Document:

exv10w1

Exhibit 10.1

PRIVILEGED AND CONFIDENTIAL

COMMITMENT LETTER

$125,000,000 Senior Secured Term Loan U.S. Facility of Quiksilver Americas, Inc.

and

€20,000,000 Senior Secured Term Loan Facility of European Borrower

June 8, 2009      

Quiksilver, Inc.

Quiksilver Americas, Inc.

c/o Quiksilver, Inc.

15202 Graham St.

Huntington Beach, CA 92649

Attention: Joseph Scirocco, Chief Financial Officer

Dear Mr. Scirocco:

     We are pleased to advise Quiksilver, Inc. (the “Parent”), Quiksilver Americas, Inc.
(the “U.S. Borrower”) and a direct subsidiary of the Parent to be organized in Luxembourg
(the “European Borrower”) of the commitment of Rhône Capital III L.P. on behalf of certain
affiliated investment vehicles and certain other affiliates (collectively, “Rhône”) with
respect to the financing of (i) a senior secured term loan facility in favor of the U.S. Borrower
in an aggregate principal amount equal to $125,000,000 (the “U.S. Facility”) on the terms
set forth in the Summary of Principal Terms and Conditions attached as Exhibit A (the “U.S.
Term Sheet”) and (ii) a senior secured term loan facility in favor of the European Borrower in
an aggregate principal amount equal to €20,000,000 (the “European Facility”) on the terms
set forth in the Summary of Principal Terms and Conditions attached as Exhibit B (the “European
Term Sheet” and, together with the U.S. Term Sheet, the “Term Sheets”), including the
related acquisition by Rhône of warrants (the “Warrants”) to subscribe for the common stock
of Parent as set forth in Exhibit C (together with the Term Sheets and this letter, the
“Commitment Letter”). The U.S. Borrower and the European Borrower are together referred to
herein as the “Borrowers” and the U.S. Facility and the European Facility are together
referred to herein as the “Facilities”.

     In consideration of our commitment, the (i) U.S. Borrower hereby (a) appoints Rhône or its
designated affiliates as the sole arranger, bookrunner, collateral agent, syndication agent and
administrative agent for the U.S. Facility, in each case with the duties and authority customary
for such roles, and (b) agrees that no titles will be given or consideration paid to any other
arranger, agent or lender with respect to the U.S. Facility other than as set forth in the U.S.
Term Sheet without the written consent of Rhône; and (ii) European Borrower hereby (a) appoints
Rhône or its designated affiliates as the sole arranger, bookrunner, collateral agent, syndication
agent and administrative agent for the European Facility, in each case with the duties and

 

 

authority customary for such roles, and (b) agrees that no titles will be given or consideration
paid to any other arranger, agent or lender with respect to the European Facility other than as set
forth in the European Term Sheet without the written consent of Rhône. After consultation with the
U.S. Borrower or the European Borrower, as the case may be, Rhône may designate one or more
institutions participating in the U.S. Facility or European Facility, as the case may be, as
arrangers, co-arrangers, agents or co-agents and may allocate any fees to be paid in connection
with the U.S. Facility or European Facility, as the case may be, among the participating
institutions as Rhône may consider advisable from time to time.

Conditions to Our Commitment

     Our financing commitment and other obligations arising under or relating to the Commitment
Letter and the Facilities are made in reliance on and subject to satisfaction or waiver by us in
writing of each of the following conditions precedent:

     (i) compliance by the Borrowers and Parent with the terms of this letter; and

     (ii) the satisfaction of each of the conditions set forth under the caption “Conditions
Precedent” in the U.S. Term Sheet and the satisfaction of each of the conditions set forth under
the caption “Conditions Precedent” in the European Term Sheet.

Alternative Transactions

     Each of the parties hereto understands and agrees that neither Borrower is obligated to
proceed with the borrowings pursuant to the Facilities. In order to induce Rhône to make the
commitments hereunder and to induce Rhône to designate directors to serve on the Parent’s Board of
Directors, Parent agrees that on the earlier of (i) the Closing Date (as defined in the respective
Term Sheets) of each of the Facilities, and (ii) in the event the Closing Date does not occur and
Rhône is willing to fund the Facilities in accordance with the terms of the Commitment Letter, the
date on or prior to nine months after the date of the Commitment Letter on which Parent or any of
its subsidiaries enters into a binding agreement to sell the business of DC Shoes or enter into an
alternative financing transaction (other than the ABL Facility and the French Facility (each as
defined in the U.S. Term Sheet) and refinancing transactions by Parent’s Australian and Asian
subsidiaries) to refinance existing indebtedness of Parent and its subsidiaries, Parent shall
promptly issue to Rhône Warrants on the terms set forth in Exhibit C hereto (except that in the
case of clause (ii) above, such Warrants shall be exercisable for a number of shares of common
stock equal to 10% of the number of common equity securities outstanding at the time of issuance of
the Warrants).

Expenses and Indemnification

     The Borrowers shall, jointly and severally, reimburse Rhône from time to time following
written demand promptly, and in any event within 10 business days following written demand, for all
reasonable out-of-pocket and documented fees and expenses previously and hereafter incurred in
connection with the Commitment Letter, the Facilities and the transactions contemplated herein
(including without limitation reasonable fees and expenses of counsel (limited to not more than one
primary counsel and necessary local counsel (limited to one local

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counsel per jurisdiction)), consultants and advisors (including (i) the reasonable and documented
fees and expenses of Sullivan & Cromwell LLP; and (ii) the reasonable and documented fees and
expenses of Lazard Frères & Co. in an amount up to, in the case of the fees of Lazard Frères & Co.,
$1,500,000), filing and recording fees and reasonable and documented costs and expenses of due
diligence, travel and lodging, duplication, messenger services, appraisal, audit and electronic
reporting) (the “Expenses”), whether or not the Facilities are consummated or definitive
credit documents are executed. The Borrowers and Rhône acknowledge that this agreement supersedes
the Expense Reimbursement Agreement of May 15, 2009 between Rhône and the Parent, and also agree to
pay all costs and expenses that Rhône incurs in connection with the enforcement of any rights and
remedies under the Commitment Letter or the transactions contemplated hereby.

     The Borrowers shall, jointly and severally, indemnify and hold harmless Rhône, each other
Lender (as defined in each Term Sheet), and each of their respective agents, attorneys,
accountants, advisors, consultants, directors, officers, employees, partners, affiliates and other
representatives (each, an “Indemnified Party”) from and against any and all actions, suits,
proceedings (including any investigations or inquiries), claims, damages, losses, costs,
liabilities and expenses of any kind or nature whatsoever that may be incurred by or asserted or
awarded against any Indemnified Party as a result of or arising out of or in connection with or by
reason of (i) any matters contemplated by the Commitment Letter or any related transaction; or (ii)
either Facility and any other financings, or any use made or proposed to be made with the proceeds
thereof. The Borrowers further agree, jointly and severally, to reimburse each Indemnified Person
upon demand for any legal or other out-of-pocket and documented expenses incurred in connection
with investigating, defending or preparing to defend any such action, suit, proceeding (including
without limitation any inquiry or investigation) or claim (whether or not Rhône or any such other
Indemnified Person is a party to any action or proceeding out of which any such expenses arise).
Notwithstanding the foregoing, each Borrower’s obligation to indemnify any Indemnified Person
hereunder does not extend to any loss, claim, damage, expense or liability found in a final,
nonappealable judgment by a court of competent jurisdiction to have resulted from such Indemnified
Party’s gross negligence, willful misconduct or bad faith. In the case of an investigation,
litigation or proceeding to which the indemnity in this paragraph applies, such indemnity shall be
effective whether or not such investigation, litigation or proceeding is brought by a Borrower, a
Borrower’s equityholders or creditors or an Indemnified Party, whether or not an Indemnified Party
is otherwise a party thereto and whether or not the transactions contemplated hereby are
consummated. Each Borrower also agrees that no Indemnified Party shall have any liability (whether
direct or indirect, in contract or tort or otherwise) to such Borrower, or such Borrower’s
subsidiaries or affiliates or to such Borrower’s or their respective equity holders or creditors
arising out of, related to or in connection with any aspect of the transactions contemplated
hereby, except to the extent of direct, as opposed to special, indirect, consequential or punitive,
damages determined in a final, nonappealable judgment by a court of competent jurisdiction to have
resulted from such Indemnified Party’s gross negligence, willful misconduct or bad faith.
Notwithstanding any other provision of this letter, no Indemnified Party shall be liable for any
damages arising from the use by others of information or other materials obtained through
electronic telecommunications or other information transmission systems, other than for direct or
actual damages resulting from the gross negligence, willful misconduct or bad faith of such
Indemnified Party as determined by a final and nonappealable judgment of a court of competent
jurisdiction.

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Other Activities of Rhône

     Each Borrower agrees that Rhône may employ the services of its affiliates, managed funds and
affiliated-managed funds in connection with each Facility and the satisfaction of its obligations
under the Commitment Letter, and such affiliates and funds will be entitled to the benefits
afforded to and subject to the obligations of Rhône hereunder. Notwithstanding their involvement
in either Facility or the receipt of confidential information in connection herewith (but subject
to the restrictions herein relating to the disclosure and handling of such confidential
information), each Borrower understands and agrees that Rhône and its respective affiliates,
managed funds and affiliate-managed funds (i) may conduct other transactions for their or their
affiliates’ own account or the account of customers in equity, debt, securities, derivatives and
other financial instruments issued by or relating to such Borrower and its affiliates and
representatives (and their respective affiliates) and other companies with which such persons may
have a commercial or competitive relationship; and (ii) may provide investment advisory, financial
advisory and other services to any of such Borrower and its affiliates and representatives (and
their respective affiliates) or to persons and companies whose interests compete with those of such
Borrower and its affiliates and representatives (and their respective affiliates).

     In connection with all aspects of each transaction contemplated by the Commitment Letter, each
Borrower acknowledges and agrees that: (i) the Facility to which it is party and any related
arranging or other services described in this letter is an arm’s-length commercial transaction
between such Borrower and its affiliates, on the one hand, and Rhône, on the other hand, as the
case may be, and such Borrower is capable of evaluating and understanding and understands and
accept the terms, risks and conditions of the transactions contemplated by this letter; (ii) in
connection with the transaction contemplated hereby and the process leading to such transaction,
Rhône is and has been acting solely as a principal and, except as expressly set forth in the
Commitment Letter, is not acting as an advisor, agent or fiduciary for such Borrower or any of its
affiliates, stockholders, creditors or employees or any other party; (iii) Rhône has not assumed
and will not assume an advisory, agency or fiduciary responsibility in such Borrower’s or its
affiliates’ favor with respect to any of the transactions contemplated hereby or the process
leading thereto (irrespective of whether Rhône has advised or is currently advising such Borrower
or its affiliates on other matters) and Rhône has no obligations to such Borrower or its affiliates
with respect to the transactions contemplated hereby except those obligations expressly set forth
in the Commitment Letter and as may be set forth in definitive documentation for such Facility;
(iv) Rhône and its respective affiliates may be engaged in a broad range of transactions that
involve interests that differ from such Borrower and its affiliates and Rhône has no obligation to
disclose any of such interests by virtue of any fiduciary, agency or advisory relationship; and (v)
Rhône has not provided any legal, accounting, regulatory or tax advice with respect to any of the
transactions contemplated hereby and such Borrower has consulted its own legal, accounting,
regulatory and tax advisors to the extent such Borrower has deemed appropriate. Each Borrower
hereby waives and releases, to the fullest extent permitted by law, any claims that it may have
against Rhône based upon or relating to any allegation that Rhône owes such Borrower and its
affiliates and representatives (and their respective affiliates) any fiduciary duty with respect to
any of the transactions contemplated hereby, and agrees, to the fullest extent permitted by law,
that neither Rhône, nor any of its respective affiliates, managed

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funds or affiliate-managed funds will have any liability (whether direct or indirect) in respect of
any claim for breach of fiduciary duty to any such person or any other person with respect to any
of the transactions contemplated hereby, including any stockholders, employees or creditors
asserting a claim derivatively, in any such person’s name or otherwise on its behalf.

Confidential Nature of the Commitment Letter

     Except as required by applicable law or pursuant to a subpoena or order issued by a court of
competent jurisdiction or by a judicial, administrative or legislative body or committee, the
Parent and each Borrower shall maintain as confidential the terms or conditions of the Commitment
Letter and the terms, conditions, provisions and documentation of the Facilities; provided,
however, it is understood and agreed that the Parent and each Borrower may disclose the
existence of the Commitment Letter and the material terms contained therein after you have accepted
and returned the countersigned copies of the Commitment Letter, in filings with the Securities and
Exchange Commission and other applicable regulatory authorities and stock exchanges. Without
limiting the foregoing, (i) the Commitment Letter may not be disclosed in whole or in part to any
person or entity other than the Parent’s and each Borrower’s and their subsidiaries’ respective
directors, employees, accountants, attorneys and professional advisors in connection with the
establishment of the Facilities on a confidential basis, without Rhône’s prior written consent; and
(ii) the Commitment Letter and draft documentation for the Facilities may be disclosed on a
confidential basis to the lenders and agent in respect of the ABL Facility and to the lenders and
mediator in respect of the French Facility (each term as defined in the U.S. Term Sheet). Parent
and Rhône shall agree in good faith on the text of any press release to be issued regarding this
Commitment Letter and the transactions contemplated hereby.

Termination of Our Commitment

     The Commitment Letter shall terminate unless accepted by the Parent and the U.S. Borrower on
or before 5:00 p.m. (New York time) on June 8, 2009 by signing below and returning this letter, so
signed, to Rhône.

     This letter does not constitute an unconditional commitment to lend. Such a commitment will
exist only upon satisfaction of all conditions precedent described in the Commitment Letter on or
before July 31, 2009. Rhône’s commitment to provide the Facilities and the other obligations of
the parties under the Commitment Letter will terminate upon written notice by Rhône on July 31,
2009 unless each Facility becomes effective on or before such date.

     The obligations of each Borrower and its affiliates and representatives (and their respective
affiliates) under the sections of the Commitment Letter entitled “Alternative
Transactions,” “Expenses and Indemnification,” Other Activities of Rhône,”
“Confidential Nature of the Commitment Letter,” “Syndication,” and, to the extent
applicable, “Governing Law, Etc.” and “Miscellaneous” will survive the termination
of our commitment and obligations. Notwithstanding the foregoing, all of the Borrowers’
reimbursement, indemnification and confidentiality obligations set forth in this letter and the
Term Sheets shall remain in full force and effect regardless of whether any definitive
documentation for the establishment of the Facilities shall be executed and notwithstanding the
termination of this letter or any undertaking hereunder, provided that the reimbursement and
indemnification provisions shall be superseded

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in each case by the applicable provisions contained in the definitive documentation upon execution
thereof and thereafter shall have no further force and effect.

Syndication

     Rhône shall have the right to syndicate all or part of either Facility to investment vehicles
controlled by Rhône and to limited partners (or their affiliates) of such investment vehicles (each
such party, a “Lender”). The Parent and each Borrower grant Rhône permission to share
confidential information of Parent and such Borrower provided to Rhône with each Lender, including
the limited partners or equivalent thereof, in each case on a confidential basis.

Governing Law, Etc.

     THIS LETTER SHALL BE GOVERNED BY AND CONSTRUED IN ACCORDANCE WITH THE LAWS OF THE STATE OF NEW
YORK WITHOUT REGARD TO ITS CONFLICT OF LAW PROVISIONS. Each of the Parent, each Borrower and Rhône
hereby irrevocably and unconditionally submits to the exclusive jurisdiction of any state or
Federal court sitting in the Borough of Manhattan over any suit, action or proceeding arising out
of or relating to the transactions contemplated hereby, the Commitment Letter or the performance of
services hereunder. Each Borrower agrees that service of any process, summons, notice or document
by registered mail addressed to such Borrower shall be effective service of process for any suit,
action or proceeding brought in any such court. Each Borrower and Rhône hereby irrevocably and
unconditionally waives any objection to the laying of venue of any such suit, action or proceeding
brought in any such court and any claim that any such suit, action or proceeding has been brought
in any inconvenient forum. Each party hereto agrees that a final judgment in any such proceeding
will be conclusive and may be enforced in other jurisdictions.

