOLE INVESTMENT
DISCRETION WITH RESPECT TO EACH SUCH ACCOUNT, OR (B) IT IS NOT A U.S. PERSON (WITHIN THE MEANING OF
REGULATION S UNDER THE SECURITIES ACT) AND (2) AGREES FOR THE BENEFIT OF AT&T INC. THAT IT WILL NOT
OFFER, SELL, PLEDGE OR OTHERWISE TRANSFER THIS SECURITY OR ANY BENEFICIAL INTEREST HEREIN, EXCEPT
IN ACCORDANCE WITH THE SECURITIES ACT AND ANY APPLICABLE SECURITIES LAWS OF ANY STATE OF THE UNITED
STATES AND ONLY (A) TO AT&T INC., (B) PURSUANT TO A REGISTRATION STATEMENT WHICH HAS BECOME
EFFECTIVE UNDER THE SECURITIES ACT, (C) TO A QUALIFIED INSTITUTIONAL BUYER IN COMPLIANCE WITH RULE
144A UNDER THE SECURITIES ACT, (D) IN AN OFFSHORE TRANSACTION IN COMPLIANCE WITH RULE 903 OR 904 OF
REGULATION S UNDER THE SECURITIES ACT, OR (E) PURSUANT TO AN EXEMPTION FROM REGISTRATION PROVIDED
BY RULE 144 UNDER THE SECURITIES ACT OR ANY OTHER AVAILABLE EXEMPTION FROM THE REGISTRATION
REQUIREMENTS OF THE SECURITIES ACT.

PRIOR TO THE REGISTRATION OF ANY TRANSFER IN ACCORDANCE WITH (2)(C) ABOVE OR (2)(D) ABOVE, A DULY
COMPLETED AND SIGNED CERTIFICATE (THE FORM OF WHICH MAY BE OBTAINED FROM THE TRUSTEE) MUST BE
DELIVERED TO THE TRUSTEE. PRIOR TO THE REGISTRATION OF ANY TRANSFER IN ACCORDANCE WITH (2)(E)
ABOVE, AT&T INC. RESERVES THE RIGHT TO REQUIRE THE DELIVERY OF SUCH LEGAL OPINIONS, CERTIFICATIONS
OR OTHER EVIDENCE AS MAY REASONABLY BE REQUIRED IN ORDER TO DETERMINE THAT THE PROPOSED TRANSFER IS
BEING MADE IN COMPLIANCE WITH THE SECURITIES ACT AND APPLICABLE STATE SECURITIES LAWS. NO
REPRESENTATION IS MADE AS TO THE AVAILABILITY OF ANY RULE 144 EXEMPTION FROM THE REGISTRATION
REQUIREMENTS OF THE SECURITIES ACT.

 

 

THIS SECURITY IS A GLOBAL SECURITY WITHIN THE MEANING OF THE INDENTURE HEREINAFTER REFERRED TO AND
IS REGISTERED IN THE NAME OF A DEPOSITORY OR A NOMINEE OF A DEPOSITORY. UNLESS AND UNTIL IT IS
EXCHANGED IN WHOLE OR IN PART FOR SECURITIES IN DEFINITIVE FORM IN ACCORDANCE WITH THE PROVISIONS
OF THE INDENTURE AND THE TERMS OF THE SECURITIES, THIS GLOBAL SECURITY MAY NOT BE TRANSFERRED
EXCEPT AS A WHOLE BY THE DEPOSITORY TO A NOMINEE OF THE DEPOSITORY OR BY A NOMINEE OF THE
DEPOSITORY TO THE DEPOSITORY OR ANOTHER NOMINEE OF THE DEPOSITORY OR BY THE DEPOSITORY OR ANY SUCH
NOMINEE TO A SUCCESSOR DEPOSITORY OR A NOMINEE OF SUCH SUCCESSOR DEPOSITORY.

UNLESS THIS CERTIFICATE IS PRESENTED BY AN AUTHORIZED REPRESENTATIVE OF THE DEPOSITORY TRUST
COMPANY, A NEW YORK CORPORATION (“DTC”), TO AT&T INC., OR ITS AGENT FOR REGISTRATION OF TRANSFER,
EXCHANGE OR PAYMENT, AND ANY CERTIFICATE ISSUED IS REGISTERED IN THE NAME OF CEDE & CO. OR IN SUCH
OTHER NAME AS IS REQUESTED BY AN AUTHORIZED REPRESENTATIVE OF DTC (AND ANY PAYMENT IS MADE TO CEDE
& CO. OR TO SUCH OTHER ENTITY AS IS REQUESTED BY AN AUTHORIZED REPRESENTATIVE OF DTC), ANY
TRANSFER, PLEDGE OR OTHER USE HEREOF FOR VALUE OR OTHERWISE BY OR TO ANY PERSON IS WRONGFUL
INASMUCH AS THE REGISTERED OWNER HEREOF, CEDE & CO., HAS AN INTEREST HEREIN.

AT&T INC.

5.35% Global Notes due 2040

CUSIP NO. 04650N AA2

ISIN NO. US04650NAA28

No. R-1

$500,000,000

     AT&T Inc., a corporation duly organized and existing under the laws of the State of Delaware
(herein called “AT&T”, which term includes any successor Person under the Indenture hereinafter
referred to), for value received, hereby promises to pay to Cede & Co., or registered assigns, the
principal sum of Five Hundred Million Dollars ($500,000,000), or such other amount as indicated on the Schedule of Exchanges of
Notes attached hereto, on September 1, 2040 (the “Maturity Date”), and to pay interest on said
principal sum from September 2, 2010 or from the most recent Interest Payment Date to which
interest has been paid or duly provided for, semiannually in arrears on March 1 and September 1 in
each year, commencing on March 1, 2011 (each an “Interest Payment Date”) and on the Maturity Date,
at the interest rate of 5.35% per annum, until the principal hereof is paid or made available for
payment. The interest so payable, and punctually paid or duly provided for, on any Interest
Payment Date will, as provided in such Indenture, be paid to the Person in whose name this Note (or
one or more Predecessor Notes) is registered at the close of business on the Regular Record Date
for such interest, which shall be the close of business on

2

 

February 15 or August 15, as the case may be (each, a “Regular Record Date”), next preceding
such Interest Payment Date. Any such interest not so punctually paid or duly provided for will
forthwith cease to be payable to the Holder on such Regular Record Date and may either be paid to
the Person in whose name this Note (or one or more Predecessor Notes) is registered at the close of
business on a Special Record Date for the payment of such Defaulted Interest to be fixed by the
Trustee, notice whereof shall be given to Holders of Notes not less than 15 days prior to such
Special Record Date, or be paid at any time in any other lawful manner not inconsistent with the
requirements of any securities exchange on which the Notes may be listed, and upon such notice as
may be required by such exchange, all as more fully provided in said Indenture.

     Any money that AT&T deposits with the Trustee or any Paying Agent for the payment of principal
or any interest on this Note that remains unclaimed for two years after the date upon which the
principal and interest are due and payable, will be repaid to AT&T upon AT&T’s request unless
otherwise required by mandatory provisions of any applicable unclaimed property law. After that
time, unless otherwise required by mandatory provisions of any unclaimed property law, the Holder
of this Note will be able to seek any payment to which such Holder may be entitled to collect only
from AT&T.

     If the Notes are issued in definitive form, payment of the principal and interest on this Note
due at the Maturity Date or upon redemption will be made at the Maturity Date or upon redemption,
as the case may be, upon presentation of this Note, in immediately available funds, at the office
of The Bank of New York Mellon, the Paying and Transfer Agent and Registrar for the Notes,
currently located at 101 Barclay Street, New York, New York 10286.

     Payment of interest on this Note due on an Interest Payment Date, other than interest at
maturity or upon redemption, may be paid by check mailed to the address of the Holder entitled
thereto as such address shall appear in the Note register. Notwithstanding the foregoing, (1) the
Depository as Holder of the Notes or (2) a Holder of more than U.S.$5,000,000 in aggregate
principal amount of Notes in definitive form is entitled to require the Paying Agent to make
payments of interest, other than interest due at maturity or upon redemption, by wire transfer of
immediately available funds into an account maintained by the Holder in the United States, by
sending appropriate wire transfer instructions as long as the Paying Agent receives the
instructions not less than ten days prior to the applicable Interest Payment Date.