     EACH PARTY HERETO HEREBY IRREVOCABLY WAIVES, TO THE FULLEST EXTENT PERMITTED BY APPLICABLE
LAW, ANY RIGHT TO A TRIAL BY JURY IN RESPECT OF ANY SUCH SUIT, ACTION, OR PROCEEDING AMONGST OR
BETWEEN ANY BORROWER AND RHÔNE OR ANY OTHER LENDER.

     Each party hereto has agreed as a material term that, to the fullest extent permitted by New
York law, no party hereto will be liable to any other party hereto for any special, consequential
or similar damages relating to the Commitment Letter or the transactions contemplated hereby or on
any cause of action based on promissory estoppel, detrimental reliance or a similar theory of
relief, in each case regardless of whether or not damages or reliance was foreseeable.

     Rhône hereby notifies each Borrower that pursuant to the requirements of the USA Patriot Act
(Title III of Pub. L. 107-56 (signed into law October 26, 2001) (the “Patriot Act”)), Rhône
and each other Lender may be required to obtain, verify and record information that identifies each
Borrower, which information may include such Borrower’s name and address and other information that
will allow Rhône and each other Lender to identify such Borrower in accordance with the Patriot
Act. This notice is given in accordance with the requirements of the Patriot Act and is effective
for each of Rhône and any other Lender.

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Miscellaneous

     Rhône, Parent and the Borrowers may mutually agree to shift Rhône’s commitment to lend between
the U.S. Facility and the European Facility, provided that the U.S. Dollar equivalent of the
aggregate amount of the Facilities shall not be reduced.

     This letter may not be assigned or transferred by either Borrower without the prior written
consent of Rhône, and any attempted assignment without such consent shall be void. With respect to
the European Borrower, Parent shall cause the European Borrower to be formed as promptly as
reasonably practical following the date hereof (on terms consistent with the European Term Sheet)
and shall promptly thereafter cause the European Borrower to execute a signature page hereto. The
Commitment Letter may not be amended or any provision thereof waived or modified except by an
instrument in writing signed by the Parent, the U.S. Borrower and Rhône. This letter is intended
to be solely for the benefit of the parties hereto and is not intended to confer any benefits upon,
or create any rights in favor of, any person other than the parties hereto, their affiliates to the
extent expressly provided in the Commitment Letter and the Indemnified Persons.

     All amounts payable by the Borrowers under the Commitment Letter will be made in U.S. dollars,
except for the fees set forth in the European Term Sheet, which will be made in Euros and, in any
case, shall not be subject to counterclaim or set-off for, or be otherwise affected by, any claim
or dispute relating to any other matter. In addition, all such payments shall be made without
deduction for any taxes, levies, imposts, duties, deductions, charges or withholdings imposed by
any national, state or other taxing authority, or will be grossed up by the Borrowers for such
amounts.

     The Commitment Letter (including the Term Sheets) set forth the entire agreement between the
parties with respect to the matters addressed herein and supersede all prior communications,
written or oral, with respect hereto. If any provision of the Commitment Letter is determined by a
court of competent jurisdiction to be invalid, illegal or unenforceable, the validity, legality or
enforceability of the remaining provisions of the Commitment Letter will not in any way be affected
or impaired thereby.

     The agreements of Rhône hereunder are made solely for the benefit of the Borrowers and may not
be relied upon or enforced by any other person. Please note that those matters that are not
covered or made clear in the Commitment Letter are subject to mutual agreement of the parties.

     If the foregoing is in accordance with your understanding of our agreement, please sign this
letter in the space indicated below and return it to Rhône at the address set forth below, no later
than 5:00 p.m., New York time, on June 8, 2009. This letter may be executed in any number of
counterparts, each of which, when so executed, shall be deemed to be an original and all of which,
taken together, shall constitute one and the same letter. Delivery of an executed counterpart of a
signature page to this letter by electronic transmission shall be as effective as delivery of an
original executed counterpart of this letter.

[Remainder of page intentionally left blank]

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     We look forward to working with you on this transaction and continuing our mutually beneficial
relationship.

	 	 	 	 	 
	 	 	RHÔNE CAPITAL III L.P.
	 
	 	 	 	 
	 

	 	By:	 	 
	 

	 	 	 	 
	 

	 	Name:	 	 
	 

	 	Title:	 	 
	 
	 	 	 	 
	 

	 	To:
	 	Rhône Capital III L.P.
	 

	 	 	 	630 Fifth Avenue, 27th Floor
	 

	 	 	 	New York, NY 10111

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The foregoing is agreed to and accepted

this ___ day of June, 2009

	 	 	 	 	 
	QUIKSILVER, INC.	 	 
	 
	 	 	 	 
	By:
	 	 	 	 
	Name:

	 	 

	 	 
	Title:
	 	 	 	 
	 
	 	 	 	 
	QUIKSILVER AMERICAS, INC.	 	 
	 
	 	 	 	 
	By:
	 	 	 	 
	Name:

	 	 

	 	 
	Title:
	 	 	 	 

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PRIVILEGED AND CONFIDENTIAL

EXHIBIT A

SUMMARY OF CERTAIN TERMS AND CONDITIONS

$125,000,000 Senior Secured Term Loan Facility

	 	 	 
	Borrower:

	 	Quiksilver Americas, Inc. (the “Borrower”).
	 
	 	 
	Guarantors:

	 	All obligations under the Facility to be
unconditionally guaranteed by Quiksilver, Inc.
(the “Parent”) and all U.S. subsidiaries of the
Borrower (other than immaterial subsidiaries to
which the Agent reasonably consents)
(collectively the “Guarantors”). Obligations
under the Facility will be guaranteed on a
senior basis. Each of the Borrower, Parent,
each other Guarantor and each other party
pledging Collateral hereunder are referred to
herein as an “Obligor”.
	 
	 	 
	Agent:

	 	Rhône Capital III L.P. or one or more
affiliated entities designated by Rhône Capital
III L.P. (collectively, “Rhône”) to be
arranger and bookrunner, administrative agent
and collateral agent (in all such capacities,
the “Agent”).
	 
	 	 
	Lenders:

	 	Rhône, investment vehicles controlled by Rhône
and limited partners of Rhône investment
vehicles (or their affiliates) (each, a
“Lender” and collectively, the “Lenders”),
which, in the case of any Lenders who are not
Rhône investment vehicles or limited partners
of Rhône investment vehicles (or their
affiliates), shall be reasonably acceptable to
the Borrower.
	 
	 	 
	Closing Date:

	 	The date on or before July 31, 2009 on which
the borrowings under the Facility are made to
be mutually agreed upon (the “Closing Date”).
	 
	 	 
	Facility:

	 	A senior secured term loan facility in an
amount not to exceed $125,000,000 (the
“Facility” and the loan made pursuant thereto,
the “Term Loan”).
	 
	 	 
	Availability:

	 	The Term Loan would be fully funded on the
Closing Date and amounts repaid would not be
able to be reborrowed.
	 
	 	 
	Maturity:

	 	The day that is one day prior to the five-year

A-1

 

	 	 	 
	 

	 	anniversary of the Closing Date (the “Maturity
Date”). The outstanding principal balance of
the Term Loan will be due and payable on the
Maturity Date.
	 
	 	 
	 

	 	The Borrower will have the right to prepay the
Term Loan in part or in full at any time and
from time to time without premium or penalty,
provided that in the event of any voluntary
prepayment by Borrower on or prior to the third
anniversary of the Closing Date, if the U.S.
dollar has depreciated against the Euro between
the Closing Date and the date of such voluntary
prepayment, the Borrower shall pay the Lenders
an additional amount such that the principal
amount and accrued PIK interest being
voluntarily prepaid plus such additional
payment yields the same amount in Euros as such
principal amount and accrued PIK interest would
have yielded at a U.S. dollar to Euro exchange
rate equal to 1.42 and provided further that
the maximum aggregate additional amount payable
shall be $18,750,000 plus 15% of the amount of
accrued and unpaid PIK interest then being
prepaid. At the time of the final payment on
the Term Loan (whether at the Maturity Date or
upon prepayment), the Borrower will pay the
Lenders an additional amount equal to the
excess, if any, of $1,500,000 over the amount
paid in respect of the exchange rate adjustment
pursuant to the immediately preceding sentence.
	 
	 	 
	Amortization:

	 	No amortization. The Term Loan will be payable
in full at maturity.
	 
	 	 
	Use of Proceeds:

	 	Proceeds of the Term Loan borrowed on the
Closing Date would be used to refinance certain
existing indebtedness of the Borrower and its
subsidiaries, to pay related transaction fees
and expenses and for general corporate
purposes.
	 
	 	 
	Security:

	 	The Facility will be secured by (i) a
first-priority, perfected security interest in
the Quiksilver and Roxy trademarks owned by the
Borrower or any Guarantor with respect to the
Americas, including the United States and
Mexico and in all D.C. Shoes trademarks owned
by D.C. Shoes, Inc.

A-2

 

	 	 	 
	 

	 	(“DC”) (the “Trademarks”);
(ii) a first-priority (subject to exceptions to
be mutually agreed upon by the Borrower and
Agent), perfected security interest in all
other property of the Borrower and Guarantors,
excluding collateral in which the lenders under
the ABL Facility (as defined below) (the “ABL
Lenders”) have a first-priority security
interest; (iii) a second-priority, perfected
security interest in all of the property of the
Borrower and Guarantors subject to a first
priority security interest granted to the ABL
Lenders under the ABL Facility; and (iv) a
first-priority perfected pledge of 66 2/3% of
the shares of the European Borrower (as
defined in the Commitment Letter)
(collectively, the “Collateral”).
	 
	 	 
	 

	 	It is understood and agreed that there will be
customary exceptions to the definition of
Collateral or the requirements and
representations relating to perfection of any
security interest in assets otherwise
constituting Collateral, including the
following, subject to Sections 9-406 through
9-409, inclusive, of the Uniform Commercial
Code of any relevant jurisdiction or any other
applicable law or principles of equity: (i) all
leasehold interests; (ii) motor vehicles and
other assets subject to certificates of title,
letter of credit rights and commercial tort
claims; (iii) assets over which the granting of
a security interest would be prohibited by
agreement or applicable law or regulation; (iv)
those assets as to which the Agent reasonably
determines the cost of obtaining or perfecting
a security interest outweighs the benefit to be
obtained thereby; (v) interests in joint
ventures and non-wholly owned subsidiaries
which cannot be pledged without the consent of
one or more third parties, provided the
Borrower makes good faith efforts to obtain any
such third-party consents in order to be able
to grant security interests in any such
interests in joint ventures and non-wholly
owned subsidiaries; and (vi) other exceptions
to be mutually agreed upon by the Borrower and
the Agent.
	 
	 	 
	 

	 	All Collateral would be free and clear of other
liens except for (i) liens in respect to the
security

A-3

 

	 	 	 
	 

	 	interests granted to the ABL Lenders
under the ABL Facility; (ii) liens in favor of
the lenders under the European Facility; and
(iii) other liens to be mutually agreed upon by
the Borrower and the Agent.
	 
	 	 
	Interest Rates:

	 	The outstanding principal balance under the
Facility would bear interest at a fixed rate of
15% per annum, of which up to 6% per annum
would be payable quarterly in kind at
Borrower’s option at any time when there is no
pending or existing Event of Default, with the
remaining portion payable in cash, in each
case, payable quarterly in arrears on the first
day of each quarter. All interest calculations
would be made on the basis of actual days
elapsed in a year of 360 days.

Upon the occurrence and during the continuance
of any Event of Default, the margin applicable
to all loans would be increased by an
additional 2% per annum, payable on demand.

The Borrower shall agree to gross up the
Lenders for any withholding taxes in customary
fashion.
	 
	 	 
	Fees:

	 	3.0% of the initial maximum principal amount of
the Term Loan fully-earned and due and payable
in cash to the Agent for its own account on the
Closing Date.
	 
	 	 
	Prepayments:

	 	Mandatory prepayment of the Term Loan without
premium or penalty (i) in full, upon a Change
in Control of Parent or Borrower, the Change in
Control definition to be mutually agreed based
on ABL Facility and French Facility
definitions; (ii) in an amount equal to the net
cash proceeds of asset sales received by the
Borrower and the Guarantors outside the
ordinary course of business in excess of
$15,000,000 in any fiscal year; and (iii) upon
the occurrence of any other event that results
in the mandatory prepayment pursuant to the ABL
Facility in an amount equal to the net cash
proceeds received by Borrower or Guarantors
therefrom (excluding any borrowing base or
overadvance-related prepayment requirement
thereunder); provided that, in the case of
clauses

A-4

 

	 	 	 
	 

	 	(ii) and (iii), Borrower shall have no
obligation to make any such prepayment if and
to the extent such prepayment is made to the
ABL Lenders and the ABL Facility is not repaid
in full as a result of such prepayment.
	 
	 	 
	Conditions Precedent:

	 	The obligation of the Lenders to make the Loan
on the Closing Date shall be subject to the
conditions set forth in the Commitment Letter
under the caption “Conditions to Our
Commitment” and the following other conditions:
	 
	 	 
	 

	 	(i) The final terms and conditions of the
Facility and the intercreditor agreement, and
all documentation relating thereto, including
Collateral and Warrant (as defined in the
Commitment Letter) documentation, being
consistent with this Term Sheet and the
Commitment Letter to which this Term Sheet is
attached and otherwise in form and substance
reasonably satisfactory to the Agent; and
execution and delivery of such documentation by
each applicable Obligor.
	 
	 	 
	 

	 	(ii) All of the capital stock of each of
Parent’s subsidiaries and each of Borrower’s
subsidiaries being owned by Parent or Borrower,
respectively, in each case free and clear of
any lien, charge or encumbrance, other than the
liens and security interest created or
permitted under the loan documentation; the
Agent having valid and perfected (subject to
the exceptions set forth under “Security” and
other exceptions reasonably acceptable to the
Agent to be set forth in the loan
documentation) liens and security interests in
all of the Collateral, with the respective
priorities set forth above; all filings and
recordations necessary or desirable in
connection with such liens and security
interests having been prepared in form for
filing or recordation (with such filings and
recordings to be made promptly upon execution
of the final documentation or delivered to the
Agent at its request for filings or
recordation); and all filing and recording fees
and taxes relating to such filings and
recordings having been duly paid.

A-5

 

	 	 	 
	 

	 	(iii) The Agent having received the final
quarterly financial statements of the Parent
and its subsidiaries for the fiscal quarter
ending April 30, 2009, with such final
quarterly financial statements corresponding in
all substantive respects to the preliminary
financial statements for the fiscal quarter
ending April 30, 2009 delivered to Rhône on May
29, 2009.
	 
	 	 
	 

	 	(iv) Receipt by the Agent of the following
documents for each Obligor (in original or copy
certified by an authorized signatory of the
relevant Obligor): (a) a copy of the
constituent documents; (b) a copy of a
resolution of the board of directors (or other
appropriate body) approving the transactions
contemplated by the Commitment Letter and
authorizing the execution and delivery of final
documentation for the Facility to which it is a
party; (c) a certificate of the Borrower and
the Parent (signed by an authorized signatory
of these companies) confirming that borrowing
or guaranteeing or securing, as appropriate,
the Facility would not cause any borrowing,
guarantee, security or similar limit binding on
any Obligor to be exceeded; and (d) a customary
incumbency certificate.
	 
	 	 
	 

	 	(v) Since January 31, 2009, there having
occurred no event or occurrence which has
resulted in or would reasonably be expected to
result in any material adverse change in the
business, assets, operations, properties,
performance or condition (financial or
otherwise) of the Borrower and its
subsidiaries, taken as a whole or of Parent and
its subsidiaries, taken as a whole.
	 