     Reference is hereby made to the further provisions of this Note set forth on the reverse
hereof, which further provisions shall for all purposes have the same effect as if set forth at
this place.

     Unless the certificate of authentication hereon has been executed by the Trustee referred to
on the reverse hereof by manual signature, this Note shall not be entitled to any benefit under the
Indenture or be valid or obligatory for any purpose.

3

 

     IN WITNESS WHEREOF, AT&T INC. has caused this instrument to be signed in its corporate name,
manually or by facsimile, by its duly authorized officers and has caused its corporate seal to be
imprinted hereon.

	 	 	 	 	 
	Dated:  September 2, 2010 

[SEAL]	AT&T INC.

 	 
	 	By:  	
/s/ Richard G. Lindner 
 	 
	 	 	Richard G. Lindner 	 
	 	 	Senior Executive Vice President

and Chief Financial Officer 	 
	 
	 	 	 
	 	By:  	/s/
Jonathan P. Klug 
 	 
	 	 	Jonathan P. Klug 	 
	 	 	Senior Vice President and Treasurer 	 

 

 

	 	 	 	 	 

Trustee’s Certificate of Authentication

This is one of the 5.35% Global Notes due 2040

of the series designated herein referred to

in the within-mentioned Indenture.

THE BANK OF NEW YORK MELLON, as Trustee

	 	 	 	 	 
	 	 	 
	 	By:  	
/s/ Beata Harvin
 	 
	 	 	Authorized Signatory 	 
	 	 	 	 
	 

 

 

REVERSE OF NOTE

     This Note is one of a duly authorized issue of debt securities of AT&T of the series specified
on the face hereof, issued under and pursuant to an Indenture, dated as of November 1, 1994,
between AT&T and The Bank of New York Mellon, as Trustee (the “Trustee,” which term includes any
successor Trustee under the Indenture), to which indenture and all indentures supplemental thereto
(collectively, the “Indenture”) reference is hereby made for a description of the rights,
limitations of rights, obligations, duties and immunities thereunder of the Trustee, AT&T and the
Holders of the Notes and of the terms upon which the Notes are, and are to be, authenticated and
delivered. The Notes will be issued in fully registered form only and in denominations of $1,000
and integral multiples of $1,000.

     The Indenture permits, with certain exceptions as therein provided, the amendment thereof and
the modification of the rights and obligations of AT&T and the rights of the Holders of the Notes
under the Indenture at any time by AT&T and the Trustee with the consent of the Holders of a
majority in principal amount of the Notes at the time outstanding. The Indenture also contains
provisions permitting the Holders of specified percentages in principal amount of the Notes at the
time outstanding to waive compliance by AT&T with certain provisions of the Indenture and certain
past defaults under the Indenture and their consequences. Any such consent or waiver by the Holder
of this Note shall be conclusive and binding upon such Holder and upon all future Holders of this
Note and of any Note issued upon the registration of transfer hereof or in exchange herefor or in
lieu hereof, whether or not notation of such consent or waiver is made upon this Note.

     No reference herein to the Indenture and no provision of this Note or of the Indenture shall
alter or impair the obligation of AT&T, which is absolute and unconditional, to pay the principal
of and interest on this Note at the times, place and rate, and in the coin or currency, herein
prescribed.

     Registrar and Paying Agent

     AT&T shall maintain in the Borough of Manhattan, The City of New York, an office or agency
where Notes may be surrendered for registration of transfer or exchange (“Registrar”) and an office
or agency where Notes may be presented for payment or for exchange (“Paying Agent”). AT&T has
initially appointed the Trustee, The Bank of New York Mellon, as its Registrar and Paying Agent.
AT&T may vary or terminate the appointment of any of its paying or transfer agencies, and may
appoint additional paying or transfer agencies.

     Optional Redemption by AT&T

     The Notes will be redeemable, as a whole or in part, at AT&T’s option, at any time on at least
30 days’, but not more than 60 days’, prior notice mailed to the registered address of each Holder
of the Notes. The redemption price will be equal to the greater of (1) 100% of the principal
amount of the Notes to be redeemed or (2) the sum of the present values of the Remaining Scheduled
Payments (as defined below) discounted to the redemption date, on a

 

 

semiannual basis (assuming a 360-day year consisting of twelve 30-day months), at a rate equal
to the sum of the Treasury Rate (as defined below) and 25 basis points. In either case, accrued
interest will be payable to the redemption date.

     “Treasury Rate” means, with respect to any redemption date, the rate per annum equal to the
semiannual equivalent yield to maturity or interpolation (on a day count basis) of the interpolated
Comparable Treasury Issue, assuming a price for the Comparable Treasury Issue (expressed as a
percentage of its principal amount) equal to the Comparable Treasury Price for such redemption
date.

     “Comparable Treasury Issue” means the United States Treasury security or securities selected
by an Independent Investment Banker as having an actual or interpolated maturity comparable to the
remaining term of the Notes to be redeemed that would be utilized, at the time of selection and in
accordance with customary financial practice, in pricing new issues of corporate debt securities of
a comparable maturity to the remaining term of such Notes.

     “Independent Investment Banker” means one of the Reference Treasury Dealers, appointed by the
Trustee after consultation with AT&T.

     “Comparable Treasury Price” means, with respect to any redemption date, (1) the average of the
Reference Treasury Dealer Quotations for such redemption date after excluding the highest and
lowest of such Reference Treasury Dealer Quotations, or (2) if the Trustee obtains fewer than three
such Reference Treasury Dealer Quotations, the average of all such quotations.

     “Reference Treasury Dealer Quotations” means, with respect to each Reference Treasury Dealer
and any redemption date, the average, as determined by the Trustee, of the bid and asked prices for
the Comparable Treasury Issue (expressed in each case as a percentage of its principal amount)
quoted in writing to the Trustee by such Reference Treasury Dealer at 3:30 p.m., New York City
time, on the third Business Day preceding such redemption date.

     “Reference Treasury Dealer” means each of Credit Suisse Securities (USA) LLC, Deutsche Bank
Securities Inc. and Morgan Stanley & Co. Incorporated and their respective affiliates and, at the
option of the Company, one other nationally recognized investment banking firm that is a primary
U.S. Government Securities dealer in the United States (a “Primary Treasury Dealer”); provided,
however, that if any of the foregoing shall cease to be a Primary Treasury Dealer, we will
substitute therefor another Primary Treasury Dealer.

     “Remaining Scheduled Payments” means, with respect to each Note to be redeemed, the remaining
scheduled payments of principal of and interest on the Note that would be due after the related
redemption date but for the redemption. If that redemption date is not an interest payment date
with respect to a Note, the amount of the next succeeding scheduled interest payment on the Note
will be reduced by the amount of interest accrued on the Note to the redemption date.

2

 

     On and after the redemption date, interest will cease to accrue on the Notes or any portion of
the Notes called for redemption, unless AT&T defaults in the payment of the redemption price and
accrued interest. On or before the redemption date, AT&T will deposit with a Paying Agent or the
Trustee money sufficient to pay the redemption price of and accrued interest on the Notes to be
redeemed on that date. If less than all of the Notes of any series are to be redeemed, the Notes
to be redeemed shall be selected by the Trustee by lot or by such other method as the Trustee in
its sole discretion deems to be fair and appropriate.

     Registration Rights

     In addition to the rights set forth under the Indenture, Holders of the Notes will enjoy all
the rights and be subject to all of the obligations set forth in the Registration Rights Agreement,
dated as of September 2, 2010 (the “Registration Rights Agreement”), between the Company and Credit
Suisse Securities (USA) LLC, Deutsche Bank Securities Inc., Morgan Stanley & Co. Incorporated,
Cabrera Capital Markets, LLC, CastleOak Securities, L.P., Comerica Securities, Inc., Loop Capital
Markets LLC, M.R. Beal & Company, RBS Securities Inc. and U.S. Bancorp Investments, Inc., including
the right to receive Additional Interest upon the occurrence of certain Registration Defaults (as
described in the Registration Rights Agreement).