	 	 
	 

	 	(vi) Since the date of the Commitment Letter,
no material changes in governmental regulations
or policies affecting the Parent or its
subsidiaries, the Borrower or its subsidiaries
or the Lenders having occurred prior to the
Closing Date.
	 
	 	 
	 

	 	(vii) The Parent and its subsidiaries not
having entered into any binding agreement to
dispose of any of the Collateral outside the
ordinary course of business (including, without
limitation, the DC

A-6

 

	 	 	 
	 

	 	Shoes business) or as
otherwise contemplated in the Commitment
Letter.
	 
	 	 
	 

	 	(viii) There existing no action, suit,
investigation, litigation or proceeding pending
or, to the knowledge of Borrower or Parent,
threatened that (a) would reasonably be
expected to (1) have a material adverse effect
on the business, assets, operations,
properties, performance, condition (financial
or otherwise) of the Parent and its
subsidiaries, taken as a whole, or of the
Borrower and its subsidiaries, taken as a
whole, (2) adversely affect the ability of the
Obligors to perform their obligations under the
loan documentation in any material respect, or
(3) adversely affect the rights and remedies of
the Agent and the Lenders under the loan
documentation in any material respect; or (b)
purports to adversely affect in any material
respect the financing of the Facility or
prevent the anticipated use of the proceeds.
	 
	 	 
	 

	 	(ix) All governmental and material third party
consents and approvals necessary in connection
with the Facility having been obtained.

(x) After giving effect to the consummation of
the transactions contemplated on the Closing
Date, no Event of Default then existing.

(xi) The Agent having received customary
endorsements naming the Agent, on behalf of the
Lenders, as an additional insured under all
applicable liability insurance policies
maintained by Borrower and the Guarantors and a
loss payee for all applicable casualty
insurance policies of the Borrower and the
Guarantors forming part of the Collateral.
	 
	 	 
	 

	 	(xii) Execution of an intercreditor agreement
between the Agent and the agents for the ABL
Lenders, with terms and conditions reasonably
satisfactory to the Agent.
	 
	 	 
	 

	 	(xiii) Execution of an agreement between
European Borrower (as defined in the Commitment
Letter) and the Agent, in form and

A-7

 

	 	 	 
	 

	 	substance
reasonably acceptable to Rhône, providing that
European Borrower (as defined in the Commitment
Letter) will not exercise the right to
terminate its licensing agreements with
Quiksilver Canada Corp. or Quiksilver Industria e Comercio de Artigos Esportivos Ltda (the
“Licensees”) nor permit the Licensees to
terminate such agreements, without the prior
written consent of the Agent (such consent not
to be unreasonably withheld).
	 
	 	 
	 

	 	(xiv) The Agent having received legal opinions
from counsel for the Borrower and the Parent in
customary form relating to: (a) the due
authorization of each Obligor to enter into the
respective Facility documentation to which each
is a party, (b) enforceability of all material
definitive loan documentation relating to the
Term Loan, the Facility, the pledge of the
Collateral and the Warrants (subject to
customary limitations and exceptions that are
reasonably acceptable to the Agent) and (c) no
conflict with the Indenture with respect to the
Senior Notes and other specified material
indebtedness of the Obligors.
	 
	 	 
	 

	 	(xv) The Agent having received (a) customary
legal opinions from local counsel in each
foreign jurisdiction where Collateral
constituting equity interests in subsidiaries
of Parent is being pledged and (b) other
customary opinions on pledges of Collateral, in
all cases covering such customary matters as the perfection, authorization and
enforceability of any such pledge and with such
exceptions as the Agent may agree.

(xvi) The Borrower having delivered a
certificate in customary form attesting to the
accuracy of representations and warranties,
absence of defaults and the solvency of the
Borrower and its subsidiaries, taken as a
whole, after giving effect to the Facility.
	 
	 	 
	 

	 	(xvii) The Agent having received (a) a copy of
the final legal and tax structure memorandum
from Skadden Arps Slate Meagher & Flom LLP
referenced in the conditions precedent in the
term

A-8

 

	 	 	 
	 

	 	sheet relating to the new French term and
revolving credit facilities with respect to
certain of the Parent’s French subsidiaries
(the “French Facility”) and any material
differences with respect to the settlement of
intercompany payables that have an impact on
the liquidity of the Obligors in such final
memorandum as compared to the prior version
delivered to the Agent being reasonably
acceptable to Agent, and (b) a copy of a funds
flow statement consistent with such memorandum,
and, to the extent the memorandum contemplates
settlement before the Closing Date, the Parent
and its subsidiaries having taken such steps as
are reasonably necessary to settle the
intercompany payables to the extent, in the
manner and on the timing set forth in such
memorandum.
	 
	 	 
	 

	 	(xviii) The Borrower having paid all fees and
expenses then due and owing to the Agent and
Lenders under the Commitment Letter to the
extent invoiced prior to the Closing Date.

(xix) The Agent having received all reasonably
required UCC, tax lien and litigation searches
relating to the Obligors and such results shall
indicate the absence of liens on the assets of
the Obligors, except for liens permitted under
the definitive documentation for the Facility
and liens for which termination statements and
releases are being tendered concurrently with
the borrowing of the Term Loan or other
arrangements reasonably satisfactory to the
Agent for the delivery of such termination
statements and releases have been made.
	 
	 	 
	 

	 	(xx) The closing of the senior secured
revolving credit facility (the “ABL Facility”)
on terms and conditions substantially the same
as those set forth in the term sheet in respect
thereof dated as of May 21, 2009 (as amended by
the letter agreement dated as of June [___],
2009), with such modifications as the Agent
shall agree in its reasonable discretion and
the initial funding of the ABL Facility and
concurrent repayment of the Borrower’s existing
revolving credit facility.

A-9

 

	 	 	 
	 

	 	(xxi) The closing of the French Facility on
terms and conditions substantially consistent
with the terms set forth in the memorandum from
Sullivan & Cromwell LLP dated May 24, 2009,
with such modifications as the Agent shall
agree in its reasonable discretion.
	 
	 	 
	 

	 	(xxii) The Borrower having caused DC Shoes,
Inc. to enter into a new agreement with Emerald
Coast, SAS and DC Shoes Australia Pty Ltd.
(which shall replace the Services Fee
Agreement) which provides that the rights of
such entities to engage in the DC business or
exploit the use of the DC trademarks, service
marks, tradenames and logos outside of the
United States shall terminate within 12 months
of a change in control of, or sale of all or
substantially all of the assets of, DC Shoes,
Inc. or of the DC trademarks, service marks,
tradenames or logos and such other terms and
conditions as are reasonably acceptable to the
Agent.
	 
	 	 
	 

	 	(xxiii) The Parent having transferred all
trademarks, service marks, tradenames and logos
related to Quiksilver and Roxy (including the
trademarks, applications and registrations with
respect thereto and all associated goodwill)
owned by the Parent with respect to the United
States and Mexico, to the Borrower.

(xxiv) The satisfaction or waiver of all
conditions set forth in the term sheet and
final documentation with respect to the
European Facility.
	 
	 	 
	 

	 	(xxv) The representations and warranties set
forth in the final documentation with respect
to the Facility (as described under
“Representations and Warranties” below) being
true and correct in all material respects as of
the Closing Date.
	 
	 	 
	 

	 	(xxvi) Entry into final documentation for the
Warrants in form consistent with Exhibit C to
the Commitment Letter and otherwise reasonably
satisfactory to the Agent, including a
registration rights agreement with respect to
the Warrants and common stock issuable upon
exercise of the

A-10

 

	 	 	 
	 

	 	Warrants, reservation of
authorized and unissued common shares in an
amount sufficient to satisfy the full exercise
of the Warrants and issuance of the Warrants to
Rhône.
	 
	 	 
	 

	 	(xxvii) Parent’s Board of Directors having
granted all necessary approvals under Parent’s
constituent documentation and Delaware General
Corporation Law with respect to the acquisition
and exercise of the Warrants.

(xxviii) In accordance with the terms of the
Warrants, the number of directors on the Board
of Directors of the Parent having been
increased by two and such new seats having been
filled by nominees of Rhône.

(xxix) Parent’s Board of Directors having
adopted an equity incentive plan for members of
current management and future hires, on terms
reasonably acceptable to the Agent.
	 
	 	 
	 

	 	(xxx) The Agent having concluded any
legally-required background checks and other
investigations to ensure compliance with the
USA Patriot Act, anti-money laundering laws
with results reasonably satisfactory to the
Agent.
	 
	 	 
	Representations and
Warranties:

	 	The final documentation shall contain
representations and warranties customarily
found in loan documentation for similar secured
financings, with exceptions, qualifications and
materiality to be mutually agreed, including
without limitation representations and
warranties with respect to: (i) authority; (ii)
capitalization of Borrower and each Guarantor;
(iii) financial statements and the absence of
undisclosed liabilities; (iv) the accuracy and
completeness of all filings under the
Securities Exchange Act of 1934 and the
accuracy and completeness of all other
information provided to the Lenders; (v)
compliance with all applicable laws, including
the Sarbanes-Oxley Act of 2002; (vi) compliance
with debt instruments in all material respects;
(vii) the absence of insolvency proceedings
against Parent and any of its direct or
indirect subsidiaries on the

A-11

 

	 	 	 
	 

	 	Closing Date;
(viii) intellectual property; (ix) real
property and leases; (x) employee benefits
plans and pension plans; (xi) labor matters;
(xii) taxation; (xiii) the due execution,
perfection (where applicable), delivery,
authorization and enforceability of all loan
documentation, including each pledge or lien;
(xiv) the absence of any amendment to the
agreements referenced in clause (xxii) of
“Conditions Precedent”, excluding amendments
made in accordance with and to satisfy such
condition; and (xv) since January 31, 2009, the
absence of any event or occurrence which has
resulted in or would reasonably be expected to
result in any material adverse change in the
business, assets, operations, properties,
performance or financial condition of the
Parent and its subsidiaries, taken as a whole,
and the Borrower and its subsidiaries, taken as
a whole.
	 
	 	 
	Covenants:

	 	The final documentation shall contain such
covenants of Parent, Borrower and the
Guarantors customarily found in loan
documentation for similar secured financings
(with customary exceptions and materiality
qualifiers to be mutually agreed upon by the
Borrower and the Agent).
	 
	 	 
	 

	 	Negative covenants would include, without
limitation: liens; negative pledges; restricted
junior payments (dividends, redemptions and
voluntary payments on certain debt);
restrictions on subsidiary distributions;
fundamental changes, investments, mergers and
acquisitions; sales of assets (including
subsidiary interests); sales and lease-backs;
transactions with affiliates; conduct of
business; amendments and waivers of
organizational documents that could materially
affect the Facility or the security therefor;
affiliate transactions; and changes to fiscal
year, including, in each case, exceptions and
baskets to be mutually agreed upon.
	 
	 	 
	 

	 	Affirmative covenants would include, without
limitation: delivery of financial statements
and other reports as set forth under
“Information

A-12

 

	 	 	 
	 

	 	Rights” below; maintenance of
existence; payment of taxes and claims;
maintenance of properties; maintenance of
insurance; books and records; inspections;
compliance with laws; environmental matters;
additional collateral and guarantors; and
further assurances.
	 
	 	 
	 

	 	In addition, Parent shall covenant that it will
work in good faith to determine whether there
is a tax-efficient way to cause a dividend,
distribution or other transfer of the Preferred
Shares from QS Holdings SARL to the European
Borrower or a wholly-owned subsidiary of the
European Borrower (subject to the Agent’s
security interest in the Preferred Shares) and,
if it determines in its reasonable discretion
that a tax-efficient method exists, effectuate
such dividend, distribution or other transfer.
	 
	 	 
	 

	 	Financial covenants would include only:
	 
	 	 
	 

	 	With respect to Parent and its subsidiaries
(including European Borrower and its
subsidiaries and in any event including
Quiksilver Brazil JV and Quiksilver Industria e
Comercio de Artigos, but excluding QS Holdings
SARL and its subsidiaries and Quiksilver
Greater China Ltd and its subsidiaries):
	 
	 	 
	 

	 	(i) Other than any incurrence pursuant
to the ABL Facility or otherwise permitted
under an existing basket in the Indenture
relating to the Senior Notes dated as of July
22, 2005 (the “Indenture”), at the time of
incurrence of any debt (pro forma for such
incurrence), total debt of such entities shall
not exceed five times the EBITDA of such
entities for the last four fiscal quarters
considered as a single period.

	 
	 	 
	 

	 	(ii) As of the last day of each fiscal
quarter, the EBITDA of such entities for the
last four fiscal quarters considered as a
single period shall be greater than the amounts
as set forth in Annex A1.

A-13

 

	 	 	 
	 

	 	(iii) Excess availability under the ABL
shall at all times be in excess of 7.5% of the
lesser of the Borrowing Base (as defined under
the ABL Facility) and the amount of the
aggregate commitments under the ABL Facility.

	 
	 	 
	 

	 	With respect to Parent and its subsidiaries,
other than any incurrence pursuant to the ABL
Facility or otherwise permitted under an
existing basket in the Indenture, at the time
of incurrence of any debt (pro forma for such
incurrence), total debt of such entities shall
not exceed five times the EBITDA of such
entities for the last four fiscal quarters.
	 
	 	 
	 

	 	In addition, other than intercompany transfers
among the subsidiaries of Newco II (as defined
in the European Term Sheet) and transfers to
the European Borrower (including intermediate
transfers to Newco II in order to effectuate
transfers to the European Borrower), the
European Borrower, Newco II and their
subsidiaries would be prohibited from incurring
or guaranteeing any indebtedness (other than
pursuant to the European Facility and the ABL
Facility and other than in accordance with
mutually agreed exceptions for the Canadian and
Brazilian subsidiaries) or granting any
security in their shares or assets (other than
pursuant to the Term Loan, the European
Facility and the ABL Facility and other than
the granting of a limited recourse pledge of
any shares of QS Holdings SARL held by Newco
II) for so long as the Term Loan is
outstanding.
	 
	 	 
	Events of Default:

	 	The final documentation shall contain those
events of default customarily found in loan
documentation for similar secured financings,
with appropriate grace periods, exceptions,
materiality, and baskets to be mutually agreed
(each, an “Event of Default”). The events of
default shall include without limitation (i)
material breach of representations and
warranties; (ii) payment and interest default;
(iii) certain negative and affirmative
covenants; (iv) cross-default on the ABL
Facility, the existing Senior Notes issued by
Parent on July 22, 2005 and the European
Facility

A-14

 

	 	 	 
	 

	 	and any refinancings thereof; (v)
cross-acceleration with respect to the French
Facility; (vi) failure of Parent’s Board of
Directors to nominate, or of Parent’s
stockholders to elect, any director proposed by
Rhône in accordance with the Warrants; (vii)
amendment of any agreements referenced in
clause (xxii) of “Conditions Precedent” in a
manner that is materially adverse to the
Lenders and excluding amendments made in
accordance with and to satisfy such condition;
(viii) bankruptcy; (ix) judgments in excess of
specified amounts; (x) material ERISA events;
(xi) failure of enforceability of liens or loan
documents; and (xii) invalidity of guarantees
or of Collateral pledges.
	 
	 	 
	Expenses:

	 	The Borrower shall pay all of the Lenders’
out-of-pocket and documented costs, including
without limitation reasonable fees and expenses
of counsel (limited to not more than one
primary counsel and necessary local counsel
(limited to one local counsel per
jurisdiction)), consultants and advisors,
filing and recording fees and reasonable and
documented costs and expenses of due diligence,
travel and lodging, duplication, messenger
services, appraisal, audit, insurance, search
and electronic reporting in connection with the
Facility and the Warrants described under
“Warrants”, as well as the reasonable
out-of-pocket and documented expenses of the
Agent in connection with the administration of
the loan documentation (including without
limitation the reasonable and documented fees
and expenses of counsel for the Agent (limited
to not more than one primary counsel and
necessary local counsel (limited to one local
counsel per jurisdiction)) and the reasonable
and documented fees and expenses of Lazard
Frères & Co. in an amount, with respect to the
fees of Lazard Frères & Co., up to $1,500,000.
The Borrower would also pay the expenses of the
Agent and the Lenders in connection with the
enforcement of the loan documentation. Borrower
shall pay the foregoing expenses regardless of
whether or not the Facility closes.

A-15

 

	 	 	 
	Indemnity:

	 	The Borrower shall indemnify and hold harmless
the Agent, each Lender and each of their
affiliates and their officers, directors,
employees, agents and advisors from claims and
losses relating to the Facility on terms
customarily contained in loan documentation for
similar secured financings.
	 
	 	 
	Information Rights:

	 	Parent shall deliver to the Lenders: (i) as
soon as available but no later than October 15
of the fiscal year ending on October 31, 2009,
and September 15 of each fiscal year
thereafter, a copy of the approved annual
budget for the upcoming fiscal year; (ii)
commencing with the first month after the first
full six months after the Closing Date, monthly
unaudited financial statements within 30 days
after the end of such period with comparisons
to the prior years and budget for all such
statements relating to periods from and after
the first month to close after the first full
18 months after the Closing Date and otherwise
in such form as prepared by management for
internal use; (iii) quarterly unaudited
financial statements within 45 days after the
end of such period with comparisons to the
prior years and budget; (iv) annual audited
financial statements within 90 days after the
end of the year; and (v) at all times, any
other information provided in writing by the
Parent or any subsidiary to the ABL Lenders or
the French Lenders. In addition, so long as
excess availability under the ABL Facility is
less than $30,000,000, Parent shall deliver to
the Lenders weekly cash flow reports, which
will include a 13-week rolling cash flow
forecast.
	 
	 	 
	 

	 	Lenders shall have customary rights to (i)
inspect the properties, books and other records
of the Obligors at reasonable times and upon
reasonable notice, and (ii) reasonably request
from time to time any other information
(financial or otherwise). Parent and Borrower
shall, and shall cause their subsidiaries to,
comply with any such inspections and requests.

A-16

 

	 	 	 
	Public Disclosure:

	 	Except as required pursuant to the Securities
Act of 1933, the Securities Exchange Act of
1934, the rules of the New York Stock Exchange
or other applicable law, the Agent and Parent
shall agree on the timing and content of any
disclosure, including without limitation, any
press release relating to the transactions
contemplated hereby prior to its initial public
dissemination, and no such disclosure shall be
made without the consent of the Agent and
Parent.
	 
	 	 
	Miscellaneous:

	 	Waiver of jury trial and submission to
jurisdiction and venue in the federal and state
courts of the State of New York. Lenders shall
have the right at any time to sell and assign
interests and sell participations under the
Facility, in accordance with customary terms,
subject to the consent of the Borrower (which
consent shall not be unreasonably withheld).
	 
	 	 
	Governing Law:

	 	New York.
	 
	 	 
	Counsel to Agent and
Lenders:

	 	Sullivan & Cromwell LLP.

A-17

 

PRIVILEGED AND CONFIDENTIAL

EXHIBIT B

SUMMARY OF CERTAIN TERMS AND CONDITIONS

€20,000,000 Senior Secured Term Loan Facility

	 	 	 
	Borrower:

	 	A newly-formed direct, wholly-owned
subsidiary of Quiksilver, Inc. (the “Parent”) to be organized in
Luxembourg (the “European Borrower”).
The European Borrower will be the
direct parent of (i) QS Holdings SARL
and (ii) a newly-formed wholly-owned
subsidiary to be organized in
Luxembourg (“Newco II”), which will
issue shares of non-voting preferred
stock (“Preferred Shares”) in
exchange for all Quiksilver and Roxy
trademarks, service marks, tradenames
and logos relating to the Americas,
excluding those owned by Quiksilver
Americas, Inc. Newco II will be the
direct owner of Quiksilver Deluxe
SARL, and the Parent shall use its
reasonable efforts to obtain any
necessary consents for the transfer
of QS Holdings SARL’s interest in
Quiksilver Brazil JV to Newco II and,
upon receipt of such consent, shall
cause QS Holdings SARL to transfer
such interest to Newco II.
	 
	 	 
	Guarantors:

	 	All obligations under the Facility to
be unconditionally guaranteed by (i)
Parent and all U.S. subsidiaries of
Parent from time to time (other than
immaterial subsidiaries to which the
Agent reasonably consents), and (ii)
Quiksilver Deluxe SARL and its
direct and indirect subsidiaries from
time to time (collectively the
“Guarantors”). Obligations under the
Facility will be guaranteed on a
senior basis. The European Borrower,
Parent, each other Guarantor and each
other party pledging Collateral (as
defined below) under the Facility is
referred to herein as an “Obligor”.
	 
	 	 
	Agent:

	 	Rhône Capital III L.P. or one or more
affiliated entities designated by
Rhône Capital III L.P.
(collectively, “Rhône”) to be
arranger and bookrunner,
administrative agent and collateral
agent (in all such capacities, the
“Agent”).
	 
	 	 
	Lenders:

	 	Rhône, investment vehicles controlled
by Rhône

B-1

 

	 	 	 
	 

	 	and limited partners of
Rhône investment vehicles (or their
affiliates) (each, a “Lender” and
collectively, the “Lenders”), which,
in the case of any Lenders who are
not Rhône investment vehicles or
limited partners of Rhône investment
vehicles (or their affiliates), shall
be reasonably acceptable to the
European Borrower.
	 
	 	 
	Closing Date:

	 	The date on or before July 31, 2009
on which the borrowings under the
Facility are made to be mutually
agreed upon (the “Closing Date”).
	 
	 	 
	Facility:

	 	A senior secured term loan facility
in an amount not to exceed
€20,000,000 (the “Facility” and the
loan made pursuant thereto, the “Term
Loan”).
	 
	 	 
	Availability:

	 	The Term Loan would be fully funded
on the Closing Date and amounts
repaid would not be able to be
reborrowed.
	 
	 	 
	Maturity:

	 	The day that is one day prior to the
five-year anniversary of the Closing
Date (the “Maturity Date”). The
outstanding principal balance of the
Term Loan will be due and payable on
the Maturity Date.
	 
	 	 
	 

	 	The European Borrower will have the
right to prepay the Term Loan in part
or in full at any time and from time
to time without premium or penalty.
	 
	 	 
	Amortization:

	 	No amortization. The Term Loan will
be payable in full at maturity.
	 
	 	 
	Use of Proceeds:

	 	Proceeds of the Term Loan borrowed on
the Closing Date will be transferred
in a manner such that they will
ultimately be received by the Parent.
	 
	 	 
	Security:

	 	The Facility will be secured by (i) a
second-priority, perfected pledge by
the Parent of the shares of the
European Borrower that are subject to
a first-priority security interest in
respect of the U.S. Facility (as
defined in the Commitment Letter);
(ii) a first-priority, perfected
pledge by the Parent of the shares of
the European Borrower to the extent
not pledged in respect of the U.S.
Facility and of all other property of
the European

B-2

 

	 	 	 
	 

	 	Borrower, other than the
shares of QS Holdings SARL; (iii) a
first-priority, perfected pledge by
QS Holdings SARL of the Preferred
Shares; (iv) a first-priority,
perfected security interest in all of
the property of Newco II, including
all intellectual property (including
trademarks, service marks, tradenames
and logos) owned by Newco II; (v) a
first-priority, perfected security
interest in the shares of each of
Quiksilver Deluxe SARL, Quiksilver
Canada Corp. and QS Retail Canada
Corp.; and (vi) in the event that
Newco II holds the shares of
Quiksilver Brazil JV and has obtained
the necessary consents in order to
grant such pledge, a first-priority,
perfected security interest in the
shares of Quiksilver Brazil JV held
by Newco II (collectively, the
“Collateral”).
	 
	 	 
	 

	 	It is understood and agreed that
there will be customary exceptions to
the definition of Collateral or the
requirements and representations
relating to perfection of any
security interest in assets otherwise
constituting Collateral in accordance
with local law and practice, in each
case as mutually agreed upon by the
European Borrower and the Agent.
	 
	 	 
	 

	 	All Collateral would be free and
clear of other liens, claims and
encumbrances, except for (i) liens in
respect to the first-priority
security interest granted to the
lenders under the U.S. Facility; and
(ii) liens to be mutually agreed upon
by the European Borrower and the
Agent.
	 
	 	 
	Interest Rates:

	 	The outstanding principal balance
under the Facility would bear
interest at a fixed rate of 15% per
annum, of which up to 100% per annum
would be payable quarterly in kind at
the European Borrower’s option at any
time when there is no pending or
existing Event of Default, with the
remaining portion payable in cash, in
each case, payable quarterly in
arrears on the first day of each
quarter. All interest calculations
would be made on the basis of actual
days elapsed in a year of 360 days.

B-3

 

	 	 	 
	 

	 	Upon the occurrence and during the
continuance of any Event of Default,
the margin applicable to all loans
would be increased by an additional
2% per annum, payable on demand.
	 
	 	 
	 

	 	The European Borrower shall agree to
gross up the Lenders for any
withholding taxes in customary
fashion.
	 
	 	 
	Fees:

	 	3.0% of the initial maximum principal
amount of the Term Loan fully-earned
and due and payable in cash to the
Agent for its own account on the
Closing Date.
	 
	 	 
	Prepayments:

	 	Mandatory prepayment of the Term Loan
without premium or penalty (i) in
full, upon a Change in Control of
Parent or the European Borrower, the
Change in Control definition to be
mutually agreed based on ABL Facility
and French Facility definitions; and
(ii) on a dollar-by-dollar basis in
the case of asset sales by the
European Borrower or Newco II; and
(iii) in an amount equal to the net
cash proceeds of asset sales received
by the subsidiaries of Newco II
outside the ordinary course of
business in excess of $2,000,000 in
any fiscal year; provided that, in
the case of clauses (iii), Borrower
shall have no obligation to make any
such prepayment if and to the extent
such prepayment is made to the ABL
Lenders and the ABL Facility is not
repaid in full as a result of such
prepayment.
	 
	Conditions Precedent:

	 	The obligation of the Lenders to make
the Loan on the Closing Date shall be
subject to the conditions set forth
in the Commitment Letter under the
caption “Conditions to Our
Commitment” and the following other
conditions:
	 
	 	 
	 

	 	(i) The satisfaction of each of the
conditions precedent set forth in the
U.S. Term Sheet (as defined in the
Commitment Letter), which shall be
incorporated by reference herein (but
references therein to “Borrower”,
“Obligors”, “Collateral” , “Lenders”,
“Agent”, “Facility” and “Closing
Date” being deemed to refer to the
“European

B-4

 

	 	 	 
	 

	 	Borrower”, “Obligors”,
“Collateral”, “Lenders”, “Agent”,
“Facility” and “Closing Date”,
respectively, as defined herein and
references therein to the “Term
Sheet” being deemed to refer to this
Term Sheet).
	 
	 	 
	 

	 	(ii) The satisfaction or waiver of
all conditions set forth in the term
sheet and final documentation with
respect to the U.S. Facility.
	 
	 	 
	 

	 	(iii) European Borrower shall have
been created as a wholly-owned direct
subsidiary of Parent and Newco II
shall own all Quiksilver and Roxy
trademarks, service marks, tradenames
and logos relating to the Americas
currently owned by QS Holdings SARL,
and Newco II will be the direct owner
of Quiksilver Deluxe SARL, in each
case free and clear of all liens
other than pursuant to the European
Facility.
	 
	 	 
	Representations and Warranties:

	 	The final documentation shall contain
representations and warranties on the
same scope as those set forth under
“Representations and Warranties” in
the U.S. Term Sheet (but references
therein to “Borrower”, “Obligors”,
“Collateral” , “Lenders”, “Agent”,
“Facility” being deemed to refer to
“European Borrower”, “Obligors”,
“Collateral”, “Lenders”, “Agent” and
“Facility”, respectively, as defined
herein).
	 
	 	 
	Covenants:

	 	The final documentation shall contain
covenants on the same scope as those
set forth under “Covenants” in the
U.S. Term Sheet (but references
therein to “Borrower”, “Obligors”,
“Collateral”, “Lenders”, “Agent”,
“Facility” being deemed to refer to
“European Borrower”, “Obligors”,
“Collateral”, “Lenders”, “Agent” and
“Facility”, respectively, as defined
herein).
	 
	 	 
	 

	 	Parent shall covenant that it will
work in good faith to determine
whether there is a tax-efficient way
to cause a dividend, distribution or
other transfer of the Preferred
Shares from QS Holdings SARL to the
European Borrower or a wholly-owned
subsidiary of the European Borrower
(subject to the Agent’s security
interest in the

B-5

 

	 	 	 
	 

	 	Preferred Shares)
and, if it determines in its
reasonable discretion that a
tax-efficient method exists,
effectuate such dividend,
distribution or other transfer.
	 
	 	 
	 

	 	In addition, other than intercompany
transfers among the subsidiaries of
Newco II and transfers to the
European Borrower (including
intermediate transfers to Newco II in
order to effectuate transfers to the
European Borrower), the European
Borrower, Newco II and their
subsidiaries would be prohibited from
incurring or guaranteeing any
indebtedness (other than pursuant to
the European Facility and the ABL
Facility and other than in accordance
with mutually agreed exceptions for
the Canadian and Brazilian
subsidiaries) or granting any
security in their shares or assets
(other than pursuant to the Term
Loan, the European Facility and the
ABL Facility and other than the
granting of a limited recourse pledge
of any shares of QS Holdings SARL
held by Newco II) for so long as the
Term Loan is outstanding.
	 
	 	 
	Events of Default:

	 	The final documentation shall contain
events of default on the same scope
as those set forth under “Events of
Default” in the U.S. Term Sheet (but
references therein to “Borrower”,
“Obligors”, “Collateral”, “Lenders”,
“Agent”, “Facility” being deemed to
refer to “European Borrower”,
“Obligors”, “Collateral”, “Lenders”,
“Agent” and “Facility”, respectively,
as defined herein).
	 
	 	 
	Expenses:

	 	The European Borrower shall pay all
of the Lenders’ out-of-pocket and
documented costs, including without
limitation reasonable fees and
expenses of counsel (limited to not
more than one primary counsel and
necessary local counsel (limited to
one local counsel per jurisdiction)),
consultants and advisors, filing and
recording fees and reasonable and
documented costs and expenses of due
diligence, travel and lodging,
duplication, messenger services,
appraisal, audit, insurance, search
and electronic reporting in
connection with the Facility and the
Warrants described under “Warrants”,
as well as the reasonable
out-of-pocket and documented

B-6

 

	 	 	 
	 

	 	expenses
of the Agent in connection with the
administration of the loan
documentation (including without
limitation the reasonable and
documented fees and expenses of
counsel for the Agent (limited to not
more than one primary counsel and
necessary local counsel (limited to
one local counsel per jurisdiction))
and the reasonable and documented
fees and expenses of Lazard Frères &
Co. in an amount, with respect to the
fees of Lazard Frères & Co., up to
$1,500,000 (less any amounts paid in
respect of such fee by the U.S.
Borrower pursuant to the U.S.
Facility). The European Borrower
would also pay the expenses of the
Agent and the Lenders in connection
with the enforcement of the loan
documentation. The European Borrower
shall pay the foregoing expenses
regardless of whether or not the
Facility closes.
	 
	 	 
	Indemnity:

	 	The European Borrower shall indemnify
and hold harmless the Agent, each
Lender and each of their affiliates
and their officers, directors,
employees, agents and advisors from
claims and losses relating to the
Facility on terms customarily
contained in loan documentation for
similar secured financings.
	 
	 	 
	Information Rights:

	 	Same as U.S. Term Sheet.
	 
	 	 
	Public Disclosure:

	 	Same as U.S. Term Sheet.
	 
	 	 
	Miscellaneous:

	 	Same as U.S. Term Sheet.
	 
	 	 
	Governing Law:

	 	New York.
	 
	 	 
	Counsel to Agent and Lenders:

	 	Sullivan & Cromwell LLP.