     Payment of Additional Amounts

     AT&T will, subject to certain exceptions and limitations set forth below, pay as additional
interest on the Notes such additional amounts (“Additional Amounts”) as are necessary so that the
net payment by AT&T or a Paying Agent of the principal of and interest on this Note to a person
that is a United States Alien Holder, after deduction for any present or future tax, assessment or
governmental charge of the United States or a political subdivision or taxing authority thereof or
therein, imposed by withholding with respect to the payment, will not be less than the amount that
would have been payable in respect of the Notes had no withholding or deduction been required;
provided, however, that the foregoing obligation to pay additional amounts shall not apply:

     (1) to any tax, assessment or governmental charge that is imposed or withheld solely
because the beneficial owner, or a fiduciary, settlor, beneficiary or member of the
beneficial owner if the beneficial owner is an estate, trust or partnership, or a person
holding a power over an estate or trust administered by a fiduciary holder:

     (a) is or was present or engaged in trade or business in the United States or
has or had a permanent establishment in the United States;

     (b) is or was a citizen or resident or is or was treated as a resident of the
United States;

     (c) is or was a foreign or domestic personal holding company, a passive foreign
investment company or a controlled foreign corporation with

3

 

respect to the United States or is or was a corporation that has accumulated
earnings to avoid United States federal income tax; or

          (d) is or was a “10-percent shareholder” of AT&T;

     (2) to any Holder that is not the sole beneficial owner of the Notes, or a portion
thereof, or that is a fiduciary or partnership, but only to the extent that the beneficial
owner, a beneficiary or settlor with respect to the fiduciary, or a member of the
partnership would not have been entitled to the payment of an additional amount had such
beneficial owner, beneficiary, settlor or member received directly its beneficial or
distributive share of the payment;

     (3) to any tax, assessment or governmental charge that is imposed or withheld solely
because the beneficial owner or any other person failed to comply with certification,
identification or information reporting requirements concerning the nationality, residence,
identity or connection with the United States of the Holder or beneficial owner of the
Notes, if compliance is required by statute, by regulation of the United States Treasury
Department or by an applicable income tax treaty to which the United States is a party as a
precondition to exemption from such tax, assessment or other governmental charge;

     (4) to any tax, assessment or governmental charge that is imposed other than by
deduction or withholding by AT&T or a Paying Agent from the payment;

     (5) to any tax, assessment or governmental charge that is imposed or withheld solely
because of a change in law, regulation, or administrative or judicial interpretation that
becomes effective after the day on which the payment becomes due or is duly provided for,
whichever occurs later;

     (6) to an estate, inheritance, gift, sales, excise, transfer, wealth or personal
property tax or any similar tax, assessment or governmental charge;

     (7) to any tax, assessment or other governmental charge any paying agent (which term
may include us) must withhold from any payment of principal of or interest on any note, if
such payment can be made without such withholding by any other paying agent; or

     (8) in the case of any combination of the above items.

Except as specifically provided herein, AT&T shall not be required to make any payment with respect
to any tax, assessment or governmental charge imposed by any government or a political subdivision
or taxing authority thereof or therein.

4

 

     “United States Alien Holder” means (a) a nonresident alien individual, (b) a foreign
corporation, (c) a foreign partnership or (d) an estate or trust that in either case is not subject
to United States federal income tax on a net income basis or income or gain from a Note.

     Redemption Upon a Tax Event

     If (a) AT&T becomes or will become obligated to pay Additional Amounts as a result of any
change in, or amendment to, the laws (or any regulations or rulings promulgated thereunder) of the
United States (or any political subdivision or taxing authority thereof or therein), or any change
in, or amendment to, any official position regarding the application or interpretation of such
laws, regulations or rulings, which change or amendment is announced or becomes effective on or
after August 4, 2010, or (b) a taxing authority of the United States takes an action on or after
August 4, 2010, whether or not with respect to AT&T or any of its affiliates, that results in a
substantial probability that AT&T will or may be required to pay such Additional Amounts, then AT&T
may, at its option, redeem, as a whole, but not in part, the Notes on any interest payment date on
not less than 30 nor more than 60 calendar days’ prior notice, at a redemption price equal to 100%
of their principal amount, together with interest accrued thereon to the date fixed for redemption.
However, AT&T may determine, in its business judgment, that the obligation to pay these Additional
Amounts cannot be avoided by the use of reasonable measures available to it, not including
substitution of the obligor under the Notes. No redemption pursuant to (b) above may be made
unless AT&T shall have received an opinion of independent counsel to the effect that an act taken
by a taxing authority of the United States results in a substantial probability that AT&T will or
may be required to pay the Additional Amounts and AT&T shall have delivered to the Trustee a
certificate, signed by a duly authorized officer stating, that based on such opinion, AT&T is
entitled to redeem the Notes pursuant to their terms.

     Further Issues

     AT&T reserves the right from time to time, without notice to or the consent of the Holders of
the Notes, to create and issue further notes ranking equally and ratably with the Notes in all
respects, or in all respects except for the payment of interest accruing prior to the issue date or
except for the first payment of interest following the issue date of those further notes. Any
further notes will have the same terms as to status, redemption or otherwise as the Notes. Any
further notes shall be issued pursuant to a resolution of the board of directors of AT&T, a
supplement to the Indenture, or under an officers’ certificate pursuant to the Indenture.

     Notes in Definitive Form

     If (1) an Event of Default has occurred with regard to the Notes represented by this Note and
has not been cured or waived in accordance with the Indenture, or (2) the Depository is at any time
unwilling or unable to continue as depository and a successor depository is not appointed by AT&T
within 90 days, AT&T may issue notes in definitive form in exchange for this Note. In either
instance, an owner of a beneficial interest in the Notes will be entitled to the

5

 

physical delivery in definitive form in exchange for this Note, equal in principal amount
to such beneficial interest and to have such Notes registered in its name.

     Notes so issued in definitive form will be issued as registered notes in minimum denominations
of $1,000 and integral multiples of $1,000, unless otherwise specified by AT&T.

     Notes so issued in definitive form may be transferred by presentation for registration to the
Registrar at its New York office and must be duly endorsed by the Holder or the Holder’s attorney
duly authorized in writing, or accompanied by a written instrument or instruments of transfer in
form satisfactory to AT&T or the Trustee duly executed by the Holder or his attorney duly
authorized in writing.

     AT&T may require payment of a sum sufficient to cover any tax or other governmental charge
that may be imposed in connection with any exchange or registration of transfer of definitive
Notes.

     Default

     In case an Event of Default, as defined in the Indenture, shall have occurred and be
continuing, the principal hereof may be declared, and upon such declaration shall become, due and
payable, in the manner, with the effect and subject to the conditions provided in the Indenture.

     Miscellaneous

     For purposes of the Notes, a Business Day means a Business Day in The City of New York and
London.

     No director, officer, employee or stockholder, as such, of AT&T shall have any liability for
any obligations of AT&T under this Note, the Indenture or for any claim based on, in respect of or
by reason of such obligations or their creation. Each Holder by accepting this Note waives and
releases all such liability. The waiver and release are part of the consideration for the issue of
this Note.

     The Notes are the unsecured and unsubordinated obligations of AT&T and will rank pari
passu with all other evidences of indebtedness issued in accordance with the Indenture.

     Notices to Holders of the Notes will be published in authorized newspapers in The City of New
York and in London. AT&T is deemed to have given the notice on the date of each publication or, if
published more than once, on the date of the first publication.

     Prior to due presentment of this Note for registration of transfer, AT&T, the Trustee and any
agent of AT&T or the Trustee may treat the Person in whose name this Note is registered as the
owner hereof for all purposes, whether or not this Note be overdue, and neither AT&T, the Trustee
nor any such agent shall be affected by notice to the contrary.

6

 

     Unless expressly provided elsewhere in this Note, all terms used in this Note which are
defined in the Indenture or the Registration Rights Agreement shall have the meanings assigned to
them in the Indenture or the Registration Rights Agreement, as the case may be.

     The Indenture and this Note shall be governed by and construed in accordance with the laws of
the State of New York.