B-7

 

EXHIBIT C

SUMMARY OF TERMS AND CONDITIONS

WARRANTS

	 	 	 
	Issuer:

	 	Quiksilver, Inc. (the “Parent”).
	 
	 	 
	Number of Shares:

	 	Warrants exercisable for a number of shares of
common stock equal to 20% less one share of the
number of common equity securities outstanding at
the time of issuance of the Warrants (except as set
forth in the Commitment Letter). The Warrants shall
be fully earned and vested as of the earlier of (i)
the Closing Date (as defined in the respective Term
Sheets) of each of the Facilities, and (ii) in the
event the Closing Date does not occur and Rhône is
willing to fund the Facilities in accordance with
the terms of the Commitment Letter, the date on or
prior to nine months following the date of the
Commitment Letter on which Parent or any of its
subsidiaries enters into a binding agreement to sell
the business of DC Shoes or enter into an
alternative financing transaction (other than the
ABL Facility and the French Facility (each as
defined in the U.S. Term Sheet) and refinancing
transactions by Parent’s Australian and Asian
subsidiaries) to refinance existing indebtedness of
Parent and its subsidiaries. The Warrants will be
attributed to Rhône without payment of any
subscription price therefor.
	 
	 	 
	Exercise Price:

	 	The exercise price of the Warrants shall be $1.86
per share (the volume weighted average price for a
60 trading day period immediately preceding June 2,
2009). The Warrants shall be exercisable at any
time during their term by paying the Exercise Price
in cash, pursuant to a “cashless exercise” of the
Warrant or by a combination of the two methods.

C-1

 

	 	 	 
	Adjustments:

	 	The Exercise Price and the number of common shares
issuable upon exercise of each Warrant will be
subject to customary adjustment for certain events,
including without limitation stock splits (including
reverse stock splits), combinations, stock dividends
(with above zero-dividend initial pricing
assumptions) and certain distributions to
stockholders (including the right to receive
non-cash dividends and distributions on an
‘as-converted’ basis). Subject to customary
exceptions, in the event Parent issues common stock
(or instruments convertible or exchangeable into or
exercisable for common stock) at a price per share
(or with a conversion or exercise price) that is
less than the Exercise Price, the Exercise Price
shall be decreased to a weighted-average downward
ratchet. In addition, the exercise price under each
Warrant will be reduced by the aggregate amount of
cash dividends paid on each share of common stock
from the date of issuance of such Warrant to the
date of exercise of such Warrant.
	 
	 	 
	 

	 	To the extent of any adjustment that would require
an approval of Parent’s stockholders under NYSE
rules, the Warrants will instead be exercisable for
non-voting preferred shares of Parent that provide
the same economic rights (including the right to
participate in any change of control) as a share of
common stock, other than a fixed dividend right to
be agreed. Such preferred shares will be
automatically converted to common stock upon receipt
of approval of Parent’s stockholders. Parent will
undertake to seek the approval of its stockholders
for such conversion and the holders of the Warrants
will agree to vote any common stock they then hold
in favor of such approval.
	 
	 	 
	Term:

	 	7 years.

C-2

 

	 	 	 
	Transferability:

	 	Warrants will not be transferrable at any time
(other than to Rhône, investment vehicles it
controls or limited partners of such investment
vehicles from time to time). Common Stock issuable
upon exercise of the Warrants will be freely
transferrable, provided that Rhône will not transfer
common stock representing 15% or more of the
then-outstanding number of shares of common stock to
any one person unless such transfer has received the
approval of the Board of Directors of Parent.
Notwithstanding the foregoing, no restrictions shall
apply to any transfer of common stock made by Rhône
pursuant to a bona fide underwritten public offering
or in open market transactions. Rhône shall benefit
from customary demand and piggy-back registration
rights with respect to the Warrants and the shares
underlying the Warrants. Parent shall pay all
expenses in connection with the exercise of the
registration rights, including underwriters’
discounts and commissions and transfer taxes, and
Parent and Rhône shall mutually agree upon selection
of the underwriters.
	 
	 	 
	Preemptive Rights:

	 	Each holder of at least 50% of the Warrants (or the
shares underlying the Warrants) initially issued to
such holder shall have additional subscription
rights pursuant to the Warrants allowing such holder
to maintain its proportionate, as-if-converted
ownership interest in Parent if Parent makes a
public or private offering of common stock (or
instruments convertible or exchangeable into or
exercisable for common stock) for cash. Excluded
issuances would include, among others, (i) Board of
Directors approved issuances to employees, officers
and directors for purposes of compensation, (ii)
Board of Directors approved issuances as
consideration in mergers and acquisitions, and (iii)
prior to the date of exercise of the Warrants, any
issuance that gives rise to an antidilution
adjustment pursuant to the terms of the Warrants.

C-3

 

	 	 	 
	Board Representation:

	 	On the issuance date of the Warrants, Parent shall
increase the number of directors on its Board of
Directors by two and fill the vacancies created
thereby with two directors nominated by Rhône.
Rhône’s right to nominate two directors shall
continue until such time as Rhône has sold 33 1/3%
of the shares of common stock issued upon exercise
of the Warrants and its right to nominate one
director shall continue until such time as Rhône has
sold 66 2/3% of the shares of common stock issued
upon exercise of the Warrants.

C-4exv10w2

Exhibit 10.2

COMMITMENT LETTER

$200,000,000 Senior Secured Revolving Credit Facility

June 8, 2009

Quiksilver, Inc. and

Quiksilver Americas, Inc.

15202 Graham St.

Huntington Beach, CA 92649

Attention:  Joseph Scirocco, Chief Financial Officer

Dear Mr. Scirocco:

     We are pleased to advise Quiksilver, Inc. (the “Parent”) and Quiksilver Americas, Inc.
of the agreement of (a) Bank of America, N.A. (“Bank”) and General Electric Capital
Corporation (“GECC”) to provide their separate commitments for the financing of a senior
secured revolving credit facility in favor of Quiksilver Americas, Inc. and certain of its domestic
subsidiaries (collectively, the “Borrower”) in an aggregate principal amount equal to
$200,000,000 (the “Facility”) and (b) Banc of America Securities LLC (“BAS”), an
affiliate of Bank, and GE Capital Markets, Inc. (“GECM”; collectively, together with BAS,
the “Arrangers”), an affiliate of GECC, to seek to arrange for the syndication of the
Facility, all as contemplated in this letter and the Summary of Principal Terms and Conditions (the
“Term Sheet”) annexed to this letter as EXHIBIT A (including, without limitation, a
maturity date of three years from the closing date of the Facility).

     Subject to the terms and conditions set forth in this letter, the Term Sheet, and the fee
letter, dated May 21, 2009, among the Borrower, Bank, BAS, GECC and GECM (the “Fee
Letter”), Bank’s several commitment under the Facility shall be in an amount equal to
$100,000,000 (the “Bank Commitment”) and GECC’s several commitment under the Facility shall
be in an amount equal to $100,000,000 (the “GECC Commitment”).

     Bank will act as the sole and exclusive administrative agent for the Facility and Bank and
GECC will act as co-collateral agents for the Facility. The Arrangers shall act as joint lead
arrangers and joint bookrunners. Each of BAS, Bank, GECC and GECM will have the rights and
authority customarily given to financial institutions in such roles, but shall have no duties other
than those expressly set forth herein. No additional agents, co-agents or arrangers will be
appointed with respect to the syndication of the Facility except with the consent of BAS and Bank.

     BAS intends to commence syndication efforts promptly. The Borrower will actively assist BAS in
achieving a Successful Syndication (as defined in the Fee Letter), until such obligation to assist
expires pursuant to the terms of the Fee Letter. Such assistance shall include, among other
things, (a) making the Borrower’s senior officers, representatives, and advisors available from
time to time to attend and make presentations regarding the business of the Borrower at one or more
meetings of prospective lenders; (b) providing, and causing its advisors to provide, BAS, Bank,
GECC and GECM and other prospective lenders with all such customary financial and other customary
information with respect to the Borrower and the transactions contemplated by this letter,
including but not limited to customary financial projections and forecasts relating to the
foregoing which BAS, Bank, GECC, GECM or any such lender reasonably may request from time to time;
and (c) assisting in the preparation of customary marketing materials to be used in connection with
the syndication of the Facility.

1

 

     BAS and Bank will, in consultation with the Borrower, manage and control all aspects of the
syndication, including decisions as to the selection of proposed additional lenders (which lenders
shall be reasonably acceptable to the Borrower, not to be unreasonably withheld) and any titles
offered to proposed additional lenders, when commitments will be accepted and the final allocations
of the commitments amongst the lenders. It is understood that no lender participating in the
Facility will receive compensation from the Borrower in order to obtain its commitment, except on
the terms contained herein, in the Term Sheet, and in the Fee Letter.

     To ensure an orderly and effective syndication of the Facility, the Borrower agrees that, from
the date hereof until the earlier of (i) the Closing Date or (ii) the occurrence of a Successful
Syndication of the Facility (as described above), the Borrower will not, and will not permit any of
its subsidiaries to, syndicate or issue, attempt to syndicate or issue, announce or authorize the
announcement of the syndication or issuance of any debt facility within the United States, other
than in connection with the Term Loan (as defined in the Term Sheet), without the prior written
consent of Bank, BAS, GECC and GECM.

     The Borrower represents and warrants that (i) all written information concerning or affecting
Quiksilver, Inc. or any of its subsidiaries (other than the projections described in clause (ii)
below, forward-looking information and information of a general economic or general industry
nature) that has been or will hereafter be made available to the Bank, BAS, GECC, GECM or any other
lender or any potential lender by the Borrower or any of its representatives in connection with the
transactions contemplated hereby is or will be when furnished, taken as a whole, complete and
correct in all material respects and does not and will not, taken as a whole, contain any untrue
statement of a material fact or omit to state a material fact necessary in order to make the
statements contained therein not materially misleading in light of the circumstances under which
such statements are or were made (after giving effect to all supplements and updates thereto), and
(ii) all financial projections that have been or will be prepared by the Borrower and made
available to Bank, BAS, GECC, GECM or any other lender or any potential lender have been or will be
prepared in good faith based upon assumptions believed by the Borrower to be reasonable at the time
of preparation thereof, provided that Borrower shall update such projections if any of such
underlying assumptions are believed by the Borrower to have changed in any material respect; it
being acknowledged that such projections are not to be viewed as facts and the actual results
during the period or periods covered by any such projections may differ significantly from the
projected results, and no assurance can be given that the projected results will be realized. The
Borrower agrees to supplement the information and projections from time to time until the
definitive loan documents become effective so that the representations and warranties contained in
this paragraph remain correct as of the Closing Date. In providing this letter and arranging for
the syndication of the Facility, Bank, BAS, GECC and GECM are relying on the accuracy of the
information furnished to them by or on behalf of the Borrower and its subsidiaries without
independent verification thereof, it being understood that projections by their nature are
inherently uncertain and no assurance is being given that the projected results will be realized.

     The Borrower hereby acknowledges that (a) Bank and BAS will make any information and
projections furnished by the Borrower (collectively, the “Company Materials”) available to
the proposed syndicate of lenders by posting the Company Materials on IntraLinks or another similar
electronic system (the “Platform”) and (b) certain of the proposed lenders may be
“public-side” lenders (i.e., Lenders that do not wish to receive material non-public information
with respect to the Borrower or its securities (each, a “Public Lender”)). The Borrower
hereby agrees that (a) if requested by BAS or Bank, the Borrower will identify that portion of the
Company Materials that may be distributed to the Public Lenders and include a reasonably detailed
term sheet with such Company Materials and that all Company Materials that are to be made available
to Public Lenders shall be clearly and conspicuously marked “PUBLIC” which, at a minimum, shall
mean that the word “PUBLIC” shall appear prominently on the

2

 

first page thereof; (b) by marking Company Materials “PUBLIC” the Borrower shall be deemed to
have authorized the Bank, BAS, and the proposed lenders to treat such Company Materials as not
containing any material non-public information with respect to the Borrower or its securities for
purposes of United States federal and state securities laws, it being understood that certain of
such Company Materials may be subject to confidentiality requirements; (c) all Company Materials
marked “PUBLIC” are permitted to be made available through a portion of the Platform designated
“Public Investor”; and (d) Bank and BAS shall treat any Company Materials that are not marked
“PUBLIC” as being suitable only for posting on a portion of the Platform designated “Private
Investor”.

     Borrower hereby acknowledges and agrees that each of the Arrangers may provide to industry
trade organizations information with respect to the Facility that is necessary and customary for
inclusion in league table measurements.

     The Borrower shall reimburse each of Bank, BAS, GECC and GECM from time to time promptly
following written demand for reasonable and documented out-of-pocket expenses (including, but not
limited to, reasonable and documented out-of-pocket due diligence and syndication expenses,
including reimbursement of all expenses for field exam, reasonable travel expenses and reasonable
and documented fees, disbursements and charges of its counsel (limited to not more than one primary
counsel and necessary local counsel (limited to one local counsel per jurisdiction) for each of
Bank and BAS, on the one hand, and GECC and GECM, on the other hand ), in each instance incurred in
connection with the preparation of this letter, the Term Sheet, the Fee Letter and the definitive
documentation for the Facility, whether or not the transactions contemplated by this letter are
closed; provided that the Borrower’s liability for GECC’s and GECM’s legal fees and expenses for
the initial closing of the Facility shall not exceed $100,000. The Borrower shall pay to the Bank
and BAS a deposit in the amount of $100,000 to be applied to such expenses of Bank and BAS. In
addition, the Borrower agrees to deliver the Bank and BAS from time to time such additional
deposits as may be necessary to cover such expenses in excess of such deposit (collectively, the
“Deposit”). If the Facility is consummated, then the Deposit, less all such reimbursable
expenses, will be applied to closing fees and expenses, and any balance returned to the Borrower.
If for any reason, the Facility is not consummated the balance, if any, of the Deposit remaining
after payment in full of all reimbursable expenses shall be returned to the Borrower.

     The Borrower agrees to indemnify and hold harmless Bank, BAS, GECC, GECM, each other lender
and each of their respective affiliates and their respective officers, directors, employees,
agents, attorneys, advisors and other representatives (each, an “Indemnified Party”) from
and against (and will reimburse each Indemnified Party as the same are incurred for) any and all
claims, damages, losses, liabilities and expenses (including, without limitation, the reasonable
fees, disbursements and other charges of counsel) that may be incurred by or asserted or awarded
against any Indemnified Party, in each case arising out of or in connection with or by reason of
(including, without limitation, in connection with any investigation, litigation or proceeding or
preparation of a defense in connection therewith) (a) any matters contemplated by this letter or
any related transaction or (b) the Facility and any other financings, or any use made or proposed
to be made with the proceeds thereof, except to the extent such claim, damage, loss, liability or
expense is found in a final, nonappealable judgment by a court of competent jurisdiction to have
resulted from such Indemnified Party’s gross negligence or willful misconduct. In the case of an
investigation, litigation or proceeding to which the indemnity in this paragraph applies, such
indemnity shall be effective whether or not such investigation, litigation or proceeding is brought
by the Borrower, the Borrower’s equityholders or creditors or an Indemnified Party, whether or not
an Indemnified Party is otherwise a party thereto and whether or not the transactions contemplated
hereby are consummated. The Borrower also agrees that no Indemnified Party shall have any
liability (whether direct or indirect, in contract or tort or otherwise) to the Borrower, or the
Borrower’s subsidiaries or affiliates or to the Borrower’s or their respective equity holders or
creditors arising out of, related to or in connection with any aspect of the transactions
contemplated hereby, except to the extent of direct, as

3

 

opposed to special, indirect, consequential or punitive, damages determined in a final,
nonappealable judgment by a court of competent jurisdiction to have resulted from such Indemnified
Party’s gross negligence or willful misconduct. Notwithstanding any other provision of this
letter, no Indemnified Party shall be liable for any damages arising from the use by others of
information or other materials obtained through electronic telecommunications or other information
transmission systems, other than for direct or actual damages resulting from the gross negligence
or willful misconduct of such Indemnified Party as determined by a final and nonappealable judgment
of a court of competent jurisdiction.