7

 

FORM OF TRANSFER NOTICE

FOR VALUE RECEIVED the undersigned registered holder hereby sell(s), assign(s) and transfer(s) unto

 

 

(Please print or typewrite name and address including zip code of assignee)

the within Note and all rights thereunder, hereby irrevocably constituting and appointing

 

attorney to transfer said Note on the books of the Company with full power of substitution in the
premises.

In connection with any transfer of this Note, unless this security is registered under the
Securities Act, the undersigned confirms that:

Check one:

o  (a) This Note is being transferred to the Company.

or

	o  (b)	 	This Note is being transferred pursuant to an effective registration statement under
the Securities Act of 1933, as amended (the “Securities Act”).

or

	o  (c)	 	This Note is being transferred inside the United States to a “qualified institutional
buyer” (as defined in Rule 144A under the Securities Act) that purchases for its own account
or for the account of a qualified institutional buyer to whom notice is given that such
transfer is being made in reliance on Rule 144A, in each case pursuant to and in compliance
with Rule 144A under the Securities Act.

or

	o  (d)	 	This Note is being transferred outside the United States in an offshore transaction
within the meaning of Regulation S under the Securities Act in compliance with Rule 904
thereunder.

or

 

 

	o  (e)	 	This Note is being transferred pursuant to the exemption from registration
provided by Rule 144 under the Securities Act.

     In addition, in each of the cases set forth above, such transfer will be in accordance with
any applicable securities laws of any States of the United States or any other applicable
jurisdiction.

     In connection with any offer, sale or transfer pursuant to (d) or (e) above, the Company and
the Trustee shall have the right, prior any such offer, sale or transfer, to require the delivery
of an opinion of counsel, certification or other information reasonably satisfactory to each of
them.

     If none of the foregoing boxes is checked, the Trustee is not obligated to register this Note
in the name of any Person other than the Holder hereof unless and until the conditions to any such
transfer of registration set forth herein and in the Indenture have been satisfied.

	 	 	 

	 
Date

	 	 
	 
	 	 
	 

	 	 
	Seller

	 	Signature
	 
	 	 
	 
	 	 
	 

	 	 
	 

	 	Signature Guarantee

(The signature to this assignment must correspond with the name as written upon the face of the
within-mentioned instrument in every particular, without alteration or any change whatsoever.)

(Signature must be guaranteed by a participant in a recognized Signature Guarantee Medallion
Program or other signature guarantor program reasonably acceptable to the Trustee)

 

 

TO BE COMPLETED BY PURCHASER IF (c) ABOVE IS CHECKED

The undersigned represents and warrants that it is purchasing this certificated Security for its
own account or an account with respect to which it exercises sole investment discretion and that it
and any such account is a “qualified institutional buyer” within the meaning of Rule 144A under the
Securities Act, and is aware that the sale to it is being made in reliance on Rule 144A and
acknowledges that it has received such information regarding the Company as the undersigned has
requested pursuant to Rule 144A or has determined not to request such information and that it is
aware that the transferor is relying upon the undersigned’s foregoing representations in order to
claim the exemption from registration provided by Rule 144A.

	 	 	 

	

	 	 
	Date
	 	 
	 
	 	 
	 

	 	 
	 

	 	Signature

	 

	 	NOTICE: To be executed by an executive officer
	 
	 	 
	 
	 	 
	 

	 	 
	 

	 	Signature Guarantee

(Signature must be guaranteed by a participant in a recognized Signature Guarantee Medallion
Program or other signature guarantor program reasonably acceptable to the Trustee)

 

 

SCHEDULE OF EXCHANGES OF NOTES

The following exchanges of a part of this Global Security for other Securities or a part of another
Global Security have been made:

	 	 	 	 	 	 	 	 	 
	 	 	 	 	 	 	Principal amount of	 	 
	 	 	Amount of decrease	 	Amount of increase	 	this Global	 	 
	 	 	in principal amount	 	in principal amount	 	Security following	 	Signature of
	Date of	 	of this Global	 	of this Global	 	such decrease (or	 	authorized officer
	Exchange	 	Security	 	Security	 	increase)	 	of Trustee

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