     Except as required under applicable law or compulsory legal process, the Parent and the
Borrower shall maintain as confidential the terms or conditions of this letter, the Term Sheet and
the Fee Letter, and the terms, conditions, provisions, and documentation of the Facility;
provided, however, it is understood and agreed that the Parent and the Borrower may
disclose the existence of this letter (including the Term Sheet) and the Fee Letter after your
acceptance of this letter and the Fee Letter, in filings with the Securities and Exchange
Commission and other applicable regulatory authorities and stock exchanges. Without limiting the
foregoing, (i) this letter, the Term Sheet and the Fee Letter may not be disclosed in whole or in
part to any person or entity other than the Parent’s and the Borrower’s respective directors,
employees, accountants, attorneys and professional advisors in connection with the establishment of
the Facility on a confidential basis, without Bank’s and GECC’s prior written consent, and (ii) the
Term Sheet and draft documentation for the Facility may be disclosed on a confidential basis to the
lenders and agent in respect of the Term Loan.

     All of the Borrower’s reimbursement, indemnification and confidentiality obligations set forth
in this letter, the Term Sheet and the Fee Letter shall remain in full force and effect regardless
of whether any definitive documentation for the establishment of the Facility shall be executed and
notwithstanding the termination of this letter or any undertaking hereunder, provided that the
reimbursement and indemnification provisions shall be superseded in each case by the applicable
provisions contained in the definitive documentation upon execution thereof and thereafter shall
have no further force and effect.

     The Parent and the Borrower each acknowledges that Bank, BAS, GECC, GECM or their respective
affiliates may be providing financing or other services to parties whose interests may conflict
with the Parent’s or the Borrower’s. Bank, BAS, GECC and GECM will not furnish confidential
information regarding the Parent and its direct and indirect subsidiaries obtained from the Parent
of the Borrower to any of their other respective customers or any other person (other than their
respective affiliates, attorneys, advisors, appraisers, commercial finance auditors, regulatory
authorities and other persons involved in the transactions contemplated hereby) and will treat
confidential information relating to the Parent and its affiliates with the same degree of care as
they treat their own confidential information. Bank, BAS, GECC and GECM further advise the Parent
and the Borrower that they will not make available to the Parent or the Borrower confidential
information that they have obtained or may obtain from any other customer. In connection with the
services and transactions contemplated hereby, the Parent and the Borrower each agrees that Bank,
BAS, GECC and GECM are permitted to access, use and share with any of their respective bank or
non-bank affiliates, agents, advisors (legal or otherwise) or representatives, any information
concerning the Parent or any of its direct and indirect subsidiaries that is or may come into the
possession of Bank, BAS, GECC or GECM or any of such affiliates.

     In connection with all aspects of each transaction contemplated by this letter, the Borrower
acknowledges and agrees that: (i) the Facility and any related arranging or other services
described in this letter is an arm’s-length commercial transaction between the Borrower and its
affiliates, on the one hand, and Bank, BAS, GECC and GECM, on the other hand, as the case may be,
and the Borrower is capable of evaluating and understanding and understands and accept the terms,
risks and conditions of the transactions contemplated by this letter; (ii) in connection with the
transaction contemplated hereby and the process leading to such transaction, each of Bank, BAS,
GECC and GECM is and has been acting

4

 

solely as a principal and, except as expressly set forth in this letter, is not acting as an
agent or fiduciary, for the Borrower or any of its affiliates, stockholders, creditors or employees
or any other party; (iii) neither Bank, BAS, GECC nor GECM has assumed or will assume an advisory,
agency or fiduciary responsibility in the Borrower’s or its affiliates’ favor with respect to any
of the transactions contemplated hereby or the process leading thereto (irrespective of whether
Bank, BAS, GECC or GECM has advised or is currently advising the Borrower or its affiliates on
other matters) and neither Bank, BAS, GECC nor GECM has any obligation to Borrower or its
affiliates with respect to the transactions contemplated hereby except those obligations expressly
set forth in this letter and as may be set forth in definitive documentation for the Facility; (iv)
each of Bank, BAS, GECC and GECM and their respective affiliates may be engaged in a broad range of
transactions that involve interests that differ from the Borrower and its affiliates and Bank, BAS,
GECC and GECM have no obligation to disclose any of such interests by virtue of any fiduciary,
agency or advisory relationship; and (v) Bank, BAS, GECC and GECM have not provided any legal,
accounting, regulatory or tax advice with respect to any of the transactions contemplated hereby
and the Borrower has consulted its own legal, accounting, regulatory and tax advisors to the extent
the Borrower has deemed appropriate. The Borrower hereby waives and releases, to the fullest
extent permitted by law, any claims that it may have against Bank, BAS, GECC or GECM with respect
to any breach or alleged breach of agency or fiduciary duty with respect to the transactions
contemplated hereby.

     The identity of the Borrower is of material importance to Bank, BAS, GECC and GECM.
Consequently, this letter may not be assigned or transferred by the Borrower without the prior
written consent of Bank, BAS, GECC and GECM, and any attempted assignment without such consent
shall be void. This letter and the Term Sheet may not be amended or any provision hereof waived or
modified except by an instrument in writing signed by the Borrower, Bank, BAS, GECC and GECM. This
letter is intended to be solely for the benefit of the parties hereto and is not intended to confer
any benefits upon, or create any rights in favor of, any person other than the parties hereto and
the Indemnified Persons.

     Each of Bank, BAS, GECC and GECM reserves the right to employ the services of its affiliates
in providing services contemplated by this letter and to allocate, in whole or in part, to its
affiliates certain fees payable to it in such manner as it and its affiliates may agree in their
sole discretion.

     All amounts payable by Borrower under this letter or the Fee Letter will be made in U.S.
dollars and, in any case, shall not be subject to counterclaim or set-off for, or be otherwise
affected by, any claim or dispute relating to any other matter. In addition, all such payments
shall be made without deduction for any taxes, levies, imposts, duties, deductions, charges or
withholdings imposed by any national, state or other taxing authority, or will be grossed up by
Borrower for such amounts.

     This letter, the Term Sheet and the Fee Letter sets forth the entire agreement between the
parties with respect to the matters addressed herein and supersedes all prior communications,
written or oral, with respect hereto. This letter may be executed in any number of counterparts,
each of which, when so executed, shall be deemed to be an original and all of which, taken
together, shall constitute one and the same letter. Delivery of an executed counterpart of a
signature page to this letter by electronic transmission shall be as effective as delivery of an
original executed counterpart of this letter.

     This letter shall terminate unless accepted by the Parent and the Borrower on or before 5:00
p.m. (Eastern time) on June 8, 2009 by signing below and returning this letter and the Fee Letter,
so signed to Bank.

     If this letter is so accepted, then, subject to the terms and conditions of this letter, Bank,
BAS, GECC and GECM would be obligated to enter into the Facility if all conditions precedent
thereto are satisfied (as reasonably determined by Bank, BAS, GECC and GECM) on or before June 26,
2009.

5

 

     This letter does not constitute an unconditional commitment to lend. Such a commitment will
exist only upon satisfaction of the following: (i) the execution and delivery of definitive loan
documents (each in form consistent with this letter and the Term Sheet and otherwise reasonably
satisfactory to the Borrower, Bank, BAS, GECC and GECM) on or before June 26, 2009; and (ii) the
satisfaction of all conditions precedent described herein or in the Term Sheet on or before June
26, 2009.

     THIS LETTER SHALL BE GOVERNED BY THE LAWS OF THE STATE OF NEW YORK. Each of the Borrower,
Bank, BAS, GECC and GECM hereby irrevocably and unconditionally submits to the exclusive
jurisdiction of any state or Federal court sitting in the Borough of Manhattan over any suit,
action or proceeding arising out of or relating to the transactions contemplated hereby, this
letter, the Term Sheet, the Fee Letter or the performance of services hereunder or thereunder. The
Borrower agrees that service of any process, summons, notice or document by registered mail
addressed to the Borrower shall be effective service of process for any suit, action or proceeding
brought in any such court. Each of the Borrower, Bank, BAS, GECC and GECM hereby irrevocably and
unconditionally waives any objection to the laying of venue of any such suit, action or proceeding
brought in any such court and any claim that any such suit, action or proceeding has been brought
in any inconvenient forum. EACH OF THE BORROWER, BANK, BAS, GECC AND GECM WAIVES THE RIGHT TO A
TRIAL BY JURY IN ANY SUCH SUIT, ACTION OR PROCEEDING AMONGST OR BETWEEN THE BORROWER AND/OR BANK,
BAS, GECC, GECM OR ANY OTHER LENDER.

     Bank, BAS, GECC and GECM hereby notify the Borrower that pursuant to the requirements of the
USA Patriot Act (Title III of Pub. L. 107-56 (signed into law October 26, 2001) (the “Patriot
Act”)), each of Bank, BAS, GECC and GECM and each of the other lenders may be required to
obtain, verify and record information that identifies the Borrower, which information may include
the Borrower’s name and address and other information that will allow each of Bank, BAS, GECC and
GECM and the other lenders to identify the Borrower in accordance with the Patriot Act. This
notice is given in accordance with the requirements of the Patriot Act and is effective for each of
Bank, BAS, GECC and GECM and the other lenders.

     This Commitment Letter amends and restates in its entirety the Commitment Letter dated May 21,
2009 among Bank, BAS, GECC, GECM, the Parent and the Borrower.

     From and after the date hereof, all references to the Commitment Letter in the Fee Letter or
any other agreement shall be deemed to be references to this Commitment Letter.

     If the foregoing is in accordance with your understanding of our agreement, please sign this
letter in the space indicated below and return it to Bank.

[Remainder of page intentionally left blank]

6

 

     We look forward to working with you on this transaction and continuing our mutually beneficial
relationship with you.

	 	 	 	 	 	 	 
	 	 	BANK OF AMERICA, N.A.	 	 
	 
	 	 	 	 	 	 
	 

	 	By	 	 	 	 
	 

	 	 	 	 	 	 
	 

	 	Name:	 	 	 	 
	 

	 	Title:	 	 	 	 
	 
	 	 	 	 	 	 
	 	 	BANC OF AMERICA SECURITIES LLC	 	 
	 
	 	 	 	 	 	 
	 

	 	By	 	 	 	 
	 

	 	 	 	 	 	 
	 

	 	Name:	 	 	 	 
	 

	 	Title:	 	 	 	 
	 
	 	 	 	 	 	 
	 	 	GENERAL ELECTRIC CAPITAL CORPORATION	 	 
	 
	 	 	 	 	 	 
	 

	 	By	 	 	 	 
	 

	 	 	 	 	 	 
	 

	 	Name:	 	 	 	 
	 

	 	Title:	 	 	 	 
	 
	 	 	 	 	 	 
	 	 	GE CAPITAL MARKETS, INC.	 	 
	 
	 	 	 	 	 	 
	 

	 	By	 	 	 	 
	 

	 	 	 	 	 	 
	 

	 	Name:	 	 	 	 
	 

	 	Title:	 	 	 	 

7

 

The foregoing is agreed to as of

the date first above written:

	 	 	 	 	 
	QUIKSILVER, INC.	 	 
	 
	 	 	 	 
	By
	 	 	 	 
	 

	 	 	 	 
	Name:
	 	 	 	 
	Title:
	 	 	 	 
	 
	 	 	 	 
	QUIKSILVER AMERICAS, INC.	 	 
	 
	 	 	 	 
	By
	 	 	 	 
	 

	 	 	 	 
	Name:
	 	 	 	 
	Title:
	 	 	 	 

8

 

EXHIBIT A

SUMMARY OF PRINCIPAL TERMS AND CONDITIONS

$200,000,000 Senior Secured Revolving Credit Facility

 

June 8, 2009

	 	 	 
	Borrower:

	 	Quiksilver Americas, Inc. and all
domestic subsidiaries which own any
assets of the type included in the
Borrowing Base (as defined below)
(collectively, the “Borrower”).
	 
	 	 
	Guarantors:

	 	Quiksilver, Inc. and all other direct
domestic subsidiaries of the Borrower
that are not Borrowers (other than
immaterial subsidiaries to be mutually
agreed upon by the Borrower, the
Administrative Agent and the
Co-Collateral Agents). In addition, each
Borrower shall cross guaranty all other
Borrowers.
	 
	 	 
	Administrative Agent:

	 	Bank of America, N.A. will act as sole
and exclusive administrative agent for
the Lenders (in such capacity, the
“Administrative Agent”).
	 
	 	 
	Joint Lead Arrangers and Joint
Bookrunners:

	 	Banc of America Securities LLC (“BAS”)
and GE Capital Markets, Inc. (“GECM”;
collectively, together with BAS, the
“Arrangers”).
	 
	 	 
	Co-Collateral Agents:

	 	Bank of America, N.A. and General
Electric Capital Corporation (“GECC”;
collectively, in such capacity, the
“Co-Collateral Agents”).
	 
	 	 
	Lenders:

	 	Bank of America, N.A., GECC and a
syndicate of financial institutions
arranged by the Arrangers, which lenders
shall be reasonably acceptable to the
Borrower, such acceptance not to be
unreasonably withheld.
	 
	 	 
	Purpose:

	 	The Facility, in conjunction with the
initial proceeds of the Term Loan
(defined below), in an initial principal
amount equal to $125,000,000, will be
used to refinance all of the obligations
under that certain Amended and Restated
Credit Agreement dated as of June 3, 2005
among the Quiksilver, Inc., Quiksilver
Americas, Inc., JPMorgan Chase Bank, N.A.
and the other parties thereto, to repay
certain other indebtedness of Quiksilver,
Inc. and its subsidiaries, to pay related
transaction fees and expenses in
connection with the

1

 

	 	 	 
	 

	 	refinancing and
repayment of indebtedness and for working
capital and general corporate purposes of
the Borrower.
	 
	 	 
	Facility:

	 	A senior secured revolving credit
facility in an aggregate principal amount
of $200,000,000 (the “Facility”). The
Facility shall include a sublimit of
$100,000,000 for the issuance of letters
of credit and a swing line loan sublimit
of 10% of the aggregate commitments under
the Facility.1
	 
	 	 
	Increase Option:

	 	Provided that no default or event of
default is then existing or would arise
therefrom, the Administrative Agent and
each of the Lenders agree that the
Borrower, at its option, may request, not
more than on two (2) occasions and in
minimum increments of $25,000,000, that
the Facility be increased by an aggregate
principal amount not to exceed
$50,000,000. Any such increase shall be
on the same terms and conditions as the
Facility. Any or all of the existing
Lenders shall initially have the right of
first refusal (but not the obligation) to
increase their respective commitments to
satisfy the Borrower’s requested increase
in the Facility. If the Lenders are
unwilling to so increase their
commitments, BAS will use its reasonable
efforts to obtain one or more financial
institutions which are not then Lenders
reasonably acceptable to the Borrower to
become party to the Facility and to
provide a commitment in an amount
necessary to satisfy the Borrower’s
requested increase in the Facility. The
Borrower shall pay BAS, the
Administrative Agent and the
participating Lenders fees and other
compensation as agreed to between the
Borrower, BAS, the Administrative Agent
or such Lenders, as applicable, in
connection with the exercise of the
Increase Option.
	 
	 	 
	Borrowing Base:

	 	Credit Extensions under the Facility
shall not exceed the lesser of
$200,000,000 or the Borrowing Base. The
Borrowing Base at any time will be the
sum of (a) 85% of the value of eligible
credit card receivables of the Borrower,
plus (b) 85% of the face amount of the
Borrowers’ eligible accounts receivable
(other than credit card receivables),
plus (c) 85% of the net orderly
liquidation value of eligible inventory
of the Borrower minus (d) customary
reserves established in connection with a
good faith determination made in the
commercially reasonable credit judgment
of the Administrative Agent and the
Co-Collateral Agent. Definitions of
appraised value, eligible inventory,
eligible credit card receivables,
eligible accounts receivable, and

 

			
	1 	 	Facility may include a Canadian subfacility on terms reasonably
acceptable to Lenders.

2

 

	 	 	 
	 

	 	reserve levels and categories will be mutually
established by the Borrower, the
Administrative Agent and the
Co-Collateral Agents upon completion of
an inventory appraisal and commercial
finance examination; provided that those
accounts outstanding for 90 days or less
from the invoice date (or 120 days or
less up to an amount not to exceed
[$TBD]) and those accounts not yet
overdue by 60 days or less shall be
included in eligible accounts receivable,
to the extent such accounts satisfy all
other eligibility criteria. Without
limiting the generality of the foregoing,
the definitive documentation shall
reflect that each Co-Collateral Agent
shall have rights at least as expansive
as the rights afforded to the
Administrative Agent, any Arranger or any
other agent or arranger in the Facility
relating to (i) (x) the definition of
Availability, Excess Availability, and
any component definition of any of the
foregoing, (y) the definition of
Borrowing Base and any component thereof
(including, without limitation, reserves,
advance rates, eligibility criteria,
reporting requirements and appraisals,
examinations and collateral audits) and
(ii) the validity, extent, perfection or
priority of the liens granted to the
Administrative Agent or the Co-Collateral
Agents in regards to the Collateral
(collectively, “Collateral Issues”), and
any provision relating to a Collateral
Issue which would otherwise only need to
be satisfactory (or, as the case may be,
reasonably satisfactory, etc.) to the
Administrative Agent or any other agent
or arranger shall be deemed to require
the consent of or be satisfactory (or, as
the case may be, reasonably satisfactory,
etc.) to the Co-Collateral Agents. In
addition, in the event that the agents
under the Facility cannot agree on issues
relating to the Borrowing Base,
Availability, Excess Availability,
Borrowing Base eligibility standards,
reserves, advance rates, borrowing base
reporting, appraisals or examinations or
any other action or determination, the
determination shall be made by the agent
either asserting the more conservative
credit judgment (that is, that would
result in the least amount of credit
being available to the Borrower) or
declining to permit the requested action.
	 
	 	 
	Closing Date:

	 	A mutually agreed upon date to be
determined but in any event on or before
June 26, 2009.
	 
	 	 
	Maturity Date:

	 	Three years from the Closing Date.
	 
	 	 
	Applicable Margin:

	 	The Applicable Margin shall be the
applicable rate per annum set forth in
the pricing grid, below, based upon
average daily Excess Availability (the
lesser of the Borrowing Base and the
amount of the aggregate commitments under
the Facility less

3

 

	 	 	 
	 

	 	outstanding credit
extensions) for the immediately preceding
fiscal quarter. Initial pricing shall be
at Level II and shall remain at Level II
for 2 full fiscal quarters after the
Closing Date (notwithstanding that the
performance measures for Level I may be
satisfied; provided that, if the
performance measures set forth below for
Level III are in effect, pricing shall be
at Level III during such period that such
performance measures are in effect). The
applicable rates shall thereafter be
adjusted quarterly in accordance with the
pricing grid.

	 	 	 	 	 	 	 	 	 	 	 
	 	 	 	 	LIBOR	 	Base Rate
	Level	 	Excess Availability	 	Loans	 	Loans
	I	 	Equal to or greater than 66%
of the lesser of the Borrowing Base and
the amount of the aggregate commitments
under the Facility
	 	 	4.00	%	 	 	3.00	%
	II	 	Less than 66% but equal to or greater
than 33% of the lesser of the Borrowing
Base and the amount of the aggregate
commitments under the Facility
	 	 	4.25	%	 	 	3.25	%
	III	 	Less than 33% of the lesser of the
Borrowing Base and the amount of the
aggregate commitments under the Facility
	 	 	4.50	%	 	 	3.50	%

	 	 	 
	Letter of Credit Issuer:

	 	Bank of America, N.A., any other Lender
requested by the Borrower and acceptable
to the Administrative Agent, or any of
their respective affiliates.
	 
	 	 
	Letter of Credit Fees:

	 	(a) Documentary Letters of Credit shall
bear a fee equal to the applicable LIBOR
Rate Margin payable quarterly in arrears
on the average daily balance of
Documentary Letters of Credit
outstanding; (b) Standby Letters of
Credit shall be priced at a fee equal to
the applicable LIBOR Rate Margin, payable
on the total face amount of each
outstanding standby letter of credit,
payable quarterly in arrears; (c) a
fronting fee shall be payable to the
Letter of Credit Issuer in an amount

4

 

	 	 	 
	 

	 	equal to 0.125% per annum for all Letters
of Credit quarterly in arrears; and (d)
Letter of Credit Issuer’s customary fees
and charges in connection with the
issuance, negotiation, amendment, and
extension of letters of credit shall be
payable by the Borrower to the Letter of
Credit Issuer. All Letter of Credit fees
shall be calculated on the basis of
actual number of days elapsed in a year
of 360 days.
	 
	 	 
	Default Pricing:

	 	Each level of the Applicable Margin and
Letter of Credit Fees shall be increased
by 2% per annum.
	 
	 	 
	Borrowing Options:

	 	At the option of the Borrower, borrowings
under the Facility shall be at a rate of
interest of either (a) the Base Rate plus
the Applicable Margin (“Base Rate Loan”),
or (b) the LIBOR Rate plus the Applicable
Margin (“LIBOR Rate Loan”). LIBOR Rates
will be quoted for one, two, three, and
six months, but there shall be a 2.0%
floor on LIBOR for one-month and
two-month LIBOR Rate Loans; provided that
Borrower shall be permitted to borrow for
one-month or two-month periods at the
three-month LIBOR rate. Base Rate Loans
shall be available on at least one
business day’s prior notice. LIBOR Rate
Loans shall require at least three
business days’ advance notice. Interest
on Base Rate Loans will be due and
payable quarterly in arrears. Interest
on LIBOR Rate Loans will be payable at
the end of each applicable interest
period or quarterly in arrears, whichever
is earlier. All interest for LIBOR Rate
Loans shall be based on a 360-day year
and actual days elapsed and all interest
on Base Rate Loans shall be based on a
365/366 day year and actual days elapsed.
“Base Rate” means the greatest of (1) the
Prime Rate announced by the Bank as its
“Prime Rate”, (2) the Federal Funds
Effective Rate plus 0.50% per annum, or
(3) the LIBOR Rate for an interest period
of one month plus 1% per annum.
	 
	 	 
	Swing Line Option:

	 	Swing line loans (“Swing Line Loans” )
will be made available by the
Administrative Agent on a same day basis
in an aggregate amount not to exceed 10%
of the aggregate commitments under the
Facility. All Swing Line Loans shall
bear interest at the Base Rate plus the
Applicable Margin.
	 
	 	 
	Unused Line Fee:

	 	The Borrower will pay an unused line fee
calculated from the Closing Date of (i)
1.00% per annum on the average daily
unused portion of the Facility if less
than 33% of the Facility has been used,
(ii) 0.75% per annum on the average daily
unused portion of the Facility if 33% or
more but less than 66% of the Facility
has been used and (iii) 0.50% per annum

5

 

	 	 	 
	 

	 	on the average daily unused portion of
the Facility if 66% or more than 66% of
the Facility has been used and, in each
case, payable quarterly in arrears and
upon the Maturity Date, and adjusted
quarterly. Swing Line Loans will, for
purposes of the commitment fee
calculations only, not be deemed to be a
utilization of the Facility.
	 
	 	 
	Optional Prepayments and
Commitment Reductions:

	 	The Borrower may repay the loans at any
time and from time to time without
premium or penalty (other than breakage
costs with respect to LIBOR loans, if
applicable), in minimum principal amounts
and with customary notice requirements to
be mutually agreed upon by the Borrower,
the Administrative Agent and the
Co-Collateral Agents.
	 
	 	 
	 

	 	The Borrower may reduce the unutilized
portion of the commitments in respect of
the Facility at any time and from time to
time, without premium or penalty, in
minimum principal amounts to be mutually
agreed upon by the Borrower, the
Administrative Agent and the
Co-Collateral Agents and subject to
customary notice requirements to be
mutually agreed upon by the Borrower, the
Administrative Agent and the
Co-Collateral Agents.
	 
	 	 
	Mandatory Prepayments:

	 	If at any time the sum of borrowings
under the Facility exceeds the lesser of
(i) the Borrowing Base as in effect at
such time and (ii) the amount of the
aggregate commitments under the Facility
as in effect at such time, prepayments of
loans (and/or the cash collateralization
of Letters of Credit) shall be required
in an amount equal to such excess.
	 
	 	 
	Additional Fees:

	 	Payable in the amounts and at the times
set forth in the Fee Letter of even dated
herewith.
	 
	 	 
	Security:

	 	The Facility (and all cash management
services and other bank products provided
to any of the Borrower or Guarantors by
any of the Lenders or their affiliates)
will be secured by a first priority
(subject to exceptions to be mutually
agreed upon by the Borrower, the
Administrative Agent and the
Co-Collateral Agents) perfected security
position on all inventory and accounts of
the Borrower and Guarantors, together
with all general intangibles (exclusive
of intellectual property subject to a
first priority lien to secure the Term
Loan) relating to inventory and accounts,
all contract rights under agreements
relating to inventory and accounts, all
documents relating to inventory, all
supporting obligations and
letter-of-credit rights relating to
inventory and accounts, all instruments
evidencing payment for inventory and
accounts;

6

 

	 	 	 
	 

	 	all money, cash, cash
equivalents, securities and other
property of any kind held directly or
indirectly by the Co-Collateral Agents or
any Lender; all deposit accounts,
credits, and balances with any financial
institution with which the Borrower
maintains deposits and which contain
proceeds of or collections on, inventory
and accounts; all books, records and
other property related to or referring to
any of the foregoing, including books,
records, account ledgers, data processing
records, computer software and other
property and all proceeds of any of the
foregoing, including, but not limited to,
proceeds of any insurance policies,
claims against third parties, subject to
exceptions and liens to be mutually
agreed upon by the Borrower, the
Administrative Agent and the
Co-Collateral Agents.
	 
	 	 
	 

	 	The Facility will also be secured by (a)
a second priority perfected security
position on substantially all other
personal property of the Borrower and the
Guarantors, subject to exceptions and
liens to be mutually agreed upon by the
Borrower, the Administrative Agent and
the Co-Collateral Agents and (b) a second
priority pledge of the direct and
indirect ownership interest in each
direct domestic subsidiary (and each
Canadian foreign subsidiary, to secure
obligations under the contemplated
Canadian sub-facility, if any) of the
Borrower and each Guarantor. The
Co-Collateral Agents shall enter into an
intercreditor agreement with the agent
for holders of a first priority lien on
such other assets which intercreditor
agreement shall be on terms and
conditions reasonably satisfactory to the
Co-Collateral Agents and which shall in
any event provide that the Co-Collateral
Agents shall have the right to utilize,
at no cost or expense, such properties of
the Borrower and Guarantors (including
without limitation intellectual property)
to the extent necessary to sell, lease or
otherwise dispose of the inventory and
accounts after an event of default
(collectively, the “Collateral”).
	 
	 	 
	 

	 	Notwithstanding the foregoing, but
subject to Sections 9-406 through 9-408
of the Uniform Commercial Code, the
security arrangements shall not include
Collateral to the extent (i) prohibited
by applicable law, (ii) constituting
leaseholds, (iii) constituting vehicles
and other assets subject to certificate
of title, (iv) constituting interests in
joint ventures and non-wholly owned
subsidiaries which cannot be pledged
without the consent of one or more third
parties, (v) those assets over which the
granting of a security interest is such
assets would be prohibited by contract or
(vi) otherwise mutually agreed upon by
the Borrower, the Administrative Agent
and the Co-

7

 

	 	 	 
	 

	 	Collateral Agents.
	 
	 	 
	Cash Management:

	 	If, at any time, (a) Excess Availability
is less than (i) 20.0% of the lesser of
the Borrowing Base and the amount of the
aggregate commitments under the Facility
for 3 consecutive Business Days, or (ii)
$30,000,000 for 3 consecutive Business
Days, (b) an Event of Default exists, or
(c) the failure to either (i) refinance
the indebtedness owing by Pilot SAS (a
wholly-owned indirect subsidiary of
Quiksilver, Inc.) to Crédit Lyonnais SA,
BNP Paribas SA and Société Générale SA
pursuant to that certain unsecured credit
agreement dated as of March 14, 2008 (the
“Pilot SAS Indebtedness”) or (ii) enter
into a binding commitment satisfactory to
the Administrative Agent and the
Co-Collateral Agents to refinance the
Pilot SAS Indebtedness (such refinancing
to close by no later than the maturity
date thereof then in effect), in each
case by no later than that date which is
fifteen (15) days prior to the maturity
date of the Pilot SAS Indebtedness then
in effect (each, a “Cash Dominion
Event”), all cash receipts (subject to
exceptions to be mutually agreed upon by
the Borrower, the Administrative Agent
and the Co-Collateral Agents) shall be
forwarded to a deposit account which is
subject to a control agreement in favor
of the Co-Collateral Agents or to a
concentration account maintained by the
Co-Collateral Agents with Bank of
America, N.A. and such receipts shall be
applied daily in reduction of the
obligations under the Facility. The
occurrence of a Cash Dominion Event shall
be deemed continuing at any time (x) when
an Event of Default is continuing or, (y)
if such Cash Dominion Event has occurred
due to the failure by the Borrower to
maintain Excess Availability as set forth
in clause (a) above, notwithstanding that
Excess Availability may thereafter exceed
the amount set forth in clause (a) above,
unless and until Excess Availability
exceeds such amounts for 60 consecutive
days, in which case a Cash Dominion Event
shall no longer be deemed to be
continuing; provided that a Cash Dominion
Event shall be deemed continuing (even if
Excess Availability exceeds the required
amounts for 60 consecutive days) if a
Cash Dominion Event has occurred and been
discontinued on 3 occasions during the
term of the Facility and (z) if such Cash
Dominion Event has occurred due to events
described in clause (c) above, until such
time as the Pilot SAS Indebtedness has
been refinanced, or a satisfactory
binding commitment to refinance the Pilot
SAS Indebtedness (such refinancing to
close by no later than the maturity date
thereof then in effect) has been entered
into.

8

 

	 	 	 
	 

	 	The definitive documentation for the
Facility shall provide that, so long as
any advances or letters of credit are
outstanding under the Facility, Borrower
shall not permit cash in an aggregate
amount in excess of 10% of the Borrowing
Base as then in effect (other than (i)
“store” cash, cash held in local,
non-concentration deposit accounts, cash
in transit between stores and depository
accounts and cash receipts from sales in
the process of inter-account transfers,
in each case as a result of the ordinary
course operations of the Borrower, and
(ii) to the extent necessary for the
Borrower and Guarantors to satisfy in the
ordinary course of their business the
current liabilities incurred by them in
the ordinary course of their business and
without acceleration of the satisfaction
of such current liabilities) to
accumulate and be maintained in
depository accounts of the Borrower and
the Guarantors.
	 
	 	 
	Representations and Warranties:

	 	Usual and customary for facilities of
this type, with exceptions,
qualifications and materiality to be
mutually agreed upon by the Borrower, the
Administrative Agent and the
Co-Collateral Agents, including, without
limitation, the following: (i) corporate
status; (ii) corporate power and
authority and enforceability; (iii) no
material violation of, or conflicts with,
law, material contracts (if any, to be
mutually agreed upon by the Borrower, the
Administrative Agent and the
Co-Collateral Agents) or organizational
documents; (iv) no material litigation;
(v) accuracy and completeness of
specified financial statements and other
information, and no material adverse
change; (vi) no required governmental or
third party approvals or consents; (vii)
use of proceeds/compliance with margin
regulations; (viii) valid title to
property and assets (including
intellectual property and licenses), free
and clear of liens, charges and other
encumbrances; (ix) status under
Investment Company Act; (x) ERISA
matters; (xi) environmental matters;
(xii) labor matters; (xiii) status and
adequacy of insurance; (xiv) status of
subsidiaries and perfected liens,
security interests and charges; (xv)
solvency; (xvi) payment of taxes; (xvii)
indebtedness and liens; (xviii)
compliance with applicable laws; (xix) no
default; (xx) licenses and permits; (xxi)
owned and leased business locations; and
(xxii) lines of business. In addition,
the security documents shall contain
representations and warranties with
respect to the Collateral which are usual
and customary for transactions of this
type.
	 
	 	 
	Other Covenants:

	 	Usual and customary affirmative and
negative covenants applicable to the
Borrower and each Guarantor and their

9

 

	 	 	 
	 

	 	subsidiaries appropriate to facilities of
this type (with customary grace periods,
baskets and materiality qualifiers to be
mutually agreed upon by the Borrower, the
Administrative Agent and the
Co-Collateral Agents) to include, without
limitation, the following:
	 
	 	 
	 

	 	a) Usual and customary financial
reporting requirements, including monthly
Borrowing Base certificates (unless
Excess Availability is less than (i)
20.0% of the lesser of the Borrowing Base
and the amount of the aggregate
commitments under the Facility, or (ii)
$30,000,000, in which case Borrowing Base
Certificates will be furnished weekly)(to
the extent possible, to include
information regarding inventory), monthly
(commencing with the first month after
the first full six months ending after
the Closing Date) (such monthlies to be
in a format to be mutually determined),
quarterly and annual collateral and
financial reporting requirements,
compliance certificates, and annual
business plans and forecasts.
	 
	 	 
	 

	 	b) (i) Notices of defaults, notices of
litigation and proceedings, environmental
actions and liabilities and ERISA and tax
events and liabilities, of changes in
accounting or financial reporting
practices, organizational structure, and
other business and financial information
as the Administrative Agent or any Lender
shall reasonably request through the
Administrative Agent; (ii) payment of
taxes and other obligations; (iii)
preservation of corporate existence,
rights (charter and statutory),
franchises, permits, licenses and
approvals; (iv) maintenance of properties
and equipment; (v) maintenance of
appropriate and adequate insurance; (vi)
visitation and inspection rights; (vi)
keeping of proper books in accordance
with generally accepted accounting
principles; (vii) compliance with laws
and material contracts; (viii) use of
proceeds; and (ix) further assurances,
additional subsidiary guaranties and
collateral and perfection and priority of
security interests.
	 
	 	 
	 

	 	c) Field examinations and inventory
appraisals will be conducted on an
ongoing basis at the reasonable
discretion of the Administrative Agent or
any Co-Collateral Agent. The Borrower
shall be required to pay the fees and
expenses for only two
examinations/appraisals per year;
provided that such limit shall be
increased to three per year if Excess
Availability is less than (i) 30% of the
lesser of the Borrowing Base and the
amount of the aggregate commitments under
the Facility for 3 consecutive Business
Days, or (ii) $45,000,000 for 3

10

 

	 	 	 
	 

	 	consecutive Business Days. In addition
to the foregoing, the Administrative
Agent or any Co-Collateral Agent may
undertake additional exams and appraisals
at any time at its own expense and may
undertake such exams and appraisals as it
deemed necessary, at the Borrower’s
expense, while an Event of Default
exists.
	 
	 	 
	 

	 	d) Limitations on (i) indebtedness,
guarantees, or other contingent
obligations; (ii) liens, investments,
loans, permitted acquisitions, joint
ventures, other investments, asset
divestitures, dividends and
distributions, other restricted payments
and prepayments, redemption or repurchase
of indebtedness, and transactions with
affiliates; (iii) material changes in the
nature of business; (iv) mergers and
consolidations; (v) changes of fiscal
year or amending organizational
documents, or amending or otherwise
modifying any debt, any related document
or any other material agreement; (vi)
limitations on intercorporate transfers;
(vii) sale/leaseback transactions; (viii)
granting negative pledges; (ix)
impairment of security interests and (x)
changes in accounting policies or
reporting practices. All of the
foregoing will be subject to such
exceptions and qualifications as the
Borrower and the Lenders may mutually
agree in the definitive documentation;
provided, however, that limitations on
foreign subsidiary indebtedness and liens
shall
be no more restrictive than the
limitations set forth in the Borrower’s
existing credit agreement and shall
permit the grant of liens on intellectual
property assets owned by foreign
subsidiaries. In any event, subject to
other limitations provided therein, the
definitive documentation shall permit the
Borrower to (A) pay cash dividends and
repurchase its capital stock if, after
giving effect to any such dividend or
repurchase, the Borrower shall have
certified, and shall have delivered
supporting documentation reasonably
satisfactory to the Administrative Agent,
that Excess Availability is greater than
(i) 30% of the lesser of the Borrowing
Base and the amount of the aggregate
commitments under the Facility
immediately preceding, and on a pro forma
on the date thereof and projected basis
for the 12 months following, such
dividend or repurchase, and (ii)
$45,000,000, and Borrower’s minimum Fixed
Charge Coverage Ratio (to be defined in a
manner to be mutually agreed upon by the
Borrower, the Administrative Agent and
the Co-Collateral Agents), calculated on
a trailing 12 month basis, is greater
than 1.25:1.0, immediately preceding, and
on a pro forma on the date thereof and
projected basis for the 12 months
following, such dividend or repurchase,
and (B) make acquisitions and

11

 

	 	 	 
	 

	 	other
investments and repurchase debt (in
addition to other carve-outs (not subject
to the following conditions) for
repurchases or redemptions of Quiksilver,
Inc.’s existing senior notes in a manner
to be mutually agreed upon by the
Borrower, the Administrative Agent and
the Co-Collateral Agents) if, after
giving effect to any such acquisition,
investment or repurchase, the Borrower
shall have certified, and shall have
delivered supporting documentation
reasonably satisfactory to the
Administrative Agent, that Excess
Availability is greater than (i) 30% of
the lesser of the Borrowing Base and the
amount of the aggregate commitments under
the Facility immediately preceding, and
on a pro forma on the date thereof and
projected basis for the 12 months
following, such acquisition, other
investment or repurchase, and (ii)
$45,000,000, and Borrower’s minimum Fixed
Charge Coverage Ratio (to be defined in a
manner to be mutually agreed upon by the
Borrower, the Administrative Agent and
the Co-Collateral Agents), calculated on
a trailing 12 month basis, is greater
than 1.1:1.0, immediately preceding, and
on a pro forma on the date thereof and
projected basis for the 12 months
following, such acquisition, other
investment or repurchase.
	 
	 	 
	 

	 	e) Usual and customary restrictions on
investments in, loans to and
distributions to non-Guarantor
subsidiaries and affiliates.
	 
	 	 
	 

	 	f) In addition, the security documents
shall contain covenants with respect to
the Collateral which are usual and
customary for transactions of this type.
	 
	 	 
	Financial Covenants:

	 	a) If, at any time, Excess Availability
is less than (i) 15% of the lesser of the
Borrowing Base and the amount of the
aggregate commitments under the Facility,
or (ii) $30,000,000, then the Borrower
will be required to maintain a minimum
Fixed Charge Coverage Ratio (excluding
operations of Europe and Asia Pacific, to
be defined in a manner to be mutually
agreed upon by the Borrower, the
Administrative Agent and the
Co-Collateral Agents), calculated on a
trailing 12 month basis, of 1.1:1.0 until
Excess Availability again equals or
exceeds each of such thresholds for 60
consecutive calendar days.
	 
	 	 
	 

	 	b) Minimum Excess Availability shall at
all times be in excess of 7.5% of the
lesser of the Borrowing Base and the
amount of the aggregate commitments under
the Facility, it being agreed that the
Minimum Excess Availability

12

 

	 	 	 
	 

	 	requirement
may be amended or waived with majority
Lender consent.
	 
	 	 
	Events of Default:

	 	Usual and customary for facilities of
this type, and to include, without
limitation, failure to pay any interest
or principal when due, failure to comply
with covenants, material
misrepresentations, insolvency,
bankruptcy, cross defaults with material
indebtedness and material agreements
(with a material adverse effect
standard), change of control, adverse
judgments, and ERISA defaults, with
appropriate grace periods, exceptions,
materiality, and baskets to be
negotiated.
	 
	 	 
	Conditions Precedent:

	 	Closing of the Facility shall be
conditioned upon satisfaction of the
following conditions and the conditions
described in the letter agreement to
which this Term Sheet is attached:
	 
	 	 
	 

	 	(a) Preparation, execution and delivery
of definitive documentation with respect
to the Facility consistent with the terms
hereof and reasonably satisfactory to the
Administrative Agent, BAS, the Lenders
and the Borrower.
	 
	 	 
	 

	 	(b) Administrative Agent shall have
received such customary corporate
resolutions, certificates and other
corporate documents as the Administrative
Agent or any Co-Collateral Agent shall
reasonably request.
	 
	 	 
	 

	 	(c) All necessary consents and
approvals, if any, to the Facility shall
have been obtained.
	 
	 	 
	 

	 	(d) Administrative Agent and the
Co-Collateral Agents shall have received
the preliminary, or final if available,
quarterly financial statements of the
Borrower and its subsidiaries for the
fiscal quarter ending April 30, 2009,
reasonably satisfactory to the
Administrative Agent and the
Co-Collateral Agents, consisting of
balance sheets, income statements, and
cash flow statements.
	 
	 	 
	 

	 	(e) Administrative Agent and the
Co-Collateral Agents shall have received
an updated business plan prepared by
management of the Borrower consisting of
consolidated balance sheets, statements
of income or operations and cash flows
and borrowing availability forecast of
the Borrower and its Subsidiaries
(excluding foreign subsidiaries other
than Canadian subsidiaries and the
Mexican and Brazilian joint ventures) on
a quarterly basis for the immediately
following fiscal year.
	 
	 	 
	 

	 	(f) Each of the Administrative Agent and
the Co-Collateral

13

 

	 	 	 
	 

	 	Agents shall have completed reasonably satisfactory
background checks on the Parent, the
Borrower and their management.
	 
	 	 
	 

	 	(g) No event shall have occurred after
October 31, 2008 that would reasonably be
expected to have a material adverse
effect on the condition (financial or
otherwise), operations, assets, or
business of the Borrower and Guarantors.
	 
	 	 
	 

	 	(h) There shall not be any action, suit,
investigation or proceeding pending or,
to the knowledge of the Borrower
threatened, in any court or before any
arbitrator or governmental authority that
would reasonably be expected to have a
material adverse effect on the condition
(financial or otherwise), operations,
assets, or business of the Borrower and
Guarantors or would reasonably be
expected to have a material adverse
effect on the Facility or the
transactions contemplated thereby.
	 
	 	 
	 

	 	(i) After giving effect to the
consummation of the transactions
contemplated on the Closing Date, no
Event of Default shall then exist.
	 
	 	 
	 

	 	(j) All costs, fees and expenses
(including, without limitation,
reasonable legal fees and expenses) and
other compensation described in this Term
Sheet and the Fee Letter to be payable by
the Borrower shall have been paid to the
extent due.
	 
	 	 
	 

	 	(k) Receipt by the Administrative Agent
of legal opinions of counsel to the
Borrower reasonably satisfactory in form
and substance to the Administrative Agent
and the Co-Collateral Agents.
	 
	 	 
	 

	 	(l) The Co-Collateral Agents shall have
received (in form for filing) all
required financing statements, and
obtained all such control agreements with
respect to deposit accounts (which
control agreements (i) may be completed
within 10 days after the Closing Date,
which grace period may be extended to 30
days after the Closing Date for selected
deposit accounts acceptable to the
Co-Collateral Agents or may be reduced or
eliminated by the Co-Collateral Agents if
the maturity date of the Pilot SAS
Indebtedness is within 20 days of the
Closing Date, and (ii) shall be subject
to such exceptions as may be acceptable
to the Co-Collateral Agents), and shall
have given all such notices, as may be
necessary for the Co-Collateral Agents to
perfect their security interest in the
Collateral for themselves and for the
benefit of the Lenders and the

14

 

	 	 	 
	 

	 	Administrative Agent and to assure their
first, or second, as applicable, priority
status therein.
	 
	 	 
	 

	 	(m) Borrower shall have entered into and
received proceeds of a term loan (the
“Term Loan”), in a minimum amount of
$125,000,000, on terms and conditions
substantially the same as those set forth
in the term sheet in respect thereof
dated as of June 8, 2009 or as otherwise
reasonably acceptable to the
Administrative Agent and the
Co-Collateral Agents, including without
limitation, execution of an intercreditor
agreement on terms and conditions
reasonably satisfactory to the
Co-Collateral Agents.
	 
	 	 
	 

	 	(n) After giving effect to the
consummation of the transactions
contemplated on the Closing Date and the
credit extensions made under the Facility
on the Closing Date Excess Availability
shall be not less than $90,000,000.
	 
	 	 
	 

	 	(o) Administrative Agent shall have
received, and be reasonably satisfied
with, evidence of the Borrower’s
insurance, together with such customary
endorsements as Administrative Agent or
any Co-Collateral Agent may reasonably
require.
	 
	 	 
	 

	 	(p) No material changes in governmental
regulations or policies affecting the
Borrower or its subsidiaries, or the
Administrative Agent or Lenders shall
occur prior to the Closing Date.
	 
	 	 
	 

	 	(q) The Borrower shall not have executed
a sale agreement with respect to the DC
Shoes business.
	 
	 	 
	 

	 	(r) The Co-Collateral Agents shall have
received all reasonably required UCC, tax
lien and litigation searches relating to
the Borrower the Guarantors and such
results shall indicate the absence of
liens on the assets of the Borrower and
the Guarantors, except for liens
permitted under the definitive
documentation for the Facility and liens
for which termination statements and
releases are being tendered concurrently
with the closing of the Facility or other
arrangements reasonably satisfactory to
the Co-Collateral Agents for the delivery
of such termination statements and
releases have been made.
	 
	 	 
	 

	 	(s) The Co-Collateral Agents shall have
concluded with results reasonably
satisfactory to them all background
checks and other investigations to ensure
compliance with the USA

15

 

	 	 	 
	 

	 	Patriot Act,
anti-money laundering laws and other
applicable laws and regulations.
	 
	 	 
	 

	 	(t) The Co-Collateral Agents shall have
received the results of, patent,
trademark and copyright searches
conducted in the United States Patent and
Trademark Office and the United States
Copyright Office, relating to the
Borrower the Guarantors and such results
shall indicate the absence of liens on
the patents, trademarks and copyrights of
the Borrower and the Guarantors, except
for liens permitted under the definitive
documentation for the Facility and liens
for which releases are being tendered
concurrently with the closing of the
Facility or other arrangements reasonably
satisfactory to the Co-Collateral Agents
for the delivery of such releases have
been made.
	 
	 	 
	Expenses:

	 	The Borrower will pay (i) all reasonable
and documented out-of-pocket expenses of
the Administrative Agent, the
Co-Collateral Agents and BAS associated
with the arrangement of the Facility and
the preparation, negotiation,
syndication, execution, delivery and
administration of the definitive
documentation and any amendment or waiver
with respect thereto (including the
reasonable fees, disbursements and other
charges of a single law firm for each
such agent or BAS, auditors and
appraisers, the charges of IntraLinks and
the charges for any field exams);
provided that the Borrower’s liability
for GECC’s and GECM’s legal fees and
expenses for the initial closing of the
Facility shall not exceed $100,000, (ii)
all out-of-pocket expenses of the
Administrative Agent and the
Co-Collateral Agents (including the
reasonable and documented fees,
disbursements and other charges of a
single law firm for each such agent) in
connection with the enforcement of the
definitive documentation or in any
bankruptcy case or insolvency proceeding
and (iii) the reasonable and documented
fees, disbursements and other charges of
one law firm for the Lenders (other than
the Administrative Agent and the
Co-Collateral Agents) in connection with
any matter referred to in clause (ii)
above.
	 
	 	 
	Administrative Agent’s Counsel:

	 	Riemer & Braunstein, LLP
	 
	 	 
	Governing Law:

	 	State of New York

16

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